<PAGE>
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:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CRAIG CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] 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>
CRAIG CORPORATION
550 SOUTH HOPE STREET, SUITE 1825
LOS ANGELES, CA 90071
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 29, 1996
The Annual Meeting of Stockholders of Craig Corporation, a Delaware
corporation, will be held at the Four Seasons Hotel, 300 South Doheny Drive, in
the Almond Room, Los Angeles, California on Thursday, February 29, 1996 at 10:00
a.m., Los Angeles time, for the following purposes:
(1) To elect a Board of Directors for the ensuing year; and
(2) To transact such other business as may properly come before the
meeting or any adjournment thereof.
A copy of the Company's Annual Report for its fiscal year ended September
30, 1995 is enclosed. Only stockholders of record at the close of business on
January 4, 1996 will be entitled to notice of and to vote at the meeting and any
adjournment thereof.
Whether or not you expect to attend the Annual Meeting in person, please
fill in, sign, date and complete the enclosed proxy card and return it promptly
in the accompanying postage prepaid, pre-addressed envelope, to assure that your
shares will be represented.
By Order of the Board of Directors
/s/ Robin W. Skophammer
Robin W. Skophammer
Secretary
February 5, 1996
PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE
ENCLOSED RETURN ENVELOPE, IN ORDER TO ENSURE THAT YOUR VOTES ARE COUNTED.
<PAGE>
CRAIG CORPORATION
550 SOUTH HOPE STREET, SUITE 1825
LOS ANGELES, CA 90071
(213) 239-0555
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 29, 1996
PERSONS MAKING THE SOLICITATION
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Craig Corporation (the "Company") of proxies for use
at the Annual Meeting of Stockholders to be held on February 29, 1996 and at any
adjournment thereof. This proxy statement is first being mailed to stockholders
on or about February 5, 1996. You are requested to sign, date and return the
enclosed proxy card in order to ensure that your shares are represented at the
meeting.
In addition to the solicitation by mail, regular employees of the Company
and its Transfer Agent may solicit proxies in person or by telephone without
additional compensation. The Company also will pay persons holding shares in
their own names or in the names of their nominees, but not owning such shares
beneficially, for the expenses of forwarding soliciting materials to the
beneficial owners. The Company will bear all expenses incurred in soliciting
its stockholders.
REVOCABILITY OF PROXY
Any proxy given by a stockholder of the Company may be revoked at any time
before it is voted at the annual meeting by a written notice to the Secretary of
the Company, or upon request if the stockholder is present at the meeting. Each
valid proxy returned which is not revoked, unless indicated otherwise on the
proxy card, will be voted in the election of directors for the nominees as
described herein.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only holders of record of Common Stock and Class A Common Preference Stock
of the Company at the close of business on January 4, 1996 are entitled to
notice of and to vote at the meeting or any adjournment thereof. The
outstanding voting securities of the Company on that date consisted of 4,210,870
shares of Common Stock, $.25 par value and 1,622,000 shares of Class A Common
Preference Stock, $.01 par value. Stockholders are entitled to 30 votes for
each share of Common Stock and 1 vote for each share of Class A Common
Preference Stock held of record.
The following table sets forth information as of January 31, 1996 with
respect to persons known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock or Class A Common Preference Stock of the
Company and as to the number of shares beneficially owned by each director and
nominee, and by all the officers and directors as a group.
2
<PAGE>
All persons listed, unless otherwise stated, have sole voting and investment
power with respect to Common Stock and Class A Common Preference Stock
beneficially owned by them.
<TABLE>
<CAPTION>
CLASS A COMMON
COMMON STOCK PREFERENCE STOCK
------------------------------- -----------------------------------
AMOUNT PERCENTAGE AMOUNT PERCENTAGE
NAME AND ADDRESS BENEFICIALLY OF BENEFICIALLY OF CLASS A
OF BENEFICIAL OWNER OWNED(11) COMMON STOCK OWNED(11) COMMON STOCK
-------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
James J. Cotter (1) 1,997,260 44.0% 129,200 7.9%
120 N. Robertson Blvd.
Los Angeles, CA 90048
Hecco Ventures(1) 617,438 13.6% 51,700 3.2%
120 N. Robertson Blvd.
Los Angeles, CA 90048
Southeastern Asset Management, Inc.(2) 950,500 20.9%
6075 Poplar Avenue, Suite 900
Memphis, TN 38119
First Pacific Advisors, Inc.(3) 435,600 26.7%
11400 West Olympic Blvd.
Suite 1200
Los Angeles, CA 90064
Don C. Whitaker 139,400 8.5%
23 Beechwood
Irvine, CA 92714
Lawndale Capital Management, Inc.(4) 163,900 10.0%
One Sansome St. Ste. 3900
San Francisco, CA 94104
S. Craig Tompkins (5)(6) 9,750 .6%
William D. Gould (5)(7) 23,600 .5% 2,500 .2%
Gerard P Laheney (5)(8) 15,000 .3%
Ralph B. Perry III (5)(9) 23,600 .5% 12,000 .7%
Edward L. Kane (5) 1,500
Robin W. Skophammer(5)(8) 15,000 .3%
Officers and Directors 2,075,960 45.7% 152,450 9.3%
as a group (7 persons)(10)
</TABLE>
_______________
(1) Includes the Common Stock and Class A Common Preference Stock owned by
Hecco Ventures I ("HVI"), which is a California general partnership. James
J. Cotter is a general partner of a general partner of HVI and,
accordingly, has shared voting and dispositive power with respect to such
shares held by HVI. With respect to the Common Stock held by Mr. Cotter,
the shares include exercisable options to acquire 300,000 shares held by
Mr. Cotter.
(2) According to Amendment Number 5 to the Report on Schedule 13G filed by
Southeastern Asset Management, Inc. ("SAM"), on or about February 13, 1995,
SAM is an investment advisor registered under Section 203 of the Investment
Advisers Act. The securities
3
<PAGE>
attributed to SAM are owned legally by SAM's investment advisory clients
and none are owned directly or indirectly by SAM. Included within the
950,500 shares covered by the amendment are 298,500 shares owned by certain
qualified retirement plans as to which SAM has sole power to vote or to
direct the vote, and 652,000 shares (including securities owned by an open-
ended management investment company as to which SAM serves as advisor) as
to which SAM has no power to vote. SAM has the power to dispose or to
direct the disposition of 525,500 shares and shared power to dispose or to
direct the disposition of 425,000 shares.
(3) Includes 160,000 shares which are owned by FPA Capital Fund, Inc. over
which First Pacific Advisors, Inc. has shared dispositive power.
(4) Includes 125,700 shares which are owned by Diamond A Partners, L.P. ("DAP")
and 18,000 shares which are owned by Diamond A Investors L.P. ("DAI") but
have shared voting and dispositive power with Lawndale Capital Management,
Inc. and Andrew E. Shapiro. According to a report on Schedule 13D dated May
22, 1995, Lawndale Capital Management, Inc., is the investment advisor to
DAP and DAI, which are investment limited partnerships.
(5) Addresses are c/o the Company, 550 South Hope Street, Suite 1825, Los
Angeles, California 9007l.
(6) Includes 8,750 vested shares subject to a currently exercisable option to
purchase Class A Common Preference Stock. Does not include 8,750 shares
subject to an option to purchase Class A Common Preference Stock which is
not currently exercisable.
(7) Includes 8,600 shares of Common Stock and 1,500 shares of Class A Common
Preference Stock owned by a trust for the benefit of Mr. Gould's children,
of which he is co-trustee; Mr. Gould disclaims beneficial ownership of the
shares held in the trust.
(8) Represents shares subject to an exercisable option to purchase Common
Stock.
(9) Includes 600 shares owned by Mr. Perry's wife, as to which Mr. Perry
disclaims beneficial ownership.
(10) The common shares beneficially owned include (i) 330,000 shares of Common
Stock subject to currently exercisable stock options and (ii) an aggregate
of 9,200 shares of Common Stock as to which Messrs. Gould and Perry
disclaim beneficial ownership. The Class A Common Preference shares
beneficially owned include 8,750 shares of currently exercisable stock
options and 1,500 shares as to which Mr. Gould disclaims beneficial
ownership.
(11) All shares subject to stock options currently exercisable, or which become
exercisable on or before March 31, 1996, are deemed to be outstanding for
the purpose of determining the percentage of each class held by such
person.
ELECTION OF DIRECTORS
Six directors are to be elected at the Annual Meeting. The term of office
for all nominees listed below will expire at the next Annual Meeting to be held
in 1997 or when their successors are elected and qualified. Unless otherwise
instructed, proxy holders will vote the
4
<PAGE>
proxies received by them for the election of the nominees named below, all of
whom are currently directors of the Company. If any nominee becomes unavailable
for any reason, it is intended that the proxies will be voted for a substitute
nominee designated by the Board of Directors. The Board of Directors has no
reason to believe the nominees named will be unable to serve if elected. Any
vacancy occurring on the Board of Directors for any reason may be filled by a
majority of the directors then in office until the next Annual Meeting of
Stockholders.
The names of the nominees for director, together with certain information
regarding them, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
James J. Cotter 57 Chairman of the Board
S. Craig Tompkins 45 President and a Director
William D. Gould(1)(2) 57 Director
Edward L. Kane 57 Director
Gerard P. Laheney(1) 57 Director
Ralph B. Perry III (2) 59 Director
</TABLE>
(1) Member of the Compensation Committee. The Compensation Committee's
functions include the review of all compensation and employment agreements
with the Company's officers and directors. The Compensation Committee held
three meetings during the fiscal year ended September 30, 1995.
(2) Member of the Audit Committee. The Audit Committee held one meeting during
the fiscal year ended September 30, 1995. The Audit Committee's functions
include the recommendation of independent auditors to the Board and approval
of the scope of their services and proposed fees for such services.
During the fiscal year ended September 30, 1995, the Board of Directors
held seven meetings. Each director attended at least 80% of the meetings of the
Board of Directors and all committees on which he served.
Mr. Cotter has been a Director of the Company since 1985 and the Chairman
of the Board of Directors since 1988. Mr. Cotter has been Chairman of the Board
of Reading Company (approximately 49.3% owned by the Company) since December
1991 and a director since September 1990. He is also the Chairman of Reading
Cinema, Inc., a wholly owned subsidiary of Reading Company and Reading
International Cinemas LLC, a limited liability company owned in equal shares by
the Company and Reading Company. Since 1987, Mr. Cotter has been a director of
Stater Bros. Holdings Inc. ("SBH") and its predecessors (50% owned by the
Company). Mr. Cotter has been a director and the Chairman of the Board of
Citadel Holding Corporation ("Citadel", of which the Company owns approximately
39.5% of the aggregate voting power) since 1991. From October 1991 to June
1992, Mr. Cotter also served as the acting Chairman of Citadel's then wholly-
owned subsidiary, Fidelity Federal Bank, FSB ("Fidelity") and served as a
director of Fidelity until December 1993. Mr. Cotter has been a director and
Chief Executive Officer of Townhouse Cinemas Corporation (motion picture
exhibition) since 1987, Executive Vice President and a director of the Decurion
Corporation (motion picture exhibition) since 1969 and of Pacific Theatres,
Inc., a wholly-owned subsidiary of Decurion Corporation.
5
<PAGE>
Mr. Tompkins has been President and a director of the Company since March
1993. Mr. Tompkins is also the President and a director of Reading Company and
has served in such positions since March 1993. He serves as the Vice Chairman
of Reading Cinemas, Inc. and Reading International Cinemas LLC. Prior thereto,
Mr. Tompkins was a partner in the law firm of Gibson, Dunn & Crutcher for more
than five years. Mr. Tompkins has been a director of Citadel Holding
Corporation since May 1993, became Vice Chairman in August 1994 and Secretary,
Treasurer and Principal Accounting Officer in September 1994. He has been a
director of G&L Realty Corp., a New York Stock Exchange listed REIT, since
December 1993.
Mr. Gould has been a director of the Company since 1985, and is Chairman of
the Compensation Committee. Mr. Gould has served as a director of Citadel
Holding Corporation since June 1995. Since July 1986, Mr. Gould has been a
member of Troy & Gould Professional Corporation, a law firm that the Company has
retained during its last fiscal year.
Mr. Kane has been a director of the Company since 1985 and served as
President of the Company from January 1988 through January 1993. Until November
1995, Mr. Kane served as a consultant to Sun Surgery Corporation, a subsidiary
of Sun Healthcare Group, Inc. and served as Vice President of Sun Surgery
Corporation from February through July 1995. Prior to its acquisition by Sun
Heathcare Group, Inc., in February 1995, Mr. Kane served as Chairman, Chief
Executive Officer and a director of Altis Outpatient Services, Inc., since
February 1993, which owned and operated ambulatory surgical centers. Mr. Kane
has served as a Director of Reading Company since 1989 and was President of
Reading Company from December 1991 through January 1993. Mr. Kane is also a
director of BDI Investment Corporation. He served as a director of Stater Bros.
Holdings Inc. and its predecessors from 1988 until January 1993. Mr. Kane was
also the Chairman of the Board of Citadel Holding Corporation and Fidelity
Federal Bank from March 1989 to October 1991.
Mr. Laheney has been a director of the Company since 1990. Mr. Laheney has
served as a director of Reading Company since November 1993. Since July 1995,
Mr. Laheney has been a portfolio manager for Portfolio Resources Group
overseeing global equities, fixed income and foreign exchange investments. Mr.
Laheney has been President of Aegis Investment Management Company, an investment
advisory firm specializing in global investment portfolio management since
August 1993. Mr. Laheney was Vice President of The Partners Financial Group,
Inc., between December 1993 through June 1995 and a Vice President of Dean
Witter Reynolds from April 1990 until December 1993.
Mr. Perry has been a director of the Company since 1985 and is Chairman of
the Audit Committee. Mr. Perry has been a member in the Los Angeles, California
law firm of Graven Perry Block Brody & Qualls, a professional corporation, since
1968. He is also a director of Reading Company and Fidelity Federal Bank. He
served as a director of Citadel Holding Corporation from August 1985 through
April 1993 and has served as a director of Fidelity since August 1985 and of
Reading Company since December 1988.
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Company's officers, directors and persons who own more than 10% of
the Company's Common Stock or Class A Common Preference Stock to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "Commission"). The Commission's rules also require such reporting persons
to furnish the Company with a copy of all Section 16(a) forms they file.
Based solely on a review of the copies of the forms which the Company
received and written representations from certain reporting persons, the Company
believes that, during the
6
<PAGE>
fiscal year ended September 30, 1995, all filing requirements applicable to
reporting persons were fulfilled.
DIRECTOR COMPENSATION
Directors who are not officers or employees of the Company receive for
services as a Director a fee of $25,000 per annum.
EXECUTIVE COMPENSATION
- ----------------------
I. SUMMARY COMPENSATION TABLE
The following table shows, for the years ended September 30, 1995, 1994 and
1993, the cash compensation paid by the Company, as well as certain other
compensation paid or accrued for those years, to the Chairman of the Board and
each of the most highly compensated executive officers of the Company whose
compensation exceeded $100,000 in all capacities in which they served.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION AWARDS
----------------------------------------------------- ---------
OTHER ANNUAL
NAME AND SALARY BONUS COMPENSATION (1) OPTIONS
PRINCIPAL POSITION YEAR ($) ($) ($) (#)
------------------ ---- ------ ----- ---------------- ---------
<S> <C> <C> <C> <C> <C>
JAMES J. COTTER:
Chairman of the
Board, Craig 1995 $350,000(2) 300,000(6)
(175,000)(6)
1994 $500,000 $350,000(2)
1993 $350,000(2) 175,000 (6)
(175,000)
Chairman of the
Board, Reading (3) 1995 $150,000
1994 $150,000
1993 $150,000
Director of SBH(3) 1995 $ 25,000
1994 $ 25,000
1993 $ 25,550
Chairman of the Board,
Citadel(3) 1995 $192,500 $ 52,243
1994 $ 84,511
1993 $100,000
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION AWARDS
----------------------------------------------------- ---------
OTHER ANNUAL
NAME AND SALARY BONUS COMPENSATION (1) OPTIONS
PRINCIPAL POSITION YEAR ($) ($) ($) (#)
------------------ ---- ------ ----- ---------------- ---------
<S> <C> <C> <C> <C> <C>
S. CRAIG TOMPKINS(4):
President, Craig 1995 $180,000 $ 80,000
1994 $180,000
1993 $105,000 17,500
President, Reading (3) 1995 $180,000
1994 $180,000 17,500
1993 $105,000
Director, Citadel(3) 1995 $ 60,000 $ 41,184
1994 $ 64,062
ROBIN SKOPHAMMER(5):
Chief Financial
Officer, Craig 1995 $150,000 $ 15,000
1994 $139,100
1993 $122,600
Director of SBH(3) 1994 $ 10,900
1993 $ 17,166
</TABLE>
- ----------------------------
(1) Excludes perquisites if the aggregate amount of such annual compensation to
the executive did not exceed $50,000 or 10% of the annual salary plus bonus,
if less.
(2) Amount is paid pursuant to a consulting agreement between the Company and
Mr. James J. Cotter which terminates on September 30, 1997. The Company
owns a condominium in a high-rise building, located in Hollywood,
California, which the Company uses as an executive office, and which is
personally used from time to time by the Chairman of the Board. Since the
incremental cost to the Company of Mr. Cotter's personal use of these
facilities is negligible, that cost has not been included as compensation in
the table.
(3) As of September 30, 1995, Stater Bros. Holdings Inc. ("SBH"), Reading
Company ("Reading") and Citadel Holding Corporation ("Citadel") are
considered affiliates of the Company and, accordingly, amounts paid or
earned by the listed executives from their services provided to these
companies are included in this schedule. The Company has no liability to
the individuals for these amounts. All amounts reported are liabilities or
have been paid directly by the respective company to the executives for
services rendered in the capacities outlined. Any shares listed as option
awards refer to that respective Company's securities.
8
<PAGE>
(4) Mr. Tompkins was elected as the President of the Company and was appointed
to the Board of Directors of the Company on February 26, 1993. On that same
date, he was elected by the Directors of Reading Company as the President
and as a member of the Board of Directors of that corporation. Although the
terms of Mr. Tompkins' employment with the Company and with Reading are
independent of one another, Mr. Tompkins has advised the Company that he
would not have accepted the positions at the Company if he had not been
elected that same day to his current positions at Reading and that it was
his understanding, based upon negotiations with the Chairman of the Board of
the Company and of Reading, that, subject to the approval of the Directors
of the Company and Reading, he would be serving in similar capacities at
both the Company and Reading. The Company has been advised by Reading that
Reading has no agreement or understanding with Mr. Tompkins with respect to
his serving as an officer or director of the Company either in his
individual capacity or on behalf of Reading. While no formal written
agreement exists as to the terms of Mr. Tompkins employment, the Company
agreed to provide Mr. Tompkins with a base salary of $180,000 for a two year
term, typical senior executive fringe benefits package, a one year severance
payment and a two year severance payment in the case of a change of control.
(5) Ms. Skophammer and the Company entered into a three year employment
agreement as of October 7, 1991, her date of hire. Ms. Skophammer's
agreement provides for pension benefits recognizing that the Company does
not currently have a pension plan. The Company agreed to create a plan in
which Ms. Skophammer will be provided with a pension benefit commensurate
with her salary and position. In addition, the agreement provides that in
the event of termination by the Company for any reason other than death, Ms.
Skophammer would be entitled to receive on the date of termination her
annual base compensation or in the event of a merger, acquisition or any
restructuring of the Company in which there is a change of control, as
defined, a severance payment equal to two years base compensation.
(6) In fiscal 1992 the Company entered into a two year Stock Appreciation Rights
Agreement with Mr. Cotter pursuant to which he was granted stock
appreciation rights with respect to 175,000 shares of Class A Common
Preference Stock of the Company at $10.50 per share. During 1993, such
agreement was terminated and replaced with an option to acquire 175,000
shares of the Company's Class A Common Preference Stock at $10.50 per share.
In June 1995, in consideration of, among other things, Mr. Cotter's
agreement to cancel his previously vested option rights and to extend his
consulting agreement with the Company for an additional year with no
increase in compensation, the Board canceled the option to purchase the
175,000 shares of Class A Common Preference Stock and approved the grant of
an option to acquire 300,000 shares of the Company's Common Stock at an
exercise price of $11.75 per share.
9
<PAGE>
II. OPTION GRANT TABLE
The following table contains information concerning the grant of stock
options by the Company during 1995.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
----------------- ----------------------------------------
% OF TOTAL
OPTIONS OPTIONS GRANTED EXERCISE
GRANTED IN FISCAL YEAR PRICE EXPIRATION
NAME (#) ($/SH) DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
James J. Cotter 300,000(1) 100% $11.75 6/11/2005 $1,485,000 $4,452,000
</TABLE>
- -------------------------
(1) Option to acquire shares of the Company's Common Stock.
During fiscal 1995, the expiration date of Mr. Laheney's options, the terms
of which are described herein under "Stock Option Plan", was extended to October
1997.
III. OPTION EXERCISES AND YEAR-END TABLE
The following sets forth information with respect to the executives named
in the Summary Compensation Table, concerning the exercise of options during
1995 and unexercised options as of September 30, 1995:
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTION AT IN-THE-MONEY
SHARES SEPTEMBER 30, 1995 AT SEPTEMBER 30, 1995
NAME SECURITY EXERCISED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
---- -------- --------- ------------------------------- ----------------------------
<S> <C> <C> <C> <C>
James J. Cotter Common Stock 0 300,000/0 $0/$0
S. Craig Tompkins Class A 0 8,750/8,750 $3,281/$3,281
Common
Preference Stock
Robin Skophammer Common Stock 0 15,000/0 $0/$0
</TABLE>
_______________
(1) Represents the amount by which the aggregate market price on September 30,
1995 of the shares subject to such options exceeded the exercise price of
such options.
10
<PAGE>
CERTAIN TRANSACTIONS
In November 1995, Reading Company and the Company formed Reading
International Cinemas LLC to develop and operate multiplex cinemas in Australia.
Reading Company and the Company have each committed to make an initial
contribution to Reading International Cinemas LLC of $5 million. The LLC
agreement provides, among other things, that each party will have preemptive
rights with respect to the provision of future capital and rights of first
refusal regarding any proposed disposition of the other's interest in Reading
International Cinemas LLC.
STOCK OPTION PLAN
In August 1984, the Board of Directors adopted a Stock Option Plan (the
"Plan") which provided for the issuance of options to purchase up to 200,000
shares of Common Stock through August 1994. Until August 1994, options could be
granted to officers, directors and key employees who owned 10% or less of the
total combined voting power and value of all classes of the Company's stock.
Options were granted to employees on the basis of a high level of performance
and efforts made to improve the financial performance of the Company. Under the
terms of the Plan, participants could receive options to purchase Common Stock
in the amounts and for the prices established by the stock option committee (the
"Committee"); provided, however that the exercise price of the options could not
be less than the fair market value of the underlying shares on the date of
grant. Incentive stock options could be granted for a term up to ten years, and
non-qualified options could be granted for a term up to ten years. Options
granted under the Plan may be exercisable in such installments as the Committee
determines. The Plan was amended in 1989 to conform to certain changes in the
federal tax laws, including changes concerning the sequence in which incentive
stock options may be exercised and the annual exercise limitation.
Options granted may be exercised only by the optionee and are
nontransferable except by will or under the laws of descent and distribution.
If the employment of an optionee is terminated within the term of the option for
any reason other than death or disability, the option will terminate within
three months from the date of such termination, as provided under the option
agreement. Should the optionee die or become disabled during the term of the
option, the option may be exercised by his personal representative within one
year from the date of his death or disability: provided, however, that the
option is otherwise exercisable and only to the extent that rights have accrued
under option. In any event, all options expire no later than their stated
expiration date. The aggregate fair market value of the Common Stock
(determined at the time the options are granted) with respect to which incentive
stock options may be exercised for the first time by an individual during any
calendar year may not exceed $100,000.
As of January 31, 1996, the executive officers and Directors of the Company
held options to purchase an aggregate of 30,000 shares of Common Stock under
this plan at an average exercise price per share of $13.3125. As of January 31,
1996, Mr. Laheney held an exercisable option which expires in October 1997 to
purchase 15,000 shares and Ms. Skophammer held an exercisable option which
expires in January 1997 to purchase 15,000 shares.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently is composed of two outside directors,
William D. Gould and Gerard P. Laheney. Messrs. Cotter, Perry, Laheney, Kane
and Tompkins serve as members of Reading Company's Board of Directors and, as
directors, approve decisions of Reading's Compensation Committee with respect to
compensation of Reading's officers and directors. Messrs. Cotter, Perry and
Kane are members of Reading's Executive Committee which
11
<PAGE>
serves as Reading's Compensation Committee. Messrs. Cotter, Gould and Tompkins
serve as members of Citadel Holding Corporation's Board of Directors, and, as
directors, approve decisions of Citadel's Compensation Committee with respect to
compensation of Citadel's officers and directors. Messrs. Cotter and Gould are
members of Citadel's Compensation Committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation policies and programs are designed to
attract and retain talented executives and motivate them to achieve the
Company's business objectives that the Board of Directors believes will enhance
stockholder value. Each of the Company's executive officers is employed
pursuant to employment agreements. The principal terms of these arrangements,
including salary and other base-level compensation, are described herein under
"Summary Compensation Table".
The Company's current compensation strategy is to supplement the executive
officers' base level compensation with periodic discretionary cash bonuses in
recognition of individual performance and stock option grants designed to link
the executives' long term compensation to appreciation in stockholder value over
time. To this end, the Compensation Committee from time to time recommends to
the Board of Directors the award of performance bonuses and stock option grants
to individual executive officers.
Periodic cash bonuses and stock option awards for executive officers of the
Company are determined primarily on the basis of the individual job performance
of the executive officers and achievement of the Company's business objectives,
but no particular weighting is given by the Compensation Committee to individual
performance versus the achievement of corporate objectives. These variable
elements in the compensation of the Company's executive officers recognize
individual contributions and are determined based upon the level of the
executive's responsibilities, the efficiency and effectiveness with which he or
she oversees the matters under his or her supervision and the degree to which
the officer has contributed to the accomplishment of major tasks that advance
the Company's goals. In light of the nature of the executive officers'
responsibilities, particularly the fact that they have overall corporate policy-
making and administrative responsibilities but do not oversee operating
businesses, the Compensation Committee's assessment of Mr. Cotter's performance
and the performance of other executive officers is not based directly on
corporate performance from a financial point of view. However, the Company's
financial performance is one factor that affects the Compensation Committee's
recommendation with respect to the overall level of compensation to be made for
all executive officers as a group. In appropriate cases, the Compensation
Committee takes into account in making its recommendations compensation received
by executive officers for companies affiliated with the Company. Mr. Cotter, in
his capacities as Chairman of the Board and Chief Executive Officer, is involved
in the negotiation of employment arrangements with the Company's other executive
officers, reviews executive performance with the Compensation Committee and is
consulted with respect to the amounts of each other executive officer's
discretionary bonus and stock option award, if any.
On June 12, 1995, the Board of Directors, upon the recommendation of the
Compensation Committee, approved the extension of Mr. Cotter's consulting
agreement for an additional year ending September 30, 1997 with no increase in
his base compensation. In connection with this extension, Mr. Cotter agreed to
cancel his fully vested options to purchase 175,000 shares of Class A Preference
Stock exercisable at $10.50 per share, and the Board, in lieu thereof, granted
him an option to purchase 300,000 shares of Common Stock exercisable at $11.75
per share, which option is vested subject to partial divestiture upon certain
conditions. On June 12, 1995,
12
<PAGE>
the day of the granting of this option, the closing price of the Company's
Common Stock on the New York Stock Exchange was $10.25.
In recommending this arrangement, the Compensation Committee believed it was
highly desirable and in the best interests of stockholders that Mr. Cotter's
services be secured for an additional one-year period. The grant of 125,000
options in excess of the number canceled, at a higher exercise price and subject
to partial divestiture, was the consideration negotiated with Mr. Cotter in
order to receive such an extension. The Committee believed that Mr. Cotter's
continued demonstrated leadership ability was critical in the Company's attempts
to enhance the value of its affiliates, Reading Company and Citadel Holding
Corporation.
Subject to an exception for "performance-based compensation", effective
January 1, 1994, corporations generally will be denied a deduction for federal
income tax purposes for compensation paid to senior executive officers to the
extent that such compensation exceeds $1 million. This new law did not impact
the Compensation Committee's deliberations with respect to 1993 and for 1994 the
Company does not expect to pay any executive officer cash compensation in excess
of the deductibility limit. The Compensation Committee is continuing to review
the Company's compensation policies and programs in light of the new
deductibility limit. The Compensation Committee and the Board of Directors,
however, retain discretion and authorize the payment of compensation that does
not qualify for income tax deductibility.
William D. Gould
Gerard P. Laheney
PERFORMANCE GRAPH
The information set forth below shall not be deemed incorporated by
reference by any general statement incorporating by reference the Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent the Company incorporates
this information by reference, and shall not otherwise be deemed soliciting
material or be deemed filed under such Acts.
The following line graph compares the cumulative total stockholder return on
Craig Corporation's Common Stock from September 30, 1990 through September 30,
1995 and Class A Common Preference Stock from the date of issuance in March 1990
through September 30, 1995 against the cumulative total return as calculated by
Media General Financial Services ("MGFS") of (i) the New York Stock Exchange and
(ii) the MGFS total industry return index for retail trade - food stores.
The past performance shown for the Company's common stock and Class A Common
Preference Stock is not necessarily indicative of future performance.
13
<PAGE>
FIVE YEAR CUMULATIVE RETURN
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
CRAIG NYSE MG RETAIL
Measurement Period CRAIG CLASS A STOCK FOOD GROUP
(Fiscal Year Covered) COMMON COMMON INDEX INDEX
- --------------------- ------ ------- ----- ----------
<S> <C> <C> <C> <C>
Measurement Pt- 1990 $100.00 $64.25* $100.00 $100.00
FYE 1991 $105.00 $68.63 $130.48 $124.38
FYE 1992 $ 51.67 $40.89 $141.83 $122.20
FYE 1993 $ 76.67 $65.71 $163.97 $143.17
FYE 1994 $ 75.00 $63.52 $171.81 $158.90
FYE 1995 $ 62.50 $51.84 $207.35 $167.76
</TABLE>
* This stock was issued in March 1990.
The graph assumes a one hundred dollar ($100) investment on September 30,
1990 and reinvestment of dividends on the date such dividends were declared.
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP has examined, as independent auditors, the consolidated
financial statements of the Company since 1987. Ernst & Young LLP also serves
as auditors the Company's affiliates, Stater Bros. Holdings Inc. and Reading
Company. A representative of Ernst & Young will attend the Annual Meeting of
Stockholders and will have the opportunity to make a statement if he or she
desires to do so and to respond to appropriate questions.
ANNUAL REPORT
A copy of the Company's Annual Report on Form 10-K for its fiscal year ended
September 30, 1995 (the "Annual Report") is enclosed.
STOCKHOLDER PROPOSALS
Any stockholder who, in accordance with and subject to the provisions of the
proxy rules of the SEC, wishes to submit a proposal for inclusion in the
Company's proxy statement for its 1996 Annual Meeting of Stockholders, must
deliver such proposal in writing to the Secretary of the Company at the
Company's principal executive offices at 550 South Hope Street, Suite 1825, Los
Angeles, CA 90071, no later than November 29, 1996.
14
<PAGE>
OTHER MATTERS
The Board of Directors does not know of any other matters to be presented
for consideration other than the matters described in the Notice of Annual
Meeting, but if any matters are properly presented, it is the intention of the
persons named in the accompany proxy to vote on such matters in accordance with
their judgment.
By Order of the Board of Directors,
/s/ Robin W. Skophammer
Robin W. Skophammer, Secretary
Dated: February 5, 1996
15
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
CRAIG CORPORATION
The undersigned hereby appoints S. Craig Tompkins and Robin W. Skophammer
proxies, each with power to act without the other and with power of substitu-
tion, and hereby authorizes them to represent and vote, as designated on the
other side, all the shares of stock of Craig Corporation standing in the name
of the undersigned with all powers which the undersigned would possess if
present at the Annual Meeting of Stockholders of the Company to be held at the
Four Seasons Hotel, The Almond Room, 300 South Doheny Drive, Los Angeles, CA
90048, on February 29, 1996 at 10:00 a.m. and at any and all or any adjourn-
ment and postponement thereof.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
FOLD AND DETACH HERE
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS 1 AND 2.
1. ELECTION OF DIRECTORS NOMINEES: James J. Cotter, S. Craig Tompkins,
William D. Gould, Edward L. Kane, Gerard P.
FOR all nominees WITHHOLD Laheney and Ralph B. Perry III
listed to the AUTHORITY
right (except to vote (Instruction: To withhold authority to vote
as marked to the for all for any individual nominee, write that
contrary) nominees nominee's name in the space provided below.)
listed to
the right ---------------------------------------------
[_] [_]
2. In their discretion, the Proxies are
authorized to vote upon such other business
as may properly come before the meeting.
Please sign exactly as name appears below.
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 in full
corporate name by President or other
authorized officer. If a partnership,
please sign in the partnership name by an
authorized person.
Dated: ___________________________, 1996
________________________________________
________________________________________
(Signature)
________________________________________
(Signature, if held jointly)
PLEASE SIGN, DATE, AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
FOLD AND DETACH HERE
