<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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 240.14a-11(c) or 240.14a-12
CSS INDUSTRIES, 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)(1) 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>
CSS INDUSTRIES, INC.
1845 Walnut Street
Philadelphia, Pennsylvania 19103
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------
The 1998 Annual Meeting of Stockholders of CSS Industries, Inc. (the
"Company") will be held at The Locust Club of Philadelphia, 1614 Locust Street,
Philadelphia, PA 19103 on Tuesday, May 5, 1998, at 10:00 a.m. local time, for
the following purposes:
1. To elect a board of eleven directors; and
2. To transact such other business as may properly come before the
meeting and at any adjournments thereof.
The board of directors has fixed March 9, 1998 as the record date for the
meeting. Accordingly, only stockholders of record at the close of business on
such date will be entitled to notice of the meeting and to vote at the meeting
and any adjournments thereof. A list of the stockholders of the Company
entitled to vote at the meeting will be available for inspection at the
Company's offices during normal business hours by any stockholder for the ten
days prior to the meeting.
By order of the board of
directors,
/s/ Stephen V. Dubin
---------------------------
STEPHEN V. DUBIN
Secretary
Philadelphia, Pennsylvania
March 27, 1998
Regardless of whether or not you plan to attend the meeting, you are urged to
complete, sign and return the enclosed proxy in the envelope provided.
<PAGE>
CSS INDUSTRIES, INC.
1845 Walnut Street
Philadelphia, Pennsylvania 19103
----------------
PROXY STATEMENT
1998 Annual Meeting of Stockholders
----------------
This proxy statement is furnished in connection with the solicitation of
proxies by the board of directors of CSS Industries, Inc. ("CSS" or the
"Company") for use at the 1998 annual meeting of stockholders of the Company
(the "Meeting") to be held at The Locust Club of Philadelphia, 1614 Locust
Street, Philadelphia, Pennsylvania 19103 on Tuesday, May 5, 1998 at 10:00 a.m.
local time, and at any adjournments thereof. The approximate date on which this
proxy statement and the accompanying form of proxy are first being sent to
stockholders is March 27, 1998.
The cost of solicitation of proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by telephone by
officers, directors or employees of the Company or its subsidiaries who will
not be specially compensated for such services. Arrangements will also be made
with banks, brokerage houses and other custodians, nominees and fiduciaries for
the forwarding of solicitation material to the beneficial owners of shares held
of record by such persons, and the Company will reimburse such persons for
reasonable out-of-pocket expenses incurred in that regard.
Arthur Andersen LLP served as the Company's independent public accountants
for 1997 and has been selected to serve as the Company's independent public
accountants in 1998. The Company has requested that a representative of Arthur
Andersen LLP attend the Meeting. Such representative will have an opportunity
to make a statement, if he or she desires, and will be available to respond to
appropriate stockholders' questions.
VOTING AT THE MEETING
Stockholders of record at the close of business on March 9, 1998 are
entitled to vote at the Meeting. As of that date, there were outstanding
10,995,874 shares of common stock, par value $.10 per share ("Common Stock"),
of the Company. Each share of Common Stock is entitled to one vote on all
matters.
The holders of a majority of the shares entitled to vote, present in
person or represented by proxy, constitute a quorum. Directors are to be
elected by a plurality of the votes cast at the Meeting. The affirmative vote
of the holders of a majority of the shares, present in person or represented by
proxy, entitled to vote at the Meeting is required to take action with respect
to any other matter that may properly be brought before the Meeting. Shares
cannot be voted at the Meeting unless the holder of record is present in person
or by proxy. The enclosed proxy is a means by which a stockholder may authorize
the voting of his or her shares at the Meeting. The shares of Common Stock
represented by each properly executed proxy card will be voted at the Meeting
in accordance with each stockholder's direction. Stockholders are urged to
specify their choices by marking the appropriate boxes on the enclosed proxy
card; if no choice has been specified, the shares will be voted as recommended
by the board of directors. If any other matters are properly presented to the
Meeting for action, the proxy holders will vote the proxies (which confer
discretionary authority to vote on such matters) in accordance with their best
judgment.
With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be excluded entirely from the vote and
will have no effect, other than for purposes of determining the presence of a
quorum. Abstentions may not be specified for the election of directors.
Abstentions will be considered present and entitled to vote at the Meeting, but
will not be counted as votes cast in the affirmative. Brokers that are member
firms of the New York Stock Exchange ("NYSE") and who hold shares in street
name for customers, but have not received instructions from a beneficial owner,
have the authority under the rules of the NYSE to vote those shares with
respect to the election of directors.
<PAGE>
Proxies may be revoked at any time prior to the time that the vote is
taken at the Meeting. Proxies may be revoked by filing with the Secretary of
the Company a written revocation or another form of proxy bearing a date later
than the date of the proxy previously furnished. A proxy may also be revoked by
attending the Meeting and voting in person. Attendance at the Meeting will not
in and of itself constitute revocation of a proxy.
Your proxy vote is important. Accordingly, you are asked to complete, sign
and return the accompanying proxy whether or not you plan to attend the
Meeting.
CSS SECURITY OWNERSHIP
The following table sets forth certain information (as of March 9, 1998, except
as otherwise noted), with respect to shares of Common Stock beneficially owned
by owners of more than five percent of the outstanding Common Stock, by all
current directors, by the executive officers of the Company named in the
Summary Compensation Table included elsewhere in this proxy statement and by
all current directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Number
of Shares Percent
Beneficially of
Beneficial Owner Owned(1) Class(2)
---------------- ------------- ---------
<S> <C> <C>
Fenimore Asset Management, Inc. .................................... 596,675(3) 5.4%
Nicholas Company, Inc. ............................................. 833,900(4) 7.6%
T. Rowe Price Associates, Inc. ..................................... 959,500(5) 8.7%
James G. Baxter .................................................... 213,470(6) 1.9%
Willard M. Bright .................................................. 18,400(7) *
James H. Bromley ................................................... 396,559 3.6%
John R. Bunting, Jr. ............................................... 17,000(8) *
Stephen V. Dubin ................................................... 326,805(9) 3.0%
Jack Farber ........................................................ 3,279,310(10) 29.8%
Richard G. Gilmore ................................................. 16,363(7) *
Leonard E. Grossman ................................................ 239,282(11) 2.2%
James E. Ksansnak .................................................. 19,200(7) *
Michael L. Sanyour ................................................. 15,725(7) *
William C. Warren .................................................. 52,030(7) *
John A. Pinti ...................................................... 47,500(12) *
Richard Barton ..................................................... 35,304(13) *
All current directors and executive officers of the Company as a
group (14 persons, including the individuals named above) ......... 4,701,114(10)(14) 42.8%
</TABLE>
- ------------
(1) In accordance with Securities and Exchange Commission regulations, the
table lists all shares as to which such persons have or share the power to
vote or to direct disposition. The number of shares indicated includes
shares issuable upon the exercise of outstanding stock options held by
each individual or group to the extent exercisable at March 9, 1998 or
within 60 days thereafter. Unless otherwise indicated, each person has the
sole power to vote and to direct disposition of the shares listed as
beneficially owned by such person.
(2) Percentage calculated with reference to an aggregate of 10,995,874 shares
of Common Stock outstanding at March 9, 1998. Percentages of less than 1%
have not been indicated.
(3) This information is as of December 31, 1997 and is based upon Amendment 2
to Schedule 13G, dated February 9, 1998 filed with the Securities and
Exchange Commission by Fenimore Asset Management, Inc., which is located
at 118 N. Grand Street, Box 310, Cobleskill, NY 12043.
2
<PAGE>
(4) This information is as of December 31, 1997 and is based upon Amendment 3
to Schedule 13G, dated January 22, 1998 filed with the Securities and
Exchange Commission by Nicholas Company, Inc., Nicholas Fund, Inc. and
Albert O. Nicholas. These filers are located at 700 North Water Street,
Milwaukee, WI 53202.
(5) This information is as of December 31, 1997 and is based upon Amendment 5
to Schedule 13G, dated February 12, 1998 filed with the Securities and
Exchange Commission by T. Rowe Price Associates, Inc. ("Price Associates")
which is located at 100 E. Pratt Street, Baltimore, MD 21202. These
securities are owned by various individual and institutional investors
which Price Associates serves as investment adviser with power to direct
investments and/or sole power to vote the securities. The T. Rowe Small
Cap Value Fund owns 750,000 (6.8% of class) of these securities. For
purposes of the reporting requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
(6) The shares shown in the table include options to purchase 10,000 shares of
Common Stock granted under the CSS 1985 Incentive Stock Option Plan, as
amended (the "1985 Plan") and options to purchase 58,750 shares of Common
Stock granted under the 1994 Equity Compensation Plan (the "1994 Plan").
(7) The shares shown in the table include options to purchase 9,000 shares of
Common Stock granted under the CSS 1991 Stock Option Plan for Non-Employee
Directors (the "1991 Plan") and options to purchase 1,000 shares of Common
Stock granted under the CSS 1995 Stock Option Plan for Non-Employee
Directors (the "1995 Plan").
(8) The shares shown in the table include options to purchase 9,000 shares of
Common Stock granted under the 1991 Plan and options to purchase 1,000
shares of Common Stock granted under the 1995 Plan. Mr. Bunting shares the
power to vote and to direct disposition of 400 shares included in this
table.
(9) The shares shown in the table include options to purchase 10,000 shares of
Common Stock granted under the 1985 Plan and options to purchase 37,500
shares of Common Stock granted under the 1994 Plan.
(10) Mr. Farber owns 1,515,151 shares directly and beneficially through his
beneficial ownership of general and limited partnership interests in Delv,
L.P. ("Delv"). Mr. Farber is the sole stockholder of the general partner
of Delv and his daughter is the sole director and is President, Secretary
and Treasurer of the general partner of Delv. The table includes 74,028
shares held by Mr. Farber's wife directly and 15,151 shares held
beneficially by her through her ownership interest in Delv, and Mr. Farber
disclaims beneficial ownership of all shares owned directly or
beneficially by his wife. The table also includes 265,702 shares of Common
Stock owned by a trust for the benefit of David M. Farber, Mr. Farber's
son, in which Mr. Farber serves as co-trustee with David Farber. In
addition, the Farber Foundation, Inc., a charitable foundation in which
Mr. Farber and certain officers of the Company are officers and directors
(the "Farber Foundation"), and the Farber Family Foundation, Inc., a
charitable foundation in which Mr. Farber is an officer and director (the
"Farber Family Foundation") own 92,784 and 284,000 shares of Common Stock,
respectively. The beneficial ownership of shares by Mr. Farber shown in
the table does not include shares of Common Stock held by the Farber
Foundation or the Farber Family Foundation, as to which Mr. Farber and the
directors and officers of the Company who are members, directors or
officers of the foundations disclaim beneficial ownership.
(11) The table includes 6,000 shares of Common Stock held by Mr. Grossman's
wife, as to which Mr. Grossman disclaims beneficial ownership. The shares
shown in the table include options to purchase 9,000 shares of Common Stock
granted under the 1991 Plan and 1,000 shares of Common Stock granted under
the 1995 Plan.
(12) The shares shown in the table include options to purchase 17,500 shares of
Common Stock granted under the 1985 Plan and options to purchase 22,500
shares of Common Stock granted under the 1994 Plan.
3
<PAGE>
(13) The shares shown in the table include options to purchase 21,188 shares of
Common Stock granted under the 1985 Plan and options to purchase 3,750
shares of Common Stock granted under the 1994 Plan. Mr. Barton resigned as
an executive officer in January, 1998.
(14) The table reflects beneficial ownership of a total of 112,000 shares of
Common Stock pursuant to stock options granted under the 1985 Plan, the
1991 Plan, the 1994 Plan and the 1995 Plan.
ELECTION OF DIRECTORS
The Company's board of directors currently has eleven members. Directors
are to be elected by a plurality of the votes cast to hold office for a term of
one year and until the election and qualification of their respective
successors. The board of directors has nominated for election as directors the
persons whose names are listed below, all of whom are presently directors of
the Company with terms expiring in 1998. All nominees have consented to be
named and to serve if elected. Except as indicated below, the board of
directors believes all nominees will be able to serve as directors; if this
should not be the case, however, the proxies may be voted for one or more
substitute nominees to be designated by the board of directors or the board of
directors may decide to reduce the number of directors.
The board of directors recommends a vote FOR the election of all nominees.
The following paragraphs set forth certain information regarding each of
the eleven nominees for directors, the positions and offices with the Company
or its subsidiaries held by each, the year he was first elected a director of
the Company, a brief account of his principal occupations during the past five
years, certain directorships held by him, and his age.
<TABLE>
<S> <C>
James G. Baxter .............. Mr. Baxter has been Executive Vice President of the Company since January
1998. From November 1995 to January 1998 he was President - Consumer
Products Group of the Company, and he has been Chief Financial Officer of
the Company since 1986. From 1986 to November 1995 he also served as
Vice President - Finance of the Company. Mr. Baxter has been a director of
the Company since November 1995. Age: 50.
Willard M. Bright ............ Mr. Bright has been a director of ZOLL Medical Corporation, a health care
product company, since 1983. From 1983 to 1996 he also served as Chairman
of ZOLL Medical Corporation. He is also a director of Macrochem
Corporation. He has been a director of the Company since 1976. Age: 84.
James H. Bromley ............. Mr. Bromley has been an independent consultant since September, 1996.
From September 1996 to December 1997 he served as Chairman of the
Company's then Direct Mail Business Products Group and Vice Chairman of
Rapidforms, Inc. ("Rapidforms"), formerly a subsidiary of the Company.
From May 1996 to September 1996, he served as President of the Company's
then Direct Mail Business Products Group. He served as President of
Rapidforms from 1979 to September 1996, and as its Chief Executive Officer
from 1987 to September 1996. He has been a director of the Company since
1989. Age: 59.
John R. Bunting, Jr. ......... Mr. Bunting has been Chairman of Bunting-Rubinsohn Associates, Inc./John
R. Bunting, Inc., financial management consultants, since 1980. He has also
been Chairman of B.R. Parking Corp. since 1982. He has been a director of
the Company since 1966. Age: 72.
Stephen V. Dubin ............. Mr. Dubin has been Senior Vice President - Law and Human Resources since
May 1996 and Secretary and General Counsel of the Company since 1978.
From 1978 to May 1996, he also served as a Vice President of the Company.
He has been a director of the Company since November 1995. Age: 59.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Jack Farber ................. Mr. Farber has been Chairman, President and Chief Executive Officer of the
Company since 1979. Mr. Farber has been a director of the Company since
1978. Age: 64.
Richard G. Gilmore .......... Mr. Gilmore has been an independent consultant since 1991. He is also a
director of Philadelphia Electric Company and seventeen mutual funds sponsored
by Legg Mason Wood Walker, Inc. and subsidiaries. Mr. Gilmore has
been a director of the Company since 1984. Age: 70.
Leonard E. Grossman ......... Mr. Grossman has been a private investor since 1989. Mr. Grossman has
been a director of the Company since 1982. Age: 63.
James E. Ksansnak ........... Mr. Ksansnak has been Vice Chairman and a Director of ARAMARK Corporation,
a service management company since May 1997. He served as an Executive
Vice President of ARAMARK Corporation from 1981 to 1987, and as Chief
Financial Officer from 1987 to 1997. He is also a director of Advanta
Corp. Mr. Ksansnak has been a director of the Company since 1988. Age: 58.
Michael L. Sanyour .......... Mr. Sanyour has been a Principal of CMS Companies, a financial services
and insurance concern, since 1987. He has been a director of the Company
since 1980. Age: 67.
William C. Warren ........... Mr. Warren is Dean Emeritus and Kent Professor of Law Emeritus of Columbia
University Law School. He is Counsel to Roberts & Holland, a law firm.
He is also a director of Barnwell Industries, Inc. and Sterling Bancorp. Mr.
Warren has been a director of the Company since 1973. Age: 88.
</TABLE>
General Information Regarding the CSS Board of Directors and its Committees.
The board of directors of the Company held six meetings in 1997. The
by-laws of the Company provide that the board of directors, by resolution
adopted by a majority of the entire board, may designate an Executive Committee
and other committees, each of which shall consist of three or more directors.
The board of directors annually elects from its members the Executive, Audit,
and Human Resources Committees. The employee members of the Board of Directors
serve as members of the stock option committee under the 1991 Plan and the 1995
Plan. The Company has no nominating committee. Each director attended at least
75% of the total number of meetings of the board of directors and committees of
the board of directors on which he served in 1997.
The Executive Committee is composed of Messrs. Farber, Bunting and
Sanyour. The Executive Committee may exercise all of the authority of the board
of directors in the business and affairs of the Company with certain
exceptions. The Executive Committee is intended to serve in the event that
action must be taken by the board of directors at a time when convening a
meeting of the entire board is not feasible. The Executive Committee acted
twice by unanimous consent in 1997.
The Audit Committee of the board of directors, which consists of Messrs.
Bunting, Gilmore, Grossman and Ksansnak, held three meetings during 1997. It
meets with the Company's independent accountants to review the scope of audit
procedures, the Company's accounting procedures and controls, and any non-audit
engagements.
The Human Resources Committee (the "H.R. Committee"), which performs
functions that include those normally performed by a compensation committee,
and which consists of Messrs. Bright, Ksansnak and Warren, held two meetings
and acted six times by unanimous consent in 1997. No member of the H.R.
Committee is a former or current officer or employee of the Company or any of
its subsidiaries. The H.R. Committee is responsible for developing and
administering the Company's executive compensation policies, plans and
programs. In addition, the H.R. Committee (1) determines on an annual basis the
compensation to be paid to the Chairman, President and Chief Executive Officer
of the Company, (2) determines the
5
<PAGE>
appropriate level of compensation for the Company's corporate level executive
officers and certain other senior corporate level management personnel
following receipt of the recommendations of the Chairman, President and Chief
Executive Officer of the Company, (3) reviews the compensation level of each
employee of the Company and its subsidiaries with an annual base salary
exceeding $150,000, and (4) makes grants and has general administrative
authority under the 1994 Plan.
Each director of the Company who is not a full time employee of the
Company or its subsidiaries receives a fee of $14,000 per annum, plus $750 for
attendance at each meeting of the board or its committees or for each
consultation with management, and is entitled to participate in the 1995 Plan.
The 1995 Plan succeeded the 1991 Plan and provides for the automatic annual
grant of nonqualified stock options to purchase 4,000 shares of Common Stock to
each of the non-employee directors of the Company as of the last business day
of November in each year, covering 1996 through 2000. In accordance with the
terms of the 1995 Plan, each of the non-employee directors of CSS received an
automatic grant of additional options to purchase 4,000 shares of Common Stock
on November 28, 1997 at an exercise price of $33.00 per share.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is certain information regarding each of the current
executive officers of the Company. See "ELECTION OF DIRECTORS" for further
information about Messrs. Farber, Dubin and Baxter. Executive officers of the
Company are elected annually by the board of directors to serve in their
respective capacities until their successors are duly elected and qualified or
until their earlier resignation or removal.
<TABLE>
<S> <C>
Jack Farber ..................... Mr. Farber has been Chairman, President and Chief Executive Officer of the
Company since 1979. Age: 64.
James G. Baxter ................. Mr. Baxter has been an Executive Vice President of the Company since
January 1998. From November 1995 to January 1998 he served as President
- Consumer Products Group of the Company, and he has been the Chief
Financial Officer of the Company since 1986. From 1986 to November 1995
he was also Vice President - Finance of the Company. Age: 50.
John A. Pinti ................... Mr. Pinti has been Executive Vice President of the Company and President
and Chief Executive Officer of The Paper Magic Group, Inc. ("Paper
Magic"), a subsidiary of the Company since January 1998. He has also been
President and Chief Executive Officer of Berwick Industries, Inc. ("Berwick"),
a subsidiary of the Company, since 1992. Age: 54.
Stephen V. Dubin ................ Mr. Dubin has been Senior Vice President-Law and Human Resources since
May 1996 and Secretary and General Counsel of the Company since 1978.
From 1978 to May 1996, he was a Vice President of the Company. Age: 59.
Clifford E. Pietrafitta ......... Mr. Pietrafitta has been Vice President - Finance of the Company since
November 1995 and Treasurer and Assistant Secretary of the Company since
1991. Age: 36.
Marc A. English ................. Mr. English has been President and Chief Executive Officer of Cleo Inc.
("Cleo"), a subsidiary of the Company, since the Company acquired Cleo in
November 1995. From June 1994 to November 1995 he was Senior Vice
President of Marketing for Cleo. From 1990 to June 1994 he was Senior Vice
President of Marketing and Sales of CPS Corp., a manufacturer and distributor
of seasonal gift wrap. Age: 45.
</TABLE>
Richard D. Barton served as President and Chief Executive Officer of Paper
Magic during 1997. Mr. Barton resigned as an officer of Paper Magic in January
1998.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the total compensation of the chief
executive officer and the four other most highly compensated executive officers
of the Company for services rendered in all capacities to the Company or its
subsidiaries for the fiscal year ended December 31, 1997, as well as the total
compensation earned by each such individual for the Company's two previous
fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------------ -------------
Securities
Underlying All Other
Name and Options Compensation(1)
Principal Position Year Salary($) Bonus($) (#) ($)
- ---------------------------------- ------ ----------- ---------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Jack Farber 1997 390,000 505,600 0 59,556(2)
Chairman, President and Chief 1996 375,000 695,800 0 80,865(2)
Executive Officer of the 1995 337,000 380,160 0 64,258(2)
Company
James G. Baxter 1997 275,000 177,000 30,000 30,676
Executive Vice President and 1996 250,000 469,500 50,000 21,144
Chief Financial Officer of the 1995 203,000 275,420 35,000 16,942
Company
John A. Pinti(3) 1997 300,000 229,929 20,000 26,472
Executive Vice President of the 1996 300,000 140,495 15,000 24,706
Company and President and 1995 300,000 150,000 0 7,653
Chief Executive Officer of
Berwick and Paper Magic
Stephen V. Dubin 1997 230,000 237,000 25,000 43,395
Senior Vice President-Law 1996 220,000 316,700 25,000 21,144
and Human Resources, 1995 211,000 179,580 25,000 16,942
Secretary and General Counsel
of the Company
Richard D. Barton(4) 1997 240,000 0 20,000 12,730
Former President and Chief 1996 220,000 129,866 15,000 22,235
Executive Officer of Paper 1995 205,021 102,841 0 7,500
Magic
</TABLE>
- ------------
(1) All of the operating subsidiaries have qualified profit sharing plans
providing for discretionary contributions by such companies related to
their financial performance. Prior to the sale of Rapidforms in December,
1997, corporate level officers participated in the Rapidforms profit
sharing plan. Beginning December 19, 1997, corporate level officers of the
Company participate in the Cleo profit sharing plan. In general,
contributions to the profit sharing plans are based upon a percentage,
determined by the board of directors of the applicable company, of the
participant's compensation, not exceeding the applicable Internal Revenue
Code maximum contribution base. Contributions vest under specified
schedules requiring from six to seven years of service, and are paid to
participants, along with earnings thereon, upon retirement or other
separation from service or, in the case of one such plan, certain other
events. In addition, the profit sharing plan includes a cash or deferred
arrangement under section 401(k) of the Internal Revenue Code which
permits employees to make salary reduction contributions to the profit
sharing plan which are subject to a discretionary matching contribution by
the Company. The Company established an unfunded non-qualified
Supplemental Executive Retirement Plan (the "SERP") effective January 25,
1994 to provide all corporate level officers of the Company (except Mr.
Farber who has entered into the deferred compensation arrangements
referred to below) additional retirement benefits. In
7
<PAGE>
addition, the Company has entered into supplemental retirement agreements
with Messrs. Baxter and Dubin to provide them with certain deferred benefits
upon death or retirement in lieu of certain benefits in the SERP. See
"Supplemental Executive Retirement Benefits" below. The amounts shown in
this column represent, for all of the years indicated, the contributions by
the applicable company to a profit sharing plan and the SERP in respect of
the named person and, in the case of Mr. Farber, to a profit sharing plan
plus the deferred compensation arrangement referred to below.
(2) Mr. Farber, as a result of being ineligible to participate in the profit
sharing plan for employees of the Company, entered into a deferred
compensation agreement with Philadelphia Industries, Inc. ("PII"), which
was merged with and into the Company on January 21, 1993. This agreement
was assumed by the Company and provides, upon retirement or other
separation from service, the same contribution as participation in the
then Rapidforms profit sharing plan and the SERP for the Company's
corporate level officers would have provided. In 1993, Mr. Farber became
eligible to and did participate in the then Rapidforms and presently Cleo
Profit Sharing Plan. Mr. Farber was also provided with additional benefits
under the deferred compensation agreement for earnings in excess of the
applicable maximum contribution base under these profit sharing plans. The
obligation to Mr. Farber under the deferred compensation agreement has
been accrued on the books of the Company and represents an unsecured debt
of the Company. The amounts shown in this column represent, for all of the
years indicated, the amount charged to the Company in respect of any
profit sharing plan and the deferred compensation agreement.
(3) In connection with the acquisition of Berwick by the Company in May 1993,
the Company assumed an employment agreement between Mr. Pinti and Berwick,
as amended in May 1993. Under the provisions of the employment agreement,
Mr. Pinti served as President and Chief Executive Officer of Berwick in
1997. The employment agreement was mutually terminated in January, 1998
and Mr. Pinti is currently an employee-at-will of the Company. In addition
to his duties with Berwick, beginning January, 1998, Mr. Pinti was elected
Executive Vice President of the Company and President and Chief Executive
Officer of Paper Magic. Mr. Pinti also participates in an unfunded
non-qualified Supplemental Executive Retirement Plan (the "Berwick SERP")
which was established effective December 11, 1996 to provide all executive
officers of Berwick additional retirement benefits. See "Supplemental
Executive Retirement Benefits" below.
(4) Mr. Barton participated in an unfunded non-qualified Supplemental Executive
Retirement Plan (the "Paper Magic SERP") which was established effective
December 12, 1996 to provide all executive officers of Paper Magic
additional retirement benefits.
No individual named above received perquisites or non-cash compensation
during the years indicated exceeding the lesser of $50,000 or an amount equal
to 10% of such person's salary and bonus.
The following table sets forth certain information regarding options
granted by the Company or its subsidiaries to the chief executive officer and
four other most highly compensated executive officers of the Company during the
fiscal year ended December 31, 1997.
Option Grant Table
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------------
Number Percent of
of Total Potential Realizable Value at
Securities Options Assumed Annual Rates of Stock
Underlying Granted Exercise Price Appreciation for
Options to Employees or Base Option Term(2)
Granted(1) in Fiscal Price Expiration -----------------------
Name (#) Year ($/Sh) Date 5%($) 10%($)
- -------------------------- --------------- -------------- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Jack Farber .............. 0 -- -- -- -- --
James G. Baxter .......... 30,000 5.8% 25.875 1/20/02 214,464 473,908
John A. Pinti ............ 20,000 3.8% 25.875 1/20/02 142,976 315,939
Stephen V. Dubin ......... 25,000 4.8% 25.875 1/20/02 178,720 394,924
Richard Barton ........... 20,000(3) 3.8% 25.875 1/20/02 142,976 315,939
</TABLE>
- ------------
(1) The options indicated were granted under the 1994 Plan. Such options may
not be exercised during the first year after their grant and thereafter
may be exercised in installments to the extent of 25% of the
8
<PAGE>
number of shares covered during the second year and to the extent of an
additional 25% of the number of shares covered during each of the next three
subsequent years. However, the H.R. Committee may accelerate the period over
which the options become exercisable. Such options are not exercisable after
the expiration of five years from the date of option grant.
(2) The dollar amounts under these columns are the result of the 5% and 10%
rates set by the rules promulgated by the Securities and Exchange
Commission and are not intended to forecast possible future appreciation,
if any, of the stock price of the Company. The Company did not use an
alternative formula for a grant date valuation, as the Company is not
aware of any formula which will determine with reasonable accuracy a
present value based on future unknown or volatile factors. There can be no
assurance that the dollar amounts reflected in these columns will be
achieved. Actual gains, if any, on stock option exercises are dependent on
the future performance of the Common Stock and overall market conditions,
as well as the executive officer's continued employment through the
vesting period.
(3) Mr. Barton resigned as an officer of Paper Magic in January, 1998 and all
of the options granted to him for the fiscal year ended December 31, 1997
were forfeited.
The table below sets forth certain information regarding options exercised
during the fiscal year ended December 31, 1997 and the value of unexercised
options at December 31, 1997 held by the five most highly compensated executive
officers of the Company.
Option Exercise Table
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at December 31, In-the-Money Options at
1997(#)(2) December 31, 1997($)
------------------------------ -----------------------------
Shares
Acquired on Value
Name Exercise (#)(1) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------------------- ----------------- -------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Jack Farber ............... 0 -- -- -- -- --
James G. Baxter ........... 20,332 265,268 61,176 87,500 887,796 909,375
John A. Pinti ............. 2,500 32,188 26,250 41,250 349,375 385,313
Stephen V. Dubin .......... 30,000 530,625 26,250 58,750 357,812 589,063
Richard Barton(3) ......... 8,278 129,352 29,222 42,500 446,555 425,156
</TABLE>
- ------------
(1) Options exercised relate to options to acquire Common Stock granted under
the 1985 Plan, as adjusted to reflect the effect of the Stock Split in
August 1993, and under the 1994 Plan.
(2) Includes exercisable and unexercisable options to acquire Common Stock
granted under the 1985 Plan, as adjusted to reflect the effect of the
Stock Split in August 1993, and under the 1994 Plan.
(3) Mr. Barton resigned as an officer of Paper Magic in January, 1998 and all
unexercisable options were forfeited. In January, 1998, Mr. Barton
exercised options to acquire 4,284 shares of Common Stock. Mr. Barton has
until April 6, 1998 to exercise the balance of the options exercisable at
December 31, 1997.
Supplemental Executive Retirement Benefits and Other Deferred Compensation
Arrangements
Prior to the sale of Rapidforms in December 1997, employees of the Company
participated in the Rapidforms profit sharing plan. In anticipation of the sale
of Rapidforms, the portion of the Rapidforms profit sharing plan covering
employees of the Company was spun-off from the Rapidforms profit sharing plan
and merged into the Cleo profit sharing plan. Thus, immediately prior to the
sale of Rapidforms, employees of the Company were "transferred" to the Cleo
profit sharing plan. Because the spin-off occurred before December 31, 1997,
discretionary Company profit sharing contributions made on behalf of Company
employees for 1997 will be made under the Cleo profit sharing plan, rather than
under the Rapidforms profit sharing plan.
Under applicable provisions of the Code, the Company is required to
disregard an employee's annual compensation in excess of a specified dollar
amount (subject to cost of living adjustments) in determining the
profit-sharing plan contribution the Company makes on behalf of such employee
under the Rapidforms profit
9
<PAGE>
sharing plan and currently the Cleo profit sharing plan. The Omnibus Budget
Reconciliation Act of 1993 ("OBRA '93") reduced this compensation limit from
$235,840 in 1993 to $150,000 in 1994, 1995 and 1996 and such limit increased to
$160,000 in 1997. The Company established the SERP to provide additional
retirement benefits to corporate level officers with regard to compensation in
excess of this dollar limit.
Under the SERP, all corporate level officers of the Company (except Mr.
Farber) are entitled to have an amount credited for their benefit on the books
of the Company equal to the difference between the amount that would have been
contributed on the officer's behalf under the Rapidforms profit sharing plan
and currently the Cleo profit sharing plan prior to OBRA '93 (calculated by
using the percentage of compensation contributed for the year and the
compensation limit prior to OBRA '93) and the amount that actually was
contributed to the Rapidforms profit sharing plan and the Cleo profit sharing
plan for the year on behalf of such officer. These amounts are adjusted to
reflect earnings and losses based on the individuals investment performance
within the Rapidforms profit sharing plan and the Cleo profit sharing plan as
if such amounts had been contributed to the Rapidforms profit sharing plan and
the Cleo profit sharing plan at the time they were credited and were invested
in the same manner as the employee's account under the Rapidforms profit
sharing plan and the Cleo profit sharing plan. All amounts payable by the
Company to any officer for whose benefit amounts have been credited represent
an unsecured debt of the Company.
Under agreements dated March 3, 1993, Messrs. Baxter and Dubin are
eligible for certain unfunded non-qualified annual retirement benefits and
death benefits in lieu of benefits to which they may be entitled under the
Rapidforms or Cleo profit sharing plans and the SERP. Although the Company has
no obligation to fund the benefits provided by those agreements, the Company
has purchased life insurance policies to provide funding for such benefits.
These additional retirement benefits are intended to compensate Messrs. Baxter
and Dubin for the loss of benefits under the Rapidforms or Cleo profit sharing
plans by reason of the pre-OBRA '93 limitations on the amount of compensation
that may be considered in calculating contributions under the profit sharing
plan. Benefits are payable upon termination of active employment and are
reduced if such termination occurs prior to age 65. A pre-retirement death
benefit is also available under these agreements. The annual retirement benefit
is a fixed annual payment for fifteen years. Assuming that Messrs. Baxter and
Dubin continue employment with the Company until age 65, their annual benefits
will be $130,987 and $58,123, respectively.
Mr. Farber, as a result of being ineligible to participate in the profit
sharing plan for employees of the Company, entered into a deferred compensation
Agreement with PII, which was merged with and into the Company on January 21,
1993. This Agreement was assumed by the Company and provides, upon retirement
or other separation from service, the same contribution as participation in the
then Rapidforms profit sharing plan (references to the Rapidforms profit
sharing plan will be changed, effective December 23, 1997, by an amendment
adopted in 1998 to refer to the Cleo profit sharing plan) and the SERP for the
Company's corporate level officers would have provided. In 1993, Mr. Farber
became eligible to and did participate in the then Rapidforms and presently
Cleo profit sharing plan. Mr. Farber was also provided with additional benefits
under the deferred compensation Agreement for earnings in excess of the
applicable maximum contribution base under the Rapidforms profit sharing plan.
The obligation to Mr. Farber under the deferred compensation Agreement has been
accrued on the books of the Company and represents an unsecured debt of the
Company.
Under the Berwick SERP and the Paper Magic SERP all officers of Berwick
and Paper Magic and their subsidiaries in the United States are entitled to
have an amount credited for their benefit on the books of the Company equal to
product of (x) the percentage then used in deriving the dollar amount approved
by the subsidiary's Board of Directors as the subsidiary's contribution to its
profit sharing plan for such calendar year and (y) the difference between each
such officer's total cash compensation for such calendar year and the dollar
amount of the compensation limitation ($160,000 for 1996). These amounts are
adjusted to reflect earnings and losses based on the investment performance of
the profit sharing plan as if such amounts had been contributed to the profit
sharing plan at the time they were credited and were invested in the same
manner as the employee's account under the profit sharing plan. All amounts
payable by the Company to any officer for whose benefit amounts have been
credited represent an unsecured debt of the Company.
10
<PAGE>
HUMAN RESOURCES COMMITTEE REPORT
The H.R. Committee is comprised of three outside directors, none of whom
has been an employee of the Company or any subsidiary. Under the H.R.
Committee's supervision, compensation policies, plans and programs have been
developed and implemented which seek to enhance the profitability of the
Company, and thus stockholder value, by aligning closely the financial
interests of the Company's senior management with those of its stockholders.
The H.R. Committee also is responsible for the administration of grants that
have been made under the 1985 Plan and administers and makes grants under the
1994 Plan. In furtherance of these goals, annual and longer term incentive
compensation is provided to attract, retain, and reward senior management of
outstanding abilities and to motivate them to perform to the full extent of
their abilities.
The Company's compensation program for senior management is comprised of
base salary, annual performance bonuses, longer term incentive compensation in
the form of Stock Options, Restricted Stock Grants and SARs, benefits available
generally to the Company's employees (including retirement benefits under
profit sharing plans), and supplemental retirement plans or deferred
compensation agreements to provide benefits in excess of those permitted to be
paid under the profit sharing plans because of annual Internal Revenue Code
contribution limitations. The "at risk" portion of the compensation program is
significant relative to overall compensation.
Base salary levels for the Company's executive officers are reviewed on an
annual basis by the H.R. Committee and are set generally to be competitive with
other companies of comparable size and geographic location, taking into
consideration the position's complexity, responsibility and need for special
expertise. Individual salaries also take into account individual experience and
performance. The H.R. Committee establishes salary levels for corporate level
officers and other executive officers of the Company. The salary of each
employee of the Company and its subsidiaries with an annual base salary
exceeding $150,000 is subject to periodic review by the H.R. Committee.
Annual incentive compensation is based upon the achievement of certain
threshold and target levels of earnings by the operating subsidiaries, the
achievement of a target level of diluted earnings per common share by the
Company for corporate level executive officers, and the attainment of
specifically defined individual goals and objectives. At the beginning of each
year, performance goals are established for the Company and each of its
subsidiaries by the H.R. Committee to be used in determining annual performance
bonuses. The formulae permit discretion in determining the size of the bonus
pool, subject to certain parameters based upon the achievement of the
performance goals, and to a limited extent in allocating the bonus pool among
participants.
The H.R. Committee annually considers the desirability of granting to
officers and other employees of the Company and the Company's principal
operating subsidiaries stock options, restricted stock grants and stock
appreciation rights under the 1994 Plan. The objective of the 1994 Plan is to
align senior management and stockholder long-term interests by creating a
strong and direct link between the executive's accumulation of wealth and
stockholder return and to enable executives to develop and maintain a
significant, long-term stock ownership position in the Company's common stock.
The H.R. Committee adopted a methodology for use beginning with 1998 stock
option grants which relates the number of stock options granted to each
optionee to the individual's position and salary level. The H.R. Committee
believes that its past grants of stock options have successfully focused the
Company's executive officers and other members of senior management on building
profitability and shareholder value.
Payments during 1997 to the Company's senior management under the various
programs discussed above were made following consideration of Section 162(m) of
the Code which became effective on January 1, 1994. Section 162(m) of the Code
limits the deduction that may be claimed by a "public company" for total
compensation in excess of $1 million paid to the chief executive officer or to
any of the other four most highly compensated officers except to the extent
that any compensation in excess of $1 million qualifies as "performance-based
compensation." Grants of Stock Options and SARs made under the 1994 Plan
qualify as "performance-based compensation."
In determining the compensation of Mr. Farber, the H.R. Committee has
taken into consideration pay levels of chief executive officers of other
companies of comparable size, his contributions to the profitable
11
<PAGE>
growth and increased return on equity of the Company over the past several
years and Mr. Farber's overall management strengths and business acumen. The
diluted earnings per share of Common Stock from continuing operations has
increased at a compound annual rate of 8% over the last year, 34% over the last
two years and 25% over the last five years. The return to stockholders as
measured by the December 31 closing price of the Common Stock has increased 23%
in 1997, increased at a 20% compound annual rate for the two years ended
December 31, 1997 and increased at a 16% compound annual rate for the five
years ended December 31, 1997. Mr. Farber's total annual compensation decreased
16% over the last year and has increased at a compound annual rate of 12% and
9%, for the two and five years ended December 31, 1997, respectively.
HUMAN RESOURCES COMMITTEE
James E. Ksansnak, Chairman
Willard M. Bright
William C. Warren
12
<PAGE>
Performance Graph
The graph below compares the cumulative total stockholders' return on
Common Stock for the period from January 1, 1993 through December 31, 1997,
with (i) the cumulative total return on the Standard and Poors 500 ("S&P 500")
Index, (ii) the Russell 2000 Index and (iii) the Standard and Poors
Manufacturing-Diversified ("S&P Manufacturing-Diversified") Index which, until
this year, was used by the Company for purposes of the comparison (assuming the
investment of $100 in Common Stock, S&P 500 Index, the Russell 2000 Index and
S&P Manufacturing-Diversified Index on January 1, 1993 and reinvestment of all
dividends).
As a result of the Company's sale of its Rapidforms subsidiary in
December, 1997, the Company has chosen to change the performance index from
that used in the Company's 1997 Proxy Statement, the S&P
Manufacturing-Diversified Index, to the Russell 2000 Index. Because the Company
does not believe it can reasonably identify a peer group or applicable
published industry or line-of-business index, it has selected the Russell 2000
Index as an index of issuers with similar market capitalizations.
COMPARISON OF CUMULATIVE TOTAL RETURN*
350|------------------------------------------------------------------|
| |
| |
| |
300|------------------------------------------------------------------|
| $ |
| |
| |
250|-----------------------------------------------------------------*|
D | $ |
O | |
L | o |
L 200|------------------------------------------------------------------|
A | #|
R | $ o * |
S | # |
150|------------------------------------*-----------------------------|
| o o # |
| $ $ |
| *# o*# |
100|o*$#--------------------------------------------------------------|
| |
| |
| |
50|-|-----------|-----------|----------|-------------|-------------|-|
1992 1993 1994 1995 1996 1997
ASSUMES INITIAL INVESTMENT OF $100
*TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
NOTE: TOTAL RETURNS BASED ON MARKET CAPITALIZATION
o CSS * S&P 500 $S&P MANUFACTURING # RUSSELL 2000
13
<PAGE>
CERTAIN TRANSACTIONS
In November 1996, the Company loaned James E. Ksansnak, a director of the
Company, $27,750 at an interest rate of 7% per annum payable on demand and
secured by a pledge of 4,000 shares of Common Stock of the Company owned by Mr.
Ksansnak. The proceeds of the loan were used to exercise stock options granted
to Mr. Ksansnak under the 1991 Plan which were expiring in November 1996. In
November 1997, the Company loaned Mr. Ksansnak $28,500 at an interest rate of
7% per annum payable on demand and secured by a pledge of 4,000 shares of
Common Stock of the Company owned by Mr. Ksansnak. The proceeds of the loan
were utilized to exercise stock options granted to Mr. Ksansnak under the 1991
Plan and which were expiring in November 1997.
In November 1996, the Company also loaned Richard G. Gilmore, a director
of the Company $27,750 at an interest rate of 7% per annum payable on demand
and secured by a pledge of 4,000 shares of Common Stock of the Company owned by
Mr. Gilmore. The proceeds of the loan were used to exercise stock options
granted to Mr. Gilmore under the 1991 Plan which were expiring in November
1996. Mr. Gilmore repaid the loan in full in August, 1997.
PROPOSALS FOR 1999 ANNUAL MEETING
Consideration of certain matters is required at the annual meeting of
stockholders, such as the election of directors. In addition, pursuant to
applicable regulations of the Securities and Exchange Commission, stockholders
may present resolutions that are proper subjects for inclusion in the proxy
statement and for consideration at the annual meeting by submitting their
proposals to the Company on a timely basis. In order to be included for the
1999 annual meeting, resolutions must be received by November 27, 1998 and
addressed to the Company's Secretary at the address set forth on the cover page
of this proxy statement.
CSS INDUSTRIES, INC.
By: /s/ Stephen V. Dubin
----------------------------
Stephen V. Dubin,
Secretary
Philadelphia, Pennsylvania
March 27, 1998
14
<PAGE>
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CSS INDUSTRIES, INC.
The undersigned hereby appoints Jack Farber, Leonard E. Grossman and
Michael L. Sanyour, and each of them acting singly, proxies of the undersigned
stockholder with full power of substitution to each of them, to vote all shares
of Common Stock of CSS Industries, Inc. (the "Company") which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Stockholders of the Company to be held at The Locust Club of Philadelphia, 1614
Locust Street, Philadelphia, PA 19103, on Tuesday, May 5, 1998, at 10:00 a.m.
(local time) and any adjournments thereof.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder and in the discretion of the holders of
this Proxy upon such other matters as may properly come before the annual
meeting or any adjournments thereof. With respect to the election of directors,
where a box is not completed, this Proxy will be voted "FOR ALL NOMINEES."
THIS PROXY IS CONTINUED ON THE REVERSE SIDE. PLEASE SIGN AND
DATE THIS PROXY ON THE REVERSE SIDE AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE.
- FOLD AND DETACH HERE -
ANNUAL MEETING OF STOCKHOLDERS
OF
CSS INDUSTRIES, INC.
Tuesday, May 5, 1998; 10:00 A.M.
THE LOCUST CLUB OF PHILADELPHIA
1614 LOCUST STREET
PHILADELPHIA, PENNSYLVANIA
================================================================================
AGENDA
1. Declaration of quorum.
2. Proof of Notice of Meeting.
3. Reading of the Minutes of the Annual Meeting of Stockholders held on
May 6, 1997 or waiver thereof.
4. Introduction of representative of independent public accountants -
Arthur Andersen LLP.
5. Nomination and election of Directors.
6. Presiding Officer's remarks.
7. Stockholders' questions and responses.
8. Adjournment.
================================================================================
<PAGE>
Please mark [X]
your votes as
indicated in
this example
Item 1 FOR ALL AUTHORITY WITHHELD
Election of the following NOMINEES FOR ALL NOMINEES
nominees as Directors: [ ] [ ]
James G. Baxter, Richard G. Gilmore,
Willard M. Bright, Leonard E. Grossman,
James H. Bromley, James E. Ksansnak,
John R. Bunting, Jr., Michael L. Sanyour,
Stephen V. Dubin, William C. Warren.
Jack Farber,
The Board of Directors recommends a vote "FOR ALL NOMINEES."
Authority withheld for the following only:
(write the name(s) of the nominee(s) on the line below)
________________________________________________________________________________
Signature(s)__________________________________________ Date ___________________
(Please mark your vote, date and sign as your name appears above and return
this Proxy in the enclosed postpaid envelope. If acting as executor,
administrator, trustee, guardian, etc., you should so indicate when signing. If
the signer is a corporation, please sign the full corporate name, and indicate
title as duly authorized officer.)
o FOLD AND DETACH HERE o
