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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY REGISTRANT [X] FILED BY A PARTY OTHER THAN A 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 sec.240.14a-11(c) or sec.240.14a-12
EKCO GROUP, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[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:
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 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:
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<TABLE>
<S> <C> <C>
LOGO EKCO Group, Inc. Telephone 603 888-1212
98 Spit Brook Road, Suite 102 FAX 603 888-1427
Nashua, New Hampshire 03062
</TABLE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 12, 1998
To the Holders of the Company's Capital Stock:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of EKCO
GROUP, INC. will be held on Tuesday, May 12, 1998, at 9:30 a.m., local time, at
Fleet Bank of Massachusetts, N.A., 75 State Street, Eighth Floor Conference
Center, Boston, Massachusetts, for the following purposes:
1. To elect eight directors to hold office until the next annual meeting
of stockholders and until their successors are chosen and qualified;
and
2. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
The close of business on March 19, 1998 has been fixed as the record date
for determining the stockholders entitled to notice of and to vote at the Annual
Meeting or any adjournments thereof. The transfer books will not be closed.
A list of the stockholders entitled to vote at the Annual Meeting will be
open to examination by stockholders for any purpose relevant to the Annual
Meeting, during ordinary business hours, for a period of ten days prior to the
Annual Meeting at the Company's Corporate Headquarters in Nashua, New Hampshire
and at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One
Financial Center, Boston, Massachusetts. The list will likewise be available at
the Annual Meeting.
Stockholders are urged to date, sign, vote and return the enclosed form of
proxy at their earliest convenience even if they plan to attend the meeting. A
return envelope is enclosed for this purpose which requires no postage if mailed
in the United States. The proxy is revocable by the person giving it at any time
prior to exercise by written notice received by the Company, by delivery of a
duly executed later dated proxy, or by voting the shares in person at the Annual
Meeting.
By order of the Board of Directors,
JOHN JAY ALTHOFF
Secretary
March 27, 1998
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EKCO GROUP, INC.
98 SPIT BROOK ROAD, SUITE 102
NASHUA, NEW HAMPSHIRE 03062
PROXY STATEMENT
This Proxy Statement is being sent beginning on or about March 27, 1998 to
all holders of the common stock, $.01 par value per share ("Common Stock"), and
Series B ESOP Convertible Preferred Stock, par value $.01 per share ("ESOP
Preferred Stock"), of EKCO Group, Inc. (the "Company") entitled to vote at the
Annual Meeting of Stockholders to be held on Tuesday, May 12, 1998 (the "Annual
Meeting") in order to provide information on the business to be transacted.
Stockholders of record at the close of business on March 19, 1998 are entitled
to vote at the Annual Meeting. As of that date, the outstanding voting stock of
the Company consisted of 19,153,444 shares of Common Stock and 1,318,681 shares
of ESOP Preferred Stock, with each share being entitled to one vote.
A proxy card is enclosed for your use. YOU ARE SOLICITED BY THE BOARD OF
DIRECTORS OF THE COMPANY TO VOTE YOUR SHARES AND TO SIGN, DATE AND RETURN THE
PROXY CARD IN THE ENCLOSED SELF-ADDRESSED POSTAGE-PAID ENVELOPE.
The shares represented by the proxies received will be voted as you
specify, or, if no specification is made, will be voted for the election of each
of management's eight nominees for election as director. Shares of ESOP
Preferred Stock and Common Stock held by the trustee of the Company's Employees'
Stock Ownership Plan Trust (the "ESOP") and not allocated to the accounts of
plan participants will be voted in proportion to the votes of the shares of ESOP
Preferred Stock which have been allocated to the accounts of participants.
You may revoke your proxy at any time before it is voted at the Annual
Meeting by delivering written notice of revocation to the Secretary of the
Company before the Annual Meeting, by submitting a later dated proxy, or by
voting the shares in person at the Annual Meeting. The solicitation will be
primarily by mail, but may also include telephone, facsimile or oral
communication by directors, officers and employees of the Company who will
receive no additional compensation for any such solicitation. All costs of the
solicitation of proxies will be borne by the Company. The Company will reimburse
brokerage companies and others for their costs in forwarding proxy materials to
the beneficial owners of stock.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of capital stock entitled to vote is necessary to constitute
a quorum at the Annual Meeting.
KPMG Peat Marwick LLP, who was the Company's independent auditor for the
fiscal year ended December 28, 1997 ("Fiscal 1997") and who has been reappointed
for the current fiscal year, is expected to have a representative present at the
Annual Meeting who will have an opportunity to make a statement if he so desires
and who will be available to respond to appropriate questions.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the close of business on March 10,
1998, the number of shares of Common Stock and ESOP Preferred Stock beneficially
owned by each person known by the Company to own more than 5% of either the
outstanding Common Stock or ESOP Preferred Stock, by each nominee for election
as director, by each individual named in the Summary Compensation Table on page
14 hereof, and by all current executive officers and directors as a group, and
the percentage of the outstanding Common Stock and ESOP Preferred Stock which
such shares represent. Except as indicated in the accompanying notes and except
in the case of the Trust of the ESOP which holds shares of ESOP Preferred Stock
and Common Stock on behalf of participants in the ESOP who have voting power and
investment power as set forth in the ESOP, the owners have sole voting and
investment power with respect to the shares. Attached to each share of Common
Stock is a Preferred Share Purchase Right to acquire one-one hundredth of a
share of the Company's Series A Junior Participating Preferred Stock, par value
$.01 per share, which rights are not presently exercisable.
<TABLE>
<CAPTION>
AMOUNT AND NATURE AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF OF BENEFICIAL
OWNERSHIP OF COMMON OWNERSHIP OF ESOP PERCENT OF ESOP
BENEFICIAL OWNERS COMMON STOCK STOCK(1) PREFERRED STOCK PREFERRED STOCK
----------------- -------------------- ----------- ----------------- ---------------
<S> <C> <C> <C> <C>
Trust of the EKCO Group, Inc........ 2,234,769(2) 11.7% 1,318,681(2) 100%
Employees' Stock Ownership Plan
c/o EKCO Group, Inc.
98 Spit Brook Road
Nashua, NH 03062
First Manhattan Co.................. 1,732,942(3) 9.0% -- --
437 Madison Avenue
New York, New York 10022
Tweedy, Browne Company L.P.
TBK Partners, L.P. ... 1,614,175(4) 8.4% -- --
Vanderbilt Partners, L.P.
52 Vanderbilt Avenue
New York, NY 10017
Dimensional Fund Advisors Inc....... 1,114,000(5) 5.8% -- --
1299 Ocean Avenue
Santa Monica, CA 90401
Pioneering Management Corporation... 1,091,000(6) 5.7% -- --
60 State Street
Boston, MA 02109
George W. Carmany, III.............. 74,753(7)(8)(9) * -- --
Stuart W. Cohen..................... 59,881(9)(10)(11) * 2,378 *
Donato A. DeNovellis................ 318,236(7)(9)(10) 1.6% 4,513 *
(11)(12)
Michael G. Frieze................... 44,753(8)(9) * -- --
Avram J. Goldberg................... 42,753(8)(9) * -- --
Brian R. McQuesten.................. 194,297(9)(10) 1.0% 12,620 *
Kenneth J. Novack................... 16,000(9) * -- --
Stuart B. Ross...................... 44,373(8)(9) * -- --
Malcolm L. Sherman.................. 1,032,974(8)(11) 5.1% 1,384 *
Bill W. Sorenson.................... 55,714(8)(9) * -- --
Herbert M. Stein.................... 148,915(8)(9) * -- --
Robert Varakian..................... 438,832(7)(9)(10) 2.2% 1,400 *
Jeffrey A. Weinstein................ 562,676(7)(9)(10)(11) 2.9% 16,732 1.3%
All Current Directors............... 2,336,547(7)(8)(9) 11.0% 40,174 3.0%
and Executive Officers (10)(11)(12)
as a Group (15 Persons)
</TABLE>
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* Represents holdings of less than one percent.
(1) Computed on the basis of 19,153,444 shares of Common Stock outstanding,
plus, in the case of any person deemed to own shares of Common Stock as a
result of owning options or rights to purchase Common Stock exercisable
within 60 days or ESOP Preferred Stock which is presently convertible into
an equal number of shares of Common Stock by the record owner, the
additional shares of Common Stock which would be outstanding upon such
exercise, purchase or conversion by such person or group.
(2) The Trust of the ESOP disclaims beneficial ownership of the shares held by
it for the participants in the ESOP.
(3) Based on an amended Schedule 13G filed in February 1998 by First Manhattan
Co. ("FMC"), a registered broker-dealer and investment advisor. FMC has
sole voting authority with respect to 163,650 of such shares, more fully
described below, shared voting authority with respect to 1,546,092 of such
shares, sole dispositive power as to 163,650 of such shares and shared
dispositive power with respect to 1,569,292 of such shares. The 163,650
shares referred to above are owned by general partners of FMC and each such
partner individually retains sole voting and investment power over such
shares. Family members of general partners own an additional 23,750 shares
as to which FMC disclaims dispositive power as to 20,750 shares and
beneficial ownership as to 3,000 of such shares.
(4) Based on an amended Schedule 13D jointly filed in June 1996 by Tweedy,
Browne Company, L.P. ("TBC"), T.B.K. Partners, L.P. ("TBK") and Vanderbilt
Partners, L.P. ("Vanderbilt"). TBC, a registered broker-dealer and
investment adviser and a member of the National Association of Securities
Dealers, Inc., may be deemed to be the beneficial owner of 1,507,275 of
such shares, which are held in the accounts of various customers (the "TBC
Accounts"), with respect to which it has obtained sole voting authority as
to 1,315,965 of such shares and shared dispositive power as to all
1,507,275 such shares. Included in the TBC shares are 410 shares held in a
TBC Account for a charitable foundation of which Christopher H. Browne, a
General Partner (as defined below) is a trustee. In addition, TBK and
Vanderbilt, each a private investment partnership, beneficially own
directly and have sole voting authority and investment discretion with
respect to 76,000 and 30,900 of such shares, respectively. The aggregate
number of shares of Common Stock with respect to which TBC, TBK and
Vanderbilt could be deemed to be the beneficial owner as of the date of
such amended Schedule 13D is 1,614,175 shares. The general partners of TBC
and Vanderbilt are Christopher H. Browne, William H. Browne and John D.
Spears (the "General Partners"). All of the General Partners and Thomas P.
Knapp are general partners of TBK. The General Partners may be deemed to
control TBC and Vanderbilt, and the General Partners and Thomas P. Knapp
may be deemed to control TBK. The aggregate number of shares of Common
Stock with respect to which each of the General Partners may be deemed to
be the beneficial owner by reason of his being a general partner of TBC,
TBK and Vanderbilt, respectively, is 1,614,175 shares, with Thomas P. Knapp
deemed to be the beneficial owner of 76,000 shares by reason of his being a
general partner of TBK. Each of TBC, TBK and Vanderbilt disclaims
beneficial ownership of Common Stock held by the other and held in the TBC
Accounts.
(5) Based upon an amended Schedule 13G filed in February 1998 by Dimensional
Fund Advisors Inc. ("Dimensional"), a registered investment advisor. All of
such shares are held in portfolios of DFA Investment Dimensions Group Inc.,
a registered open-end investment company (the "Fund"), or in DFA Investment
Trust Company, a Delaware business trust (the "Trust"), or in the DFA Group
Trust and DFA Participation Group Trust, investment vehicles for qualified
employee benefit plans, for all of which Dimensional serves as investment
manager. Of the foregoing shares, Dimensional has sole dispositive
authority as to all 1,114,000 of such shares and sole voting authority as
to 752,100 shares.
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Further, persons who are officers of Dimensional also serve as officers of
the Fund and the Trust, and in such capacities, may vote 136,500 additional
shares owned by the Fund and 225,400 additional shares owned by the Trust.
Dimensional disclaims beneficial ownership of all such shares.
(6) Based upon a Schedule 13G filed in January 1998 by Pioneering Management
Corporation, an investment adviser.
(7) Includes the following number of shares of Common Stock owned jointly by
the following persons and their wives as to which such persons may be
deemed to share voting and investment power: Mr. Carmany, 38,000 shares;
Mr. DeNovellis, 25,673 shares; and Mr. Varakian, 4,000 shares. Excludes
6,000 shares owned by Mr. Weinstein's children as to which Mr. Weinstein
disclaims beneficial ownership.
(8) Includes the following number of shares of Common Stock currently issuable
upon the exercise of stock options held by the following directors pursuant
to the Company's 1988 Directors' Stock Option Plan, as amended: Mr.
Carmany, Mr. Frieze and Mr. Goldberg, 19,753 shares each, all of which are
subject to repurchase by the Company; Mr. Ross, 31,373 shares; Mr. Sherman,
16,162 shares, of which 5,387 shares are subject to repurchase by the
Company; Mr. Sorenson, 35,714 shares; and Mr. Stein, 45,714 shares.
(9) Includes the following number of shares of Common Stock currently issuable
upon the exercise of stock options held by the following persons pursuant
to the 1987 Stock Option Plan, as amended: Mr. Carmany, Mr. Frieze, Mr.
Goldberg, Mr. Ross, Mr. Sorenson and Mr. Stein, 10,000 shares each and Mr.
Novack, 15,000 shares, all of which shares are subject to repurchase by the
Company; Mr. Cohen, 26,432 shares, of which 10,952 shares are subject to
repurchase by the Company; Mr. DeNovellis, 236,345 shares, of which 31,358
shares are subject to repurchase by the Company; Mr. McQuesten, 117,385
shares, of which 5,508 shares are subject to repurchase by the Company; Mr.
Sherman, 1,010,000 shares; Mr. Varakian, 423,000 shares, of which 91,667
shares are subject to repurchase by the Company; Mr. Weinstein, 361,228
shares, of which 10,994 shares are subject to repurchase by the Company;
and all current executive officers and directors as a group, 2,280,390
shares, of which 250,646 shares are subject to repurchase by the Company.
(10) Includes the following number of shares of Common Stock purchased pursuant
to the Company's 1984 and 1985 Restricted Stock Plans, as amended, which
are held in escrow, are presently subject to repurchase by the Company and
as to which certain transfer restrictions apply: Mr. Cohen, 16,366 shares;
Mr. DeNovellis, 39,174 shares; Mr. McQuesten, 15,710 shares; Mr. Varakian,
10,000 shares; Mr. Weinstein, 30,158 shares; and all current executive
officers and directors as a group, 114,908 shares.
(11) Includes the number of shares of ESOP Preferred Stock listed in the table,
if any, and the following number of shares of Common Stock allocated to the
ESOP accounts of the following participants: Mr. Cohen, 705 shares; Mr.
DeNovellis, 1,263 shares; Mr. McQuesten, 2,958 shares; Mr. Sherman, 428
shares; Mr. Varakian, 432 shares; Mr. Weinstein, 3,708 shares; and all
current executive officers and directors as a group, 9,783 shares. Mr.
DeNovellis, an executive officer, is also the trustee of the ESOP, but the
1,318,681 shares of ESOP Preferred Stock and the 916,088 shares of Common
Stock held by the ESOP and not allocated to the accounts of executive
officers are not included in calculating the number of shares held by "All
Current Directors and Executive Officers as a Group," and Mr. DeNovellis
disclaims beneficial ownership of shares of ESOP Preferred Stock and Common
Stock held by the ESOP (other than shares specifically allocated to his
account under the ESOP).
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(12) Includes 11,410 shares of Common Stock held by retirement plans of
subsidiary corporations of which Mr. DeNovellis is trustee and as to which
Mr. DeNovellis disclaims beneficial ownership.
ELECTION OF DIRECTORS
Each director will hold office until the next annual meeting of
stockholders and until his successor is chosen and qualified, or until his
earlier resignation or removal. The Board of Directors has inquired of each
nominee and determined that each will serve if elected. If any of the nominees
becomes unavailable for election, the Board of Directors may designate
substitute nominees, in which event shares of Common Stock and ESOP Preferred
Stock, pursuant to directions received from the ESOP participants, represented
by proxies will be voted for such substitute nominees unless an instruction to
the contrary is indicated on the proxy.
Biographical summaries and ages as of March 25, 1998 of those persons
nominated by the Board of Directors for election as a director are listed below.
No nominee for director or executive officer has any family relationship with
any other nominee or with any other executive officer of the Company.
GEORGE W. CARMANY, III; AGE 58; PRESIDENT, G.W. CARMANY COMPANY (AN ADVISOR TO
AND INVESTOR IN SMALL COMPANIES).
Mr. Carmany has served as a director of the Company since February 1997 and
is President of G.W. Carmany Company, which he established in 1995. From 1975
until 1994, he served American Express Company (a global travel and financial
services company) in senior positions in that company's international banking
division and at the corporate level, including Senior Executive Vice President,
Treasurer and Director of its subsidiary The Boston Company (an investment
manager and private bank) from July 1990 to May 1993 and Chairman of Olympia and
York Noteholders Steering Committee from November 1992 to April 1994. Mr.
Carmany is a director of Equivest Finance, Inc. (a finance company).
MICHAEL G. FRIEZE; AGE 60; CHIEF EXECUTIVE OFFICER, EXECUTIVE VICE PRESIDENT AND
TREASURER OF THE SEVERAL GORDON BROTHERS COMPANIES (A GROUP OF COMPANIES WHICH
PROVIDE RETAIL, MERCHANT AND FINANCIAL SERVICES AND WHOLESALE AND RETAIL FINE
JEWELRY).
Mr. Frieze has served as a director of the Company since February 1997. In
1966, he joined Gordon Brothers companies, where he has served Gordon Brothers
Corporation (a jewelry distributor) as Chairman since January 1992, Chief
Executive Officer since January 1991, Executive Vice President since October
1993 and Treasurer since October 1990. He has served Gordon Brothers Partners,
Inc. (a merchant services company) as Chief Executive Officer, Executive Vice
President and Treasurer since January 1992. In addition, he also serves various
other Gordon Brothers companies in similar executive capacities, including
Jewelry Promotions, Inc. (a jewelry sales company), Kurt Gutman Jewelry, Inc.
(an importer and distributor of gold and jewelry), Gordon Brothers Capital
Corporation (a financial services company) and Gordon Brothers Ltd. (a U.K.
merchant services company).
AVRAM J. GOLDBERG; AGE 68; CHAIRMAN, THE AVCAR GROUP, LTD. (A MANAGEMENT
CONSULTING FIRM).
Mr. Goldberg has served as a director of the Company since February 1997
and has been Chairman of The AVCAR Group since 1990. From 1958 to 1989, Mr.
Goldberg served The Stop & Shop Companies, Inc. (a chain of supermarket and mass
retailing stores) in a number of senior executive positions, including
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Chairman of the Board and Chief Executive Officer from 1985 to 1989. Mr.
Goldberg serves as a director of Whole Foods Market, Inc. (a chain of natural
foods supermarkets).
KENNETH J. NOVACK; AGE 56; MEMBER OF THE FIRM OF MINTZ, LEVIN, COHN, FERRIS,
GLOVSKY AND POPEO, P.C. (A LAW FIRM).
Mr. Novack has served as a director of the Company since March 1998. He is
a member of the firm of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.,
which he joined in 1966. The firm of Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C. and Mr. Novack have served as outside legal counsel to the Company
since 1988. Mr. Novack is a director of Organogenesis Inc. (a biotechnology
management company).
STUART B. ROSS; AGE 60; EXECUTIVE VICE PRESIDENT, XEROX CORPORATION (A WORLDWIDE
DOCUMENT PROCESSING SERVICING COMPANY); CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
XEROX FINANCIAL SERVICES, INC. (A FINANCIAL SERVICES COMPANY).
Mr. Ross has served as a director of the Company since February 1989. He
has served in his present positions with Xerox Corporation and Xerox Financial
Services since May 1990.
MALCOLM L. SHERMAN; AGE 66; CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER OF
THE COMPANY.
Mr. Sherman has served as Chief Executive Officer of the Company since
December 1996, Chairman of the Board since July 1996 and as a director of the
Company since May 1995. From February 1993 to July 1996, Mr. Sherman served as a
consultant to the Company. He has served since February 1993 as Chairman of the
Board of Advisors of Gordon Brothers companies. He served as Chairman and a
director of K.T. Scott, Ltd. (a chain of wallpaper and window treatment stores)
from January 1991 to August 1995. He served as President and Chief Executive
Officer of Morse Shoe, Inc. (a manufacturer, importer and retailer of shoes)
from January 1992 until December 1993. Prior to 1988, Mr. Sherman served Zayre
Stores (a chain of general merchandise discount stores) in a number of executive
capacities, including Chairman from 1982 to 1987, and from 1972 to 1987 served
Zayre Corporation (a group of companies engaged in retail businesses) as its
Executive Vice President. Mr. Sherman is a director of Maxwell Shoe Co. (a shoe
importer) and One Price Clothing, Inc. (a chain of sportswear stores).
BILL W. SORENSON; AGE 66; CHAIRMAN AND DIRECTOR, MANAGEMENT RESOURCES OF
AMERICA, INC. (A MANAGEMENT CONSULTING FIRM); CHAIRMAN AND DIRECTOR, AMERICAN
SPORTS PRODUCTS GROUP INC. (A HOLDING COMPANY WHICH OWNS SPORTS EQUIPMENT
MANUFACTURING BUSINESSES).
Mr. Sorenson has served as a director of the Company since October 1986 and
has been Chairman and a director of Management Resources of America, Inc. since
January 1986 and was its Chief Executive Officer from January 1986 to May 1994.
He has been Chairman and a director of American Sports Products Group Inc. since
May 1994.
HERBERT M. STEIN; AGE 69; CHAIRMAN, CHIEF EXECUTIVE OFFICER AND DIRECTOR,
ORGANOGENESIS INC. (A BIOTECHNOLOGY DEVELOPMENT COMPANY); PRESIDENT, H. M. STEIN
& CO., INC. (A FINANCIAL MANAGEMENT FIRM).
Mr. Herbert Stein has served as a director of the Company since September
1981. He has served as Chairman of Organogenesis Inc. since February 1991 and
its Chief Executive Officer and a director since 1987. Mr. Stein has also served
as President of H. M. Stein & Co., Inc. since 1970. He is a director of Apogee
Technology (a company engaged in research and development of digital
amplification).
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COMMITTEES OF BOARD OF DIRECTORS AND MEETING ATTENDANCE
Audit Committee. The Audit Committee currently consists of three
non-employee directors: George W. Carmany, III, Michael G. Frieze and Herbert M.
Stein. The Audit Committee reviews the engagement of the Company's independent
auditors. The Audit Committee also reviews the audit fees of the independent
auditors and the adequacy of the Company's internal accounting procedures. The
Audit Committee met two times during Fiscal 1997.
Compensation Committee. The Compensation Committee currently consists of
three non-employee directors: Avram J. Goldberg, Stuart B. Ross and Bill W.
Sorenson. The Compensation Committee reviews, approves and makes recommendations
regarding the Company's compensation policies, practices and procedures to
ensure that the legal and fiduciary responsibilities of the Board of Directors
are carried out and that such policies, practices and procedures contribute to
the success of the Company. The Compensation Committee administers the Company's
1984 and 1985 Restricted Stock Plans (collectively, the "1984 and 1985 Plans"),
the 1987 Stock Plan (the "1987 Stock Plan") and the 1984 Employee Stock Purchase
Plan. The Committee met six times during Fiscal 1997.
Other Committees. The Executive Committee currently consists of Malcolm L.
Sherman, George W. Carmany, III and Michael G. Frieze. The Executive Committee
has the authority to take all actions that could be taken by the full Board of
Directors with certain exceptions. The Executive Committee meets as necessary
between regularly scheduled meetings of the Board of Directors to take such
action as is advisable for the efficient operation of the Company. The Executive
Committee met two times during Fiscal 1997. The Company does not have a standing
nominating committee or any other regular committee.
Meeting Attendance. During Fiscal 1997, there were fifteen meetings of the
Board of Directors, and the various committees of the Board of Directors met a
total of ten times. All the members of the Board of Directors attended at least
87% of the aggregate of all meetings held by the Board of Directors and the
Committees of the Board upon which they served. In addition, from time to time,
the members of the Board of Directors and its committees act by unanimous
written consent pursuant to Delaware law.
REQUIRED VOTE FOR APPROVAL -- The affirmative vote of holders of a majority
of the issued and outstanding shares of the capital stock of the Company present
in person or represented by proxy and entitled to vote at the Meeting is
required to elect each director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF EACH PERSON NOMINATED
AS A DIRECTOR.
COMPENSATION OF DIRECTORS
DIRECTORS' FEES
Directors of the Company who are not employees receive an annual fee of
$10,000, a fee of $1,000 for each Board of Directors' meeting attended,
including telephonic meetings, and reimbursement of meeting travel expenses.
Such directors also receive a fee of $1,000 for attendance at each meeting of a
committee of the Board of Directors, including telephone meetings. Mr. Sherman,
an employee director, does not receive additional compensation for serving on
the Board of Directors.
DIRECTORS' STOCK OPTIONS
As of March 19, 1998, the Company had 286,072 shares available for future
grants under the 1988 Directors' Stock Option Plan, as amended (the "Directors'
Plan"). The Directors' Plan provides for the granting of non-qualified stock
options (each, a "Director Option") to purchase Common Stock to non-employee
directors of the Company. Under the terms of the Directors' Plan, Director
Options are automatically granted to Outside Directors (as defined) at the time
they so qualify. An "Outside Director" is
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a director who is not an employee of the Company or an affiliate (as defined) of
the Company, who has not been so employed within one year before the time of
grant, and has been elected as a director by the stockholders of the Company. No
Outside Director may be granted more than one Director Option. The option
exercise price for each share of Common Stock covered by a Director Option is
the fair market value (as defined) of such share on the date the Director Option
is granted. Each Director Option covers that number of shares determined by
dividing $100,000 by the fair market value of a share of Common Stock on the
date of grant, but in no event may the number of shares subject to such Director
Option be greater than 50,000. Each Director Option has a term of ten years from
the date of grant, subject to earlier termination as provided in the Directors'
Plan.
Each outstanding Director Option is exercisable at any time and from time
to time in accordance with the terms of the Directors' Plan. Shares purchased
pursuant to the exercise of any Director Option are subject to repurchase by the
Company within three years of the date of grant of the Director Option at the
exercise price upon termination of the Outside Director's directorship with the
Company as follows: as to all shares so purchased if termination occurs prior to
the first anniversary of the date of grant of the Director Option; as to up to
two-thirds of the shares purchased pursuant to the Director Option if
termination occurs prior to the second such anniversary; and as to up to
one-third of the shares purchased pursuant to the Director Option if termination
occurs prior to the third such anniversary. The shares cease to be subject to
the right of the Company to repurchase them if termination of the directorship
is due to the death of the Outside Director or if a change of control (as
defined) of the Company occurs at any time before the Outside Director's
directorship is terminated.
In October 1997, each Outside Director was granted a stock option covering
10,000 shares of Common Stock at an option exercise price of $6.4688 per share
(the fair market value (as defined) of the shares on the date of grant) pursuant
to the Company's 1987 Stock Option Plan, as amended (the "1987 Stock Plan") and
Mr. Novack, in his capacity as a consultant to the Company, was likewise granted
a stock option for 15,000 shares on the same date. The terms of the option
grants, other than as to the number of shares granted, are the same as the
Director Options described above, except for the option to Mr. Novack, which
becomes exercisable in equal annual installments over a five-year period
assuming his continued consultancy relationship with the Company.
COMPENSATION OF EXECUTIVE OFFICERS
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
three-member Compensation Committee of the Board of Directors. The following is
a report covering compensation paid or accrued in Fiscal 1997, which is
submitted by the Compensation Committee whose members currently are Avram J.
Goldberg, Stuart B. Ross and Bill W. Sorenson. This report addresses the
elements of the executive compensation program for Fiscal 1997, including a
discussion of the decisions regarding the Fiscal 1997 compensation of the CEO
and the Company's other executive officers who were executive officers in Fiscal
1997, including the persons named in the Summary Compensation Table below
(collectively, "Senior Management").
The Compensation Committee has considered the effect of the limitations on
the deductibility of executive compensation under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), on the Company's compensation
policies and practices. Section 162(m) generally disallows a tax deduction by a
public company for annual compensation in excess of $1 million paid to its CEO
and to any of the Company's four other most highly compensated executives. It is
the policy of the Compensation Committee and Board of Directors to seek to
preserve tax deductibility of compensation paid to executives unless regulatory
requirements to do so are contrary to the best interests of the Company and its
stockholders.
8
<PAGE> 11
At last year's annual meeting of stockholders, the stockholders approved an
amendment to the 1987 Stock Plan which had the effect of excluding from the
limitation on deductible compensation under Section 162(m) compensation of the
Company's executives as a result of their exercise of non-qualified stock
options under the 1987 Stock Plan. Compensation attributable to the Company's
1995 Incentive Plan, more fully described below, including restricted stock
issued pursuant to the 1984 and 1985 Plans (but excluding stock options granted
under the 1987 Stock Plan), does not currently qualify for any exception to the
Section 162(m) tax deduction limitations and therefore counts against the $1
million limit.
CEO COMPENSATION -- The CEO's compensation was negotiated by a Special
Committee of the board of directors in late 1996 with the advice of KPMG Peat
Marwick LLP ("KPMG"), who acted as independent compensation consultants to the
Company to assist the Special Committee in determining reasonable compensation
arrangements with the CEO. This arrangement was subsequently approved by the
Compensation Committee in November 1996.
The CEO's compensation is comprised of an annual salary of $250,000, such
bonus as may be determined by the Board of Directors or the Compensation
Committee and a stock option to purchase 900,000 shares of Common Stock pursuant
to the Company's 1987 Stock Plan. No bonus was awarded for Fiscal 1997. KPMG
compared the CEO's above-described compensation to a compensation peer group
consisting of fifteen consumer goods companies, some of which were substantially
larger and some substantially smaller than the Company. The CEO's cash
compensation was found to be less than the 25th percentile of such companies and
his long-term compensation was above that paid to other newly hired chief
executive officers but reflected the relatively high risk involved with stock
options. Overall, the CEO's total compensation was at median competitive levels
with respect to other recently hired chief executive officers. The CEO's Fiscal
1997 compensation also includes an award of stock options made by the
Compensation Committee in February 1997 when performance unit right ("SAR")
awards made to the CEO and certain Senior Management under the 1996 Performance
Unit Rights Award Plan, as amended, were cancelled and replaced by stock options
granted pursuant to the 1987 Stock Plan and valued at 110% of the value of the
SARs using the Black-Scholes option pricing model adapted for use in valuing
executive stock options and SARs.
With respect to the 900,000 share stock option, all 900,000 shares are
currently exercisable (300,000 shares were exercisable on the December 1996
option grant date and the remaining 600,000 option shares became exercisable in
Fiscal 1997 when the fair market value (as defined) of the Common Stock as
reported by the New York Stock Exchange ("NYSE") became equal to or greater than
$6.00 as to 300,000 option shares and $8.00 as to the remaining 300,000 option
shares).
SENIOR MANAGEMENT -- GENERAL -- Compensation in Fiscal 1997 for Senior
Management (other than Robert Varakian whose compensation is discussed in "Other
Arrangements" below) was based upon the Company's 1995 Incentive Compensation
Plan for Executive Employees (the "1995 Incentive Plan") for each participating
executive. The purpose of the 1995 Incentive Plan is to enable the Company and
its subsidiaries to attract and retain highly qualified executive management and
to motivate such individuals by providing competitive total compensation based
partly on their performance and partly on the performance of the Company. The
1995 Incentive Plan provides variable performance incentives based on the
Company's performance and the participating executive's individual performance
and contribution to the achievement of Company objectives.
The structure of the 1995 Incentive Plan was originally proposed by Towers
Perrin, an independent compensation consulting firm retained by the Compensation
Committee for compensation during the period of the Company's 1995 through and
including its 1999 fiscal year. In February 1997 upon the recommendation of the
CEO, the Compensation Committee replaced the cash bonus component of the 1995
Incentive Plan with a cash incentive plan (the "1997 Cash Bonus Plan") based
upon the Company's operating budget as approved by the Board of Directors. The
1995 Incentive Plan was further modified in Fiscal 1997 based upon the
9
<PAGE> 12
recommendations made to the Compensation Committee by Coopers & Lybrand, L.L.P.
("Coopers & Lybrand"), an independent executive compensation consulting firm
retained by the Compensation Committee. Coopers & Lybrand conducted an analysis
of the 1995 Incentive Plan's base, short-term and long-term compensation and
assessed these elements against published survey data representing an average of
300 companies in similar industries and/or of comparable revenue size. The 1995
Incentive Plan, as modified, is described as follows:
The 1995 Incentive Plan consists of three components: Base compensation,
cash-based incentive compensation awards in accordance with the 1997 Cash Bonus
Plan and long-term incentive awards of (i) restricted stock made in the
Company's 1995 fiscal year which vests based on performance goals for each of
the five fiscal years beginning in fiscal 1995 (with no further grants to be
made through 1999), and (ii) stock options granted in fiscal 1995 through Fiscal
1997, with awards in future years to be made at the discretion of the
Compensation Committee.
The 1997 Cash Bonus Plan was implemented in order to provide a more
reasonably achievable incentive to reward participating Senior Management if the
Company achieves or exceeds its operating budget in Fiscal 1997 and in future
years. As consideration for participating in the 1997 Cash Bonus Plan, each
participating executive agreed to forego receipt of 50% of the number of stock
options which otherwise would have been awarded under the terms of the 1995
Incentive Plan at the beginning of Fiscal 1997. Target bonus amounts for
participating executives remained the same for Fiscal 1997 as those which had
been established in the Company's 1996 fiscal year pursuant to the 1995
Incentive Plan. The 1997 Cash Bonus Plan provides for payment of a participating
executive's target bonus for a fiscal year as follows: If the budgeted profit
(as defined) is fully achieved, then 60% of the target bonus will be paid; for
every variance of 5% above or below budgeted profit, payment is increased or
decreased, as the case may be, by one-third of this portion of the target bonus,
with no upper limit in the bonus earned from achievement of profit in excess of
the budgeted profit and no target bonus payable at 85% or less of budgeted
profit. The remaining 40% of the target bonus will be payable only if (i) actual
achieved profit exceeds 85% of budgeted profit, and then (ii) in the following
manner: up to a maximum of 20% from the successful accomplishment of goals and
objectives specific to the individual as approved by the individual's supervisor
and the CEO, and 20% to be discretionary with the review and approval of the
CEO.
The 1995 Incentive Plan provides participating executives with the option
to have all or a portion of any bonus paid either in cash or deferred until a
specified date or time and up to 20% of any increase in base compensation over
the prior year's base compensation paid either in cash or deferred, with
deferrals to be solely invested in interest bearing accounts. There were no
deferrals in Fiscal 1997.
Stock options and restricted stock are subject to the terms and conditions
of the Company's respective stock plans and such additional restrictions as may
be specified in the 1995 Incentive Plan. Such terms and conditions are more
fully described below and in the notes following the Summary Compensation and
Option Grants Tables. In the event of a change of control (as defined), the 1995
Incentive Plan provides for accelerated payment of unpaid annual incentive
compensation amounts, the lapsing of the Company's repurchase rights on stock
acquired through the exercise of stock options and the lapsing of all
restrictions on restricted stock.
FISCAL 1997 TOTAL REMUNERATION -- Total remuneration for Mr. Cohen, Mr.
DeNovellis, Mr. McQuesten and Mr. Weinstein, the members of Senior Management
who participate in the 1995 Incentive Plan ("Participating Senior Management"),
was changed in Fiscal 1997 to reflect the 1997 Cash Bonus Plan and its
concomitant 50% reduction in stock option shares awarded in such year and the
changes noted below in "Fiscal 1997 Cash Compensation," and their total
remuneration for Fiscal 1997 is comprised of their base salary and stock
options, more fully described below in "Long-Term Incentive Awards."
10
<PAGE> 13
FISCAL 1997 CASH COMPENSATION -- Coopers & Lybrand performed a comparative
assessment of base salary and target bonus opportunities, which was based upon
compensation data for Participating Senior Management as of January 1997.
Coopers & Lybrand concluded that these cash components of compensation, when
compared to companies in similar industries and/or comparable revenue size,
generally ranged between the 50th and 75th percentile levels. In July 1997, the
Compensation Committee approved the following increases in base salary and
target bonus as recommended by Coopers & Lybrand, which reflected Mr.
DeNovellis' job responsibilities and Mr. Weinstein's new responsibilities as
head of the Company's international division: Mr. DeNovellis' base salary was
increased by 10.2% and his target bonus was increased 6.9%, and Mr. Weinstein's
base salary was increased by 6.7% and his target bonus was increased 11%, both
as compared to cash compensation for the Company's 1996 fiscal year. In
September 1997, the Compensation Committee approved a 4% increase in Mr.
McQuesten's base salary in accordance with management's recommendation. For
Fiscal 1997, Participating Senior Management did not defer any of their Fiscal
1997 salary increases. No bonuses were paid for Fiscal 1997 to Participating
Senior Management because the requisite percentage of budgeted profit under the
1997 Cash Bonus Plan was not achieved.
LONG-TERM INCENTIVE AWARDS -- The Compensation Committee approved the grant
for Fiscal 1997 of stock options reflected in the tables that follow pursuant to
the 1987 Stock Plan and the 1995 Incentive Plan to Participating Senior
Management, as modified by the 1997 Cash Bonus Plan. Each option granted under
the 1987 Stock Plan is referred to as an "Option." The number of shares covered
by options granted in Fiscal 1997 to Participating Senior Management pursuant to
the 1995 Incentive Plan was at the rate of 50% of the number set by the
Compensation Committee in January 1995. (The January 1995 and January 1996
awards were based on total remuneration percentages which obtained in the
Company's 1995 fiscal year at a $3.79 Black-Scholes value calculated by Towers
Perrin based upon a $6.375 share closing price of the Common Stock as reported
by the NYSE on January 3, 1995, the date of allocation and the first such
award.) Option grants provide the right to purchase shares of Common Stock at
the fair market value on the date of grant. Each Option for Fiscal 1997 for
Participating Senior Management becomes exercisable immediately but is subject
to repurchase rights of the Company which lapse over three years from the date
of grant of the Option or upon the executive's death or disability (as defined),
upon a change of control (as defined), or in accordance with the terms of
Participating Senior Management's employment agreements, more fully described in
"-- Employment, Termination of Employment and Change of Control Arrangements"
below.
The Compensation Committee approved the award in fiscal 1995 of grants of
restricted stock reflected in the Summary Compensation Table below pursuant to
the 1984 and 1985 Plans to Participating Senior Management, with no further
grants to be made pursuant to the 1995 Incentive Plan through fiscal 1999. The
number of shares granted was set by the Compensation Committee based on the
total remuneration percentages for the Company's 1995 fiscal year based on the
$6.375 share closing price of the Common Stock as reported by the NYSE on
January 3, 1995, the date of award. Under the 1995 Incentive Plan and the
individual restricted stock purchase agreements, the shares are apportioned into
five blocks ("Performance Blocks"), with each identified with one fiscal year in
the 5-year period beginning with fiscal 1995 and ending with fiscal 1999.
Restrictions on disposition of shares in each Performance Block lapse either (i)
if the specified Target Return on Capital (as defined) for the performance of
the Company for the designated year is achieved, then at the rate of 20% per
year on each of the first, second, third, fourth and fifth anniversaries of the
closing date (as defined) for each full year of employment following the later
to occur of (a) January 1 of the year designated for the Performance Block, or
(b) the closing date (as defined) for the shares in such Performance Block; (ii)
upon the purchaser's death or disability (as defined); (iii) upon a change of
control (as defined); or (iv) upon specified continued service with the Company.
The restrictions on disposition also lapse in accordance with the terms of
Participating Senior Management's employment agreements, more fully described in
"-- Employment, Termination of Employment and Change of Control Arrangements"
below.
11
<PAGE> 14
OTHER ARRANGEMENTS -- Mr. Varakian's Fiscal 1997 compensation from December
30, 1996 through November 14, 1997 was based upon a September 25, 1996
Employment Agreement negotiated between Housewares and Mr. Varakian which
provided for a base salary of $300,000 per annum and a cash bonus for Fiscal
1997 of $200,000. The Employment Agreement was amended as of November 14, 1997
when he assumed responsibility as President of Housewares. The Employment
Agreement, as amended, is more fully described in "-- Employment, Termination of
Employment and Change of Control Arrangements" below and includes a stock option
covering 75,000 shares of Common Stock awarded to Mr. Varakian in November 1997
pursuant to the 1997 Stock Plan, more fully described below in "-- Option Grants
Table."
SAR CANCELLATIONS -- In February 1997, the Compensation Committee approved
the cancellation of SAR awards previously made to the CEO, Mr. DeNovellis, Mr.
Varakian and Mr. Weinstein in fiscal 1996 pursuant to the Company's 1996
Performance Unit Rights Award Plan in exchange for the grant of stock options
pursuant to the 1987 Stock Plan, more fully described in Note 2 to the "Option
Grants Table" below. The stock options were valued at 110% of the value of the
SARs using the Black-Scholes option pricing model adapted for use in valuing
executive stock options and SARs.
The tables below and the accompanying footnotes reflect the decisions
covered by the above discussion.
AVRAM J. GOLDBERG STUART B. ROSS BILL W. SORENSON
PERFORMANCE GRAPH
The following table compares the total shareholder return to the Company's
Common Stock with the Standard & Poors 500 Index and the Dow Jones Consumer
Non-Cyclical Index for a period of five years and assumes $100 was invested on
December 31, 1992. Total return assumes that dividends, if any, were reinvested.
The stock performance in the table below is not necessarily indicative of future
price performance.
<TABLE>
<CAPTION>
Measurement Period 'EKCO Group, 'DJ Consumer,
(Fiscal Year Covered) Inc.' S & P 500 Non-Cyclical'
<S> <C> <C> <C>
Dec-92 100 100 100
Dec-93 70 110 97
Dec-94 65 112 107
Dec-95 60 153 157
Dec-96 44 193 196
Dec-97 75 243 233
</TABLE>
12
<PAGE> 15
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table includes individual compensation
information for the Company's CEO, each of the four other most highly
compensated executive officers of the Company in Fiscal 1997 who were serving as
executive officers of the Company at the end of Fiscal 1997 and one additional
individual (Robert Varakian) who was not serving as an executive officer at the
end of Fiscal 1997 (collectively, the "Named Executive Officers") for services
rendered in all capacities to the Company during the last three fiscal years:
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-------------------- -------------------------------------------
RESTRICTED SECURITIES
NAME AND STOCK UNDERLYING ALL OTHER
PRINCIPAL SALARY BONUS AWARD(S) OPTIONS/SARS COMPENSATION
POSITION(S) YEAR ($)(1) ($) ($)(2)(3) (#)(2)(4) ($)(5)
----------- ---- ------ ----- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Malcolm L. Sherman................ 1997 250,000 -- -- 110,000 23,674
Chairman and Chief Executive 1996 18,108 -- -- 900,000/100,000 76,612
Officer
Stuart W. Cohen................... 1997 182,300 -- -- 6,424 14,148
Vice President, Strategic Planning 1996 182,300 -- -- 12,847 5,127
and Business Development 1995 97,596 -- 108,425 7,161 --
Donato A. DeNovellis.............. 1997 236,615 -- -- 122,269 28,480
Executive Vice President, 1996 207,000 6,297 21,739 24,538/100,000 22,609
Finance & Administration and Chief 1995 207,000 6,297 212,821 24,538 27,471
Financial Officer
Brian R. McQuesten................ 1997 131,969 -- -- 4,131 59,621
Vice President and Controller 1996 113,700 2,843 18,256 8,262 14,514
1995 113,700 2,843 78,642 6,992 20,645
Robert Varakian................... 1997 308,654 200,000 -- 350,000 14,200
President, EKCO Housewares, Inc. 1996 300,000 199,000 51,500 33,000/250,000 --
and President, B. VIA
International Housewares, Inc.(6)
Jeffrey A. Weinstein.............. 1997 244,507 -- -- 63,246 28,916
Executive Vice President 1996 219,600 7,320 16,248 16,491/50,000 23,178
and President, EKCO International, 1995 219,600 7,320 165,024 16,491 28,766
Inc.
</TABLE>
- ---------------
(1) The amounts shown include the individual's before-tax contributions to the
Company's 401(k) retirement plan.
(2) Pursuant to the Company's Series A Junior Participating Preferred Stock
Purchase Rights Plan, with each share of Common Stock issued, including
shares of Common Stock issued in connection with a compensation plan, a
right to purchase one one-hundredth of a share of the Company's Series A
Junior Participating Preferred Stock will be issued. Such rights are not
currently exercisable.
13
<PAGE> 16
(3) On December 28, 1997, the number of shares listed below were held in escrow
pursuant to the terms of the 1984 and 1985 Plans for each named purchaser.
The shares are valued as of December 26, 1997 at $7.25 per share (net of
consideration paid).
<TABLE>
<CAPTION>
NO. OF MARKET VALUE
SHARES AT 12/26/97
------ ------------
<S> <C> <C>
Stuart W. Cohen............................................. 16,366 $117,017
Donato A. DeNovellis........................................ 39,174 $280,095
Brian R. McQuesten.......................................... 15,710 $112,327
Robert Varakian............................................. 10,000 $ 71,500
Jeffrey A. Weinstein........................................ 30,158 $215,630
</TABLE>
The foregoing number of shares of Mr. Cohen and Mr. Varakian and 35,080
shares of Mr. DeNovellis, 12,080 shares of Mr. McQuesten and 26,900 shares
of Mr. Weinstein are apportioned into Performance Blocks, with each
identified with a fiscal year of a 5-year period beginning with fiscal 1995
(or for Mr. Varakian, a 4-year period beginning with fiscal 1996) and
ending with fiscal 1999. Restrictions on disposition on shares in each
Performance Block lapse either (i) if the specified Target Return on
Capital (as defined) for the performance of the Company for the designated
fiscal year is achieved, then at the rate of 20% per year on each of the
first, second, third, fourth and fifth anniversaries of the closing date
(as defined) (or for Mr. Varakian, 25% per year on each of the first,
second, third and fourth such anniversaries) for each full year of
employment following the later to occur of (a) January 1 of the year
designated for the Performance Block or (b) the closing date for the shares
in such Performance Block; (ii) upon the purchaser's death, disability (as
defined); (iii) upon a change of control (as defined); or (iv) upon
specified continued service with the Company.
The remaining shares of restricted stock of Mr. DeNovellis (4,094 shares),
Mr. McQuesten (3,630 shares) and Mr. Weinstein (3,258 shares) are held in
escrow as a result of the election made by such individuals to defer all or
a portion of their increases in salary for fiscal 1995 in accordance with
the terms of the 1995 Incentive Plan. Restrictions on disposition of such
shares lapse in accordance with the terms of the 1995 Plan at the rate of
20% per year on each of the first, second, third, fourth and fifth
anniversaries of the closing date (as defined), provided that the purchaser
is at each such anniversary date an employee or director of the Company,
upon the purchaser's death or disability (as defined) or upon a change of
control (as defined).
(4) Options to purchase the number of shares shown were granted pursuant to the
1987 Stock Plan. The following number of shares were granted in Fiscal 1997
in consideration for the cancellation of SARs which had been granted
pursuant to the 1996 Performance Unit Rights Award Plan in the prior fiscal
year at the rate of 110% of the SARs using the Black-Scholes option pricing
model adapted for use in valuing executive stock options and SARs: Mr.
DeNovellis, 110,000 shares; Mr. Sherman, 110,000 shares; Mr. Varakian,
275,000 shares; and Mr. Weinstein, 55,000 shares.
(5) The amounts shown for Fiscal 1997 consist of (i) the sum of the economic
benefit to each of the following persons for split dollar life insurance
coverage plus the difference between the premiums paid in 1997 and the
present value of the recoverable premium as follows: Mr. DeNovellis,
$14,280; Mr. McQuesten, $7,072; and Mr. Weinstein, $13,929 (Mr. Sherman, Mr.
Cohen and Mr. Varakian did not have such coverage); (ii) automobile
allowances and other automobile payments as follows: Mr. Sherman, $9,631 and
Mr. McQuesten, $37,562 (Mr. DeNovellis, Mr. Varakian and Mr. Weinstein have
the use of Company-owned automobiles instead of automobile allowances, and
Mr. Cohen does not have such an allowance); and (iii) the value of shares of
ESOP Preferred Stock and Common Stock allocated to the account of each
person for plan year 1997 pursuant to the ESOP, as follows:
14
<PAGE> 17
Mr. Sherman, $14,043; Mr. Cohen, $14,148; Mr. DeNovellis, $14,200; Mr.
McQuesten, $14,987; Mr. Varakian, $14,200; and Mr. Weinstein, $14,987.
(6) Mr. Varakian became President of Housewares on November 14, 1997, at which
time he ceased serving as an executive officer of the Company.
OPTION GRANTS TABLE
The following table sets forth information as to option grants made by the
Company during Fiscal 1997 to the Named Executive Officers pursuant to the 1987
Stock Plan:
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO GRANT
UNDERLYING EMPLOYEES EXERCISE DATE
OPTIONS IN FISCAL PRICE EXPIRATION PRESENT
NAME (#)(1)(2) YEAR ($/SH) DATE VALUE($)(3)
---- ---------- ------------ -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Malcolm L. Sherman................. 110,000 13.6 4.125 02-05-07 224,257
Stuart W. Cohen.................... 6,424 0.8 4.250 03-04-07 13,513
Donato A. DeNovellis............... 12,269 15.1 4.250 03-04-07 25,808
110,000 4.125 02-05-07 224,257
Brian R. McQuesten................. 4,131 0.5 4.250 03-04-07 8,690
Robert Varakian.................... 275,000 43.2 4.125 02-05-07 560,643
75,000 6.875 12-14-07 276,450
Jeffrey A. Weinstein............... 8,246 7.8 4.250 03-04-07 17,345
55,000 4.125 02-05-07 112,129
</TABLE>
(1) All of the foregoing Options were granted pursuant to the 1987 Stock Plan
and individual option agreements. The exercise price of each Option (which
is equal to the fair market value (as defined) of the Common Stock on the
date of grant) is subject to adjustment for stock splits or dividends,
combinations, recapitalizations or similar transactions. The Options are
exercisable at any time and from time to time in accordance with the terms
of the individual option agreements. Shares of Common Stock purchased
pursuant to the exercise of options held by Mr. Cohen, Mr. McQuesten, Mr.
DeNovellis as to 6,424 shares, Mr. Varakian as to 75,000 shares and Mr.
Weinstein as to 8,246 shares are subject to repurchase by the Company within
three years of the date of grant of the option at the option exercise price
upon the termination of the employee's employment with the Company as
follows: as to all shares so purchased if such termination occurs prior to
the first anniversary of the date of grant of the option; as to up to
two-thirds of the shares which may be purchased pursuant to the option if
termination occurs prior to the second such anniversary; and as to up to
one-third of the shares which may be purchased pursuant to the option if
termination occurs prior to the third such anniversary. Shares of Common
Stock purchased upon the exercise of such Options cease to be subject to the
right of the Company to purchase them if termination of employment is due to
the death or disability (as defined) of the employee, or if a change of
control (as defined) of the Company occurs at any time before the employee's
employment is terminated or as otherwise provided in the executive's
Employment Agreement.
(2) Options granted to Mr. DeNovellis and Mr. Sherman, each as to 110,000
shares, Mr. Varakian as to 275,000 shares and Mr. Weinstein as to 55,000
shares were issued to the named optionees pursuant to the 1987 Stock Plan in
February 1997 when SARs granted pursuant to the 1996 Performance Unit Rights
Award Plan were cancelled.
(3) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. The actual value, if any, an executive may realize
will depend on the excess of the stock price over the exercise
15
<PAGE> 18
price on the date the Option is exercised, so there is no assurance that the
value realized by an executive will be at or near the value estimated by the
Black-Scholes model. The estimated values under that model are based upon
the following assumptions: stock price volatility of 0.4, future dividend
yield of 0, and risk-free interest rates of 5.64%, 5.66%, 5.71% and 5.80%,
based on the 1, 2, 3 and 6-year strip yields of U.S. Treasury Securities at
December 28, 1997. It was also assumed that the Options have a weighted
average expected life of six years and eleven months based on the agreements
described in Note 1 above and historical data with respect to exercises of
Options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR
VALUES
The table below sets forth information as to the number of securities
underlying stock options granted pursuant to the 1987 Stock Plan and the
Directors' Plan and the value of such securities as of December 26, 1997 with
respect to the Named Executive Officers. None of the Named Executive Officers
exercised any stock options during Fiscal 1997.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT FY-END (#) AT FY-END ($)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE(1) UNEXERCISABLE(2)
---- ---------------- ----------------
<S> <C> <C>
Malcolm L. Sherman.................................... 1,026,162/ -- 3,848,422/ --
Stuart W. Cohen....................................... 26,432/ -- 44,638/ --
Donato A. DeNovellis.................................. 171,345/ -- 431,167/ --
Brian R. McQuesten.................................... 135,885/ -- 431,450/ --
Robert Varakian....................................... 409,800/ 31,200 939,475/ 12,900
Jeffrey A. Weinstein.................................. 397,728/ -- 1,064,375/ --
</TABLE>
- ---------------
(1) Includes the following number of shares of Common Stock subject to
repurchase by the Company under the 1987 Stock Plan as of December 28, 1997:
Mr. Sherman, 5,387 shares; Mr. Cohen, 17,376 shares; Mr. DeNovellis, 36,807
shares; Mr. McQuesten, 11,970 shares; Mr. Varakian, 91,667 shares; and Mr.
Weinstein, 24,737 shares.
(2) Based upon the $7.25 closing price of the Common Stock on December 26, 1997
as reported by The Wall Street Journal. Each option has an exercise price
equal to the fair market value of the Common Stock on the date of grant.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
In July 1992, the Company adopted the Supplemental Executive Retirement
Plan (the "SERP"). The SERP is a retirement plan which uses a defined benefit
formula to provide for lump sum payments to be made upon retirement, termination
of employment, death or disability, to certain officers designated by the Board
of Directors, as more fully described below. The SERP is not qualified under
Section 401(a) of the Code.
Each lump sum payment to a participant in the SERP is calculated in order
to equal the actuarial equivalent of a lifetime pension. The amount of a
participant's payment under the SERP is generally determined by multiplying an
amount designated by the Compensation Committee with respect to such participant
by such participant's years of credited service (as defined). Certain additional
payments are
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<PAGE> 19
payable to a participant under the SERP if his employment with the Company
terminates within three years of a change in control (as defined) and under
certain other circumstances specified in the SERP. A participant's benefits
under the SERP vest at 20% per year beginning upon the attainment of five years
of credited service (as defined), becoming fully vested upon the attainment of
ten years of such credited service; notwithstanding the foregoing, upon a change
in control (as defined) of the Company, all participants shall become 100%
vested in their benefits in the SERP, and if such participant's employment with
the Company terminates within three years after such change in control, a lump
sum payment of SERP benefits shall be made to such participant.
The estimated lump sum payments payable under the SERP to the Named
Executive Officer-participants upon each such Named Executive Officer's
respective normal retirement date (as defined) will be the actuarial equivalent
of an annual payment of the following amounts: Mr. DeNovellis, $41,782 per
annum; Mr. McQuesten, $25,075 per annum; and Mr. Weinstein, $47,151 per annum.
Mr. Cohen, Mr. Sherman and Mr. Varakian do not participate in the SERP.
EMPLOYMENT, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
The Company has employment agreements (collectively, "Employment
Agreements") with its CEO and Senior Management, as well as with other
executives and management personnel. The Employment Agreements provide for
certain fringe benefits, including life insurance, participation in certain
benefit plans of the Company, certain medical expenses, the use of an automobile
provided by the Company in the case of Mr. DeNovellis, Mr. Varakian and Mr.
Weinstein and an automobile allowance in the case of Mr. Sherman.
The Employment Agreement of Malcolm L. Sherman began on December 4, 1996
and will continue until terminated by Mr. Sherman or the Company for any reason.
The Employment Agreement provides for salary at the annual rate of $250,000 and
such bonus as may be determined by the Board of Directors or the Compensation
Committee. The Employment Agreement includes a covenant against competition with
the Company extending for a period of 36 months after termination for any reason
and provides for a gross up payment (as defined) ("gross up payment") if any
payment received by him (or his estate) as a result of such termination is
subject to the excise tax imposed by Section 4999 of the Code.
The term of the Employment Agreement of Robert Varakian began on September
25, 1996 and will continue until December 31, 1999 unless terminated earlier
and, if not terminated on or before such date, it will automatically renew from
year to year. Mr. Varakian's Employment Agreement was amended as of November 14,
1997 (as amended, the "Varakian Employment Agreement") when he became President
of Housewares and provides for an annual base salary of $375,000 for the
remainder of 1997 and calendar years 1998 and 1999, and, thereafter for each
year of the term, as determined by the Board of Directors, provided that in each
such year his salary shall be at least 5% higher than his salary in the prior
year. The Varakian Employment Agreement specifies a cash bonus for Fiscal 1997
of $200,000. Beginning with fiscal 1998 and each subsequent year of the term,
Mr. Varakian is entitled to a non-discretionary target cash bonus of 50% of base
salary if Actual EBIT (as defined) of the Housewares Division (as defined) for
any such year is 100% of Budgeted EBIT (as defined) for the division for such
year. For every variance of 5% for which Actual EBIT is above or below Budgeted
EBIT, payment is increased or decreased, as the case may be, by one-third of the
target bonus, with no upper limit on the target bonus which may be earned and no
target bonus payable at 85% or less of Budgeted EBIT. The Varakian Employment
Agreement also provides for a stock option to purchase an aggregate of 75,000
shares pursuant to the Company's 1987 Stock Plan, which option was granted as of
November 14, 1997. In the event of Mr. Varakian's death, his estate shall
receive a lump sum payment of one year's base salary. In the event of the
termination of his employment as a result of his total and permanent disability
(as defined) ("total and permanent disability"), the Varakian Employment
Agreement provides for salary continuation for 12 months. If he elects to
terminate the Varakian Employment Agreement after
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<PAGE> 20
6 months but within 24 months of the occurrence of a change of control (as
defined) ("change of control") of the Company (unless such change of control was
approved by resolution of the Company's board of directors with at least
two-thirds of the directors serving as of September 25, 1996 voting in favor),
the Company is obligated to pay him a lump sum cash payment equal to (a) three
times his then current base salary, plus (b) three times the greater of (i)
$150,000, or (ii) the bonus received by him for the fiscal year prior thereto
(the "Lump Sum Payment"), and he shall be entitled to the continuation of
medical, dental and life insurance benefit coverage (as defined) ("benefit
coverage continuation") until the earlier of his full-time employment by a third
party with comparable benefits or three years. If his employment is terminated
by the Company without good cause (as defined) at any time during the term prior
to a change of control or if the Varakian Employment Agreement is not renewed,
the Company is obligated to pay him in a lump sum two times his base salary rate
plus any bonus to which he is entitled. In addition, he is entitled to
continuation of medical, dental and life insurance coverage until the earlier of
his full time employment by a third party or two years following such
termination. Immediately upon a change of control while he is employed by the
Company, he shall immediately have the unconditional, unencumbered and free
right, title and interest in all shares of stock of the Company which have been
granted, sold or optioned (subject to his obligation to pay the option exercise
price to the extent not theretofore paid) to him by the Company ("Stock Rights")
at any time prior to the change of control. Following a change of control and
upon an event of constructive termination (as defined) or termination of his
employment by the Company without good cause, the Varakian Employment Agreement
requires the Company to pay him the Lump Sum Payment. The Varakian Employment
Agreement includes a covenant against competition with the Company extending for
a period of 12 months after termination of employment.
The Employment Agreements with Mr. DeNovellis, Mr. McQuesten and Mr.
Weinstein were amended and restated effective May 25, 1995 and the Employment
Agreement with Mr. Cohen was implemented as of June 12, 1995 (collectively, as
amended, the "1995 Employment Agreements"). The 1995 Employment Agreements
currently provide for base salaries of $182,300, $250,000, $135,200 and $250,000
for Mr. Cohen, Mr. DeNovellis, Mr. McQuesten and Mr. Weinstein, respectively,
and provide for increases as determined by the Board of Directors or the
Compensation Committee based on performance reviews performed at least annually.
The term of each of the 1995 Employment Agreements will continue until
terminated by the executive or the Company. In the event of the total and
permanent disability of such executive, the 1995 Employment Agreements provide
for salary and benefit coverage continuation for 36 months (as to Mr. DeNovellis
and Mr. Weinstein) and 12 months (as to Mr. Cohen and Mr. McQuesten), and
outplacement benefits. In the event of such executive's death, the executive's
estate shall receive a lump sum payment of one year's salary in addition to
payment received under the Company's group life insurance plan. In the event of
the executive's death or total and permanent disability, the executive's estate
in the case of death or the executive in the case of such disability shall
immediately have Stock Rights to all shares of stock of the Company held by the
executive at any time prior to the executive's death or disability. The 1995
Employment Agreements provide that if employment of the executive is terminated
by the Company without good cause (as defined) prior to a change of control of
the Company, or in the case of Mr. Weinstein if he notifies the Company of his
termination of employment within 90 days after the Company proposes to relocate
him without his consent, the Company is obligated to pay the executive a lump
sum in cash (the "Lump Sum Payment Amount") equal to (i) the executive's then
current salary, plus (ii) the maximum payable to him under all specified
compensation bonus plans and arrangements for the fiscal year in which the
termination occurs (subject to certain adjustments), plus (iii) an amount equal
to the value of the securities, cash or other property allocated to the
executive's account in the ESOP for the fiscal year preceding the fiscal year in
which the termination occurs, in addition to any distribution from the ESOP to
which the executive may be entitled, multiplied (iv) in the case of Mr.
DeNovellis and Mr. Weinstein, by two, and in the case of Mr. Cohen and Mr.
McQuesten, by one. In addition, the executive shall be entitled to benefit
coverage continuation until the
18
<PAGE> 21
earlier of either his full-time employment by a third party or, as to Mr.
DeNovellis and Mr. Weinstein, two years, and as to Mr. Cohen and Mr. McQuesten,
one year, following such termination, as well as outplacement benefits.
Following such termination, certain automobile benefits are provided to Mr.
Weinstein and Mr. DeNovellis for a period of two years, and each of the
above-named executives shall have Stock Rights to all shares of stock of the
Company held by the executive at any time prior to such termination. In
addition, each of the above-named executives shall be entitled to receive a
gross-up payment if any payment received by him (or his estate) as a result of
such termination is subject to the excise tax imposed by Section 4999 of the
Code. Immediately upon a change of control while the executive is employed by
the Company and without regard to whether or not the executive's employment is
terminated, the 1995 Employment Agreements provide that the executive shall
immediately have Stock Rights to all shares of stock of the Company held by the
executive at any time prior to the change of control. Following a change of
control and upon an event of constructive termination or termination of the
executive's employment by the Company without good cause or if the executive
elects to terminate his 1995 Employment Agreement after 6 months but within 24
months of the occurrence of a change of control of the Company (unless such
change of control was approved by the resolution of the Company's board of
directors with at least two-thirds of the directors serving as of May 25, 1995
(or June 12, 1995 for Mr. Cohen) voting in favor), the 1995 Employment
Agreements of Mr. DeNovellis and Mr. Weinstein require that the Company pay each
such executive three times his respective Lump Sum Payment Amount (two times as
to Mr. Cohen and Mr. McQuesten), as well as Stock Rights to shares of the
Company's stock described above immediately upon such constructive termination,
and provide benefit coverage continuation for a period of three years for Mr.
DeNovellis and Mr. Weinstein and two years for Mr. Cohen and Mr. McQuesten,
outplacement benefits and, with respect to Mr. DeNovellis and Mr. Weinstein,
automobile benefits for a period of three years. In addition, each executive
shall be entitled to receive a gross-up payment in certain circumstances. The
1995 Employment Agreements of Mr. DeNovellis, Mr. McQuesten and Mr. Weinstein
provide that in order to assure prompt payment of amounts due upon termination
and as necessary to secure the Company's obligations under any stock
appreciation rights plan or other equity-linked plan (excluding stock options,
restricted stock subject to repurchase rights, or any equity plan which gives
the executive ownership of shares), the Company has agreed to keep in place
irrevocable letters of credit in amounts equal to at least four times the annual
salary of Mr. DeNovellis and Mr. Weinstein and two and one-half times as to Mr.
McQuesten. Each of the 1995 Employment Agreements includes a covenant against
competition with the Company after termination for any reason extending for a
period of 24 months as to Mr. DeNovellis and Mr. Weinstein and 12 months as to
Mr. Cohen and Mr. McQuesten.
401(K) RETIREMENT PLAN
The Company sponsors a plan which permits employees to defer compensation
to the extent permitted by Section 401(k) of the Code (the "401(k) Plan"). The
401(k) Plan permits, but does not require discretionary contributions by the
Company. Other than the employee deferred compensation, the Company made no
contributions to the 401(k) Plan in Fiscal 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN BUSINESS RELATIONSHIPS
LEGAL COUNSEL
Kenneth J. Novack, a director of the Company, is a member of the law firm
of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. The firm of Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C. and Mr. Novack have served as outside
legal counsel to the Company since 1988.
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<PAGE> 22
ESOP LOANS
The Company has loaned $6.9 million to the ESOP since fiscal 1989 to
purchase an aggregate of 1.8 million shares of ESOP Preferred Stock and one
million shares of Common Stock (collectively, the "ESOP Loans"). As of December
31, 1997, the 1997 ESOP plan year-end, a total of $4,054,686 was outstanding
under the ESOP Loans. The ESOP Loans bear interest at 7.5% and 10% per annum and
mature in 2010 through 2015. As of December 31, 1997, there were 1,186,461
shares of ESOP Preferred Stock and 288,899 shares of Common Stock allocated to
employee accounts under the ESOP.
STOCKHOLDER PROPOSALS AND OTHER MATTERS
Under Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as
amended, shareholders of the Company may present proper proposals for inclusion
in the Company's proxy statement and for consideration at the next annual
meeting of stockholders by submitting their proposals to the Company in a timely
manner. In order to be considered for inclusion in the proxy statement
distributed to stockholders prior to the annual meeting in 1999, a stockholder
proposal must be received by the Company no later than November 27, 1998 and
must otherwise comply with the requirements of Rule 14a-8. Requests should be
delivered in writing to John Jay Althoff, Secretary, EKCO Group, Inc., 98 Spit
Brook Road, Suite 102, Nashua, New Hampshire 03062.
The Board of Directors does not know of any other business to be acted upon
at the Annual Meeting other than that which is explained in this Proxy
Statement. If any other business calling for a vote of the stockholders is
properly presented at the Annual Meeting, the persons holding the proxies will
vote your shares in accordance with their best judgment on such matters.
In order that your shares may be represented if you do not plan to attend
the Annual Meeting, and in order to assure the required quorum, please fill out,
sign, date and return your proxy promptly.
By Order of the Board of Directors
JOHN JAY ALTHOFF
Secretary
Dated: March 27, 1998
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER
28, 1997 (OTHER THAN THE EXHIBITS THERETO) FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, WHICH PROVIDES ADDITIONAL INFORMATION ABOUT THE COMPANY, IS
AVAILABLE TO BENEFICIAL HOLDERS OF THE COMMON STOCK AND ESOP PREFERRED STOCK
WITHOUT CHARGE UPON WRITTEN REQUEST TO SUSAN M. SCACCHI, TREASURER, EKCO GROUP,
INC., 98 SPIT BROOK ROAD, SUITE 102, NASHUA, NEW HAMPSHIRE 03062.
20
<PAGE> 23
EKCO GROUP, INC.
98 Spit Brook Road, Suite 102
Nashua, New Hampshire 03062
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS, MAY 12, 1998
The undersigned stockholder hereby appoints MALCOLM L. SHERMAN and JOHN JAY
ALTHOFF, and each of them, as attorneys-in-fact and proxies of the undersigned,
with full power of substitution, to vote all shares of capital stock of EKCO
Group, Inc. standing in the name of the undersigned on March 19, 1998 at the
Annual Meeting of Stockholders to be held May 12, 1998 at Fleet Bank of
Massachusetts, N.A., 75 State Street, Eighth Floor Conference Center, Boston,
Massachusetts, at 9:30 a.m., local time, and all adjournments thereof, for the
election of directors as set forth on the reverse side and more fully described
in the accompanying Proxy Statement.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ON
THE REVERSE SIDE. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF EACH OF MANAGEMENT'S NOMINEES FOR DIRECTOR. THIS PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS, WHICH RECOMMENDS A VOTE FOR THE ELECTION OF
ALL NOMINEES FOR DIRECTOR. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENTS THEREOF.
PLEASE MARK THIS PROXY, DATE AND SIGN IT ON THE REVERSE SIDE AND RETURN IT
PROMPTLY IN THE ACCOMPANYING ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
<PAGE> 24
Please mark your
[X] votes as in this
example.
<TABLE>
<S> <C> <C> <C>
(1) ELECTION OF FOR ALL NOMINEES WITHHOLD NOMINEES: George W. Carmany, III
DIRECTORS LISTED TO THE RIGHT AUTHORITY Michael G. Frieze
(EXCEPT AS MARKED TO VOTE FOR ALL NOMINEES Avram J. Goldberg
TO THE CONTRARY). LISTED TO THE RIGHT. Kenneth J. Novack
[ ] [ ] Stuart B. Ross
Malcolm L. Sherman
Bill W. Sorenson
Herbert M. Stein
</TABLE>
(Instructions: To withhold authority to vote for any
individual nominee(s), write that nominee's name on
the space provided below.)
- ------------------------------------------------------------
<TABLE>
<S> <C>
(2) OTHER The Proxies shall vote in their discretion upon such other business as
MATTERS: may properly come before the meeting or any adjournments thereof.
</TABLE>
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<TABLE>
<S> <C> <C> <C>
Signature Date Signature Date
--------------------- --------- ------------------------ -------
IF HELD JOINTLY
</TABLE>
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. When signing as
attorney, executor, administrator, trustee or guardian, please give your
full title as it appears hereon. Joint owners should each sign this proxy.
If the account is registered in the name of a corporation, partnership or
other entity, a duly authorized individual must sign on its behalf and
give their title.
