<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 (S)240.14a-11(c) or (S)240.14a-12
NEW ENGLAND BUSINESS SERVICE, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 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:
________________________________________________________________________
(4) Date Filed:
________________________________________________________________________
<PAGE>
NEW ENGLAND BUSINESS SERVICE, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 25, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of New
England Business Service, Inc., a Delaware corporation (the "Company"), will
be held at the offices of the Company, 500 Main Street, Groton, Massachusetts,
on Friday, October 25, 1996 at 10:00 a.m., Eastern Daylight Savings Time, for
the purpose of considering and voting upon the following matters:
1. To fix the number of directors and elect a Board of Directors to serve
until the next Annual Meeting of Stockholders and until their successors
are elected and qualified;
2. To ratify the selection of Deloitte & Touche LLP as independent auditors
of the Company for the fiscal year ending June 28, 1997; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on September 6, 1996
as the record date for the determination of stockholders entitled to notice of
and to vote at this meeting. Accordingly, only stockholders of record at the
close of business on that date are entitled to vote at the meeting or at any
adjournment thereof.
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended June 29, 1996, which contains financial statements and other information
of interest to stockholders, accompanies this Notice and the accompanying
Proxy Statement.
The business matters enumerated above are discussed more fully in the
accompanying Proxy Statement. Whether or not you plan to attend the meeting,
you are urged to study the Proxy Statement carefully and then to fill out,
sign and date the enclosed Proxy. To avoid unnecessary expense, please mail
your Proxy promptly in the enclosed return envelope, which requires no postage
if mailed in the United States.
In accordance with Article Ten of the Company's By-Laws, notice is given
that on January 26, 1996, the Board of Directors voted to amend the By-Laws of
the Company to provide that the fiscal year shall end on the last Saturday in
June rather than June 30.
By order of the Board of Directors
Timothy D. Althof
Secretary
September 11, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN AND
MAIL PROMPTLY THE ENCLOSED PROXY WHICH IS BEING SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS. A RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES IS ENCLOSED FOR THAT PURPOSE.
<PAGE>
NEW ENGLAND BUSINESS SERVICE, INC.
500 MAIN STREET
GROTON, MASSACHUSETTS 01471
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 25, 1996
The Proxy accompanying this Proxy Statement is solicited by the Board of
Directors of New England Business Service, Inc. (the "Company") to be voted at
the Annual Meeting of Stockholders to be held on Friday, October 25, 1996 and
at any adjournment thereof (the "Meeting").
It is expected that copies of the Notice of Meeting, this Proxy Statement
and the enclosed form of Proxy will be mailed approximately September 11, 1996
to each stockholder entitled to vote at the Meeting. The Company's Annual
Report to Stockholders for the fiscal year ended June 29, 1996, accompanies
this Proxy Statement.
VOTING SECURITIES
Only the record holders of shares of Common Stock ($1.00 par value) of the
Company ("Common Stock") at the close of business on September 6, 1996 may
vote at the Meeting. Each share of Common Stock is entitled to one vote on the
matters to be voted upon at the Meeting.
On September 6, 1996, there were 13,476,408 shares of Common Stock issued
and outstanding. On that date, the following persons were known by the Company
to own beneficially more than 5% of the Company's outstanding shares of Common
Stock:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP PERCENT
------------------- ----------------------- -------
<S> <C> <C>
Jay R. Rhoads, Jr. ............................ 1,623,450(1) 12.04
New England Business Service, Inc.
500 Main Street
Groton, MA 01471
Fidelity Management and Research Corporation... 1,427,700(2) 10.59
82 Devonshire Street
Boston, MA 02110
David L. Babson & Company...................... 1,158,800(3) 8.60
1 Memorial Drive
Cambridge, MA 02142
Quest Advisory Group........................... 1,114,600(4) 8.27
1414 Avenue of The Americas
New York, NY 10019
Systematic Financial Management, Inc........... 957,943(5) 7.11
Two Executive Drive
Fort Lee, NJ 07024
</TABLE>
- --------
(1) Sole voting and investment power with respect to 1,517,682 shares; shared
voting and investment power with respect to 105,768 shares. Includes 3,250
shares issuable within 60 days upon exercise of options.
(2) Sole investment power with respect to 1,427,700 shares and sole voting
power with respect to 91,200 shares.
(3) Sole investment power with respect to 1,158,800 shares and sole voting
power with respect to 639,900 shares.
(4) Sole investment and voting power with respect 1,114,600 shares.
(5) Shared voting power with respect to 6,300 shares and sole investment power
with respect to 957,943 shares.
<PAGE>
On September 6, 1996, the directors, the Chief Executive Officer, and the
other four executive officers of the Company beneficially owned the number of
shares of Common Stock shown below:
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
<TABLE>
<CAPTION>
NAME OF DIRECTOR SOLE VOTING AND SHARED VOTING
OR EXECUTIVE OFFICER INVESTMENT POWER AND INVESTMENT POWER TOTAL PERCENT
-------------------- ---------------- -------------------- --------- -------
<S> <C> <C> <C> <C>
Jay R. Rhoads, Jr. ..... 1,517,682(7) 105,768(1) 1,623,450 12.04
Richard H. Rhoads....... 66,237(7) 1,841(2)(7) 68,078 *
Peter A. Brooke......... 18,279(7) 21,018(3) 39,297 *
Benjamin H. Lacy........ 18,250(7) 18,250 *
Frank L. Randall, Jr. .. 6,250(7) 6,250 *
Robert J. Murray........ 70,750(7) 20,000(4) 90,750 *
Brian E. Stern.......... 750(7) 750 *
Robert L. Gable......... 5,000 5,000
Herbert W. Moller....... 100 100
Russell V. Corsini,
Jr. ................... 90,743(7) 5,048(5)(6) 95,791 *
Edward M. Bolesky....... 52,484(7) 4,087(6) 56,571 *
Linda A. Jacobs......... 21,602(7) 1,394(6) 22,996 *
Robert S. Brown, Jr..... 61,174(7) 4,198(6) 65,372 *
All Directors and
Executive Officers
as a Group (13
persons)............... 2,092,655(8) 15.52
</TABLE>
- --------
* Less than one percent
(1) Including 85,768 shares owned by Mr. Rhoads' wife, as to all of which Mr.
Rhoads disclaims beneficial ownership.
(2) Including 1,000 shares owned by Mr. Rhoads' wife individually and 841
shares owned by his wife and a co-trustee of a trust for the benefit of
Mr. Rhoads' children, as to all of which shares Mr. Rhoads disclaims
beneficial ownership.
(3) Including 12,468 shares owned by Mr. Brooke's wife and 8,550 shares owned
by Mr. Brooke's children, as to all of which shares Mr. Brooke disclaims
beneficial ownership.
(4) Shares owned jointly by Mr. Murray and Mr. Murray's wife.
(5) Including 1,040 shares owned by Mr. Corsini's children, as to all of
which shares Mr. Corsini disclaims beneficial ownership.
(6) Shares owned by the following persons and held in an account by the
trustee of The 401(k) Plan for Employees of New England Business Service,
Inc.; Mr. Corsini, 4,008 shares; Mr. Bolesky, 4,087 shares; Ms. Jacobs,
1,394 shares, and Mr. Brown, 4,198 shares.
(7) Includes shares which may be acquired within 60 days through the exercise
of stock options. The persons who have such options and the number of
shares which may be so acquired are as follows: Jay R. Rhoads, Jr. 3,250;
Richard H. Rhoads, 43,250; Mr. Brooke, 3,250; Mr. Lacy, 3,250; Mr.
Randall, 3,250; Mr. Murray, 70,750; Mr. Corsini, 88,820; and Mr. Bolesky,
49,259; Mr. Stern, 750; Ms. Jacobs, 21,350; and Mr. Brown, 59,054.
(8) Including 129,667 shares owned by trusts or custodians for the benefit of
children of officers and directors, by spouses or dependent children of
officers and directors, as to all of which shares the officers and
directors disclaim beneficial ownership, 346,233 shares which directors
and officers owning currently-exercisable options may acquire pursuant to
Company stock option and stock appreciation rights plans, 20,000 shares
jointly owned by officers or directors and their spouses and 13,687
shares held for the accounts of current officers by the trustee of The
401(k) Plan for Employees of New England Business Service, Inc.
2
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company's By-Laws provide for a Board of Directors of not fewer than
three nor more than nine directors. The persons named as proxies in the
accompanying form of Proxy intend (unless authority to vote therefor is
specifically withheld) to vote to fix the number of directors for the ensuing
year at eight and to vote for the election of the eight persons named below,
being the nominees of the present Board, as directors to hold office until the
next Annual Meeting and until their respective successors are elected and
qualified. All of the nominees except Mr. Gable and Mr. Moller were re-elected
to their position at the 1995 Annual Meeting. Mr. Gable and Mr. Moller were
elected Directors on July 26, 1996, to fill vacancies on the Board. If any of
the nominees becomes unavailable to serve as a director, the persons named as
proxies have discretionary authority to vote for a substitute. The Board of
Directors has no reason to believe that any of the nominees will be
unavailable to serve if elected.
NOMINEES FOR ELECTION AS DIRECTORS
Information regarding each nominee is presented below.
Robert J. Murray, age 55, was elected Chief Executive Officer and Chairman
of the Board in December, 1995. Mr. Murray retired from The Gillette Company
in 1995 having been with that company for more than 34 years. From January 1,
1991 until his retirement in 1995, Mr. Murray was Executive Vice President,
North Atlantic Group of The Gillette Company. During 1990, he served as Vice
President, Chairman's Office of Gillette and from 1985 to 1989 as Chairman of
the Board of Management of Braun AG, one of Gillette's German subsidiaries.
Mr. Murray is a Director of Fleet National Bank, LoJack Corporation, North
American Mortgage, and Allmerica Financial Corporation.
Richard H. Rhoads, age 66, joined the Company in 1965 and has been a
Director since 1970. From 1975 to 1991, he was Chief Executive Officer. His
principal occupation since 1988 has been his position as Chairman of the
Board, a position from which he retired in December, 1995. Since January,
1980, he has served as a member and Chairman of the Executive Committee of the
Board. Mr. Rhoads is the brother of Jay R. Rhoads, Jr.
Peter A. Brooke, age 67, has been a Director of the Company since 1989. He
also served in that capacity from 1970 to 1983. His principal occupation for
more than five years prior to December 31, 1995, was as Chairman and Chief
Executive Officer of Advent International Corporation. In January 1996, Mr.
Brooke retired as Chief Executive Officer of Advent International but remains
as Chairman of the Board of Directors. Advent International Corporation is an
international venture capital management firm. Mr. Brooke is a Director of
Unitrode Corporation.
Robert L. Gable, age 65, was elected as Director of the Company on July 26,
1996, to fill a vacancy on the Board and to serve until the 1996 Annual
Meeting of Stockholders and until his successor is elected and qualified. Mr.
Gable has been Chairman and Chief Executive Officer of Unitrode Corporation
since 1990. From 1988 to 1990, Mr. Gable was a Management Consultant. From
1985 until 1988, Mr. Gable was President and CEO of Computervision
Corporation.
Benjamin H. Lacy, age 70, has been a Director of the Company since 1970. His
principal occupation is as President of the Clipper Ship Foundation, Inc., a
grant making charitable foundation. Prior to his retirement in May, 1995, Mr.
Lacy was of counsel to the law firm of Hill & Barlow, a Professional
Corporation, which has served as general counsel to the Company since 1973.
Herbert W. Moller, age 54, was elected as Director of the Company on July
26, 1996, to fill a vacancy created by the enlargement of the Board from 8 to
9, and to serve until the 1996 Annual Meeting of Stockholders and until his
successor is elected and qualified. Mr. Moller has held several positions at
The Gillette Company
3
<PAGE>
since 1966. Mr. Moller has been the Vice President, Finance and Strategic
Planning, Gillette North Atlantic Group, since 1992. From 1989 through 1992,
Mr. Moller was Vice President of Management Information Systems at The
Gillette Company.
Jay R. Rhoads, Jr., age 71, has been a Director of the Company since its
incorporation in 1955. He served as President from 1965 to 1971 and as Chief
Executive Officer from 1965 to 1975 and as Chairman of the Board from 1971 to
1987. Mr. Rhoads is the brother of Richard H. Rhoads.
Brian E. Stern, age 48, was elected a Director of the Company on April 28,
1995. Mr. Stern has been President of the Office Document Products Group and
Corporate Senior Vice President of Xerox Corporation since 1994. From 1993 to
1994, Mr. Stern was President of the Personal Document Products Division. From
1992 to 1993, Mr. Stern was Vice President of Corporate Business Strategy of
Xerox and from 1990 to 1992, Vice President, Finance, Development and
Manufacturing of Xerox.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has standing executive, audit, organization and compensation,
stock option, and nominating committees of the Board of Directors.
The Audit Committee was comprised of Messrs. Brooke (Chairman), Lacy and
Murray during the first half of the 1996 fiscal year. Following his election
as Chairman of the Board, President and Chief Executive Officer on December
13, 1995, Mr. Murray resigned from the committee and Mr. Brian E. Stern was,
at the regular meeting of the Board held on January 26, 1996, appointed to
succeed him. At a Board of Director's Meeting on August 19, 1996 Herbert W.
Moller was elected to the Audit Committee, Messrs. Brooke, Lacy, Stern and
Moller comprised the committee thereafter. The Committee met twice during the
last fiscal year. The Committee reviewed the matters raised in the management
letter which was submitted to the Committee by its independent public
accounting firm, Deloitte & Touche LLP, and discussed the letter with
representatives of Deloitte & Touche LLP. The Audit Committee also recommended
to the Board of Directors the selection of Deloitte & Touche LLP to serve as
the Company's auditors for the fiscal year ending June 28, 1997.
The Organization and Compensation Committee reviews and makes
recommendations to the Board of Directors concerning the election of Officers
and the compensation of the Officers and Directors. It was comprised of
Messrs. Lacy (Chairman), Brooke and Murray during the first half of the 1996
fiscal year. Following his election as Chairman of the Board, President and
Chief Executive Officer on December 13, 1995, Mr. Murray resigned from the
Committee and Mr. Richard H. Rhoads was, at the regular meeting of the Board
held on January 26, 1996, appointed to succeed him. Messrs. Lacy, Brooke and
Rhoads comprised the Committee thereafter. The Committee met three times in
Fiscal Year 1996 to discuss the existing executive organization and
compensation structure and proposed changes thereto and one time to review the
annual evaluation of the Company's officers, to fix their base salaries for
fiscal year 1997 and to approve the 1997 Executive Bonus Plan.
The Stock Option Committee, which administers and awards options under the
Company's 1990 Key Employee Stock Option and Stock Appreciation Rights Plan
and 1994 Key Employee and Eligible Director Stock Option and Stock
Appreciation Rights Plan, was comprised of Messrs. Murray, (Chairman) and
Brooke until Mr. Murray's election as Chairman of the Board, President and
Chief Executive Officer. Mr. Richard H. Rhoads was also appointed to replace
Mr. Murray as a member of the Stock Option Committee on January 26, 1996, and
Mr. Lacy was added to the committee on July 26, 1996. Messrs. Brooke, Rhoads
and Lacy comprised the Committee thereafter. The Stock Option Committee met or
acted by unanimous consent three times in fiscal year 1996.
The Nominating Committee was comprised of Messrs. Randall (Chairman) and Jay
R. Rhoads, Jr. The function of the Nominating Committee is to recommend to the
Board of Directors persons to be nominated for election as directors by the
stockholders at the Annual Meeting of Stockholders or by the Board of
Directors to fill vacancies. At the regular Board of Director's meeting held
July 26, 1996 the Committee nominated Messrs. Gable and Moller to serve as
directors until the next annual meeting. The Nominating Committee also
4
<PAGE>
recommended to the Board of Directors the persons nominated for election as
directors by the Stockholders at the Annual Meeting to be held October 25,
1996.
The Executive Committee, comprised of Messrs. Richard H. Rhoads (Chairman),
Benjamin H. Lacy and William C. Lowe prior to December 13, 1995; of Messrs.
Rhoads (Chairman) and Lacy from December 13, 1995, to January 26, 1996; and of
Messrs. Rhoads (Chairman), Murray and Lacy commencing January 26, 1996, met or
acted by unanimous consent seven times in fiscal year 1996.
The Board of Directors met eleven times during fiscal year 1996. All of the
directors attended at least 75% of the meetings of the Board of Directors and
committees of the Board on which they served.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, Directors and persons who own more than ten percent of a
registered class of the Company's equity securities ("Reporting Persons") to
file reports of ownership and changes in ownership on Forms 3,4 and 5 with the
Securities and Exchange Commission (the "SEC") and the New York Stock Exchange
(the "NYSE"). These Reporting Persons are required by SEC regulation to
furnish the Company with copies of all Forms 3, 4 and 5 they file with the SEC
and the NYSE.
Based solely on the Company's review of the copies of the Forms it has
received and written representations from certain Reporting Persons, the
Company believes that all of its Reporting Persons complied with all filing
requirements applicable to them with respect to transactions during fiscal
year 1996.
CERTAIN TRANSACTIONS
On November 30, 1995, the Company entered into a loan agreement with its
then President and Chief Executive Officer, William C. Lowe in the amount of
$106,000. Upon the termination of Mr. Lowe's employment on December 13, 1995,
Mr. Lowe was relieved of his payment obligation in consideration of a general
release and other covenants.
5
<PAGE>
COMPENSATION OF OFFICERS AND DIRECTORS
The following table sets forth all compensation paid by the Company through
September 6, 1996 to the Chief Executive Officer and each of the other four
most highly compensated executive officers of the Company (the "Named Executive
Officers") in all capacities during the fiscal years ended June 29, 1996, June
30, 1995 and June 24, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ---------------------------
OTHER
NAME AND ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION NO. OF OPTIONS COMPENSATION
------------------ ---- ------------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Murray........ 1996 $ 212,046 $ 0 $ 0 301,000 $ 0
Chairman, President and 1995 0 0 0 0 0
Chief Executive Officer 1994 0 0 0 0 0
Elected December 13,
1995
William C. Lowe......... 1996 196,900 0 0 20,876 1,006,000(3)
President, CEO 1995 375,000 171,300 0 45,833 0
Resigned December 13,
1995 1994 187,500 212,500 110,500(2) 300,000 0
Russell V. Corsini,
Jr. ................... 1996 202,700 0 0 8,792 2,931(1)
Vice President, 1995 193,000 63,000 0 19,300 3,700(1)
Chief Financial Officer 1994 193,000 72,100 0 10,938 4,500(1)
Robert S. Brown, Jr. ... 1996 170,000 0 0 7,373 5,100(1)
Vice President--Circu-
lation and 1995 170,000 54,300 0 11,805 3,300(1)
International 1994 170,000 64,000 0 9,634 4,500(1)
Edward M. Bolesky....... 1996 164,800 0 0 7,148 2,472(1)
Vice President--Direct
Marketing, 1995 154,000 66,300 0 12,833 4,600(1)
Telesales & Service 1994 139,000 51,900 0 7,877 4,200(1)
Linda A. Jacobs......... 1996 154,000 0 0 6,680 3,080(1)
Vice President, Busi-
ness 1995 136,500 41,100 45,300(4) 12,222 3,457(1)
Solutions and Image
Products 1994 103,000 64,500 0 0 3,013(1)
Gerald G. Kokos......... 1996 90,865 72,500 104,147(5) 8,198 106,903(5)
Vice President, General
Manager, 1995 165,000 82,500 0 40,000 0
Software and Services 1994 0 0 0 0 0
Resigned November 30,
1995
Sally L. Conkright...... 1996 110,141 0 0 0 59,167(6)
Vice President,
Business Planning 1995 142,000 41,300 17,400(7) 9,861 3,513(1)
and Development 1994 142,000 53,100 20,500(7) 8,047 4,811(1)
Resigned January 31,
1996
</TABLE>
- --------
(1) The amount reported is the dollar value of Company contributions to the
account of the Named Executive Officers pursuant to the terms of The 401(k)
Plan for Employees of New England Business Service, Inc.
(2) Other Annual Compensation for Mr. Lowe in 1994 consists entirely of
relocation expenses paid by the Company in excess of those available
generally to all salaried employees under the Company's Relocation Policy.
Of this amount $31,250 represents one month's salary paid to Mr. Lowe to
cover out-of-pocket relocation expenses not otherwise covered by the said
Policy and $56,100 represents that portion of a
6
<PAGE>
$148,000 fee paid by the Company to a relocation services firm in
connection with the sale to it of Mr. Lowe's former residence which exceeds
the sum of the customary brokerage fee, attorneys' fees, transfer taxes and
other reasonable fees associated with such sale, all of which are paid
generally by the Company for all relocating salaried employees under the
said Policy.
(3) All other compensation for Mr. Lowe consists entirely of compensation paid
to Mr. Lowe following his resignation under the terms of his termination
agreement. Upon the termination of his employment on December 13, 1995,
the Company, as termination pay in extinguishment of all stock options
held by him and in consideration of a general release and other covenants,
agreed to pay him a total of $900,000 over a period of 12 months and to
cancel a debt of $106,000 owed by him to the Company.
(4) Other Annual Compensation for Ms. Jacobs consists entirely of relocation
expenses paid by the Company.
(5) Other Annual Compensation for Mr. Kokos consists entirely of relocation
expenses paid by the Company. All other compensation for Mr. Kokos
consists of $4,361 of separation pay, $101,452 in extinguishment of all
stock options held by him and $1,090 as the dollar value of the Company
contributions to his account pursuant to the terms of The 401(k) Plan for
Employees of New England Business Service, Inc.
(6) All other compensation for Ms. Conkright in fiscal year 1996, consists
entirely of compensation paid to Ms. Conkright following her resignation
under the terms of her termination agreement.
(7) Other Annual compensation for Ms. Conkright, in 1994 and 1995 consist
entirely of expenses paid on her behalf for educational benefits.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
OPTIONS APPRECIATION
NUMBER OF GRANTED EXERCISE FOR OPTION TERM
SHARES TO EMPLOYEES PRICE PER EXPIRATION ----------------------
NAME GRANTED IN FISCAL YEAR SHARE DATE 5% 10%
---- --------- -------------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Murray........ 300,000(1) 48.6% 18.25 2/2/06 3,447,000 8,727,000
1,000(2) 0.2% 20.125 11/6/06 12,657 32,074
Russell V. Corsini,
Jr. ................... 8,792(3) 1.4% 20.75 9/29/05 96,736 290,751
Robert S. Brown, Jr. ... 7,373(3) 1.2% 20.75 9/29/05 96,217 243,825
Edward M. Bolesky....... 7,148(3) 1.2% 20.75 9/29/05 93,281 236,384
Linda A. Jacobs......... 6,680(3) 1.1% 20.75 9/29/05 87,174 220,908
</TABLE>
- --------
(1) In his capacity as Chairman, President and CEO Mr. Murray received two
stock option awards in fiscal 1996. The first grant for 50,000 shares vest
annually in ten equal installments beginning on February 2, 1996 and
ending on February 2, 2005. The second grant for 250,000 shares vest
annually in four equal installments beginning on February 2, 1996 and
ending February 2, 1999. For each grant, all options vest immediately in
case of a change in control of the Company.
(2) In his capacity as a non-executive Director, Mr. Murray received a grant
for 1,000 shares on November 6, 1995. The shares will vest in four equal
installments beginning on November 6, 1995 and ending November 6, 1998.
All options vest in case of a change in control of the Company.
(3) The stock options awarded vest annually in four equal installments
beginning on September 29, 1995 and ending on September 29, 1998, except
that all of such options will vest immediately in case of a change in
control of the Company.
This presentation is intended to disclose the potential value which would
accrue to the option holder if the option were exercised the day before it
would expire and if the per share value had appreciated at the compounded
annual rate indicated above each column. The application of an absolute
mathematical formula results in a higher potential realizable value for
options granted at a time when the market value is relatively high. The
assumed rates of appreciation of 5% and 10% are prescribed by Securities and
Exchange Commission rules on disclosure of executive compensation. The Company
does not advocate or necessarily agree that these rates are indicative of
future growth in the market price of the Common Stock.
7
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END (1)
ACQUIRED VALUE ------------------------------ -------------------------
AT EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- -------- ------------ -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Murray........ 0 0 70,750 233,250 $ 86,625 $290,625
Russell V. Corsini, Jr.. 0 0 81,797 16,245 209,706 14,475
Robert S. Brown, Jr..... 0 0 54,260 11,433 159,975 8,855
Edward M. Bolesky....... 0 0 44,264 11,778 135,581 9,626
Linda A. Jacobs......... 0 0 16,625 11,121 39,752 9,167
</TABLE>
- --------
(1) In-the-Money options are options where the current market value exceeds
the exercise price.
PENSION PLAN AND TRUST AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Along with other employees of the Company, the Named Executive Officers
participate in the Company's Pension Plan and Trust which is a defined benefit
plan that meets regulatory requirements (the "Pension Plan"). The Named
Executive Officers also participate in the Company's Supplemental Executive
Retirement Plan (the "Supplemental Plan"). Benefits under the Pension Plan,
payable upon normal retirement at age 65 as a life annuity or an actuarial
equivalent thereof, are based upon age, length of service and an average of
the participant's five highest consecutive years of compensation out of the
ten years immediately preceding the normal retirement date or other date of
termination of employment. The Supplemental Plan provides for making payments
concurrently with payments made under the Pension Plan in amounts equal to the
difference between the amount received by an executive (or his contingent
beneficiary) under the Pension Plan and the amount which would be receivable
in accordance with the Pension Plan's formula (as illustrated by the following
Retirement Benefit Table) if the annual earnings taken into account in
determining the amount payable to any Participant as a pension under the
Pension Plan were not subject to the maximum dollar limitation under the
Pension Plan.
RETIREMENT BENEFIT TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
AVERAGE --------------------------
ANNUAL EARNINGS 15 20 25
--------------- -------- -------- --------
<S> <C> <C> <C>
$ 25,000....................................... $ 5,000 $ 7,000 $ 8,000
50,000....................................... 10,000 14,000 17,000
100,000....................................... 25,000 34,000 42,000
150,000....................................... 40,000 54,000 67,000
200,000....................................... 55,000 74,000 92,000
250,000....................................... 70,000 94,000 117,000
300,000....................................... 85,000 114,000 142,000
400,000....................................... 115,000 154,000 192,000
500,000 and over.............................. 145,000 194,000 242,000
</TABLE>
For the persons named in the Summary Compensation Table, the years of
credited service and 1996 compensation covered by the pension plans as of June
26, 1996 are: Mr. Murray is not in the plan; Messrs. Corsini, 14.2 years--
$202,700; Brown, 24.8 years--$170,000; Bolesky, 15.2 years--$164,800; and Ms.
Jacobs, 7.4 years--$150,000.
DEFERRED COMPENSATION PLAN
The Company has established the New England Business Service, Inc. Deferred
Compensation Plan (the "Plan") pursuant to which the Named Executive Officers
of the Company may elect to defer, until 60 days
8
<PAGE>
following the termination of his or her employment with the Company, a portion
of all compensation payable by the Company for his or her personal services
rendered to the Company during each Plan year (the "Deferral Amounts"). Each
participating officer may request that the Deferral Amounts be allocated among
several available investment options established and offered by the Company.
The benefit payable under the Plan at any time to a participant following
termination of employment is equal to the sum of the applicable Deferral
Amounts and any earnings or losses attributable to the investment of such
Deferral Amounts.
COMPENSATION OF DIRECTORS
Directors of the Company generally receive as compensation for all services
as directors $12,000 per year plus $1,000 for each Board meeting and each
meeting (not held on the same day as a Board meeting) of any Committee of the
Board which they attend. In fiscal year 1996, Benjamin H. Lacy received an
additional $15,000 as compensation for his services as Chairman of the
Organization and Compensation Committee and as recording secretary to the
Board. In fiscal year 1997, Mr. Lacy is expected to receive $20,000 as
compensation for the above noted services. In fiscal year 1996, Mr. Lacy and
Mr. Peter A. Brooke received $25,000 and $35,000 respectively, as compensation
for their services provided as members of a special committee of the Board.
Robert J. Murray received no compensation for his services as director, after
his election as Chairman and Chief Executive Officer on December 13, 1995.
The Directors of the Company elected at the 1995 Annual Meeting of
Stockholders and not actively employed by the Company were granted stock
options for 1,000 shares pursuant to The NEBS 1994 Key Employee and Eligible
Director Stock Option and Stock Appreciation Rights Plan with an exercise
price determined by the market value of the Company's Common Stock on the
tenth day following such Annual Meeting. Each eligible director will be
granted 1,000 shares per year upon each subsequent election at an Annual
Meeting of Stockholders of the Company, under similar terms, except that any
newly elected director, or director retiring from active employment with the
Company in the preceding year, will be granted an option to acquire 3,000
shares following the first subsequent Annual Meeting and 1,000 shares upon
each re-election thereafter.
The Company has established The NEBS Deferred Compensation Plan for Outside
Directors, pursuant to which any director who is not an employee of the
Company may elect to defer until after his or her retirement as a director or
after his or her 70th birthday any or all of the compensation payable by the
Company for all services as a director. They may elect to be paid in a lump
sum on the first day of the first fiscal year beginning after such date or in
quarterly installments over a period of not to exceed ten years. Interest is
credited to each director's account quarterly at the so-called "base rate" of
interest of The First National Bank of Boston on the last preceding June 30th
and December 31st. No such elections are presently in effect.
9
<PAGE>
REPORT OF ORGANIZATION AND COMPENSATION
COMMITTEE AND STOCK OPTION COMMITTEE
POLICIES
In providing for the compensation of the Named Executive Officers, it is the
policy of the Organization and Compensation Committee (the "Committee") to
recommend base salaries for each of them within salary ranges, the midpoints
of which are in general at about the 60th percentile of the base salaries of
officers in similar positions in a representative group of companies of
comparable size, as determined by a nationally recognized compensation and
benefits consultant. In Fiscal Year 1996 this representative group included
non-durable goods manufacturers, computer software producers and business
services providers. For Fiscal Year 1997 the representative group has been
redefined, with reference to some of the Officer positions, to include catalog
merchants generally and retail stores. In addition, annual bonuses are
provided for, the payment and the amount of which will depend upon the
Company's degree of attainment of pre-established sales and earnings targets
and, in some instances, upon the attainment of pre-established individual
objectives. Twenty-five percent (25%) of any bonuses earned in fiscal year
1997 will be payable in shares of the Company's common stock, valued at 100%
of market, which the recipients are expected to retain. Long-range
compensation is tied directly to the increase in value of the Company's Common
Stock and, hence, takes the form of the award of stock options, with option
prices equal to 100% of current market value, in amounts reflecting the level
of responsibility of the grantees for the Company's long-range success.
In determining its executive compensation policies from year to year, the
Company expects to take appropriate measures to prevent the employee
remuneration paid by it from being rendered non-deductible by operation of the
terms of Section 162(m) of the Internal Revenue Code of 1986, as amended. Such
measures may include (i) limiting the amount of non-performance-based
compensation paid to any employee, and (ii) complying with the statutory
requirements for exempting performance-based compensation from non-
deductibility by obtaining stockholder approval of qualified performance-based
compensation plans. In October, 1994 such approval was obtained for the
Company's NEBS 1994 Key Employee and Eligible Director Stock Option and Stock
Appreciation Rights Plan and for the Company's Stock Compensation Plan.
IMPLEMENTATION
1. Salaries. The individual salaries of the Named Executive Officers other
than Robert J. Murray for fiscal year 1996 were recommended by the Committee
and approved by the Board at the beginning of the year. Mr. Murray's salary
was similarly recommended and approved in January, 1996, in connection with
his employment as the Company's new Chairman of the Board, President and Chief
Executive Officer. The salary ranges established for each of the Named
Executive Officers were based upon data compiled by a nationally recognized
compensation and benefits consultant concerning the base salaries paid to
comparable officers of like-sized non-durable goods manufacturers, computer
software producers and business services providers. The Committee believes
that the compensation paid to officers within this broad group of companies is
more representative of the competition the Company must meet in hiring and
retaining its executives than the small group of companies, mostly of
substantially larger size than the Company, forming the peer group with which
the Company's results are compared in the graph on page 12 below. Within these
ranges, the actual salaries fixed for the officers were recommended by the
Committee after consideration of individual performance review reports
prepared by the Chairman of the Board with respect to William C. Lowe, who
served as President and Chief Executive Officer until December 13, 1995, and
by Mr. Lowe with respect to the other Named Executive Officers other than Mr.
Murray. The Committee also discussed with Mr. Lowe the performance of the
Company during fiscal year 1995 and the contribution of the individual Named
Executive Officers other than Mr. Murray to that performance.
2. Annual Bonuses. At the beginning of fiscal year 1996, all of the Named
Executive Officers other than Mr. Murray were designated as participants in
the Company's 1996 Executive Bonus Plan (the "Bonus Plan") and target bonuses
of 70% of base salary for the Chief Executive Officer and 50% of base salary
for the other
10
<PAGE>
Named Executive Officers were established. No bonuses were paid under the
Bonus Plan except that, in connection with his separation from the Company,
Mr. Kokos received a bonus of $37,500 based upon the Company's performance
during the first quarter of the fiscal year.
3. Stock Options. In September 1995, the Stock Option Committee authorized
the granting of a stock option to Mr. Lowe covering shares with a market value
on the date of the grant equal to 110% of his 1996 base salary. The options
granted to the other Named Executive Officers other than Mr. Murray were for
shares with a market value of 90% of their respective 1996 base salaries. Mr.
Lowe's options terminated upon the termination of his employment. Mr. Murray
received stock options to purchase a total of 300,000 shares for $18.25 per
share (the then market value) on February 2, 1996, in accordance with the
terms of his employment by the Company.
4. Mr. Lowe's Compensation. The process by which the compensation of William
C. Lowe as President and Chief Executive Officer of the Company was arrived at
in fiscal year 1996 was as stated above and differed in no material way from
that employed with respect to the other Named Executive Officers (other than
Mr. Murray). Mr. Lowe was given no fringe benefits other than those available
to all officers of the Company. Upon the termination of his employment on
December 13, 1995, the Company, as termination pay in extinguishment of all
stock option claims, and in consideration of a general release and other
covenants, agreed to pay him a total of $900,000 over a period of 12 months
and to cancel a debt of $106,000 owed by him to the Company.
5. Mr. Murray's Compensation. In connection with his employment as Chairman,
President and Chief Executive Officer as of December 13, 1995, Mr. Murray's
base salary and bonus target, were fixed at the same level as those of his
predecessor, William C. Lowe. On February 2, 1996, he was awarded stock
options to purchase a total of 300,000 shares at the then market value of
$18.25 per share. This was the same number of shares as to which Mr. Lowe was
granted an option in 1994, upon his becoming President and Chief Executive
Officer. The Committee is of the opinion that Mr. Murray's compensation is
reasonable and appropriate in the context of his prior employment as Executive
Vice President, North Atlantic Group of the Gillette Company, the compensation
earned by him in that position, and the desirability of obtaining the services
of a person of his stature and ability as Chairman, President and Chief
Executive Officer of the Company.
ORGANIZATION AND COMPENSATION COMMITTEE
AND STOCK OPTION COMMITTEE
Peter A. Brooke Benjamin H. Lacy Richard H
Rhoads
11
<PAGE>
[PERFORMANCE GRAPH]
NEB S&P 600 Peer Group
1991 100 100 100
1992 94.53 117.1 89.8
1993 99.08 150.46 105.05
1994 121.36 153.27 117.8
1995 133.29 184.48 148.27
1996 137.09 232.47 190.16
The following chart compares the value of $100 invested in the Company's
Common Stock from June 30, 1991 through June 29, 1996 with a similar
investment in the S&P 600 Small Cap Stock Index, and in a peer group
consisting of the seven(1) publicly held companies listed below which are in
the same industry as the Company.
LOGO
PEER GROUP COMPANIES:
American Business Moore Corporation, Ltd. The Standard Register
Products, Inc. Paris Business Forms, Company
Ennis Business Forms, Inc. Wallace Computer
Inc. The Reynolds & Reynolds Services, Inc.
Company
- --------
(1) Historically, Duplex Products, Inc. was included in the NEBS peer group.
During Fiscal Year 1996, Duplex was acquired by The Reynolds & Reynolds
Company.
12
<PAGE>
PROPOSAL TWO
ELECTION OF AUDITORS
Upon the recommendation of its Audit Committee, the Board of Directors
selected the firm of Deloitte & Touche LLP as auditors of the Company for the
Fiscal Year ending June 28, 1997, subject to ratification by a vote of the
holders of a majority of the shares of Common Stock voting thereon at the
Annual Meeting. A representative of Deloitte & Touche LLP, which served as
auditors for Fiscal Year 1996, is expected to be present at the Meeting, with
the opportunity to make a statement if he or she desires to do so, and to be
available to respond to appropriate questions.
The persons named as proxies in the accompanying form of Proxy intend
(unless specific contrary instructions are given) to vote for ratification of
the selection of Deloitte & Touche LLP as auditors for the 1997 fiscal year.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1997 Annual
Meeting of Stockholders must be received by the Company, at its offices at 500
Main Street, Groton, Massachusetts 01471, no later than May 14, 1997, in order
to be considered for inclusion in the Proxy Statement and form of proxy
relating to that meeting.
OTHER MATTERS
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than that shown above. However, if any
other proper business should come before the Meeting, it is the intention of
the persons named in the enclosed form of Proxy to vote the Proxies with
respect to any such business in accordance with their best judgment. Matters
with respect to which the enclosed form of Proxy confers such discretionary
authority are as follows: (i) matters which the Board of Directors does not
know of a reasonable time before the mailing of this Proxy Statement are to be
presented at the Annual Meeting; (ii) approval of the minutes of the prior
meeting of stockholders, such approval not constituting ratification of the
action taken at such meeting; (iii) election of any person as a director if
any of the nominees named herein are unable to serve or for good cause will
not serve; and (iv) matters incident to the conduct of the meeting.
Brokers holding shares for beneficial owners must vote those shares
according to the specific instructions they receive from the owners. If
specific instructions are not received, however, brokers may vote these shares
in their discretion, depending on the type of proposal involved. However, the
New York Stock Exchange can preclude brokers from exercising their voting
discretion on certain proposals. Absent specific instructions from the
beneficial owner in such case, the broker may not vote on that proposal. This
results in what is known as a "broker non-vote" on such a proposal. In the
event of a broker non-vote with respect to any issue coming before the
Meeting, the Proxy will nonetheless be counted as present for purposes of
determining the existence of a quorum.
The vote required for approval of directors is the affirmative vote of a
plurality of the shares present or represented at the Meeting and entitled to
vote thereon. Unless authority to vote for any director is withheld in the
Proxy, votes will be cast in favor of election of the nominees listed herein.
Votes withheld from election of directors will be excluded entirely from the
vote and will have no effect.
The cost of preparing, assembling and mailing the proxy material will be
borne by the Company. In addition to the use of the mails, certain officers
and regular employees of the Company, without additional compensation, may use
their personal efforts, by telephone or otherwise, to obtain Proxies. The
Company will also request brokerage houses, custodians, nominees and
fiduciaries to forward copies of the proxy material to those persons
13
<PAGE>
for whom they hold shares and to request instruction for voting the Proxies.
The Company will reimburse such brokerage houses and other persons for their
reasonable expenses in connection therewith.
Any stockholder giving a Proxy in the accompanying form retains the power to
revoke it, by appropriate written notice to the Secretary of the Company or by
the giving of a later-dated Proxy, at any time prior to the exercise of the
powers conferred thereby. Attendance in person at the Meeting will not in
itself be deemed to revoke a Proxy unless the stockholder gives an affirmative
notice at the Meeting that the stockholder intends to revoke the Proxy and to
vote in person.
The Nominating Committee will accept shareholders' suggestions on candidates
to consider as potential Board members as part of the Committee's review of
the composition of the Board. Such recommendations may be sent to the
Nominating Committee through the Company Secretary at New England Business
Service, Inc., 500 Main Street, Groton, MA 01471.
The shares represented by a Proxy will be voted as directed by the
stockholder giving the Proxy.
IF NO CONTRARY INSTRUCTIONS ARE GIVEN, THE PROXY WILL BE VOTED (1) TO FIX
THE NUMBER OF DIRECTORS AT EIGHT AND TO ELECT THE PERSONS NAMED UNDER
"ELECTION OF DIRECTORS," (2) TO RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP
AS AUDITORS FOR FISCAL YEAR 1997, AND (3) IN THE DISCRETION OF THE PROXY
HOLDERS AS TO ANY OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING.
14
<PAGE>
DETACH HERE
NEW ENGLAND BUSINESS SERVICE, INC.
MEETING OF STOCKHOLDERS -- OCTOBER 25, 1996
P THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R OF NEW ENGLAND BUSINESS SERVICE, INC.
O
X
Y The undersigned stockholder in New England Business Service, Inc. (the
"Company") hereby appoints Richard H. Rhoads, Robert J. Murray and Russell V.
Corsini, Jr. and each of them, attorneys, agents and proxies, with power of
substitution to each, to vote all shares of Common Stock that the undersigned
is entitled to vote at the Annual Meeting of Stockholders of the Company to be
held at the offices of the Company, 500 Main Street, Groton, Massachusetts on
October 25,1996 at 10:00 a.m., Eastern Daylight Savings Time, and any
adjournments thereof.
-----------
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
-----------
<PAGE>
DETACH HERE
[X] Please mark
votes as in
this example
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO CONTRARY INSTRUCTIONS ARE INDICATED, THIS PROXY WILL
BE VOTED IN FAVOR OF ALL PROPOSALS IN THE PROXY STATEMENT.
<TABLE>
<S> <C> <C>
2. To ratify the FOR AGAINST ABSTAIN
1. To fix the number of persons constituting the selection of [___] [___] [___]
full Board of Directors at eight and to elect Deloitte &
the following nominees as directors: Richard Touche LLP as
H. Rhoads, Peter A. Brooke, Benjamin H. Lacy, independent aud-
Robert J. Murray, Herbert W. Moller, Robert itors of the Company
L. Gable, Jay R. Rhoads, Jr., and Brian E. Stern. for the current
fiscal year end-
FOR WITHHELD MARK HERE ing June 28, 1997.
[___] [___] IF YOU PLAN
TO ATTEND 3. And to vote and act upon any other
[__]______________________________ THE MEETING [___] business which may properly come
For all nominees except as noted before the meeting or any adjournment
above MARK HERE thereof.
FOR ADDRESS
CHANGE AND Please sign exactly as your name is printed
NOTE BELOW [___] opposite. When signing at attorney-in=fact,
executor, administrator, trustee or guardian,
please give title. If stock is held in joint names,
all named stockholders should sign.
</TABLE>
<TABLE>
<S> <C>
Signature___________________________________ Date:______ Signature: ___________________________________ Date:_______
</TABLE>
