<PAGE>
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Resgistrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to s240.14a-11(c) or s240.14a-12
Waverly, Inc.
............................................................................
(Name of Registrant as Specified In Its Charter)
Waverly, Inc.
............................................................................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i), or 14a-6(j)(2).
[ ] $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 Exchange
Act 0-11.1
1) Title of each class of securities to which transaction applies:
.............................................................................
2) Aggregate number of securities to which transaction applies:
.............................................................................
3) Price per unit or other underlying value of transaction pursuant to
Exchange Act Rule 0-11.
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4) Proposed maximum aggregate value of transaction:
.............................................................................
1. Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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<PAGE>
WAVERLY, INC.
- -------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
- ----------------------------------------
To the Shareholders of
WAVERLY, INC.
Notice is hereby given that the Annual Meeting of Shareholders
of Waverly, Inc. will be held at The Center Club, 100 Light
Street, Baltimore, Maryland 21202, at 4:00 p.m. on Monday, April
29, 1996, for the following purposes:
1. To elect four Class B Directors to the Board of Directors
for a term of three years.
2. To approve the appointment of Coopers & Lybrand L.L.P. as
independent accountants of the Company for the fiscal year
ending December 31, 1996.
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Shareholders of record at the close of business on February 26,
1996, will be entitled to notice of and to vote at the meeting.
All shareholders are cordially invited to attend the meeting in
person. Those who cannot attend are urged to sign, date and mail
promptly the enclosed proxy in the envelope provided for that
purpose. A majority of the outstanding shares of Common Stock
must be represented at the meeting in order to transact
business, and whether you own a few or many shares, your proxy
is important in fulfilling this requirement. Returning your
proxy does not deprive you of your right to attend the meeting
and vote your shares in person.
A copy of the annual report to shareholders is enclosed
herewith.
By order of the Board of Directors
E. MAGRUDER PASSANO, JR.
Secretary
March 29, 1996
<PAGE>
PROXY STATEMENT
- ---------------
This Proxy Statement is furnished in connection with the
solicitation by the Company of proxies to be voted at the Annual
Meeting of Shareholders to be held on April 29, 1996, at 4:00
p.m., at The Center Club, 100 Light Street, Baltimore, Maryland
21202, and at any adjournment thereof. The expense of preparing,
printing and mailing the proxies will be borne by the Company.
In addition to solicitations by mail, the Company may solicit
proxies in person or by telephone and arrange for brokerage
houses and other custodians, nominees and fiduciaries to send
proxies and proxy material to their principals at the expense of
the Company.
Any proxy may be revoked by a shareholder at any time prior to
its use by execution of another proxy bearing a later date, by
written notice to any of the persons named in the proxy, or by
oral or written statement at the meeting.
Holders of record at the close of business on February 26,
1996, of outstanding Common Stock of the Company are entitled to
notice of and to vote at the meeting. Each share of stock is
entitled to one vote. There is no provision for cumulative
voting. Shares represented by any proxy properly executed and
received pursuant to this solicitation will be voted at the
meeting in accordance with the recommendation of the Board of
Directors, unless otherwise directed by the shareholder. Shares
of Common Stock held by the trustee of the Companys Incentive
Savings Plan will be voted by the trustee. On February 26, 1996,
the Company had 4,443,419 shares of Common Stock outstanding and
entitled to vote at the meeting (4,821,027 shares if adjusted
for all stock options exercisable within 60 days after the
record date).
The principal executive offices of the Company are located at
351 W. Camden Street, Baltimore, Maryland 21201. The approximate
date on which this Proxy Statement and the attached form of
proxy will be mailed to shareholders is March 29, 1996.
PRINCIPAL HOLDERS OF COMMON STOCK
- ---------------------------------
The following table lists the only persons known to the Company
to be holding beneficially 5% or more of the Companys
outstanding Common Stock or to have filed a Schedule 13D or 13G
as of the record date, February 26, 1996:
<TABLE>
<CAPTION>
Number Percent of Total
Name and Address of Shares(1) Outstanding
- ---------------- ------------ ----------------
<S> <C> <C>
Life Estate under the Will of Edward B. Passano
(2)(3) 1,613,911 36.3%
Michael Urban (3)(4) 400,000 9.0%
Estate of John F. Spahr, Sr., J.F. Spahr, Jr.,
R.N. Spahr and the Estate of C.C.F. Spahr (5) 248,500 5.6%
All members of the Passano family and
their associates, including the above (6) 2,671,779 59.1%
Newsweb Corporation and its affiliates (7) 335,149 7.5%
1645 W. Fullerton Ave.
Chicago, IL 60614
State Street Bank and Trust Company (8) 271,750 6.1%
225 Franklin Street
Boston, MA 02110
<PAGE>
Theodore L. Cross and certain persons (9) 249,956 5.6%
200 W. 57th Street 15th Floor
New York, NY 10019
The Times Mirror Company (10) 218,500 4.9%
Times Mirror Square
Los Angeles, CA 90053
__________________
<FN>
(1) Includes shares issuable to the designated individuals
under options exercisable within 60 days after the record date.
(2) This is a Life Estate under the Will of Edward B. Passano
presently held for the benefit of his son, Edward M. Passano,
Sr. The shares held in the Passano Life Estate are subject to a
voting trust agreement described below.
(3) The address of such person is 351 W. Camden Street,
Baltimore, Maryland 21201.
(4) Includes 400,000 shares held by a corporation and which Dr.
Urban is deemed to own beneficially, which are subject to a
voting trust agreement described below.
(5) The address of the Messrs. Spahr, the Estate of John F.
Spahr, Sr. and the Estate of C.C.F. Spahr (the Estate) is 351 W.
Camden Street, Baltimore, Maryland 21201. Of these shares,
247,500 shares are held collectively subject to a ten-year
escrow agreement described below and are subject to four
separate voting trust agreements also described below and 1,000
shares are issuable to the Estate upon exercise of an option.
John F. Spahr, Jr. disclaims beneficial ownership of the shares
owned by the Estate and owned by Robert N. Spahr. Robert N.
Spahr disclaims beneficial ownership of the shares owned by the
Estate and owned by John F. Spahr, Jr. John F. Spahr, Jr. is the
beneficial owner of the Estate of John F. Spahr, Sr.
(6) Includes 78,150 shares issuable under options exercisable
within 60 days of the record date.
(7) Newsweb Corporation is engaged primarily in the printing
and broadcasting industries. Information obtained from Newsweb
and its affiliates as of November 1, 1994, contained in a
statement on Schedule 13D states that Fred Eychaner, as
president and sole shareholder of Newsweb, had sole power to
vote or to direct the vote and sole power to dispose or direct
the disposition of 104,200 shares owned by Newsweb, 220,949
shares owned by Fred Eychaner and 10,000 shares owned by Fred
Eychaner IRA.
(8) Based on a Schedule 13G filed with the SEC by State Street
Bank and Trust Company for the year ending December 31, 1995,
includes 1,300 shares held in various collective investment
funds for employee benefit plans and other index accounts as to
which State Street Bank and Trust Company, Trustee, has sole
voting and dispositive power and 270,450 shares held in various
trust accounts, with respect to which State Street Bank and
Trust Company, as Trustee or Co-Trustee, has sole voting power
as to 143,286 shares, sole dispositive power as to 1,700 shares
and shared dispositive power as to 268,750 shares.
<PAGE>
(9) Theodore Cross principal occupation is editor and publisher
of various academic journals. Information obtained from Mr.
Cross as of December 8, 1994, contained in a statement on
Schedule 13D states that Mr. Cross had sole power to vote or to
direct the vote and sole power to dispose or direct the
disposition of 178,787 shares owned by Theodore Cross. Mr. Cross
is deemed to have sole power to vote or to direct the vote and
sole power to dispose or direct the disposition of 3,250 shares
owned by Management Reports, Inc. by virtue of his ownership of
60% of the issued and outstanding stock of Management Reports,
Inc. James A. Hellmuth, as sole trustee of the Louisville
Charitable Remainder Unit Trust, has sole power to vote or to
direct the vote and sole power to dispose or direct the
disposition of 2,500 shares owned by the Louisville Trust. Mary
Cross, Amanda B. Cross, Lisa W. Pownall-Gray, Ann Fairchild
Warner, Polly Mackwell and Stuart G. Warner each has sole power
to vote or to direct the vote and sole power to dispose or
direct the disposition of their respective shares.
(10) Times Mirror is engaged principally in the publication of
newspapers, books, magazines and other information and
educational products. Information obtained from Times Mirror as
of October 19, 1994, contained in a statement on Schedule 13D
states that Times Mirror had sole power to vote or to direct the
vote and sole power to dispose or direct the disposition of all
218,500 shares.
</TABLE>
The stock subject to the Passano Family Life Estate referred to
in note (2) above is voted by Edward M. Passano, Sr., William M.
Passano, Jr. and Susan P. Macfarlane, all of 351 W. Camden
Street, Baltimore, Maryland 21201, as voting trustees under a
voting trust agreement (the Passano Voting Trust) dated July 31,
1989, which will expire on the earliest to happen of (1) the
execution of a subsequent voting trust agreement by the parties;
(2) the lapse of ten years from July 31, 1989; or (3) the death
of Edward M. Passano, Sr. The latter is entitled to a 50% vote
with respect to the stock subject to the voting trust and the
other trustees are entitled to the remaining 50% vote, so that,
unless the trustees are in agreement, it could happen that the
stock subject to the voting trust could be not voted at all.
William M. Passano, Jr., Susan P. Macfarlane and E. Magruder
Passano, Jr., the three grandchildren of the original testator,
have agreed that upon the death of Edward M. Passano, Sr., they
will enter into a ten-year voting trust agreement (together with
the Passano Voting Trust, the Passano Voting Trusts) pursuant to
which the stock they will then receive from the termination of
the Life Estate under Edward B. Passanos Will will be voted as a
unit for that period. The voting trustees will be those three
grandchildren of the original testator or their respective
spouses.
The shares referenced in note (4) above remain subject to a
voting trust (the Urban Voting Trust) of which Mr. William M.
Passano, Jr. and Dr. Urban are the co-trustees. The address of
the trustees is 351 W. Camden Street, Baltimore, Maryland 21201.
The duration of the Urban Voting Trust shall be coterminous with
that of the Passano Voting Trust described above. The shares
must be voted in the same way as the shares subject to the
Passano Voting Trust described above unless the Passano family
shares are deadlocked and cannot be voted at all, in which case
Dr. Urban will have the sole right to vote the 400,000 shares.
The 247,500 shares owned by the Messrs. Spahr and the Estate
referred to in note (5) above have been placed in voting trusts
(the Spahr Voting Trusts) of which Mr. William M. Passano, Jr.
of 351 W. Camden Street, Baltimore, Maryland 21201 and each of
the Messrs. Spahr of 351 W. Camden Street, Baltimore, Maryland
21201 are respective trustees. The duration of each of the Spahr
Voting Trusts shall be coterminous with that of the Passano
Voting Trust described above. The shares in each of the Spahr
Voting Trusts must be voted in the same way as the shares
subject to the Passano Voting Trust described above, unless the
Passano family shares are deadlocked and cannot be voted at all,
in which case each of the Messrs. Spahr will have the sole right
to vote their respective 77,500 shares, Mr. Passano will have
the sole right to vote the 50,000 shares owned by the Estate and
Mr. John F. Spahr, Jr. will have the sole right to vote the
42,500 shares owned by the Estate of John F. Spahr, Sr. The
247,500 shares held by each of the Messrs. Spahr and the Estate
are subject to an escrow agreement until January 10, 2001 to secure
indemnification obligations in the agreement relating to the
acquisition of Lea & Febiger. Under the terms of the escrow
agreement, each of the Messrs. Spahr may obtain the release of
up to 35,000 shares in the event of death, disability or divorce.
<PAGE>
As a result of these arrangements, the Dr. Urban, Messrs. Spahr
and the Estate may be deemed to be associates of the Passano
family, as that term is defined in the rules and regulations of
the Securities and Exchange Commission.
ELECTION OF DIRECTORS
- ---------------------
Waverly's Board of Directors is divided into three classes. Each
class of directors is elected for a three-year term. Joseph M.
Palazzolo has been nominated as a Class B Director to fill the
vacancy resulting from the retirement of Oliver S. Travers
effective on the date of the 1996 Annual Meeting. In addition,
Mr. Edward M. Passano, Sr. will assume the position of Director
Emeritus. The terms of the current Class B Directors will expire
on the date of the 1996 Annual Meeting. The Class B Directors
elected in 1996 will serve for a term that expires at the Annual
Meeting of Shareholders in 1999 or when their successors are
elected and qualified.
Proxies solicited hereby cannot be voted for a greater number
of persons than the number of nominees named. It is intended
that, unless contrary instructions are given, the persons named
in the accompanying proxy will vote all proxies in favor of the
nominees listed below to serve for their respective terms and
until their successors are elected and qualified. Management has
no reason to believe that any nominee will be unable to accept
nomination or election. However, if such event should occur,
management intends that the proxy holders will vote for such
other person or persons as they may deem advisable.
Name and Age Other Positions with the Director
on Record Date Company and Principal Occupations Since
- ------------------------------------------------------------------------------
Nominees for Class B Directors
Term Expiring at 1996 Annual Meeting
- ------------------------------------
Samuel G. Macfarlane (64) Consultant and former Vice President 1966
and Chief Financial Officer and
Treasurer of Waverly, Inc.
Ackneil M. Muldrow, II (58) President and CEO, Development 1992
Credit Fund, Inc., 1992
Baltimore, MD
Joseph M. Palazzolo (46) Chairman, Gateway Investments, Inc., 1996
Muttontown, NY 1996
William M. Passano, Jr. (67) Chairman of the Board 1965
The Board of Directors recommends a vote "FOR" the proposal to
approve the election of four Class B Directors for a term of
three years.
<PAGE>
Name and Age Other Positions with the Director
on Record Date Company and Principal Occupations Since
- ------------------------------------------------------------------------------
Class C Directors
Term Expiring at 1997 Annual Meeting
- ------------------------------------
David J. Callard (57) President, Wand Partners, Inc., 1974
private investment firm,
New York, NY
Edward B. Hutton, Jr. (50) President and Chief Executive 1988
Officer
Michael M.E. Johns (54) Dean of Medical Faculty and Vice 1993
President for Medicine, The Johns
Hopkins University School of
Medicine, Baltimore, MD
John F. Spahr, Jr. (45) Managing Director, Teton Data 1991
Systems, Jackson, WY
Michael Urban (56) President and Chief Executive 1990
Officer, Urban & Schwarzenberg
Verlag fur Medizin, GmbH, a
subsidiary of the Company
Class A Directors
Term Expiring at 1998 Annual Meeting
- ------------------------------------
Barbara J. Bonnell (64) Director of Research and Information, 1974
Baltimore Development Corporation,
Baltimore, MD
Donald W. Dick, Jr. (53) Principal, EuroCapital Advisors, LLC, 1980
private investment firm,
Weehawken, NJ
Carolyn Manuszak (56) President, Villa Julie College, 1987
Stevenson, MD
E. Magruder Passano, Jr. (53) Vice Chairman of the Board, 1972
Secretary
Richard C. Riggs, Jr. (56) President and CEO, 1995
Barton-Cotton, Inc. Baltimore, MD
The nominee for director and directors currently on the Board
have been engaged in the principal occupation indicated in the
foregoing table for the five years preceding December 31, 1995,
except as follows:
Prior to July, 1995, Mr. Dick was partner, Overseas Partners,
Inc., a private investment firm in Jersey City, New Jersey.
Prior to December 31, 1991, Mr. Macfarlane was Vice President,
Chief Financial Officer and Treasurer of the Company. From 1992
to 1993, Mr. Palazzolo was Chairman of Frost and Sullivan, Inc.,
and prior to 1992, was President and CEO of JPT Publishing, Inc.
From 1991 to 1993, Mr. Spahr was Chief Executive Officer of Lea
& Febiger, a division of the Company, and prior to 1991, Mr.
Spahr was a partner of Lea & Febiger, L.P., a publisher of books
in the field of medicine and related disciplines.
The following directors hold directorships with other companies
as follows: Mr. Callard is a director of Chartwell RE
Corporation. Mr. Dick is a director of the T. Rowe Price Growth
Stock Fund, Inc., the T. Rowe Price New America Growth Fund, the
T. Rowe Price Growth & Income Fund, Inc., the T. Rowe Price
Capital Appreciation Fund, the T. Rowe Price Balanced Fund,
Inc., the T. Rowe Price Mid-Cap Growth Fund, Inc., the T. Rowe
Price OTC Fund, Inc., the T. Rowe Price Dividend Growth Fund,
Inc., the T. Rowe Price Blue Chip Growth Fund, Inc., T. Rowe
Price New Horizons Fund, Inc., T. Rowe Price New Era Fund, Inc.,
T. Rowe Price Equity Income Fund, T. Rowe Price Science and
Technology Fund, Inc., T. Rowe Price Small-Cap Value Fund, T.
Rowe Price Index Trust, Inc., T. Rowe Price Equity Series, Inc.,
T. Rowe Price Personal Strategy Funds, Inc., T. Rowe Price Value
Fund, Inc., T. Rowe Price Capital Opportunity Fund, Inc., T.
Rowe Price Health Sciences Fund, Inc., T. Rowe Price
International Series, Inc., T. Rowe Price International Funds,
Inc. and Institutional International Funds, Inc. Mr. William M.
Passano, Jr. is a director of First Maryland Bancorp and of the
First National Bank of Maryland.
<PAGE>
Mr. Samuel G. Macfarlane is the brother-in-law of Mr. William
M. Passano, Jr. Mr. E. Magruder Passano, Jr. is the son of Mr.
Edward M. Passano, Sr. and a first cousin of Mr. William M.
Passano, Jr.
Pursuant to the terms of an Agreement and Plan of Merger
between the Company and Lea & Febiger, L.P. (the L&F Agreement),
the Company agreed to use its best efforts to cause the election
of John F. Spahr, Jr. to the Board of Directors (or if he is
unable to serve, then another specified member of the Spahr
family will be designated). If the Passano Family Voting Trust
(see the Principal Holders of Common Stock) fails to vote all
its shares for the election of Mr. Spahr (or one of the
designated substitutes) as Director and Mr. Spahr (or such
substitute) is thus not elected, each of the Spahr Voting Trusts
(see Principal Holders of Common Stock) will automatically
expire.
Committees of the Board
- -----------------------
The full Board of Directors meets on a quarterly basis to
receive and act on reports of committees and of management, to
declare dividends and to take any other action requiring Board
approval. In 1995 the Board of Directors held four meetings.
Each director other than Dr. Johns attended at least 75% of the
meetings of the Board of Directors and Committees of the Board
on which such directors served.
Executive Committee. The Board of Directors has an Executive
Committee consisting in fiscal 1995 of Messrs. Callard (Chair),
Hutton, Johns, Macfarlane, Muldrow, E. Magruder Passano, Jr.,
William M. Passano, Jr., Riggs, Spahr, and Travers, Dr. Urban
and Ms. Manuszak. The Executive Committee met five times in
1995, and minutes of its meetings are distributed to all members
of the Board.
Audit Committee. The Companys Audit Committee consisted in
fiscal 1995 of Ms. Bonnell and Messrs. Macfarlane, Riggs and
Travers (Chair). During the fiscal year and through February 28,
1996, the Committee met on four occasions to review with the
Companys independent accountants the annual financial statements
prior to their release, to receive and review with them their
annual letter on internal controls and interim reports on
quarterly reviews and to review with them their plans and budget
for the 1996 audit.
Management Committee. The Management Committee, consisting in
fiscal 1995 of Ms. Manuszak (Chair) and Messrs. Johns, Muldrow
and Travers, met in February prior to the regular February Board
meeting to formulate recommendations to the Board for all
executive compensation for the ensuing year, including the
awards of stock options, and to determine bonus awards for the
preceding years performance.
Nominating Committee. The Nominating Committee consisted in
fiscal 1995 of Messrs. E. Magruder Passano, Jr. and William M.
Passano, Jr.
An annual directors fee of $15,000 is paid to directors, other
than Messrs. Callard and Spahr, who are not employees of the
Company plus $500 for each Committee meeting they attend.
Committee Chairs also receive an annual fee of $1,000 for such
service. Pursuant to the terms of the Director Stock Plan,
one-half of the directors fee is payable in Company stock. The
stock awards are made on the dates of the Board of Directors
regular February and July meetings and consist of the number of
shares equal to one-half of the retainer fee to be paid on that
date divided by the market value of the stock on the business
day immediately preceding the date of grant. Pursuant to the
Plan, awards of 77 shares and 106 shares were made to each
director (other than Messrs. Callard and Spahr) in February 1995
and July 1995, respectively. For information regarding Mr.
Callards and Mr. Spahrs waivers of director compensation, see
Certain Transactions.
<PAGE>
The following table sets forth information regarding the
beneficial ownership by named executive officers, directors,
nominee for director and all executive officers, directors and
nominee for director, as a group, of the Companys outstanding
Common Stock on February 26, 1996:
Shares Beneficially Percent of Total
Name Owned (1)(2) Outstanding
- ---- ------------------- ----------------
William M. Passano, Jr., Chairman, 159,331 (3) 3.6%
Director
E. Magruder Passano, Jr., Vice Chairman, 172,945 3.9%
Director
Edward B. Hutton, Jr., President and CEO, 105,655 2.4%
Director
Arthur E. Newman, Executive Vice President 24,267 *
Michael Urban, President and CEO, Urban & 400,000 (4) 9.0%
Schwarzenberg Verlag fur Medizin, GmbH,
Director 400,000 (4)
Alma J. Wills, President, Periodical 21,550 *
Publishing
Barbara J. Bonnell, Director 2,974 *
David J. Callard, Director 34,474 *
Donald W. Dick, Jr., Director 2,236 *
Michael M.E. Johns, Director 541 *
Samuel G. Macfarlane, Director 5,087 *
Carolyn Manuszak, Director 1,580 *
Ackneil M. Muldrow, II, Director 1,150 *
Joseph M. Palazzolo, Director 89 *
Edward M. Passano, Sr. Director 3,600 *
Richard C. Riggs, Jr., Director 272 *
John F. Spahr, Jr., Director 77,500 (4) 1.7%
Oliver S. Travers, Director 2,191 *
All executive officers, directors and
nominees for director as a group
(24 persons), including the Life Estate
under the Will of Edward B. Passano
(1,613,911 shares) and all shares held
in the Spahr Voting Trusts
(247,500 shares) 2,921,938 65.8%
- --------------------
*Less than 1% of the Common Stock outstanding.
(1) Includes shares owned by trusts, spouses and minor children
of the indicated persons.
(2) Includes the following numbers of shares subject to options
exercisable within 60 days after the record date: William M.
Passano, Jr., 60,000 shares; E. Magruder Passano, Jr., 18,150
shares; Edward B. Hutton, Jr., 104,347 shares; Arthur E. Newman,
23,875 shares; Alma J. Wills, 20,550 shares; David J. Callard,
5,625 shares; and all executive officers, directors and nominee
for director as a group (24 persons), 284,810 shares.
(3) Excludes 1,613,911 shares held in Life Estate under the
Will of Edward B. Passano, the 400,000 shares held in the Urban
Voting Trust and the 247,500 shares held in the Spahr Voting
Trust with respect to which Mr. Passano has shared voting power
by virtue of his status as a trustee of the various voting
trusts. For a description of the voting trust arrangements
relating to these shares, see the description under Principal
Holders of Common Stock.
<PAGE>
(4) For a description of the voting trust arrangements relating
to these shares, see the description under Principal Holders of
Common Stock.
CERTAIN TRANSACTIONS
- --------------------
The Company and Mr. David J. Callard have an agreement pursuant
to which Mr. Callard provides financial advisory services in his
capacity as Chair of the Executive Committee and advisory
services in the area of acquisition and development (A&D). Under
this agreement, Mr. Callard is retained at an annual
compensation rate of $90,000 through March 31, 1996, and in
fiscal 1995 was awarded an option to purchase 2,500 shares of
Common Stock at an exercise price of $28.50 per share which was
the fair market value on the grant date. The option is
excercisable to the extent of 25% of the shares one year from
the grant date, an additional 25% two years from the grant date,
an additional 25% three years from the grant date and in full
four years from the grant date. Out-of-pocket expense
reimbursements for 1995 amounted to $11,600. Beginning in April
1996, the Company has agreed to pay Mr. Callard an annual
retainer of $50,000. The agreement also entitles Mr. Callard to
receive contingent compensation for each A&D transaction in
which he plays an active role at the Companys request. Such
additional compensation is to be determined by mutual agreement
at the outset of each A&D project, reflecting its complexity and
size. In connection with the agreement, Mr. Callard has waived
his right to directors fees and future participation in the
Companys Director Stock Plan.
Waverly has entered into an agreement with Mr. John F. Spahr,
Jr., which replaces his prior employment agreement, pursuant to
which Mr. Spahr will provide consulting services to the Company.
Under this agreement, Mr. Spahr received $110,000 for 1995 and
is entitled to receive $50,000 for each of the years 1996
through 2000. In connection with the agreement, Mr. Spahr has
waived his right to directors fees and future participation in
the Companys Director Stock Plan.
The Company's subsidiary, Urban & Schwarzenberg Verlag fur
Medizin, GmbH is indebted to Gisela Urban, Dr. Urbans mother,
for 150,000 DM (approximately $104,415) bearing interest at 8%
per annum payable on demand on one years notice. Loan amounts
have been converted into dollars based upon the currency
exchange rate of .6961 DM per dollar in effect on December 29,
1995.
MANAGEMENT COMMITTEE REPORT
- ---------------------------
The Management Committee (the Committee), composed entirely of
nonemployee directors, meets periodically to formulate
recommendations for approval by the Board of Directors for
executive compensation. The Committee consisted in fiscal 1995
of Carolyn Manuszak (Chair), Michael M.E. Johns, Ackneil M.
Muldrow, II and Oliver S. Travers.
The Committee's compensation recommendations are designed to
enable the Company to attract and retain qualified executives,
reward achievement of corporate and personal goals and motivate
officers to meet divisional and corporate financial and
strategic objectives and to contribute to increasing the
shareholder value. Executive officers receive a salary, are
eligible for a bonus under Waverlys Incentive Plan (WIN Plan)
and participate in the Company's Defined Benefit Pension Plan and
in the Company's Incentive Savings Plan (WISP), a tax-qualified
plan that permits employees to make contributions, a portion of
which is matched by the Company. In addition, executive officers
are eligible to receive grants of options to purchase Company
stock. The Committee emphasizes stock ownership by executives as
highly desirable in that it closely aligns the economic
interests of the executives with those of the shareholders.
<PAGE>
Salaries for executive officers (other than for the Chief
Executive Officer and the Chairman) are reviewed each year by
the Company's Chief Executive Officer and the Committee. Salaries
for the Chief Executive Officer and the Chairman are reviewed
annually by the Committee. Salaries are reviewed in light of the
executives' performances for the prior year, inflation and salary
levels paid to comparable executives at comparable companies.
The companies considered by the Committee include the companies
in the Dow Jones Media Index shown in the Stock Performance
Graph, which have comparable revenues to those of the Company,
as well as other companies with revenues comparable to those of
the Company in other industry groups. These comparables reflect
the Company's view that the employment market for the Company's
officers includes a broader range of companies than that with
which the Company should be compared for financial purposes and
that salaries for the Companys officer's should be comparable
with salaries of similarly situated officers at such companies.
The Company pays annual cash bonuses to executives under the
WIN Plan for achievement of corporate and/or divisional
financial targets and for achievement of individual performance
objectives established as part of the Company's long-range
planning process. At the beginning of each year, the Board meets
with senior management to review the Company's long-range
strategic objectives and its annual budget. Financial and
performance targets, derived from this process, are used by the
Committee to establish objectives under the WIN Plan. In 1995,
these objectives included achievement of certain levels of
earnings per share and return on equity. Each officers bonus
under the WIN Plan depends on performance, as compared with
budget, of his or her division, except for certain corporate
officers (such as the Chief Executive Officer), whose bonus
depends on overall Company achievement. Maximum bonuses for each
officer may not exceed 50% of salary. Bonuses paid for
performance in 1995 are reflected in the Summary Compensation
Table shown below.
The Company awards stock options to its executives from time to
time to provide additional financial incentives and reward
superior performance. The Committee grants options to individual
officers based on its evaluation of a number of factors,
including level of base salary, level of responsibility,
expected level of contribution to the Company, tenure with the
Company, prior individual performance and prior stock option
grants. The largest grants are awarded to the most senior
employees who, in the view of the Management Committee, have the
greatest potential impact on the Company's profitability and
growth. Options under the plan may be either incentive stock
options or nonqualified stock options at the discretion of the
Management Committee. The exercise price of these options will
be at least equal to the fair market value of the Common Stock
on the date of grant. In 1995, the Committee granted stock
options exercisable at fair market value to certain key
employees, including the Companys officers. Stock option awards
to the executive officers named in the Summary Compensation
Table are disclosed in that table.
Mr. Hutton, the Company's Chief Executive Officer, received
compensation in 1995 in accordance with the guidelines referred
to above. Mr. Hutton's base salary effective February 1995 was
$335,000, reflecting the Committees conclusion that the
performance of the Company in 1994 warranted a 7.7% increase in
1995. The Committee had established budget, earnings per share
and return on equity targets for Mr. Hutton under the WIN Plan
for 1995 based on the long-range strategic business plan. The
Company exceeded its budget and performance targets in 1995 and,
in light of this performance, Mr. Hutton was awarded a bonus of
$80,200 and an option to purchase 8,500 shares of Common Stock
at an exercise price of $42.25 per share which was equal to the
fair market value on the grant date. The Company also pays 100%
of the premium on a $2,000,000 term-life insurance policy for
Mr. Hutton.
<PAGE>
Rules proposed pursuant to Section 162(m) of the Internal
Revenue Code limit the allowable deduction for certain covered
compensation paid to the Company's officers to $1 million per
year per executive. The rules provide that certain qualifying,
performance-based compensation will not be subject to the
deduction limit. The Company has structured its Employee Stock
Option Plan to cause option awards issuable under the Plan to
comply with these rules. In view of the current levels of other
compensation paid to its executives, the Company expects that
its compensation will fall well within the limits imposed by the
Code and that Section 162(m) will not limit the deductibility of
its compensation to officers.
Carolyn Manuszak, Chair
Michael M.E. Johns, M.D.
Ackneil M. Muldrow, II
Oliver S. Travers
EXECUTIVE COMPENSATION
- ----------------------
The following table sets forth information concerning the
compensation paid by the Company in the last three fiscal years
to the Chief Executive Officer of the Company and the four next
most highly compensated executive officers:
<TABLE>
<CAPTION>
Summary Compensation Table
- --------------------------
Long-Term
Annual Compensation (1) Compensation All Other
Name and ----------------------- Awards Compensation
Principal Position Year Salary ($)(2) Bonus ($)(3) Options(#) ($)(4)
- ------------------ ---- ------------- ------------ ---------- ------
<S> <C> <C> <C> <C> <C>
William M. Passano, Jr. 1995 300,000 71,800 0 8,610
Chairman of the Board 1994 300,000 75,000 0 14,410
1993 300,000 0 2,500 5,562
Edward B. Hutton, Jr. 1995 335,000 80,200 7,500 15,452
President and CEO 1994 310,000 77,500 7,500 9,750
1993 310,000 0 7,500 7,501
Michael Urban 1995 313,000 52,500 0 540
President and CEO, Urban 1994 263,000 47,700 5,000 2,899
& Schwarzenberg, Verlag 1993 245,000 0 5,000 1,250
fur Medizin, GmbH (5)
Arthur E. Newman 1995 194,000 46,500 4,500 2,811
Executive Vice President 1994 183,500 45,875 4,500 2,908
1993 183,500 0 4,500 3,991
Alma J. Wills 1995 130,000 20,300 3,000 2,018
President, Periodical 1994 121,500 26,669 3,000 2,087
1993 121,500 24,725 3,000 2,468
- ----------------------------------------------
<PAGE>
<FN>
(1) Does not include perquisites and other personal benefits
where the aggregate value of such compensation to the executive
officer is less than 10% of annual salary and bonus.
(2) Includes salary deferrals under the WISP.
(3) Comprises bonuses under the WIN Plan, which were accrued
during the fiscal year indicated but were paid or will be paid
during the following fiscal year.
(4) Includes Company matching contributions under the WISP.
Under the WISP, the Company makes matching contributions of 25%
of each participants contribution subject to a maximum of 1.5%
of an employees compensation up to $9,240. Also includes life
insurance premiums paid by the Company. The amounts for 1995 are
as follows:
Financial
WISP Insurance Counseling
---- --------- ----------
Passano, W. $2,310 $ 6,300 $ 5,200
Hutton $2,310 $ 10,642 $ 2,500
Urban $ 0 $ 540 $ 0
Newman $2,310 $ 501 $ 0
Wills $1,740 $ 278 $ 0
(5) Dr. Urban's compensation has been converted into dollars
based upon the currency exchange rate of .6961 DM per dollar in
effect on December 29, 1995, .6453 DM per dollar in effect
December 30, 1994, and .5759 DM per dollar in effect on December
31, 1993.
</TABLE>
The following tables set forth information concerning the
grant and exercise of options in the last fiscal year under the
Waverly, Inc. 1995 Employee Stock Option Plan to the persons
named in the Summary Compensation Table:
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
---------------------------------
---------------Individual Grants----------------------- Potential Realizable
Value at Assumed
Number Annual Rates of
of Securities % Of Total Stock Price
Underlying Options Granted Exercise Appreciation for
Options to Employees in Price Expiration Option Term (2)
Name Granted(1) Fiscal Year ($/Sh) Date 0% 5% 10%
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Passano, W. 0 0.0% $ 0.00 N/A $0 $ 0 $ 0
Hutton 7,500 13.1% $28.50 1/27/05 $0 $134,426 $340,662
Urban 0 0.0% $ 0.00 N/A $0 $ 0 $ 0
Newman 4,500 7.9% $28.50 1/27/05 $0 $ 80,656 $204,397
Wills 3,000 5.2% $28.50 1/27/05 $0 $ 53,770 $136,265
- ---------------------------------------------
<PAGE>
<FN>
(1) All options were granted with an exercise price equal to
the fair market value of the Common Stock underlying the option
on the date of the grant. The options are exercisable to the
extent of 25% of the shares one year from the grant date, an
additional 25% two years from the grant date, an additional 25%
three years from the grant date, and in full four years from the
grant date, subject to such limitations as are imposed by
Section 162(m) of the Internal Revenue Service code on qualified
options, unless accelerated upon a change in control,
retirement, death or disability. These options have a term of
ten years, unless terminated sooner in connection with death,
disability, retirement or termination.
(2) Amounts are based on the 0%, 5% and 10% annual compounded
rates of appreciation of the Common Stock price, prescribed by
the Securities and Exchange Commission, and are not intended to
forecast future appreciation of the Companys Common Stock. The
prices of the Common Stock, assuming such annual compounded
rates of appreciation, would be $28.50, $46.42 and $73.92,
respectively.
</TABLE>
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
- ------------------------------------------------------------------------
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money
Acquired on Value Options at FY-End Options at FY-End(1)
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Passano, W. 0 0 54,030 8,470 $1,541,600 $ 238,475
Hutton 0 0 100,000 15,000 2,906,250 526,875
Urban 21,250 $335,625 0 3,750 0 100,313
Newman 0 0 21,625 7,875 579,344 172,406
Wills 1,200 23,250 18,300 5,250 510,113 114,938
- --------------------------------------
<FN>
(1) Based upon the difference between the exercise price and
the closing price of the stock on NASDAQ/NMS on December 29,
1995 ($46.75).
</TABLE>
DEFINED BENEFIT PENSION PLAN
- ----------------------------
The Company has a trusteed, noncontributory, defined benefit
pension plan in which all U.S. employees are eligible to
participate. The plan provides for an annual retirement benefit
payable monthly based on the sum of (i) amounts accrued to date
under various career average pay formulae and (ii) amounts
accruing beginning for 1989 based on the following formula: 1.5%
of participant's compensation plus .65% of earnings in excess of
the Social Security Covered Compensation (the average of Social
Security Taxable Wage Basis for a specified 35-year period) for
each year of credited service. Earnings for purposes of the
pension plan include base salary and commissions but not
overtime or bonuses. Benefits are payable upon retirement, death
or disability or upon termination of employment after five years
of service. Benefits are not subject to reduction for Social
Security benefits. At their normal retirement at age 65, the
estimated annual retirement payments (based on compensation for
1995 and subject to the limitations imposed by IRS regulations)
would be as follows: Mr. Hutton, $69,952; Mr. Newman, $66,647;
and Ms. Wills, $61,999. Mr. William Passano Jr.s annual
retirement payments assuming retirement at age 70 would be
$102,957.
<PAGE>
The Company's subsidiary, Urban & Schwarzenberg, has agreed to
provide supplementary retirement benefits to two current and
thirteen former employees, including Dr. Urban. Monthly benefits
are payable upon retirement based upon 50% of the retirees
highest achieved salary level. Upon the retirees death, his or
her spouse and/or other specified beneficiaries are generally
entitled to receive a benefit payment. At his normal retirement
at age 65, the estimated annual retirement payment to Dr. Urban
under this plan (based on compensation for 1995) would be
225,000 DM (approximately $156,623).
STOCK PERFORMANCE GRAPH
- -----------------------
In accordance with the Securities Exchange Act regulations, the
following performance graph compares the performance of the
Company's Common Stock with the S&P 500 Index and with the Dow
Jones Media Index.
The graph assumes that the value of the investment in the
Companys Common Stock and in each Index was $100 at December 31,
1990, and that all dividends were reinvested.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Year Waverly, Inc. S&P 500 Index Dow Media Index
- ---- ------------- ------------- ---------------
1990 $100.00 $100.00 $100.00
1991 93.57 130.45 112.85
1992 144.38 140.37 133.59
1993 104.26 154.45 161.26
1994 166.31 156.49 155.05
1995 292.66 215.29 222.36
<PAGE>
INDEPENDENT ACCOUNTANTS
- -----------------------
The Board of Directors of the Company, upon the recommendation
of its Audit Committee, none of the members of which is an
officer or employee of the Company, proposes and recommends
approval of the appointment of Coopers and Lybrand L.L.P. as
independent accountants to make an examination of the accounts
of the Company for the year ending December 31, 1996. Coopers &
Lybrand L.L.P. was the independent accounting firm for the
Company's most recently completed fiscal year ended December 31,
1995.
Representatives of Coopers & Lybrand L.L.P. are expected to be
present at the shareholders' meeting. They will be given the
opportunity to make a statement, if they desire to do so, and
will be available to respond to appropriate questions.
The Board of Directors recommends a vote "FOR" the proposal to
approve the appointment of Coopers & Lybrand L.L.P. as the
Company's independent accountants for 1996.
VOTE REQUIRED TO APPROVE MATTERS
- --------------------------------
A quorum for the meeting requires the presence in person or by
proxy of shareholders entitled to cast a majority of all votes
entitled to be cast at the meeting. The election of directors
requires a plurality of votes cast at the meeting. The
ratification of the appointment of Coopers & Lybrand L.L.P. as
independent accountants of the Company requires the affirmative
vote of a majority of the votes cast at the meeting.
Votes cast by proxy or in person at the meeting will be
tabulated by the inspectors of election appointed for the
meeting. Proxies marked with abstentions, and shareholders
present at the meeting who abstain from voting, will be treated
as present for purposes of determining the presence of a quorum.
Any broker non-votes (i.e., proxies from brokers or nominees
marked to indicate that such persons have not received
instructions from the beneficial owner or other persons entitled
to vote shares as to the vote on a particular matter with
respect to which the brokers or nominees do not have
discretionary power to vote) will be disregarded.
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
- --------------------------------------------
Shareholders proposals for the 1997 Annual Meeting must be
received at the Companys principal executive offices not later
than November 30, 1996.
OTHER BUSINESS
- --------------
As of the date of this Proxy Statement, Management does not
intend to bring any other matters before the meeting requiring
action of the shareholders, nor does it have any information
that other matters will be brought before the meeting. However,
if any other matters requiring the vote of the shareholders
properly come before the meeting, the persons named in the
enclosed form of proxy intend to vote in accordance with their
best judgment.
By order of the Board of Directors
E. MAGRUDER PASSANO, JR.
Secretary
March 29, 1996
