<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
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 Section240.14a-11(c) or
Section240.14a-12
CONTINENTAL MATERIALS CORPORATION
----------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
----------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
CONTINENTAL MATERIALS CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 2000 annual meeting of stockholders of Continental Materials Corporation
(the "Company") will be held at The Northern Trust, 50 South LaSalle Street,
Chicago, Illinois, on Wednesday, May 24, 2000, at 10:00 a.m., to consider and
act upon the following matters:
(a) The election of three directors to serve until the 2003 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 30, 2000; and
(d) 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 31, 2000 are
entitled to notice of and to vote at the annual meeting or any adjournment
thereof. A list of these stockholders will be available for inspection for ten
days preceding the meeting at the Company's office, 225 West Wacker Drive,
Chicago Illinois, and will also be available for inspection at the meeting.
Accompanying this notice are the Annual Report for the fiscal year ended
January 1, 2000, 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 promptly.
By Order of the Board of Directors,
/s/ Mark S. Nichter
Mark S. Nichter
Secretary
Chicago, Illinois
April 24, 2000
<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 24, 2000, 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, for
the ratification of PricewaterhouseCoopers LLP, and in the judgment of the
Proxies on any other proposals. The approximate date on which this proxy
statement and the enclosed proxy are first sent or given to stockholders is
April 24, 2000.
The holders of record on March 31, 2000, of the 1,872,042 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.
The three nominees for election as directors at the 2000 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 30, 2000. 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. Because the election of
directors is determined on the basis of the greatest number of votes cast,
abstentions and broker non-votes have no effect on the election of directors.
With respect to other matters, shares present in person or by proxy but 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 proxies will vote for the election of such persons designated by
them as are expected to 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
Thomas H. Carmody, 53.................. 1994 Chief Executive Officer of Summitt 2000
International, LLC, a sports
marketing and distribution company,
since 1999. Mr. Carmody previously
held the same position with
Continental Sports Group, LLC, a
sports marketing and distribution
company, from 1998 to 1999. Mr.
Carmody was previously Consultant
to the Chairman and Chief Executive
Officer of Reebok International,
Ltd., a publicly traded footwear,
apparel and fitness equipment
company, from 1996 to 1998. Mr.
Carmody has also previously served
as Vice President, U.S. Operations
and Vice President, Sports Division
of Reebok, from 1993 to 1996.
Ronald J. Gidwitz, 55.................. 1974 Partner in GCG Partners, a strategic 2000
consulting and equity capital firm
since 1998. Mr. Gidwitz was
previously President of Helene
Curtis, a producer of personal care
products from 1979 to 1998 and
Chief Executive Officer from 1985
to 1998.
Darrell M. Trent, 61................... 1997 Chairman of the Board and Chief 2000
Executive Officer of Acton
Development Company, Inc., a real
estate development and property
management company, since 1988. Mr.
Trent was also Chairman of the
Board and Chief Executive Officer
of Clean Earth Technologies, Inc.,
an environmental management venture
from 1992 to 1994.
</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>
CONTINUING DIRECTORS
James G. Gidwitz, 53,
Chairman of the Board and
Chief Executive Officer.............. 1978 Chairman of the Board and Chief 2001
Executive Officer of the Company
since 1983.
Betsy R. Gidwitz, 59................... 1996 Former Professor from Massachusetts 2001
Institute of Technology.
Joseph J. Sum, 52,
Vice President and Treasurer......... 1989 Vice President and Treasurer of the 2001
Company since 1988. Mr. Sum
previously served as Assistant
Treasurer of the Company from 1978
through August 1988, Controller
from 1979 through January 1989 and
Secretary from 1983 through
February 1993.
Ralph W. Gidwitz, 64................... 1984 President, Chief Executive Officer 2002
and Director of Financial Capital
Corporation, a financial consulting
company, since 1996. Mr. Gidwitz
was previously President, Chief
Executive Officer and Director of
RKG Corporation, a company engaged
in mergers and acquisitions from
1991 through 1996.
William G. Shoemaker, 83............... 1968 Independent business consultant since 2002
January 1991.
Theodore R. Tetzlaff, 55............... 1981 Partner in the Chicago law firm of 2002
Jenner & Block since 1982 and
Chairman of its Executive Committee
since 1997. Mr. Tetzlaff also
served as General Counsel of
Tenneco, Inc. from 1992 to 1999.
</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."
3
<PAGE>
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 1999 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; 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 was one committee
meeting in 1999.
The Compensation Committee was composed of Ronald J. Gidwitz and Theodore R.
Tetzlaff in 1999. See "COMPENSATION COMMITTEE REPORT" for discussion of
responsibilities. The Committee held two meetings in 1999.
BOARD MEETINGS
The Board of Directors held four meetings in fiscal 1999. All directors
except Ronald Gidwitz and Theodore Tetzlaff 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 or she 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 two other executive officers for the years 1997
through 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------- ----------------------------
AWARDS PAYOUTS
------------------ ---------
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........... 1999 $389,722 $350,000 -- None None None $312,172
Chairman and Chief 1998 366,931 311,250 -- None None None 104,472
Executive Officer 1997 359,550 260,900 -- None None None 100,559
Joseph J. Sum.............. 1999 182,844 100,000 $66,250 None 400 None 49,297
Vice President and 1998 166,500 91,700 -- None None None 38,305
Chief Financial Officer 1997 162,591 75,900 -- None None None 31,513
Mark S. Nichter............ 1999 104,558 45,000 -- None None None 20,912
Secretary (3) 1998 97,000 40,100 14,488 None None None 19,774
1997 94,750 34,000 15,680 None None None 18,968
</TABLE>
- ------------------------------
(1) For Mr. Sum, the amount shown represents the dollar value of the difference
between the price paid for common stock upon exercise of stock options and
the fair market value of such stock at the date of purchase. Where no
amounts are shown, Other Annual Compensation does not exceed the reporting
thresholds.
(2) For 1999, the amounts shown represent the employer matching contributions to
the Company's 401(k) Plan. For Messrs. Gidwitz and Sum, these amounts
include amounts deferred under a Supplemental Profit Sharing Plan.
(3) Mr. Nichter is 49 years old and has served as the Company's Secretary since
1992 and Corporate Controller since 1989.
4
<PAGE>
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. In the following discussion and
table, all quantities and amounts have been restated for the June 1999 reverse
and forward stock split. During 1995 there were options granted for 156,000
shares of stock at an exercise price of $6.5625. All 156,000 options became
exercisable during 1996 although none were exercised. Under the reload
provisions of the Plan, options for 400 shares were granted during 1999 with an
exercise price of $23.125. There have been no other options granted. During
1997, 24,000 of the shares were forfeited when the grantee resigned from the
Company. During 1999, 18,000 shares were purchased under the program by two of
the grantees. In addition, as noted in the table below, Mr. Sum purchased 4,000
shares under the program during 1999.
The following table sets forth certain information with respect to stock
options granted during the last fiscal year to the executive officers named in
the Summary Compensation Table. Using values of 5% to 10% in assumed rates of
stock price appreciation (compounded annually) for the option term of
approximately 6 years, the table also shows the potential realizable value of
the stock options.
OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
% OF TOTAL APPRECIATION FOR
OPTIONS GRANTED EXERCISE OR OPTION TERM (1)
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% 10%
- ---- ----------- --------------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Joseph J. Sum.............. 400 100 $23.125 9/26/05 $3,000 $7,000
</TABLE>
- ------------------------
(1) The dollar amounts used in these columns are the results of calculations
required by the Securities and Exchange Commission and, therefore, are not
intended to forecast possible future appreciation, if any, of the stock
price.
The following table sets forth the activity for 1999 regarding the number of
shares for which stock options were acquired on exercise, the value realized,
the number of shares for which options were outstanding and the value of those
options as of the fiscal year end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED IN-
THE-MONEY OPTIONS AT
FY-END
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE (#) UNEXERCISABLE
- ------------------------------ --------------- ------------------ ----------------- --------------------
<S> <C> <C> <C> <C>
James G. Gidwitz.............. 0 0 60,000/0 $986,250/0
Joseph J. Sum................. 4,000 $39,087 20,400/0 328,750/0
</TABLE>
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. 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 as an important measure
of performance. The Committee also considered return on net investment 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.
1999 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 of the CEO, and compensation of chief executive officers in
similarly situated companies. Based on this review, the Committee increased the
CEO's salary by 6.2% in 1999 as compared with 2.1% in 1998 and 3.7% in 1997. In
setting the 1999 increase, the Committee considered, among other things, the
level of compensation of executives in similarly situated
6
<PAGE>
companies. In granting the chief executive officers bonus in 1999, the Committee
likewise considered the incentive compensation paid to CEOs of similar companies
and the Company's performance in 1999. The Company's performance in 1999
exceeded all goals set forth in the Company's annual business plan. Net income
grew 49% to $6,902,000 compared to $4,618,000 in 1998. Accordingly, the
Committee granted the CEO a bonus of $350,000 for 1999 compared to $311,250 for
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 "EXECUTIVE
COMPENSATION--Stock Options" above. 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 1999 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 J. Gidwitz, had an interest.
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. During fiscal year 1999, 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 1999 with respect to these companies equaled
approximately $184,000. 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
related charges.
7
<PAGE>
COMPARISON OF TOTAL SHAREHOLDER RETURN
The following graph compares the yearly percentage change in the Company's
cumulative total stockholder return on its common stock for a five-year period
(December 31, 1994 to December 31, 1999), 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" was changed for the year to
more reasonably compare to the Company's current product and sales profile and
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 CUSTOMER SELECTED AMEX
<S> <C> <C> <C>
Materials Stock List Market Index
1994 $100.00 $100.00 $100.00
1995 $104.30 $116.29 $128.90
1996 $182.80 $135.08 $136.01
1997 $231.18 $163.16 $163.66
1998 $313.98 $241.05 $161.44
1999 $395.70 $209.98 $201.27
</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: Centex
Construction Products, Inc.; Devcon International Corp.; Fedders Corporation;
Florida Rock Industries, Inc.; Hanson PLC; Lafarge Corporation; LSB
Industries, Inc.; Martin Industries, Inc.; Martin Marietta Materials, Inc.;
Mesteck, Inc.; and York International Corp.
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 24, 2000 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>
NAME AND ADDRESS PERCENT OF
OF BENEFICIAL OWNER NO. OF SHARES CLASS (1)
- ------------------- ------------- ----------
<S> <C> <C>
Gidwitz Family.............................................. 846,720(2)(4) 43.8%
225 West Wacker Drive,
Suite 1800
Chicago, Illinois 60606
Warren G. Lichtenstein...................................... 309,200(5) 16.5%
750 Lexington Avenue
New York, New York 10022
Continental Materials Corporation Employees Profit Sharing 80,245 4.3%
Retirement Plan...........................................
Thomas H. Carmody........................................... 200
James G. Gidwitz............................................ 66,002(2)(3)(4)) 3.5%
Betsy R. Gidwitz............................................ 6,002(3) .3%
Ralph W. Gidwitz............................................ 6,002(3) .3%
Ronald J. Gidwitz........................................... 6,002(3) .3%
Mark S. Nichter............................................. 0(2)
William G. Shoemaker........................................ 320
Joseph J. Sum............................................... 17,400(2)(4) .9%
Theodore R. Tetzlaff........................................ 0
Darrell M. Trent............................................ 2,000 .1%
All directors and officers as a group (includes ten 946,885(6) 50.6%
persons)..................................................
</TABLE>
- ------------------------
(1) Based on 1,872,042 shares of Common Stock outstanding as of April 3, 2000.
Shares subject to options exercisable within 60 days of April 3, 2000 are
considered for the purpose of determining the percent of the class held by
the holder of such option, but not for the purpose of computing the
percentages held by others. 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 80,245 shares held by the Company's Employee Profit Sharing
Retirement Plan as to which James G. Gidwitz, Mark S. Nichter and Joseph J.
Sum share voting power as trustees of such Plan.
(3) Excludes shares held indirectly as follows, which shares are included in the
Gidwitz Family holdings (See "ELECTION OF DIRECTORS--Family Relationships"
for a description of the Gidwitz Family):
(a) 727,126 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) 4,914 shares owned by McCord Group, Inc. whose beneficial owners include
members of the Gidwitz Family.
(c) 342 shares owned by a partnership whose beneficial owners are members of
the Gidwitz Family.
(d) 30,330 shares held directly by Gidwitz family members other than those
family members included in the security ownership of management table
above.
9
<PAGE>
With respect to the shares referenced in this Note, the beneficial owners
indicated in (d) have sole voting and investment power and the beneficial owners
indicated in (a), (b) and (c) have shared voting and investment power.
(4) Includes shares of Common Stock subject to options which are exercisable
within 60 days of April 1, 1999 as follows: James G. Gidwitz, 60,000 shares
(which shares are also included in the Gidwitz Family holdings); and Joseph
J. Sum, 13,400 shares.
(5) Represents 309,200 shares held by Steel Partners II, L.P. By virtue of his
position with Steel Partners II, Mr. Lichtenstein has sole power to vote and
dispose of such 309,200 shares. Information is per the most recent
Schedule 13D filed with the Securities and Exchange Commission which
Schedule is dated August 6, 1999.
(6) Includes shares held by the Gidwitz Family, shares held by directors and
officers who are not members of the Gidwitz Family and 80,245 shares held by
the Company's Employee Profit Sharing Retirement Plan as to which James G.
Gidwitz, Mark S. Nichter and Joseph J. Sum share voting power as trustees of
such Plan.
PROPOSAL FOR RATIFICATION OF ENGAGEMENT OF
INDEPENDENT AUDITORS
The Board of Directors and the Audit Committee recommend ratification of the
continued engagement of PricewaterhouseCoopers LLP, Certified Public
Accountants, to audit the Company's books for the fiscal year ending
December 30, 2000. 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 PricewaterhouseCoopers 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.
10
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STOCKHOLDER PROPOSALS AND OTHER MATTERS
The deadline for receipt of stockholder proposals for inclusion in the
Company's proxy statement for its 2000 fiscal year is December 15, 2000. With
respect to stockholder proposals not included in the Company's proxy statement
and form of proxy, the Company may utilize discretionary authority conferred by
proxy in voting on any such proposals if, among other situations, the
stockholder does not give timely notice of the matter to the Company by
March 12, 2001. This notice requirement and deadline are independent of the
notice requirement and deadline described above for a shareholder proposal to be
considered for inclusion in the Company's proxy statement. 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.
SECTION 16(a) BENEFICIAL REPORTING COMPLIANCE
James G. Gidwitz and Ronald J. Gidwitz each filed one late report with the
Securities and Exchange Commission under Section 16(a) relating to three
purchases of stock totaling forty four shares acquired indirectly by them
through a partnership.
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
$4,000. 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,
/s/ James G. Gidwitz
James G. Gidwitz
Chairman of the Board
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[FRONT]
PROXY PROXY
CONTINENTAL MATERIALS CORPORATION
PROXY CARD FOR ANNUAL MEETING ON MAY 24, 2000
The undersigned hereby appoints James G. Gidwitz and Joseph J. Sum as
Proxies, each with 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 of record by the undersigned
on March 31, 2000, at the annual meeting of stockholders to be held on May 24,
2000, or any adjournment thereof.
The Board of Directors unanimously recommends a vote FOR Proposals (1)
and (2).
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. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS
THEREOF.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
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<PAGE>
CONTINENTAL MATERIALS CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY / /
<TABLE>
<S> <C> <C>
FOR all nominees WITHHOLD
listed below AUTHORITY To vote
(except as marked to for all nominees
the contrary below) listed below
/ / / /
</TABLE>
(1) Election of three nominees to the Board of Directors.
Thomas H. Carmody, Ronald J. Gidwitz and Darrell M. Trent
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THAT NOMINEE'S NAME.)
FOR AGAINST ABSTAIN
(2) Approval and ratification of the Directors' / / / / / /
appointment of PricewaterhouseCoopers LLP
as the Company's independent auditors for the
year ending December 30, 2000.
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
Dated , 2000
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Signature
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Signature if held jointly
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.
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