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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined:
- -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------------------
(5) Total Fee paid:
- -------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing.
(1) Amount Previously Paid: ...................................................
(2) Form Schedule or Registration Statement No:................................
(3) Filing Party:..............................................................
(4) Date Filed:................................................................
<PAGE>
CHECKPOINT SYSTEMS, INC. PROXY STATEMENT
[LOGO]
2000 NOTICE OF ANNUAL MEETING
2
<PAGE>
[LOGO]
CHECKPOINT SYSTEMS, INC.
101 Wolf Drive
P.O. Box 188
Thorofare, NJ 08086
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Checkpoint Systems, Inc. will be held on
Thursday, May 4, 2000, at 10:00 a.m., at The Union League of Philadelphia, 140
South Broad Street, Philadelphia, Pennsylvania for the following purposes:
1. To elect two directors for a three-year term; and
2. To transact such other business as may properly come before the
Meeting.
A complete list of Shareholders will be available at the Company's corporate
offices noted above, prior to the meeting. Shareholders owning Company shares at
the close of business on March 16, 2000 are entitled to receive notice of the
Meeting and to vote at the Meeting or any adjournments that may take place.
You are cordially invited to attend the Meeting in person. If you are unable to
attend in person, the Board of Directors urges you to sign, date and return the
enclosed proxy card promptly.
This Proxy Statement, proxy card and Checkpoint's 1999 Annual Report are being
mailed to shareholders on or about April 3, 2000.
By Order of the Board of Directors
NEIL D. AUSTIN
Vice President, General Counsel
and Corporate Secretary
April 3, 2000
3
<PAGE>
QUESTIONS AND ANSWERS
1. Q: ON WHAT AM I VOTING?
A: You are being asked to vote on the election of two directors (Kevin P.
Dowd and Alan R. Hirsig).
2. Q. WHO IS ENTITLED TO VOTE?
A. Shareholders as of the close of business on March 16, 2000 (the Record
Date) are entitled to vote at the Annual Meeting.
3. Q. WHO CAN ATTEND THE ANNUAL MEETING?
A. All Shareholders, as of the Record Date on March 16, 2000 can attend.
4. Q. HOW DO I VOTE?
A. You May Vote By Mail.
You do this by signing each proxy card you receive and returning your
proxy card(s) in the enclosed, prepaid and addressed envelope. If you
mark your voting instructions on the proxy card your shares will be
voted as you instruct. If you return a signed card but do not provide
voting instructions, your shares will be voted as recommended by the
Board of Directors.
You May Vote in Person at the Meeting.
Ballots will be passed out at the Meeting to anyone who wants to vote
at the Meeting. If you hold your shares in street name, you must
request a legal proxy from your stockbroker, and bring it with you to
the meeting, in order to vote at the Meeting.
You May Vote by Telephone.
Shareholders may vote by telephone. To do this follow the instructions
entitled "Vote by Telephone" that came with this Proxy Statement. The
telephone voting procedure is designed to verify shareholders through
the use of a Control Number that is provided on each proxy card. If
you vote by telephone, you do not have to mail in your proxy card.
You May Vote on the Internet.
Shareholders may vote on the Internet. To do this follow the
instructions entitled "Vote by Internet" that came with your proxy
statement. If you vote by Internet, you do not have to mail in your
proxy card.
5. Q. CAN I CHANGE MY VOTE?
A. You can revoke your proxy and change your vote at any time before the
polls close at the meeting. To do this:
o Sign another proxy with a later date; or
o Vote by telephone or on the Internet at a later date (Your latest
telephone or Internet proxy will be counted and all earlier votes
will be disregarded); or
o Notify the Secretary of Checkpoint in writing and vote in person
at the meeting. If you hold your shares in street name, you must
request a legal proxy from your stockbroker in order to vote at
the meeting.
However, once the voting on a particular matter is completed at
the Meeting, you will not be able to revoke your proxy or change
your vote as to any matters on which voting has been completed.
4
<PAGE>
6. Q. WHAT CONSTITUTES A QUORUM?
A. A quorum is present at the meeting when shareholders of record owning
a majority of the outstanding shares are present. Shareholders may be
present at the meeting in person or represented by proxy. As of the
Record Date, March 16, 2000, 30,196,584 shares of common stock were
issued and outstanding. Every shareholder of common stock is entitled
to one vote for each share held. Shareholders do not have the right to
cumulate their votes in the election of directors. There is no other
class of voting securities outstanding.
There must be a quorum for the meeting to be held. If you submit a
properly executed proxy card, even if you abstain from voting, then
you will be considered part of the quorum. A WITHHELD vote is the same
as an abstention. Similarly, if a broker fails to vote shares with
respect to which it has discretionary authority ("broker non-votes"),
the shares will still be counted as present for quorum purposes.
The affirmative vote of a majority of the votes which all shareholders
present are entitled to cast is required to approve any proposal. For
voting purposes, only shares voted FOR the adoption of a proposal or
the election of directors will be counted as voting in favor in
determining whether a proposal is approved or a director is elected.
As a consequence abstentions, broker non-votes and WITHHELD votes will
all have the same effect as a vote against the adoption of a proposal
or the election of a director.
7. Q. WILL MY SHARES BE VOTED IF I DO NOT SIGN AND RETURN MY PROXY CARD?
A. If your shares are held in street name, your brokerage firm, under
certain circumstances, may vote your shares.
Under the New York Stock Exchange Rules, brokerage firms have
authority to vote customers' unvoted shares on certain "routine"
matters, including the election of directors.
If you do not vote your proxy, your brokerage firm may either:
o Vote your shares on routine matters, or
o Leave your shares unvoted.
When a brokerage firm votes its customers' unvoted shares on routine
matters, these shares are counted for purposes of establishing a
quorum to conduct business at the meeting. A brokerage firm cannot
vote customers' shares on non-routine matters.
You may have granted your stockbroker discretionary voting authority
over your account. Your stockbroker may be able to vote your shares
depending upon the terms of the agreement you have with your
stockbroker.
8. Q. WHAT IF I RECEIVE MORE THAN ONE PROXY CARD?
A. This means that you have various accounts that are registered
differently with the transfer agent and/or with brokerage firms.
Please sign and return all proxy cards to ensure that all your shares
are voted.
5
<PAGE>
9. Q. WHEN ARE SHAREHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING DUE?
A. In order for Shareholder proposals to be considered for inclusion in
the Company's proxy materials for the next Annual Meeting of
Shareholders, proposals must be submitted in writing and received by
the Company no later than December 7, 2000.
10. Q. WHO ARE THE COMPANY'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS?
A PricewaterhouseCoopers LLP, the Company's independent certified public
accountants for the fiscal year 1999, have been selected to continue
for the fiscal year 2000. A representative of PricewaterhouseCoopers
LLP is expected to be present at the Meeting and will have the
opportunity to make a statement if he/she desires to do so. The
representative is also expected to be available to respond to
appropriate questions from shareholders.
6
<PAGE>
PROPOSALS TO BE VOTED ON
------------------------
1. ELECTION OF DIRECTORS
---------------------
Nominees for re-election this year are:
o Kevin P. Dowd
o Alan R. Hirsig
Each has consented to serve a three-year term.
THE BOARD RECOMMENDS A VOTE FOR THESE NOMINEES.
UNLESS YOU GIVE CONTRARY INSTRUCTIONS, THE SHARES WHICH YOU OWN WILL BE
VOTED "FOR" THE ELECTION OF THE NOMINEES.
2. OTHER BUSINESS
--------------
The Board knows of no other business for consideration at the meeting. If
any matters not specifically set forth on the proxy card and in this Proxy
Statement properly come before the Meeting, the persons named in the
enclosed proxy will vote or otherwise act, on your behalf, in accordance
with their reasonable business judgment on such matters.
GENERAL
This Proxy Statement is furnished by Checkpoint and the proxy card enclosed is
being solicited by the Board of Directors of Checkpoint for use at the 2000
Annual Meeting of Shareholders.
7
<PAGE>
THE BOARD OF DIRECTORS
At the Meeting, the Shareholders will elect two Class III directors to hold
office until the 2003 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 III directors, Kevin P. Dowd, Raymond R. Martino and Albert E. Wolf
will expire at the Meeting. Mr. Martino has declined to stand for re-election,
therefore, his term will expire on May 4, 2000. 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. Wolf will not stand for re-election. No
successor is being named at this time. In addition, Elisa Margaona elected to
retire from the Board of Directors, effective February 24, 2000. No successor is
being named for Ms. Margaona at this time.
In light of Mr. Martino's decision not to stand for re-election, Mr. Wolf's and
Ms. Margaona's retirement and in accordance with the Company's Articles of
Incorporation, the Board has adjusted each Class to make each Class as equal in
number as possible. The Board members and their newly assigned Class are as
follows:
Class I Class II Class III
Term Expires: 2001 Term Expires: 2002 Term Expires: 2000
- ------------------ ------------------ ------------------
Roger D. Blackwell Richard J. Censits Kevin P. Dowd
William P. Lyons, Jr. David W. Clark, Jr. Alan R. Hirsig
The Board of Directors has nominated Kevin P. Dowd and Alan R. Hirsig for
election at the Meeting as the Company's Class III directors and Messrs. Dowd
and Hirsig 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
reasonable business judgment. Unless contrary instructions are given, the shares
represented by the enclosed proxy will be voted "FOR" the election of Mr. Dowd
and Mr. Hirsig. The Board of Directors recommends a vote "FOR" the election of
these nominees
The nominees for election as the Class III directors and the directors whose
terms of office will continue after the Meeting, together with certain
information about them, are as follows:
ROGER D. BLACKWELL
Director Since 1990
Term Expires 2001
Age 60
For more than the past five years, Dr. Blackwell has been a professor of
marketing at Ohio State University and President of Roger Blackwell Associates,
Inc., a consulting firm and a member of the Board of Directors of Max & Erma's,
8
<PAGE>
Restaurants, Inc. Dr. Blackwell joined the Board of Directors of Intimate
Brands, Inc. in 1995. In 1996, Dr. Blackwell became a director of Airnet Systems
and Applied Industrial Technologies and in 1999 became a director of Anthony and
Sylvan Pools. Dr. Blackwell also serves as a Trustee of Flex-Funds.
RICHARD J. CENSITS
Director Since 1985
Term Expires 2002
Age 62
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, Inc. MedQuist provides
electronic transcription information services to the health care industry
nationwide. Mr. Censits was a director of EnergyNorth, Inc. from 1993 until
February 1998, and was a Trustee of the University of Pennsylvania from 1989 to
1999.
DAVID W. CLARK, JR.
Director Since 1982
Term Expires 2002
Age 62
Mr. Clark has been Chairman of the Board since February 1999. Mr. Clark has been
a managing director of Pryor & Clark, a company engaged in investments, since
June 1992. Mr. Clark is a director of Acme United Corp., Corcap, CompuDyne
Corporation and SS&C Technologies, Inc.
KEVIN P. DOWD
Director Since 1995
Term Expires 2000
Age 51
Mr. Dowd has been President of the Company since August 1993, and was named
Chief Executive Officer and a Director of the Company in January 1995. Mr. Dowd
was also Chief Operating Officer from August 1993 to April 1997. Mr. Dowd 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
a director of MAB Paints, Inc., C&D Technologies, Inc., and Holy Redeemer Health
System, Inc., a not for profit organization.
ALAN R. HIRSIG
Director Since 1998
Term Expires 2000
Age 60
Mr. Hirsig is currently a business consultant. Mr. Hirsig was Chief Executive
Officer of ARCO Chemical Company. He had been President and Chief Executive
Officer of ARCO Chemical Company from 1991 until his retirement in July 1998.
Mr. Hirsig is a member of the Board of Directors of Hercules, Inc., Celanese
A.G., and Philadelphia Suburban Corporation. He is also a member of the Boards
of the Curtis Institute of Music, Bryn Mawr College, YMCA of Philadelphia and
Vicinity and Rosenbach Museum and Library.
9
<PAGE>
WILLIAM P. LYONS, JR.
Director Since 1998
Term Expires 2001
Age 59
Mr. Lyons is a founding Managing Partner of Madison Partners, LLC, an investment
firm and currently serves as a Director of Keystone Consolidated Industries,
Inc. From 1995 to February 1998, Mr. Lyons was Chairman of the Board of Holmes
Protection Group, Inc. an electronic security systems and monitoring company.
Since 1993, Mr. Lyons has served as Chairman of the Board of JVL Corp., now an
investment firm, but formerly a generic pharmaceutical manufacturer.
BOARD AND COMMITTEE MEETINGS
The Board held 4 regular and 4 special meetings in 1999. Each director attended
at least 75% of all Board and applicable committee meetings during 1999. The
following table describes the Board's committees:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Number of
Name of Committee and Members Functions of the Committee Meetings in 1999
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
AUDIT Reviews the scope and results of annual 2
Roger D. Blackwell audit and questions of accounting and tax
Richard J. Censits* policy and the adequacy of internal
David W. Clark, Jr. controls, and makes recommendations for
the selection of the Company's
independent certified public accountants.
- ----------------------------------------------------------------------------------------------------------
EXECUTIVE Considers various matters as delegated 21
Richard J. Censits by the full Board from time to time
David W. Clark, Jr. including strategic financing alternatives,
William P. Lyons, Jr.* acquisitions and long range goals and
planning of the Company.
- ----------------------------------------------------------------------------------------------------------
STOCK OPTION AND COMPENSATION Acts at various times during the year Various Times
Roger D. Blackwell to approve salaries and benefits and During the Year
Alan R. Hirsig compensation arrangements for the Company's
Raymond R. Martino* officers and to grant stock options.
- ----------------------------------------------------------------------------------------------------------
INTEGRATION Oversees the integration process of the 1
Richard J. Censits Meto acquisition and reports progress to
David W. Clark, Jr.* the Board.
Alan R. Hirsig
Raymond R. Martino
- ----------------------------------------------------------------------------------------------------------
*Chairperson for 1999.
</TABLE>
10
<PAGE>
In February 1999, the Board of Directors elected Richard J. Censits, David W.
Clark, Jr., and William P. Lyons as members of the Executive Committee of the
Board of Directors. At that meeting Mr. Lyons was elected as Chairman of the
Executive Committee and Mr. Clark was elected as Chairman of the Board of
Directors.
In November 1999, the Board of Directors formed the Integration Committee of the
Board of Directors to oversee the Meto AG acquisition. At that meeting Mr. Clark
was elected as Chairman of the Integration Committee.
Board Compensation
- --------------------------------------------------------------------------------
Type of Compensation Cash
- --------------------------------------------------------------------------------
Annual Retainer $4,000
- --------------------------------------------------------------------------------
Board Attendance Fee (per meeting) $2,000
- --------------------------------------------------------------------------------
Committee Attendance Fee (per meeting)* $1,000
- --------------------------------------------------------------------------------
*Non-Employee directors are not compensated for attendance fees if a committee
meets on a day when a board meeting is taking place.
Employee directors do not receive additional compensation, other than their
normal salary, for their service as a director.
Non-Employee directors receive reimbursement of out-of-pocket expenses for
attending Board and committee meetings.
Option Awards to Non-Employee Directors and Other Compensation
Non-employee directors are entitled to receive non-incentive stock options to
purchase Checkpoint common stock under the Stock Option Plan (1992), but no
director may be awarded Options for an aggregate of more than 10% of the Option
or Options under the Stock Option Plan. Effective with the 1997 Shareholders'
Meeting each non-employee director is to receive, upon his initial election as a
director, and upon his subsequent re-election as a director, non-incentive stock
options for 10,000 shares.
In February 1999 the Board of Directors expanded the role of the Executive
Committee (Messrs. Censits, Clark and Lyons) to include direct participation
with the CEO in the pursuit of strategic alternatives to enhance shareholder
value. This activity resulted among other things in the acquisition of Meto AG.
The Executive Committee will continue to pursue the enhancement of shareholder
value via strategic steps, including future acquisitions. As compensation for
this expanded responsibility, the Board approved (with members of the Executive
Committee abstaining) a one-time payment of $150,000 to each Executive Committee
member, with $100,000 paid in 1999, and the balance to be paid in 2000. The
previously approved grant of performance warrants for the Executive Committee
were cancelled by the Board of Directors.
11
<PAGE>
Other Agreements
Effective January 1, 1995, the Company entered into an agreement with Mr. Wolf.
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 paid the sum
of $125,000 in five equal installments of $25,000 each beginning January 1, 1995
to Mr. Wolf for his agreement not to compete.
PRINCIPAL SHAREHOLDERS
OWNERS OF MORE THAN 5%
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 16, 2000. 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.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent of Common Stock (1)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Crabbe Huson Group, Inc.(1) 1,685,635 5.59%
121 SW Morrison, Suite 1400
Portland, Oregon 97204
- -----------------------------------------------------------------------------------------------
Westport Asset Management, Inc. (1) 2,414,200 8%
253 Riverside Avenue
Westport, Connecticut 06880
- -----------------------------------------------------------------------------------------------
Merrill Lynch, & Co., Inc. (1) 1,946,556 6.45%
250 Vesey Street
World Financial Center N.Tower
New York, NY 10381
- -----------------------------------------------------------------------------------------------
Dimensional Fund Advisors, Inc. 1,632,400 5.41%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) As reported on Schedules 13G filed with the Securities and Exchange
Commission ("SEC") on: (i) February 3, 2000 in the case of Crabbe Huson
Group, Inc.; (ii) February 16, 2000 in the case of Westport Asset
Management, Inc.; (iii) February 7,2000 in the case of Merrill Lynch & Co.,
Inc.; and (iv) February 3, 2000 in the case of Dimensional Fund Advisors,
Inc.
12
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
This table shows the number of shares of Checkpoint Common Stock owned by each
director, the Company's Chief Executive Officer and the four other most highly
compensated executive officers and other executive officers as of March 1, 2000.
Each person named below has sole voting power and sole investment power with
respect to the shares indicated as beneficially owned, unless otherwise stated.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership (1) Percent of Common Stock
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Roger D. Blackwell 113,556 (2) .38%
- -----------------------------------------------------------------------------------------------------
Richard J. Censits 35,000 (3) .12%
- -----------------------------------------------------------------------------------------------------
David W. Clark, Jr. 149,306 (4) .50%
- -----------------------------------------------------------------------------------------------------
Alan R. Hirsig 15,000 (5) .05%
- -----------------------------------------------------------------------------------------------------
William P. Lyons, Jr. 83,200 (6) .28%
- -----------------------------------------------------------------------------------------------------
Kevin P. Dowd 571,587 (7) 1.90%
- -----------------------------------------------------------------------------------------------------
William J. Reilly, Jr. 245,218 (8) .81%
- -----------------------------------------------------------------------------------------------------
Michael E. Smith 221,156 (9) .73%
- -----------------------------------------------------------------------------------------------------
Jeffrey A. Reinhold 148,665 (10) .49
- -----------------------------------------------------------------------------------------------------
Luis A. Aguilera 320,000 (11) 1.06%
- -----------------------------------------------------------------------------------------------------
All Directors and Officers as a Group 2,034,303 (12) 6.75%
(12 persons)
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) Unissued shares subject to options exercisable within 60 days of March 1,
2000 are deemed to be outstanding for the purpose of calculating the
percent of Common Stock beneficially owned.
(2) Includes 103,356 Options and 200 shares purchased on behalf of Dr.
Blackwell as sole trustee under the Roger D. Blackwell Pension Plan.
(3) Includes 10,000 Options.
(4) Includes 79,356 Options.
(5) Consists of 10,000 Options.
(6) Includes 10,000 Options and 40,000 shares purchased by JVL Corporation, a
corporation that is wholly owned by Mr. Lyons, and 18,000 shares purchased
on behalf of Mr. Lyons under an IRA account.
(7) Includes 533,334 Options and 32,000 shares owned by Mr. Dowd, 6,253 shares
of which are held by the custodian of the Company's Employees' Stock
Purchase Plan ("ESPP").
(8) Includes 230,000 Options and 15,218 shares owned by Mr. Reilly, 5,818
shares of which are held by the custodian of the ESPP.
(9) Includes 210,000 Options and 6,156 shares that are held by the custodian of
the ESPP.
(10) Includes 144,005 Options
(11) Includes 270,000 Options.
(12) See footnotes 1-12 above. Total shown includes 23,749 shares held by the
custodian of the ESPP.
13
<PAGE>
EXECUTIVE COMPENSATION
Cash, Bonus and Deferred Compensation
This table shows for the last three fiscal years, compensation information for
the Company's Chief Executive Officer and the named executive officers as
required under the rules of the SEC.
<TABLE>
<CAPTION>
Summary Compensation Table
- ----------------------------------------------------------------------------------------
Long Term
Annual Compensation Compensation
- ----------------------------------------------------------------------------------------
Salary Bonus Stock Options
Name and Principal Position Year ($) (1) ($) (2)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kevin P. Dowd 1999 454,126 0 120,000
President, Chief Executive 1998 427,341 0 100,000
Officer and Director 1997 387,787 0 200,000
- ----------------------------------------------------------------------------------------
William J. Reilly, Jr. 1999 280,351 0 50,000
Executive Vice President 1998 260,230 0 75,000
1997 233,392 0 100,000
- ----------------------------------------------------------------------------------------
Michael E. Smith 1999 270,860 0 50,000
Executive Vice President 1998 239,793 0 75,000
1997 221,101 0 100,000
- ----------------------------------------------------------------------------------------
Jeffrey A. Reinhold 1999 223,441 0 50,000
Senior Vice President, Chief 1998 196,863 0 95,000
Administration Officer, Chief 1997 180,814 0 35,000
Financial Officer and Treasurer
- ----------------------------------------------------------------------------------------
Luis A. Aguilera 1999 216,048 0 10,000
Senior Vice President, 1998 210,010 0 15,000
Manufacturing 1997 194,079 0 100,000
- ----------------------------------------------------------------------------------------
</TABLE>
(1) Amounts shown in the "Salary" column include payments under the:
o Company's Executive Supplemental Plan, a plan adopted in 1991 for those of
its highly compensated officers whose participation in the Company's 401(K)
savings plans may be limited by applicable Internal Revenue Service
regulations;
o Checkpoint Systems, Inc. Employee Stock Purchase Plan;
o Checkpoint Systems of Puerto Rico, Inc. Employee Savings Plan, but only as
to Mr. Aguilera. Mr. Aguilera does not participate in either the Company's
Employee Stock Purchase Plan or the Executive Supplemental Plan.
14
<PAGE>
(2) 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), described under the caption "Compensation and Stock
Option Committee Report on Executive Compensation."
The table above does not include columns for Restricted Stock Awards, Long-Term
Incentive Plan Payouts, Other Annual Compensation and All Other Compensation.
Checkpoint had no amounts to report in the columns for Restricted Stock Awards
and Long-Term Incentive Plan Payouts. The amount of Other Annual Compensation
paid to the named executive officers was in each case for perquisites which are
not reportable since they did not exceed the lesser of $50,000 or 10% of salary
and bonus as reported for each named executive officer. Amounts reportable as
All Other Compensation are reported in the "Salary" column.
Stock Option Awards in 1999
The table below shows stock option grants to the Company's Chief Executive
Officer and named executive officers in 1999.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
- --------------------------------------------------------------------------------------------------------------------
Potential Realizable
Number of Value at Assumed
Securities % of Total Annual Rates of Stock
Underlying Options/SAR's Price Appreciation
Options/SAR's Granted to Exercise or For Option Term (2) (3)
Granted Employees in Base Price Expiration -------------------------
Name (#) (1) Fiscal Year ($/Share) Date 5% ($) 10% ($)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Kevin P. Dowd 26,447 2.8888 7.56 12/09/2009 125,782 318,757
93,553 10.2188 7.56 06/09/2010 473,320 1,216,880
- --------------------------------------------------------------------------------------------------------------------
William J. Reilly 26,447 2.8888 7.56 12/09/2009 125,782 318,757
23,553 2,5727 7.56 06/09/2010 119,164 306,363
- --------------------------------------------------------------------------------------------------------------------
Michael E. Smith 26,447 2.888 7.56 12/09/2009 125,782 318,757
23,553 2,5727 7.56 06/09/2010 119,164 306,363
- --------------------------------------------------------------------------------------------------------------------
Jeffrey A. Reinhold 17,687 1.9319 7.56 12/09/2009 84,120 213,176
32,313 3.5295 7.56 06/09/2010 163,484 420,308
- --------------------------------------------------------------------------------------------------------------------
Luis A. Aguilera 6,667 0.7282 7.56 12/09/2009 31,708 80,355
3,333 0.3641 7.56 06/09/2010 16,863 43,364
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The top figure, where applicable, reflects an incentive stock option and
the bottom figure(s) reflects a non-incentive stock option. Under the
Checkpoint Systems, Inc. Stock Option Plan (1992) options granted prior to
July 23, 1997 are exercisable immediately (subject to a six-month holding
requirement in the case of management subject to Section 16 of the
Securities Exchange Act of 1934). The term of the incentive stock options
is ten years and the term for non-incentive stock options is ten years and
six months. In July 1997, the Compensation and Stock Option Committee
declared that all options issued under the Company's Stock Option Plan
(1992) on or after July 23, 1997 to persons with the title of vice
president or above were to vest over a period of three years at a rate of
33% per year. Options issued to persons with a title other than vice
president or above are to vest over a period of two years at a rate of 34%
15
<PAGE>
upon the first anniversary of the grant, 33% upon 18 months after the
anniversary date; and 33% upon the second anniversary date.
(2) Represents a 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
The table below shows stock option exercises and the value of unexercised
stock options held by the Company's Chief Executive Officer and the named
executive officers.
<TABLE>
<CAPTION>
Aggregated Option Exercises in 1999 and Fiscal Year-End Option Values
- --------------------------------------------------------------------------------------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SAR's Options/SAR's
At FY-End(#)(2) At FY-End($)(3)
Shares Acquired Value Exercisable/ Exercisable/
Name On Exercise (#) ($)(1) Unexercisable Unexercisable
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kevin P. Dowd 0 0 533,334/236,666 153,130/176,256
- --------------------------------------------------------------------------------------------------
William J. Reilly, Jr. 0 0 230,000/125,000 0/73,440
- --------------------------------------------------------------------------------------------------
Michael E. Smith 0 0 210,000/125,000 0/73,440
- --------------------------------------------------------------------------------------------------
Jeffrey A. Reinhold 0 0 144,005/119,999 0/73,440
- --------------------------------------------------------------------------------------------------
Luis A. Aguilera 0 0 270,000/45,000 31,252/14,688
- --------------------------------------------------------------------------------------------------
</TABLE>
(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.
16
<PAGE>
(3) The first number represents the value based on the stock price at fiscal
year-end of exercisable but unexercised options; the second number
represents the value of unexercisable options.
Employment Agreements
In March, 1999, the Company renewed and amended the original Employment
Agreements of Messrs. Reilly, Reinhold and Smith for an additional term of two
years terminating July 2001. In May 1999 the Company renewed and amended the
original Employment Agreement of Mr. Aguilera for an additional term of two
years terminating July 2001. The Agreements for Messrs. Aguilera, Reilly,
Reinhold and Smith state that upon termination of employment, in certain
circumstances, the executive would be entitled to severance pay for a period of
eighteen months base salary plus health insurance benefits during such period.
If a change-of-control of the Company should take place, as defined in the
Agreement and the Agreement is not assumed, or if the responsibilities of the
executive should change, the executive could receive severance payments under
the Agreement.
In March 1999, the Company amended Mr. Dowd's Employment Agreement to provide
for amended "change-in-control" definitions and related items.
In July 1998, the Company entered into a three year Employment Agreement with
Mr. Dowd, who is also a Director of the Company. Mr. Dowd's agreement states
that should employment terminate, in certain circumstances, Mr. Dowd would be
entitled to severance pay of twenty-four months of base salary. Should a
change-in-control of the Company take place, as defined in the Agreement and the
Agreement is not assumed, or if the responsibilities of Mr. Dowd should change,
in conjunction with a change-of-control then he could receive severance payments
under the Agreement of thirty-six months of base salary.
Each Agreement provides for a two year non-compete period by the executive
beginning on the date of termination of employment from the Company.
17
<PAGE>
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee of the Board of Directors has
furnished the following report on executive compensation:
General
Under the supervision of the Compensation and Stock Option 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 Committee (based on a review of various analytical
data secured from outside consultants) believes to be salary levels paid to
senior management of similar sized companies with comparable responsibilities.
Annual base salary and longer term incentive compensation provide 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 contributions, 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 1999, Mr. Dowd's
compensation was formulated by the Committee based on these factors and that
continued advancements in technology and market penetration would be required in
1999 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 1999 was set at
$400,010. Mr. Dowd was given the right to participate in the 1999 Bonus Plan
(see below). Mr. Dowd's targeted percentage was 160% and adjusted based on
earnings per share growth. Mr. Dowd did not receive a payment under the 1999
Bonus Plan for the fiscal year 1999.
18
<PAGE>
While the targeted earnings per share growth plan was not achieved for
1999, the Company did complete the acquisition of Meto AG, creating a new
platform for the Company as a global designer, manufacturer and marketer of
identification and security products. The Committee considered these factors,
among others, and set Mr. Dowd's base salary for 2000 at $500,000. Mr. Dowd was
also given the right to participate in the 2000 Bonus Plan, which is
substantially similar to the 1999 Bonus Plan.
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 1999 Bonus Plan, discretionary management bonuses and the Stock Option
Plan.
For 1999 the Board of Directors approved the 1999 Bonus Plan. The 1999
Bonus Plan provides for a Bonus Pool to be formed when earnings per share
("EPS") increases over a defined target. The Bonus Pool is then apportioned
among four (4) groups of employees; corporate officers; vice presidents, middle
management and front line employees. Each group has a targeted bonus percentage
assigned which is adjusted, depending on the percentage increase or decrease
over the targeted EPS growth. Other than for Messrs. Aguilera, Dowd, Reilly,
Reinhold and Smith, whose bonuses are determined solely on the basis of
financial performance of the Company, all participants will have a percentage of
their bonuses determined by individual performance. No Bonus Pool will be formed
unless 1999 EPS attains a specified level. The specified minimum target for EPS
was not attained for the fiscal year 1999 and therefore no bonuses were paid. No
discretionary bonuses were paid for the fiscal year 1999.
In order to provide incentives to employees over the longer term, the
Company maintains the Stock Option Plan (1992) ("Stock Option Plan"). At various
times during the year, the Committee grants options to purchase the Company's
Common Stock under the Stock Option Plan. Under the Stock Option Plan, as most
recently approved by the Shareholders at the 1997 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 as set forth in the Stock Option Plan. The maximum number of shares
available for option under the Plan from its inception is 12,000,000; 1,338,149
remain available for grant thereunder as of March 1, 2000. The Committee
believes that the Stock Option 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.
Stock option awards under the Stock Option Plan typically are granted
annually. In fixing the grants of stock options to the individual senior
management group during 1999, including the Named Executive 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
Stock Option Plan. Any awards to the Chief
19
<PAGE>
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 it's past grants of options and the Profit
Incentive Plan have successfully focused the Company's senior management on
9building profitability and shareholder value.
The foregoing report submitted by:
Roger D. Blackwell
Alan R. Hirsig
Raymond R. Martino
20
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph assumes the investment of $100 in Checkpoint Systems, Inc.
Common Stock on December 23, 1994, the Center for Research in Security Prices
Index ("CRSP Index") for NYSE/AMEX/NASDAQ Stock market, and the CRSP Index for
NYSE/AMEX/NASDAQ Electronic Components and Accessories.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
NYSE/AMEX/NASDAQ
NYSE/AMEX/NASDAQ Electronic Components
Year Checkpoint Systems, Inc. Stock Market Index And Accessories Index
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
1994 100.00 100.00 100.0
- ----------------------------------------------------------------------------------------
1995 189.7 135.9 161.2
- ----------------------------------------------------------------------------------------
1996 246.2 167.4 246.0
- ----------------------------------------------------------------------------------------
1997 165.4 209.3 258.3
- ----------------------------------------------------------------------------------------
1998 119.9 264.4 394.5
- ----------------------------------------------------------------------------------------
1999 93.6 329.7 773.3
- ----------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
SUBMISSION OF PROPOSALS FOR THE 2001 ANNUAL MEETING
Shareholders of the Company are entitled to submit proposals on matters
appropriate for shareholder action consistent with regulations of the SEC and
the Company's By-Laws. Should a shareholder wish to have a proposal considered
for inclusion in the proxy statement for the Company's 2001 Annual Meeting, the
proposal must be received at the Company's offices no later than December 7,
2000.
In connection with the Company's 2001 Annual Meeting, if the shareholders'
notice is not received by the Company on or before February 19, 2001, the
Company (through management proxy holders) may exercise discretionary voting
authority when the proposal is raised at the annual meeting without any
reference to the matter in the proxy statement.
All shareholder proposals and notices should be directed to the Secretary of the
Company at 101 Wolf Drive, Thorofare, New Jersey 08086.
COST OF SOLICITATION
The Company pays for distributing and soliciting proxies and reimburses brokers,
nominees, fiduciaries and other custodian's reasonable fees and expenses in
forwarding proxy materials to shareholders. The Company is not using an outside
proxy solicitation firm this year, but employees of the Company or its
subsidiaries may solicit proxies through mail, telephone or other means.
Employees do not receive additional compensation for soliciting proxies.
ANNUAL REPORT ON FORM 10-K
The Company will provide, without charge, a copy of the Company's Annual Report
on Form 10-K as filed with the SEC, on written request. Written request should
be directed to the Secretary of the Company at 101 Wolf Drive, Thorofare, New
Jersey 08086.
By Order of the Board of Directors
Neil D. Austin
Vice President, General Counsel
and Corporate Secretary
22
<PAGE>
Checkpoint Systems' Shareholder Direct Service provides timely information about
corporate financial results and other matters of interest to shareholders.
Through this service, you can hear recorded summaries of major news developments
at Checkpoint Systems, including quarterly earnings releases, and request copies
of our financial documents by fax or mail.
This service is available 24 hours a day, seven days a week. We hope you will
use the service to stay informed about important developments at Checkpoint
Systems. The toll free number is: 877-CKP-NEWS or 877-257-6397.
Please also visit our new enhanced Financials section of our corporate web site
at: www.checkpointsystems.com. This site will include updated stock quotes and
charts, historical closing price information, archived SEC filings, and the
ability to receive our news and earnings releases automatically via e-mail.
23
<PAGE>
DIRECTIONS TO THE UNION LEAGUE OF PHILADELPHIA
140 South Broad Street
Philadelphia, Pennsylvania
From the North
- --------------
Follow I-95 South to Exit 17. Take 676 West/Central Phila Exit. Follow 676 West
to the first exit which is Broad Street/Central Phila. This exit will bring you
onto 15th Street. ** Continue on 15th Street until you see City Hall on your
left. Bare left around City Hall. Make a right at the first light which is Broad
Street. Take Broad Street two blocks to Sansom Street. Union League is on the
right. Make right on Sansom Street for parking garage.
From the South
- --------------
Follow I-95 North to Exit 17. Follow signs for 676 West/Central Phila Exit.
follow 676 West to the first exit which is Broad Steet/Central Phila. This exit
will bring you onto 15th Street. Continue following as above**.
From the East
- -------------
Benjamin Franklin Bridge to 676 West/Central Phila Exit. You will get on 676
West, then take the first exit, which is Broad Street/Central Phila exit. This
exit will bring you onto 15th Street. Continue on 15th and follow as above**.
From the West
- -------------
Take the PA Turnpike to Exit 24 which is the Valley Forge Exit. When you get off
take 76 East to Exit 38 which is 676 East/Central Phila. Stay in right hand
lanes as you exit so you can make a right at the light which is 15th Street.
Continue on 15th and follow as above**.
24
<PAGE>
APPENDIX B
CHECKPOINT SYSTEMS, INC.
ANNUAL MEETING OF SHAREHOLDERS - MAY 4, 2000
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
Thursday, May 4, 2000, at 10:00 a.m., at the Union League of Philadelphia,
Philadelphia, Pennsylvania, 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)
25
<PAGE>
PLEASE MARK YOUR
[X] VOTES AS IN THIS
EXAMPLE
FOR all of the
nominees for WITHHOLD
Class III AUTHORITY
Director listed, To vote for
1. ELECTION except as all nominees NOMINEES: Kevin P. Dowd
OF marked to the Alan R. Hirsig
CLASS III contrary below)
DIRECTORS
For, except vote withheld from the following nominees:
- ----------------------------------------
2. 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 III DIRECTORS.
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.
26
