<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / 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 Section 240.14a-11(c) or Section
240.14a-12
CONTINENTAL MATERIALS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 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>
CONTINENTAL MATERIALS CORPORATION
-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1996 annual meeting of stockholders of Continental Materials Corporation
(the "Company") will be held at 225 West Wacker Drive, Chicago, Illinois, on
Wednesday, May 22, 1996, at 10:00 a.m., to consider and act upon the following
matters:
(a) The election of three directors to serve until the 1999 annual
meeting or until their successors are elected and qualified.
(b) The ratification of the appointment of independent certified public
accountants to the Company for the fiscal year ending December 28, 1996.
(c) The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 29, 1996, are
entitled to notice of and to vote at the annual meeting or any adjournment
thereof.
Accompanying this notice are the Annual Report for the fiscal year ended
December 30, 1995, a proxy statement, a form of proxy, and an envelope for
returning the executed proxy to the Company. Stockholders unable to attend the
annual meeting in person are requested to date, sign and return the enclosed
proxy at once.
By Order of the Board of Directors,
Mark S. Nichter
Secretary
Chicago, Illinois
April 11, 1996
<PAGE>
CONTINENTAL MATERIALS CORPORATION
225 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
PROXY STATEMENT
--------------
GENERAL INFORMATION
The enclosed proxy is solicited by and on behalf of the Board of Directors
(the "Board") of Continental Materials Corporation, a Delaware corporation (the
"Company"), for use at the annual meeting of the Company's stockholders to be
held on May 22, 1996, and is revocable at any time before it is exercised. Such
revocation may be effected by written notice to the Secretary of the Company, by
executing a subsequent proxy or by voting at the meeting in person. All proxies
duly executed and received will be voted on all matters presented at the
meeting. Where a specification as to any matter is indicated, the proxy will be
voted in accordance with such specification. Where, however, no such
specification is indicated, the proxy will be voted for the named nominees and
in favor of all proposals. The approximate date on which this proxy statement
and the enclosed proxy are first sent or given to stockholders is April 11,
1996.
The holders of record on March 29, 1996, of the 1,105,921 outstanding shares
of common stock of the Company are entitled to notice of and to vote at the
annual meeting. Each such share is entitled to one vote for each Director.
The three nominees for election as directors at the 1996 annual meeting of
stockholders who receive the greatest number of votes cast for the election of
directors at that meeting by the holders of the Company's common stock entitled
to vote at that meeting, a quorum being present, shall become directors at the
conclusion of the tabulation of votes. An affirmative vote of the holders of a
majority of the voting power of the Company's common stock, present in person or
represented by proxy and entitled to vote at the meeting, a quorum being
present, is necessary to approve the ratification of the appointment of
independent certified public accountants for the fiscal year ending December 28,
1996. Under Delaware law and the Company's Restated Certificate of Incorporation
and By-Laws, the aggregate number of votes entitled to be cast by all
stockholders present in person or represented by proxy at the meeting, will be
counted for purposes of determining the presence of a quorum. Abstentions and
broker non-votes are counted for purposes of determining the presence or absence
of a quorum. If a quorum is present at the meeting, the total number of votes
cast FOR each of these matters will be counted for purposes of determining
whether sufficient affirmative votes have been cast. Shares not voted, whether
by abstention, broker non-vote, or otherwise, have the same legal effect as a
vote AGAINST the matter even though the stockholder or interested parties
analyzing the results of the voting may interpret such a vote differently.
<PAGE>
ELECTION OF DIRECTORS
The Company has a Board of Directors consisting of nine persons, divided
into three classes. At this year's annual meeting three directors will be
elected to serve for a term of three years or until their successors are elected
and qualified. It is the intention of the persons named in the accompanying form
of proxy to vote for the nominees named below. Management has no reason to
believe that any nominee will be unable to serve. If any nominee should not be
available, the persons named in the proxy will vote for the election of such
persons as will continue as nearly as possible the existing management goals of
the Company.
<TABLE>
<CAPTION>
NAME, AGE AND OTHER SERVED AS CURRENT TERM
POSITIONS, IF ANY, DIRECTOR AS DIRECTOR
WITH COMPANY SINCE BUSINESS EXPERIENCE EXPIRES
- ------------------------------------------ --------- ---------------------------------------------- -------------
<S> <C> <C> <C>
NOMINEE DIRECTORS
Ralph W. Gidwitz, 60...................... 1984 President, Chief Executive Officer and
Director of RKG Corporation, a company
engaged in mergers and acquisitions since
1991. 1996
William G. Shoemaker, 79.................. 1968 Independent business consultant since January,
1991. Consultant to Consolidated Packaging
Corporation, a manufacturer of paperboard and
packaging materials, from 1977 through 1990. 1996
Theodore R. Tetzlaff, 51.................. 1981 Partner in the Chicago law firm of Jenner &
Block since 1982. 1996
CONTINUING DIRECTORS
Thomas H. Carmody, 49..................... 1994 Vice President, U.S. Operations of Reebok
International, Ltd., a publicly traded
footwear, apparel and fitness equipment
company, since December 15, 1993. From April,
1992 to December 15, 1993 Mr. Carmody was
Vice President, Sports Division of Reebok and
prior to that, he was President of Brooks
Shoes, Inc. 1997
Ronald J. Gidwitz, 51..................... 1974 President of Helene Curtis Industries, Inc. a
producer of personal care products, since
July 1, 1979 and Chief Executive Officer
since 1985. Director of Helene Curtis
Industries, Inc. 1997
William A. Ryan, 69....................... 1974 Chairman of the Board and Chief Executive
Officer of Team, Inc., a publicly traded
diversified services company, since 1995.
President of the Company from 1974 to 1995. 1997
James G. Gidwitz, 49, Chairman of the
Board and Chief Executive Officer....... 1978 Chairman of the Board and Chief Executive
Officer of the Company since 1983. 1998
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE AND OTHER SERVED AS CURRENT TERM
POSITIONS, IF ANY, DIRECTOR AS DIRECTOR
WITH COMPANY SINCE BUSINESS EXPERIENCE EXPIRES
- ------------------------------------------ --------- ---------------------------------------------- -------------
<S> <C> <C> <C>
Betsy R. Gidwitz, 55...................... 1996 Former Professor from Massachusetts Institute
of Technology. 1998
Joseph J. Sum, 48, Vice President and
Treasurer............................... 1989 Elected Assistant Treasurer of the Company in
1978. Served as Controller of the Company
from 1979 through January 1989 and Secretary
from 1983 through February 1993. Elected Vice
President and Treasurer on August 8, 1988. 1998
</TABLE>
FAMILY RELATIONSHIPS
James G. Gidwitz and Ronald J. Gidwitz are sons of Gerald S. Gidwitz. The
late Joseph L. Gidwitz was Gerald S. Gidwitz's brother. Ralph W. Gidwitz is a
son of, and Betsy R. Gidwitz is a daughter of, Joseph L. Gidwitz. Gerald S.
Gidwitz, together with his wife, and their descendants as well as the
descendants of Joseph L. Gidwitz are herein referred to as the "Gidwitz Family."
See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
COMMITTEES OF THE BOARD
The Company's Board of Directors has established an Audit Committee and a
Compensation Committee. There is no standing nominating committee or other
committee performing similar functions.
In 1995 the Audit Committee was composed of Theodore R. Tetzlaff, William G.
Shoemaker and Ralph W. Gidwitz. The function of the Audit Committee is to review
and make recommendations regarding: the hiring or retention of an independent
accounting firm to audit the Company's financial statements; the Company's
policies with respect to maintaining its books and records and furnishing
information to its independent auditors; the scope and effectiveness of the
independent auditor's audit procedures; the implementation of recommendations
made by the independent auditors in their annual management letter; the adequacy
and competency of Company personnel engaged in such activities; the procedures
of the Company in furnishing the public financial information, in accordance
with generally accepted accounting principles and practices; and such other
matters relating to the Company's financial affairs and accounts as the Audit
Committee deems desirable or in the best interest of the Company. There were two
committee meetings in 1995.
The Compensation Committee was composed of Ronald J. Gidwitz and Theodore R.
Tetzlaff in 1995. See "COMPENSATION COMMITTEE REPORT" for discussion of
responsibilities. The Committee held three meetings in 1995.
BOARD MEETINGS
The Board of Directors held three meetings in fiscal 1995. All directors
attended 75% or more of the aggregate number of meetings of the Board of
Directors and the Committees of the Board of Directors during the time when they
served.
DIRECTOR'S COMPENSATION
Each director who is not an officer or employee of the Company receives a
set fee of $10,000 per year, plus additional fees of $500 for each board meeting
or board committee meeting which he attends, with a $5,000 cap on the aggregate
meeting fee.
EXECUTIVE COMPENSATION
The following table summarizes the compensation of the Company's chief
executive officer and its three other executive officers for the years 1993
through 1995.
3
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------
PAYOUTS
AWARDS ----------
ANNUAL COMPENSATION -------------------- LONG-TERM
---------------------------------------- RESTRICTED INCENTIVE
NAME AND PRINCIPAL OTHER ANNUAL STOCK STOCK PLAN ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION (1) AWARDS OPTIONS PAYOUTS COMPENSATION (2)
- ------------------------ --------- --------- --------- ------------------ --------- --------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James G. Gidwitz -- 1995 $ 338,850 $ 68,000 -- None 30,000 None $ 72,955
Chairman and Chief 1994 315,350 236,550 -- None None None 57,734
Executive Officer 1993 304,350 88,020 -- None None None 44,708
William A. Ryan -- 1995 278,600 -- -- None None None 62,153
Former President and 1994 278,600 167,100 -- None None None 55,973
Chief Operating Officer 1993 268,850 62,200 -- None None None 45,141
(3)
Joseph J. Sum -- 1995 150,000 11,250 -- None 12,000 None 16,360
Vice President and 1994 130,000 50,000 -- None None None 21,089
Chief Financial 1993 127,558 23,500 -- None None None 14,870
Officer
Mark S. Nichter -- 1995 87,218 5,500 -- None None None 8,380
Secretary 1994 80,000 25,000 -- None None None 11,349
1993 77,825 10,000 -- None None None 7,779
</TABLE>
- ------------
(1) Other Annual Compensation does not exceed the reporting thresholds.
(2) For 1995, the amounts shown include employer matching contributions to the
Company's 401(k) Plan of $71,389, $50,813, $14,646 and $7,890 for Messrs.
Gidwitz, Ryan, Sum and Nichter, respectively. For Messrs. Gidwitz, Ryan and
Sum, these amounts include amounts deferred under a Supplemental Profit
Sharing Plan. The amounts shown also include group term life insurance
premiums paid by the Company in the amount of $1,566, $11,340, $1,444 and
$490 for Messrs. Gidwitz, Ryan, Sum and Nichter, respectively.
(3) Mr. Ryan served as President and Chief Operating Officer until July 13,
1995. The Compensation Table includes amounts paid to Mr. Ryan for the
entire year.
As noted, Mr. Ryan relinquished his duties as President and Chief Operating
Officer on July 13, 1995. The Company has agreed to pay Mr. Ryan his current
annual salary of $278,600 through December 31, 1996. In addition, Mr. Ryan will
continue to participate in the Company's group health and life insurance
programs. Mr. Ryan will not be eligible for bonus considerations or receive a
profit sharing award for 1996.
STOCK OPTIONS
The Company's Amended and Restated 1994 Stock Option Plan provides for the
granting of stock options to attract, retain and reward key managerial employees
of the Company or its subsidiaries. The Stock Option Plan provides that grants
of options and option prices will be established by the Compensation Committee
of the Board of Directors. Option prices may not be less than the fair market
value of the stock at the date of the grant. During 1995 there were options
granted for 78,000 shares of stock at an exercise price of $13.125. Of the
78,000 outstanding options at December 30, 1995, none were exercisable.
The following table sets forth certain information with respect to stock
options granted during the last fiscal year to the executive officers named in
the Summary Compensation Table. Using a range of 0% to 10% in assumed rates of
stock price appreciation (compounded annually) for the option term of ten years,
the table also shows the potential realizable value of the stock options.
4
<PAGE>
OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
% OF TOTAL OPTIONS FOR OPTION TERM
GRANTED TO EXERCISE OR (2)
OPTIONS EMPLOYEES IN FISCAL BASE PRICE EXPIRATION ------------------
NAME GRANTED(1) YEAR ($/SH) DATE 0% 5% 10%
- ----------------------- ----------- ------------------- ----------- ----------- --------- ------------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
James G. Gidwitz....... 30,000 38.5 $ 13.125 9/26/05 $ 0 $ 198,750 $ 579,750
Joseph J. Sum.......... 12,000 15.4 13.125 9/26/05 0 79,500 231,900
All Optionees.......... 78,000 100 13.125 9/26/05 0 516,750 1,507,350
</TABLE>
- ---------
(1) Options granted are exercisable if and when the price of the Company's
common stock has attained and maintained a closing price on the American
Stock Exchange composite transaction listing equal to 133% of the option
price for 30 consecutive trading days anytime before they became exercisable
as provided below. If the options once become exercisable under the terms of
the preceding sentence, they shall be exercisable from then until the tenth
anniversary of the date of grant. The options will become exercisable 30
days before the fifth anniversary of the grant and shall remain exercisable
until such fifth anniversary, if the price target described above has not
been met.
(2) The dollar amounts used in these columns are the results of calculations
required by the Securities and Exchange Commission and, therefore, are not
intended to forecast possible future appreciation, if any, of the stock
price.
The following table sets forth the number of shares for which stock options
were exercised during the last fiscal year, the value realized, the number of
shares for which options were outstanding and the value of those options as of
the fiscal year end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
IN- THE-MONEY
OPTIONS AT
FY-END
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ---------------------------------------------- --------------------- ----------------------- ------------- --------------
<S> <C> <C> <C> <C>
James G. Gidwitz.............................. 0 0 0/30,000 0/0
Joseph J. Sum................................. 0 0 0/12,000 0/0
</TABLE>
PENSION PLAN FOR MR. RYAN
Certain additional contractual benefits had been extended to Mr. William A.
Ryan pursuant to a Deferred Compensation Agreement. Under this program, Mr. Ryan
will receive annual retirement benefit payments from the Company of
approximately $89,000 for a period of ten years.
5
<PAGE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation.
The Executive Compensation Program is administered by the Compensation
Committee of the Board of Directors (the "Committee"). The Committee's major
responsibilities are:
1. Reviewing the Company's major compensation and benefit practices,
policies and programs including administration of the Company's Amended
and Restated 1994 Stock Option Plan with respect to executive officers;
and
2. Reviewing executive officers' salaries and bonuses.
COMPENSATION PHILOSOPHY
It is the philosophy of the Company to ensure that executive compensation is
linked to corporate performance. Accordingly, in years in which performance
goals are achieved or exceeded, executive compensation should be higher than in
years in which the performance is below expectation. At the same time, the
Committee is cognizant of its need to offer compensation that is competitive. By
providing the opportunity for compensation that is comparable to the levels
offered by other similarly situated companies, the Company is able to attract
and retain key executives. The Committee regularly reviews the Company's
compensation programs to ensure that pay levels and incentive opportunities are
competitive and reflect the performance of the Company. In conducting this
review the Committee retains independent compensation consultants.
COMPENSATION PROGRAM COMPONENTS
To achieve its compensation goals, the compensation program consists
primarily of two components base salary and bonuses. Both components are
adjusted based upon corporate performance and individual initiative and
performance. Total pay levels, that is the aggregate of base salary and annual
bonus, are largely determined through comparisons with companies of similar size
and complexity. In addition, William Ryan, the former President, participated in
the Company's Deferred Compensation Plan which is discussed above under the
heading "Pension Plan for Mr. Ryan." Total pay levels for the executive officers
are competitive within a range that the Committee considers to be reasonable and
necessary.
PERFORMANCE MEASURES
The Committee uses various performance measures in evaluating annual
executive compensation. The Committee examined earnings, adjusted for certain
unusual or nonrecurring items, as an important measure of performance. The
Committee also considered return on net investment, cash flows and personal
goals. In its consideration, the Committee did not assign quantitative relative
weights to these factors or follow mathematical formulae. Rather, the factors
discussed above are compared by the Committee with the Company's annual business
plan, the Company's prior year's performance and the performance of other
companies in the industry segments in which the Company competes. The Committee
then made judgments after considering the various factors. The Committee
believes that these performance measures serve to align the interests of
executives with the interests of stockholders.
1995 COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In evaluating the compensation of the Company's chief executive officer (the
"CEO"), the Committee reviewed the CEO's existing compensation arrangements, the
performance of the Company (taking into account the performance measures
discussed above) and the CEO and compensation of chief executive officers in
similarly situated companies. Based on this review, the Committee increased the
CEO's salary by 7.5% in 1995 as compared with 3.6% in 1994 and 4.6% in 1993. In
setting the 1995 increase, the Committee considered, among other things, the
level of compensation of executives in similarly situated companies. In granting
the CEO's bonus in 1995, the Committee likewise considered the incentive
compensation paid to CEOs of similar companies, the Company's performance in
1995, and the CEO's additional duties assumed when Mr. Ryan retired. The
Company's performance
6
<PAGE>
in 1995 did not attain the goals set forth in the Company's business plan,
although much of the shortfall was due to unusual or non-recurring items.
Accordingly, the Committee granted the CEO a bonus of $68,000 for 1995 compared
to $236,550 last year.
STOCK OPTION AND LONG-TERM PLANS
The Company maintains the Continental Materials Corporation Amended and
Restated 1994 Stock Option Plan. As discussed under the heading "Stock Options"
above, the Company granted certain individuals, options for 78,000 shares of
stock. The Company has no other long term compensation plans.
SUMMARY
After reviewing all of its existing compensation programs, the Committee
continues to believe that the total compensation program for executives of the
Company is competitive with the compensation programs provided by other
corporations of similar size and complexity. Moreover, the Committee believes
that it has set compensation at levels that reflect each executive officer's
contribution towards the Company's objectives.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
RONALD J. GIDWITZ AND THEODORE R. TETZLAFF
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
Theodore R. Tetzlaff, a member of the Compensation Committee, is a partner
in the Chicago law firm of Jenner & Block. From time to time, the Company
retains Jenner & Block to provide it with legal services. The dollar amount of
fees paid to Jenner & Block by the Company in 1995 did not exceed 5% of that
firm's annual gross revenues.
The Company engaged in various transactions in which members of the Gidwitz
Family, including Ronald Gidwitz, had an interest.
L.O.M. Holdings, Inc. ("L.O.M."), a company whose subsidiaries are engaged
in the travel agency business, is owned by members of the Gidwitz Family. The
Company purchased a total of approximately $37,000 in airline tickets and other
travel services from subsidiaries of L.O.M. during its last fiscal year.
Management believes that these purchases were on terms that were as favorable as
might be obtained from an unrelated third party.
The Company is currently serving as the sponsoring corporation in an
Insurance Purchasing Group (the "Group"), which consists of the Company and its
subsidiaries and other companies in which the Gidwitz Family are the principal
owners. The cost of such insurance is allocated among all members of the Group
based on such factors as, but not limited to, nature of the risk, loss history
and size of operations. From time to time, the Company will advance payments to
the insurance carriers on behalf of the individual members of the Group. The
Company invoices each member of the Group for their respective share of each
payment. Interest at the rate of prime plus one percent is charged on all
amounts not paid by a member after 30 days from receipt of an invoice sent by
the Company. During fiscal year 1995, certain members of the Group were indebted
to the Company with respect to advances made by the Company under the insurance
purchasing program. The largest aggregate amount of indebtedness outstanding at
any time during fiscal year 1995 with respect to these companies equalled
approximately $279,000. As of the date of this proxy statement, no past due
amounts are owing to the Company from any member of the Group. The Company's
participation in the Group has, in management's opinion, resulted in significant
savings to the Company in terms of the cost of insurance premiums and other
insurance charges.
7
<PAGE>
COMPARISON OF TOTAL SHAREHOLDER RETURN
The following graph compares the Company's cumulative total stockholder
return on its common stock for a five year period (December 31, 1990 to December
31, 1995), with the cumulative total return of the American Stock Exchange
Market Value Index ("ASEMVI"), and a peer group of companies selected by the
Company. The "Peer Group" is more fully described below. Dividend reinvestment
has been assumed with respect to the ASEMVI and the Peer Group. The companies in
the peer group are weighted by market capitalization as of the beginning of the
measurement period. The Company has never paid a dividend.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CONTINENTAL MATERIALS CP PEER GROUP INDEX BROAD MARKET INDEX
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 112.50 75.34 123.17
1992 127.08 65.92 124.86
1993 133.33 79.34 148.34
1994 193.75 78.45 131.04
1995 202.08 99.59 168.90
</TABLE>
The Company manufactures and markets products in two separate industries.
These industries are (i) heating and air conditioning and (ii) construction
materials, primarily ready-mix concrete. The Company's principal activities have
occurred exclusively in these two industries for over 15 years. The Peer Group
selected by the Company for the above graph is a combination of companies from
these two industries. The companies included in the Peer Group are: American
Business Computer Corporation; Danaher Corporation; Fedders Corporation; Florida
Rock Industries Inc.; ICC Technologies; Kysor Industrial Corporation; Lancer
Corporation; LSB Industries, Inc.; Mesteck Inc.; Tecumseh Products Inc.;
Westinghouse Electric Corporation; and Wynn's International, Inc.
8
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following information is furnished as to the Common Stock of the Company
owned beneficially as of March 22, 1996 by (i) each director, (ii) the executive
officers named in the summary compensation table, (iii) directors and executive
officers as a group, and (iv) persons that have reported beneficial ownership of
more than 5% of the Company's Common Stock.
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OF CLASS
OF BENEFICIAL OWNER NO. OF SHARES (1)
- ---------------------------------------- ---------------- ------------
<S> <C> <C>
Gidwitz Family
225 West Wacker Drive, Suite 1800
Chicago, Illinois 60606 392,993(2) 35.5%
Warren G. Lichtenstein
750 Lexington Avenue
New York, New York 10022 99,700(4) 9.0%
Lawrence Butler
750 Lexington Avenue
New York, New York 10022 99,700(4) 9.0%
Continental Materials Corporation
Employees Profit Sharing
Retirement Plan 59,098 5.3%
Thomas H. Carmody 100
James G. Gidwitz --(2)(3)
Betsy R. Gidwitz --(3)
Ralph W. Gidwitz --(3)
Ronald J. Gidwitz --(3)
Mark S. Nichter 100(2)
William A. Ryan 600
William G. Shoemaker 160
Joseph J. Sum 200(2)
Theodore R. Tetzlaff 0
All directors and officers as a group
(includes ten persons) 453,251 40.1%
</TABLE>
- ---------
(1) The shares owned in each case except as otherwise indicated, constitute
less than 1% of the outstanding shares of the Company's common stock.
(2) Excludes 59,098 shares held by the Company's Employee Profit Sharing
Retirement Plan as to which James L. Gidwitz, Mark S. Nichter and Joseph J. Sum
share voting power as trustees of such Plan.
(3) Excludes shares held indirectly as follows:
(a) 363,563 shares owned by a partnership whose managing partners are
Betsy R. Gidwitz, Gerald S. Gidwitz, James G. Gidwitz, Ralph W. Gidwitz, and
Ronald J. Gidwitz.
(b) 23,268 shares owned by L.O.M. whose beneficial owners include
members of the Gidwitz Family.
9
<PAGE>
(c) 6,162 shares held directly by family members of Joseph L. Gidwitz
other than those family members included in the security ownership of
management table above.
With respect to the shares referenced in this Note, the beneficial owners
indicated in (c) have sole voting and investment power and the beneficial owners
indicated in (a) and (b) have shared voting and investment power.
(4) Represents 73,450 shares held by Steel Partners II and 26,250 shares
managed by Steel Partners Services, Ltd. Messrs. Lichtenstein and Butler
disclaim beneficial ownership of such shares.
PROPOSAL FOR RATIFICATION OF EMPLOYMENT OF
INDEPENDENT AUDITORS
The Board of Directors and the Audit Committee recommend ratification of the
continued employment of Coopers & Lybrand L.L.P., Certified Public Accountants,
to audit the Company's books for the fiscal year ending December 28, 1996. An
appropriate resolution ratifying such employment will be submitted to the
stockholders at the annual meeting. If such resolution is not adopted,
management will reconsider such appointment.
A representative of Coopers & Lybrand is expected to be present at the
stockholders' annual meeting. The representative will have an opportunity to
make a statement if he/she desires to do so, and he/she will be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
STOCKHOLDER PROPOSALS AND OTHER MATTERS
The deadline for receipt of stockholder proposals for inclusion in the
Company's proxy statement for its 1996 fiscal year is December 20, 1996.
The management does not know of any matters to be presented at the annual
meeting other than those set forth in this proxy statement. If any other matters
not now known come before the annual meeting, it is intended that the persons
named in the proxies will act according to their best judgment.
EXPENSES
The entire expense of preparing, printing and mailing the form of proxy and
the material used for the solicitation thereof will be borne by the Company. In
addition, the Company has retained the services of Beacon Hill Partners, Inc. to
solicit proxies from nominees and brokers' accounts at a cost of approximately
$3,500. Solicitation of proxies will be made by mail but also may be made
through oral communications by directors, officers or employees of the Company
who will receive no additional compensation for such efforts.
By Order of the Board of Directors,
James G. Gidwitz
Chairman of the Board
10
<PAGE>
PROXY CONTINENTAL MATERIALS CORPORATION
PROXY CARD FOR ANNUAL MEETING ON MAY 22, 1996
The undersigned hereby appoints James G. Gidwitz and Joseph J. Sum as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote as designated below, all the shares of common
stock of Continental Materials Corporation held on record by the undersigned on
March 29, 1996, at the annual meeting of stockholders to be held on May 22, 1996
or any adjournment thereof.
The Board of Directors unanimously recommends a vote FOR the following:
<TABLE>
<S> <C> <C> <C>
(1) Election of three nominees to the Board of Directors.
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees listed
below) below
</TABLE>
Ralph W. Gidwitz, William G. Shoemaker and Theodore R. Tetzlaff
<TABLE>
<S> <C> <C> <C>
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a line through that nominee's name.)
(2) Approval and ratification of the Directors' appointment of Coopers & Lybrand as the Company's
independent auditors for the year ending December 28, 1996.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C> <C> <C>
(3) In their discretion, the Proxies are authorized to vote upon such other business as may properly
come before the meeting.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
(Continued, and to be signed on the other side)
<PAGE>
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO INSTRUCTIONS ARE GIVEN, IT
WILL BE VOTED "FOR" ELECTION OF ALL NOMINEES AS DIRECTORS OF THE COMPANY, AND
"FOR" APPROVAL AND RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS.
DATED: ___________________ , 1996
_________________________________
Signature
_________________________________
Signature if held jointly
Please vote, sign, date and
return this proxy promptly.
Please sign exactly as name appears above. Executors, administrators, trustees,
guardians, attorneys-in-fact, etc. should give their full titles. If signer is a
corporation, please give full corporate name and have a duly authorized officer
sign, stating title. If a partnership, please sign in partnership name by
authorized person. If stock is registered in two names, both should sign.
