<PAGE> 1
SCHEDULE 14A INFORMATION
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
Carlyle Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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 0-12.
(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:
------------------------------------------------------------------------
[ ] 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> 2
CARLYLE INDUSTRIES, INC.
1 PALMER TERRACE
CARLSTADT, NEW JERSEY 07072
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 1998
TO THE STOCKHOLDERS OF CARLYLE INDUSTRIES, INC.
NOTICE is hereby given that the Annual Meeting (the "Meeting")
of Stockholders of CARLYLE INDUSTRIES, INC. (the "Company"), a Delaware
corporation, will be held at the New York Hilton and Towers, 1335 Avenue of the
Americas, Madison Suite, 2nd Floor, New York, New York, on May 14, 1998, at 9:30
A.M. for the following purposes:
1. To elect three directors to serve until the next
Annual Meeting of Stockholders and until their
successors are elected.
2. To ratify the selection of Arthur Andersen LLP as the
independent auditors of the Company for the fiscal
year ending December 31, 1998.
3. To transact such other business as may properly come
before the Meeting or any adjournments thereof.
All of the above matters are more fully described in the
accompanying Proxy Statement.
The Board of Directors has fixed the close of business on
April 3, 1998 as the date for the determination of Stockholders entitled to
notice of, and to vote at, the Meeting. A list of Stockholders entitled to vote
at the Meeting will be open to examination by Stockholders during ordinary
business hours for a period of ten (10) days prior to the Meeting at the
executive offices of the Company, 1 Palmer Terrace, Carlstadt, New Jersey 07072.
The list will also be available at the Meeting.
By order of the Board of Directors,
EDWARD F. COOKE
Secretary
Carlstadt, New Jersey
April 16, 1998
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE DATE AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE
MEETING, YOU MAY REVOKE THE PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE> 3
CARLYLE INDUSTRIES, INC.
1 PALMER TERRACE
CARLSTADT, NEW JERSEY 07072
------------
ANNUAL MEETING OF STOCKHOLDERS
------------
PROXY STATEMENT
APPROXIMATE DATE OF MAILING: APRIL 16, 1998
The enclosed proxy is solicited on behalf of the Board of
Directors (the "Board") of Carlyle Industries, Inc. (the "Company") for use at
the Annual Meeting of Stockholders to be held at the time and place set forth in
the foregoing notice and at any adjournments thereof (the "Meeting"). Proxies in
the accompanying form, which are properly executed and duly returned to the
Company and not revoked prior to exercise, will be voted in accordance with the
instructions contained therein. If a proxy is executed and returned without
instructions as to how it is to be voted, such proxy will be voted in favor of
all proposals contained in this Proxy Statement. Each proxy granted pursuant to
this solicitation is revocable and may be revoked at any time prior to its
exercise provided written notice of revocation is received by the Secretary of
the Company prior to the Meeting. A Stockholder who attends the Meeting in
person may, if he or she wishes, vote by ballot at the Meeting, thereby
canceling any proxy previously given by such Stockholder.
The Company has two classes of outstanding voting securities
entitled to be voted at the Meeting: common stock, $0.01 par value per share
(the "Common Stock") and Series B Preferred Stock, $0.01 par value per share
(the "Preferred Stock"). The Common Stock and the Preferred Stock are referred
to herein together as the "Capital Stock" of the Company. Each outstanding share
of Capital Stock (i.e., Preferred Stock and Common Stock) is entitled to one
vote. Unless otherwise stated, the Common Stock and the Preferred Stock will
vote together as a single class on all matters submitted for a Stockholders'
vote at the Meeting.
April 3, 1998 has been fixed by the Board as the record date
for the determination of Stockholders entitled to notice of, and to vote at, the
Meeting. At the close of business on March 15, 1998, there were outstanding and
entitled to vote 7,382,782 shares of Common Stock and 20,805,060 shares of
Preferred Stock.
The holders of a majority of the shares of Capital Stock
issued and outstanding and entitled to vote at the Meeting, present in person or
represented by proxy, shall constitute a quorum at the Meeting. Any Stockholder
present in person or by proxy at the Meeting who abstains from voting on any
particular matter described herein will nonetheless be counted for purposes of
determining a quorum. For purposes of voting on the matters described herein,
the affirmative vote of (i) a plurality of the shares of Capital Stock present
or represented by proxy at the Meeting and entitled to vote is required to elect
management's three nominees for election to the Board; and (ii) a majority of
the shares of Capital Stock present or represented by proxy at the Meeting and
entitled to vote is required to ratify the selection by the Board of Arthur
Andersen LLP as independent auditors of the Company for the fiscal year ending
December 31, 1998.
With respect to the election of directors, only shares that
are voted in favor of a particular nominee will be counted towards such
nominee's achievement of a plurality. Shares present at the Meeting that are not
voted for a particular nominee, shares present by proxy where
<PAGE> 4
the Stockholder properly withholds authority to vote for such nominee and broker
non-votes will not be counted towards such nominee's achievement of a plurality.
With respect to any of the other matters to be voted upon, if the Stockholder
abstains from voting or directs his proxy to abstain from voting, the shares are
considered present at the Meeting for such matter but, since they are not
affirmative votes for the matter, they will have the same effect as votes
against the matter. With respect to broker non-votes on any such matter, the
shares are not considered present at the Meeting for such matter and they are,
therefore, not counted in respect of such matter. Such broker non-votes do have
the practical effect of reducing the number of affirmative votes required to
achieve a majority for such matter by reducing the total number of shares from
which the majority is calculated.
EXECUTIVE OFFICERS
The executive officers of the Company are identified in the
table below. Each executive officer of the Company serves at the pleasure of the
Board.
<TABLE>
<CAPTION>
Year Became an
Name Age Executive Officer Positions
- ---- --- ----------------- ---------
<S> <C> <C> <C>
Karen Brenner 42 1996 Chairman of the Board, President and Chief
Executive Officer
Edward F. Cooke 44 1994 Vice President, Chief Financial Officer and
Secretary
</TABLE>
ELECTION OF DIRECTORS
(PURPOSE 1)
At the Meeting, three directors are to be elected to serve
until their successors are elected and qualify. The Board has designated the
individuals named below as nominees. Proxies received from Stockholders of the
Company will be voted, unless authority to so vote is withheld, for the election
of the Board's nominees. Authority to vote for any or all of the nominees may be
withheld in the manner indicated on the enclosed proxy. If for any reason any of
the nominees for election to the Board becomes unavailable for election, the
proxies solicited will be voted for such other nominees as are selected by the
Board. The Board has no reason to believe that any of the nominees will not be
available or will not serve if elected. All of the nominees for election at this
Meeting were previously elected by the Company's Stockholders as directors of
the Company.
The number of directors currently constituting the full Board
of Directors of the Company is four. As of the date of the Meeting, there will
be one vacancy on the Board, for which management is not submitting any nominee.
If, following the Meeting, the Board selects two or more additional persons to
serve as directors, the Board will increase the number of directors constituting
the whole Board in order to create the necessary vacancies to be filled by such
persons. No such persons have been selected and, accordingly, there is no
current plan to increase the number of directors constituting the full Board to
more than four.
2
<PAGE> 5
NOMINEES FOR DIRECTORS
<TABLE>
<CAPTION>
Year First
Became
Name Age a Director
- ---- --- ----------
<S> <C> <C>
Karen Brenner 42 1996
Robert A. Levinson 72 1993
Joseph S. DiMartino 54 1995
</TABLE>
The Board recommends a vote FOR each of the nominees for election as
directors.
BIOGRAPHICAL INFORMATION
Certain information about the executive officers and the
nominees for election as directors is set forth below. This information has been
furnished to the Company by the individuals named.
Ms. Brenner was elected President and Chief Executive Officer
of the Company effective as of October 9, 1996, and was appointed Chairman of
the Board of the Company in May 1996. Ms. Brenner served as Vice Chairman of the
Company from February 1996 until she was appointed Chairman and was engaged as a
consultant to the Company in February 1996. Ms. Brenner served as a Managing
Director and had been affiliated with the Noel Group, Inc., a publicly held
leveraged buy-out company ("Noel"), in various executive capacities from 1989 to
March 1, 1998. She was responsible for making investment decisions for Noel and
for the oversight of its portfolio companies. From 1992 until 1994, Ms. Brenner
served as Chairman of the Board and a consultant to The Forschner Group, Inc.
Ms. Brenner is Chairman of the Board and Chief Executive Officer of Lincoln
Snacks Company; a director of On Assignment, Inc.; a director of Motorcar Parts
and Accessories, Inc.; a member of the Board of Trustees of Prep for Prep; and a
trustee of the City Parks Foundation of New York.
Mr. Levinson is a consultant to Andrex Industries Corp., a
company engaged in textile manufacturing and processing, where he served as
Chairman and President from April 1979 to May 1995. Since June 1989, he has
served as Chairman of the Board of Levcor International Inc., a public company
engaged in textile converting and oil and gas production. Since December 1992,
Mr. Levinson has served as a consultant to Complete Management, Inc., a public
company which provides various services to physician practices in New York and
New Jersey.
Mr. DiMartino is a director of Noel and has served as a
director or Chairman of the Board of Noel since March 1995. Since January 1995,
Mr. DiMartino has been Chairman of the Board, a director, a trustee or the
Managing General Partner of various funds in the Dreyfus Family of Funds. For
more than five years prior thereto, he was President, a director, and until
December 1994, Chief Operating Officer, of the Dreyfus Corporation (the "Fund
Manager"), and Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of the Fund Manager and, until August
1994, the Fund's distributor. From August 1994 to December 1994, he was a
director of Mellon Bank Corporation. He is a trustee of Bucknell University, and
a director of the Muscular Dystrophy Association and HealthPlan Services
Corporation. Mr. DiMartino is also a director of Staffing Resources, Inc.,
Century Business Services, Inc. and HealthPlan Services, Inc.
3
<PAGE> 6
Mr. Cooke was elected Chief Financial Officer, Secretary and
Vice President of the Company in February 1997, April 1996 and May 1996,
respectively. Mr. Cooke resigned from such positions in September 1997, was
reappointed to such positions in February 1998 and currently serves in such
capacities. From October 1997 to January 1998, Mr. Cooke served as Chief
Financial Officer of Missbrenner, Inc. Mr. Cooke served as Controller of the
Company from April 1994 until May 1996 and served as Chief Accounting Officer of
the Company from March 1995 until February 1997. From December 1993 to March
1994, he was a consultant to the Company and advised the Company in connection
with its accounting and financial operations. In October and November of 1993,
Mr. Cooke worked as an independent consultant. From 1988 until September 1993,
Mr. Cooke was the Director of Finance and Administration at McNamee Consulting
Company, Inc. in New York City. In that capacity, he was responsible for the day
to day oversight of financial and administrative affairs of that firm.
No family relationship exists among the officers and directors
of the Company.
COMMITTEES
COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 1997 ("fiscal
1997"), the Board had three standing committees: a Compensation Committee, an
Audit Committee and an Executive Committee, as well as certain special purpose
committees.
The Compensation Committee is currently composed of Messrs.
Joseph S. DiMartino and Robert A. Levinson. Each of the aforementioned persons
is not and never was an officer or employee of the Company or its subsidiaries.
However, Mr. DiMartino is or was affiliated in one capacity or the other with
Noel, the controlling stockholder of the Company. See "Biographical
Information". The Compensation Committee works closely with the Board in
establishing and implementing the Company's compensation policies and practices.
See "Report of Board of Directors." Additionally, it or the Board administers
the Company's 1994 Incentive Program (the "Incentive Program") under which
employees, officers, directors, key executives, consultants and advisors of the
Company are eligible to receive stock options, restricted stock and other
benefits.
The Audit Committee is currently composed of Mr. Robert A.
Levinson. Messrs. Samuel F. Pryor, IV, Alan Woltz and Bill Bennett served as
members of the Audit Committee during portions of fiscal 1997. The functions of
the Audit Committee are to review the adequacy of systems and procedures for
preparing the financial statements of the Company as well as the suitability of
internal financial controls, and to review and approve the scope and performance
of the independent auditors' work.
The Executive Committee is currently composed of Ms. Karen
Brenner and Messrs. Robert A. Levinson and Joseph S. DiMartino. The Executive
Committee has all the powers and authority granted to the full Board and
functions as such between meetings of the full Board and when the full Board is
otherwise unable to meet.
The Company does not have a nominating committee.
MEETINGS OF THE BOARD
During fiscal 1997, the Board held seven meetings, the
Compensation Committee held no meetings, the Audit Committee held one meeting
and the Executive Committee held two meetings. In addition, during fiscal 1997,
the Board acted two times by written consent of its members. Each member of the
Board attended over 75% of the meetings of the Board held in
4
<PAGE> 7
1997. In addition, each member of the Compensation Committee, the Audit
Committee and the Executive Committee attended all meetings held of the
respective Committees during fiscal 1997. The Company's directors discharge
their responsibilities throughout the year, not only at Board and committee
meetings, but also through personal meetings and other communications, including
telephone contacts with the Chairman and Chief Executive Officer and others
regarding matters of interest and concern to the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None
PRINCIPAL STOCKHOLDERS
The following table sets forth each person known to the
Company to be the beneficial owner of more than 5% of the outstanding Common
Stock and/or Preferred Stock of the Company as of March 15, 1998. Beneficial
ownership has been determined for purposes herein in accordance with Rule 13d-3
of the Exchange Act, under which a person is deemed to be the beneficial owner
of securities if such person has or shares voting power or investment power in
respect of such securities or has the right to acquire beneficial ownership
within 60 days. On March 15, 1998, there were outstanding 7,382,782 shares of
Common Stock and 20,805,060 shares of Preferred Stock of the Company.
<TABLE>
<CAPTION>
COMMON STOCK SERIES B PREFERRED STOCK
Percent of
Amount of Amount of Aggregate
Shares Shares Voting Power
Name and Address of Beneficially Percent Beneficially Percent of Capital
Beneficial Owner Owned of Class Owned of Class Stock
- ---------------- ------ -------- ------ -------- -----
<S> <C> <C> <C> <C> <C>
The Noel Group, Inc.(1) -0- -0- 19,312,837.5 92.83% 68.5%
667 Madison Avenue
New York, NY 10021
GAMCO Investors, Inc. (2) 1,121,915 15.2% - 0 - - 0 - 4.0%
c/o Gabelli Funds, Inc.
One Corporate Center
Rye, New York 10580
</TABLE>
(1) Noel acquired the entire equity interest in the Company in October
1993. In December 1997, Noel made an irrevocable distribution to its
common stockholders of 2,205,814 shares of the Company's Common Stock.
In February 1994, Noel made an irrevocable distribution to its common
stockholders of 3,542,404 shares of the Company's Common Stock. In a
series of other transactions, Noel sold, or caused the Company to
issue, shares of the Company's Common Stock and/or Preferred Stock to
various affiliates of Noel and certain members of the Company's
management group. As Noel does not have or share voting or investment
power over the securities transferred to its affiliates or members of
the Company's management group, the shares reported in this table
reflect Noel's remaining equity interest in the Company as of March 15,
1998. Mr. Joseph S. DiMartino and Ms. Karen Brenner, both of whom are
Board nominees for election at the Meeting, are or were affiliated in
various capacities with Noel. See "Biographical Information." Mr.
DiMartino also beneficially owns shares of common stock, par value $.01
per share, of Noel ("Noel Common Stock"), as more particularly set
forth in the footnotes to the table entitled "Equity Securities
Beneficially Owned by the Directors and Named Executive Officers."
5
<PAGE> 8
(2) Represents shares held by GAMCO Investors, Inc. and various other
entities which are directly or indirectly controlled by Mario J.
Gabelli and for which he acts as chief investment officer, including
registered investment companies and pension plans. This information is
based solely upon the contents of a filing on Schedule 13D dated March
9, 1998 made by Mario J. Gabelli and related entities with the
Securities and Exchange Commission.
EQUITY SECURITIES BENEFICIALLY OWNED BY THE DIRECTORS
AND NAMED EXECUTIVE OFFICERS
According to information furnished to the Company, as of March
15, 1998, the nominees for election to the Board, the Company's current "named
executive officers" (the "Named Executive Officers") within the meaning of Item
402(a)(3) of Regulation S-K of the Securities Act of 1933, as amended (the
"Act"), and all director nominees and executive officers as a group,
beneficially owned shares of Capital Stock of the Company as set forth below.
Beneficial ownership has been determined for purposes herein in accordance with
Rule 13d-3 of the Exchange Act under which a person is deemed to be the
beneficial owner of securities if such person has or shares voting power or
investment power in respect of such securities or has the right to acquire
beneficial ownership within 60 days.
<TABLE>
<CAPTION>
COMMON STOCK SERIES B PREFERRED STOCK
Percent of
Aggregate
Amount of Voting
Amount of Shares Shares Power of
Name and Address of Beneficially Percent Beneficially Percent Capital
Beneficial Holder Owned of Class Owned of Class Stock
<S> <C> <C> <C> <C> <C>
Karen Brenner 306,600(1) 4.01% -- -- 1.1%
c/o Carlyle Industries,
Inc.
1 Palmer Terrace
Carlstadt, NJ 07072
Edward F. Cooke 17,222(2) (3) -- -- (3)
c/o Carlyle Industries,
Inc.
1 Palmer Terrace
Carlstadt, NJ 07072
Robert A. Levinson 142,770(4) 1.93% 610,120 2.93% 2.67%
c/o Andrex Industries
Corp.
1071 Avenue of the
Americas
New York, NY 10019
Joseph S. DiMartino 29,571(5) (3) 19,508,860.5(6) 93.77% 69.29%
c/o Dreyfus Corporation
200 Park Avenue, 10th Fl
New York, NY 10166
All directors and 495,163(8) 6.46% 20,118,980.5(9) 96.70% 72.4%
executive officers as a
group (4 persons) (7)(8)
</TABLE>
6
<PAGE> 9
(1) Includes: (i) 50,000 shares held by the Noel Group, Inc. Retirement
Plan FBO K. Brenner, and (ii) 256,600 shares which Ms. Brenner could
acquire on or within 60 days after March 15, 1998 upon the exercise of
stock options.
(2) Includes: (i) 5,000 shares held of record by Mr. Cooke; and (ii) 12,222
shares which Mr. Cooke could acquire on or within 60 days after March
15, 1998 upon the exercise of stock options.
(3) Represents less than 1% of the aggregate votes entitled to be cast.
(4) Includes: (i) 59,570 shares held of record by Mr. Levinson; (ii) 75,000
shares held by three trusts for the benefit of Mr. Levinson's children,
as to all of which trusts Mr. Levinson serves as co-trustee; and (iii)
8,200 shares of Common Stock which Mr. Levinson could acquire on or
within 60 days after March 15, 1998 upon the exercise of director's
stock options.
(5) Includes: (i) 8,200 shares which could be acquired on or within 60 days
after March 15, 1998 upon exercise of director's stock options; and
(ii) 20,478 shares held by Mr. DiMartino as trustee under two Rabbi
Trusts (the "Rabbi Trusts") established by the Company for the benefit
of former executives under the Company's deferred compensation program.
Mr. DiMartino also beneficially owns 8,334 shares of Noel Common Stock.
(6) Includes: (i) 196,023 shares held by Mr. DiMartino as trustee under the
Rabbi Trusts and (ii) 19,312,837.5 shares held by Noel, of which Mr.
DiMartino is a director, as to all of which shares Mr. DiMartino
disclaims beneficial ownership.
(7) For purposes of computing the aggregate number of shares beneficially
owned by directors and Executive Officers of the Company as a group,
the same shares are not counted more than once.
(8) Includes 285,222 shares subject to stock options issued under the
Incentive Program which were exercisable on or within 60 days after
March 15, 1998.
(9) Includes 19,312,837.5 shares held by Noel, as referred to in footnote
(6) above.
EXECUTIVE COMPENSATION
The following summary compensation table sets forth certain
information concerning the compensation of the Named Executive Officers for the
fiscal years ending as of December 31, 1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Restricted
Stock Other Annual All Other
Name and Principal Options Awards Compensation Compensation
Position Year Salary ($) Bonus($) (#)(1) ($)(2) $(3) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Karen Brenner Fiscal 1996 0 150,000 211,000 0 (3) 210,355
Chairman of the Fiscal 1997 250,000 305,814(5) 150,000 0
Board, President
and
Chief Executive
Officer(4)
Edward F. Cooke, Fiscal 1995 94,500 10,000 5,000 0 1,772(7)
Vice President, Fiscal 1996 111,750 85,000 0 0 (3) 2,804(7)
Chief Fiscal 1997 102,997 110,767(5) 20,000 2,417(7)
Financial Officer
and
Secretary (6)
</TABLE>
7
<PAGE> 10
(1) Stock options reported under this column were granted under the terms
and provisions of the Incentive Program. For a description of the stock
options granted in fiscal 1997, see "Option Grants in Last Fiscal
Year."
(2) As of March 1, 1994, Mr. Cooke was issued 5,000 shares of restricted
Common Stock. On that date there existed no independent trading market
for the Company's Common Stock. The shares were acquired by the Named
Executive Officer at a price of $.20 per share, which was the then fair
market value of the Common Stock as determined by the Board.
Accordingly, no value has been attributed to the awards of restricted
stock in the Summary Compensation Table. All of the shares reported in
the table below have vested. Mr. Cooke is entitled to full voting and
dividend rights on a pro rata basis with the other holders of the
Company's Common Stock.
Based upon the latest information available to the Company, as of
December 31, 1997, Mr. Cooke held 5,000 shares of restricted Common
Stock which have an aggregate value of $6,500. The value was calculated
by multiplying the closing price of the Common Stock (as reported on
the NYSE on December 31, 1997) by the respective number of shares and
subtracting therefrom the aggregate consideration paid by Mr. Cooke.
(3) The named executive officer receives certain perquisites; such
perquisites, however, do not exceed the lesser of $50,000 or 10% of
such officer's salary and bonus.
(4) Ms. Brenner was elected to serve as President and Chief Executive
Officer of the Company effective in October 1996 and was appointed
Chairman of the Board of the Company in May 1996.
(5) Includes special one-time bonuses of $150,000 and $50,000 awarded to
Ms. Brenner and Mr. Cooke, respectively, in recognition of their
extraordinary efforts in connection with the sale of the Company's
Thread Group to Hicking Pentecost PLC.
(6) Mr. Cooke was elected Chief Financial Officer, Secretary and Vice
President of the Company effective in February 1997, April 1996, and
May 1996, respectively. Mr. Cooke resigned from such positions in
September 1997, was reappointed to such positions in February 1998 and
currently serves in such capacities. From April 1994 until May 1996,
Mr. Cooke served as Controller of the Company, and from March 1995
until February 1997, he served as Chief Accounting Officer of the
Company.
(7) The amounts reported in this column include the matching Company
contributions to the Company's Deferred Compensation 401(k) Plan and
the Non-Qualified Deferred Compensation Program on behalf of the named
executive officer for fiscal years 1997, 1996 and 1995, as set forth
below.
<TABLE>
<CAPTION>
Name Qualified Plan ($) Non-Qualified Plan($)
- ---- ------------------ ---------------------
1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Edward F. Cooke 2,417 2,023 1,772 -0- 781 - 0 -
</TABLE>
8
<PAGE> 11
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides certain summary information
concerning individual grants of stock options to purchase shares of Common Stock
made to Named Executive Officers during fiscal 1997. Except as set forth in the
table on the following page, during fiscal 1997 the Company did not grant any
stock options to any of the Named Executive Officers.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Rates of
Stock Price Appreciation
INDIVIDUAL GRANTS for Option Term
- ---------------------------------------------------------------------------------------- ---------------------------
Number of Percent of Total
Shares Options Granted
Underlying to Employees in
Grant(1) Fiscal Year Exercise Price Expiration 5% 10%
Name (#) % ($) Date ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Karen Brenner 150,000 45.45% $2.00 5/16/07 188,668 478,122
Edward F. Cooke 20,000 6.06% $2.00 5/16/07 25,156 63,750
</TABLE>
(1) The stock options reported above were awarded pursuant to the Incentive
Program at exercise prices equal to the fair market value of the Common
Stock on the date of grant. The options granted to Ms. Brenner and Mr.
Cooke vest ratably over a thirty-six-month period and terminate ten
years after the grant date, subject to early termination in the event
of death or termination of the optionee's employment for any reason.
Payment for options exercised may be in cash or shares of Common Stock,
the fair market value of which is determined by the Board of Directors
or the Compensation Committee in accordance with the terms of the
Incentive Program.
(2) Amounts represent hypothetical gains that could be achieved from the
exercise of the respective stock options and the subsequent sale of the
Common Stock underlying such options if the options were exercised at
the end of the option terms. The gains are based upon assumed rates of
stock price appreciation of 5% and 10% compounded annually from the
date the respective options were granted. The rates of appreciation are
mandated by the rules of the Securities Exchange Act of 1934, as
amended, and do not represent the Company's estimate or projection of
the future Common Stock price.
9
<PAGE> 12
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table provides certain summary information
concerning stock option exercises during fiscal 1997 by the Named Executive
Officers and the value of unexercised stock options held by the Named Executive
Officers as of December 31, 1997.
<TABLE>
<CAPTION>
Value of
Number of Unexercised "In
# of Shares Unexercised the Money"
Acquired on Value Annualized Options at Fiscal Options at
Name Exercise(1) Realized (1) Gain (1) Year End(2) Fiscal Year End(3)
- ---- ----------- ------------ ---------- -------------- ------------------
Exer- Unex- Exer- Unex-
cisable ercisable cisable ercisable
<S> <C> <C> <C> <C> <C> <C> <C>
Karen Brenner -- -- -- 237,733 123,267 -- --
Edward F. Cooke -- -- -- 7,778 22,222 -- --
</TABLE>
(1) None of the Named Executive Officers exercised any stock options during
fiscal 1997.
(2) Represents the aggregate number of stock options held as of December
31, 1997 which could and could not be exercised on that date pursuant
to the terms and provisions of the stock options and the Incentive
Program.
(3) All of the unexercised stock options held by Named Executive Officers
at the 1997 fiscal year end were "out of the money" (i.e., the exercise
price of the options exceeded the fair market value of the Common
Stock).
COMPENSATION OF DIRECTORS
During fiscal 1997, each director who was not an officer or an
employee of the Company (an "Outside Director") received a director's fee of
$10,000 (prorated, where applicable), plus a $3,000 chairman fee for each
committee of which he or she was the chairman plus $1,000 for attendance at each
meeting of the Board. In addition, each Outside Director received $250 for
attendance, during the 1st quarter of fiscal 1997, at each Executive Committee,
Audit Committee or Compensation Committee meeting.
EMPLOYMENT AGREEMENTS/SEPARATION AGREEMENTS
Karen Brenner, the Company's Chairman of the Board, President
and chief Executive officer entered into an agreement with the Company in
February 1998 which sets forth the terms of her continued employment with the
Company. Pursuant to such agreement, the Company will pay to Ms. Brenner a
salary equal to $250,000 per annum, plus any accrued and unpaid bonus, and Ms.
Brenner will be entitled to participate in the Company's Incentive Program and
other plans and benefits afforded by the Company to its management employees.
Ms. Brenner will also be entitled to receive a "transaction bonus" in the amount
of $100,000 in the event of a sale of all, or substantially all, of the capital
stock or assets of the Company.
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<PAGE> 13
In addition, (i) in the event of a sale or change in control
of the Company, Ms. Brenner shall be paid severance pay equal to one year of her
base salary then in effect and (ii) in the event of any involuntary termination
of her employment by the Company, without cause, Ms. Brenner shall be paid
severance pay equal to six months of her base salary then in effect.
Edward F. Cooke, the Company's Vice President, Chief Financial
Officer and Secretary entered into an agreement with the Company in March 1998
which sets forth the terms under which Mr. Cooke's employment with the Company
may be terminated. Pursuant to such agreement, if within one year after a change
in control of the Company Mr. Cooke's employment is terminated for any reason,
the Company shall pay Mr. Cooke an amount equal to one year of his base salary
then in effect.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's
executive officers and directors, and persons who own more than ten percent of
the Common Stock of the Company to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the exchange on which
the Common Stock is listed for trading. Executive officers, directors and more
than ten percent stockholders are required by regulations promulgated under the
Exchange Act to furnish the Company with copies of all Section 16(a) reports
filed. Based solely on the Company's review of copies of the Section 16(a)
reports filed for the fiscal year ended December 31, 1997, the Company believes
that all reporting requirements applicable to its executive officers, directors,
and more than ten percent stockholders were complied with for fiscal 1997,
except that Mr. Joseph S. DiMartino inadvertently failed to timely file a report
in respect of his acquisition of 893 shares of Common Stock in December 1997.
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<PAGE> 14
STOCK PERFORMANCE GRAPH
The quarterly changes in cumulative shareholder return for the
period commencing on December 16, 1994, when the Company's stock was unstapled
from the common stock of Noel, and ending on December 31, 1997, are shown on the
following graph. The assumption is that $100 was invested in shares of the stock
of each of the Company, a peer group comprised of Cone Mills, Springs Industries
and Dixie Yarns (with the amount pro-rated by market capitalization as of the
beginning of the period) (the "Old Peer Group"), a group consisting of eighteen
issuers with a market capitalization similar to that of the Company's (the "New
Peer Group") and the Russell 2000 Index (and that all dividends were
reinvested). The New Peer Group was used instead of a published industry or
line-of-business index because the Company was unable to reasonably identify
such an index. The total cumulative dollar returns shown in the graph represent
the value such investments would have had on December 31, 1997. The comparisons
in the graph are required by the Securities and Exchange Commission and are not
intended to forecast or be indicative of possible future performance of the
Company's Common Stock.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, PEER GROUP AND BROAD MARKET
<TABLE>
<CAPTION>
- -----------------------------FISCAL YEAR ENDING-----------------------------
COMPANY 1994 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
CARLYLE INDUSTRIES INC 100.00 106.67 41.67 31.67 20.00
OLD PEER GROUP 100.00 102.18 107.07 107.18 129.47
NEW PEER GROUP 100.00 98.32 101.59 57.81 32.26
BROAD MARKET 100.00 100.00 128.44 149.77 183.23
</TABLE>
12
<PAGE> 15
REPORT OF BOARD OF DIRECTORS
OVERALL POLICY
The Company's executive compensation program is designed to be
closely linked to corporate performance and the total return to Stockholders
over the long-term. The overall objectives of this strategy are to attract and
retain the best possible executive talent, to motivate these executives to
achieve the goals inherent in the Company's business strategy, to link executive
and Stockholder interests and finally to reward individual contributions as well
as overall business results.
The key elements of the Company's executive compensation
during the last fiscal year consisted of base salary, an annual bonus and the
grant of stock options under the Incentive Program.
SALARIES
The Board or the Compensation Committee approves the salaries
of the Chief Executive Officer and Chief Financial Officer of the Company and
exercises oversight over the compensation of the other executive officers of the
Company. All final determinations are subjective. In establishing salary levels
for fiscal 1997, the Board placed the most emphasis on management's efforts in
restructuring the Company's businesses and promoting greater cost-efficiencies
and on the success of the Company's strategic divestiture strategy. The Board
also afforded substantial weight to the Company's long-term prospects and
performance. The factors of lesser significance which the Committee considered
were experience of the executive officers and the Committee's subjective
understanding of salary levels of executive management personnel of other
similarly situated companies.
BONUSES
Bonuses are determined in accordance with the Company's bonus
plan. Under the bonus plan, bonuses are awarded to executive officers based upon
the attainment by the Company of certain predetermined ROTC levels (i.e., return
on total capital) and the achievement by the executive officers of individual
performance objectives. The target levels and objectives are approved by the
Board or the Compensation Committee at the beginning of the fiscal year.
Notwithstanding the satisfaction of target levels and objectives, all final
determinations of bonuses require the approval of the Board or the Compensation
Committee. All persons serving as executive officers at fiscal year end were
awarded bonuses in fiscal 1997 (see "Summary Compensation Table"). In fiscal
1997, the Company awarded Ms. Brenner and Mr. Cooke special, one-time bonuses of
$150,000 and $50,000, respectively, in recognition of their extraordinary
efforts in carrying out the Company's strategic divestiture program, including
the sale of the Company's Thread Division to Hicking Pentecost PLC.
STOCK OPTIONS
Under the Incentive Program, which was adopted by the Company
in 1994, the Company's employees and executive officers are eligible to receive
stock options, stock appreciation rights, restricted stock and other stock based
awards. The Board or the Compensation Committee is responsible for determining
the recipients and the size of the awards. In selecting the size and type of
awards under the Incentive Program, the Board or the Compensation Committee
considers the nature of the position held as well as the other factors used to
determine salaries and its subjective expectation of the potential for
appreciation in the market value of the Common Stock. All final determinations
are subjective.
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<PAGE> 16
Stock options awarded under the Incentive Program generally
vest over a period of several years from the date of grant. This approach is
designed to align the interests of the executive officers with those of the
Stockholders over the long-term since the full benefits of the compensation
package cannot be realized unless stock price appreciation occurs over a number
of years.
COMPENSATION OF CHIEF EXECUTIVE OFFICEr
Ms. Karen Brenner, the current Chairman of the Board, Chief
Executive Officer and President of the Company, is paid a salary of $250,000 per
annum, as more fully described in "Employment Agreements/Separation Agreements"
above.
Ms. Brenner is also eligible for participation in the
Company's annual bonus plan. The Committee awarded Ms. Brenner a $155,814 bonus
under the Company's bonus plan on account of fiscal 1997, in recognition of her
efforts in bringing about substantial reductions in the Company's overhead and
other significant improvements in the Company's operations. As previously
described, the Compensation Committee also awarded Ms. Brenner a special
one-time bonus of $150,000 in view of her efforts in connection with the sale of
the Company's Thread Division, which she earned in March 1997.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION PLANS
It is the policy of the Board or the Compensation Committee to
have the executive compensation plans of the Company treated as fully tax
deductible under Section 162(m) of the Internal Revenue Code, as amended (the
"Code") whenever, in the judgment of the Board or the Compensation Committee, to
do so would be consistent with the business objectives of those plans. All
compensation paid during fiscal year 1997 was, in fact, fully tax deductible.
The Board or the Compensation Committee, however, reserves the right to grant
future compensation awards in such amounts as it may deem appropriate in the
exercise of its business judgment, notwithstanding whether those awards are
fully tax deductible.
Board of Directors
KAREN BRENNER
ROBERT A. LEVINSON
JOSEPH S. DIMARTINO
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<PAGE> 17
INDEPENDENT AUDITORS
(PURPOSE 2)
Arthur Andersen LLP ("Arthur Andersen"), certified public
accountants, have been appointed by the Board, upon recommendation of the Audit
Committee of the Board, as independent auditors for the Company to examine and
report on its financial statements for the fiscal year ending December 31, 1998,
which appointment is being submitted to the Stockholders for ratification at the
Meeting. Representatives of Arthur Andersen are expected to be present at the
Meeting, with the opportunity to make a statement if they desire to do so, and
to be available to respond to appropriate questions. The appointment of the
independent auditors will be ratified if it receives the affirmative vote of the
holders of a majority of shares of the Capital Stock of the Company present at
the Meeting, in person or by proxy, and entitled to vote thereon. Submission of
the appointment of Arthur Andersen to the Stockholders for ratification will not
limit the authority of the Board to appoint another accounting firm to serve as
independent auditors if the auditors resign or their engagement is otherwise
terminated.
The Board recommends a vote FOR the appointment of Arthur
Andersen LLP as independent auditors of the Company.
STOCKHOLDERS' PROPOSALS
Any proposal by stockholders of the Company intended to be
presented at the 1999 Annual Meeting of Stockholders must be received by the
Company at its principal executive office not later than December 1, 1998 for
inclusion in the Company's proxy statement and form of proxy relating to that
meeting. Any such proposal must also comply with the other requirements of the
proxy solicitation rules of the Securities and Exchange Commission.
ANNUAL REPORT
Concurrently with the mailing of these proxy materials, the
Company is mailing a copy of its Annual Report to Stockholders for the fiscal
year ended December 31, 1997. Such Annual Report is not to be regarded as proxy
solicitation material.
UPON WRITTEN REQUEST BY A STOCKHOLDER ENTITLED TO VOTE AT THE
1998 ANNUAL MEETING, THE COMPANY WILL FURNISH THAT PERSON WITHOUT CHARGE WITH A
COPY OF THE FORM 10-K ANNUAL REPORT FOR 1997 WHICH IS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES
THERETO. If the person requesting the report was not a Stockholder of record on
April 3, 1998, the request must contain a good faith representation that the
person making the request was a beneficial owner of the Common Stock of the
Company at the close of business on such date. Requests should be addressed to
Carlyle Industries, Inc., One Palmer Terrace, Carlstadt, New Jersey 07072 (Attn:
Edward F. Cooke).
OTHER BUSINESS
(PURPOSE 3)
Management does not know of any other matters to be presented
at the Meeting for action by the Stockholders. If any other matters requiring a
vote of the Stockholders arise at the Meeting or any adjournment thereof, it is
intended that votes will be cast pursuant to the
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<PAGE> 18
proxies with respect to such matters in accordance with the best judgment of the
persons acting under the proxies.
SOLICITATION AND EXPENSES OF SOLICITATION
Officers and employees of the Company may solicit proxies by
personal interview, mail, telegraph and telephone. No compensation will be paid
by the Company to any person in connection with the solicitation of proxies.
Brokers, bankers and other nominees will be reimbursed for out-of-pocket and
other reasonable clerical expenses incurred in obtaining instructions from
beneficial owners of the Company's stock. The cost of preparing this Proxy
Statement and all other costs in connection with solicitation of proxies for the
Annual Meeting of Stockholders are being borne by the Company.
Even if you plan to attend the Meeting in person, please sign,
date and return the enclosed proxy promptly. If you attend the Meeting, your
proxy will be voided at your request and you can vote in person. A postage-paid
return-addressed envelope is enclosed for your convenience. Your cooperation in
giving this matter your immediate attention and in returning your proxies will
be appreciated.
By order of the Board of Directors,
EDWARD F. COOKE
Secretary
April 16, 1998
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<PAGE> 19
CARLYLE INDUSTRIES, INC.
PROXY/VOTING INSTRUCTION CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CARLYLE
INDUSTRIES, INC. FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 14, 1998
The undersigned appoints Edward F. Cooke and Karen Brenner, and each of
them, with full power of substitution in each, the proxies of the undersigned,
to represent the undersigned and vote all shares of Carlyle Industries, Inc.
Common Stock which the undersigned may be entitled to vote at the Annual
Meeting of Stockholders to be held on May 14, 1998, and at any adjournment or
postponement thereof, as indicated on the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2 AND 3.
(Continued, and to be signed and dated on reverse side.)
CARLYLE INDUSTRIES, INC.
P.O. Box 11424
New York, N.Y. 10203-0424
<PAGE> 20
1. Election of Directors FOR all nominees listed below.
WITHHOLD AUTHORITY to vote *EXCEPTIONS
for all nominees listed below.
Nominees: Karen Brenner, Joseph S. DiMartino and Robert A. Levinson
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE
PROVIDED BELOW.)
*Exceptions __________________________________________________________
2. To ratify the selection of Arthur Andersen LLP as the independent auditors
of the Company for the fiscal year ending December 31, 1998.
FOR / / AGAINST / / ABSTAIN / /
3. To transact such other business as may properly come before the Meeting or
any adjournments thereof.
CHANGE OF ADDRESS OR
COMMENTS MARK HERE
Please sign exactly as your name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign full corporate name by an authorized officer. If a partnership, please
sign in partnership name by any authorized person.
Date: _________________, 1998
_____________________________
signature
_____________________________
signature if held jointly
Votes must be indicated
(x) in black or blue ink [x]
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING ENCLOSED
ENVELOPE.
