SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities and Exchange Act of 1934
[X] 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 Rule 14a-11(c) or Rule 14a-12
CHECKPOINT SYSTEMS, INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- -----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(l), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- -----------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- -----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 1-11:
- -----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -----------------------------------------------------------------------------
(5) Total Fee paid: $125.00
- -----------------------------------------------------------------------------
[ ] 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>
CHECKPOINT SYSTEMS, INC.
101 Wolf Drive
P.O. Box 188
Thorofare, NJ 08086
------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on Tuesday, April 23, 1996
------------
The Annual Meeting of Shareholders (the "Meeting") of Checkpoint Systems,
Inc. (the "Company") will be held on Tuesday, April 23, 1996, at 10:00 a.m.,
local time, at the Company's corporate headquarters located at 101 Wolf Drive,
Thorofare, New Jersey, for the following purposes:
1. To elect two Class II directors to hold office until the 1999 Annual
Meeting of Shareholders and until their successors are duly elected and
qualified;
2. To amend and restate the Company's Employee Stock Purchase Plan to
increase the available Company contribution under the Plan on behalf of each
participant from: (a) 40% of the first $20.00 to 40% of the first $30.00 paid
each week on behalf of the participant, (b) 25% of the amount in excess of
$20.00 but not in excess of $40.00 to 25% of the amount in excess of $30.00
but not in excess of $45.00, (c) 20% of the amount in excess of $40.00 but not
in excess of $60.00 to 20% of the amount in excess of $45.00 but not in excess
of $60.00; and (d) 10% of the amount in excess of $60.00 but not in excess of
$80.00; and
3. To transact such other business as may properly come before the
Meeting.
You are cordially invited to attend the Meeting in person. The Board of
Directors has fixed the close of business on March 12, 1996 as the record date
for the Meeting. Only Shareholders of record at that date are entitled to
notice of and to vote at the Meeting and any adjournment or postponement
thereof.
The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the attached proxy statement for further information with
respect to the business to be transacted at the Meeting. The Board of
Directors urges you to sign, date and return the enclosed proxy promptly.
Should you decide to attend the Meeting in person, you may revoke your proxy
at that time.
NEIL D. AUSTIN
Secretary
March 22, 1996
<PAGE>
CHECKPOINT SYSTEMS, INC.
101 Wolf Drive
P.O. Box 188
Thorofare, NJ 08086
---------------
PROXY STATEMENT
---------------
GENERAL
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Checkpoint Systems, Inc. (the "Company")
for use at the Company's Annual Meeting of Shareholders (the "Meeting") which
will be held on the date, at the time and place and for the purposes set forth
in the foregoing notice, and any adjournment or postponement thereof. This
proxy statement, the foregoing notice and the enclosed proxy are first being
sent to shareholders of the Company (the "Shareholders") on or about March
22, 1996.
The Board of Directors does not presently intend to bring any matter before
the Meeting except as specifically indicated in the notice and does not know
of anyone else who intends to do so. If any other matters properly come
before the Meeting, however, the persons named in the enclosed proxy, or their
duly constituted substitutes acting at the Meeting, will be authorized to vote
or otherwise act thereon in accordance with their judgment on such matters.
If the enclosed proxy is properly executed and returned prior to voting at the
Meeting, the shares represented thereby will be voted in accordance with the
instructions marked thereon. In the absence of instructions, the shares will
be voted "FOR" the nominees of the Board of Directors in the election of the
Class II directors; "FOR" the proposal to amend and restate the Checkpoint
Systems, Inc. Employee Stock Purchase Plan to increase the available Company
contribution.
Any proxy may be revoked at any time prior to its exercise by notifying the
Secretary in writing, by delivering a duly executed proxy bearing a later
date, or by attending the Meeting and voting in person.
VOTING SECURITIES AND SECURITY OWNERSHIP
Voting Securities
At the close of business on March 12, 1996, the record date fixed for the
determination of Shareholders entitled to notice of and to vote at the
Meeting, there were outstanding 29,142,264 shares of the Company's Common
Stock, $.10 par value per share (the "Common Stock") outstanding, each
entitled to one vote. There is no other class of voting securities
outstanding. The presence at the Meeting, in person or by proxy, of at least
a majority of the votes that all Shareholders are entitled to cast shall
constitute a quorum for purposes of conducting business. If the Meeting is
adjourned, any unfinished business of the Meeting may be carried on at any
continuation of the original meeting, notwithstanding that a quorum is not
present at the continued meeting. In the election of the Class II directors,
Shareholders entitled to vote do not have cumulative voting rights.
<PAGE>
Security Ownership of Principal Shareholders
The following table sets forth certain information respecting the holdings
of the parties who were known to the Company to be the beneficial owners of
more than 5% of the outstanding Common Stock of the Company as of March 12,
1996. The parties named below have sole voting power and sole investment
power with respect to the shares indicated as beneficially owned, except where
otherwise indicated.
Amount and Nature of Percent of
Name and Address of Beneficial Owner Beneficial Ownership Common Stock
- ------------------------------------ -------------------- --------------
Strome Susskind Investment
Management, L.P. 2,765,400 (1) 9.49
SSCO, Inc.
Mark E. Strome
100 Wilshire Boulevard, 15th Floor
Santa Monica, CA 90401
- -----------
(1) Based on information supplied in a Schedule 13G dated February 13, 1996
and filed with the Securities and Exchange Commission on February 13, 1996 by
Strome Susskind Investment Management, L.P. ("SSIM") a registered investment
adviser; SSCO, Inc. ("SSCO") the sole general partner of SSIM and Mark E.
Strome, Settlor and Trustee of The Strome Family Trust, controlling
shareholder of SSCO, as being owned at December 31, 1996.
Security Ownership of Management
The following table sets forth certain information respecting the Common
Stock of the Company beneficially owned by each director and nominee for
director, the Chief Executive Officer and the four other most highly
compensated executive officers of the Company other than the Chief Executive
Officer, and by the group consisting of such persons and the other executive
officers as of March 5, 1996. Each of the persons named below has sole
voting power and sole investment power with respect to the shares indicated as
beneficially owned, unless otherwise stated.
Amount and Nature of Percent of
Name and Address of Beneficial Owner Beneficial Ownership Common Stock(1)
- ------------------------------------ -------------------- --------------
Robert O. Aders 19,356(2) .07
Dr. Roger D. Blackwell 93,556(3) .32
Richard J. Censits 58,756(4) .20
David W. Clark, Jr. 139,356(5) .48
Allan S. Kalish 10,956(6) .04
Jermain B. Porter 55,356(7) .19
Albert Soffa 4,000 .01
Albert E. Wolf 1,206,663(8) 4.14
Kevin P. Dowd 404,751(9) 1.39
Steven G. Selfridge 322,370(10) 1.11
William J. Reilly, Jr. 188,716(11) .65
Luis A. Aguilera 310,000(12) 1.06
Michael E. Smith 154,654(13) .53
All Directors and Officers as a Group 3,364,711(14) 11.55
(21 persons)
- ------------
<PAGE>
(1) Unissued shares subject to options exercisable within 60 days of
March 5, 1996 are deemed to be outstanding for the purpose of calculating
the percent of Common Stock beneficially owned.
(2) Includes 9,356 shares subject to currently exercisable options to
purchase the Company's Common Stock and 10,000 shares purchased on behalf of
Mr. Aders as sole trustee under the Robert O. Aders IRA IMA Rollover account.
(3) Includes 93,356 shares subject to currently exercisable options to
purchase the Company's Common Stock. All options reported herein and in the
footnotes below are currently exercisable to purchase the Company's Common
Stock (the "Options").
(4) Includes of 9,356 Options.
(5) Includes of 89,356 Options.
(6) Includes 9,356 Options.
(7) Includes 33,356 Options, and excludes 16,040 shares owned by Mr. Porter's
wife, as to which Mr. Porter disclaims beneficial ownership.
(8) Includes currently exercisable options to purchase 459,356 shares of
Common Stock; 116,306 shares held in trust for Mr. Wolf in accordance with the
Will of his late father, as to which Mr. Wolf is both a Trustee and income
beneficiary and has sole voting power. Amount shown excludes 278,800 shares
owned by Mr. Wolf's wife and 99,688 shares held in trust for Mr. Wolf's
children, as to which Mr. Wolf's children are principal beneficiaries and Mr.
Wolf is the income beneficiary, both as to which Mr. Wolf disclaims beneficial
ownership.
(9) Includes 400,000 Options and 4,751 shares held by the custodian of the
Company's Employees' Stock Purchase Plan ("ESPP").
(10) Includes 320,000 Options, 40 shares (20 shares each) which are held by
each of Mr. Selfridge's two minor children, under the NJ Unif Tran Min Act;
and 2,329 shares held by the custodian of the ESPP.
(11) Includes 180,000 Options and 4,316 shares held by the custodian of the
ESPP.
(12) Includes 230,000 Options.
(13) Includes 150,000 Options and 4,654 shares held by the custodian of the
ESPP.
(14) See footnotes 1-12 above. Total shown includes 23,872 shares held by the
custodian of the ESPP.
<PAGE>
ELECTION OF DIRECTORS
Identification of the Directors to be Elected
At the Meeting, the Shareholders will elect two Class II directors to hold
office until the 1999 Annual Meeting of Shareholders and until their
respective successors have been duly elected and qualified. The Company's
Board of Directors is divided into three classes serving staggered three-year
terms, the term of one class of directors expiring in each year. The term of
the Company's three Class II directors, Robert O. Aders, David W. Clark, Jr.,
and Albert Soffa will expire at the Meeting. Pursuant to the Company's
Amended and Restated By-Laws, a Director reaching age 70 is no longer
qualified to stand for re-election; therefore, Mr. Soffa will not stand for
re-election. A successor has not yet been nominated.
The Board of Directors has nominated Robert O. Aders and David W. Clark, Jr.
for election at the Meeting as the Company's Class II directors and Messrs.
Aders and Clark have indicated their willingness to continue to serve as
directors. If a nominee, at the time of his election, is unable or unwilling
to serve, and as a result a substitute nominee is designated, the persons
named in the enclosed proxy or their substitutes will have discretionary
authority to vote or to refrain from voting for the substitute nominee in
accordance with their judgment. Unless contrary instructions are given, the
shares represented by the enclosed proxy will be voted "FOR" the election of
Messrs. Aders and Clark.
The nominees for election as the Class II directors and the directors whose
terms of office will continue after the Meeting, together with certain
information about them, are as follows:
Director Term
Name Age Since Expires Positions with the Company
- ---- --- -------- ------- --------------------------
Robert O. Aders 69 1994 1996 Director
Roger D. Blackwell 56 1990 1998 Director
Richard J. Censits 58 1985 1998 Director(1)(3)
David W. Clark, Jr. 58 1982 1996 Director(1)(3)
Kevin P. Dowd 47 1995 1997 President, Chief Executive
Officer and Director
Allan S. Kalish 70 1994 1997 Director (2)
Jermain B. Porter 70 1981 1998 Director(2)
Albert E. Wolf 66 1969 1997 Chairman of the Board
and Director (3)
- ------------
(1) Member of the Company's Audit Committee.
(2) Member of the Company's Compensation and Stock Option Committee.
(3) Member of the Company's Executive Committee.
Principal Occupations and Directorships Held by Each Nominee For Director and
the Directors Whose Terms of Office Continue After the Meeting
Mr. Aders has been Chairman of The Advisory Board, Inc., an international
consulting organization since 1992. Mr. Aders is Of Counsel at the law firm
of Collier, Shannon, Rill & Scott. He is also President Emeritus and a member
of the Board of Directors of Food Marketing Institute ("FMI"), where he served
as Chief Executive Officer from the founding of FMI in 1976 until his
retirement in 1993. Mr. Aders has been a trustee of the National Urban
<PAGE>
League, Food Industry Crusade Against Hunger, St. Joseph's Academy of Food
Marketing, and a member of the Board of Stedman Nutrition Foundation at Duke
Medical Center. Mr. Aders is a director of Telepanel Systems, Inc. a Canadian
manufacturer of electronic shelf labels for sale to retailers in Canada and
the United States.
For more than the past five years, Dr. Blackwell has been a professor of
marketing at Ohio State University, the President of Roger Blackwell
Associates, Inc., a consulting firm, and a member of the Board of Directors
of Max & Erma's, Inc. In February, 1992, Dr. Blackwell became a member of the
Board of Directors of Worthington Foods, Inc., and in September, 1992, a
member of the Board of Directors of Paul Harris Stores, Inc. Mr. Blackwell
also serves as a Trustee of Flex-Funds and is a director of Intimate Brands,
Inc.
Mr. Censits is currently a business consultant. Mr. Censits was Chief
Executive Officer and a member of the Board of Directors of MedQuist, Inc.
(formerly Summit Health Group, Inc.) from 1987 until 1995, and Chairman from
1992 to 1995. Mr. Censits is currently a director of MedQuist. MedQuist, Inc.
provides health information management services to hospitals and other health
care providers nationwide. Mr. Censits is a director of EnergyNorth, Inc.,
DiMark, Inc., and is a Trustee of the University of Pennsylvania.
Mr. Clark has been a managing director of Pryor & Clark, a company engaged
in investments, since June, 1992. He served as President and Chief Operating
Officer of Corcap, Inc. ("Corcap"), a company engaged in the manufacture of
elastomer materials and components, from July, 1988 through June, 1992. From
October, 1985 to July, 1988, Mr. Clark was the President and Chief Operating
Officer of Lydall, Inc. ("Lydall"), a diversified manufacturing concern which
manufactures industrial materials and components. Mr. Clark is a director of
Acme United Corp., Corcap, CompuDyne Corporation and Securities Software and
Consulting, Inc.
Mr. Dowd has been President, Chief Executive Officer and a Director of the
Company since January 1, 1995 and President and Chief Operating Officer of the
Company since August, 1993. He was Executive Vice President of the Company
from May 1992 to August 1993. Mr. Dowd was Executive Vice President -
Marketing, Sales and Service from April, 1989 to May, 1992 and Vice President
of Sales from August, 1988 to April, 1989. Mr. Dowd is currently a board
member of Holy Redeemer Health System, Inc.
Since September, 1993, Mr. Kalish has been Chairman of AC Publishers, Inc.
publishers of Seven Arts, a monthly arts and culture review and Business
Philadelphia, the Delaware Valley region's monthly business magazine and since
June, 1988 Chairman of Penn Publishing Co., Inc. an organization which
publishes the Official Visitors Guide for the Philadelphia Convention and
Business Bureau. Effective January, 1996 A.C. Publishers, Inc. and Penn
Publishing Co., Inc. merged. Mr. Kalish also owns Kalish & Associates,
consultants to marketing management and advertising agencies. Mr. Kalish is
also a Senior Partner of Interactive Marketing Ventures, a Safeguard
Scientifics, Inc. partnership company. Mr. Kalish is currently a board member
of Police Athletic League, American Music Theater Festival and Philadelphia
Sports Congress.
<PAGE>
Mr. Porter was a private consultant to business from January, 1982
through 1994. Mr. Porter previously was a principal and consultant with
Towers, Perrin, Forster & Crosby, international consultants to business in the
management of human resources.
Mr. Wolf has been Chairman of the Board since April, 1986 and Chairman of
the Executive Committee since October, 1994. Mr. Wolf served as Chief
Executive Officer of the Company from April, 1972 to December, 1994, President
of the Company from July, 1977 to April, 1986 and from July, 1991 through
August, 1993, and a director of the Company since July, 1969. Mr. Wolf is a
director of Lydall.
Meetings and Committees of the Board of Directors
The Board of Directors held 4 regular and 4 special meetings during
the past fiscal year.
The Board of Directors has an Audit Committee, a Compensation and Stock
Option Committee and an Executive Committee. Messrs. Censits,
Clark and Soffa constitute the members of the Audit Committee; Messrs. Porter,
Soffa and Kalish constitute the members of the Compensation and Stock Option
Committee; and Messrs. Wolf, Censits, Clark and Soffa constitute the members
of the Executive Committee. The Audit Committee met once during the
last fiscal year with the Company's independent public accountants to
discuss the scope and results of the annual audit and questions of
accounting and tax policy. The Compensation and Stock Option Committee acted
at various times during the last fiscal year to approve salaries and
benefits and compensation arrangements for the Company's officers
and to grant stock options. The Executive Committee, formerly the Corporate
Development Committee, met three times during the year to consider strategic
financing alternatives, acquisitions and long-range goals of the Company.
During the fiscal year, all directors attended all of the regularly scheduled
meetings of the Board of Directors and of the committees on which they served.
Compensation Committee Interlocks and Insider Participation
The Company's Compensation and Stock Option Committee (the "Committee")
consists of Messrs. Porter, Soffa and Kalish. None of the members of the
Committee is or, during the last fiscal year was, an officer or employee
of the Company or any of its subsidiaries.
EXECUTIVE COMPENSATION
Cash, Bonus and Deferred Compensation
The following table sets forth the total annual and long-term compensation
paid by the Company for services in all capacities rendered during the fiscal
years ended December 31, 1995, December 25, 1994 and December 26, 1993 to the
Company's Chief Executive Officer and its four most highly compensated
executive officers other than the Chief Executive Officer (the "Named
Officers"):
<PAGE>
Summary Compensation Table
Annual
Compensation Awards
-------------------- -------
Stock
Salary Bonus Options
Name and Principal Position Year ($)(1) ($)(2) (3)
- -------------------------- ---- ------- ------- -------
Kevin P. Dowd 1995 331,770 150,000 200,000
President, Chief Executive 1994 282,214 0 0
Officer and Director 1993 247,102 0 150,000
Steven G. Selfridge 1995 201,287 90,000 210,000
Executive Vice President 1994 187,979 0 40,000
1993 168,102 0 90,000
William J. Reilly, Jr. 1995 200,937 90,000 150,000
Senior Vice President 1994 186,127 0 40,000
1993 161,450 0 80,000
Luis A. Aguilera 1995 189,602 90,000 120,000
Senior Vice President - 1994 399,895 0 40,000
Manufacturing 1993 169,941 0 40,000
Michael E. Smith 1995 184,494 90,000 150,000
Senior Vice President 1994 159,330 0 40,000
1993 125,114 0 80,000
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(1) Amounts shown in the "Salary" column include payments to the Named
Officers under the Company's Executive Supplemental Plan, a plan adopted in
1991 for those of its highly compensated officers who are excluded by Internal
Revenue Service regulations from participating in the Company's 401(k) savings
plans. Payments under the Executive Supplemental Plan were made to or
for the benefit of the Named Officers as follows: Mr. Dowd: 1995 - $30,293;
1994 - $25,243; 1993 - $18,272; Mr. Selfridge: 1995 - $19,347; 1994 - $18,137;
1993 - $13,273; Mr. Reilly: 1995 - $18,175; 1994 - $16,812; 1993 - $11,864;
Mr. Smith: 1995 - $17,165; 1994 - $14,338; 1993 - $9,955. Amounts shown for
Mr. Aguilera include the Company's matching contributions under one of the
Company's 401(K) savings plans as follows: $3,500 (1995), $3,500 (1994) and
$4,941 (1993). Amounts shown also reflect the Company's matching contribution
under the Checkpoint Systems, Inc. Employee Stock Purchase Plan for the Named
Officers as follows: Mr. Dowd: $884 (1995-1993); Mr. Selfridge: $884
(1995-1993); Mr. Reilly: $884 (1995-1993); Mr. Smith: $884 (1995-1993).
(2) Bonus amounts were paid pursuant to the Company's Profit Incentive
Plan, described under the caption "Compensation Committee Report on Executive
Compensation."
(3) Options reflected in the "Awards/Stock Options" column reflect grants of
options to purchase the Company's Common Stock under the Company's Stock
Option Plan (1992) and its predecessor plans, described under the caption
"Compensation Committee Report on Executive Compensation."
<PAGE>
The Company does not grant SARs or restricted stock to officers.
The aggregate value of personal benefits received by each executive officer
named in the foregoing table during the last fiscal year did not exceed the
lesser of $50,000 or 10% of the annual salary and bonus reported for the Named
Officer in the "Salary" and "Bonus" columns of the Summary Compensation Table
above and thus is not required to be disclosed.
Set forth below is further information with respect to grants of stock
options made during the fiscal year ended December 31, 1995 under the
Checkpoint Systems, Inc. Stock Option Plan (1992) to the Named Officers:
Option Grants in Last Fiscal Year
- ----------------------------------------------------------------------
Potential
Individual Grants Realizable
- -------------------------------------------- Value at
Assumed Annual
Number of % of Total Rates of
Securities Options/ Stock Price
Underlying SAR's Appreciation
Options/ Granted to Exercise for Option
SAR's Employees or Base Term (2)(3)
Granted in Fiscal Price Expiration ------------------
Name (#)(1) Year ($/Sh) Date 5%($) 10%($)
- -------------- --------- ---------- ------ ---------- --------- --------
Kevin P. Dowd 10,322 0.5898 9.6875 01/03/05 62,886 159,365
89,678 5.1244 9.6875 07/03/05 581,011 1,493,630
Steven G. 10,322 0.5898 9.6875 01/03/05 62,886 159,365
Selfridge 39,678 2.2673 9.6875 07/03/05 257,068 660,886
30,000 1.7142 10.1875 10/26/05 204,534 525,887
70,000 4.0000 12.4373 04/06/06 582,456 1,497,462
William J. 10,322 0.5898 9.6875 01/03/05 62,886 159,365
Reilly, Jr. 39,678 2.2673 9.6875 07/03/05 257,068 660,856
30,000 1.7142 10.1875 10/26/05 204,534 525,887
70,000 4.0000 12.4373 04/06/06 582,456 1,497,462
Luis A. 10,322 0.5898 9.6875 01/03/05 62,886 159,365
Aguilera 39,678 2.2673 9.6875 07/03/05 257,068 660,886
30,000 1.7142 10.1875 10/26/05 204,534 525,887
40,000 2.2875 12.4375 04/06/06 332,832 885,693
Michael E. 10,322 0.5898 9.6875 01/03/05 62,886 159,365
Smith 39,678 2.2673 9.6875 07/03/05 257,068 660,856
30,000 1.7142 10.1875 10/26/05 204,534 525,887
70,000 4.0000 12.4373 04/06/06 582,456 1,497,462
- -----------
(1) Table reflects options granted to the Named Officers listed above to
purchase the Company's Common Stock. For each of the named officers granted
options, the top figure reflects an incentive stock option ("ISO") and the
bottom figure(s) reflect a grant which is not an ISO ("NSO"). Under the
<PAGE>
Checkpoint Systems, Inc. Stock Option Plan (1992)(the "Stock Option Plan"),
options are immediately exercisable (subject to a six-month holding
requirement in the case of management subject to Section 16 of the Securities
Exchange Act of 1934) to purchase Common Stock; the term of such options is
generally ten years (in the case of an ISO), and ten years and six months (in
the case of an NSO).
(2) Represents gain that would be realized assuming the options were held
until expiration and the stock price increased at compounded rates of 5% and
10% from the base price per share.
(3) The dollar amounts under these columns use the 5% and 10% rates of
appreciation required by the Securities and Exchange Commission. This
presentation is not intended to forecast possible future appreciation of the
Company's Common Stock.
Option Exercises and Fiscal Year-End Option Values
Set forth below is information with respect to options exercised and
unexercised as of the fiscal year ended December 31, 1995 for each of the
Named Officers.
Aggregated Option Exercises in Last Fiscal Year and FY End Option Values
Number of
Securities Value of
Underlying Unexercised
Shares Acquired on Unexercised In-the-Money
Exercise or With Options/SAR's Options/SAR's
Respect to Which at FY-End(#)(2) at FY-End($)(3)
Option Grants --------------- ---------------
Exercised Value Exercisable/ Exercisable/
Name (#) ($)(1) Unexercisable Unexercisable
- ---- ------------------ ------- --------------- ---------------
Kevin P. Dowd 50,000 422,190 450,000/0 4,903,120/0
Steven G. Selfridge 50,000 439,314 402,000/0 3,782,183/0
William J. Reilly, Jr. 70,000 574,376 250,000/0 2,401,248/0
Luis A. Aguilera 70,000 546,566 230,000/0 2,310,623/0
Michael E. Smith 80,000 636,562 240,000/0 2,278,123/0
- ------------
(1) Represents the difference between the fair market value of the shares at
the date of exercise and the exercise price multiplied by the number of shares
acquired.
(2) The first number represents the number of exercisable but unexercised
options; the second number represents the number of unexercisable options.
<PAGE>
(3) The first number represents the value based upon the stock price at fiscal
year-end of exercisable but unexercised options; the second number represents
the value of unexercisable options.
Compensation of Directors
In 1995, directors who were not employees of the Company received $1,000
each fiscal quarter and $2,000 for each Board of Directors' meeting that they
attended. Directors who are employees of the Company do not receive any
additional compensation for their service as directors.
Non-employee directors are eligible to receive NSO's pursuant
to a formula set forth in the Company's Employee Stock Option Plan (1992)
(the "Stock Option Plan"), described in footnote (1) to the "Option Grants"
table and under the heading "Compensation Committee Report on Executive
Compensation." Under the Stock Option Plan, each non-employee member of the
Board of Directors shall be granted a NSO on April 29, 1995 and on April 29 of
each third year thereafter during which the Plan shall remain in effect,
provided that the non-employee member of the Board of Directors is then
serving in such position and provided further that there are then available
sufficient shares under this Plan, each such NSO will cover the lesser of (i)
10,000 shares (approximately adjusted if necessary for stock dividends, stock
split or other charges) of common stock, (ii) a number of shares of common
stock having an aggregate fair market value on the date of grant equal to
$100,000, or (iii) the number of shares then available under the applicable
limits of the plan. Pursuant to the Stock Option Plan, on April 29, 1995,
each non-employee director received 9,356 options.
Effective January 1, 1995, the Company entered into a consulting agreement
with Mr. Wolf. Mr. Wolf will provide consulting services to the Company on an
as-needed basis. As compensation, Mr. Wolf will receive $530,014 per year for
five years, of which $255,014 will be deferred annually. In addition, the
Company will pay the sum of $125,000 in five equal installments of $25,000
each commencing January 1, 1995 to Mr. Wolf for his agreement not to compete.
The Company entered into a consulting agreement on November 1, 1994 with The
Advisory Board, Inc. a company owned by Robert O. Aders, a member of the Board
of Directors. The agreement term ends December 31, 1996 and requires a
payment of $20,000 per quarter during the contract period. The Company paid
$80,000 to The Advisory Board, Inc. for the year 1995.
Effective July 1, 1995, the Company entered into Employment Agreements
(each an "Agreement") with each of the Named Officers, one of whom is
Mr. Dowd, who is also a Director of the Company. Mr. Dowd's Agreement
is for a period of three years and each other Agreement is for a period
of two years. Each Agreement provides that upon termination of employment
in certain circumstances the executive would be entitled to severance pay
of not less than twelve months of base salary and not more than eighteen
months of base salary plus health insurance benefits during such period.
A change-in-control of the Company (as defined in the Agreement) or a change
in the responsibilities or duties of the executive could result in severance
payments to the executive under the Agreement. Each Agreement provides for
a two year non-compete period by the executive commencing upon the date of
termination of employment from the Company.
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
General
Under the supervision of the Compensation Committee of the Board of
Directors, the Company has developed and implemented compensation
policies, plans and programs which seek to enhance the profitability of
the Company, and thus shareholder value, by aligning the financial
interests of the Company's senior management with those of its
shareholders. In furtherance of these goals, and because the Committee
believes that it is appropriate that senior management have a greater
portion of their compensation at risk than other employees, annual cash
base salaries of senior management are generally set somewhat below what
the Company (based on a review of various analytical data secured from
outside consultants) believe to be salary levels paid to senior
management of similar sized companies with comparable responsibilities.
Annual base salary and longer term incentive compensation provides an
important incentive in attracting and retaining corporate officers and
other key employees and motivating them to perform to the full extent of
their abilities in the best long-term interests of the Shareholders.
Both types of compensation are variable and are closely tied to the
Company's performance in a manner that encourages a sharp and
continuing focus on building revenue growth, long term profitability
and shareholder value.
In the early part of each fiscal year, the Committee reviews with the
Chief Executive Officer and approves, with any modifications it deems
appropriate, an annual compensation plan for each of the Company's senior
executives (other than the Chief Executive Officer). This salary plan is
developed by the Company's human resources staff based on a review of
industry, peer group and national surveys of compensation levels,
historical compensation policies of the Company, and, to a large extent,
subjective judgments of the Committee relating to the past and expected
future contribution, level of experience, leadership abilities and
overall performance. In addition, the Committee is advised, from time to
time upon request, by independent compensation consultants concerning
compensation competitiveness.
The Committee also reviews and fixes the base salary of the Chief
Executive Officer based on a review of similar data and the Committee's
subjective assessment of his past performance and its expectation as to
his future contributions in leading the Company and its businesses. For
1995, Mr. Dowd's compensation was formulated by the Committee based on
these factors as well as the Committee's expectation that revenue growth of
the Company would continue in the 20% to 30% range and that continued
structural changes would have to be made in 1995 for the long-term benefit of
the Company. Mr. Dowd's salary and incentive program was approved by
unanimous vote of the Board of Directors (with Mr. Dowd abstaining). Mr.
Dowd's base salary for the fiscal year 1995 was set at $300,000. Mr. Dowd was
given the right to participate in the Profit Incentive Plan (see below). Mr.
Dowd's participation percentage was 20% plus any discretionary allocation.
Mr. Dowd received $150,264 under the Profit Incentive Plan for the fiscal year
1995.
<PAGE>
Long Term Compensation
In addition to salary, senior management of the Company has the
potential to receive additional compensation from one of three possible
sources: the Company's Profit Incentive Plan, discretionary management bonuses
and the Checkpoint Systems, Inc. Stock Option Plan (1992).
For 1995 and subsequent years, the Board of Directors approved the Profit
Incentive Plan ("PIP"). The Chief Executive Officer and President and certain
Vice Presidents participate in the PIP. Under the PIP, a bonus pool is
created when pre-tax, pre-bonus earnings exceed 18% of the adjusted beginning
balance of Shareholders Equity for the relevant year. If such earnings are
attained, a bonus pool is created equal to (i) 3% of all pre-tax, pre-bonus
earnings, plus (ii) 6% of pre-tax, pre-bonus earnings in excess of 27% of the
adjusted beginning balance of Shareholders Equity for the relevant year.
Distribution of the pool, if any was created, for 1995 was determined as
follows: 20% to Mr. Dowd; 10% to Mr. Aguilera; 10% to Mr. Selfridge; 10% to
Mr. Reilly; 10% to Mr. Smith; 5% to Mr. Austin, the Company's Vice
President-General Counsel and Secretary; and 5% to Mr. Farestad, the Company's
Vice President-Research and Development; and 4% to Mr. Reinhold, the Company's
Vice President-Finance, Chief Financial Officer and Treasurer. The remaining
26% was divided among the foregoing at the discretion of the Committee
taking into account such subjective factors as they determined to be
appropriate under the circumstances. The Board of Directors, in conjunction
with the Compensation Committee recommendation, determined that setting a
minimum floor on the PIP before any bonus pool is created, equal to 18% of the
adjusted beginning balance of shareholder equity, focused the executive
management of the Company on first addressing the minimum appropriate level of
shareholder value increases. Only after attaining this appropriate return for
shareholders, will senior management begin to participate in the PIP. The
target minimums were attained by the Company in 1995, and bonuses were paid
from the PIP for the fiscal year 1995. No discretionary bonuses were paid for
the fiscal year 1995.
In order to provide incentives to employees over the longer term, the
Company maintains a stock option plan. At various times during the year, the
Committee grants options to purchase the Company's Common Stock
under the Checkpoint Systems, Inc. Stock Option Plan (1992) (the "Stock
Option Plan"). The Company has granted options under various plans since 1982,
but the current plan has been in effect since 1987. Under this
plan, as most recently approved by the Shareholders at the 1992 Annual
Meeting of Shareholders, the Committee has the authority to grant both
incentive and non-incentive options to purchase the Company's Common
Stock at an exercise price of at least 100% of the fair market value on
the date of grant. All employees of the Company and its affiliates are
eligible to receive awards of options thereunder; non-employee directors may
only receive non-incentive options pursuant to a formula set forth
in the Stock Option Plan. The maximum number of shares available for
option under the Plan from its inception is 9,000,000; 1,532,784 remain
available for grant thereunder as of March 5, 1996. The Committee
believes that the 1992 Plan has been well-received by employees and
directors as a way to attract and retain quality management and
encourage them to strive for the long-term success of the Company.
<PAGE>
Stock option awards under the 1992 Plan typically are granted annually,
although several grants were made in 1995. In fixing the grants of stock
options to the individual senior management group during 1995, including the
Named Officers other than the Chief Executive Officer, the Committee reviewed
with the Chief Executive Officer the recommended individual
awards, taking into account such facts and subjective issues such as the
respective scope of accountability, strategic and operational goals,
performance requirements and anticipated contributions of each of the
senior management group and information on previous awards under the
1992 Plan. Any awards to the Chief Executive Officer are fixed separately by
the Committee and are based, among other things, upon a subjective review of
competitive compensation data from several surveys, data from selected peer
companies, information regarding his total compensation and historical
information regarding his long-term compensation awards as well as the
Committee's subjective evaluation of his past and expected future
contributions to the Company's achievement of long-term performance goals,
including revenue and earnings growth.
The Committee believes that its past grants of options and the Profit
Incentive Plan have successfully focused the Company's senior management on
building profitability and shareholder value.
The foregoing report submitted by:
Allan S. Kalish
Jermain B. Porter
Albert Soffa
STOCK PERFORMANCE GRAPH
NYSE/AMEX/NASDAQ
NYSE/AMEX/NASDAQ Electronic Components
Stock Market and Accessories
Year Checkpoint Systems, Inc. Index Index
- ---- ------------------------ ---------------- ---------------------
1990 100.0 100.0 100.0
1991 84.9 131.7 125.3
1992 186.3 148.3 182.6
1993 123.3 163.8 246.6
1994 213.7 163.7 275.6
1995 409.6 223.8 433.7
Assumes $100 invested on December 28, 1990 in Checkpoint Systems, Inc.
Common Stock, the Center for Research in Security Prices ("CRSP Index")
for NYSE/AMEX/NASDAQ Stock market, the CRSP Index for NYSE/AMEX/NASDAQ
Electronic Components and Accessories.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P. ("Coopers"), the Company's independent certified
public accountants for the fiscal year 1995, have been selected to continue
for the fiscal year 1996. A representative of Coopers is expected to be
present at the Meeting and will have the opportunity to make a statement if he
desires to do so. The representative is also expected to be available to
respond to appropriate questions.
<PAGE>
PROPOSAL TO APPROVE THE AMENDMENT AND
RESTATEMENT OF THE COMPANY'S
EMPLOYEES' STOCK PURCHASE PLAN
In 1984, the Company adopted its Employees' Stock Purchase Plan
(the "Plan"). The Plan was amended and restated in 1987 and again in 1995.
At a meeting held on February 28, 1996, the Board of Directors approved a
proposal to amend and restate the Plan to increase the available Company
contribution, subject to the approval of the Company's shareholders.
The primary terms of the Plan, as amended and restated, are as
follows:
1. Administration. The Plan is administered by the Vice
President-Finance of the Company. Pursuant to the Plan, the administrator
has authority to interpret the Plan, and to prescribe rules deemed necessary
to effectuate the provisions of the Plan. The administrator may delegate
certain administrative functions to a custodian designated by the Company
pursuant to the Plan. The custodian may be a bank, investment company,
registered broker dealer or similar financial institution. The current
custodian designated by the Company is Smith Barney, Inc. All expenses
associated with the operation of the Plan including brokerage expenses and
fees of the custodian are borne by the Company.
2. Eligibility. All persons who have been full time employees of
the Company or any subsidiary designated as a participating subsidiary for 90
days are eligible to participate in the Plan. At March 16, 1996,
approximately 1,139 persons were eligible to participate in the Plan, of whom
370 persons were participating in the Plan. An eligible employee may elect to
participate in the Plan as of the first day of any month by executing and
delivering to the Company, not less than thirty days in advance of his
proposed entry date, a Stock Purchase and Payroll Deduction Agreement.
3. Term. The Plan became effective in 1984 and, unless the Plan
is sooner terminated at the option of the Company, will continue in operation
until the last day of the Company's 2000 fiscal year.
4. Payroll Deductions; Matching Contribution. A participating
employee may elect to have not less than $4.00 nor more than $80.00 deducted
from his weekly pay on an after tax basis and have such amount applied to the
purchase of the Company's common stock. The Company makes a matching
contribution to each participant's account in an amount equal to (a) 40% of
the first $30.00 paid each week on behalf of the participant, (b) 25% of the
amount in excess of $30.00 but not in excess of $45.00, (c) 20% of the amount
in excess of $45.00 but not in excess of $60.00; and (d) 10% of the amount in
excess of $60.00 but not in excess of $80.00. Not later than the tenth day of
each month, all sums deducted from employees' pay in the preceding month as
well as the Company's matching contributions are remitted to the custodian for
investment in the Company's common stock.
5. Purchase of Common Stock. Not later than the last day of each
month in which the custodian has received payment in full of all payroll
deductions and matching contributions, the custodian will use the funds in its
possession to purchase the Company's common stock, in open market transactions
at prevailing market prices. Common stock purchased by the custodian is held
in the custodian's name and allocated to the accounts of the participants pro
rata.
<PAGE>
6. Withdrawal of Common Stock. Common Stock purchased by the
custodian shall be allocated to each participant's account, provided that a
participant may request the custodian to cause certificates for the
participant's shares to be issued in the participant's name and delivered to
him. Participants who are subject to Section 16 of the Exchange Act must
agree not to sell shares withdrawn from the Plan for six months following
withdrawal.
7. Withdrawal of Participant. A participant may withdraw from the
Plan at any time, and shall be deemed to have withdrawn from the Plan upon the
termination of his employment for any reason. Upon a participant's
withdrawal, at the participant's request, the custodian shall deliver to the
withdrawing participant a certificate or certificates for the shares of common
stock allocated to the participant by the custodian, together with a cash
payment for any fractional share or any amount deducted from the participant's
pay and not yet invested in common stock. A participant who withdraws from
the Plan may not thereafter participate in the Plan for a period of six full
calendar months from the effective date of his withdrawal.
8. Amendment. The Plan may be amended from time to time by the
Board of Directors, provided that shareholder approval is required for any
change which would (i) materially increase the benefits accruing to
participants under the Plan; (ii) materially increase the number of securities
which may be issued under the Plan; or (iii) materially modify the
requirements for participation in the Plan. Neither the amendment of the Plan
nor its termination shall impair the rights of participants in the Plan to
receive shares allocated to their respective accounts, as well as any payroll
deductions not yet invested in common stock.
9. Tax Consequences. Generally, a participant will recognize
income at the time shares of common stock are allocated to his account in an
amount equal to the excess, if any, of the fair market value of the common
stock so allocated at the time allocated over the amount paid by the
participant for the purchase of such common stock. The amount so taxed, if
any, will be added to the participant's basis in the shares acquired. The
Company will be entitled to deduct as compensation expense all income so
recognized by participating employees.
The foregoing description of the Plan is qualified in its entirety
by reference to the Plan which is attached as Appendix A to this Proxy
Statement and incorporated herein by reference.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE PROPOSAL TO
APPROVE THE AMENDMENT AND RESTATEMENT OF THE COMPANY'S EMPLOYEES' STOCK
PURCHASE PLAN. A majority of a quorum shall be the number of votes necessary
to carry this proposal.
SHAREHOLDER PROPOSALS
In order for Shareholder proposals to be considered for inclusion in the
Company's proxy materials for the next Annual Meeting of Shareholders, such
proposals must be received by the Company no later than November 27, 1996.
<PAGE>
COST OF SOLICITATION OF PROXIES
The Company will bear the cost of the solicitation of the Board of
Directors' proxies for the Meeting, including the cost of preparing,
assembling and mailing proxy materials, the handling and tabulation of proxies
received and charges of brokerage houses and other institutions, nominees and
fiduciaries incurred in forwarding such materials to beneficial owners. In
addition to the mailing of the proxy material, such solicitation may be made
in person or by telephone or telegraph by directors, officers or regular
employees of the Company who will not be specifically compensated therefor, or
by a professional proxy solicitation organization engaged by the Company.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE, WITHOUT CHARGE TO EACH PERSON SOLICITED BY THIS
PROXY STATEMENT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K (INCLUDING THE FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES THERETO) AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION FOR ITS MOST RECENT FISCAL YEAR. SUCH WRITTEN REQUEST
SHOULD BE DIRECTED TO NEIL D. AUSTIN, SECRETARY, AT THE ADDRESS OF THE COMPANY
APPEARING ON THE FIRST PAGE OF THIS PROXY STATEMENT.
<PAGE>
APPENDIX A
CHECKPOINT SYSTEMS, INC.
AMENDED AND RESTATED
EMPLOYEES' STOCK PURCHASE PLAN
1. Purpose of the Plan. The purpose of the Checkpoint Systems,
Inc. Employees' Stock Purchase Plan (the "Plan") is to provide an opportunity
for eligible employees of Checkpoint Systems, Inc. (the "Company") and its
subsidiaries to obtain an ownership interest in the Company through purchase
of shares of Company common stock ("shares"), by payroll deductions, as an
incentive to promote the profitable growth of the Company. During the period
when the Plan is in effect, the Custodian shall purchase shares on the open
market for allocation to the accounts of participants in accordance with the
provisions of the Plan.
For purposes of the Plan, the term "subsidiary" shall mean any
corporation (whether or not in existence at the time the Plan is adopted)
which is (i) a subsidiary of the Company under the definition of "subsidiary
corporation" contained in Section 425(f) of the Internal Revenue Code of 1986,
as amended (the "Code"), or any similar provision hereafter enacted, and (ii)
which is designated as a participating subsidiary by the Company's Board of
Directors.
2. Term of the Plan. The operation of this Plan shall commence
on the date fixed by the Company and shall terminate on the last day of the
Company's 2000 fiscal year unless terminated by the Company prior to such
date. The Company's fiscal year is a 52- or 53- week period ending each year
on the last Sunday of December.
3. Custodian. The Company shall be the Custodian for the Plan,
unless the Company shall, in its discretion, select a bank, investment
company, registered broker-dealer or similar financial institution to be the
Custodian.
<PAGE>
4. Eligibility Requirements. Any full-time employee of the
Company or a subsidiary who has been a full-time employee continuously for 90
or more days shall be eligible to participate in the Plan. Any employee may
join the Plan on the first day of any month during the Company's fiscal year
(the "entry date"), provided he (i) submits to the Vice President-Finance of
the Company a properly completed and executed Stock Purchase and
Payroll Deduction Agreement no later than 30 days prior to the proposed entry
date, and (ii) qualifies as an eligible employee of such entry date. The
Company may establish a shorter time period in the case of inception of the
Plan.
5. Stock Purchase and Payroll Deduction Agreement. An employee
wishing to purchase shares pursuant to the Plan shall complete and execute a
Stock Purchase and Payroll Deduction Agreement (the "Purchase Agreement"). A
participant may specify as the amount to be deducted from his compensation an
amount which may not exceed $80.00 per week and which may not be less than
$4.00 per week. A participant may increase or decrease the amount to be
deducted from his compensation as of the first day of any month by delivering,
to the Vice President-Finance of the Company, a written amendment to
his Purchase Agreement at least thirty days prior to the first day of the
month in which the change is to take effect.
6. Payments to Custodian; Company Contributions. The Company
or subsidiary by whom the participant is employed will pay to the Custodian,
on behalf of each employee participating in the Plan (i) the total of all
amounts withheld from each participant's compensation for each month pursuant
to the provisions of Section 5 above, and (ii) in addition, as an employer
contribution for each employee who is a participant in the Plan on the first
day of the succeeding calendar month, the following percentages of the amounts
paid to the Custodian each week on behalf of each participant pursuant to
clause (i): a) 40% of the first $30.00 paid each week on behalf of the
participant, (b) 25% of the amount in excess of $30.00 but not in excess of
$45.00, (c) 20% of the amount in excess of $45.00 but not in excess of
$60.00; and (d) 10% of the amount in excess of $60.00 but not in excess of
$80.00. Such payments shall be paid to the Custodian within the first ten
days of the calendar month next succeeding the calendar month in which such
withholdings occurred. In the discretion of the participant's employer, such
payments may be made in one or more installments.
7. Duties of Custodian; Stock Purchase Accounts. The Custodian
will hold as a custodian all funds received by it under the Plan and, until
delivery thereof to the participants hereunder, all of the Company's shares
acquired by the Custodian under the Plan. The Custodian shall establish and
maintain an account in the name of each participant to which shall be credited
all amounts deducted from the participant's compensation, together with the
employer's matching contributions under Section 6 above. No interest will be
paid by the Custodian on funds at any time held by it hereunder.
The Custodian may rely on all orders, requests, and instructions
with respect to the Plan given in writing and signed by the Vice
President-Finance, and the Custodian shall not be liable to any person for
any action taken in accordance therewith. The Custodian may impose reasonable
terms and conditions incident to the handling of a participant's account under
the Plan.
<PAGE>
8. Purchase of Shares. Not later than the last business day of
the month in which the Custodian shall have received from the Company (and any
subsidiary which has been designated for participation in the Plan) payment in
full of the payroll deductions and Company and subsidiary contributions for
the preceding month, pursuant to Section 6 above, but subject to the
withdrawal provisions of Section 11, the Custodian will apply the funds then
in its custody to the purchase, at prevailing market prices, of the number of
whole common shares which can be purchased with such funds.
All purchases of shares will be made in the name of the Custodian
or its nominee. Any funds which are less than the price of one share and not
expended by the Custodian shall be retained by the Custodian and added to the
funds available during the following month, except that any funds remaining
unexpended at the termination of the Plan shall be proportionately allocated
to the accounts of the participants included in the final payment to the
Custodian.
As of the last business day of each month, the shares purchased
during the month with the funds received by the Custodian under the Plan shall
be credited pro rata (to the nearest one-thousandth of a share) to the
accounts of the participants in the Plan in accordance with their respective
interest in such funds as of the past preceding calendar month.
9. Transfer of Shares to Participants. Upon the written
request of a participant, a certificate in the participant's name for the full
number of shares in such participant's account shall be transferred by the
Custodian out of its name into the name of the participant, and a certificate
evidencing such shares shall be issued in the name of, and delivered to, the
participant. With respect to a written request of a participant who is an
executive officer of the Company subject to the provisions of Section 16 of
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), such
request shall be accompanied by such participant's written undertaking not to
sell the shares withdrawn for a period of six months following such
withdrawal, and the certificate evidencing such shares shall bear a legend
reflecting such transfer restriction. At the request of the participant, such
shares may be registered jointly in the names of the participant and another
person.
10. Shares Retained by the Custodian. Accumulations of whole
shares not previously transferred to participants under Section 9 shall be
held by the Custodian for the account of the participant entitled thereto, but
all rights accruing to an owner of record of such shares shall belong to and
be vested in the participant for whose account such shares are being held,
including the right to receive any and all dividends payable in respect of
such shares whether in cash, shares or otherwise, and the right to receive all
notices of shareholders' meetings and to vote thereat to the same extent as if
such shares were held in street named by a member firm of the New York Stock
Exchange.
<PAGE>
Dividends received by the Custodian with respect to shares which
have not been allocated to the accounts of participants or which have been
allocated to the accounts of participants in less than whole shares shall be
allocated at the time the shares are allocated to such accounts in accordance
with the respective interests of the participants in such shares at the time
of such allocation. Shares which have not been allocated to the accounts of
participants or which have been allocated to the accounts of participants in
less than whole shares shall not be voted by the participants or the
Custodian.
11. Withdrawal from the Plan. Any participant who for any
reason ceases to be a full-time employee of the Company and any subsidiary
shall be deemed to have withdrawn from the Plan on the date on which such
termination of employment occurs. In addition, any participant may
voluntarily withdraw from the Plan, effective as of the first day of any month
by delivery of written notice to the Vice President-Finance of the
Company (or other person designated by the Company) no later than 30 days
prior to the date on which the withdrawal is to be effective. A participant
who has withdrawn from the Plan may not thereafter re-join the Plan until the
expiration of six (6) full calendar months from the effective date of his
withdrawal.
Upon withdrawal from the Plan, a participant may request the
Custodian to deliver to him all whole shares held by the Custodian which have
been allocated to his account as of the close of the calendar month preceding
the month in which his termination of employment occurs (or as of the close of
the second calendar month preceding the month of the effective date of
withdrawal) together with the cash value, equal to the mean between high and
low sale prices as of the last business day of such calendar month, of any
fractional shares then allocated to his account.
A withdrawing participant who requests delivery of his shares
shall also receive, in case, the amount of any funds allocated to his account
as a result of payroll deductions during the month in which his employment is
terminated and during the preceding calendar month (or, in the case of
withdrawal, during the time period subsequent to the close of the second
calendar month preceding the month of the effective date of withdrawal and
prior to the effective date of withdrawal), without increase by reason of any
employer contributions.
If the withdrawing participant does not request delivery of his
shares and other funds allocated to his account, such shares and funds shall
remain in his account; in such case, the withdrawing participant shall pay the
brokerage commissions, transfer taxes, and any other fees incurred upon the
sale of such shares or the investment or reinvestment of such funds.
12. Administration of the Plan. Except to the extent that
responsibilities may be delegated to, and assumed by, a Custodian other than
the Company, the Plan shall be administered by the Vice President-Finance of
the Company. His determinations as to any questions which may
arise with respect to the interpretation of the provisions of the Plan shall
be final, and he may prescribe such rules as he deems necessary to effectuate
the provisions of the Plan.
The Vice President-Finance of the Company shall receive
no additional compensation for serving as administrator of the Plan.
<PAGE>
13. Expenses. Brokerage expenses, the charges of a Custodian
other than the Company, and all costs of maintaining records and executing
transfers with respect to shares acquired under the Plan shall be borne by the
Company.
14. Withholding Taxes. All taxes subject to withholding which
are payable with respect to Company or participating subsidiary contributions
hereunder shall be deducted from the participants' compensation and shall not
reduce contributions hereunder.
15. Statement of Account. Not less frequently than annually,
the Custodian shall distribute to each participant a statement of his account.
The statement shall include (i) the total number of shares allocated to the
participant's account which are in the custody of the Custodian and (ii) the
number of shares purchased for the account of the participant, and the
purchase prices thereof, for the period covered by the statement.
16. Government Regulations. The Plan and the transactions with
respect to shares pursuant thereto are subject to all applicable rules and
regulations of state and federal law and to such approval of governmental
agencies as may be required.
17. Termination or Amendment of the Plan. The Plan may be
amended from time to time by the Board of Directors, provided that shareholder
approval shall be required for any change which would (i) materially increase
the benefits accruing to participants under the Plan; (ii) materially increase
the number of securities which may be issued under the Plan; or (iii)
materially modify the requirements for participation in the Plan. The Company
may terminate the Plan at any time. No termination or amendment shall impair
the rights of any participant under the Plan to receive any shares which have
been allocated to his account, together with the amount of any payroll
deductions which have not been applied to the purchase of shares. Upon
termination of the Plan, any cash or shares remaining in the possession of the
Custodian after satisfaction of the above rights of participants shall belong
to the Company.
APPENDIX B
CHECKPOINT SYSTEMS, INC.
ANNUAL MEETING OF SHAREHOLDERS - APRIL 23, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of CHECKPOINT SYSTEMS, INC. (the "Company),
revoking all previous proxies, hereby appoints Neil D. Austin and Jeffrey A.
Reinhold, and each of them acting individually, as the attorney and
proxy of the undersigned, with full power of substitution, to vote all
shares of Common Stock of the Company which the undersigned would be
entitled to vote if personally present at the Annual Meeting of
Shareholders of the Company, to be held on Tuesday, April 23, 1996, at
10:00 a.m., at 101 Wolf Drive, Thorofare, New Jersey, and at any
adjournment or postponement thereof, provided that said proxies are
authorized and directed to vote.
(Continued and to be Signed on Reverse Side)
<PAGE>
PLEASE MARK YOUR
[X] VOTES AS IN THIS
EXAMPLE
FOR all of the
nominees for WITHHOLD
Class II AUTHORITY
Director listed, To vote for
1.ELECTION (except as all nominees NOMINEES: Robert O. Aders
OF Class II marked to the listed at David W. Clark, Jr.
DIRECTORS contrary below) right
For, except vote withheld from the following nominees:
- ----------------------------------------
2. Proposal to approve the amendment [ ]FOR [ ]ABSTAIN [ ]AGAINST
and restatement of the Company's
Employee Stock Purchase Plan.
3. To vote on such other business as may properly come before the meeting.
UNLESS OTHERWISE SPECIFIED, THE SHARES WILL BE VOTED "FOR" THE ELECTION OF THE
NOMINEES FOR THE CLASS II DIRECTORS, AND "FOR" THE PROPOSAL TO AMEND AND
RESTATE THE CHECKPOINT SYSTEMS, INC. EMPLOYEE STOCK PURCHASE PLAN. THIS PROXY
ALSO DELEGATES DISCRETIONARY AUTHORITY TO VOTE WITH RESPECT TO ANY OTHER
BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR
POSTPONEMENT THEREOF.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING,
PROXY STATEMENT AND ANNUAL REPORT OF CHECKPOINT SYSTEMS, INC.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
SIGNATURE(S)......................... DATE ............................
SIGNATURE(S)......................... DATE ............................
NOTE: Please sign this Proxy exactly as name(s) appear in address.
When signing as attorney-in-fact, executor, administrator, trustee or
guardian, please add your title as such. If the shareholder is a
corporation, please sign with full corporate name by duly authorized
officer or officers and affix the corporate seal. Where stock is held
in the name of two or more persons, all such persons should sign.
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