<PAGE>
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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 (S) 240.14a-11(c) or (S) 240.14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
JPS Packaging Company
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
JPS Packaging Company 4200 Somerset Drive, Suite 208 Prairie Village, KS 66208
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To Be Held April 17, 2000
TO ALL STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of JPS Packaging Company, a Delaware corporation (the "Company"),
will be held on Monday, April 17, 2000, at 10:00 a.m. (local time), at the
Company's San Leandro facility located at 2540 Alvarado Street, San Leandro,
California, 94577, for the following purposes:
1) To elect the members of the Board of Directors for the ensuing year
or until their successors are duly elected and qualified;
2) To consider and approve the appointment of KPMG LLP as independent
auditors of the Company for 2000; and
3) To transact such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on February 25,
2000, as the record date for the determination of the stockholders entitled to
notice of, and to vote at, the Annual Meeting or any adjournments or
postponements thereof.
BY ORDER OF THE BOARD OF DIRECTORS
N. Brian Stevenson
Chief Executive Officer
Date: March 15, 2000
YOUR VOTE IS IMPORTANT
You are urged to sign, date and mail your proxy even though you may plan
to attend the Annual Meeting. No postage is required if mailed in the United
States. If you attend the Annual Meeting, you may vote by proxy or you may
withdraw your proxy and vote in person. By returning your proxy promptly, a
quorum will be better assured at the Annual Meeting, which will prevent
follow-up costs and delays.
<PAGE>
JPS Packaging Company
4200 Somerset Drive, Suite 208
Prairie Village, KS 66208
----------------
PROXY STATEMENT
March 15, 2000
----------------
The proposals in the accompanying form of proxy (the "Proxy") are solicited
by the Board of Directors of JPS Packaging Company, a Delaware corporation
(the "Company"), for use at its Annual Meeting of Stockholders (the "Annual
Meeting") to be held on Monday, April 17, 2000 at 10:00 a.m. (local time), at
the Company's San Leandro facility located at 2450 Alvarado Street, San
Leandro, California, 94577, and any adjournments or postponements thereof.
Shares represented by properly executed Proxies received prior to the Annual
Meeting will be voted at the Annual Meeting in accordance with instructions
thereon with respect to the proposals described in this Proxy Statement.
If a Proxy is signed and returned and no instructions are given on the
Proxy card with respect to the matters to be acted upon, the shares
represented by such Proxy will be voted for the election of the nominees for
Director as designated below and for approval of the appointment of KPMG LLP
as the independent auditor of the Company.
Any Stockholder giving a Proxy has the power to revoke it at any time
before it is exercised by giving written notice of revocation or a properly
executed Proxy bearing a later date to the corporate secretary of the Company.
A Proxy may also be revoked by attending the Annual Meeting and voting in
person. Attendance at the Annual Meeting will not in and of itself constitute
the revocation of a Proxy.
The Company will bear all the costs of solicitation of Proxies. In addition
to solicitation by mail, Proxies may be solicited in person or by telephone by
officers of the Company, and the Company may reimburse brokers or other
persons holding stock in their names or in the name of nominees for their
expenses in sending proxy soliciting material to beneficial owners. This Proxy
Statement and the accompanying form of Proxy are first being mailed or given
to stockholders on or about March 15, 2000.
Only stockholders of record at the close of business on February 25, 2000
(the "Record Date") will be entitled to notice of, and to vote at, the Annual
Meeting. On the Record Date, the Company had 5,555,205 shares of common stock
issued, outstanding and entitled to vote. Each issued and outstanding share of
common stock is entitled to one vote on each matter to be voted on at the
Annual Meeting.
The Bylaws of the Company require that a majority of the votes of the
shares of common stock issued, outstanding and entitled to vote at the Annual
Meeting be present in person or represented by Proxy at the Annual Meeting in
order to constitute a quorum for the transaction of business thereat. Provided
a quorum is present, the affirmative vote of a plurality of the issued and
outstanding shares of voting common stock is required for the election of each
nominee for Director, and the affirmative vote of a majority of the issued and
outstanding shares of voting common stock is required for approval of the
appointment of the independent auditors. For purposes of determining the
outcome of the votes on these matters, an instruction to "abstain" from voting
on a proposal will be treated as shares present and entitled to vote, and will
have the same effect as a vote against a proposal. "Broker non-votes", which
occur when brokers are prohibited from exercising discretionary voting
authority for beneficial owners who have not provided voting instructions, are
not counted for the purpose of determining the number of shares present in
person or represented by proxy on a voting matter and have no effect on the
outcome of the vote.
Management of the Company does not intend to present any matter at the
Annual Meeting except as indicated in the accompanying notice of Annual
Meeting of Stockholders. Should any other matters properly
1
<PAGE>
come before the Annual Meeting, it is intended that the persons named in the
accompanying form of Proxy, or their substitutes, will vote the Proxy in
accordance with their judgment of the best interests of the Company on such
matters.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth with respect to the Company's common stock
as of December 31, 1999: (i) the only persons known to be beneficial owners of
more than five percent of the Company's voting common stock; (ii) the number
of shares beneficially owned by each current Director and nominee; (iii) the
number of shares beneficially owned by the executive officer named in the
"Summary Compensation Table" set forth herein; and (iv) the number of shares
beneficially owned by all Directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Address of Beneficial Owner Beneficial Ownership (1) of Class
- ------------------------------------ ------------------------ --------
<S> <C> <C>
G. Kenneth Baum ............................ 1,866,137(2)(3) 32.9%
120 West 12th Street
Kansas City, MO 64105
William D. Thomas .......................... 1,698,930(3)(4) 29.9%
120 West 12th Street
Kansas City, MO 64105
George K. Baum Group, Inc.
120 West 12th Street ....................... 1,488,100(5) 26.2%
Kansas City, MO 64105
Forum Capital Partners...................... 734,000(6) 12.9%
One Oxford Centre, Suite 3950
Pittsburgh, PA 15219
D. Patrick Curran........................... 206,280(7) 3.6%
N. Brian Stevenson.......................... 74,073(8) 1.3%
John T. Carper.............................. 68,507(9) 1.2
Leo Benatar................................. 47,000(10) *
Edwin W. Stranberg.......................... 19,035(11) *
Charles A. Sullivan......................... 11,230(12) *
A. Lawrence Walton.......................... 8,260(13) *
Directors and Executive Officers as a Group
(9 Persons)................................ 2,511,352 44.2%
</TABLE>
- --------
*Percentages do not exceed one percent of the issued and outstanding shares of
common stock.
(1) Calculated in accordance with Rule 13d-3 under the Securities Exchange Act
of 1934, as amended. Nature of beneficial ownership of securities is
direct unless indicated otherwise by footnote. Beneficial ownership as
shown in the table arises from sole voting power and sole investment power
unless otherwise indicated by footnote.
(2) Includes 371,787 shares held indirectly by Mr. Baum, as trustee of a
revocable trust established by him, and 5,625 shares issuable pursuant to
options, which are currently exercisable by Mr. Baum.
(3) Includes 1,488,100 shares owned by George K. Baum Group, Inc. ("Group").
Mr. Baum and Mr. Thomas are each officers and directors and have shared
voting and investment power over these shares. Mr. Baum is also a
shareholder of Group.
2
<PAGE>
(4) Includes 151,105 shares held by Mr. Thomas as trustee of a revocable trust
established by him, 50,000 shares held by his spouse as trustee of a
revocable trust established by her, 4,100 shares held by his spouse as
custodian for their children, in which he disclaims beneficial ownership
and 5,625 shares issuable pursuant to options which are currently
exercisable by Mr. Thomas.
(5) Excludes shares owned by officers and employees of Group and its
subsidiaries.
(6) The ownership reported is based upon the amended Schedule 13G as filed
with the Securities and Exchange Commission, dated September 8, 1999.
(7) Includes 5,625 shares issuable pursuant to options which are currently
exercisable by Mr. Curran.
(8) Includes 31,500 shares held directly by Mr. Stevenson, 2,000 shares held
by his spouse, 573 shares indirectly held in his account in the Company's
401(k) Plan and 40,000 shares issuable pursuant to options which are
currently exercisable by Mr. Stevenson.
(9) Includes 39,862 shares held directly by Mr. Carper, 13,200 shares held by
his spouse, and 3,900 shares held indirectly by Mr. Carper, as trustee of
an irrevocable trust, 545 shares held in his account in the Company's
401(k) Plan and 11,000 shares issuable pursuant to options which are
currently exercisable by Mr. Carper.
(10) Includes 11,000 shares held directly by Mr. Benatar and 36,000 shares
issuable pursuant to options which are currently exercisable by Mr.
Benatar.
(11) Includes 1,035 shares indirectly held in his account in the Company's
401(k) Plan and 8,000 shares issuable pursuant to options which are
currently exercisable by Mr. Stranberg.
(12) Includes 5,625 shares issuable pursuant to options which are currently
exercisable by Mr. Sullivan.
(13) Includes 632 shares indirectly held in his account in the Company's
401(k) Plan and 6,000 shares issuable pursuant to options which are
currently exercisable by Mr. Walton.
PROPOSAL ONE:
ELECTION OF DIRECTORS
The number of Directors constituting the Board of Directors has been fixed
at seven. The shares represented by the enclosed Proxy will be voted, unless
otherwise indicated, for the election of all seven nominees for Director named
below. The Directors elected at the Annual Meeting will serve for one year or
until their successors are duly elected and qualified. In the unanticipated
event that any nominee for Director should become unavailable, the Board of
Directors, at its discretion, may designate a substitute nominee, in which
event such shares will be voted for such substitute nominee.
MANAGEMENT RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
SEVEN NOMINEES FOR DIRECTOR NAMED BELOW.
<TABLE>
<CAPTION>
Name of Nominee for Director Principal Occupation for Last Five
Director Since Age Years and Directorships
- ------------------- -------- --- -------------------------------------------
<S> <C> <C> <C>
G. Kenneth Baum (1)... 1998 69 Chairman of the Board of George K. Baum
Group, Inc., an investment company in
Kansas City, Missouri, since May 1994.
Chairman of the Board of George K. Baum &
Company, an investment banking firm, from
April 1982 until May 1994. Mr. Baum is also
a Director of H&R Block, Inc. and
Interstate Bakeries Corporation.
Leo Benatar (1)....... 1998 70 Chairman of the Board of the Company since
August 1998. Associated consultant for A.
T. Kearney, Inc. and Principal of Benatar &
Associates from June 1996 to present.
Chairman of the Board
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Name of Nominee for Director Principal Occupation for Last Five
Director Since Age Years and Directorships
- ------------------- -------- --- -------------------------------------------
<S> <C> <C> <C>
of Engraph, Inc. (a subsidiary of Sonoco
Products Company) and Senior Vice President
of Sonoco Products Company from October
1993 until May 1996. Chairman and Chief
Executive Officer of Engraph, Inc. from
1981 until October 1993. Mr. Benatar is a
Director of Interstate Bakeries
Corporation, Johns Manville Corporation,
Mohawk Industries, Inc., PAXAR Corporation,
and Aaron Rents, Inc. and was the Chairman
and a Director of the Federal Reserve Bank
of Atlanta until January 1996.
John T. Carper.......... 1998 48 President of the Company since March 1998
and Chief Financial Officer since November
1998. Senior Vice President of Finance and
Chief Financial Officer of Sealright Co.,
Inc. from May 1996 to June 1998. From May
1994 to June 1996, Mr. Carper was Vice
President--Finance and Chief Financial
Officer of Sealright Co., Inc. From July
1989 to May 1994, he was a partner with
KPMG LLP, independent public accountants.
D. Patrick Curran (2)... 1998 55 Chairman of the Board and President of
Curran Companies, a manufacturer and
supplier of specialty chemicals, since
August 1979. Mr. Curran is also a Director
of Applebee's International, Inc.
N. Brian Stevenson...... 1998 55 Chief Executive Officer of the Company
since September 1998. Executive Vice
President and Chief Operating Officer of
Huntsman Packaging Corporation from January
1992 to September 1998.
Charles A. Sullivan..... 1998 64 Chairman of the Board of Interstate
Bakeries Corporation since May 1991.
President and Chief Executive Officer of
Interstate Business Corporation since March
1989. Mr. Sullivan is a Director of UMB
Bank, n.a. and The Andersons, Inc.
William D. Thomas (1) 1998 56 Senior Managing Director of George K. Baum
(2).................... Merchant Banc, LLC. since May 1996.
President of George K. Baum Group, Inc.
since May 1994. Vice Chairman of George K.
Baum & Company from June 1991 until May
1994.
</TABLE>
- --------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
Board Committees and Director Meetings
The Board of Directors of the Company held five meetings during 1999. No
Director standing for election at the Annual Meeting attended fewer than 75% of
the total number of meetings of the Board of Directors and the committees of
the Board on which he served during 1999.
4
<PAGE>
The Compensation Committee held one meeting during 1999. The primary
function of the Committee is the administration of the Company's overall
compensation program, including the JPS Packaging Long-Term Compensation Plan
(the "Long-Term Plan").
The Audit Committee held one meeting during 1999. The functions performed
by the Audit Committee are the review of significant financial information of
the Company, ascertainment of the existence of an effective accounting and
internal control system, oversight of the audit function and recommendation of
the appointment of the independent public accountants of the Company.
The Company does not have a standing Nominating Committee.
Compensation of Directors
Each non-officer Director is paid $5,000 annually, plus $500 for each
meeting of the Board of Directors and $500 for each meeting of its committees
which he attends. During the fiscal year 1999, the Company paid a total of
$31,000 in Directors' fees. Mr. Benatar, Mr. Stevenson, and Mr. Carper do not
receive any fees for attendance at the meetings.
Compensation Committee Interlocks
The Compensation Committee consists of G. Kenneth Baum, Leo Benatar and
William D. Thomas. There are no Compensation Committee interlocks with other
companies.
EXECUTIVE OFFICERS
In addition to those executive officers listed in the foregoing table of
director nominees, the Company's other executive officers as of March 15, 2000
are as follows:
<TABLE>
<CAPTION>
Name of Non-Director
Executive Officers Age Principal Occupation for Last Five Years
- -------------------- --- ------------------------------------------------
<S> <C> <C>
Edwin W. Stranberg....... 49 Senior Vice President of Operations of the
Company since November 1998. From January 1992
to November 1998, Mr. Stranberg was Vice
President of Huntsman Packaging Corporation.
A. Lawrence Walton....... 55 Senior Vice President of Business Development
and Marketing of the Company since September
1998. From July 1998 to September 1998, Mr.
Walton was Vice President of Sales of the
Company. From September 1996 to June 1998, he
was Vice President of Food and Beverage Sales,
Sealright Co., Inc. From February 1996 to August
1996, he was Vice President of Research and
Development of Sealright Co., Inc. Mr. Walton
was Vice President, Marketing and Technical
Services of the San Leandro facility of the
Company from June 1994 to February 1996. From
July 1991 to June 1994, he was Vice President of
Marketing and Sales of Glenroy, Inc., a flexible
packaging company.
Rick Merical............. 45 Vice President and Western Regional Manager of
the Company since August 1999. From August 1993
to August 1999, Mr. Merical was Vice President
of Huntsman Packaging Corporation.
</TABLE>
5
<PAGE>
SUMMARY COMPENSATION TABLE
The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the Company's
Chief Executive Officer and of each of the Company's three other most highly
compensated executive officers whose remuneration for the year ended December
31, 1999, exceeded $100,000 (collectively, the "Named Executive Officers") for
services to the Company.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
- ------------------------------------------------------- -------------------------------------
AWARDS PAYOUTS
--------------------- ---------------
OTHER ALL
ANNUAL RESTRICTED SECURITIES OTHER
COMPEN- STOCK UNDERLYING LTIP COMPEN-
NAME AND PRINCIPAL SALARY BONUS SATION AWARD(S) OPTIONS PAYOUTS SATION
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- ------------------ ---- -------- ------- ------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
N. Brian Stevenson,
Chief
Executive Officer...... 1999 $250,000 -0- $5,000 none 25,000 none none
1998 $ 75,592 $75,000 $1,588 none 200,000 none none
1997 n/a n/a n/a n/a n/a n/a n/a
John T. Carper, Presi-
dent and
Chief Financial Offi-
cer................... 1999 $168,000 -0- $4,200 none 10,000 none none
1998 $ 80,669 -0- $ 807 none 55,000 none none
1997 n/a n/a n/a n/a n/a n/a n/a
Edwin W. Stranberg, Sen-
ior
Vice President, Opera-
tions................. 1999 $175,000 -0- $3,660 none 10,000 none none
1998 $ 25,240 $40,000 -0- none 40,000 none none
1997 n/a n/a n/a n/a n/a n/a n/a
A. Lawrence Walton, Sen-
ior Vice
President, Business De-
velopment
and Marketing.......... 1999 $150,000 -0- $3,800 none 10,000 none none
1998 $ 74,484 -0- $ 906 none 30,000 none none
1997 n/a n/a n/a n/a n/a n/a n/a
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table summarizes options granted during 1999 pursuant to the
Long-Term Plan:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS (1) FOR OPTION TERM (2)
---------------------------------------------------- --------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED (#) (3) FISCAL YEAR ($/SH) DATE (4) 5% ($) 10% ($) PRESENT VALUE ($)
- ---- --------------- ------------- ----------- ---------- ------ ------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
N. Brian Stevenson,
Chief Executive Offi-
cer.................... 25,000 46% 3.00 12-06-09 38,600 77,200 none
John T. Carper, Presi-
dent and Chief Finan-
cial Officer........... 10,000 18% 3.00 12-06-09 15,400 30,800 none
Edwin W. Stranberg, Sen-
ior Vice President, Op-
erations............... 10,000 18% 3.00 12-06-09 15,400 30,800 none
A. Lawrence Walton, Sen-
ior Vice President, New
Business Development
and Marketing.......... 10,000 18% 3.00 12-06-09 15,400 30,800 none
</TABLE>
- --------
(1) All options were granted with an exercise price equal to the greater of
the closing price for the Company's common stock on the date of grant, as
reported on the NASDAQ National Market System or $3.00. Except in the
event of death, disability or retirement, if any of the named executive
officers ceases to be employed by the Company, his options shall terminate
immediately. Upon a merger or consolidation in which the Company is not
the surviving corporation, all options outstanding shall become vested and
exercisable immediately prior to such merger or consolidation.
6
<PAGE>
(2) The potential realized value portion of the table illustrates value that
might be realized upon exercise of the options immediately prior to the
expiration of their term, assuming the specified compounded rates of
application on the Company's Common Stock over the term of the options.
(3) The options granted during the year ended December 31, 1999 are
exercisable beginning on the day immediately following the first
anniversary of the grant date, with 20% of such option becoming
exercisable at that time and with an additional 20% of such options
becoming exercisable on the day immediately following each successive
anniversary date. Full vesting occurs on the day immediately following the
fifth anniversary of the grant date. In the event of a "change in control"
(as defined in the optionees' stock option agreements), the options become
fully vested.
(4) The options were granted for a term of ten years, require the exercise of
10% of the vested options annually and are subject to earlier termination
in certain events related to termination of employment.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table summarizes the net value realized on the exercise of
options in 1999, and the value of the outstanding options at December 31,
1999, for each named Executive Officer.
<TABLE>
<CAPTION>
Number of securities Value of unexercised
Shares underlying unexercised in-the-money options at
acquired options at fiscal year- fiscal year end
on Value end (#) ($) (1)
exercise Realized ------------------------- -------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
N. Brian Stevenson,
Chief Executive
Officer............... -0- -0- 40,000 185,000 -0- -0-
John T. Carper,
President and Chief
Financial Officer..... -0- -0- 11,000 54,000 -0- -0-
Ed Stranberg, Senior
Vice President,
Operations............ -0- -0- 8,000 42,000 -0- -0-
A. Lawrence Walton,
Senior Vice President,
New Business
Development........... -0- -0- 6,000 34,000 -0- -0-
</TABLE>
- --------
(1) As December 31, 1999, the last reported sale price of the Company's Common
Stock, which was reported on the NASDAQ National Market System on December
31, 1999 was $2.97 per share.
JPS Packaging Company Savings Plan
The JPS Packaging Savings Plan (the "JPS Savings Plan") is a defined
contribution plan which is intended to be a 401(k) plan. All employees of the
Company not covered by a collective bargaining agreement are eligible for
participation in the JPS Savings Plan.
Participants in the JPS Savings Plan may elect to have up to fifteen
percent of their pre-tax compensation (up to a maximum of $10,000 per year)
and seven percent of their after-tax compensation contributed to the JPS
Savings Plan. For employees who have completed one year of service, the
Company will match fifty percent of each participant's pre-tax contribution,
but only to the extent that the participant's contribution does not exceed
five percent of compensation. Total contributions for a participant are
currently limited by Federal law to the lesser of twenty-five percent of such
participant's compensation or $30,000 per year. A participant's election
deferrals will be vested from the time made. The Company's matching
contributions will vest at the rate of twenty percent for each of the
participant's first five years of service and will be fully vested after five
years of employment or upon retirement, disability or death. In 1999, the
Company amended the Plan to direct the Company's matching contribution to be
invested in the Company's stock.
7
<PAGE>
In addition to the Company's matching contributions, the Company may
contribute additional amounts determined by the Compensation Committee in its
sole discretion, which amounts will be allocated to each participant's account
in the proportion that such participant's compensation bears to the total
compensation of all participants for that plan year. These additional Company
contributions vest in the same manner as the Company matching contributions.
JPS Packaging Long-Term Compensation Plan
The Long-Term Plan, administered by the Compensation Committee, provides
for granting of stock options, restricted stock, performance shares and
performance units payable to employees of the Company, including the Company's
Directors and executive officers. Under the Long-Term Plan, the Compensation
Committee has sole discretion to determine those employees eligible to receive
awards and the amount and type of awards. Grants of awards to Directors of the
Company must be authorized by the Board of Directors.
The maximum number of shares of the Company's common stock subject to award
will be 550,000. No more than 55,000 shares may be issued pursuant to
restricted stock awards under the Long-Term Plan. Terms and conditions will be
set forth in written agreements, the terms of which will be consistent with
the Long-Term Plan.
Under the Long-Term Plan, the Compensation Committee is authorized (i) to
grant stock options that qualify as "Incentive Stock Options" under Section
422 of the Internal Revenue Code of 1986, as amended, and (ii) to grant stock
options that do not so qualify. The option price for any stock options shall
not be less than 100% of the fair market value of the Company's common stock
on the date of grant. No stock options may be exercised more than ten years
after its date of grant. In the case of Incentive Stock Options, the aggregate
fair market value of the shares with respect to which options are exercisable
for the first time by any recipient during any calendar year cannot, under
present tax rules, exceed $100,000. The Compensation Committee has discretion
to determine the treatment of awards under the Long-Term Plan in the event of
a change in ownership or a change in control of the Company.
Employment Agreements
Mr. Stevenson entered into an employment agreement with the Company
effective September 14, 1998. Under the agreement, Mr. Stevenson is entitled
to an annual base salary of $250,000, subject to annual adjustment by the
Compensation Committee. Mr. Stevenson is also entitled to receive an annual
incentive compensation bonus in an amount up to his annual base salary as
determined by the Compensation Committee. Upon commencement of his employment
Mr. Stevenson received a bonus of $75,000. Mr. Stevenson was also granted
options to purchase 200,000 shares of the Company's common stock which vests
over a period of five years from September 14, 1998 (the "Date of Grant"), ten
percent of which must be exercised or lost each year over a ten year period,
subject to certain restrictions, at an exercise price equal to $4.0625 per
share. In addition, Mr. Stevenson will be granted options to purchase 25,000
shares of the Company's common stock in each of the calendar years ending 1999
and 2000, if certain financial targets are met. If Mr. Stevenson's employment
is terminated without cause or if he resigns for good reason, he is entitled
to receive one year's current base salary in twelve equal payments. All stock
options awarded to Mr. Stevenson will vest immediately upon a termination of
his employment without cause, due to his disability, his resignation for good
reason or upon a change of control (as defined in his employment agreement).
Mr. Carper entered into an employment agreement with the Company effective
July 1, 1998. Under the agreement, Mr. Carper is entitled to an annual base
salary of $155,000, subject to annual adjustment by the Compensation
Committee. Mr. Carper is also entitled to receive an annual incentive
compensation bonus in an amount up to 50% of his annual base salary as
determined by the Compensation Committee. Mr. Carper was also granted options
to purchase 55,000 shares of the Company's common stock which vests over a
period of five years from July 1, 1998 (the "Date of Grant"), ten percent of
which must be exercised or lost each year
8
<PAGE>
over a ten year period, subject to certain restrictions, at an exercise price
equal to $4.00 per share. If Mr. Carper's employment is terminated without
cause or if he resigns for good reason, he is entitled to receive one-half of
his current base salary in a lump sum payment. All stock options awarded to
Mr. Carper will vest immediately upon a termination of his employment without
cause, due to his disability, his resignation for good reason or upon a change
of control (as defined in his employment agreement).
Mr. Stranberg entered into an employment agreement with the Company
effective November 9, 1998. Under the agreement, Mr. Stranberg is entitled to
an annual base salary of $175,000, subject to annual adjustment by the
Compensation Committee. Mr. Stranberg is also entitled to receive an annual
incentive compensation bonus in an amount up to 50% of his annual base salary
as determined by the Compensation Committee. Upon commencement of his
employment, Mr. Stranberg received a bonus of $40,000. Mr. Stranberg was also
granted options to purchase 40,000 shares of the Company's common stock which
vests over a period of five years from December 14, 1998 (the "Date of
Grant"), ten percent of which must be exercised or lost each year over a ten
year period, subject to certain restrictions, at an exercise price equal to
$4.00 per share. In addition, Mr. Stranberg will be granted options to
purchase 10,000 shares of the Company's common stock in each of the calendar
years ending 1999 and 2000, if certain financial targets are met. If Mr.
Stranberg's employment is terminated without cause or if he resigns for good
reason, he is entitled to receive one year's current base salary in twelve
equal payments. All stock options awarded to Mr. Stranberg will vest
immediately upon a termination of his employment without cause, due to his
disability, his resignation for good reason or upon a change of control (as
defined in his employment agreement).
COMPENSATION COMMITTEE REPORT
The Compensation Committee consists of the Chairman of the Board of
Directors and two non-employee Directors. It recommends to the full Board of
Directors the compensation of the Chief Executive Officer. The Compensation
Committee also approves and monitors the Executive Incentive Plan ("EIP"), Key
Management Incentive Plan, Sales Management Incentive Plan and Sales Account
Managers Incentive Plan, and it administers the Long-Term Plan. The
Compensation Committee's report for fiscal 1999 is set forth below.
Compensation Philosophy
The Compensation Committee believes that it is in the best interest of the
stockholders of the Company to attract, retain and motivate dedicated and
talented management personnel by offering a competitive compensation package
that maintains an appropriate relationship between compensation and the
creation of stockholder value. The general philosophy of the Compensation
Committee is to integrate (i) reasonable levels of annual base salary, (ii)
annual incentive bonus awards based upon achievement of short-term corporate
and individual performance goals such that management compensation levels will
be higher in years in which performance goals are achieved or exceeded, and
(iii) equity-based grants to ensure that management has a continuing stake in
the long-term success of the Company in return for creating value to its
stockholders.
Base Salary
Base salary ranges are established each year for each executive position
based primarily on a review of salaries offered by other manufacturing
companies with revenues comparable to the Company for positions with
comparable responsibilities. The Compensation Committee may utilize external
salary surveys to establish base salaries in reference to comparable
manufacturing companies but has not yet undertaken or commissioned such a
survey. The Compensation Committee expects executive salaries each year to be
based upon job performance and results achieved, potential for future
responsibilities, and the overall financial performance of the Company. Based
on the above, there were no increases in the base salary of the executives.
9
<PAGE>
Annual Incentive Compensation
Incentive compensation is based on Company and individual performance, with
overall Company financial performance as the team measurement, and
quantitative goals as the measurement for individual performance. Earnings
before interest, taxes, depreciation and amortization ("EBITDA") is currently
used to measure the Company's financial performance. The EIP adopted for 1999
set EBITDA targets which were not achieved, and thus executive bonuses were
not paid for 1999.
Equity-Based Grants
Individual stock options have been granted under the Long-Term Plan to the
Chairman of the Board and each of the other executive officers. The selection
of the participants, allotment of shares, exercise price, determination of the
vesting schedule and other conditions are established by the Compensation
Committee. While there is no explicit formula for deciding specific stock
option grants, the Chief Executive Officer and other executive officers have
been advised that they may receive additional option grants based upon the
Company's performance in 2000. In awarding options, the Committee also
evaluates the recipient's ability to influence the Company's long-term growth
and profitability as well as the number of options previously granted to the
recipient.
Chief Executive Officer Compensation
Mr. Stevenson was employed by the Company effective September 14, 1998, and
the terms of his employment agreement were negotiated by the Compensation
Committee. Under the terms of his employment agreement, his annual base salary
will be reviewed annually and he will participate in the EIP approved by the
Compensation Committee. The number of options granted upon commencement of his
employment and for the years 1999 and 2000 were set in his employment
agreement.
Deductibility of Compensation Expenses
Under the Omnibus Budget Reconciliation Act of 1993 the Company is not
allowed a tax deduction for compensation paid in excess of $1 million to any
officer listed in the Summary Compensation Table, subject to certain
exceptions. The Committee did not consider this restriction in setting
executive compensation because in no case does compensation subject to the
limitation paid to any executive approach the $1 million limit.
Summary
The Compensation Committee believes that the executive officers of the
Company are dedicated to achieving significant improvements in long-term
financial performance and that the compensation policies and programs
contribute to achieving this focus.
The Compensation Committee Report is submitted by:
G. Kenneth Baum
Leo Benatar
William D. Thomas
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COMPANY PERFORMANCE
The following graph shows a comparison of cumulative total returns for the
Company as of December 31, 1999, the NASDAQ Composite and an index of peer
companies selected by the Company.
Comparison of Cumulative Total Return for Fiscal Year Ended December 31, 1999
(JPS Packaging Company, NASDAQ Composite, and Peer Group)
in Dollars
[LINE CHART]
JPS Packaging NASDAQ Peer Group
- ---------------------------------------------------------------
July 1, 1998 100.00 100.00 100.00
December 31, 1998 83.33 117.16 96.36
December 31, 1999 65.97 206.64 79.17
<TABLE>
<CAPTION>
December 31,
July 1 -------------
1998 1998 1999
------ ------ ------
<S> <C> <C> <C>
The Company.......................................... 100.00 83.33 65.97
NASDAQ............................................... 100.00 117.16 206.64
Peer Group........................................... 100.00 96.36 79.17
</TABLE>
The total cumulative return on investment (change in the year-end stock
price plus dividends reinvested at the ex-dividend date) for the fiscal year
ended December 31, 1999 for the Company, the peer group and the NASDAQ
Composite is based on the stock prices at the end of the fiscal year 1999,
assuming a $100 investment. The graph compares the performance of the Company
with that of the NASDAQ Composite and peer companies selected by the Company
with the investment weighted at the beginning of the period based on market
capitalization.
The peer group consists of the following companies: Bemis Company, Inc.,
Sonoco Products Company, Liqui-Box, Inc., and Ivex Packaging Corp. The peer
group was approved by the Compensation Committee.
11
<PAGE>
CERTAIN RELATIONSHIPS AND OTHER TRANSACTIONS
The Company's Directors, G. Kenneth Baum and William D. Thomas, have
certain affiliations with George K. Baum & Company ("GKB"), one of the
Company's financial advisors. Mr. Baum is an employee and Mr. Thomas is a Vice
President of GKB, and both Mr. Baum and Mr. Thomas are affiliated with George
K. Baum Group, Inc., which holds 1,488,100 shares of the Company's common
stock.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and executive officers to file with the Securities Exchange
Commission ("SEC") and The NASDAQ Stock Market initial reports of ownership
and reports of changes in ownership of the Company's common stock and other
equity securities. Directors and executive officers are required by SEC
regulations to furnish the Company with copies of all Section 16(a) reports
they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during 1999 all Section 16(a) filing requirements
applicable to its Directors and executive officers were complied with.
PROPOSAL TWO:
APPROVAL OF INDEPENDENT AUDITORS
The Board of Directors has voted to appoint KMPG LLP as independent
auditors of the Company for the fiscal year 2000, subject to approval of the
stockholders at the Annual Meeting.
KPMG LLP audited the consolidated financial statements of the Company for
the fiscal year 1999. Representatives of KPMG LLP will be present at the
Annual Meeting, will have the opportunity to make a statement if they desire
to do so, and will be available to respond to questions by stockholders. The
affirmative vote of a majority of the shares present and entitled to vote at
the Annual Meeting is necessary for the approval of the appointment of KPMG
LLP as the Company's independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE "FOR" THE APPROVAL OF THE APPOINTMENT.
----------------
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STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
To be considered for inclusion in the Company's next Proxy Statement,
Stockholder proposals for the 2001 Annual Meeting of Stockholders of the
Company must be received by the corporate secretary in writing at the
Company's principal office, 4200 Somerset Drive, Suite 208, Prairie Village,
Kansas 66208, no later than December 1, 2000.
VOTING PROXIES AND OTHER MATTERS
Proxies will be voted in accordance with the choices specified on the form
of proxy. If no choice is specified, shares will be voted: (i) "FOR" the
Director nominees listed on the Proxy and in this Proxy Statement, and (ii)
"FOR" the appointment of KPMG LLP as independent auditors of the Company for
the fiscal year 2000.
Management of the Company does not intend to present any business to the
stockholders at the Annual Meeting except as indicated herein and presently
knows of no other business to be presented at the Annual Meeting. Should any
other business come before the Annual Meeting, the persons named in the
accompanying form of Proxy will vote the Proxy in accordance with their
judgment of the best interests of the Company on such matters.
BY ORDER OF THE BOARD OF DIRECTORS
N. Brian Stevenson
Chief Executive Officer
March 15, 2000
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<PAGE>
JPS PACKAGING COMPANY
ANNUAL MEETING OF STOCKHOLDERS
APRIL 17, 2000
THIS PROXY AND EACH OF THE PROPOSALS ARE SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS.
The undersigned hereby appoints N. Brian Stevenson and John T. Carper,
jointly and individually, as Proxies, each with full power of substitution, and
hereby authorized them to represent and to vote, as designed below, all the
shares of common stock of JPS Packaging Company which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders to
be held on April 17, 2000, or any adjournments or postponements thereof.
1. ELECTION OF DIRECTORS
[ ] FOR ALL NOMINEES LISTED BELOW
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
(to vote for all nominees listed below)
(INSTRUCTIONS: To withhold authority to vote for an individual nominee
strike a line through the nominee's name.)
G. Kenneth Baum Leo Benatar N. Brian Stevenson John T. Carper
D. Patrick Curran Charles A. Sullivan William D. Thomas
2. APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE
FISCAL YEAR 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies authorized to vote upon such other
business as may properly come before the Annual Meeting.
SEE REVERSE SIDE FOR MATTERS TO BE VOTED ON.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. NONE OF THE PROPOSALS ARE RELATED TO OR
CONDITIONED ON THE APPROVAL OF ANY OTHER PROPOSAL. IF NO DIRECTION IS GIVEN,
THIS PROXY WILL BE VOTED "FOR" ALL NOMINEES FOR DIRECTOR AND "FOR" PROPOSAL 2.
<PAGE>
Please mark, date, sign and return this Proxy card by mail in the enclosed,
postage prepaid envelope.
DATED: __________________________________
_________________________________________
Signature
_________________________________________
Signature
(Please sign exactly as name appears on stock certificate. Where stock is
registered jointly, all owners must sign. Corporate owners should sign full
corporate name by an authorized person. Executors, administrators, trustees or
guardians should indicate their status when signing.)
