<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WALLACE COMPUTER SERVICES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/X/ 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.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
November 6, 1995
------------------------
IMPORTANT ANNUAL MEETING
DECEMBER 8, 1995
------------------------
Dear Fellow Stockholders:
You are cordially invited to attend the annual meeting of stockholders of
Wallace Computer Services, Inc. scheduled to be held Friday, December 8, 1995.
The meeting will be held in the Grand Ballroom of the Oak Brook Marriott, 1401
West 22nd Street, Oak Brook, Illinois, at 10:00 a.m., local time. Your Board of
Directors and management look forward to greeting those stockholders able to be
present.
This year's meeting is of particular importance to all Wallace stockholders
because of Moore Corporation Limited's ongoing, unsolicited, hostile attempt to
take over your Company. To further its own objectives, Moore is seeking your
support to elect three of its own hand-picked nominees in place of the three
experienced directors (including Wallace's President and CEO, Bob Cronin)
nominated by your Board. Moore also wants you to support several proposals that
would allow Moore's nominees to control the Board and make it possible for them
to sell Wallace for as little as $60 per share.
Your Board of Directors remains opposed to Moore's $60 per share offer -- an
offer which we believe is inadequate and not in your best interests. We thank
our many stockholders for their unwavering support in the face of Moore's
hostile, unsolicited and conditional tender offer for your shares of Wallace.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE WALLACE
NOMINEES TO THE BOARD AND "AGAINST" MOORE'S PROPOSALS.
Enclosed with this letter is Wallace's notice of meeting and proxy statement
and a WHITE proxy card. You should read these materials for a more complete
description of the matters to be considered at the annual meeting. Then, take a
moment to sign, date and mail your WHITE proxy card in the postage prepaid
envelope provided.
On behalf of everyone at Wallace, we thank you for your continued support
which has been a source of strength for us all. We remain committed to acting in
the best interests of you, our stockholders, and our Company. Please feel free
to call us or our proxy solicitor, Morrow & Co., Inc., if you have any
questions. Our phone number is (708) 449-8600 and the phone number of Morrow &
Co., Inc. is (800) 662-5200.
Sincerely,
<TABLE>
<S> <C>
[SIG] [SIG]
TED DIMITRIOU BOB CRONIN
CHAIRMAN OF THE BOARD PRESIDENT AND CEO
</TABLE>
IMPORTANT
Your vote is important. Please take a moment to sign, date and promptly mail
your WHITE proxy card in the postage prepaid envelope provided. Remember, do not
return any proxy card sent to you by Moore, not even as a vote of protest.
If your shares are registered in the name of a broker, only your broker can
execute a proxy and vote your shares and only after receiving your specific
instructions. Please contact the person responsible for your account and direct
him or her to execute a proxy on your behalf today. If you have any questions or
need further assistance in voting, please contact the firm assisting us in
solicitation of proxies:
MORROW & CO., INC.
Call toll free at (800) 662-5200
<PAGE>
[LOGO]
------------------------
NOTICE OF 1995 ANNUAL MEETING OF STOCKHOLDERS
------------------------
TO THE STOCKHOLDERS OF
WALLACE COMPUTER SERVICES, INC.:
Notice is hereby given that the 1995 Annual Meeting of Stockholders of
Wallace Computer Services, Inc., a Delaware corporation, will be held in the
Grand Ballroom of the Oak Brook Marriott, 1401 West 22nd Street, Oak Brook,
Illinois, on Friday, December 8, 1995, at 10:00 a.m., for the following
purposes:
1. To elect three directors for the class of directors whose terms are
expiring at the 1995 Annual Meeting.
2. To consider and vote upon three proposals by a wholly owned subsidiary
of Moore Corporation Limited, an Ontario corporation ("Moore"), to (i)
remove all of the members of the Board of Directors of the Company, other
than Moore's three director nominees if they are then directors of the
Company, (ii) amend the Company's Bylaws to fix the number of directors
of the Company at five and (iii) repeal each provision of the Company's
Bylaws or amendment thereto adopted without stockholder approval
subsequent to February 15, 1995 and prior to the 1995 Annual Meeting.
3. To consider and vote upon a proposal to ratify the appointment of Arthur
Andersen LLP as the Company's independent public accountants for fiscal
year 1996.
4. To transact such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on November 3, 1995
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the 1995 Annual Meeting and at any adjournment or postponement
thereof.
It is important that your shares be voted at the 1995 Annual Meeting.
Whether or not you expect to attend, you are urged to sign and date the
accompanying WHITE proxy card and promptly return it to the Company in the
accompanying postage prepaid envelope.
By Order of the Board of Directors
MICHAEL T. LAUDIZIO
SECRETARY
Hillside, Illinois
November 6, 1995
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY URGES YOU TO REJECT THE PROXY
SOLICITATION OF MOORE AND NOT SIGN OR RETURN ANY GOLD PROXY CARD SENT TO YOU BY
MOORE.
TO SUPPORT YOUR BOARD, PLEASE SIGN, DATE AND PROMPTLY RETURN YOUR WHITE PROXY
CARD IN THE ENCLOSED POSTAGE PREPAID ENVELOPE. IF YOU HAVE ANY QUESTIONS OR NEED
ASSISTANCE, PLEASE CALL THE COMPANY AT (708) 449-8600 OR MORROW & CO., INC. ,
WHICH IS ASSISTING US, TOLL FREE AT (800) 662-5200.
<PAGE>
WALLACE COMPUTER SERVICES, INC.
4600 WEST ROOSEVELT ROAD
HILLSIDE, ILLINOIS 60162
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 8, 1995
------------------------
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of Wallace Computer Services, Inc. (the
"Company") to be voted at the Annual Meeting of Stockholders of the Company to
be held on December 8, 1995, and at any and all adjournments or postponements
thereof (the "Annual Meeting"). The Board of Directors has fixed the close of
business on November 3, 1995 as the record date for determining the stockholders
entitled to notice of, and to vote at, the Annual Meeting. This Proxy Statement
and the accompanying WHITE proxy card are first being mailed to stockholders on
or about November 6, 1995.
At the Annual Meeting, stockholders will consider and vote upon the election
of three directors to hold office for three years. Moore Corporation Limited, an
Ontario corporation and a competitor of the Company ("Moore"), has commenced a
proxy solicitation to replace the three current directors standing for
re-election with Moore's own nominees. At the Annual Meeting, stockholders will
consider and vote upon three proposals of a wholly owned subsidiary of Moore
(the "Moore Proposals") to (i) remove all of the members of the Board of
Directors of the Company, other than Moore's director nominees if they are then
directors of the Company (the "Board Removal Proposal"), (ii) amend the
Company's Bylaws to fix the number of directors of the Company at five (the
"Number of Directors Proposal") and (iii) repeal each provision of the Company's
Bylaws or amendment thereto adopted without stockholder approval subsequent to
February 15, 1995 and prior to the Annual Meeting (the "Bylaw Repeal Proposal").
Moore's nomination of an opposition slate of directors and the Moore Proposals
are in furtherance of its attempts to take over the Company by means of an
unsolicited hostile tender offer for all outstanding shares of the Company's
common stock, par value $1.00 per share (the "Common Stock"), at a price of $60
per share in cash (the "Moore Offer"). At the Annual Meeting, the stockholders
will also consider and vote upon the ratification of the appointment of Arthur
Andersen LLP as the Company's independent public accountants for fiscal year
1996 and any other business that may properly come before the Annual Meeting.
Your Board of Directors has unanimously concluded that the Moore Offer is
inadequate and not in the best interests of the Company and its stockholders and
that, in light of the Company's future prospects, the interests of the
stockholders will be best served by the Company remaining an independent entity.
YOUR BOARD OF DIRECTORS UNANIMOUSLY OPPOSES MOORE'S SOLICITATION OF PROXIES AND
URGES YOU NOT TO SIGN OR RETURN ANY GOLD PROXY CARD SENT TO YOU BY MOORE. WE
RECOMMEND THAT YOU SUPPORT YOUR BOARD BY VOTING "FOR" THE BOARD'S NOMINEES AND
"AGAINST" THE MOORE PROPOSALS.
Your vote is important, regardless of how many shares you own. Please sign
and date the accompanying WHITE proxy card and mail it in the enclosed postage
prepaid envelope as promptly as possible, whether or not you expect to attend
the meeting.
Whether or not you have previously signed a proxy card sent by Moore, your
Board urges you to show your support for the Board by signing, dating and
promptly mailing the enclosed WHITE proxy card. By signing and dating the WHITE
proxy card, you will revoke any earlier dated proxy card solicited by Moore
which you may have signed. Remember, it will not help your Board to return a
Moore Gold proxy card voting to "Withhold
1
<PAGE>
Authority." Do not return any Gold proxy card sent to you by Moore. The only way
to support your Board's nominees and determinations is to vote "FOR" the Board's
nominees and "AGAINST" the Moore Proposals on the WHITE proxy card.
IF YOUR SHARES ARE HELD IN THE NAME OF A BANK, BROKER OR OTHER NOMINEE, WE
URGE YOU TO CONTACT THE PARTY RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT HIM OR HER
TO VOTE "FOR" YOUR BOARD'S NOMINEES AND "AGAINST" THE MOORE PROPOSALS ON THE
COMPANY'S WHITE PROXY CARD.
BACKGROUND OF RECENT EVENTS
On or about February 16, 1995, a representative of Lazard Freres & Co. LLC
("Lazard") contacted Mr. Neele E. Stearns, Jr., a member of the Company's Board
of Directors, and inquired whether a representative of the Company would be
willing to meet with Mr. Reto Braun, the Chief Executive Officer of Moore, to
discuss a possible business combination on a friendly basis involving Moore and
the Company. Mr. Stearns replied that he would communicate with representatives
of the Company and then follow up with the Lazard representative. On February
21, 1995, Mr. Stearns contacted the Lazard representative and informed him that
Mr. Braun or a representative of Lazard should communicate in writing directly
with Mr. Robert J. Cronin, the President and Chief Executive Officer of the
Company, regarding the possibility of discussing a business combination.
On or about February 24, 1995, Mr. Braun sent a letter to Mr. Cronin,
indicating a desire to begin discussions with the Company to explore the
possibility of a combination with Moore. On March 8, 1995, at a regularly
scheduled meeting of the Board of Directors, the Board discussed the February 24
letter of Mr. Braun and Moore's interest in pursuing a transaction with the
Company. On March 14, Mr. Cronin informed Mr. Braun by telephone that the
Company was successfully pursuing its corporate strategy, saw no reason to
depart from it and that, accordingly, the Company was not for sale. However, Mr.
Cronin stated he was nevertheless prepared to meet with Mr. Braun if he still
desired to do so. Mr. Braun stated that such a meeting was unnecessary and that
the Company should "consider the situation closed."
On April 18, 1995, Mr. Cronin and Mr. Braun met each other at an industry
conference in New York City. Mr. Braun indicated that the two should meet for
lunch. Mr. Cronin stated that he would be willing to have such a meeting and
that Mr. Braun's secretary should check his availability with his secretary. In
the following weeks, Mr. Braun's secretary contacted Mr. Cronin's secretary
several times to arrange a lunch meeting for Messrs. Braun and Cronin.
Ultimately the secretaries scheduled the lunch between Mr. Braun and Mr. Cronin
for August 8, 1995.
On the evening of Sunday, July 30, 1995, Mr. Braun called Mr. Cronin from
New York and left a recorded message on Mr. Cronin's home answering machine
stating that Moore and FRDK, Inc., a wholly owned subsidiary of Moore (the
"Bidder"), would launch a tender offer for the Company. At approximately 10:30
p.m. on that Sunday evening, a messenger slipped a letter from Mr. Braun under
the front door of Mr. Cronin's home. The letter confirmed that Moore and the
Bidder would launch a tender offer and stated, among other things, that Moore
intended to nominate three individuals for election to the Company's Board of
Directors and to commence litigation against the Company. On July 31, 1995,
Moore and the Bidder commenced litigation (the "Moore Action") against the
Company and its directors in the United States District Court for the District
of Delaware to, among other things, enjoin the Company from taking action to
implement and enforce certain takeover defenses of the Company and to compel the
Company to take certain action with respect to such takeover defenses. On August
2, 1995, Moore and the Bidder commenced their tender offer for all outstanding
shares of the Company's Common Stock at a price of $56 per share (the "Initial
Moore Offer").
Since July 30, the Company has been contacted by Moore and its advisors
several times concerning arranging a meeting to discuss the Initial Moore Offer
and the possibility of a combination between Moore and the Company. The Company
has determined that at this time a meeting would not be beneficial to the
Company or its stockholders.
After carefully considering in a number of meetings the Company's business,
financial condition and prospects, the terms and conditions of the Initial Moore
Offer and other matters, on August 14, 1995 the Board
2
<PAGE>
of Directors of the Company unanimously concluded that the Initial Moore Offer
is inadequate and not in the best interests of the Company and the stockholders
and that, in light of the Company's future prospects, the interests of the
stockholders will be best served by the Company remaining an independent entity.
Accordingly, the Board unanimously recommended that the stockholders reject the
Initial Moore Offer and not tender their shares of Common Stock pursuant to the
Initial Moore Offer.
On August 15, 1995, the Company commenced litigation (the "Wallace Action")
against Moore and the Bidder to enjoin the Initial Moore Offer under the federal
antitrust laws and to enjoin Moore from violations of the federal securities
laws.
On August 17, 1995, the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, expired.
On August 28, 1995, Moore extended the Initial Moore Offer until September
19, 1995 and announced that less than 1% of the shares of Common Stock had been
tendered to it as of the initial expiration date. Moore also announced that it
intended to present the Moore Proposals at the Annual Meeting.
On September 18, 1995, Moore extended the Initial Moore Offer until November
8, 1995 and announced that approximately 1.6% of the shares of Common Stock had
been tendered to it as of September 18, 1995.
On September 25, 1995, the Company filed a First Amended Complaint to the
Wallace Action. Among other things, the First Amended Complaint added Mr. Braun
as a defendant and asserts that Moore, Bidder and Mr. Braun have made false and
misleading statements of fact in connection with their proxy solicitation
materials. On the same day, the Company and its Board filed an Answer and
Counterclaim in connection with the Moore Action. The Counterclaim brought
against Moore, Bidder and Mr. Braun contains similar allegations and requests
similar relief to that contained in the Wallace Action as modified by the First
Amended Complaint.
On September 27, 1995, the United States District Court for the Southern
District of New York granted a motion filed by the defendants to dismiss the
Wallace Action without prejudice. The Court indicated in its opinion that the
Company was free to bring all of its claims in the Wallace Action as
counterclaims in the Moore Action.
On October 12, 1995, the Initial Moore Offer was amended by the Bidder to
increase the cash price offered for the Company's Common Stock from $56 to $60
per share, and shortened the expiration date to November 3, 1995 from November
8, 1995. In connection with its increased offer, the Bidder indicated that it
will terminate the Moore Offer and all other efforts to acquire the Company
unless a significant number of shares of Common Stock are tendered on or prior
to the expiration date.
On October 17, 1995 the Board of Directors of the Company unanimously
concluded that the Moore Offer is inadequate and not in the best interest of the
Company and the stockholders and that, in light of the Company's future
prospects, the interests of the stockholders will be best served by the Company
remaining an independent entity. Accordingly, the Board unanimously recommended
that the stockholders reject the Moore Offer and not tender their shares of
Common Stock pursuant to the Moore Offer.
On November 6, 1995, Moore extended the Moore Offer until December 11, 1995
and announced that approximately 73.5% of the shares of Common Stock had been
tendered to it as of November 3, 1995.
CERTAIN LITIGATION INVOLVING MOORE
On July 31, 1995, Moore and the Bidder commenced the Moore Action in the
United States District Court for the District of Delaware. The Moore Action, as
amended, asserts, among other things, that the use of certain anti-takeover
devices is not proportionate to the Moore Offer and is in breach of the
directors' fiduciary duties to the Company's stockholders. The Moore Action, as
amended, seeks to, among other things, enjoin the Company from taking action to
implement and enforce certain takeover defenses of the Company and to compel the
Company to take certain action with respect to such takeover defenses.
On September 25, 1995, the Company and its directors filed an Answer and
Counterclaim in connection with the Moore Action. The counterclaim brought
against Moore, Bidder and Reto Braun asserts that the effect
3
<PAGE>
of the transactions contemplated by the Offer to Purchase may be substantially
to lessen competition in a relevant market and therefore violate Section 7 of
the Clayton Act, 15 U.S.C. Section 18. In particular, the Company alleges that
the effect of an acquisition of the Company by Moore would be to change a
three-firm market for large, forms-intensive customers with multiple locations
into a two-firm market. The counterclaim brought by the Company also asserts
that Moore and the Bidder have made false and misleading statements of fact in
connection with the Moore Offer and their proxy solicitation materials. The
counterclaim seeks (i) a declaration that the Moore Offer, if consummated, would
violate Section 7 of the Clayton Act, (ii) a declaration that Mr. Braun, Moore
and the Bidder have violated certain provisions of the federal securities laws
and (iii) injunctive relief in connection with the foregoing.
WHY YOU SHOULD VOTE "FOR" YOUR BOARD'S NOMINEES
AND AGAINST THE MOORE PROPOSALS
Your Board of Directors has unanimously concluded that the Moore Offer is
inadequate and not in the best interests of the Company and its stockholders and
that, in light of the Company's future prospects, the interests of the
stockholders will be best served by the Company remaining an independent entity.
In making its decision, the Board of Directors considered numerous factors,
including, but not limited to, the following:
(i) The Board's familiarity with the business, financial condition,
prospects and current business strategy of the Company, the nature of the
businesses in which the Company operates and the Board's belief that the
Moore Offer does not reflect the long-term values inherent in the Company.
In this regard, the Board of Directors particularly considered:
-The Company's exceptional performance for the fourth quarter of the
fiscal year ended July 31, 1995 and for all of such fiscal year.
-The Company's financial projections of earnings per share of 78 cents on
estimated sales of $206 million for the first quarter of the current
fiscal year and earnings per share of $3.28 on estimated sales of $825
million for all of such current fiscal year.
-The popularity and rapid growth rate of the Company's Wallace
Information Network (W.I.N.) and Select Services systems.
-The Company's reputation as a provider of superior products and services
and its position in its industry as a technological leader and
innovator.
-The fact that the Company has experienced increased sales every year
since the Company went public in 1961 and, except for one year,
experienced increased profit in every year since 1961.
-The fact that the Company and each of its business lines have grown in
sales at higher rates than the industry as a whole.
-The fact that the Company has gained market share over the past several
years and the Company's expectation of continuing to do so in the
future.
(ii) The opinion of the Company's management as to the Company's
prospects for future growth and profitability, based on its knowledge of the
Company's businesses, its views as to the long-term strategic plan, the
various strategic initiatives which have been implemented over the past
several years (including recent acquisitions and alliances to expand label
sales, the development of new approaches in supplying office products to
large organizations, new applications for imaging and personalization, and
enterprise-wide approaches to electronic forms), and the acquisition and
other opportunities that will be available in the future, its assessment of
certain new products in various stages of development (such as linerless
labels and patented direct response marketing systems), and its opinion
concerning the Company's financial condition and current conditions in the
businesses in which the Company operates.
(iii) The oral opinion of Goldman, Sachs & Co. ("Goldman Sachs"), the
Company's financial advisor, after reviewing with the Board of Directors
many of the factors referred to herein and other financial criteria used in
assessing an offer, that the Moore Offer is inadequate.
4
<PAGE>
(iv) Certain legal issues raised by the Moore Offer under the antitrust
laws of the United States, which issues are described under "Certain
Litigation Involving Moore" above.
(v) The numerous conditions to which the Moore Offer is subject. Twelve
general conditions and many more sub-conditions (none of which is unusual
for a hostile tender offer) must be satisfied or waived before the Bidder is
obligated to consummate the Moore Offer. In particular, the Moore Offer
contains, among other conditions, expansive conditions relating to
litigation, changes in the Company's business, the suspension of securities
trading on a national exchange and the acquisition by any person of 5% or
more of the Company's Common Stock.
(vi) The disruptive effect consummation of the Moore Offer could have on
the Company's employees, suppliers, customers and the communities where the
Company operates. In particular, the combined work force of the two
companies might exceed the needs of Moore following an acquisition of the
Company, thereby raising uncertainty regarding the continued employment of
employees of the Company. Furthermore, both suppliers and customers of the
Company have expressed concerns regarding their continued relationship with
the Company following an acquisition of the Company by Moore. In addition,
the Company has plants in 20 cities in the U.S. and certain of those plants
are major employers in the local communities in which they are located.
The Company's business strategy, which is based on customer service,
technological leadership and product innovation, is working. Sales for fiscal
year 1995 rose 21 percent, while net income before extraordinary items increased
17 percent, over the previous year. From the beginning of fiscal year 1995 to
July 28, 1995 (the date immediately prior to the announcement of the Initial
Moore Offer), the Company's shares produced a 43 percent total return for
stockholders. The Board and management are committed to continuing to generate
real stockholder value by achieving superior revenue growth that exceeds the
industry average, enhancing operating profitability and growing earnings per
share. Accordingly, the Board strongly recommends that you vote against the
Moore Proposals so that the Company can continue with its current successful
strategy.
VOTING PROCEDURES
The Board of Directors has fixed the close of business on November 3, 1995
as the record date (the "Record Date") for determining the stockholders entitled
to notice of, and to vote at, the Annual Meeting. On the Record Date, there were
22,714,598 shares of Common Stock outstanding. The holders of the Common Stock
are entitled to one vote per share on each matter submitted to a vote at the
Annual Meeting. Stockholders do not have the right to cumulate votes in the
election of directors. A majority of the outstanding shares of Common Stock
entitled to vote, present in person or represented by proxy, shall constitute a
quorum. Abstentions and broker non-votes are counted for purposes of determining
the presence or absence of a quorum at the Annual Meeting for the transaction of
business.
Whether or not you plan to attend the meeting, you are urged to vote by
proxy. Duly executed and unrevoked proxies received by the Company prior to the
Annual Meeting will be voted in accordance with the stockholder's specifications
marked thereon. If no specifications are marked thereon, the WHITE proxies
distributed by your Board will be voted FOR the election of your Board's
nominees and the ratification of the appointment of Arthur Andersen LLP as
independent public accountants and AGAINST the Moore Proposals. Any stockholder
giving a proxy may revoke it at any time prior to voting at the Annual Meeting
by filing with the Secretary of the Company a duly executed revocation, by
submitting a later dated proxy with respect to the same shares or by attending
the Annual Meeting and voting in person (although attendance at the Annual
Meeting will not in and of itself constitute a revocation of your proxy).
A stockholder may, with respect to the election of directors, (i) vote for
the election of all three director nominees proposed by your Board, (ii)
withhold authority to vote for all such director nominees or (iii) withhold
authority to vote for any of such director nominees by so indicating in the
appropriate space on the proxy. The Company's Bylaws provide that directors
shall be elected by a plurality of the votes cast by stockholders holding shares
of stock of the Company entitled to vote for the election of directors.
Consequently, votes that are withheld in the election of directors and broker
non-votes will have no effect on the election.
5
<PAGE>
With respect to the Moore Proposals and the ratification of the appointment
of Arthur Andersen LLP as the Company's independent public accountants, a
stockholder may vote for or against such matters or abstain from voting.
Pursuant to the Company's Bylaws (i) approval of each of the Board Removal
Proposal and the Number of Directors Proposal requires the affirmative vote of
stockholders holding at least 80% of the outstanding shares of Common Stock
entitled to vote generally in the election of directors, (ii) approval of the
Bylaw Repeal Proposal requires the affirmative vote of a majority of the shares
represented and entitled to vote at the Annual Meeting (assuming a quorum is
present) and (iii) the ratification of the appointment of Arthur Andersen LLP as
the Company's independent public accountants requires the affirmative vote of
stockholders holding a majority of the shares of Common Stock entitled to vote.
Consequently, an abstention or a broker non-vote on the Board Removal Proposal,
the Number of Directors Proposal, the Bylaw Repeal Proposal or the ratification
of accountants will have the effect of a negative vote.
ITEM 1
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes and currently consists
of eight directors, six of whom are not, and have not been, employees of the
Company. The terms of three directors currently expire at the Annual Meeting,
the terms of two directors currently expire at the 1996 Annual Meeting and the
terms of three directors currently expire at the 1997 Annual Meeting. At the
Annual Meeting, three directors will be elected for a term expiring at the 1998
Annual Meeting.
Unless otherwise instructed, the proxy holders will vote the WHITE proxies
received by them FOR the election of your Board's three nominees named below.
If, for any reason, any of the Board's nominees listed below should cease to be
a candidate for election, it is intended that all properly signed proxies in the
form enclosed will be voted for a substitute nominee designated by the Board of
Directors. Each of your Board's nominees listed below has consented to serve as
a director, and the Board of Directors has no reason to believe that any nominee
will be unwilling or unable to serve, if elected.
THE BOARD OF DIRECTORS URGES YOU TO VOTE "FOR" THE BOARD'S NOMINEES
AS DIRECTORS OF THE COMPANY
Moore is seeking the election of a slate of three directors that are
committed to supporting a sale of the Company. The Board believes that the
election of Moore's handpicked representatives to the Company's Board of
Directors would conflict with the best interests of the stockholders. Your Board
opposes Moore's nominees for several reasons. First, the Company's Board of
Directors, along with the Company's financial advisor, Goldman Sachs, have
determined that the Moore Offer is inadequate. The Board also determined that,
in light of the Company's future prospects, the interests of the stockholders
will be best served by the Company remaining independent. Moore's nominees for
directors, having presumably determined that $60 is an adequate price for the
Common Stock and indicating their support for the sale of the Company, would be
hindered in objectively considering opportunities other than selling the Company
at $60 per share. Second, even if Moore's nominees were elected, they could not
by themselves bring about the sale of the Company unless the entire Board were
removed. As a result, the election of Moore's nominees would only serve to
disrupt the management of the Company and divert the Board from its pursuit of
the current successful business strategy. Third, the Company and Moore are
fierce competitors that vie for the same contracts. Installing directors on the
Board that are loyal to Moore and its takeover attempt may jeopardize the
confidentiality of the Company's business plans and seriously compromise the
competitiveness of the Company. The Company needs a qualified, experienced and
cohesive Board of Directors -- not a divided and contentious one.
If the Board Removal Proposal and the Number of Directors Proposal are
defeated, but Moore's nominees for directors are elected and, as a result, Mr.
Cronin is not reelected as a director of the Company, the Board of Directors
may, in view of the important role Mr. Cronin has played as chief executive
officer, determine to increase the number of directors of the Company by one, as
permitted by the Bylaws of the Company, and elect Mr. Cronin to fill the vacancy
created by such increase.
6
<PAGE>
THE BOARD'S NOMINEES
The following sets forth information on your Board's nominees for election
as directors at the Annual Meeting.
<TABLE>
<CAPTION>
BOARD COMMITTEE
NAME AND AGE PRINCIPAL OCCUPATION FOR PAST FIVE YEARS DIRECTOR SINCE MEMBERSHIP
- ---------------------- ------------------------------------------------- ----------------- -------------------
<S> <C> <C> <C>
Robert J. Cronin (50) President and Chief Executive Officer of the November 11, 1992 Executive
Company since November 11, 1992. President and
Chief Operating Officer of the Company from June
1, 1992 until November 11, 1992. Senior Vice
President -- Sales of the Company from November
14, 1990 until June 1, 1992, and Vice President
-- Sales of the Company from November 16, 1988
until November 14, 1990. Previously held various
sales management positions within the Company's
Business Forms Division
R. Darrell Ewers (62) Retired Executive Vice President of Wm. Wrigley January 20, 1993 Audit and
Jr. Company, a manufacturer of chewing gum (1) Compensation
Neele E. Stearns, Jr. Former President and Chief Executive Officer of January 17, 1990 Audit
(59) CC Industries, Inc., a holding company with
operations in home furnishings, casual furniture
and envelope manufacturing, and real estate
development and management (2)
</TABLE>
DIRECTORS CONTINUING IN OFFICE
The following sets forth information on the incumbent directors of the
Company with terms expiring at either the 1996 Annual Meeting or the 1997 Annual
Meeting.
<TABLE>
<CAPTION>
BOARD COMMITTEE
NAME AND AGE PRINCIPAL OCCUPATION FOR PAST FIVE YEARS DIRECTOR SINCE MEMBERSHIP
- ---------------------- ------------------------------------------------- ----------------- -------------------
DIRECTORS WITH TERMS EXPIRING AT 1996 ANNUAL MEETING
<S> <C> <C> <C>
Richard F. Doyle (67) Retired Senior Vice President -- Finance & October 26, 1971 Audit (Chairman)
Administration of Texas Oil & Gas Corp., a and Executive
developer of oil and gas interests
William E. Olsen (67) Independent Consultant. Retired President and June 20, 1979 Compensation
Chief Executive Officer of IGA, Inc., a food
wholesaler and retailer
DIRECTORS WITH TERMS EXPIRING AT 1997 ANNUAL MEETING
Theodore Dimitriou Chairman of the Board of the Company. Chief November 1, 1972 Executive
(69) Executive Officer of the Company until November (Chairman)
11, 1992, and President of the Company until
April 3, 1990. Interim President of the Company
from January 15, 1992 to June 1, 1992 (3)
Fred F. Canning (71) Retired President and Chief Operating Officer of January 12, 1984 Compensation
(4) Walgreen Co., a drug store chain (Chairman) and
Executive
William N. Lane III Chairman, President and Chief Executive Officer January 17, 1990 Compensation
(52) of Lane Industries, Inc., a holding company with
operations in office machines, hotels, ranching
and radio broadcasting (5)
<FN>
- ------------------------------
(1) Mr. Ewers is also a director of Wm. Wrigley Jr. Company.
(2) Mr. Stearns is also a director of Maytag Corporation.
(3) Mr. Dimitriou is also a director of Walgreen Co. and General Binding
Corporation.
(4) Pursuant to the Company's director age policy, Mr. Canning will serve as a
director only until the 1996 Annual Meeting.
(5) Mr. Lane is also a director of General Binding Corporation.
</TABLE>
It is the policy of the Company that no person may serve as a director past
the month in which he reaches age 70, except that any person who was a director
on November 7, 1984 (which includes Messrs. Canning, Dimitriou, Doyle and
Olsen), may serve as a director through the month in which he reaches age 72.
The Board
7
<PAGE>
of Directors may, in its discretion, allow a director to continue to serve after
the month in which he reaches age 70 or 72, as the case may be, until the next
Annual Meeting. Mr. Canning will reach age 72 on April 1, 1996. In accordance
with the Company's director age policy, Mr. Canning will serve as a director
only until the 1996 Annual Meeting. It is anticipated that a replacement
director will be elected at the 1996 Annual Meeting to fill the remainder of Mr.
Canning's term.
The Company's Bylaws permit nominations for election of directors to be made
by the Board of Directors, by a nominating committee of the Board of Directors
(there currently is no such committee) or by any stockholder having the right to
vote generally in the election of directors. However, the Bylaws provide that,
in the case of any nomination by a stockholder at an annual meeting, written
notice (containing certain required information) of the stockholder's intention
to make the nomination must be given to the Secretary of the Company not later
than 90 days prior to the annual meeting. The chairman of an annual meeting may
refuse to acknowledge the nomination of any person that is not made in
compliance with the procedures set forth in the Bylaws.
MEETINGS OF THE BOARD AND ITS COMMITTEES
During fiscal year 1995, the Board of Directors met six times, the Audit
Committee met twice, the Compensation Committee met three times and the
Executive Committee met twice. There is no nominating committee. Each of the
incumbent directors attended at least 75% of the meetings of the Board of
Directors and its Committees on which he served during fiscal year 1995.
The Audit Committee, consisting of three non-employee directors, is
responsible for recommending to the Board of Directors the appointment of
independent public accountants (subject to ratification by the stockholders);
reviewing the fees charged by the Company's independent public accountants;
reviewing the Company's annual financial statements prior to submission to the
Board of Directors; reviewing the scope and results of the Company's annual
audits; and certain other matters concerning the Company's accounts and
financial affairs as specified in the Company's Bylaws.
The Compensation Committee, consisting of four non-employee directors, is
responsible for reviewing and recommending to the Board of Directors the
salaries of officers and key managers of the Company; reviewing and recommending
incentive bonus, stock option, retirement, and welfare plans and programs for
officers and key managers of the Company; and certain other matters concerning
the performance and compensation of the Company's management employees as
specified in the Company's Bylaws. Qualified members of the Compensation
Committee also serve as the Salary, Bonus and Option Committee under the
Company's Executive Incentive Plan and as the committee of the Company's Board
of Directors that administers the Company's 1989 Stock Option Plan.
The Executive Committee is authorized, subject to certain limitations
imposed by law and in the Company's Bylaws, to exercise the powers and authority
of, and act in lieu of, the Board of Directors in the management and direction
of the Company's business and affairs.
COMPENSATION OF DIRECTORS
Each director receives an annual director's fee of $20,000. Each director
also receives a fee of $800 plus expenses for each meeting of the Board of
Directors and its Committees that he attends.
The Company has a Retirement Plan for outside directors pursuant to which
outside directors (which include all directors other than Mr. Cronin and Mr.
Dimitriou) will be eligible to receive benefits when they complete five years of
service as outside directors. All outside directors, with the exception of Mr.
Ewers, have completed five years of service as outside directors and are
participants in the Retirement Plan. The annual retirement benefit payable to
each participating director is equal to the annual director's fee in effect on
his retirement date. Retirement benefits commence upon the retirement of a
participating director, continue for the lesser of ten years or the number of
years of service as an outside director, and cease upon the death of the
participating director. Because the actual retirement benefits to be received by
each participating director will be based upon the annual director's fee in
effect on his retirement date and the period of time during which he
8
<PAGE>
serves as an outside director, the amount of the retirement benefits to be paid
to participating outside directors cannot be calculated prior to retirement. As
of the end of fiscal year 1995, the Company has accrued the estimated amount of
retirement benefits under the Retirement Plan.
The Company established a Deferred Compensation/Capital Accumulation Plan
for Directors for each of calendar years 1988, 1993, 1994 and 1995 in which all
incumbent directors were eligible to participate. For the 1995 Plan, Messrs.
Canning, Dimitriou, Doyle, Ewers and Stearns elected to participate. For the
1994 Plan, Messrs. Canning, Dimitriou, Doyle and Ewers elected to participate.
For the 1993 Plan, Messrs. Canning, Doyle and Ewers elected to participate. For
the 1988 Plan, only Mr. Olsen elected to participate. Each participating
director was allowed to elect to defer up to 100% of his director's and meeting
fees. Subject to certain conditions, the amount of fees deferred bears interest,
compounded annually at 12% per annum for amounts deferred under the 1993, 1994
and 1995 Plans and 16% per annum for amounts deferred under the 1988 Plan. A
participating director is entitled to receive payment of the undistributed
amount of his deferral account in either fifteen annual installments beginning
at age 65 or, if a participating director so elects, in ten annual installments
beginning at age 70 or age 72. If a participating director has not previously
begun to receive installment payments from his deferral account, he will receive
an interim distribution from his deferral account in both the seventh and the
eighth years following the deferral year in an amount equal to the amount of
fees that he deferred.
ITEM 2
THE MOORE PROPOSALS
The Company has been advised that a wholly owned subsidiary of Moore intends
to present the following resolutions at the Annual Meeting:
BOARD REMOVAL PROPOSAL
"RESOLVED: That all of the directors of Wallace Computer Services, Inc.
("Wallace") other than Curtis A. Hessler, Albert W. Isenman III and Robert
P. Rittereiser, if then directors of Wallace, be removed without cause,
effective at the time this resolution is approved."
THE COMPANY'S BOARD OF DIRECTORS STRONGLY RECOMMENDS THAT YOU VOTE AGAINST
THIS BOARD REMOVAL PROPOSAL.
NUMBER OF DIRECTORS PROPOSAL
"RESOLVED: That the Amended and Restated Bylaws (the "Bylaws") of Wallace,
be and they hereby are amended, effective at the time this resolution is
approved, by amending the first sentence of Section 3.2(a) of the Bylaws in
its entirety to read as follows:
Section 3.2. Number, Election, Tenure and Qualifications; Stockholder
Nominations; Vacancies; Removal; Resignation.
(a) Number, Election, Tenure and Qualifications. Subject to any special
rights of the holders of preferred stock to elect additional directors, the
Board of Directors shall consist of five members."
THE COMPANY'S BOARD OF DIRECTORS STRONGLY RECOMMENDS THAT YOU VOTE AGAINST
THIS NUMBER OF DIRECTORS PROPOSAL.
BYLAW REPEAL PROPOSAL
"RESOLVED: That each provision of the Bylaws or amendment thereto adopted by
the Board of Directors of Wallace without the approval of stockholders
subsequent to February 15, 1995 and prior to the approval of this resolution
be, and it hereby is, repealed, effective at the time this resolution is
approved."
THE COMPANY'S BOARD OF DIRECTORS STRONGLY RECOMMENDS THAT YOU VOTE AGAINST
THIS BYLAW REPEAL PROPOSAL.
9
<PAGE>
For the reasons set forth below, your Board of Directors is unanimously
opposed to each of the Moore Proposals:
The Board of Directors has determined that the Moore Offer is inadequate
and not in the best interests of the Company and its stockholders. If the
Board Removal Proposal and the Number of Directors Proposal are approved,
the Moore nominees would control the Board and would be able, together with
Moore, to take action to satisfy most of the conditions to the Moore Offer
and thereby sell the Company for $60 per share. Moore has determined that
$60 per share is an adequate price for the Common Stock of the Company.
Presumably Moore's nominees are in agreement. Thus, a vote for the Removal
Proposal and the Number of Directors Proposal is essentially a vote to give
control of the Board to Moore, and to sell the Company for as little as $60
per share.
The Board believes that the interests of the Company and its
stockholders will be best served by retaining the Company's current
Directors, who will act on behalf of the Company and its stockholders
independently of the interests of Moore. If all of the current Directors are
removed, the Board believes Moore's nominees for directors will act in a
manner consistent with the interests of Moore, the Company's fiercest
competitor. Your Board believes Moore's interests are to acquire the Company
at the lowest possible cost to Moore and at the lowest possible price for
the Company's stockholders. This is inconsistent with your interests as
stockholders of the Company.
The effect of the Bylaw Repeal Proposal would be to repeal the notice
provision (the "Notice Provision") in the Bylaws of the Company which
requires that, under most circumstances, a stockholder of the Company
desiring to introduce business at any annual meeting of the Company deliver
notice to the Secretary of the Company not later than sixty, and not earlier
than ninety, days in advance of such meeting. The Board of Directors adopted
the Notice Provision, like many companies have, to provide an orderly
procedure for conducting annual meetings of stockholders and to allow the
stockholders to be reasonably informed when matters are brought before them
at the Annual Meeting.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST"
EACH OF THE MOORE PROPOSALS.
ITEM 3
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee and subject to ratification
by the stockholders, the Board of Directors has appointed Arthur Andersen LLP as
independent public accountants for the Company for fiscal year 1996.
Arthur Andersen LLP has served as the Company's independent public
accountants since fiscal year 1960. Representatives of Arthur Andersen LLP are
expected to be present at the Annual Meeting with the opportunity to make a
statement if they so desire, and such representatives will be available to
respond to appropriate questions from the stockholders.
ITEM 4
OTHER MATTERS
The Board of Directors is not aware of any matters to be presented at the
Annual Meeting other than those listed in the notice of the meeting. However, if
any other matters do come before the Annual Meeting, it is intended that the
holders of proxies solicited by the Board of Directors will vote on such other
matters at their discretion in accordance with their best judgment.
10
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the cash compensation and certain other
components of compensation for fiscal years 1995, 1994 and 1993 for the Chief
Executive Officer and the other four most highly compensated executive officers
of the Company for the fiscal year ended July 31, 1995:
SUMMARY COMPENSATION TABLE*
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
FISCAL --------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY (1) BONUS (1) OPTIONS (2) (3)(5)
-------------------------------- ------ ---------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Robert J. Cronin (4) 1995 $ 355,000 $ 262,000 19,000 $ 71,149
President and Chief 1994 318,750 194,077 10,000 56,160
Executive Officer 1993 293,750 150,530 6,000 40,093
Michael O. Duffield 1995 200,125 113,960 11,400 17,316
Senior Vice President/ 1994 182,750 101,079 4,900 15,411
Operations 1993 165,000 35,424 3,100 12,875
Michael J. Halloran 1995 195,625 83,370 7,900 27,151
Vice President/Chief 1994 185,250 91,960 4,400 19,222
Financial Officer/ 1993 177,400 36,307 3,000 18,790
Assistant Secretary
Bruce D'Angelo 1995 179,000 76,440 7,900 18,834
Vice President/Sales 1994 162,500 69,347 4,000 14,467
1993 145,000 51,260 3,500 10,913
Michael T. Leatherman 1995 175,583 71,400 12,900 19,215
Senior Vice President/ 1994 157,000 77,661 4,500 13,816
Chief Information Officer 1993 148,675 33,982 3,400 15,414
<FN>
- ------------------------
* There were no Restricted Stock Awards, SARS or LTIP Payouts during the
three most recent fiscal years.
(1) Compensation deferred at the election of the executive officer pursuant to
Deferred Compensation/Capital Accumulation Plans established by the Company
for the calendar years 1995, 1994 and 1993 is included in the relevant
salary and bonus columns.
(2) Represents the number of shares of the Company's Common Stock for which
options were granted to each executive officer for fiscal years 1995, 1994
and 1993 under the Company's 1989 Stock Option Plan. Stock options granted
to each executive officer for fiscal year 1995 were approved and granted by
the Compensation Committee on September 6, 1995.
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
(3) All Other Compensation includes (a) Company contributions under the
Company's Profit Sharing and Retirement Plan, (b) Company contributions
under the Company's Supplemental Profit Sharing Plan and (c) above-market
accrued interest on compensation deferred under the Company's Deferred
Compensation/Capital Accumulation Plan to the extent that such accrued
interest exceeds interest that would have accrued on such deferred
compensation at market interest rates. The amounts of All Other
Compensation for each of the three components above were as follows:
</TABLE>
FISCAL YEAR 1995
<TABLE>
<CAPTION>
PROFIT SHARING SUPPLEMENTAL
AND RETIREMENT PROFIT SHARING ABOVE-MARKET
PLAN PLAN ACCRUED INTEREST
---------------- ---------------- ----------------
<S> <C> <C> <C>
Mr. Cronin $ 15,047 $ 24,367 $ 8,385
Mr. Duffield 13,107 1,879 2,330
Mr. Halloran 15,046 6,946 5,159
Mr. D'Angelo 13,107 3,368 2,359
Mr. Leatherman 13,107 1,361 4,747
</TABLE>
FISCAL YEAR 1994
<TABLE>
<CAPTION>
PROFIT SHARING SUPPLEMENTAL
AND RETIREMENT PROFIT SHARING ABOVE-MARKET
PLAN PLAN ACCRUED INTEREST
---------------- ---------------- ----------------
<S> <C> <C> <C>
Mr. Cronin $ 18,874 $ 10,407 $ 5,679
Mr. Duffield 13,879 -- 1,532
Mr. Halloran 15,407 -- 3,815
Mr. D'Angelo 13,113 -- 1,354
Mr. Leatherman 11,040 -- 2,776
</TABLE>
FISCAL YEAR 1993
<TABLE>
<CAPTION>
PROFIT SHARING SUPPLEMENTAL
AND RETIREMENT PROFIT SHARING ABOVE-MARKET
PLAN PLAN ACCRUED INTEREST
---------------- ---------------- ----------------
<S> <C> <C> <C>
Mr. Cronin $ 18,309 $ 5,494 $ 3,665
Mr. Duffield 12,214 -- 661
Mr. Halloran 15,979 -- 2,811
Mr. D'Angelo 10,410 -- 503
Mr. Leatherman 14,163 -- 1,251
<FN>
(4) On November 11, 1992, Mr. Cronin was promoted to Chief Executive Officer of
the Company from Chief Operating Officer.
(5) Director and meeting fees earned by Mr. Cronin as a director of the Company
are $23,350, $21,200 and $12,625 for calendar years 1995, 1994 and 1993,
respectively, and are included in All Other Compensation.
</TABLE>
12
<PAGE>
OPTION GRANTS FOR FISCAL YEAR 1995
The following table sets forth information with respect to options granted
for fiscal year 1995 to purchase shares of the Company's Common Stock under the
Company's 1989 Stock Option Plan to the five executive officers listed in the
Summary Compensation Table.
OPTION GRANTS FOR LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION DATE PRESENT VALUE
NAME GRANTED (1) FISCAL YEAR ($/SH.) (1) (1) (2)
- ------------------------- ----------- --------------- ----------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Robert J. Cronin 19,000 13.8% $ 57.875 9/6/05 $ 391,970
Michael O. Duffield 11,400 8.3% 57.875 9/6/05 235,182
Michael J. Halloran 7,900 5.7% 57.875 9/6/05 162,977
Bruce D'Angelo 7,900 5.7% 57.875 9/6/05 162,977
Michael T. Leatherman 7,900 5.7% 57.875 9/6/05 162,977
Michael T. Leatherman 5,000 3.6% 32.875 3/8/05 44,950
<FN>
- ------------------------
(1) Under the terms of the Company's 1989 Stock Option Plan, options can be
either tax-favored incentive stock options or non-qualified stock options.
Tax-favored incentive stock options must have an option price not less than
100% of market value on the date of grant. Non-qualified stock options may
have an option price not less than 85% of market value on the date of
grant; however, no options have been granted to date at an option price
less than 100% of market value on the grant date. Options become
exercisable as to 40% of the shares one year after the grant date and as to
the remaining 60% of the shares two years after the grant date; however,
the Compensation Committee has the authority to accelerate the
exercisability of an option. Options may be granted with exercise periods
up to ten years. All options granted to date have had an exercise period of
ten years from the grant date.
(2) The Black-Scholes option pricing method has been used to calculate the
present value of options as of the date of grant. The model assumptions
include: (a) an option term of 5.58 years, which represents the weighted
average (by number of option shares) over the past ten years of the length
of time between the grant date of options and the exercise date of such
options for the listed executive officers; (b) an interest rate equal to
the interest rate on a U.S. Treasury Bond with a maturity date
corresponding to that of the option term; (c) a volatility factor
calculated using monthly stock prices for the Company's Common Stock for
the 3 years (36 months) prior to the grant date; and (d) a dividend rate of
$.715 per share, which was the total amount of dividends paid with respect
to a share of the Company's Common Stock in fiscal year 1995.
</TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1995 AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information with respect to the exercise in
fiscal year 1995 of options to purchase shares of the Company's Common Stock
granted under the Company's 1989 Stock Option Plan by the five executive
officers listed in the Summary Compensation Table. In addition, this table
includes the fiscal year-end number and value of unexercised options held by
each listed executive officer.
13
<PAGE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE- MONEY OPTIONS AT
NUMBER OF SHARES OPTIONS AT 7/31/95 7/31/95 (2)
ACQUIRED ON VALUE -------------------------- ---------------------------
NAME EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ----------------- ----------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Cronin 3,841 $ 49,453 49,559 13,600 $ 1,790,126 $ 356,200
Michael J. Duffield -- -- 19,240 6,760 673,705 177,370
Michael J. Halloran -- -- 9,200 6,200 316,650 163,100
Bruce D'Angelo -- -- 6,400 6,100 215,050 161,950
Michael T. Leatherman -- -- 7,360 11,540 254,120 300,180
<FN>
- ------------------------
(1) Value realized equals the aggregate amount of the excess of the fair market
value on the date of exercise over the relevant exercise price(s).
(2) Value of unexercised in-the-money options is calculated as the aggregate
difference between the fair market value of $58.38 per share (which was the
closing price of the Company's Common Stock as reported in the New York
Stock Exchange Composite Transactions for July 31, 1995) over the relevant
exercise price(s).
</TABLE>
LONG-TERM INCENTIVE PLANS -- AWARDS IN FISCAL YEAR 1995
The following table sets forth information with respect to awards made for
fiscal year 1995 under the Company's Long-Term Performance Plan to the five
executive officers listed in the Summary Compensation Table.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE OR
NUMBER OF OTHER PERIOD ESTIMATED FUTURE
SHARES, UNTIL PAYOUTS UNDER NON-STOCK
UNITS OR MATURATION OR PRICE- BASED PLANS
NAME OTHER RIGHTS PAYOUT (1) MAXIMUM
- ------------------------- ------------ --------------- -----------------------
<S> <C> <C> <C>
Robert J. Cronin -- 11/01/97 $ 309,000
Michael O. Duffield -- 11/01/97 232,000
Michael J. Halloran -- 11/01/97 154,000
Bruce D'Angelo -- 11/01/97 154,000
Michael T. Leatherman -- 11/01/97 193,000
<FN>
- ------------------------
(1) Pursuant to the Long-Term Incentive Plan, payouts for 1995 awards (as
adjusted to reflect the results of fiscal years 1996 and 1997) must occur
prior to December 1, 1997; however, based on past practice, the Company
anticipates that such payouts will occur on or about November 1, 1997.
</TABLE>
In fiscal year 1995, the Company introduced a Long-Term Performance Plan,
the purpose of which is to provide incentive compensation to certain key
employees in a form which relates the financial reward to an increase in the
value of the Company to its stockholders. In general, the Company's net
operating profit after taxes (with the cost of inventories determined on a
first-in, first-out ("FIFO") basis) is reduced by a capital charge, which is
intended to represent the return expected by stockholders and debt holders of
the Company. The participants in the plan are awarded a predefined percentage of
the excess or deficit of the net operating profit after taxes (with the cost of
inventories determined on a FIFO basis) less the capital charge. Each
participant's award is deferred for a period of two years during which the
results of the following two years are added to or subtracted from the amount
awarded. After the completion of the second year following the award year, the
participant is paid the lesser of the initial award or the adjusted amount. The
Plan does not provide for any threshold or target award amounts.
For the awards made for fiscal year 1995, as reflected in the table above,
the participant will receive the full award amount shown in cash following the
Company's fiscal year 1997, provided that the results of fiscal years 1996 and
1997 do not cause a net reduction to the fiscal year 1995 award. A plan
participant immediately prior to
14
<PAGE>
the occurrence of a Material Change (as defined in the Long-Term Performance
Plan) will be entitled to receive payment of such participant's accrued award
under the Long-Term Performance Plan if, at any time during the two-year period
beginning with the date that the Material Change occurs, such participant's
employment with the Company terminates for any reason other than cause. A
"Material Change" as defined in the Long-Term Performance Plan includes the
acquisition of beneficial ownership of 35% or more of the outstanding shares of
the Company's Common Stock, the election of directors representing one-half or
more of the Company's Board of Directors of persons who were not nominated or
recommended by, the incumbent Board of Directors, or the occurrence of any other
event or state of facts that the Board of Directors determines to constitute a
"Material Change" for purposes of the Plan.
EMPLOYMENT CONTRACTS AND TERMINATION, SEVERANCE AND CHANGE-OF-CONTROL
ARRANGEMENTS
The Company has entered into an Employment Agreement, dated as of January 1,
1995, with Mr. Cronin pursuant to which Mr. Cronin will be employed as the
Company's President and Chief Executive Officer until December 31, 1999. The
employment agreement provides for Mr. Cronin to be paid a base salary of at
least $365,000 per year and, at the Company's discretion, annual bonuses may be
awarded to Mr. Cronin under the Company's Executive Incentive Plan or otherwise.
In the event of a Material Change (as defined in such agreement), Mr. Cronin,
for his continued employment, will be paid for each fiscal year during the
remainder of the term of the employment agreement an annual bonus equal to an
amount not less than the average annual bonus awarded to Mr. Cronin for the last
two fiscal years preceding the fiscal year in which the Material Change occurs.
A "Material Change" as defined in Mr. Cronin's agreement includes the
acquisition of beneficial ownership of 50% or more of the outstanding shares of
the Company's Common Stock, the election as directors representing one-half or
more of the Company's Board of Directors of persons who were not nominated or
recommended by the incumbent Board of Directors, or the occurrence of any other
event or state of facts that the Board of Directors determines to be a "Material
Change" for purposes of the employment agreement. At the election of Mr. Cronin,
his annual bonus for any fiscal year may be deferred and paid, with interest
(based on the rate paid on 90-day bank certificates of deposit), in 120 equal
monthly installments following the termination of his employment. The employment
agreement also provides that, if Mr. Cronin should become disabled during the
term of his employment, he will be paid 50% of his base salary then in effect
for the remainder of the employment term or until his death, whichever occurs
first. In the event of a Material Change, Mr. Cronin may elect to terminate his
services if (i) the Company fails to continue to employ Mr. Cronin in the same
capacity in which he was employed immediately prior to the Material Change, (ii)
the Company impedes or otherwise fails to permit Mr. Cronin to exercise fully
and properly his duties and responsibilities or (iii) the Company fails to pay
Mr. Cronin's base salary or award to him an annual bonus when due. In the event
Mr. Cronin elects to terminate his services pursuant to the preceding sentence,
Mr. Cronin will be entitled to a termination payment equal to the present value
of the minimum base salary, bonuses and other compensation to which he would
have been entitled if he had continued in the employ of the Company through the
last day of the term of the employment agreement. In the event that, in
connection with a Material Change, the termination payment or any other amounts
payable to Mr. Cronin or certain of his beneficiaries is subject to the excise
tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended,
or any similar tax or assessment (collectively, "Excise Taxes"), the Company
shall pay the amount necessary to reimburse Mr. Cronin or his beneficiaries, as
the case may be, for (i) all Excise Taxes that may be imposed and (ii) any and
all income and other taxes that may be imposed on Mr. Cronin or his
beneficiaries under clause (i) above or under this clause (ii). Subject to
certain limitations, during the term of the employment agreement, Mr. Cronin and
his dependents will receive all benefits, and may participate in other plans and
programs, which executive employees of the Company are entitled to receive or in
which they are entitled to participate. In addition, subject to certain
limitations, Mr. Cronin and his wife will be entitled to reimbursement of all
medical expenses they may incur during Mr. Cronin's lifetime. The employment
agreement also provides for Mr. Cronin to receive a monthly supplemental
retirement benefit in an amount up to 50% of his average monthly compensation
from the Company for the last sixty months of his full-time employment, reduced
by his monthly social security retirement benefits and the monthly amount
payable under a single life annuity equal to the value of all other amounts
payable under any retirement plan or program of the Company (other than amounts
attributable to his contributions). Subject to certain limitations, during the
term of the employment agreement and for a period of two years after the later
to occur of (i) the end of the term of the employment agreement and (ii) the
termination of Mr. Cronin's
15
<PAGE>
employment for any reason, Mr. Cronin has agreed not to, directly or indirectly,
own, manage, operate, control, be employed by, participate in or be connected
with the ownership, management, operation or control of, any entity which is
directly engaged in any business or activity directly competitive with any
business of the Company.
The Company has entered into an agreement with Mr. Dimitriou pursuant to
which Mr. Dimitriou shall serve the Company, and the Company shall employ Mr.
Dimitriou, as a consultant until August 31, 1998, or such earlier date (subject
to certain conditions) as Mr. Dimitriou may elect. Mr. Dimitriou is required to
devote at least 20% of his business time and energies to the Company and its
subsidiaries. Pursuant to such agreement, Mr. Dimitriou is paid a consulting fee
at a rate of not less than $100,000 per annum. In addition, the agreement
provides for Mr. Dimitriou to receive a supplemental retirement benefit which
supplements retirement benefits provided under social security and the Company's
Profit Sharing and Retirement Plan and Supplemental Profit Sharing Plan so that
he can anticipate receiving a retirement income equal to 50% of the average
monthly compensation he received during the last sixty months of his full-time
employment. The supplemental retirement benefit for Mr. Dimitriou is $130,560
per year. After a Material Change (as defined below), Mr. Dimitriou may (as a
result of changes in his title, duties and responsibilities, interference with
the performance of his duties and responsibilities, or failure to be paid
compensation or receive benefits) elect to terminate his services and receive a
termination payment in an amount equal to the discounted present value of the
minimum compensation he would have been entitled to receive under the agreement
until his 70th birthday, as well as lump sum distributions of his deferred
bonuses (and related interest) and his supplemental retirement benefit. A
"Material Change" as defined in Mr. Dimitriou's agreement includes the
acquisition of beneficial ownership of 35% or more of the outstanding shares of
the Company's Common Stock, the election as directors representing one-fourth or
more of the Company's Board of Directors of persons who were not nominated or
recommended by the incumbent Board of Directors, or the occurrence of any other
event or state of facts that the Board of Directors determines to be a "Material
Change" for the purposes of the agreement.
The Company has adopted an Executive Severance Pay Plan, in which Mr.
Cronin, Mr. Duffield, Mr. Halloran, Mr. D'Angelo and Mr. Leatherman are Level II
Participants and certain other executive employees are either Level I
Participants or Level II Participants. The Executive Severance Pay Play provides
for each participant to receive a severance benefit of either one (in the case
of Level I Participants) or two (in the case of Level II Participants) times the
participant's annual compensation if the participant's employment with the
Company and its subsidiaries voluntarily or involuntarily terminates at any time
during the two-year period after the occurrence of a Material Change (as defined
in the Executive Severance Pay Play) for any reason other than Cause (as defined
in the Executive Severance Pay Play). A "Material Change" as defined in the
Executive Severance Pay Play includes the acquisition of beneficial ownership of
35% or more of the outstanding shares of the Company's Common Stock, the
election as directors representing one-half or more of the Company's Board of
Directors of persons who were not nominated or recommended by, the incumbent
Board of Directors, or the occurrence of any other event or state of facts that
the Board of Directors determines to be a "Material Change" for the purposes of
the Executive Severance Pay Play. Participants in the Company's Executive
Severance Pay Plan may also be entitled to receive a severance benefit under the
Company's Employee Severance Pay Plan, which provides a severance benefit to
non-union employees of the Company and its subsidiaries based upon length of
service in the event that a participant's employment is involuntarily terminated
without cause within a period of two years after the occurrence of a Material
Change (as such terms are defined in the Executive Severance Pay Play); however,
any severance benefit provided under the Company's Employee Severance Pay Plan
is reduced by any severance benefit under the Executive Severance Pay Plan, and,
in most cases, the severance benefit provided under the Executive Pay Plan would
exceed the severance benefit provided under the Company's Employee Severance Pay
Plan.
The Company's Long-Term Performance Plan, Executive Incentive Plan, Employee
Severance Plan and Deferred Compensation/Capital Accumulation Plans each contain
provisions which provide for accelerated benefits or vesting under certain
specified circumstances in the event of a change of control of the Company. The
Company's Profit Sharing and Retirement Plan, which covers all full-time
employees of the Company (other
16
<PAGE>
than employees covered by collective bargaining agreements) who have completed
one year of service, has a provision that is intended to preserve and protect
the Plan assets for the benefit of participant's in the event of a change in
control or other similar material change with respect to the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Dimitriou, the Chairman of the Board of the Company, serves on the Board
of Directors of General Binding Corporation. Mr. Lane, who is the Chairman of
the Board of General Binding Corporation, serves on the Compensation Committee
of the Company. Mr. Dimitriou does not serve on the Compensation Committee of
General Binding Corporation.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") consists of four non-employee
members of the Board of Directors. The Committee is responsible for reviewing
and recommending to the Board of Directors the compensation of officers and key
management personnel of the Company. Under the supervision of the Committee, the
Chairman of the Board and the Chief Executive Officer define the Company's
compensation philosophy and objectives and develop compensation plans to achieve
those objectives.
The Company's compensation philosophy and objectives as they relate to
executives are to (a) include those individuals who are officers or are in other
key management positions that have a direct effect on profits, (b) adequately
compensate those individuals at levels which are competitive with similar
positions in other companies, and (c) provide methods of compensation that both
retain executives in the long-term and offer incentives in a manner that
enhances stockholder value.
COMPENSATION OF EXECUTIVE OFFICERS
In the case of Mr. Cronin, compensation is governed by the terms described
below and as set forth in his employment agreement with the Company (which is
described under the heading "Employment Contracts and Termination, Severance and
Change-of-Control Arrangements"). Compensation of executive officers for fiscal
year 1995 was structured to consist of the following elements:
BASE SALARY -- Base salary is intended to provide a sufficient level of
compensation to attract and retain qualified management. Base salary ranges are
based on comparative compensation surveys supplied by professional compensation
consultants. The surveys compare the evaluated position to positions of equal
responsibilities at companies of similar size and complexity. Base salary
increases are determined based on the incumbent's performance in the position as
measured by performance objectives established at the beginning of the fiscal
year. The Company's salaries generally fall at median levels of the established
range. Salary increases for executive officers generally range from four to
seven percent depending on the evaluation of the executive's performance and the
executive's salary relative to the established salary range. The Committee
believes that the Company's direct competitors for executive talent are not
limited to the companies that would be included in a peer group. Thus, the
survey comparison group is not the same as the peer group used in the
performance graph under the heading "Performance Graph."
INCENTIVE BONUSES -- The Committee and Board of Directors adopted two new
incentive bonus plans that began in fiscal year 1995. The intent of the plans is
to provide incentive compensation in a form that aligns the employee's financial
reward to the financial results of the Company. The two plans are the Annual
Bonus Plan and the Long-Term Performance Plan.
ANNUAL BONUS PLAN -- The Annual Bonus Plan is a cash bonus in which the
actual payout is determined based upon a matrix that measures the level of the
Company's return on investment ("ROI"), and the percentage of completion an
executive achieves on predefined individual performance objectives. In the
Annual Bonus Plan, executives are targeted to receive a bonus of 25% to 45% of
base salary (Mr. Cronin is targeted at 45%). The targeted bonus is achieved if
the Company's ROI is equal to the budgeted ROI established at the beginning of
the year, and the executive achieves 75% of the executive's individual
performance objectives. Individual performance objectives generally relate to
financial goals and operational goals that relate to the executive's specific
responsibilities. Objectives are assigned point values. The percentage of points
achieved to total points available determines the percentage of achievement.
Generally, financial goals include measures such as the
17
<PAGE>
level of sales, the level of operating expenses, and the utilization/turnover of
assets. Operational objectives generally relate to the development and
implementation of major products, programs or projects. An executive's actual
bonus can be increased or decreased from target depending on the Company's
actual ROI and the executive's individual performance objective achievements.
The maximum actual bonus can be 160% of target, provided the actual ROI exceeds
110% of targeted ROI and the executive achieves at least 90% of the individual
performance objective points. The minimum actual bonus can be 20% of target,
provided the actual ROI is 90% of targeted ROI and the executive achieves at
least 45% of the individual performance objective points. No bonus will be
earned if either the actual ROI is less than 90% of targeted ROI or the
executive achieves less than 45% of the individual performance objective points.
Actual bonus awards for 1995 ranged from 60% to 160% of targeted bonuses. The
Company's ROI for fiscal year 1995 was 114% of targeted ROI.
LONG-TERM PERFORMANCE PLAN -- The Long-Term Performance Plan is a rolling
three year plan that compensates executives for Company performance in excess of
the Company's weighted cost of capital. The Company's weighted cost of capital
is intended to equal the theoretical return expected by stockholders and debt
holders of the Company. In general, the Company's net operating profit after
taxes (with the cost of inventories determined on a FIFO basis) is reduced by a
capital charge (the company's average investment multiplied by the Company's
weighted cost of capital). The net result is an excess or deficit of net
operating profit after taxes. The participants in the plan receive an award
equal to a predefined percentage of the excess or deficit of the net operating
profit after taxes. Mr. Cronin's predefined percentage for fiscal 1995 equaled
two percent. The aggregate percentage for all participants (including Mr.
Cronin) approximated 9.7% in fiscal year 1995. Participant award amounts are
banked for a period of two years during which the results of the following two
fiscal years are added to or subtracted from the amount banked. After the
completion of the second year following the award year, the participant is paid
the lesser of the initial award (assuming the initial award was positive), or
the amount in the bank. For awards made in fiscal year 1995, the participant
will receive the full award amount in cash during the Company's fiscal year
1998, provided that the results of fiscal years 1996 and 1997 do not cause a net
reduction to the fiscal year 1995 award.
DEFERRED COMPENSATION/CAPITAL ACCUMULATION PLAN -- The Deferred
Compensation/Capital Accumulation Plan (the "CAP") is intended to motivate
executive officers and employees in certain key management positions to remain
in the employment of the Company, thus providing the Company with a qualified
and stable executive team to achieve its long-term goals. The CAP allows
participants to elect to defer up to 20% of their salary and cash bonus. A CAP
has been in effect for each calendar year since 1988, with the exception of
1992. The deferred amount bears interest at a rate determined by the Committee,
and has ranged between 12% and 16% per annum. The Committee elected 12% for the
1995 Plan. If a participant remains in the continuous employment of the Company
for a period of seven years after the year of deferral, an interim distribution
equal to the amount deferred will be made from the participant's deferral
account. A second interim distribution equal to the first interim distribution
will be made to each participant who remains in the continuous employment of the
Company for a period of eight years after the year of deferral. Most
participants will also receive additional distributions beginning at age 65. A
participant whose employment terminates prior to retirement receives a lump-sum
distribution equal to the amount deferred plus interest between 6% and 8%, less
the amount of any interim distributions. The Company has purchased for its
account life insurance on the participants, which is expected to be sufficient
to fund distributions under the Plan.
STOCK COMPENSATION -- Stock compensation is intended to provide a longer
term reward to executives for sound Company performance and to align the
interests of the executive more closely with those of the stockholders by
increasing management stock ownership. The Company provides stock compensation
via two plans, the 1989 Stock Option Plan (the "Option Plan") and the Employee
Stock Purchase Plan (the "ESP"). The Committee administers the Option Plan
pursuant to which options to purchase shares of the Company's Common Stock are
granted to executive officers and other key members of management. Options under
the Option Plan become exercisable as to 40% of the shares one year after grant
and the remaining 60% of the shares become exercisable two years after grant;
however, the Committee has the authority to accelerate the exercisability of any
option. The Committee determines the number of options to be granted based upon
a matrix similar to the annual bonus matrix that utilizes the same performance
measures. The Committee also considers comparative information including the
number of stock grants made by similar companies.
18
<PAGE>
The ESP is available to all employees of the Company who have completed at
least one year of service. Under the Plan, employees electing to participate may
purchase shares of the Company's Common Stock at an exercise price equal to the
lower of (a) 85% of the mean market value on the first day of the offering
period or (b) 85% of the mean market value on the last day of the offering
period. The offering period is a six-month period beginning on January 1 and
July 1 of each year. Participating employees may purchase stock equal to the
lesser of (a) shares having a market value of no more than 10% of the
participant's base salary or (b) shares having a market value of $25,000 (market
value is determined using the market price of the stock as of the first day of
the offering period). In addition to the two stock compensation plans, on
November 1, 1994, the Board of Directors permitted officers and other key
management personnel the opportunity to convert their deferred cash bonus
balances under the Company's Executive Incentive Plan to stock equivalents. All
eligible officers and key management personnel participating in the Executive
Incentive Plan elected to convert their cash balances to stock equivalents.
STOCK OWNERSHIP GUIDELINES -- The Committee and the Board of Directors
adopted stock ownership guidelines that began in fiscal year 1995. The
guidelines recommend that officers and other key management personnel own a
minimum of one to three times their base salaries in Common Stock or stock
equivalents of the Company (Mr. Cronin is recommended to own three times his
base salary). The guidelines suggest that ownership levels in the Company's
Common Stock or stock equivalents should be achieved by August 1, 2001.
OTHER COMPENSATION ELEMENTS -- The Company provides a Profit Sharing and
Retirement Plan (the "P.S. Plan") in which executive officers participate on the
same terms as non-executive employees subject to limits on the amounts that may
be contributed. In addition, a Supplemental Profit Sharing Plan provides to
executives and other highly compensated participants additional contributions to
compensate them for contributions not allowed under the P.S. Plan due to
contribution limitations. This supplemental plan is designed to place executives
in the same relative position as non-highly compensated participants in the P.S.
Plan. The Company also provides each executive officer with split-dollar life
insurance (up to $200,000 of coverage) and an automobile for which the Company
makes the lease and insurance payments.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The fiscal year 1995 compensation for Robert J. Cronin, the Chief Executive
Officer, was established following the same philosophy and objectives as
discussed in this report.
As reported in the Summary Compensation Table, total fiscal year 1995 annual
compensation to Mr. Cronin was $688,149, the significant elements of which were
base salary and the annual bonus. In addition, Mr. Cronin was awarded $309,000
from the Long-Term Performance Plan that is deferred, contingent upon the
results of fiscal years 1996 and 1997, and payable in fiscal year 1998. Mr.
Cronin also was granted 19,000 stock options under the Option Plan.
Mr. Cronin's base salary as of July 31, 1995 of $365,000 was determined
based upon the Company's established salary range for the Chief Executive
Officer. Mr. Cronin's base salary as of July 31, 1995, is below the 25th
percentile of Chief Executive Officer base salary compensation as determined in
a 1995 survey by professional compensation consultants using companies of
similar size and complexity. Effective November 1, 1995, Mr. Cronin's base
salary will be increased to $401,500. The Committee believes that Mr. Cronin's
salary is within an acceptable range.
Mr. Cronin's fiscal 1995 incentive bonus was $262,000 (71.8% of his base
salary and 160% of his targeted bonus). The annual bonus award was determined by
the Company's actual ROI as compared to targeted ROI and his level of
achievement against his individual performance objectives established at the
beginning of the year. The Company's actual ROI was 114.4% of its targeted ROI.
Individual performance objectives included, among others, the level of sales,
productivity per employee, various asset management ratios, the continued
development and penetration of the Company's W.I.N. systems, the development and
implementation of several strategic products and services, the completion and
integration of at least two acquisitions and the formation of two strategic
alliances. For fiscal year 1995, Mr. Cronin achieved in excess of 90% of his
individual performance objectives.
19
<PAGE>
The Committee believes Mr. Cronin's incentive bonuses are reasonable as
compared to the Company's performance.
In summary, the Committee views Mr. Cronin's fiscal 1995 compensation as an
appropriate amount, given the Company's financial performance in fiscal year
1995, his individual achievements and the competitive standards for Chief
Executive Officer talent. The Company achieved record financial performance in
fiscal 1995 that created tremendous stockholder value as displayed in the
performance graph under the heading "Performance Graph" and as evidenced by the
$292 million (or 41.5%) increase in the Company's equity market capitalization
(market capitalization is computed based upon the Company's closing stock price
of $44 as of July 28, 1995, the last trading day prior to the Initial Moore
Offer).
Submitted by the Compensation Committee of the Board of Directors of the
Company.
Fred F. Canning Chairman
R. Darrell Ewers
William N. Lane III
William E. Olsen
20
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the cumulative total stockholder
return on the Company's Common Stock for the five-year period from July 31, 1990
to July 31, 1995, with the cumulative total return for the same period of the
Standard & Poor's ("S&P") 500 stock index, the S&P MIDCAP 400 index, and a stock
index composed of a group of six publicly traded companies, consisting of
American Business Products, Duplex Products, Ennis Business Forms, Moore
Corporation Limited, New England Business Service and Standard Register Company
(the "Peer Group Index"). Comparisons are based on the assumption that the value
of an investment on July 31, 1990 in the Company's Common Stock, the S&P 500
stock index, the S&P MIDCAP 400 index, and the Peer Group Index was $100 and
that all dividends were reinvested. The performance line of the Company reflects
the performance both as of July 31, 1995 and as of July 28, 1995, the last
trading day prior to public announcement of the Initial Moore Offer.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WALLACE COMPUTER S&P400
SERVICES, INC. PEER GROUP S&P 500 MIDCAP
----------------------- -------------- --------- -----------
<S> <C> <C> <C> <C>
07/31/90 $ 100 $ 100 $ 100 $ 100
07/31/91 $ 105.17 $ 100.05 $ 112.73 $ 122.42
07/31/92 $ 116.06 $ 92.57 $ 127.13 $ 143.69
07/30/93 $ 118.70 $ 104.75 $ 136.12 $ 167.58
07/29/94 $ 158.28 $ 107.89 $ 145.32 $ 173.48
07/28/95 $ 226.08 $ 130.15 $ 183.20 $ 214.24
07/31/95 $ 299.94 $ 131.28 $ 183.20 $ 216.02
</TABLE>
INDEMNIFICATION ARRANGEMENTS AND LIMITATION ON LIABILITY
Pursuant to the provisions of the Company's Restated Certificate of
Incorporation, as amended (the "Certificate of Incorporation"), and the
provisions of indemnification agreements between the Company and each of its
directors and officers, the Company is obligated (subject to certain conditions)
to hold harmless and indemnify its directors and officers, to the fullest extent
permitted from time to time by applicable law, from and against expenses
(including attorney's fees), judgments, fines, amounts paid in settlement, and
other liabilities and claims that its directors and officers may incur or become
subject to as a result of or in connection with serving or having served at any
time as a director or officer of the Company (including liabilities relating to
service as a trustee or otherwise in connection with employee benefit plans)
and, in the case of officers, as an employee or agent of the Company or as a
director, officer, employee or agent or in any other capacity at the request of
the Company with any subsidiary or other entity. The Company's indemnification
obligations under its Certificate of Incorporation and under indemnification
agreements with its directors and officers do not extend to liabilities or
claims based upon or attributable to any breach of duty of loyalty to the
Company or its stockholders, any acts or omissions that are not in good faith or
that involve intentional misconduct or deliberate dishonesty, any improper
personal profit or benefit, or any income taxes in respect of compensation.
Directors
21
<PAGE>
and officers also have indemnification rights against the Company under Section
145 of the Delaware General Corporation Law, and the Company maintains director
and officer liability insurance coverage for its directors and officers.
Pursuant to the above indemnification agreements, subject to certain
limitations, the Company must advance any and all defense costs (including
attorney's fees) of investigating, defending or otherwise contesting any claim
made against the director with respect to any alleged act or omission by him as
a director of the Company, provided that the director gives the Company a
written undertaking to repay all such advances if and to the extent it is
ultimately determined that the director is not entitled to indemnification with
respect to such claim. Each of the directors of the Company has entered into an
undertaking to repay if and to the extent it is ultimately determined that the
director is not entitled to indemnification with respect to litigation currently
pending in which the Company and the directors were named as defendants.
Under the provisions of the Company's Certificate of Incorporation, no
director of the Company shall have any personal liability to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director;
provided, however, that, unless and except to the extent otherwise permitted
from time to time by applicable law, the liability of a director for monetary
damages is not eliminated or limited for any breach of duty of loyalty to the
Company or its stockholders, for acts or omissions that are not in good faith or
that involve intentional misconduct, deliberate dishonesty, or a knowing
violation of law, for any dividends or redemptions or repurchases of stock that
are unlawful under the Delaware General Corporation Law, or for any act or
omission that occurred prior to November 12, 1986.
VOTING SECURITIES
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of November 3, 1995 with
respect to each person or entity known to the Board of Directors to be the
beneficial owner of more than five percent (5%) of the outstanding shares of the
Company's Common Stock.
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS OF BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED OF CLASS
---------------------------------------- ------------ --------
<S> <C> <C>
David L. Babson & Co., Inc. 1,306,632(1) 5.8%
One Memorial Drive
Cambridge, MA 02142
Merrill Lynch & Co., Inc. 1,154,450(2) 5.1%
World Financial Center
North Tower
250 Vesey Street
New York, NY 10281
<FN>
- ------------------------
(1) Based upon a Schedule 13G filed David L. Babson & Co., Inc. ("Babson") on
February 10, 1995. Such Schedule 13G states that Babson beneficially owned
1,306,632 shares, of which it had sole voting power with respect to 786,495
shares, shared voting power with respect to 520,137 shares and sole
dispositive power with respect to 1,306,632 shares.
(2) Based upon a Schedule 13G filed by Merrill Lynch & Co., Inc. and certain
affiliated entities ("Merrill Lynch") on February 10, 1995. Such Schedule
13G states that Merrill Lynch beneficially owned 1,154,450 shares and that
it had shared powers to vote and to dispose of or direct the disposition of
1,154,450 shares.
</TABLE>
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following table lists the beneficial ownership, as of November 3, 1995,
of the Company's Common Stock by each director, the Board's nominees, the five
executive officers listed in the Summary Compensation
22
<PAGE>
Table, and all directors and executive officers as a group. Unless otherwise
noted, the listed director, nominee or executive officer has sole power to vote
and sole power to dispose of or direct the disposition of all shares listed
opposite such person's name.
<TABLE>
<CAPTION>
SHARES PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED CLASS
- --------------------------- ------------------ -----------
<S> <C> <C>
Fred F. Canning 1,100 *
Robert J. Cronin 61,854(1) *
Theodore Dimitriou 120,298(2) *
Richard F. Doyle 2,800 *
R. Darrell Ewers 500 *
William N. Lane III 110,253(3) *
William E. Olsen 400 *
Neele E. Stearns, Jr. 1,200 *
Michael O. Duffield 23,794(4) *
Michael J. Halloran 16,645(5) *
Bruce D'Angelo 10,735(6) *
Michael T. Leatherman 11,200(7) *
All Directors and Executive 404,474(8) 1.8%
Officers as a group
(18 persons)
<FN>
- ------------------------
* Less than 1% of the outstanding shares of Common Stock.
(1) Includes 55,000 shares that Mr. Cronin has the right to acquire through the
exercise of options granted to him under the Company's 1989 Stock Option
Plan that are presently exercisable or will become exercisable within a
period of 60 days. Excludes 13,117 share equivalents held by Mr. Cronin as
a result of Mr. Cronin converting his deferred bonus amount into stock
equivalents during fiscal year 1995.
(2) Includes 35,000 shares that Mr. Dimitriou has the right to acquire through
the exercise of options granted to him under the Company's 1989 Stock
Option Plan that are presently exercisable or will become exercisable
within a period of 60 days.
(3) Includes 100,253 shares held in trusts for which Mr. Lane acts as a
co-trustee. Mr. Lane has shared powers to vote and dispose of the shares
held by such trusts.
(4) Includes 23,060 shares that Mr. Duffield has the right to acquire through
the exercise of options granted to him under the Company's 1989 Stock
Option Plan that are presently exercisable or will become exercisable
within a period of 60 days. Excludes 4,253 share equivalents held by Mr.
Duffield as a result of Mr. Duffield converting his deferred bonus amount
into stock equivalents during fiscal year 1995.
(5) Includes 12,760 shares that Mr. Halloran has the right to acquire through
the exercise of options granted to him under the Company's 1989 Stock
Option Plan that are presently exercisable or will become exercisable
within a period of 60 days. Excludes 4,866 share equivalents held by Mr.
Halloran as a result of Mr. Halloran converting his deferred bonus amount
into stock equivalents during fiscal year 1995.
(6) Includes 10,100 shares that Mr. D'Angelo has the right to acquire through
the exercise of options granted to him under the Company's 1989 Stock
Option Plan that are presently exercisable or will become exercisable
within a period of 60 days. Excludes 2,517 share equivalents held by Mr.
D'Angelo as a result of Mr. D'Angelo converting his deferred bonus amount
into stock equivalents during fiscal year 1995.
(7) Includes 11,200 shares that Mr. Leatherman has the right to acquire through
the exercise of options granted under the Company's 1989 Stock Option Plan
that are presently exercisable or will become exercisable within a period
of 60 days. Excludes 3,260 share equivalents held by Mr. Leatherman as a
result of Mr. Leatherman converting his deferred bonus amount into stock
equivalents during fiscal year 1995.
(8) Includes 183,660 shares that all executive officers as a group have the
right to acquire through the exercise of options granted under the
Company's 1989 Stock Option Plan that are presently exercisable or will
</TABLE>
23
<PAGE>
<TABLE>
<S> <C>
become exercisable within a period of 60 days. Excludes 47,294 share
equivalents held by all executive officers as a group as a result of
executive officers converting their deferred bonus amounts into stock
equivalents during fiscal year 1995.
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF SECURITIES EXCHANGE ACT OF 1934
Under Section 16(a) of the Securities Exchange Act of 1934, as amended, the
Company's directors and executive officers are required to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission and the New York Stock Exchange. Whenever a director or
executive officer files a Form 3, 4 or 5, a copy of the Form is required to be
furnished to the Company.
Based solely upon a review of the Form 3, 4 and 5 filings received by the
Company since the beginning of fiscal year 1995, the Company has not identified
any failure on the part of any of its directors and executive officers to file
on a timely basis any Form 3, 4 or 5 during fiscal year 1995.
SOLICITATION OF PROXIES
Proxies may be solicited by mail, advertisement, telephone or other methods
and in person. Solicitations may be made by directors, officers, investor
relations personnel and other employees of the Company, none of whom will
receive additional compensation for such solicitations. The Company will request
banks, brokerage houses and other custodians, nominees and fiduciaries to
forward all of its solicitation materials to the beneficial owners of the shares
of Common Stock they hold of record. The Company will reimburse these record
holders for customary clerical and mailing expenses incurred by them in
forwarding these materials to their customers.
The Company has retained Morrow & Co., Inc. ("Morrow") for solicitation and
advisory services in connection with the solicitation, for which Morrow is to
receive a fee estimated at $200,000, together with reimbursement for its
reasonable out-of-pocket expenses. The Company has also agreed to indemnify
Morrow against certain liabilities and expenses. It is anticipated that Morrow
will employ approximately 75 persons to solicit stockholders for the Annual
Meeting. Morrow is also acting to assist the Company in connection with the
Moore Offer, for which Morrow will be paid customary compensation in addition to
reimbursement for reasonable out-of-pocket expenses.
Pursuant to a letter agreement dated July 30, 1995 (the "Letter Agreement"),
the Company has retained Goldman Sachs as financial advisor with respect to the
Moore Offer and certain other possible transactions. Pursuant to the Letter
Agreement, the Company has agreed to pay: (a) a fee of $500,000, payable on the
date of the letter agreement (which amount has been paid and is creditable on a
one time basis against any fees payable under clause (b), (c) or (d) below); (b)
if 15% or more of the outstanding stock of the Company is acquired by Moore or
any other person or group (including the Company), in one or a series of
transactions or if all or substantially all of the assets of the Company are
transferred, in one or a series of transactions, by way of a sale, distribution
or liquidation, a fee equal to 0.62% of the aggregate value of all such
transactions (in the event at least 50% of the outstanding stock of the Company
is acquired by Moore or any other person, such aggregate value will be
determined as if such acquisition were of 100% of the stock of the Company); (c)
if the Company or any entity formed or owned in substantial part or controlled
by the Company or one or more members of senior management of the Company or any
employee benefit plan of the Company or any of its subsidiaries effects certain
recapitalization transactions, a fee equal to 0.62% of the aggregate value of
such transaction; (d) if the Company sells, distributes or liquidates all of its
assets, or a portion of its assets having an aggregate value of $50 million or
more, and no fee is otherwise payable pursuant to clause (b) or (c) above, a fee
based upon the aggregate value of such transaction pursuant to a schedule
ranging from 2.00% if the aggregate value of the transaction is $50 million, to
0.75% if the aggregate value of the transaction is $750 million or more; and (e)
in the event no transaction of the type described in clause (b) or (c) above has
been consummated by any of the following dates, a fee of $1.5 million on each
such date as of which no transaction has been consummated: October 31, 1995,
January 31, 1996, April 30, 1996, July 31, 1996 and October 31, 1996. Any fee
paid pursuant to clause (e) shall be creditable on a one time basis against any
fee payable under clause (b), (c) or (d) above. Any fee paid under clause (b)
above shall be in certain instances creditable on a one time basis against any
fee subsequently paid under clause (c) above, and vice versa.
24
<PAGE>
Pursuant to the Letter Agreement, Goldman Sachs will act as the Company's
financial advisor with regard to the proxy solicitation by Moore. No additional
fee will be paid to Goldman Sachs in connection therewith.
The Company has also agreed to reimburse Goldman Sachs periodically for
their reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of their attorneys, plus any sales, use or similar taxes
(including additions to such taxes, if any) arising in connection with any
matter referred to in the Letter Agreement. In addition, the Company has agreed
to indemnify Goldman Sachs against certain liabilities, including liabilities
under federal securities laws. Pursuant to a separate letter dated July 30,
1995, Goldman Sachs has agreed, subject to limited exceptions, to use
confidential information supplied by the Company only for the engagement
contemplated by the Letter Agreement and not to disclose such information.
In the case of public offerings or private placements of securities of the
Company that are related to a transaction contemplated by the Letter Agreement,
the Company has agreed to offer Goldman Sachs the right to act as lead manager
or agent on such transactions. In such case, Goldman Sachs would charge
customary fees pursuant to a separate agreement.
The Letter Agreement may be terminated at any time by either party thereto,
with or without cause, effective upon receipt of written notice to that effect.
Goldman Sachs will be entitled to the transaction fee set forth above if at any
time prior to the expiration of 18 months after such termination a transaction
of the type contemplated by clause (b), (c) or (d) above is consummated and, in
the case of a transaction contemplated by clause (b) or (d), there was contact
with the acquiring party, or any affiliate thereof, regarding such a transaction
during the period of Goldman Sachs' engagement. Any fee paid under clause (e)
shall, however, be credited against any such transaction fee.
The cost of soliciting proxies for the Annual Meeting is being borne by the
Company. Costs incidental to these solicitations of proxies include expenditures
for printing, postage, legal, accounting, public relations, soliciting,
advertising and related expenses and are expected to be approximately $500,000
in addition to the fees of Morrow described above (excluding the amount normally
expended by the Company for the solicitation of proxies at its annual meetings).
Total costs incurred to date for, in furtherance of, or in connection with these
solicitations of proxies are approximately $200,000.
Certain information about the directors and executive officers of the
Company and certain employees and other representatives of the Company who may
also solicit proxies is set forth in the attached Schedule I. Schedule II sets
forth certain information relating to shares of Common Stock owned by such
parties and certain transactions between any of them and the Company. Schedule
III sets forth certain information with respect to Goldman Sachs. Schedule IV
sets forth certain transactions by Goldman Sachs with respect to securities of
the Company.
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Stockholder proposals intended for inclusion in the proxy statement for the
1996 Annual Meeting must be received at the Company's corporate headquarters,
4600 West Roosevelt Road, Hillside, Illinois 60162, not later than July 10,
1996. Stockholder proposals should be addressed to the attention of the
Company's Corporate Secretary.
25
<PAGE>
In addition, the Company's Bylaws require that there be furnished to the
Secretary of the Company written notice with respect to the nomination of a
person for election as a director or the submission of a proposal (other than
nominations and proposals submitted at the direction of the Board) at an annual
meeting of stockholders. In order for any such nomination or submission to be
proper, the notice must contain certain information concerning the nominating or
proposing stockholder and the nominee or the proposal, as the case may be, and
must be furnished to the Company generally not later than 90 days in the event
of a nomination and not earlier than 90 days and not later than 60 days in the
event of a proposal. Copies of the applicable Bylaw provisions may be obtained,
without charge, upon written request to the Secretary of the Company at its
principal executive offices.
By Order of the Board of Directors
[SIG]
T. DIMITRIOU
CHAIRMAN OF THE BOARD OF DIRECTORS
Hillside, Illinois
November 6, 1995
26
<PAGE>
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS,
AND CERTAIN EMPLOYEES OF THE COMPANY
The following table sets forth the name and the present principal occupation
or employment (except with respect to the directors, whose principal occupation
is set forth in the Proxy Statement), and the name, principal business and
address of any corporation or other organization in which such employment is
carried on, of (1) the directors and executive officers of the Company and (2)
certain employees of the Company who may assist in soliciting proxies from
stockholders of the Company. Unless otherwise indicated below, the principal
business address of each such person is 4600 West Roosevelt Road, Hillside,
Illinois 60162 and such person is an employee of the Company. Directors are
indicated with a single asterisk.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
NAME AND PRINCIPAL PRESENT OFFICE OR OTHER
BUSINESS ADDRESS PRINCIPAL OCCUPATION OR EMPLOYMENT
- --------------------------------------------------- ---------------------------------------------------
<S> <C>
Neele E. Stearns, Jr.* ............................
100 North Riverside Plaza
Suite 1700
Chicago, IL 60606
Robert J. Cronin* .................................
R. Darrell Ewers* .................................
261 Sheridan Road
Winnetka, IL 60093
Richard F. Doyle* .................................
Route 13, Box 47
Charlottesville, VA 22901
William E. Olsen* .................................
275 Oak Creek Dr., Unit 210
Wheeling, IL 60090
Theodore Dimitriou* ...............................
Fred F. Canning* ..................................
441 Rockefeller Road
Lake Forest, IL 60045
William N. Lane III* ..............................
Lane Industries, Inc.
One Lane Center
1200 Shermer Road
Northbrook, IL 60062
Michael J. Halloran ............................... Vice President/Chief Financial Officer/Assistant
Secretary
Michael O. Duffield ............................... Senior Vice President/Operations
Michael T. Leatherman ............................. Senior Vice President/Chief Information Officer
Bruce D'Angelo .................................... Vice President/Sales
Michael T. Laudizio ............................... Divisional Vice President/Corporate Secretary/
Director of Taxation
Michael T. Quane .................................. Treasurer
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL PRESENT OFFICE OR OTHER
BUSINESS ADDRESS PRINCIPAL OCCUPATION OR EMPLOYMENT
- --------------------------------------------------- ---------------------------------------------------
<S> <C>
Wayne E. Richter .................................. Vice President/General Manager -- Label Division
Donald J. Hoffmann ................................ Vice President/Engineering and Research
10 S. Davis Dr.
Bellwood, IL 60104
Michael M. Mulcahy ................................ Vice President/General Manager -- Colorforms
955 Pratt Blvd. Division
Elk Grove Village, IL 60007
Michael R. Finger ................................. Vice President/General Manager -- Direct Mail
1750 Wallace Ave. Division
St. Charles, IL 60104
</TABLE>
CERTAIN EMPLOYEES OF THE
COMPANY WHO MAY ALSO SOLICIT PROXIES
<TABLE>
<CAPTION>
PRESENT OFFICE OR OTHER
NAME AND PRINCIPAL PRINCIPAL
BUSINESS ADDRESS OCCUPATION OR EMPLOYMENT
- ------------------------------------------------------------------------ ------------------------------
<S> <C>
Bradley P. Samson....................................................... Director of Public Relations
Teresa A. Sorrentino.................................................... Public Relations Specialist
</TABLE>
I-2
<PAGE>
SCHEDULE II
SHARES HELD BY DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN EMPLOYEES OF THE COMPANY AND
CERTAIN TRANSACTIONS BETWEEN ANY OF THEM AND THE COMPANY
The shares of Common Stock held by directors and Michael O. Duffield,
Michael J. Halloran, Michael T. Leatherman and Bruce D'Angelo are set forth in
the Proxy Statement. The following officers and employees of the Company own the
following shares as of November 3, 1995:
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK
NAME OF BENEFICIALLY
BENEFICIAL OWNER OWNED (1)
--------------------- -----------------
<S> <C>
Michael T. Laudizio.................................... 700
Michael T. Quane....................................... 1,361
Wayne E. Richter....................................... 11,332
Donald J. Hoffmann..................................... 6,987
Michael M. Mulcahy..................................... 11,235
Bradley P. Samson...................................... 24
Michael R. Finger...................................... 12,080
</TABLE>
- ------------------------
(1) Amounts include shares acquirable within 60 days of November 3, 1995
pursuant to the exercise of currently outstanding options as follows: Mr.
Laudizio (700); Mr. Quane (1,000); Mr. Richter (8,980); Mr. Hoffmann
(4,740); Mr. Mulcahy (9,400); and Mr. Finger (11,720).
PURCHASES AND SALES OF SECURITIES
The following table sets forth information concerning all purchases and
sales of securities of the Company by directors, officers and certain employees
since November 3, 1993:
<TABLE>
<CAPTION>
DATE OF NATURE OF NUMBER OF SHARES
NAME TRANSACTION TRANSACTION OF COMMON STOCK
- ----------------------------------- ----------- ----------- ----------------
<S> <C> <C> <C>
DIRECTORS:
Robert J. Cronin................... 1/24/94 (1) 507
7/11/94 (1) 312
8/17/94 (2) 3,841
8/17/94 (5) 2,308
1/18/95 (1) 509
7/18/95 (1) 345
10/16/95 (2) 2,159
Theodore Dimitriou(4).............. 12/20/93 Gift 5,720
1/24/94 (1) 404
3/4/94 Sale 40,000
3/15/94 Sale 10,000
7/11/94 (1) 437
1/18/95 (1) 318
Neele E. Stearns, Jr............... 12/5/94 Purchase 700
William N. Lane III................ 11/14/94 Purchase 2,000
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
DATE OF NATURE OF NUMBER OF SHARES
NAME TRANSACTION TRANSACTION OF COMMON STOCK
- ----------------------------------- ----------- ----------- ----------------
OFFICERS:
<S> <C> <C> <C>
Michael J. Halloran................ 1/24/94 (1) 484
7/11/94 (1) 153
1/18/95 (1) 279
7/18/95 (1) 221
Michael O. Duffield................ 1/5/94 (2) 1,000
1/5/94 (3) 1,000
4/8/94 (2) 5,000
4/8/94 (3) 5,000
7/18/95 (1) 378
Bruce D'Angelo..................... 12/16/93 (2) 2,000
12/16/93 (3) 2,000
1/24/94 (1) 87
7/11/94 (1) 54
1/18/95 (1) 236
7/18/95 (1) 198
Michael T. Quane................... 1/18/95 (1) 164
7/18/95 (1) 197
Wayne E. Richter................... 12/28/93 Sale 500
1/24/94 (1) 224
7/11/94 (1) 154
1/18/95 (1) 290
7/18/95 (1) 255
7/18/95 (2) 1,000
7/18/95 (3) 1,000
Donald J. Hoffmann................. 1/24/94 (1) 315
7/11/94 (1) 43
1/18/95 (1) 74
7/18/95 (1) 160
8/3/95 (2) 2,000
8/3/95 (5) 931
Michael M. Mulcahy................. 1/24/94 (1) 313
3/17/94 (2) 8,000
3/17/94 (3) 8,000
7/11/94 (1) 211
1/18/95 (1) 339
7/18/95 (1) 311
Michael R. Finger.................. 3/30/94 (2) 8,000
3/30/94 (3) 8,000
CERTAIN EMPLOYEES:
Bradley P. Samson.................. 7/18/95 (1) 24
<FN>
- ------------------------
(1) Purchase made pursuant to the Employee Stock Purchase Plan
(2) Purchase made pursuant to the Incentive Stock Option Plan
(3) Sale of Incentive Stock Options
(4) Transactions made for the benefit of the Theodore Dimitriou Trust.
(5) Disposition for the purpose of paying option exercise price.
</TABLE>
II-2
<PAGE>
T. Dimitriou, R.F. Doyle and F.F. Canning have agreed to serve as the
proxies on the Company's WHITE Annual Meeting proxy card.
Except as disclosed in this Schedule or in the Proxy Statement, none of the
Company, any of its directors, executive officers or the employees of the
Company named in Schedule I owns any securities of the Company or any subsidiary
of the Company, beneficially or of record, has purchased or sold any of such
securities within the past two years or is or was within the past year a party
to any contract, arrangement or understanding with any person with respect to
any such securities. Except as disclosed in this Schedule or in the Proxy
Statement, to the best knowledge of the Company, its directors and executive
officers or the employees of the Company named in Schedule I, none of their
associates beneficially owns, directly or indirectly, any securities of the
Company. The Company owns all of the capital stock of its subsidiary, Visible
Computer Supply Corporation, an Illinois corporation.
Other than as disclosed in this Schedule and in the Proxy Statement, to the
knowledge of the Company, none of the Company, any of its directors, executive
officers or the employees of the Company named in Schedule I has any substantial
interest, direct or indirect, by security holdings or otherwise, in any matter
to be acted upon at the Annual Meeting.
Other than as disclosed in this Schedule and in the Proxy Statement, to the
knowledge of the Company, none of the Company, any of its directors, executive
officers or the employees of the Company named in Schedule I is, or has been
within the past year, a party to any contract, arrangement or understanding with
any person with respect to any securities of the Company, including, but not
limited to, joint ventures, loan or option arrangements, puts or calls,
guarantees against loss or guarantees of profit, division of losses or profits,
or the giving or withholding of proxies.
Other than as set forth in this Schedule or in the Proxy Statement, to the
knowledge of the Company, none of the Company, any of its directors, executive
officers or the employees of the Company named in Schedule I, or any of their
associates, has had or will have a direct or indirect material interest in any
transaction or series of similar transactions since the beginning of the
Company's last fiscal year or any currently proposed transactions, or series of
similar transactions, to which the Company or any of its subsidiaries was or is
to be a party in which the amount involved exceeds $60,000.
Other than as set forth in this Schedule and in the Proxy Statement, to the
knowledge of the Company, none of the Company, any of its directors, executive
officers or the employees of the Company named in Schedule I, or any of their
associates, has any arrangements or understandings with any person with respect
to any future employment by the Company or its affiliates or with respect to any
future transactions to which the Company or any of its affiliates will or may be
a party.
II-3
<PAGE>
SCHEDULE III
INFORMATION CONCERNING GOLDMAN, SACHS & CO.
The Company has retained Goldman Sachs to act as its financial advisor in
connection with the transactions described in the Proxy Statement. Goldman Sachs
from time to time also execute routine brokerage transactions for the account of
the Company's Profit Sharing and Retirement Trust.
Goldman Sachs are principally engaged as a partnership in furnishing a full
range of investment banking and brokerage services for institutional and
individual clients. Goldman Sachs do not admit that they or any of their
partners, directors, officers or employees is a "participant," as defined in
Schedule 14A promulgated under the Securities Exchange Act of 1934, as amended,
by the Securities and Exchange Commission ("Schedule 14A"), in the solicitation
to which the Proxy Statement relates or that such Schedule 14A requires the
disclosure in the Proxy Statement or this Schedule of certain information
concerning Goldman Sachs.
The following partners and employees (the "Individuals") of Goldman Sachs
may engage in solicitation activities in connection with the solicitation to
which the Proxy Statement relates (and to the extent that any such Individual
does, in fact, engage in such solicitation activities, any such Individual would
thereby become a "participant," as defined in Schedule 14A):
<TABLE>
<CAPTION>
NAME POSITION
- ----------------------- ----------------
<S> <C>
Cody J. Smith Partner
Mark F. Dzialga Vice President
George B. Foussianes Vice President
Frederick P. Wich, Jr. Vice President
Jon A. Woodruff Associate
Raja Benchekroun Analyst
Gargi Banerjee Analyst
</TABLE>
Each of the Individuals is engaged in the investment banking business at
Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004 other than
Frederick P. Wich, Jr., who engages in the business at Goldman, Sachs & Co.,
4900 Sears Tower, Chicago, Illinois 60606, and is either a general partner or is
employed by Goldman Sachs in the capacity listed beside his or her name.
As of November 3, 1995, Goldman Sachs did not beneficially own any shares of
Common Stock, and owned of record 1,570,855 shares of Common Stock for customer
accounts. In the normal course of their business, Goldman Sachs regularly buy
and sell securities, including the Company's securities, for their own account
and for the accounts of their customers, which transactions may result from time
to time in Goldman Sachs having a net "long" or net "short" position in the
Company's securities or option contracts in the Company's securities. A list of
all securities of the Company bought and sold by Goldman Sachs for their own
account over the last two years is set forth on Schedule IV. It is
impracticable, however, owing to the volume of such transactions, to list each
transaction for the accounts of customers involving the Company's securities for
the past two years for the purpose of the Proxy Statement.
None of the Individuals owned of record or beneficially any of the Company's
securities at October 12, 1995. None of the Individuals purchased or sold for
their own account securities of any class of the Company within the past two
years.
To the knowledge of the Company, none of the Individuals own of record any
securities of the Company which are not also beneficially owned by them nor do
they beneficially own, directly or indirectly, any securities of any parent or
subsidiary of the Company.
In the normal course of their business, Goldman Sachs finance the securities
positions of Goldman Sachs by bank and other borrowings and repurchase and
securities borrowing transactions. To the knowledge of the Company, none of such
borrowings were intended specifically for the purpose of purchasing securities
of the Company.
III-1
<PAGE>
Except as set forth below or as disclosed elsewhere in this Schedule or the
Proxy Statement, and except for customary arrangements with respect to
securities of the Company held by Goldman Sachs for the accounts of their
customers, to the knowledge of the Company, none of the Individuals, Goldman
Sachs or any associate of such persons is or has been, within the past year, a
party to any contract, arrangement or understanding with any person with respect
to any securities of the Company, including, but not limited to, joint ventures,
loan or option arrangements, puts or calls, guarantees against loss or
guarantees of profit, division of losses or profits, or the giving or
withholding of proxies. Except as set forth below or as disclosed elsewhere in
this Schedule or the Proxy Statement, to the knowledge of the Company, none of
the Individuals, Goldman Sachs or any associate of such persons has any
arrangement or understanding with any person with respect to any future
employment by the Company or its affiliates or any future transactions to which
the Company or any of its affiliates will or may be a party, nor any material
interest, direct or indirect, in any transaction which has occurred since August
1, 1995 or any currently proposed transaction, or series of similar
transactions, to which the Company or any of its affiliates was or is to be a
party and in which the amount involved exceeds $60,000.
III-2
<PAGE>
SCHEDULE IV
TRADING HISTORY OF GOLDMAN, SACHS & CO. (FOR THEIR OWN ACCOUNT)
COMMON SHARES
Shares Purchased (Trade Date)
1995: 16800 (1/17); 1100 (3/16); 42400 (3/20); 3200 (7/11); 600 (7/28); 300
(8/02); 500 (8/21); 500 (9/11); 4200 (10/18)
1994: 9400 (3/18); 1300 (6/15); 14750 (10/06); 523 (10/07); 377 (12/01); 5900
(12/06)
1993: 1000 (1/19); 5600 (1/20); 200 (2/01); 700 (2/17); 1000 (2/18); 6100
(4/12); 1300 (5/21); 8000 (9/27)
Shares Sold (Trade Date)
1995: 200 (1/11); 200 (1/13); 400 (1/16); 2000 (1/23); 2200 (1/30); 500 (2/08);
1400 (2/21); 500 (3/02); 900 (3/06); 2200 (3/09); 3300 (3/10); 24600 (4/13);
3100 (4/17); 3200 (6/26); 6100 (7/25)
1994: 400 (1/18); 300 (1/19); 900 (1/28); 200 (3/15); 9400 (3/18); 800 (4/28);
800 (5/06); 100 (6/17); 3200 (9/30); 5132 (10/07); 2277 (10/10); 377 (12/01);
400 (12/16); 100 (12/22); 700 (12/27); 200 (12/28); 1200 (12/29); 500 (12/30)
1993: 6600 (1/20); 200 (2/01); 400 (2/02); 1000 (2/18); 6100 (4/12); 1000
(5/28); 900 (6/08); 1700 (7/01); 6600 (9/27); 1800 (12/09)
OPTIONS
Options Purchased (Trade Date)
1995: none
1994: 322 (6/15); 4000 (9/09); 3000 (9/12)
1993: none
Options Sold (Trade Date)
1995: none
1994: 3100 (6/15); 3000 (6/16); 600 (6/17); 300 (9/16)
1993: none
IV-1
<PAGE>
IMPORTANT
Your proxy is important. No matter how many shares of Common Stock you own,
please give the Company your proxy FOR the election of your Board's nominees for
director and AGAINST the Moore Proposals by signing, dating and returning the
Company's WHITE proxy card today in the postage prepaid envelope provided.
DO NOT RETURN ANY GOLD PROXY CARDS
THAT YOU MAY HAVE RECEIVED FROM MOORE.
If you have already submitted a proxy to Moore for the Annual Meeting, you
may change your vote to a vote FOR the election of your Board's nominees and
AGAINST the Moore Proposals by signing, dating and returning the Company's WHITE
proxy card, which must be dated after any proxy you may have submitted to Moore.
Only your latest dated proxy for the Annual Meeting will count at the meeting.
If any of your shares of Common Stock are held in the name of a brokerage
firm, bank, bank nominee or other institution, only it can vote such shares and
only upon receipt of your specific instructions. Accordingly, please contact the
person responsible for your account and instruct that person to execute the
Company's WHITE proxy card as soon as possible.
If you have any questions or require any additional information or
assistance, please contact our proxy solicitor:
MORROW & CO., INC.
CALL TOLL FREE: (800) 662-5200
<PAGE>
[LOGO]
WALLACE COMPUTER SERVICES, INC.
PROXY CARD
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 8, 1995.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby constitutes and appoints T. Dimitriou, R. F. Doyle and
F. F. Canning, and each of them, true and lawful agents and proxies of the
undersigned, with full power of substitution, to represent the undersigned
and to vote all shares of stock which the undersigned is entitled to vote at
the Annual Meeting of Stockholders of WALLACE COMPUTER SERVICES, INC. (the
"Company") to be held on December 8, 1995, and at any and all adjournments
and postponements thereof, on all matters before such meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE. HOWEVER, IF NO
VOTE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE ELECTION AS DIRECTORS
OF THE NOMINEES LISTED ON THE REVERSE SIDE, "FOR" THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS,
"AGAINST" THE PROPOSAL OF A WHOLLY OWNED SUBSIDIARY OF MOORE CORPORATION
LIMITED ("MOORE") TO REMOVE ALL MEMBERS OF THE BOARD OF DIRECTORS OF THE
COMPANY, OTHER THAN MOORE'S DIRECTOR NOMINEES IF THEY ARE THEN DIRECTORS OF
THE COMPANY ("MOORE'S BOARD REMOVAL PROPOSAL"), "AGAINST" THE PROPOSAL OF A
WHOLLY OWNED SUBSIDIARY OF MOORE TO AMEND THE COMPANY'S BYLAWS TO FIX THE
NUMBER OF DIRECTORS OF THE COMPANY AT FIVE ("MOORE'S NUMBER OF DIRECTORS
PROPOSAL"), AND "AGAINST" THE PROPOSAL OF A WHOLLY OWNED SUBSIDIARY OF MOORE
TO REPEAL EACH PROVISION OF THE COMPANY'S BYLAWS OR AMENDMENT THERETO ADOPTED
WITHOUT STOCKHOLDER APPROVAL SUBSEQUENT TO FEBRUARY 15, 1995 AND PRIOR TO THE
ANNUAL MEETING ("MOORE'S BYLAWS REPEAL PROPOSAL"), ALL OF WHICH MATTERS ARE
MORE FULLY DESCRIBED IN THE ANNUAL MEETING PROXY STATEMENT OF WHICH THE
UNDERSIGNED STOCKHOLDER ACKNOWLEDGES RECEIPT.
THIS PROXY GRANTS DISCRETIONARY AUTHORITY (1) TO VOTE FOR A SUBSTITUTE
NOMINEE OF THE BOARD OF DIRECTORS IF ANY NOMINEE FOR DIRECTOR LISTED ON THE
REVERSE SIDE IS UNABLE TO SERVE, OR FOR GOOD CAUSE WILL NOT SERVE AS A
DIRECTOR (UNLESS AUTHORITY TO VOTE FOR ALL NOMINEES OR FOR THE PARTICULAR
NOMINEE WHO HAS CEASED TO BE A CANDIDATE IS WITHHELD) AND (2) TO VOTE IN
ACCORDANCE WITH THE BEST JUDGMENT OF THE NAMED PROXIES ON OTHER MATTERS THAT
MAY COME BEFORE THE MEETING.
PLEASE VOTE, SIGN AND DATE THIS PROXY ON THE OTHER SIDE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE
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This proxy is being solicited by the Board of Directors of Wallace Computer
Services, Inc.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED, THIS PROXY
WILL BE VOTED "FOR" PROPOSALS 1 AND 2 AND "AGAINST" PROPOSALS 3, 4 AND 5.
The Board of Directors recommends a vote "FOR" Proposals 1 and 2.
1. Election of Directors:
FOR WITHHELD FOR ALL EXCEPT
/ / / / / /
Robert J. Cronin, Neele E. Stearns, Jr. and R. Darrell Ewers.
If you do not wish your shares voted "FOR" a particular nominee or nominees,
mark the "For All Except" box and strike a line through the nominee's
name(s). Your shares will be voted for the remaining nominee(s).
2. Ratification of Appointment of Arthur Andersen LLP as Independent Public
Accountants
FOR AGAINST ABSTAIN
/ / / / / /
The Board of Directors recommends a vote "AGAINST" Proposals 3, 4 and 5.
3. Moore's Board Removal Proposal
FOR AGAINST ABSTAIN
/ / / / / /
4. Moore's Number of Directors Proposal
FOR AGAINST ABSTAIN
/ / / / / /
5. Moore's Bylaws Repeal Proposal
FOR AGAINST ABSTAIN
/ / / / / /
Please sign this proxy exactly as your name appears hereon. Joint owners
should each sign personally. Trustees and other fiduciaries should indicate
the capacity in which they sign, and where more than one name appears, a
majority should sign. If a corporation, the signature should be that of an
authorized officer who should state his or her title.
Please mark, sign, date and return the proxy promptly using the enclosed
envelope.
Signature Date
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Signature Date
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Title:
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