<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
INFORMATION STATEMENT
PURSUANT TO SECTION 14(F) OF THE
SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
------------------------
THE COLEMAN COMPANY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 1-988 13-3639257
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (IRS EMPLOYER
INCORPORATION) IDENTIFICATION NO.)
</TABLE>
------------------------
2111 EAST 37TH STREET NORTH
WICHITA, KANSAS 67219
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(316) 832-2700
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
- --------------------------------------------------------------------------------
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<PAGE>
THE COLEMAN COMPANY, INC.
2111 EAST 37TH STREET NORTH
WICHITA, KANSAS 67219
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INFORMATION STATEMENT PURSUANT TO SECTION 14(F) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND RULE 14F-1 THEREUNDER
- --------------------------------------------------------------------------------
This Information Statement is being mailed on or about March 18, 1998 to
holders of record as of March 18, 1998 of shares of Common Stock, par value $.01
per share ('Company Common Stock' or 'Coleman Common Stock'), of The Coleman
Company, Inc., a Delaware corporation (the 'Company' or 'Coleman'), in
connection with (i) the election of persons designated by Sunbeam Corporation, a
Delaware corporation ('Sunbeam'), as directors of the Company otherwise than at
a meeting of the stockholders of the Company and (ii) the resignation of the
current directors of the Company, in each case, pursuant to an Agreement and
Plan of Merger, dated as of February 27, 1998 (the 'Holdings Merger Agreement'),
among Sunbeam, Laser Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Sunbeam ('LAC'), Coleman (Parent) Holdings Inc., a Delaware
corporation ('Parent Holdings'), and CLN Holdings Inc., a Delaware corporation
and a wholly owned subsidiary of Parent Holdings ('CLN Holdings'). CLN Holdings
is an indirect wholly owned subsidiary of Mafco Holdings Inc., a corporation
wholly owned by Ronald O. Perelman ('Mafco'), and is the indirect beneficial
owner of 44,067,520 shares of Company Common Stock, representing approximately
82.4% of the total number of outstanding shares.
Pursuant to the Holdings Merger Agreement, LAC will be merged with CLN
Holdings (the 'Holdings Merger'). In the Holdings Merger, all of the outstanding
shares of capital stock of CLN Holdings will be converted into the right to
receive (i) 14,099,749 fully paid nonassessable shares of common stock, par
value $.01 per share, of Sunbeam ('Sunbeam Common Stock') and (ii) $159,956,756
in cash, without interest thereon. As a result of the Holdings Merger, CLN
Holdings will become a wholly owned subsidiary of Sunbeam and Sunbeam will
become the indirect owner of approximately 82.4% of the outstanding Company
Common Stock.
At the same time that it entered into the Holdings Merger Agreement,
Sunbeam also entered into an Agreement and Plan of Merger, dated as of February
27, 1998 (the 'Company Merger Agreement'), with the Company and Camper
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Sunbeam ('CAC'). Pursuant to the Company Merger Agreement, following the
consummation of the Holdings Merger, CAC will be merged with the Company (the
'Company Merger'). In the Company Merger, each outstanding share of Company
Common Stock (other than shares held indirectly by Sunbeam including through
Coleman Worldwide Corporation ('Coleman Worldwide') and dissenting shares, if
any) will be converted into the right to receive (i) 0.5677 of a share of
Sunbeam Common Stock and (ii) $6.44 in cash, without interest thereon. Upon
consummation of the Company Merger, the Company will become a wholly owned
subsidiary of Sunbeam.
Consummation of the Holdings Merger is subject to the expiration of the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the satisfaction of certain other customary conditions.
It is currently anticipated that the Holdings Merger will be completed later
this month or early next month. Consummation of the Company Merger is subject to
the completion of the Holdings Merger and the filing of certain definitive
documents required in connection therewith with the Securities and Exchange
Commission. It is anticipated that the Company Merger will be consummated later
this Spring. Neither the Holdings Merger nor the Company Merger is conditioned
upon approval of Sunbeam's or the Company's stockholders.
Additional information with respect to the Holdings Merger and the Company
Merger and the shares of Sunbeam Common Stock to be received by the Company's
stockholders in the Company Merger will be contained in an Information Statement
and Prospectus to be mailed to all holders of Company Common Stock prior to the
consummation of the Company Merger.
Pursuant to the Holdings Merger Agreement, all current members of the
Company's board of directors will remain as directors until the consummation of
the Holdings Merger, at which time they will resign from their positions as
directors of the Company, and up to six individuals designated by Sunbeam will
become directors of
<PAGE>
the Company. Sunbeam has elected to designate five individuals to become
directors of the Company (the 'Sunbeam Designees'), and information with respect
to the Sunbeam Designees is set forth below.
No action is required on the part of the stockholders of the Company in
order to effect the election of the Sunbeam Designees. Nevertheless, Section
14(f) of the Securities Exchange Act of 1934, as amended (the 'Exchange Act'),
requires the mailing to the Company's stockholders of the information set forth
in this Information Statement at least ten days prior to a change in a majority
of the Company's directors otherwise than at a meeting of the Company's
stockholders. As of March 3, 1998, there were 53,610,950 shares of Company
Common Stock outstanding, the holders of which shares are entitled to cast one
vote per share on all matters submitted to a vote of stockholders.
The information contained in this Information Statement concerning the
Sunbeam Designees and the information set forth in the section entitled 'Source
and Amount of Funds for Change in Control' has been furnished to the Company by
Sunbeam and the Company assumes no responsibility for such information. The
principal executive offices of the Company are located at 2111 East 37th Street
North, Wichita, Kansas 67219, and the principal executive offices of Sunbeam are
located at 1615 South Congress Avenue, Suite 200, Delray Beach, Florida 33445.
INFORMATION REGARDING DIRECTORS TO BE DESIGNATED BY SUNBEAM
As described below, the Sunbeam Designees are officers and/or directors of
Sunbeam. None of the Sunbeam Designees is a director of, or holds any position
with, the Company, and none of the Sunbeam Designees owns any shares of Company
Common Stock. The name, age, present principal occupation or employment and
five-year employment history of each of the Sunbeam Designees are set forth
below. Each Sunbeam Designee's term of office as a director of the Company will
expire after a period of one year or at the time such Sunbeam Designee's
successor is duly elected and shall have qualified. Unless otherwise indicated,
the business address of each of the Sunbeam Designees is Sunbeam Corporation,
1615 South Congress Avenue, Suite 200, Delray Beach, Florida 33445. Each of the
Sunbeam Designees is a citizen of the United States.
Albert J. Dunlap, age 60, has been Chairman and Chief Executive Officer of
Sunbeam since July 18, 1996. From April 1994 to December 1995, he was Chairman
and Chief Executive Officer of Scott Paper Company. From 1991 to 1993, Mr.
Dunlap was the Managing Director and Chief Executive Officer of Consolidated
Press Holdings Limited (an Australian media, chemicals and agricultural
operation).
Charles M. Elson, age 38, has been a Director of Sunbeam since his
appointment to the Sunbeam Board of Directors on September 25, 1996. Mr. Elson
has been a Professor of Law at Stetson University College of Law since 1990 and
serves as Of Counsel to the law firm of Holland & Knight (since May 1995). He is
also a Member of the American Law Institute and Advisory Council and Commission
on Director Compensation and Director Professionalism of the National
Association of Corporate Directors. Mr. Elson is a Trustee of Talledega College
and a Salvatori Fellow of the Heritage Foundation. Mr. Elson has served as a
Director of Circon Corporation (a medical manufacturer) since October, 1997. Mr.
Elson's business address is Stetson University College of Law, 1401 61st Street
South, St. Petersburg, Florida 33707.
David C. Fannin, age 52, has been Executive Vice President, General Counsel
and Secretary of Sunbeam since January 1994. From 1979 until 1993, Mr. Fannin
was a partner in the law firm of Wyatt, Tarrant & Combs, Louisville, Kentucky.
Russell A. Kersh, age 44, has been Vice Chairman and Chief Financial
Officer of Sunbeam since February 1, 1998, and has been a Director of Sunbeam
since his appointment on August 6, 1996. He served as Executive Vice President,
Finance and Administration of Sunbeam from July 22, 1996 to January 1998. From
June 1994 to December 1995 he was Executive Vice President, Finance and
Administration of Scott Paper Company. Mr. Kersh served as Chief Operating
Officer of Adidas America from January 1993 to May 1994.
Peter A. Langerman, age 42, has been a Director of Sunbeam since 1990 and
served as the Chairman of the Board of Directors of Sunbeam from May 22, 1996
until July 18, 1996. Since November 1996, Mr. Langerman has been Senior Vice
President and Chief Operating Officer of Franklin Mutual Advisers, Inc., a
registered investment advisor and a wholly owned subsidiary of Franklin
Resources, Inc., a diversified financial services
2
<PAGE>
organization. Mr. Langerman was a Senior Vice President of Heine Securities
Corporation, an investment advisory service company, from 1986 to November 1996,
and a Vice President of Mutual Series Fund from 1988 until its acquisition by
Franklin Resources, Inc. in 1996. He has been a Director of Franklin Mutual
Series Fund, Inc. (previously Mutual Series Fund Inc.) since 1988 and a Director
of Metallurg Inc. (a metals and related materials manufacturer) since 1997. Mr.
Langerman's business address is Franklin Mutual Advisers, Inc., 51 John F.
Kennedy Parkway, Short Hills, New Jersey 07078.
INFORMATION REGARDING CURRENT DIRECTORS OF COLEMAN
The name, age, present principal occupation or employment, five-year
employment history, selected biographical information, and period of service as
a director of the Company of each of the current directors of the Company are
set forth below.
Ronald O. Perelman, age 55, a director of the Company since 1989, has been
Chairman of the Board and Chief Executive Officer of Mafco, MacAndrews & Forbes
Holdings Inc. and various of its affiliates since 1980. Mr. Perelman is also
Chairman of the Executive Committee of the Board of Consolidated Cigar Holdings
Inc. ('Cigar Holdings'), M&F Worldwide Corporation, and Revlon, Inc. ('Revlon')
and Chairman of the Board of Meridian Sports Incorporated ('Meridian'). Mr.
Perelman is also a director of the following corporations which file reports
pursuant to the Exchange Act: California Federal Bank, A Federal Savings Bank,
CLN Holdings, Coleman Worldwide, Cigar Holdings, First Nationwide Holdings Inc.,
First Nationwide (Parent) Holdings Inc., Meridian, M&F Worldwide Corporation,
Revlon Consumer Products Corporation ('Revlon Products'), Revlon, and REV
Holdings Inc. ('REV Holdings'). (On December 27, 1996, Marvel Holdings Inc.,
Marvel (Parent) Holdings Inc. and Marvel Entertainment Group, Inc. ('Marvel'),
of which Mr. Perelman was then a director, and Marvel III Holdings Inc., of
which Mr. Perelman is a director, and several of the subsidiaries of Marvel
filed voluntary petitions for reorganization under Chapter 11 of the United
States Bankruptcy Code.)
Donald G. Drapkin, age 50, a director of the Company since 1989, has been a
director and Vice Chairman of MacAndrews & Forbes Holdings Inc. and various of
its affiliates since 1987. Mr. Drapkin was a partner in the law firm of Skadden,
Arps, Slate, Meagher & Flom in New York for more than five years prior to 1987.
Mr. Drapkin is also a director of the following corporations which file reports
pursuant to the Exchange Act: Coleman Worldwide, The Cosmetic Center, Inc.,
Revlon Products, Revlon, Algos Pharmaceutical Corporation, Black Rock Asset
Investors, Cardio Technologies, Inc., Genta, Inc., Playboy Enterprises, Inc.,
VIMRx Pharmaceuticals Inc., and Weider Nutrition International Inc. (On December
27, 1996, Marvel Holdings Inc., Marvel (Parent) Holdings Inc., and Marvel, of
which Mr. Drapkin was a director, and several of their subsidiaries and Marvel
III Holdings Inc., of which Mr. Drapkin is a director, filed voluntary petitions
for reorganization under Chapter 11 of the United States Bankruptcy Code.)
Frank Gifford, age 67, has been a Director of the Company since 1997. Mr.
Gifford has been a commentator with ABC Sports since 1997. (On December 27,
1996, Marvel, of which Mr. Gifford was a director, and several of its
subsidiaries filed voluntary petitions for reorganization under Chapter 11 of
the United States Bankruptcy Code.)
Lawrence M. Jones, age 66, has been a director of the Company since 1989.
Mr. Jones was Chairman and Chief Executive Officer of the Company from October
1990 to December 1993 and has been associated with the Company for more than 36
years, including serving as President and Chief Executive Officer from July 1989
to September 1990. Prior to rejoining the Company in 1989, Mr. Jones was Vice
Chairman and Chief Financial Officer of Fleming Companies, Inc. (distributor of
food products, health and beauty items) from December 1987 to June 1989. Mr.
Jones presently serves as a director of Union Pacific Resources, and was a
director of Fourth Financial Corporation until January 1996, of Fleming
Companies, Inc. until December 1996, and of Prince Sports Group, Inc. until
March 1997. Mr. Jones also served as Chairman of Rollerblade, Inc. from February
1996 to April 1997.
Ann D. Jordan, age 63, has been a director of the Company since June 1997.
Ms. Jordan is a consultant and a director of Johnson & Johnson, Automatic Data
Processing, Inc., The Travelers Corporation, and Salant Corporation. Ms. Jordan
also serves on the Board of Directors of the National Symphony Orchestra, Sloan
3
<PAGE>
Kettering Memorial Medical Center, Child Welfare League, Sasha Bruce Youthworks,
University of Chicago, Spellman College, The John F. Kennedy Center for the
Performing Arts and the SEC Consumer Affairs Advisory Commission. She was
formerly a Field Work Associate Professor at the School of Social Service
Administration of the University of Chicago and served as Director of the
Department of Social Services for the University of Chicago Medical Center.
Jerry W. Levin, age 53, has been Chairman and Chief Executive Officer of
the Company since February 1997, and a past Chairman of the Company from 1989 to
1991, and a director since 1989. Mr. Levin has been Chairman of the Board of
Revlon and of Revlon Products since their respective formations in 1992 and
Chairman of the Board of The Cosmetic Center, Inc., since April 1997. Mr. Levin
served as Chief Executive Officer of Revlon and of Revlon Products from 1992
until January 1997, and President of Revlon and of Revlon Products from their
respective formations in 1992 to November 1995. Mr. Levin has been Executive
Vice President of MacAndrews & Forbes Holdings Inc. since March 1989. For 15
years prior to joining MacAndrews & Forbes Holdings Inc. he held various senior
positions with The Pillsbury Company ('Pillsbury'). Mr. Levin is also a director
of the following corporations which file reports pursuant to the Exchange Act:
Coleman Worldwide, The Cosmetic Center, Inc., Ecolab Inc., U.S. Bancorp Inc.,
Meridian, Revlon, Revlon Products, and REV Holdings.
John A. Moran, age 65, has been a director of the Company since July 1996.
Mr. Moran currently serves as Chairman of Rutherford-Moran Oil Corporation. From
1967, Mr. Moran was affiliated with Dyson-Kissner-Moran Corporation, a private
holding company, serving in various executive positions including Chairman of
the Board, President and Chief Executive Officer, and Executive Vice President.
He is a director of Bessemer Securities Corporation. He is a member and former
Chairman of the National Advisory Council of the University of Utah, as well as
a member of World Presidents Organization, the Chief Executives Organization and
The Foreign Policy Association. He is a former director of the United Nations
Association and trustee of the Brooklyn Museum.
James D. Robinson, age 62, has been a director of the Company since June
1997. Mr. Robinson is Chairman and Chief Executive Officer of RRE Investors,
LLC, a private venture investment firm, and Chairman of Violy, Byorum & Partners
Holdings, LLC, a private firm specializing in financial advisory and investment
banking activities in Latin America. He previously served as Chairman, and Chief
Executive Officer of the American Express Company from 1977 to 1993. Mr.
Robinson is a Director of Bristol-Myers Squibb Company, Cambridge Technology
Partners, Inc., The Coca-Cola Company, First Data Corporation and Union Pacific
Corporation.
Bruce Slovin, age 62, a director of the Company since 1993, has been
President of MacAndrews & Forbes Holdings Inc., and various of its affiliates
since 1980. Mr. Slovin is also a director of the following corporations which
file reports pursuant to the Exchange Act: Cantel Industries, Inc., Coleman
Worldwide, Continental Health Affiliates, Inc., Infu-tech, Inc., Meridian and
M&F Worldwide Corporation.
William H. Spoor, age 75, has been a director of the Company since May
1992. Mr. Spoor retired in September 1985 as Chairman and Chief Executive
Officer of Pillsbury after 14 years in that position and 36 years with
Pillsbury. He returned to Pillsbury as Chairman of the Executive Committee in
September 1987, and resumed as Chairman, Chief Executive Officer and President
of Pillsbury in March 1988, from which he retired in August 1988. Mr. Spoor now
serves as Chairman Emeritus of Pillsbury and is in the business of personal
investments. He is a director of L & L Holdings and Inner City Tennis.
BOARD OF DIRECTORS AND ITS COMMITTEES
During 1997, the Board of Directors of Coleman met five times. The average
attendance of all directors at Board and Committee meetings during 1997 was 95%.
During 1997, Mr. Hammes, former Chief Executive Officer of the Company, missed
the one board meeting held while he was still a director.
The Committees established by the Board to assist it in the discharge of
its responsibilities are the Executive Committee, the Audit Committee, and the
Management Compensation and Stock Option Committee, all of which are described
below. The Company does not have a Nominating Committee.
The Executive Committee consists of four members, Messrs. Perelman,
Drapkin, Levin, and Slovin. The Executive Committee is authorized and empowered
to act on behalf of and in place of the Board of Directors to
4
<PAGE>
exercise all the power and authority of the Board of Directors consistent with
the Certificate of Incorporation and By-laws of the Company and the General
Corporation Law of the State of Delaware. The Executive Committee took action by
unanimous written consent seven times during 1997 and did not meet during 1997.
The Audit Committee consists of three members, Messrs. Moran, Jones, and
Spoor, all of whom are directors who are not receiving compensation as employees
of the Company or its affiliates. The Audit Committee provides assistance to the
Board in fulfilling its responsibilities to the stockholders, potential
stockholders, and the investment community relating to corporate accounting and
reporting practices, and the quality and integrity of the financial reports. In
carrying out these responsibilities, the Audit Committee reviews and recommends
the selection of the Company's independent public accountants to the Board,
meets with the independent public accountants and management to review proposed
audits, reviews adequacy and effectiveness of accounting and financial controls
of the Company, and gives recommendations for the improvement of such internal
control procedures. The Audit Committee met five times during 1997.
The Management Compensation and Stock Option Committee (the 'Compensation
Committee') consists of four members, Ms. Jordan and Messrs. Robinson, Drapkin,
and Slovin, none of whom is an officer or employee of the Company and each of
whom is ineligible to participate in any of the Company's executive compensation
plans. The Compensation Committee's responsibilities include approving
compensation policies and determining compensation for all of the Company's
Board-elected officers, except junior officers; determining the eligibility of
participants and the amount of all stock options and/or stock appreciation
rights granted to any employee of the Company pursuant to the terms of the
Company's stock option plans, as well as administering and interpreting those
plans; and administering and overseeing The Coleman Company, Inc. Executive
Annual Incentive Plan (the 'Incentive Plan'). The Compensation Committee took
action by unanimous written consent four times and met seven times during 1997.
COMPENSATION OF DIRECTORS
Directors who are not currently receiving compensation as employees of the
Company or any of its affiliates are paid an annual retainer fee of $25,000 and
are reimbursed for reasonable out-of-pocket expenses incurred in connection with
Company business. In addition, such directors receive a fee of $1,000 for each
meeting of the Board of Directors or any committee meetings they attend.
EXECUTIVE OFFICERS AND MANAGEMENT
The following table sets forth as of the date hereof the executive officers
of the Company.
<TABLE>
<CAPTION>
NAME POSITION
- ---- --------
<S> <C>
Jerry W. Levin...................... Chairman and Chief Executive Officer
Mark Goldman........................ Executive Vice President (Chairman--Eastpak)
Patrick McEvoy...................... Executive Vice President (President--Coleman Safety & Security Products)
Joseph P. Page...................... Executive Vice President and Chief Financial Officer
David A. Ramon...................... Executive Vice President (President--Outdoor Recreation Group)
Paul E. Shapiro..................... Executive Vice President and General Counsel
David K. Stearns.................... Executive Vice President (President--Coleman Powermate)
James L. Rasmus..................... Senior Vice President--Human Resources
Karen Clark......................... Vice President--Finance
</TABLE>
5
<PAGE>
The following sets forth the age, position with the Company, and selected
biographical information for the executive officers of the Company who are not
directors.
Mark Goldman, age 43, has been Executive Vice President since April 1995
and President of Eastpak since 1978. He joined Eastpak in 1976.
Patrick McEvoy, age 47, has been Executive Vice President since March 1996
and President of Coleman Safety & Security Products, Inc. since January 1996. He
joined Coleman in April 1994 as the Senior Vice President of Product Development
and Operations for the Company's North American Recreation business unit. Prior
to joining Coleman, he served as Vice President of Black & Decker Corporation
from 1990 to 1994, and Vice President for the Chrysler Corporation from 1988 to
1990.
Joseph P. Page, age 44, joined the Company in August 1997 as Executive Vice
President and Chief Financial Officer. Since December 1993, Mr. Page has served
as Executive Vice President and Chief Financial Officer of Andrews Group
Incorporated ('Andrews Group'). From December 1993 through January 1997, Mr.
Page was Executive Vice President and Chief Financial Officer of New World
Communications Group. Prior to his employment with Andrews Group, Mr. Page was a
partner in the accounting firm of Price Waterhouse for more than five years.
David A. Ramon, age 42, has been Executive Vice President since May 1997.
Prior to joining the Company, Mr. Ramon was a Director, President, and Chief
Operating Officer for New World Television Incorporated from 1995 to 1997, and
Executive Vice President and Chief Financial Officer for Gillett Holdings, Inc.
from 1985 to 1994.
Paul E. Shapiro, age 56, has been Executive Vice President and General
Counsel of the Company since July 1997. Mr. Shapiro has been an Executive Vice
President of Andrews Group since 1994, and from January 1994 to June 1997,
served as the Executive Vice President and General Counsel of Marvel. Prior to
January 1994, Mr. Shapiro was a shareholder in the law firm of Greenberg,
Traurig, Hoffman, Lipoff, Rosen & Quental from 1991 to 1993, and is currently Of
Counsel to that firm. Mr. Shapiro is a director of Toll Brothers, Inc. (On
December 27, 1996, Marvel, of which Mr. Shapiro was an executive officer and
director, and several of subsidiaries of Marvel, filed voluntary petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code.)
David K. Stearns, age 50, has been Executive Vice President since January
1995, and Senior Vice President--Marketing from October 1991 to January 1995. He
joined the Company in 1976 and has served in various positions, including Vice
President/General Manager--Import Division from 1985 to 1990.
James L. Rasmus, age 45, joined the Company in April 1997 as Senior Vice
President--Human Resources. Prior to joining Coleman, Mr. Rasmus was the
Executive Project Director, Shared Services for Tenneco. He has also held senior
human resource positions with Case Corporation, United Technologies and Xerox
Corporation.
Karen Clark, age 37, has been Vice President--Finance since July 1997.
Prior to joining Coleman, Ms. Clark served as Corporate Controller for Precision
Castparts Corp. from 1994 to 1997. She was also Manager--Corporate Planning for
Tektronix from 1990 to 1994. Ms. Clark is a member of the Financial Executives
Institute and the American Institute of Certified Public Accountants.
All of the executive officers serve at the pleasure of the Board.
6
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SUMMARY COMPENSATION TABLE
The following table sets forth information concerning annual, long term and
other compensation of the Company's Chief Executive Officer and the next four
most highly-compensated executive officers, and three of its former executive
officers.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------ ---------- -----------------------
SECURITIES
OTHER ANNUAL UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS PAYOUTS COMPENSATION
- ------------------------------- ---- -------- -------- ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jerry W. Levin (1) ............ 1997 $300,000 $300,000 $ 2,567 500,000 0 $ 0
Chairman and Chief Executive
Officer
David A. Ramon (2) ............ 1997 400,000 125,000 2,912 100,000 0 0
Executive Vice President
Mark Goldman (3) .............. 1997 250,000 0 6,300 40,000 0 4,230
Executive Vice President 1996 250,000 0 0 0 0 4,270
1995 250,000 0 0 20,000 0 4,492
David K. Stearns (4) .......... 1997 240,000 134,844 105,930 20,000 0 6,212
Executive Vice President 1996 222,500 0 16,899 25,000 0 4,455
1995 189,996 159,425 121,880 40,000 0 3,877
Patrick McEvoy (5) ............ 1997 200,000 0 72,675 0 0 4,064
Executive Vice President 1996 200,000 0 190,114 15,000 0 3,717
1995 190,000 159,290 38,305 20,000 0 794
Michael N. Hammes (6) ......... 1997 116,668 0 27,441 0 0 1,212,035
Former Chief Executive 1996 625,000 0 0 80,000 0 3,270
Officer 1995 600,000 891,103 163,590 100,000 0 3,117
Frederik van den Bergh (7) .... 1997 250,000 0 22,769 10,000 0 641,409
Former Executive Vice 1996 333,333 233,333 204,266 130,000 0 2,124
President
Steven Kaplan (8) ............. 1997 186,666 180,666 1,713 10,000 0 175,686
Former Executive Vice 1996 116,667 50,000 31,592 125,000 0 501
President
</TABLE>
- ------------------
(1) 'Bonus' in 1997 includes $300,000 paid in January 1998 for 1997
performance. 'Other Annual Compensation' in 1997 includes $2,567 for
Company-paid parking expenses.
(2) 'Bonus' in 1997 includes $125,000 paid in March 1998 for 1997
performance. 'Other Annual Compensation' in 1997 includes Company-paid expense
of $2,912 related to relocation.
(3) 'Other Annual Compensation' in 1997 includes $6,300 for car allowance.
'All Other Compensation' in 1997 includes $3,230 for the Company's 401(k) match
and $1,000 for premiums paid for term life insurance.
(4) 'Bonus' in 1997 includes $60,000 bonus paid for relocation during 1997,
and $74,844 paid in March 1998 for 1997 performance. 'Other Annual Compensation'
includes (i) for 1997, $82,500 ordinary income realized upon the exercise/sale
of certain stock options during 1997, $4,284 interest differential housing
allowance, $8,700 car allowance, $5,455 relocation expenses and $4,991 tax
gross-up thereon, (ii) for 1996, $10,155 for interest differential housing
allowance, $3,844 for personal use of Company vehicle, $2,900 for car allowance,
and (iii) for 1995, includes $113,561 for relocation costs. 'All Other
Compensation' includes (i) for 1997, $3,230 and $2,982, respectively, for the
Company's 401(k) match and premiums paid for term life insurance, (ii) for 1996,
$3,164 and $1,291, respectively, for the Company's 401(k) match and premiums
paid for term life insurance, and (iii) for 1995, $3,077 and $800, respectively,
for the Company's 401(k) match and premiums paid for term life insurance.
(Footnotes continued on next page)
7
<PAGE>
(Footnotes continued from previous page)
(5) 'Bonus' for 1995 includes $159,290 paid in February 1996 for 1995
performance. 'Other Annual Compensation' includes (i) for 1997, $42,222
forgiveness of a loan, $21,753 interest differential housing allowance, $8,700
car allowance, (ii) for 1996, $141,376 reimbursement of capital loss due to
relocation ($45,877 of which is a tax gross-up), $20,844 for other payments
related to relocation ($3,510 of which is a tax gross-up), $19,194 interest
differential housing allowance, $8,700 car allowance, and (iii) for 1995,
$25,513 (which includes a $4,402 tax gross-up) related to the forgiveness of a
loan, $8,700 car allowance, and $4,092 related to various gifts ($1,410 of which
is a tax gross-up on the gifts). 'All Other Compensation' includes (i) for 1997,
$3,230 and $834, respectively, for the Company's 401(k) match and premiums paid
for term life insurance, (ii) for 1996, $3,183 and $534, respectively, for the
Company's 401(k) match and premiums paid for term life insurance, and (iii) for
1995, $0 and $794, respectively, for the Company's 401(k) match and premiums
paid for term life insurance.
(6) Mr. Hammes ceased to be an employee of the Company in February 1997.
'Bonus' includes $591,103 paid in February 1996 for 1995 performance pursuant to
a predecessor incentive plan and a $300,000 special bonus paid in 1995 pursuant
to Mr. Hammes' employment agreement. 'Other Annual Compensation' includes (i)
for 1997, $13,663 for personal use of a Company vehicle, $10,853 for relocation
costs ($4,912 of which is a tax gross-up), and $2,925 interest differential
housing allowance, and (ii) for 1995, $137,703 for relocation costs. 'All Other
Compensation' includes (i) for 1997, $2,380 and $0, respectively, for the
Company's 401(k) match and premiums paid for term life insurance, and $1,209,655
for termination of employment payments including but not limited to severance
payments, lump sum payments, and the value of benefits received pursuant to a
severance agreement entered into with Mr. Hammes as of February 28, 1997 (see
'Employment Agreements and Termination of Employment Arrangements'), (ii) for
1996, $3,230 and $40, respectively, for the Company's 401(k) match and premiums
paid for term life insurance and (iii) for 1995, $3,077 and $40, respectively,
for the Company's 401(k) match and premiums paid for term life insurance.
(7) Mr. van den Bergh ceased to be an employee of the Company in June 1997.
'Bonus' for 1996 includes $233,333 guaranteed incentive payment made in 1996
pursuant to Mr. van den Bergh's employment agreement. 'Other Annual
Compensation' includes (i) for 1997, $9,630 for Company vehicle expenses, $5,493
for tax preparation expenses, $6,822 for housing allowance, and $824 for
representation allowance, and (ii) for 1996, includes a $153,100 payment made to
Mr. van den Bergh to compensate him for the loss of stock option price
appreciation upon leaving his former employer. 'All Other Compensation' includes
(i) for 1997, $641,409 for termination of employment payments including, but not
limited to, severance payments, lump sum payments, and the value of benefits
received pursuant to a severance agreement entered into with Mr. van den Bergh
as of June 30, 1997 (see 'Employment Agreements and Termination of Employment
Arrangements'), and (ii) for 1996, $2,124 for premiums paid for term life
insurance.
(8) Mr. Kaplan ceased to be an employee of the Company in October 1997.
'Bonus' includes (i) for 1997, $130,666 guaranteed incentive and $50,000 (final
installment) signing bonus payments made in 1997 pursuant to Mr. Kaplan's
employment agreement and (ii) for 1996, $50,000 payment made during 1996 for
first installment of signing bonus pursuant to Mr. Kaplan's employment
agreement. 'Other Annual Compensation' includes (i) for 1997, $1,416 for the
personal use of a Company car, and $297 for relocation costs, and (ii) for 1996,
$31,592 for relocation costs ($14,103 of which is a tax gross-up). 'All Other
Compensation' includes (i) for 1997, $174,812 for payments including, but not
limited to, severance payments, lump sum payments and value of benefits received
pursuant to a termination agreement entered into with Mr. Kaplan as of August
31, 1997 (see 'Employment Agreements and Termination of Employment
Arrangements'), and $874 for premiums paid for term life insurance and (ii) for
1996, $501 for premiums paid for term life insurance.
8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning individual grants of
stock options during 1997 to the Company's Chief Executive Officer and the next
four most highly-compensated executive officers, and three of its former
executive officers. Pursuant to the Company Merger Agreement, each outstanding
option to acquire Company Common Stock will vest and become exercisable at the
effective time of the Holdings Merger and, to the extent not exercised prior to
the effective time of the Company Merger, will be converted into the right to
receive cash in an amount equal to the excess, if any, of $27.50 over the per
share exercise price of such option.
<TABLE>
<CAPTION>
% OF
TOTAL OPTIONS
GRANTED TO
EMPLOYEES EXPIRATION GRANT DATE
OPTIONS IN FISCAL EXERCISE DATE OF PRESENT
NAME GRANTED YEAR PRICE OPTIONS VALUE(7)
- --------------------------------------------------- ------- ------------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Jerry W. Levin (1)................................. 200,000 9.27% $ 12.25 02/11/07 $1,257,120
300,000 13.91 14.00 04/15/07 2,150,835
David A. Ramon (2)................................. 62,500 2.89 12.25 02/11/07 392,850
37,500 1.73 16.875 05/13/07 334,558
Mark Goldman (3)................................... 20,000 .92 15.00 02/12/07 100,422
20,000 .92 16.125 12/17/07 160,930
David K. Stearns (4)............................... 20,000 .92 16.125 12/17/07 158,532
Patrick McEvoy..................................... 0 0 0 0 0
Michael N. Hammes.................................. 0 0 0 0 0
Frederik van den Bergh (5)......................... 10,000 .46 14.00 04/15/07 67,527
Steven F. Kaplan (6)............................... 10,000 .46 14.00 04/15/07 67,527
</TABLE>
- ------------------
(1) Mr. Levin's options were granted on February 11, 1997 and April 15, 1997,
respectively. The February 11, 1997 and 200,000 of the April 15, 1997
options were granted pursuant to the 1996 Stock Option Plan. The remainder
of the April 15, 1997 option was granted pursuant to the 1993 Stock Option
Plan. The options are exercisable in installments of 50%. The earlier option
vested on April 15, 1997 and December 31, 1997. The later option vested on
April 15, 1997 and is scheduled to vest again on April 15, 1998.
(2) Mr. Ramon's options were granted on February 11, 1997 and May 13, 1997,
respectively. The February 11, 1997 and May 13, 1997 options were granted
pursuant to the 1996 Stock Option Plan. The options are exercisable in
installments of 50%. The earlier option vested on April 15, 1997 and
December 31, 1997. The later option vested on May 13, 1997 and December 31,
1997.
(3) Mr. Goldman's options were granted on February 12, 1997 and December 17,
1997, respectively. The February 12, 1997 option was granted pursuant to the
1996 Stock Option Plan and the December 17, 1997 option was granted pursuant
to the 1993 Stock Option Plan. The February 12, 1997 option is exercisable
in installments of 33%, 33%, and 34%. This option is scheduled to vest on
February 12, 2000, February 12, 2001, and February 12, 2002, respectively.
The December 17, 1997 option is exercisable in installments of 50%. This
option is scheduled to vest on June 17, 1998 and December 17, 1998.
(4) Mr. Stearn's options were granted on December 17, 1997 pursuant to the 1996
Stock Option Plan. The option becomes exercisable in installments of 25%.
The option is scheduled to vest on December 17, 1998, December 17, 1999,
December 17, 2000, and December 17, 2001, respectively.
(5) Mr. van den Bergh's options were granted on April 15, 1997 pursuant to the
1996 Stock Option Plan. Pursuant to an agreement entered into with Mr. van
den Bergh as of June 30, 1997, Mr. van den Bergh's options expired
unexercised.
(6) Mr. Kaplan's options were granted on April 15, 1997 pursuant to the 1996
Stock Option Plan. Pursuant to an agreement entered into with Mr. Kaplan as
of August 31, 1997, Mr. Kaplan's options expired unexercised.
(7) The grant date present values were estimated using the Black-Scholes option
pricing model and the following weighted-average assumptions: risk-free
interest rates from 5.84% to 6.89%, dividend yield of 0%, volatility of the
expected market price of Company Common Stock from 27.25% to 35.43%, and a
weighted-average expected life of the options from 4.5 to 8.5 years.
9
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth aggregated option exercises in the last
fiscal year and fiscal year-end option values for the Company's Chief Executive
Officer and the next four most highly-compensated executive officers, and three
of its former executive officers.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED FY-END (#) FY-END ($)
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE (1)
- ------------------------------------------------- ------------ ------------ ------------- -----------------
<S> <C> <C> <C> <C>
Jerry W. Levin................................... 0 0 350,000/ $ 1,071,875/
150,000 309,375
David A. Ramon................................... 0 0 100,000/ 238,281/
0 0
Mark Goldman..................................... 0 0 0/ 0/
60,000 21,250
David K. Stearns................................. 15,000 $ 82,500 28,720/ 41,790/
110,280 46,253
Patrick McEvoy................................... 0 0 21,900/ 35,989/
63,100 39,923
Michael N. Hammes................................ 0 0 0/ 0/
580,000(2) 0
Frederik van den Bergh........................... 0 0 0/ 0/
130,000(3) 0
Steven F. Kaplan................................. 0 0 0/ 0/
135,000(4) 0
</TABLE>
- ------------------
(1) Market closing price of $16.0625 per share on December 31, 1997 was used in
computing year-end values.
(2) Mr. Hammes' right to exercise the options expired on May 29, 1997, pursuant
to the agreement entered into with Mr. Hammes on February 28, 1997. The
options expired by their terms unexercised on May 29, 1997.
(3) Mr. van den Bergh was paid in lieu of the vested options that were
in-the-money on August 27, 1997, pursuant to the agreement entered into with
Mr. van den Bergh as of June 30, 1997. The options were allowed to expire by
their terms unexercised on September 30, 1997.
(4) Mr. Kaplan's right to exercise the options expired on November 30, 1997,
pursuant to the agreement entered into with Mr. Kaplan as of August 31,
1997. The options expired by their terms unexercised on November 30, 1997.
10
<PAGE>
EMPLOYMENT AGREEMENTS AND TERMINATION OF
EMPLOYMENT ARRANGEMENTS
The Company has an employment agreement with Mr. Levin effective for the
term October 1, 1997 through December 31, 2000. Pursuant to the Company Merger
Agreement, the Company will not have any responsibility for the Company's
obligations under Mr. Levin's employment agreement following consummation of the
Holdings Merger, except for payment of the transaction bonus described below.
The employment agreement provides for a base salary of $1,000,000 per annum, and
participation in the Incentive Plan with a 100% target bonus opportunity. The
employment agreement with Mr. Levin also provides for, among other things,
participation in the Company's other benefit plans, certain pension benefits and
payments upon death, disability, termination without cause and change of control
of the Company. Upon a termination of employment without cause, Mr. Levin would
be entitled, among other things, to receive payments equal to base salary for
the balance of the term of the agreement (but in any event not less than one
year). Upon a change of control, Mr. Levin would be entitled to a lump sum
payment equal to base salary and target bonus payable for the remainder of the
term. In addition, Mr. Levin's employment agreement provides for a gross-up for
certain excise taxes resulting from payments and benefits under the employment
agreement. Pursuant to the employment agreement, Mr. Levin is entitled to a
transaction bonus equal to 1.5% of the enterprise value of certain divestitures,
up to a maximum aggregate amount of $1.5 million. The consummation of the sale
of Coleman Safety & Security Products, Inc. would result in a transaction bonus
payable to Mr. Levin of $1.5 million.
The Company has an employment agreement with Mr. Shapiro effective for the
term July 1, 1997 through June 30, 2000. Pursuant to the Company Merger
Agreement, the Company will not have any responsibility for the Company's
obligations under Mr. Shapiro's employment agreement following consummation of
the Holdings Merger. The employment agreement provides for a base salary of
$350,000 per annum, and participation in the Incentive Plan with a 70% target
bonus opportunity. The employment agreement with Mr. Shapiro also provides for,
among other things, participation in the Company's other benefit plans and
payments upon death, disability, termination without cause and change of control
of the Company. Upon a termination of employment without cause, Mr. Shapiro
would be entitled, among other things, to receive payments equal to base salary
for the balance of the term of the agreement (but in any event not less than one
year). Upon a change of control, Mr. Shapiro would be entitled to a lump sum
payment equal to base salary and target bonus payable for the remainder of the
term. In addition, Mr. Shapiro's employment agreement provides for a gross-up
for certain excise taxes resulting from payments and benefits under the
employment agreement.
The Company has an employment agreement with Mr. McEvoy effective for the
term January 1, 1996 through December 31, 1998. Pursuant to the employment
agreement, Mr. McEvoy is paid a base salary of $200,000 per annum, and is
entitled to participate in the Incentive Plan with a 70% target bonus
opportunity. The employment agreement with Mr. McEvoy also provides for, among
other things, participation in the Company's other benefit plans and payments
upon death, disability, termination without cause and, subject to certain
conditions, change of control of the Company. Upon a termination of employment
without cause, or termination of employment upon a change of control, Mr. McEvoy
would be entitled, for two years, among other things, to receive payments equal
to base salary and target bonus and to participate in the Company's medical
plans. In addition, Mr. McEvoy's employment agreement provides for a gross-up
for certain excise taxes resulting from payments and benefits under the
employment agreement. In addition, in connection with the sale of Coleman Safety
& Security Products, Inc., the Company and Mr. McEvoy entered into a retention
agreement. Pursuant to such retention agreement, Mr. McEvoy will receive, among
other things, a special bonus for one year in an amount equal to Mr. McEvoy's
base salary, provided that if Mr. McEvoy becomes entitled to severance payments
under his employment contract as a result of a termination of employment within
three months of a sale of Coleman Safety & Security Products, Inc., the
severance payments to Mr. McEvoy under his employment agreement will be reduced
by the payments of the special bonus.
Mr. Goldman had two employment agreements with the Company which became
effective November 1, 1994 and terminated December 31, 1997. Under the
agreements, which had identical material terms, Mr. Goldman's base salary was
$250,000 per year, and Mr. Goldman was eligible for a discretionary incentive
payment each year.
Mr. Hammes had an employment agreement with the Company effective January
1, 1996, which provided for, among other things, a base salary of $700,000 per
annum. Mr. Hammes' employment was terminated
11
<PAGE>
February 28, 1997. Effective such date, Mr. Hammes' entered into a severance
agreement with the Company having a severance period of two years. Pursuant to
the severance agreement, Mr. Hammes is entitled to, among other things,
severance payments during the severance period at the rate of $700,000 per
annum, and continued participation in the Company's medical plans during the
severance period, and is entitled to certain pension payments beginning March 1,
1999. In addition, pursuant to the severance agreement, Mr. Hammes was paid a
lump sum payment during 1997 of $450,000 and is entitled to another $450,000
lump sum payment at the end of the severance period.
Mr. van den Bergh had an employment agreement with the Company effective as
of May 1, 1996, which provided for, among other things, a base salary of
$500,000 per annum. Mr. van den Bergh's employment was terminated effective June
30, 1997. Effective such date, Mr. van den Bergh entered into a severance
agreement with the Company having a severance period of one year. Pursuant to
the severance agreement, Mr. van den Bergh was paid two lump sum payments during
1997 totaling $550,000 and is entitled to, among other things, continued
participation in the Company's medical plans during the severance period.
Mr. Kaplan had an employment agreement with the Company effective as of
August 1, 1996, which provided for, among other things, a base salary of
$280,000 per annum. Mr. Kaplan's employment was terminated effective August 1,
1997. Effective such date Mr. Kaplan entered into a severance agreement with the
Company having a severance period of two years. Pursuant to the severance
agreement, Mr. Kaplan is entitled to, among other things, severance payments
during the severance period at the rate of $426,000 per annum, and continued
participation in the Company's medical plans during the severance period.
REPORT ON EXECUTIVE COMPENSATION BY THE COMPENSATION COMMITTEE
The Compensation Committee is comprised entirely of directors who are not
officers or employees of the Company. The Compensation Committee is composed of
Messrs. Robinson (Chairman), Drapkin and Slovin, and Ms. Jordan. The
Compensation Committee is responsible for:
o Reviewing and approving the salary and annual incentive compensation of
the Company's executive officers;
o Reviewing, approving or modifying performance standards against which
annual incentive compensation awards will be made for executive officers;
o Reviewing, approving or modifying annual incentive compensation awards
for executive officers;
o Reviewing, approving or modifying stock option awards for all employees,
including executive officers;
o Reviewing, approving or modifying supplemental benefit or compensation
plans which are available to designated executives;
o Reviewing and recommending to the Board of Directors changes to current
executive officer benefit plans or the adoption of new executive
compensation programs requiring shareholder approval; and
o Reviewing and acting as appropriate on any other issues relating to
executive compensation and brought to the Compensation Committee by the
Chairman for its consideration.
COMPENSATION PHILOSOPHY
In 1994, the compensation philosophy for the Company was developed and
adopted. The philosophy includes the following principles:
o Support the achievement of the Company's desired financial performance
and return to shareholders;
o Provide compensation that will attract and retain the required high level
talent; and
o Align executive officers' interests with the Company's success by linking
both annual incentive compensation and long-term incentive compensation,
in the form of stock option and/or stock appreciation rights awards, with
the Company's success in achieving performance goals.
The executive compensation philosophy for the Company, as approved and
adopted by the Compensation Committee, provides for an overall level of
potential compensation opportunity that, if aggressive financial goals are
achieved and superior shareholder returns are realized, will be at a 75th
percentile level of competitiveness with consumer products companies of
comparable size. To determine pay level opportunities, the Compensation
Committee consulted with outside consultants and with the Company's officer
responsible for human resources.
12
<PAGE>
The Compensation Committee intends, over time, to set salaries in a manner
consistent with the foregoing. Annual incentive and stock option opportunities
are intended to be set above predicted competitive norms. Actual individual
compensation levels may be greater or lesser than median competitive levels,
based upon annual and long-term Company performance. The Compensation Committee,
at its discretion, sets executive compensation at levels which it judges are
justified by external, internal and other circumstances.
COMPLIANCE WITH FEDERAL TAX LEGISLATION
The Omnibus Budget Reconciliation Act of 1993 added Section 162(m) to the
Internal Revenue Code of 1986, as amended (the 'Code'), which generally
precludes the Company and other public companies from taking a tax deduction for
compensation over $1 million which is not 'performance-based' and is paid, or
otherwise taxable, to executives named in the Summary Compensation Table and
employed by the Company at the end of the applicable tax year. The Company
attempts to preserve as much deduction as possible without undercutting the
compensation objectives set forth above. Each director on the Compensation
Committee is an 'outside director' within the meaning of Section 162(m) of the
Code.
BASE COMPENSATION
During 1997, the base compensation of each executive officer was reviewed
and compared to median levels of competitiveness for similarly sized consumer
products companies. The Company has adopted the practice of base compensation
increases for executive officers based on an annual review of the executive
performance and to adjust compensation to keep it approximately to the standard
described above.
ANNUAL CASH INCENTIVE COMPENSATION
The Chief Executive Officer was paid a bonus based on the targets in the
Incentive Plan, even though a certain condition to payment of the target bonus
was not satisfied. The other named executive officers who were employed by
Coleman at the end of the year were also paid a bonus based on the same
criteria. During 1997, no bonus was paid to the former Chief Executive Officer.
The bonuses were paid to recognize the substantial progress made in the
restructuring of Coleman.
LONG TERM INCENTIVES
In 1997, the Compensation Committee approved option grants to the Chief
Executive Officer of 200,000 shares on February 11, 1997, at an exercise price
of $12.25 and 300,000 shares on April 14, 1997 at an exercise price of $14.00.
It also approved grants totaling in the aggregate 160,000 shares to the other
named executive officers employed by the Company at the end of 1997. The
Compensation Committee believes that these grants, which were primarily made in
the first half of 1997, provide an appropriate link between the interests of
executives with those of the Company's shareholders.
OTHER BENEFITS
The Company provides medical and retirement benefits to executive officers
that are generally available to Company salaried employees, including
participation in medical and dental benefit plans, a qualified 401(k) employee
savings plan and a qualified defined benefit retirement plan. In addition, the
Company provides certain executive officers and key management employees a
nonqualified benefit equalization plan which is designed to make up for benefits
that would otherwise be lost due to various tax limitations. The Company's
benefit plans are intended to provide a median level of benefits when compared
to similarly sized consumer products companies. The Company also provides
certain executive officers with certain executive perquisites which may be
deemed to be a personal benefit or constitute compensation to such executive
officers, including (for example) car allowances and reimbursements, and club
membership dues.
The Compensation Committee believes the executive compensation philosophy
and programs are appropriate and serve the interests of the shareholders and the
Company.
Compensation Committee:
James D. Robinson, Chairman
Donald G. Drapkin
Ann D. Jordan
Bruce Slovin
13
<PAGE>
CUMULATIVE SHAREHOLDER RETURN PERFORMANCE GRAPH
The graph set forth below presents a comparison of cumulative shareholder
return for the Company Common Stock for the five year period December 31, 1992
through December 31, 1997, on an indexed basis, as compared with the S&P Midcap
400 stock index and a selected peer group of companies.
The group of companies selected for the peer group represents a portfolio
of companies which share certain characteristics considered relevant to the
earnings performance and related cumulative shareholder return for the Company
Common Stock. Selection of the peer group for the performance line was impacted
by the fact that many of the Company's direct competitors are privately held or
are subsidiaries of much larger public companies. Selection criteria applied in
formulating the group of 12 companies, each of whose stock is publicly traded,
required each company to share one or more of the following characteristics
representative of the Company: (a) competitors with the Company in one or more
of its product lines; (b) companies which serve mass merchandisers and their
customers; (c) companies offering strong brand name consumer products; and (d)
companies serving recreational products consumers.
The 12 companies selected as the peer group are as follows: Johnson
Worldwide Associates, Inc.; Anthony Industries, Inc.; Huffy Corporation;
Kellwood Company (parent of American Recreation Products, Inc.); Russell
Corporation; Snap-on Tools Corporation; Sunbeam; Brunswick Corporation; V.F.
Corporation (parent of JanSport, Inc.); Newell Co.; Rubbermaid Incorporated; and
Cooper Industries, Inc.
14
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
[GRAPH]
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
Coleman (NYSE:CLN) 100 98 123 123 96 113
S&P MidCap 400 100 114 110 143 171 226
Peer Group 100 107 100 106 124 160
PENSION PLANS
Retirement Plan. The Company participates in the New Coleman Company, Inc.
Retirement Plan for Salaried Employees (the 'Salaried Pension Plan') which
replaced a prior plan that was terminated on June 30, 1989. Participants in the
Salaried Pension Plan include participants under the prior plan and certain
salaried exempt employees who are at least 21 years old and have completed at
least one year of service with the Company.
Benefits to participants vest fully after five years of Vesting Service (as
defined in the Salaried Pension Plan) and such benefits are determined primarily
by a formula based on the average of the five consecutive years of greatest
compensation earned during the last ten years of the participant's service to
the Company, and the number of years of service attained by the individual
participant. Such compensation is composed primarily of regular base salary and
contributions to qualified deferred compensation plans and does not include
amounts paid pursuant to the Company's annual cash incentive compensation plans.
Participants make no contributions to the Salaried Pension Plan.
Excess Benefit Plan. The Company participates in the New Coleman Holdings
Inc. Excess Benefit Plan (the 'Excess Benefit Plan') for designated employees
who are participants in the Salaried Pension Plan and whose retirement income
from the Salaried Pension Plan in the form of payment to be made under the
Salaried Pension Plan exceeds the maximum permissible under the Employee
Retirement Income Security Act, as amended, and certain Code provisions. The
Excess Benefit Plan supplements the Salaried Pension Plan by providing
additional retirement benefits to its participants in excess of the maximum
amount permitted under the Salaried Pension Plan, which benefits generally are
payable in conjunction with payments made under the Salaried Pension Plan.
Benefits payable under the Excess Benefit Plan have been included in the
estimated annual benefits payable listed on the table following discussion of
the Consolidated Supplemental Retirement Plan. The Excess Benefit Plan was
amended and restated effective January 1, 1995 to add a provision allowing
annual cash incentive compensation plan payments to designated participants to
be included as compensation in the formula used to determine benefits under the
Excess Benefit Plan. Thirteen executives participated in this feature of the
Excess Benefit Plan during 1997.
Consolidated Supplemental Retirement Plan. In addition to the obligation
of the Company under the Salaried Pension Plan and the Excess Benefit Plan, the
Company had committed to provide other supplemental retirement benefits solely
for Mr. Hammes, including credit for additional years of service and certain
other
15
<PAGE>
formula changes. Pursuant to an agreement entered into with Mr. Hammes in
February 1997, discussed above, Mr. Hammes is no longer a participant in the
Consolidated Supplemental Retirement Plan.
The following table shows estimated annual benefits payable under the
Salaried Pension Plan and the Excess Benefit Plan, and reflects the straight
life benefit form of payment for employees, assumes normal retirement at age 65,
and reflects deductions for Social Security and other offset amounts:
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION
-------------------------------------------------------
FINAL AVERAGE 10 YEARS 20 YEARS 30 YEARS 35 YEARS
EARNINGS OF SERVICE OF SERVICE OF SERVICE OF SERVICE
- ------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
$ 100,000 $ 15,896 $ 31,792 $ 47,688 $ 55,636
200,000 35,896 71,792 107,688 125,636
300,000 55,896 111,792 167,688 195,636
400,000 75,896 151,792 227,688 265,636
500,000 95,896 191,792 287,688 335,636
600,000 115,896 231,792 347,688 405,636
700,000 135,896 271,792 407,688 475,636
800,000 155,896 311,792 467,688 545,636
900,000 175,896 351,792 527,688 615,636
1,000,000 195,896 391,792 587,688 685,636
1,100,000 215,896 431,792 647,688 755,636
1,200,000 235,896 471,792 707,688 825,636
1,300,000 255,896 511,792 767,688 895,636
1,400,000 275,896 551,792 827,688 965,636
1,500,000 295,896 591,792 887,688 1,035,636
1,600,000 315,896 631,792 947,688 1,105,636
1,700,000 335,896 671,792 1,007,688 1,175,636
1,800,000 355,896 711,792 1,067,688 1,245,636
</TABLE>
Benefits under the Salaried Pension Plan are payable upon normal retirement
at age 65, and at age 55 following vested termination, disability, and death. A
participant may elect to commence early benefit payments at any time after the
participant's 55th birthday or may retire with 30 years of Vesting Service at
amounts reduced from those payable upon normal retirement age. As of December
31, 1997, credited years of service for each of the individuals listed on the
Summary Compensation Table are as follows: Mr. Levin, 8.7 years; Mr. Ramon, 4.6
years; Mr. Goldman, 4 years; Mr. Stearns, 21.2 years; Mr. McEvoy, 3.8 years; Mr.
Hammes, 3.4 years; Mr. van den Bergh, zero years; and Mr. Kaplan, 1.1 years. In
accordance with Mr. Hammes' termination of employment agreement (see Employment
Agreements and Termination of Employment Arrangements), discussed above, Mr.
Hammes will be entitled to receive a pension of $15,110 per month commencing
March 1, 1999.
Pursuant to the Company Merger Agreement, from and after the effective time
of the Holdings Merger, Sunbeam has agreed to allow Company employees to
participate in Sunbeam benefit plans on substantially the same basis as
similarly situated Sunbeam employees, and has also agreed to cause the Company
to continue its employee benefit plans for a period of at least six (6) months
following such date. Sunbeam has also agreed to give Company employees full
credit for purposes of eligibility and vesting of benefits and benefit accrual
for service with the Company and its affiliates prior to the effective time of
the Holdings Merger, provided, however, that no such crediting of service
results in duplication of benefits.
16
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning beneficial ownership,
as of the close of business on March 3, 1998, of the Company's Common Stock by
its 5% beneficial owners, directors, Chief Executive Officer and the next four
most highly-compensated executives, and of directors and executive officers as a
group.
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE
COMPANY COMMON STOCK OF CLASS
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING
- --------------------------------------------------------------------------- -------------------- -----------
<S> <C> <C>
Ronald O. Perelman ........................................................ 44,067,520(1) 82%
35 East 62nd Street
New York, New York 10021
Sunbeam Corporation ....................................................... 44,067,520(2) 82%
1615 South Congress Avenue, Suite 200
Delray Beach, Florida 33445
Donald G. Drapkin.......................................................... 30,000(3) *
Frank Gifford.............................................................. 0 *
Lawrence M. Jones.......................................................... 40,512 *
Ann D. Jordan.............................................................. 0 *
Jerry W. Levin............................................................. 373,000(4) *
John A. Moran.............................................................. 10,000 *
James D. Robinson.......................................................... 0 *
Bruce Slovin............................................................... 52,600(5) *
William H. Spoor........................................................... 6,000(6) *
David A. Ramon............................................................. 100,000(7) *
Mark Goldman............................................................... 0 *
David K. Stearns........................................................... 25,342(8) *
Patrick McEvoy............................................................. 0 *
Michael N. Hammes.......................................................... 0(9) *
Steven Kaplan.............................................................. 0(9) *
Frederik van den Bergh..................................................... 11,000(9) *
All Directors and Executive Officers as a Group (21 persons) .............. 44,768,474(10) 83%
</TABLE>
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* Less than 1%.
(1) Substantially all of the shares owned are pledged to secure obligations of
Coleman Worldwide and CLN Holdings and shares of intermediate holding
companies are or from time to time may be pledged to secure obligations of
MacAndrews & Forbes Holdings Inc. or its affiliates.
(2) The Statement on Schedule 13D filed by Sunbeam on March 9, 1998 indicates
that Sunbeam may be deemed to be the beneficial owner of 44,067,520 shares
by reason of its execution of the Holdings Merger Agreement.
(3) Includes 10,000 shares owned by trusts for the benefit of Mr. Drapkin's
children and as to which beneficial ownership is disclaimed.
(4) Includes 2,000 shares owned by trusts for the benefit of Mr. Levin's
children and as to which beneficial ownership is disclaimed. Includes
350,000 shares which may be acquired within 60 days pursuant to stock
options.
(5) Includes 46,300 shares held in trust for family members and as to which
beneficial ownership is disclaimed.
(6) Includes 4,000 shares held in trust for the benefit of Mr. Spoor pursuant
to the IDS Bank & Trust, Trustee, The Pillsbury Company 401(k) Savings
Plan.
(7) Includes 100,000 shares which may be acquired within 60 days pursuant to
stock options.
(8) Includes 520 shares held by Mr. Stearns' spouse and as to which beneficial
ownership is disclaimed. Includes 20,720 shares which may be acquired
within 60 days pursuant to stock options.
(9) No current information is available as to share ownership. Reflects
information in the Company's records as of the date of termination of
employment.
(10) Includes an additional 52,500 shares which may be acquired by directors and
executive officers as a group within 60 days pursuant to stock options.
Excludes 1,002,380 shares which may be acquired by directors and executive
officers pursuant to stock options which will vest and become exercisable
upon consummation of the Holdings Merger.
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SOURCE AND AMOUNT OF FUNDS FOR CHANGE IN CONTROL
Upon consummation of the Holdings Merger, Sunbeam will have acquired
control of the Company. The total amount of funds and other consideration
required by Sunbeam to consummate the Holdings Merger is $159,956,756 in cash
and 14,099,749 shares of Sunbeam Common Stock (collectively, the 'Holdings
Merger Consideration'). Sunbeam expects to obtain the cash portion of the
Holdings Merger Consideration from a combination of new revolving and term
credit facilities and the issuance of other debt securities that are expected to
be issued by Sunbeam concurrently with the closing of the Holdings Merger.
Sunbeam has made no decision with respect to repayment or refinancing of such
indebtedness and may repay such indebtedness out of its internally generated
funds or from proceeds of a subsequent financing. Any decisions with respect to
such repayment or refinancing will be made based on a review from time to time
of the advisability of particular transactions, as well as on prevailing
interest rates and financial and economic conditions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Relationship with MacAndrews & Forbes. Ronald O. Perelman, through
MacAndrews & Forbes Holdings Inc. ('MacAndrews Holdings') which is wholly owned
by Mafco (together with MacAndrews Holdings, 'MacAndrews & Forbes'),
beneficially owns indirectly approximately 82% of Coleman's Common Stock. Due to
its stock ownership, MacAndrews & Forbes controls Coleman and is able to elect
the entire board of directors. On February 27, 1998, the Holdings Merger
Agreement and the Company Merger Agreement were executed as described in further
detail above. As a result of the Holdings Merger, CLN Holdings will become a
wholly owned subsidiary of Sunbeam and Sunbeam will become the indirect owner of
approximately 82% of the outstanding Coleman Common Stock. Additionally, upon
consummation of the Holdings Merger, all of the current members of Coleman's
board of directors will resign from their positions as directors and the five
Sunbeam Designees will become directors of the Company.
MacAndrews & Forbes is a diversified holding company with interests in
several industries. The principal executive offices of MacAndrews & Forbes are
located at 35 East 62nd Street, New York, New York 10021.
Cross-Indemnification Agreement. Coleman and New Coleman Holdings Inc.
('New Coleman Holdings') are parties to a cross-indemnification agreement (the
'Cross-Indemnification Agreement'), pursuant to which Coleman has agreed to
indemnify New Coleman Holdings against all liabilities related to the outdoor
products business transferred to Coleman, and New Coleman Holdings has agreed to
indemnify Coleman and its immediate corporate parent against all liabilities of
New Coleman Holdings other than liabilities related to the outdoor products
business transferred to Coleman. The liabilities that Coleman will indemnify New
Coleman Holdings against include (i) asserted and potential product liability
claims arising out of products manufactured or sold by the outdoor products
business, and (ii) asserted and potential environmental claims and liabilities
related to facilities currently or formerly owned or used by the outdoor
products business.
Tax Sharing Agreement. Coleman is included in the consolidated tax group
of which Mafco is the common parent and Coleman's tax liability will be included
in the consolidated Federal income tax liability of Mafco. Coleman is also
included in certain state and local tax returns of Mafco or its affiliates.
Coleman participates in a Tax Sharing Agreement (the 'Tax Sharing Agreement')
pursuant to which it pays to Coleman Worldwide amounts equal to the taxes that
Coleman would otherwise have to pay if it were to file separate Federal, state
or local income tax returns (including any amounts determined to be due as a
result of a redetermination of the tax liability of Mafco arising from an audit
or otherwise). Under Federal law, Coleman is subject to liability for the
consolidated Federal income tax liabilities of the consolidated group of which
Mafco is the common parent, for any taxable period during which Coleman or a
subsidiary is a member of that consolidated group. Mafco has agreed, however, to
indemnify Coleman for any such Federal income tax liability (and certain state
and local tax liabilities) of Mafco or any of its subsidiaries that Coleman is
actually required to pay. Because the payments to be made by Coleman under the
Tax Sharing Agreement are determined by the amount of taxes that Coleman would
otherwise have to pay if it were to file separate Federal, state or local income
tax returns, the Tax Sharing Agreement will benefit Mafco to the extent that
Mafco can offset the taxable income generated by Coleman against losses and tax
credits generated by Mafco and its other subsidiaries.
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Following the consummation of the Holdings Merger, Coleman will no longer be
included in the Mafco consolidated tax group. The Tax Sharing Agreement will be
terminated on the date of the Holdings Merger. The Holdings Merger Agreement
provides for certain tax indemnities and tax sharing payments with respect to
Mafco, Coleman and their respective affiliates.
Insurance Programs. Coleman is insured under policies maintained by
MacAndrews & Forbes or its affiliates, including health and life insurance,
workers compensation, and liability insurance. The Company's expense represents
its expected costs for self-insured retentions and premiums for excess coverage
insurance. For 1997, such expense, including the Company's allocable share of
premiums for such insurance, was approximately $13.3 million. Management
believes that the terms for such insurance are at least as favorable as terms
that could be obtained by the Company were it separately insured.
Services Provided by and to Other Affiliates. From time to time, Coleman
purchases from affiliates, at negotiated rates, specialized accounting and other
services. Coleman also provides at negotiated rates specialized accounting
services and other services to an affiliate. The net expense for such services
was approximately $400,000 during 1997. Coleman believes that the terms of such
arrangements are at least as favorable to Coleman as those it could have
negotiated with nonaffiliated parties. In addition, certain employees of the
Company have been paid by MacAndrews & Forbes or other affiliates of the
Company, and the Company reimburses such affiliates for the compensation expense
for such employees.
Purchases of Inactive Subsidiaries. During the first quarter of 1997,
Coleman purchased an inactive subsidiary from an affiliate for approximately
$1.0 million, plus a portion of certain tax benefits to the extent such benefits
are realized by Coleman. During the fourth quarter of 1997, Coleman purchased an
inactive subsidiary from an affiliate for which the Company agreed to pay 50% of
the tax benefits realized by Coleman when and if such benefits are realized.
Coleman expects to realize certain tax benefits from the tax losses of such
subsidiaries.
Office Lease. Coleman subleases its office space in New York City from an
affiliate. The rent paid by Coleman represents the allocable portion, based on
the space leased, of the rent paid by the affiliate to its third party landlord.
The expense for such rent during 1997 was approximately $158,000. Coleman
believes that the terms of the sublease are at least as favorable to Coleman as
those it could have negotiated with nonaffiliated parties.
Pension Plans. New Coleman Holdings maintains pension and other retirement
plans in various forms covering employees of Coleman who meet eligibility
requirements. New Coleman Holdings also has an unfunded excess benefit plan
covering certain of Coleman's U.S. employees whose benefits under the plans
described above are limited by provisions of the Code. Coleman pays to New
Coleman Holdings its allocable costs of maintaining such plans for Coleman's
employees. As part of the consummation of the Holdings Merger, such pension and
other benefits plans will be assigned to and assumed by Coleman.
Other Arrangements. At the beginning of 1995, Mr. McEvoy, an Executive
Vice President of Coleman, had a noninterest-bearing loan from Coleman in the
amount of $63,333. At the end of 1997, the principal balance of the loan was $0.
During 1997, Coleman purchased licensing services from an affiliate, for
which it paid approximately $650,000.
During 1997, Coleman sold products to an affiliate, for which it received
approximately $900,000.
During 1997, Coleman used an airplane owned by a corporation of which a
director of Coleman is a stockholder, for which Coleman paid approximately
$158,000.
During 1997, a subsidiary of Coleman paid approximately $254,000 for
warehouse space leased from a real estate partnership in which Mr. Goldman, an
Executive Vice President of Coleman, and three other immediate family members of
Mr. Goldman's are partners. A manufacturing business owned by Mr. Goldman's
father contracted with Coleman's subsidiary for the manufacture of goods sold to
the subsidiary, for which the subsidiary paid approximately $2.6 million during
1997. Pursuant to the agreement by which Coleman acquired the Eastpak business,
Mr. Goldman is entitled to certain additional payments from Coleman upon Eastpak
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achieving certain operating targets. In accordance with such agreement, a final
additional payment of $12.0 million was paid to Mr. Goldman for 1997 financial
performance.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10 percent of the Company
Common Stock, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission.
Based solely on the Company's review of the reporting forms received by it,
the Company believes that for 1997 all such filing requirements were satisfied.
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THE COLEMAN COMPANY, INC.
March 18, 1998
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