UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ACME UNITED CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
Acme United Corporation
75 Kings Highway Cutoff
Fairfield, CT 06430
March 29, 1999
Dear Fellow Shareholder:
On behalf of your Board of Directors and Management, I cordially invite you to
attend the Annual Meeting of Shareholders of Acme United Corporation scheduled
to be held on Monday, April 26, 1999 at 11:00 a.m., at the Norwalk Inn &
Conference Center, 99 East Avenue, Norwalk, Connecticut. This will be my fourth
Annual Meeting since appointment as your Company's President and Chief Executive
Officer, and I particularly look forward to greeting personally those
shareholders able to attend.
At the Meeting, shareholders will be asked to elect seven directors to serve for
a one year term. Information regarding this matter is set forth in the
accompanying Notice of Annual Meeting and Proxy Statement to which you are urged
to give your prompt attention.
It is important that your shares be represented and voted at the Meeting.
Whether or not you plan to attend, please take a moment to sign, date and
promptly mail your proxy in the enclosed prepaid envelope. This will not limit
your right to vote in person should you attend the meeting.
On behalf of your Board of Directors, thank you for your continued support and
interest in Acme United Corporation.
Sincerely,
/s/ Walter C. Johnsen
- -----------------------------
Walter C. Johnsen
President and Chief Executive Officer
<PAGE>
Acme United Corporation
75 Kings Highway Cutoff
Fairfield, CT 06430
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 26, 1999
Notice is hereby given that the Annual Meeting of Shareholders of Acme United
Corporation will be held at the Norwalk Inn & Conference Center, 99 East Avenue,
Norwalk, Connecticut, on Monday, April 26, 1999, at 11:00 A.M. for the following
purposes:
1. To elect seven Directors of the Company to serve until the next Annual
Meeting and until their successors are elected.
2. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on March 8, 1999, will be
entitled to vote at the meeting and at any adjournment thereof.
/s/ Ronald P. Davanzo
-----------------------------
March 29, 1999 Ronald P. Davanzo, Vice President and
Fairfield, Connecticut Chief Financial Officer, Secretary
and Treasurer
YOUR VOTE IS IMPORTANT
You are urged to date, sign and promptly return your proxy so that your shares
may be voted in accordance with your wishes and in order that the presence of a
quorum may be assured. The prompt return of your signed proxy, regardless of the
number of shares you hold, will aid the Company in reducing the expense of
additional proxy solicitation. The giving of such proxy does not affect the
right to vote in person in the event you attend the meeting.
Enclosure: The Annual Report of the Company for the year 1998.
<PAGE 1>
Acme United Corporation
75 Kings Highway Cutoff
Fairfield, CT 06430
ANNUAL MEETING OF SHAREHOLDERS
April 26, 1999
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of proxies
by the directors of Acme United Corporation (hereinafter called the "Company")
to be used at the Annual Meeting of Shareholders of the Company, to be held
April 26, 1999, or at any adjournment thereof. The purposes are set forth in the
accompanying Notice of Annual Meeting of Shareholders and in this Proxy
Statement. Any proxy given may be revoked by a shareholder orally or in writing
at any time prior to the voting of the proxy.
The approximate date on which this Proxy Statement and the enclosed Proxy is
first sent or given to shareholders is March 31, 1999.
Only holders of Common Stock of record at the close of business on March 8, 1999
will be entitled to vote at the meeting. Each holder of the 3,377,488 issued and
outstanding shares of $2.50 par value Common Stock is entitled to one vote per
share.
Each share of Common Stock is entitled to one vote on each question to be
presented at the Annual Meeting. A plurality of the vote cast by the shares of
stock entitled to vote, in person or by proxy, at the Annual Meeting will elect
directors as long as a quorum is present. A quorum consists of a majority of the
votes entitled to be cast on a question. Once a share is represented for any
purpose at the meeting, it is deemed present for quorum purposes for the
remainder of the meeting. If a quorum exists, action on each other question to
be voted upon will be approved if votes, in person or by proxy, cast by
shareholders favoring the action exceed the vote cast by shareholders opposing
the action. In certain circumstances, a shareholder will be considered to be
present at the Annual Meeting for quorum purposes, but will not be deemed to
have voted in the election of directors or in connection with other matters
presented for approval at the Annual Meeting. Such circumstances will exist
where a shareholder is present but specifically abstains from voting, or where
shares are represented at a meeting by a proxy conferring authority to vote on
certain matters but not for the election of directors or on other matters. Under
Connecticut law, such abstentions and non-votes have a neutral effect on the
election of management's nominees for directors and on the approval or
disapproval of the other matters presented for shareholder action.
<PAGE 2>
PRINCIPAL SHAREHOLDERS
The following information is given with respect to any person who, to the
knowledge of the Company's Board of Directors, owns beneficially more than 5% of
the Common Stock of the Company (exclusive of treasury shares) as of February 1,
1999:
Shares Owned
Shareholder Type of Ownership on February 1, 1999 Percent of Class
- --------------------------------------------------------------------------------
Henry C. Wheeler (1) Direct 392,192 11.61
149 Lansdowne
Westport, CT 06880
- --------------------------------------------------------------------------------
Henry C. Wheeler and Fleet Direct (2) 93,740 2.78
National Bank
777 Main Street,
MSN 321, Hartford, CT 06115
Trustees for Henry C. Wheeler (1)
- --------------------------------------------------------------------------------
Fleet National Bank Direct 6,033 .18
777 Main Street
MSN 321, Hartford, CT 06115
Executor of the Estate of Phyllis S. Wheeler
- --------------------------------------------------------------------------------
Walter C. Johnsen Direct 196,700 5.82
75 Kings Highway Cutoff
Fairfield, CT 06430
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Dimensional Fund
Advisors Inc. Indirect (3) 181,538 5.38
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
- --------------------------------------------------------------------------------
(1) Henry C. Wheeler died on March 2, 1999.
The persons shown above have sole voting power in these shares except that in
the trust marked (2) the fiduciaries share voting and dispositive power, and as
noted in (3) below.
(3) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 181,538 shares, all of which
are held in portfolios of DFA Investment Dimensions Group Inc. ("Fund"), a
registered open-end investment company, or in series of The DFA Investment Trust
Company ("Trust"), a Delaware business trust, or the DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified employee benefit
plans, all of which Dimensional serves as investment manager. Dimensional has
sole voting power over 142,831 shares and sole dispositive power over 181,538
shares. Persons who are officers of Dimensional also serve as officers of the
Fund and the Trust. In their capacity as such officers, they have the right to
vote 28,707 additional shares which are owned by the Fund and 10,000 shares
which are owned by the Trust and all of which shares are included in the 181,538
shares disclosed. Dimensional disclaims beneficial ownership of such shares.
<PAGE 3>
SECURITY OWNERSHIP OF MANAGEMENT
The following table indicates, as to each named executive officer, director and
nominee, and as to all directors and executive officers as a group, the number
of shares and percentage of the Company's Common Stock beneficially owned as of
February 1, 1999. The persons shown have sole voting power in these shares
except as shown in the footnotes below.
Common Stock Beneficially Owned
as of February 1, 1999
Number of Shares (1) Percent
- --------------------------------------------------------------------------
David W. Clark, Jr 16,546 (2) *
George R. Dunbar 12,526 (2) *
Richmond Y. Holden, Jr. 2,500 (3)
Walter C. Johnsen 354,200 (4) 9.56
Peter H. Kamin 163,000 (5) 4.40
Wayne R. Moore 14,388 (2) *
Gary D. Penisten 55,600 (2) 1.50
James L.L. Tullis 17,500 (6) *
Henry C. Wheeler 485,932 (7) 13.11
Executive Officers and Directors
as a Group (15 persons) 1,224,380 (8) 33.04
*Less than 1.0%
(1) Based on a total of 3,377,488 outstanding shares as of February 1, 1999 and
327,875 shares issuable upon exercise of outstanding options exercisable
within 60 days of February 1, 1999.
(2) Includes 7,500 shares issuable upon exercise of outstanding options within
60 days of February 1, 1999.
(3) Includes 2,500 shares issuable upon exercise of outstanding options within
60 days of February 1, 1999.
(4) Includes 157,500 shares issuable upon exercise of outstanding options
within 60 days of February 1, 1999.
(5) Includes 22,700 shares held in a trust fund for Mr. Kamin's children of
which Mr. Kamin serves as trustee. Mr. Kamin has full voting and
dispositive power on these shares.
(6) Includes 12,500 shares issuable upon exercise of outstanding options within
60 days of February 1, 1999.
(7) Henry C. Wheeler was Co-Trustee with Fleet National Bank of 93,740 shares
and shared voting and dispositive power on these shares. See Principal
Shareholders for details. Henry C. Wheeler died on March 2, 1999.
(8) Includes 253,688 shares issuable upon exercise of outstanding options
exercisable within 60 days of February 1, 1999.
<PAGE 4>
ELECTION OF DIRECTORS
Each of the following persons has been nominated as a director until the next
Annual Meeting of Shareholders and until his successor is chosen and qualified.
The proxies in the enclosed form which are executed and returned will be voted
(unless otherwise directed) for the election as directors of the following
nominees, all of whom are now members of the Board of Directors, except Peter H.
Kamin.
Nominees Principal Occupation Director Since
- --------------------------------------------------------------------------------
Walter C. Johnsen President and Chief Executive 1995
(age 48) Officer as of November 30,1995;
Executive Vice President from
January 24, 1995 to November 29,
1995. Formerly served as Vice
Chairman and a principal of
Marshall Products, Inc., a
medical supply distributor.
Gary D. Penisten Chairman of the Board since 1994
(age 67) February 27, 1996. He is a
Director of D.E. Foster &
Partners L.P., an executive search
firm. From 1977 to 1988, he was
Senior Vice President of Finance,
Chief Financial Officer and a
Director of Sterling Drug Inc. in
New York City. From 1974 to 1977
he served in the U.S. Government as
Assistant Secretary of the Navy for
Financial Management. Prior to that,
he was employed by General Electric.
Wayne R. Moore President and Chief Executive 1976
(age 68) Officer of the Moore Special Tool
Company (1974-93)and its Chairman of
the Board (1986-93). He was Chairman
of the Board of the Producto Machine
Company (1994-97). Mr. Moore was
Chairman of the Association for
Manufacturing/U.S. Machine Tool
Builders(1985-86) and Committee
Member of the U.S. Eximbank(1984). He
is a Trustee of the American Precision
Museum and on theBoard of Advisors of
the Fairfield University School of
Engineering.
George R. Dunbar President of Dunbar Associates, a 1977
(age 75) municipal management consulting firm.
Former Chief Administrative Officer
for the City of Bridgeport. President
(1972-87), Bryant Electric division
of Westinghouse Electric Corporation,
manufacturer of electrical distribution
and utilization products, Bridgeport, CT.
<PAGE 5>
Nominees Principal Occupation Director Since
- --------------------------------------------------------------------------------
David W. Clark, Jr. Managing Director of Pryor & Clark 1980
(age 61) Company, an investment company. From
July 1988 to June 1992, Mr. Clark
was President of Corcap, Inc., which
was spun out of Lydall, Inc. in July
1988. Mr. Clark joined Lydall in 1972
as Vice President-Treasurer and
Director. He became Executive Vice
President in 1977 and President in
1986. Until July of 1992, Mr. Clark
was also Chairman of the Board of
CompuDyne Corporation of which he
remains a Director. He is also a
Director of Checkpoint Systems, Inc.,
Thorofare, NJ; and SSC Technologies,
Bloomfield, CT.
Richmond Y. Holden, Jr. President and Chief Executive Officer 1998
(age 44) of J.L. Hammett Co. since 1992;
Executive Vice President from 1989 to
1992. J.L. Hammett Co. is a
distributor and retailer of
educational products throughout the
United States, and is one of the
largest distributors to the K-12
educational marketplace. Currently
Chairman of the Board of PC-Build, a
computer upgrade, network services
and computer services company.
Peter H. Kamin General Partner, Peak Investment
(age 37) Limited Partnership from June 1992
to present. Mr. Kamin was a
Principal with Morningside N.A., an
investment company from 1988 to 1992.
He is a Director of Data Transmission
Network Corp., Omaha, NE, Insurance
Auto Auctions, Inc., Schaumburg, IL,
and several privately-held companies.
Management does not expect that any of the nominees will become unavailable for
election as a director, but, if for any reason that should occur prior to the
Annual Meeting, the persons named in the proxy will vote for such substitute
nominee, if any, as may be recommended by Management.
There were no material transactions between the Company and any officer of the
Company, any director or nominee for election as director, any security holder
holding more than 5% of the Common Stock of the Company or any relative or
spouse of any of the foregoing persons.
The Board of Directors had seven meetings. All directors attended at least 75%
of the aggregate of the total number of the Board meetings and meetings of
Committees of which they were a member.
<PAGE 6>
DIRECTORS' FEES
All directors who are not salaried employees received a fee of $2,500 per
quarter plus $500 for each Board of Directors meeting attended. The fees earned
for service on the Committees of the Board were $500 per Committee meeting and
$500 for each one-half day, or major portion thereof, devoted to Committee work.
The Chairman of the Executive Committee earned an additional $500 per day to
compensate for the broader responsibility and related effort.
Effective November 19,1995, all fees payable to such directors have been
deferred until the Company completes four consecutive quarters with aggregate
earnings per share of $.50 or more, the Company or one of its major businesses
has been sold or a change in control of the Company has occurred. Until one such
events occurs, the fees as earned shall be accrued by the Company and when one
of such events does occur, the accrued fees shall be paid as promptly as
possible thereafter.
Fees Earned Prior to July 1, 1997
For fees earned prior to July 1, 1997, each such director was offered the option
of receiving, when such fees become payable, (a) an amount equal to the fees
earned during the period of deferral, or (b) the sum of (i) the amount of the
fees earned during the period of deferral, plus or minus, as the case may be
(ii) the aggregate amount of the fees earned each month during the period of
deferral times the Percentage Increase or Decrease in the Company's Stock Price
index ("Index"). The "Percentage Increase or Decrease in the Index" shall mean
the increase or decrease expressed as a percentage in the Index from the first
business day of the month during which fees were earned and the Index on the
last business day prior to the date of payment. The Index for any given day
shall be the closing price on the American Stock Exchange for the Company's
stock on such day. All payments pursuant to the Deferred Compensation Plan for
Directors shall be without interest. All such directors selected Option (b),
which ties payments to the Stock Price Index, and is applicable to all fees
earned prior to July 1, 1997.
Fees Earned on and after July 1, 1997
Effective July 1, 1997, the plan was amended so all fees that have been deferred
under the plan will be paid when due in treasury shares. Treasury shares will be
allocated each month based on the closing price of Company shares on the first
day of the month during which the fees were earned divided into fees earned.
Also, effective July 1, 1997, two new long-term payout options were approved.
The first option authorizes deferral of receipt of treasury shares based on fees
earned until the board member retires or otherwise departs from the board. The
second option also authorizes deferral of receipt of treasury shares based on
fees earned until the board member retires or otherwise departs from the board;
however, the payout is deferred over a four year period. If the deferred payout
option is selected, upon departure from the board, 20% of the shares will be
paid out immediately and the remainder will be paid in four equal installments
over the next four anniversaries of the board member's departure. If a major
business is sold or a change of control of the Company is imminent, at the
discretion of the board the stock balance in each director's account can be
distributed to the director or to his estate immediately prior to culmination of
the transaction. In the event of death, all stock will be distributed promptly
to the director's estate. All but one director elected the first option. One
director elected the second option.
Under the amendment effective July 1, 1997, directors also had the option to
continue the indexing of fees after July 1, 1997, but would be paid in treasury
shares. No director elected this option.
Newman M. Marsilius retired from the Board effective April 27, 1998. Upon his
retirement, he was issued 6,613 equivalent treasury shares which had been
deferred under this plan.
<PAGE 7>
Equivalent treasury shares that have been deferred under this plan since its
inception in November 1995 to December 31, 1998 are as follows:
Equivalent
Treasury Shares Market
Earned Through Value at
December 31, 1998 December 31, 1998
- --------------------------------------------------------------------------------
David W. Clark, Jr. 10,478 $ 23,576
George R. Dunbar 20,104 45,234
Richmond Y. Holden, Jr. 3,154 7,097
Wayne R. Moore 10,674 24,017
Gary D. Penisten 41,360 93,060
James L.L. Tullis 7,061 15,887
- --------------------------------------------------------------------------------
Total 92,831 $208,871
- --------------------------------------------------------------------------------
The Company owned 105,007 treasury shares as of December 31, 1998.
DIRECTORS STOCK OPTIONS
Under the Non-Salaried Directors Stock Option Plan, options were granted on
April 28, 1997 for 10,000 shares each to Messrs. Clark, Dunbar, Moore and
Penisten, of which 2,500 shares vested on April 28, 1997, 2,500 shares vested on
April 28, 1998, 2,500 shares will vest on April 28, 1999, and 2,500 shares will
vest on April 28, 2000. On April 27, 1998, options were granted for 2,500 share
each to Messrs. Clark, Dunbar, Moore and Penisten, of which all shares vested
immediately. Additionally, on April 27, 1998, options were granted for 10,000
shares to Richmond Y. Holden, Jr. of which 2,500 shares vested on April 27,
1998, 2,500 shares will vest on April 27, 1999, 2,500 shares on April 27, 2000,
and 2,500 shares on April 27, 2001.
Newman M. Marsilius' options fully vested on April 27, 1998, upon his retirement
from the Board; the Board extended the exercise date for his options to April
27, 2000.
COMMITTEE STRUCTURE
There is an Executive Committee of the Board of Directors which is composed of
Mr. Penisten as Chairman, and Messrs. Clark and Dunbar. The function of the
Executive Committee is to act for the Board of Directors during the intervals
between meetings of the Board. During 1998, the Committee held two meetings. In
addition, the Committee members each worked independently on numerous projects
for the Company.
There is an Audit Committee of the Board of Directors which is composed of Mr.
Penisten as Chairman, and Messrs. Dunbar, Holden and Moore. During 1998, this
committee met three times - twice with the Company's independent auditors and
once to approve a change in the Company's independent auditors. The function of
the Audit Committee is to maintain a direct and separate line of communications
between the Board of Directors and the Company's independent auditors. In
addition, some Committee members attended management meetings as part of the
process of selecting new Company independent auditors.
The functions of a Nominating Committee are performed by the whole Board. The
Board will consider nominees for directors recommended by shareholders, and such
recommendations may be made by submitting in writing to the Board, care of the
Secretary at Company's principal executive office, the name, address, telephone
number and resume of his or her business and educational background along with a
written statement by the shareholder as to why such person should be considered
for election to the Board of Directors.
<PAGE 8>
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION COMMITTEE AND INSIDER PARTICIPATION
The Company's executive compensation program is administered by the Compensation
Committee of the Board of Directors. During 1998, the Committee was composed of
certain non-employee members of the Board of Directors, which include Mr. Dunbar
as Chairman, and Messrs. Clark, Moore and Tullis. The Committee had one meeting
during 1998.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is committed to a strong, positive link between
business, performance and strategic goals, and compensation and benefit
programs.
OVERALL EXECUTIVE COMPENSATION POLICY
Our compensation policy is designed to support the overall objective of
enhancing value for our shareholders by:
o Attracting, developing, rewarding and retaining highly qualified and
productive individuals.
o Directly relating compensation to both Company and individual
performance.
o Ensuring compensation levels that are externally competitive and
internally equitable.
Following is a description of the elements of the Company's executive
compensation program and how each relates to the objectives and policy outlined
above.
BASE SALARY
The Committee reviews each executive officer's salary annually. In determining
appropriate salary levels, we consider level and scope of responsibility,
experience, company and individual performance, internal equity, as well as pay
practices of other companies relating to executives of similar responsibility.
By design, we strive to set executives' salaries at competitive market levels.
External surveys and resource materials are used to verify this. We believe
maximum performance can also be encouraged through the use of appropriate
incentive programs.
ANNUAL INCENTIVES
Annual incentive award opportunities are made available to executives to
recognize and reward corporate and individual performance. The plan in effect
for 1998 provided for an incentive bonus based on the achievement of corporate
profitability goals set for each individual, based upon his area of
responsibility. The bonuses would range from 5% to 31% of base salary, provided
a minimum goal were reached. The amount individual executives may earn under the
bonus plan is directly dependent upon the individual's position, responsibility
and ability to impact our financial success. No incentive bonus was granted for
1998.
In 1999, the incentive plan criteria will be similar to the plan in 1998.
<PAGE 9>
STOCK OPTION INCENTIVES
The Company's stock option compensation program is administered by the
Compensation Committee of the Board of Directors. The purpose of the Company's
Amended and Restated Stock Option Plan for Employees is to promote the interests
of the Company by enabling its key employees to acquire an increased proprietary
interest in the Company and thus to share in the future success of the Company's
business. Accordingly, the plan is intended as a means not only of attracting
and retaining outstanding management personnel but also of promoting a closer
identity of interests between employees and stockholders. Since the employees
eligible to receive options under the plan will be those who are in a position
to make important and direct contributions to the success of the Company, the
Committee believes that the grant of options under the plan has been and will
continue to be in the best interests of the Company.
The following options were granted in 1998:
Options for 10,000 shares were granted to Brian S. Olschan on September 22,
1998 of which 2,500 shares vested on September 23, 1998, 2,500 shares will
vest on September 23, 1999, 2,500 shares on September 23, 2000, and 2,500
shares on September 23, 2001.
Options for 4,000 shares were granted to Cheryl L. Kendall on January 27,
1998 of which 1,000 shares vested on January 27, 1998. Additionally 5,000
shares were granted to Ms. Kendall on June 23, 1998 of which 1,250 shares
vested on June 23, 1998. Ms. Kendall resigned on March 17, 1999.
Options for 1,750 shares were granted to David N. Buck on January 27, 1998
of which 437.5 shares vested on January 27, 1998, 437.5 shares vested on
January 27, 1999. Mr Buck left the Company's employ on March 22, 1999.
Options for 3,000 shares were granted to Ronald P. Davanzo on January 27,
1998 of which 750 shares vested on January 27, 1998, 750 shares vested on
January 27, 1999, 750 shares will vest on January 27, 2000, and 750 shares
on January 27, 2001. Additionally 2,000 shares were granted to Mr. Davanzo
on April 27, 1998 of which 500 shares vested on April 27, 1998, 500 shares
will vest on April 27, 1999, 500 shares will vest on April 27, 2000 and 500
shares will vest on April 27, 2001.
The Committee also granted options for 19,700 shares in the aggregate to
twelve other employees with staggered vesting dates through October 27,
2001.
RATIONALE FOR CEO COMPENSATION
Walter C. Johnsen was designated President and Chief Executive Officer of the
Company effective on November 30, 1995. His compensation package was designed to
encourage performance in line with the interests of our shareholders. We believe
Mr. Johnsen's total compensation was competitive in the external marketplace and
reflective of Company and individual performance.
Mr. Johnsen's compensation was $183,000 per annum, of which $30,000 was deferred
compensation. The deferred compensation is indexed in a manner consistent with
the Directors' Fees Deferred Plan described above for salary earned prior to
August 1, 1997. Deferred compensation earned after August 1, 1997 will be paid
when due in treasury shares. The factors which the Committee considered in
determining Mr. Johnsen's base salary for fiscal 1998 were those as stated above
for other executive officers.
COMPENSATION COMMITTEE
George R. Dunbar, Chairman
David W. Clark, Jr.
Wayne R. Moore
James L.L. Tullis
The Compensation Committee Report on Executive Compensation shall not be deemed
incorporated by reference by any general statement incorporating by reference in
this proxy statement into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
<PAGE 10>
SUMMARY COMPENSATION TABLE
The following sets forth information concerning the compensation of the
Company's Chief Executive Officer and each of the four other most highly
compensated officers of the Company at the end of the last completed fiscal
year. No information is given as to any person for any fiscal year during which
such person was not an officer of the Company.
ANNUAL COMPENSATION
<TABLE>
Other Annual All Other
Name and Principal Position Year Salary(1) Bonus Compensation (2) Compensation
- -----------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Walter C. Johnsen 1998 $158,885 $ 0 $ 0 $30,000 (4)
President & Chief 1997 $149,420 $ 0 $ 0 $30,000 (4)
Executive Officer (3) 1996 $150,000 $ 0 $2,000 $ 0
- -----------------------------------------------------------------------------------------------------
Brian S. Olschan 1998 $160,962 $ 0 $ 0 $ 0
Executive Vice President 1997 $140,115 $ 0 $ 0 $ 0
and Chief Operating Officer (5) 1996 $ 43,283 $ 0 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------
Cheryl L. Kendall 1998 $114,235 $ 0 $ 0 $ 0
Vice President-Chief 1997 $102,463 $ 0 $ 0 $ 0
Financial Officer (6) 1996 $ 50,004 $ 0 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------
David N. Buck 1998 $104,231 $ 0 $6,231 (8) $ 0
Vice President- 1997 $ 88,100 $ 0 $5,861 (8) $ 0
Medical Sales (7) 1996 $ 77,868 $ 0 $6,000 (8) $ 0
- -----------------------------------------------------------------------------------------------------
Ronald P. Davanzo 1998 $105,577 $ 0 $ 0 $ 0
Vice President- 1997 $ 57,365 $ 0 $ 0 $ 0
International (9)
</TABLE>
(1) Effective 1997, the Company changed its payroll payment cycle from monthly
to bi-weekly. The salary reported is gross wages paid, which varies
slightly from annual compensation.
(2) Does not include the value of perquisites and other personal benefits
because the aggregate amount of such compensation, if any, does not exceed
the lesser of $50,000 or ten (10%) percent of the total amount of annual
salary and bonus for any named individual.
(3) Walter C. Johnsen also served as Chief Financial Officer from March 25,
1996 to June 30, 1996.
(4) Walter C. Johnsen received $30,000 in deferred compensation for the years
1998 and 1997 to be paid in treasury shares.
(5) Brian S. Olschan joined Acme as Senior Vice President-Sales and Marketing
on September 12, 1996. He was promoted to Executive Vice President and
Chief Operating Officer on January 25, 1999.
(6) Cheryl L. Kendall joined Acme as Vice President-Chief Financial Officer on
July 1, 1996. On September 20, 1996 she assumed the additional positions of
Secretary and Treasurer. She resigned from the Company on March 17, 1999.
(7) David N. Buck joined Acme as Territory Manager on November 26, 1984. He was
promoted to the position of Vice President - Medical Sales on January 1,
1997. Mr. Buck left the employ of the Company on March 22, 1999.
(8) David N. Buck received as other annual compensation a car allowance.
(9) Ronald P. Davanzo joined Acme as Director, International Finance and
Planning on May 19, 1997. He was promoted to Vice President - International
on April 27, 1998 and continues in that capacity. He was named Vice
President and Chief Financial Officer, Secretary and Treasurer on March 18,
1999.
<PAGE 11>
OPTION GRANTS IN LAST FISCAL YEAR AND POTENTIAL REALIZABLE VALUES
The following table provides information concerning each option granted during
the last fiscal year to each of the named executive officers and the potential
realizable value of such options at certain assumed rates of stock appreciation.
<TABLE>
Individual Grants
- ------------------------------------------------------------------------ Potential Realizable
Number of % of Total Value at Assumed
Shares Options Annual Rates of Stock
Underlying Granted to Exercise Price Appreciation
Options Employees in or Base Expiration for Option Term
Name Granted Fiscal Year Price Date 5% 10%
- -----------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Walter C -0- 0% $0 -- $0 $0
Johnsen
- -----------------------------------------------------------------------------------------------------
Brian S. 10,000 22.0% $2.6875 September 22, $10,000 $16,000
Olschan per share 2008
- -----------------------------------------------------------------------------------------------------
Cheryl L. 4,000 8.8% $5.375 January 27, $ 8,000 $13,000
Kendall (1) per share 2008
5,000 11.0% $4.00 June 23, $ 8,000 $12,000
per share 2008
- -----------------------------------------------------------------------------------------------------
David N. 1,750 3.85% $5.375 January 27, $ 4,000 $ 6,000
Buck (2) per share 2008
- -----------------------------------------------------------------------------------------------------
Ronald P. 3,000 6.6% $5.375 January 27, $ 6,000 $10,000
Davanzo per share 2008
2,000 4.4% $5.50 April 27, $ 4,000 $ 6,000
per share 2008
</TABLE>
(1) Cheryl L. Kendall resigned on March 17, 1999. The unvested portion of the
options lapsed on the date of her resignation.
(2) David N. Buck left the employ of the Company on March 22, 1999. The
unvested portion of the options lapsed on March 22, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR
END OPTION VALUES
The following table provides information concerning each option exercised during
the last fiscal year by each of the named executive officers and the value of
unexercised options held by such executive officers at the end of the fiscal
year.
<TABLE>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at Fiscal Year at Fiscal Year
Shares End (#)(1) End ($)(1)(2)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized($) Unexercisable Unexercisable
- --------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C>
Walter C. Johnsen -0- $0 150,000/-0- $0/$0
- --------------------------------------------------------------------------------------------
Brian S. Olschan -0- $0 22,500/17,500 $0/$0
- --------------------------------------------------------------------------------------------
Cheryl L. Kendall (3) -0- $0 9,000/10,000 $0/$0
- --------------------------------------------------------------------------------------------
David N. Buck (4) -0- $0 4,938/2,562 $0/$0
- --------------------------------------------------------------------------------------------
Ronald P. Davanzo -0- $0 2,250/4,750 $0/$0
</TABLE>
(1) The Company has no unexercised SARs.
(2) Values stated are based on the closing price per share of the Company's
Common Stock on the American Stock Exchange on December 31, 1998, the last
trading day of the fiscal year. All stock options have been granted at a
price in excess of the closing price per share on December 31, 1998.
(3) Cheryl L. Kendall resigned on March 17, 1999. The unvested portion of the
options lapsed on the date of her resignation.
(4) David N. Buck left the employ of the Company on March 22, 1999. The
unvested portion of the options lapsed on March 22, 1999.
<PAGE 12>
ACME UNITED CORPORATION RETIREMENT PLANS
In December 1995, the Board of Directors adopted a resolution to freeze the
defined benefit pension plan resulting in no further benefit accruals after
February 1, 1996. The life annuity annual benefit at age 65 was zero for Walter
C. Johnsen, Brian S. Olschan, and Ronald P. Davanzo. Amounts earned by others
under this plan are not subject to a deduction for estimated Social Security
benefits, and do not include benefits which would result from the transfer by a
retiring employee of his accrued profit-sharing account balance to the pension
plan.
CHANGE-IN-CONTROL ARRANGEMENTS AND SEVERANCE PAY PLAN
The Company has a Salary Continuation Plan in effect covering officers of the
Company employed in the United States at the level of Vice President or above,
under the age of 65 and having at least one (1) year of Company service. Amongst
others, this plan covers Walter C. Johnsen, Brian S. Olschan, and Ronald P.
Davanzo, and is designed to retain key employees and provide for continuity of
management in the event of an actual or threatened change in control of the
Company. First, the plan provides that in the event of such a change in control
each such key employee would have specific rights and receive certain benefits
if, within one year after such change in control (two years for officers who
like Mr. Johnsen are also directors), either the employee's employment is
terminated by the Company involuntarily, his/her responsibility, status or
compensation is reduced, or if he/she is transferred to a location unreasonably
distant from his/her current location. In such circumstances the compensation
which the employee would be entitled to receive would be a lump sum payment
equal to a specific number of months' compensation based upon the level of
his/her non-deferred compensation in effect immediately preceding such
disposition. Secondly, any such key employee resigning within six (6) months
after the disposition of the Company (one year for certain officers who like Mr.
Johnsen are also directors) would be entitled to a similar payment. Under the
first scenario Messrs. Johnsen and Olschan would be entitled to thirty (30)
months' compensation, respectively and Mr. Davanzo nine (9) months compensation.
Under the second scenario, Messrs. Johnsen and Olschan would be entitled to
twenty-four (24) months', and Mr. Davanzo would be entitled to six (6) months'
compensation.
The Company has a Severance Pay Plan in effect covering officers of the Company
employed in the United States at the level of Vice President or above, under the
age of 65 and having at least one (1) year of Company service. Amongst others,
this Plan covers Messrs. Johnsen, Olschan and Davanzo and is designed to enable
the Company to attract and retain key employees. The Plan provides that in the
event the key employee's employment is terminated by the Company involuntarily,
his/her responsibility, status or compensation is reduced, or if he/she is
transferred to a location unreasonably distant from his/her current location,
he/she shall be entitled to benefits under the Plan. In such circumstances the
compensation which the employee would be entitled to receive would be a lump sum
payment equal to a specific number of months compensation based upon the level
of his/her non-deferred compensation in effect immediately preceding such
termination. Under the Plan Messrs. Johnsen and Olschan would be entitled to
nine (9) months' compensation, and Mr. Davanzo six (6) months' compensation,
upon such severance. This plan applies only if the Salary Continuation Plan does
not apply.
PERFORMANCE GRAPH
The following Performance Graph shall not be deemed incorporated by reference by
any general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under such Acts.
The graph compares the yearly cumulative total stockholder return on the
Company's Common Stock with the yearly cumulative total return of (a) the AMEX
Market Index and (b) a peer group of companies that, like the Company, (i) are
currently listed on the American Stock Exchange, and (ii) have a market
capitalization of $10 million to $20 million. The peer group includes the
following companies: Acme United Corporation, American Vanguard Corp, Arizona
Land Income Corp, Atlantic Premium Brands, Avenue Entertainment Grp, Azco Mining
Inc, B&H Ocean Carriers Ltd, Barnwell Industries Inc, Beard Co, Bentley
Pharmaceutical, Blackrock CA Inv QMT, Blackrock FL IQMT, Blackrock NJ IQMT,
Britesmile Inc, Cannon Express Inc CL A, Canyon Resources Corp, Carmel Container
System, Carver Bancorp Inc, Chad Therapeutics A, Coast Distribution Systs,
Concord Fabrics Inc A, Cornerstone Bank, Cycomm International Inc,
<PAGE 13>
Dairy Mart Conv CL A, Dallas Gold & Silver EX, Dayton Mining Corp, Denamerica
Corporation, Diversified Corp Res Inc, Empire of Carolina Inc, Espey Mfg &
Electronic, ETZ Lavud CL A, ETZ Lavud Ltd Ord, Female Health Co. (The), Frontier
Adjust of Amer, Global Income Fund Inc, Graham Corp, Halifax Corporation, Halsey
Drug Co, Hastings Manufacturing, Haywood Bancshares Inc, Heist C.H. Corporation,
ICH Corp, IGI Inc, Income Opportune Rlty Inv, Insite Vision Inc, Integra Inc,
Integrated Orthopedics, Integrated Tech USA, Intelligent Controls Inc,
Intelligent Systems Corp, Interlott Tech Inc, Internat Airline Supp Gp, Jaclyn
Inc, Kentucky First Bancorp, Laser Technology Inc, Matec Corp, Mcrae Industries
CL A, Measurement Specialties, Medtox Scientific Inc, Merrimac Industries Inc,
Midsouth Bancorp, Milestone Scientific Inc, Mission West Properties, Morgan
Group Inc CL A, Movie Star Inc, MSR Exploration Ltd, Multigraphics Inc, Ohio Art
Co, Oshman's Sporting Goods, Penobscot Shoe Co, Pinnacle Bancshares Inc,
Pittsbgh & WV Railroad, Polyvision Corp, Property Capital Trust, Riviera Tool
Company, Rotonics Manufacturing, Saba Petroleum Co, Scandinavia Co, Servotronics
Inc, Southern Banc Co Inc, Southfirst Bancshares, Sterling Cap CP, Stratesec
Inc, Sunair Electronics Inc, Surety Capital Corp, Tenera Inc, Thackeray Corp,
Three Rivers Fin, Trans Lux Corp, Transfinancial Hldgs Inc, Tuxis Corporation,
Unapix Entertainment Inc, Uni-Marts Inc, United Foods Inc CL B, United Guardian
Inc, Versar Inc. Vista Gold Corp, Washington Sav Bank, Wellco Enterprises Inc,
Wells-Gardner Electronic, White Electronic Design, Winston Resources Inc.
The Company does not believe it can reasonably identify a peer group of
companies on an industry or line-of-business basis for the purpose of developing
a comparative performance index. While the Company is aware that some other
publicly-traded companies market products in one of the Company's two
lines-of-business, none of these other companies provide most or all of the
products offered by the Company, and many offer other products or services as
well. Moreover, some of these other companies that engage in one of the
Company's two lines-of-business do so through divisions or subsidiaries that are
not publicly-traded. Furthermore, many of the other companies are substantially
more highly capitalized than the Company. For all of these reasons, any such
comparison would not, in the opinion of the Company, provide a meaningful index
of comparative performance.
The comparisons in the graph below are based on historical data and are not
indicative of, or intended to forecast, the possible future performance of the
Company's Common Stock.
[PRINTER INSERT GRAPH]
COMPARISION OF CUMULATIVE TOTAL RETURN OF COMPANY, PEER GROUP AND
AMEX MARKET INDEX
- -------------------------------FISCAL YEAR ENDING-----------------------------
1993 1994 1995 1996 1997 1998
ACME UNITED CORP 100.00 76.47 91.18 129.41 141.18 52.94
PEER GROUP 100.00 82.38 87.18 95.93 84.63 60.52
AMEX MARKET INDEX 100.00 88.33 113.86 120.15 144.57 142.61
SELECTION OF AUDITORS
Ernst & Young LLP was selected as auditors for the Company on April 1, 1998 and
acted as auditors for the year 1998. Representatives of Ernst & Young LLP are
expected to be present at the 1999 Annual Meeting with the opportunity to make a
statement if they desire to do so and are expected to be available to respond to
appropriate questions. The Company knows of no direct or material indirect
financial interest in the Company or of any connection with the Company by this
accounting firm except the professional relationship between auditor and client.
<PAGE 14>
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
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's common stock, to file with the SEC and the
American Stock Exchange reports of ownership and changes in ownership of common
stock and other equity securities of the Company. Officers, directors and
greater than 10% shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on review of copies of such reports furnished to the Company or
written representations that no other reports were required, the Company
believes that, during the 1998 fiscal year, all filing requirements applicable
to its officers, directors and greater than 10% beneficial owners were complied
with.
SHAREHOLDER PROPOSALS
To allow sufficient time for preparation of the proxy and proxy statement,
shareholder proposals for presentation at the Annual Meeting scheduled for April
24, 2000 must be received by the Secretary of the Company no later than November
25, 1999.
In addition, the Company's by-laws provide that any shareholder wishing to make
a nomination for the office of director at the 2000 Annual Meeting must give the
Company at least sixty (60) days' advance notice, and that notice must meet
certain requirements set forth in the by-laws. Shareholders may request a copy
of the by-laws from the Secretary of the Company.
Notices and requests should be addressed to Secretary, Acme United Corporation,
75 Kings Highway Cutoff, Fairfield, Connecticut 06430.
OTHER BUSINESS
Management does not know of any matters to be presented, other than those
described herein, at the Annual Meeting. If any other business should come
before the meeting, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies in accordance with their best
judgment.
Solicitation of proxies is being made by management through the mail, in person
and by telephone and telegraph. The Company will be responsible for costs
associated with this solicitation.
By Order of the Board of Directors
Ronald P. Davanzo, Vice President and
Chief Financial Officer, Secretary
and Treasurer
Acme United Corporation
75 Kings Highway Cutoff
Fairfield, Connecticut 06430
March 29, 1999
