<PAGE> 1
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 / /
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Check the appropriate box:
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/ /
(Name of Registrant as Specified In Its Charter)
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/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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state how it was determined):
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<PAGE> 2
COURIER CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JANUARY 18, 1996
To the Stockholders of
COURIER CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders (the "Annual Meeting") of COURIER CORPORATION (the
"Corporation") will be held at the Sheraton Inn Lowell, 50 Warren
Street, Lowell, Massachusetts, at ll:00 A.M. on Thursday, January
18, 1996, for the following purposes:
1. To elect three Class A Directors to hold office for a term
of three years and until their respective successors shall
be elected and shall have qualified;
2. To approve an amendment to the Corporation's 1993 Stock
Incentive Plan, which would, among other things, increase
the number of shares available for grant under the Plan by
100,000 shares, representing 4.97% of the number of
outstanding shares, as described in the accompanying Proxy
Statement;
3. To ratify and approve the selection by the Board of
Directors of Deloitte & Touche LLP as independent public
accountants for the Corporation for the current fiscal year
ending September 28, 1996; and
4. To transact such other business as may properly come before
the Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on
November 24, 1995 as the record date for the determination of the
stockholders entitled to notice of and to vote at the Annual
Meeting and at any adjournments or postponements thereof.
By order of the Board of Directors,
F. BEIRNE LOVELY, JR., Clerk
165 Jackson Street
Lowell, Massachusetts 01852
December 8, 1995
IF YOU DO NOT EXPECT TO ATTEND IN PERSON, IT WOULD BE
APPRECIATED IF YOU WOULD FILL IN AND SIGN THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE> 3
PROXY STATEMENT
COURIER CORPORATION
165 JACKSON STREET
LOWELL, MASSACHUSETTS 01852
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 18, 1996
NATURE OF SOLICITATION
This Proxy Statement is furnished in connection with and
accompanies a Proxy for and Notice of Annual Meeting of
Stockholders (the "Notice") of Courier Corporation (the
"Corporation" or "Courier"), to be held January 18, 1996 at ll:00
A.M. at the Sheraton Inn Lowell, 50 Warren Street, Lowell,
Massachusetts, for the purposes set forth in said Notice. The
solicitation is made on behalf of the Board of Directors of the
Corporation.
This Proxy Statement and the accompanying Notice and Proxy
Card (the "Proxy") are first being sent to stockholders on or
about December 8, 1995. The Board of Directors has fixed the
close of business on November 24, 1995 as the record date for the
determination of stockholders entitled to notice of and to vote
at the Annual Meeting (the "Record Date").
The cost of preparing, assembling and mailing the Proxy and
Notice and this Proxy Statement and of soliciting Proxies is to
be borne by the Corporation. In addition to the use of the
mails, solicitation may be made by telephone and personally by
employees and Directors of the Corporation. Corporate Investor
Communications, Inc. has been hired by the Corporation to act as
a distribution agent and solicitor only with respect to record
holders who are brokers, dealers, banks or other entities that
exercise fiduciary powers in nominee name or otherwise, at a fee
of approximately $2,700. The Corporation will also bear the
expense of banks, brokers and other fiduciaries or nominees who
may forward Proxies and proxy material to beneficial owners of
shares held of record by such holders of record.
Any Proxy given pursuant to this solicitation may be revoked
by the person giving it prior to the exercise of the powers
conveyed by it by filing with the Clerk of the Corporation a
written revocation or duly executed Proxy bearing a later date or
by attending the Annual Meeting and voting in person. Unless a
Proxy is revoked, the shares represented thereby will be voted at
the Annual Meeting or at any adjournment thereof in the manner
hereinafter described.
The Annual Report of the Corporation for the fiscal year
ended September 30, 1995 including financial statements for the
fiscal year ended September 30, 1995, is being mailed to
stockholders concurrently with this Proxy Statement.
VOTING SECURITIES
As of the Record Date, the securities outstanding and
entitled to vote at the Annual Meeting consist of 2,011,470
shares of Common Stock, par value $1 per share, of the
Corporation (the "Common Stock"). Only holders of record at the
close of business on November 24, 1995 will be entitled to vote
at the meeting. Each stockholder is entitled to one vote, in
person or by proxy, for each share held. A majority in interest
of all shares of Common Stock issued, outstanding and entitled to
vote at the meeting constitutes a quorum for the meeting
(1,005,736 shares). Abstentions and broker votes shall be
counted in determining the number of shares present at the
meeting.
<PAGE> 4
A plurality of votes properly cast for the election of
Directors by stockholders attending the meeting in person or by
proxy will elect Directors to office. A majority of votes
properly cast at the meeting is required for approval of other
matters presented at the meeting, unless a larger vote is
required by law, or by the Corporation's Articles of
Organization or By-Laws. Abstentions and broker non-votes
will not be counted as votes cast at the meeting.
<TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of November 24, 1995, the
ownership of Common Stock of the Corporation by each Director, by
each executive officer named in the Summary Compensation Table
below (each "Named Executive Officer"), by all Directors and
executive officers of the Corporation as a group, and by any
person or group known to the Corporation to be the beneficial
owner of more than 5% of the outstanding shares of Common Stock.
The number of shares beneficially owned by each person and entity
is determined according to rules of the Securities and Exchange
Commission (the "Commission"), and the information is not
necessarily indicative of beneficial ownership for any other
purpose. Under such rules, beneficial ownership includes any
shares as to which the individual or entity has sole or shared
voting power or investment power and also any shares which the
individual or entity has the right to acquire within sixty days of
November 24, 1995 through the exercise of an option or similar
right. Except as noted below, each holder has sole voting and
investment power with respect to all shares of Common Stock listed
as owned by such person or entity.
<CAPTION>
Number of Shares
Beneficially % of Shares
Name Owned (1)(2)(3) Outstanding
---- ---------------- -----------
<S> <C> <C>
James F. Conway III 257,740 (4) 12.4%
Kathleen Foley Curley 1,200 0.1%
Richard K. Donahue 1,450 0.1%
Edward J. Hoff 51,124 2.5%
Arnold S. Lerner 1,718 (5) 0.1%
Charles E. Otto 5,200 0.3%
W. Nicholas Thorndike 17,100 1.0%
George Q. Nichols 27,936 1.4%
Thomas G. Osenton 10,538 0.5%
Robert P. Story, Jr. 38,360 (6) 1.9%
Peter M. Folger 8,509 0.4%
All Directors and Executive Officers
as a Group (11 persons) 420,875 19.6%
Courier Employee Stock Ownership Plan 153,753 (7) 7.6%
The Killen Group, Inc. 153,000 (8) 7.6%
T. Rowe Price Associates, Inc. 130,000 (9) 6.5%
<FN>
(1) The information concerning the amount of Common Stock of the Corporation
beneficially owned by each of the Directors and executive officers was furnished
to the Corporation by each such Director or executive officer.
</TABLE>
2
<PAGE> 5
(2) Includes shares subject to options exercisable within sixty
days as follows: Mr. Conway, 61,433; Ms. Curley, 1,200; Mr.
Donahue, 450; Mr. Hoff, 8,800; Mr. Otto, 5,200; Mr. Thorndike,
600; Mr. Nichols, 19,899; Mr. Osenton, 7,400; Mr. Story, 26,900;
Mr. Folger, 6,566; and all Directors and executive officers as a
group, 138,448. For purposes of calculating the percentage of
shares outstanding with respect to each individual and the group,
the shares subject to such options have been treated as if they
were issued and outstanding only as to such individual or group.
(3) Includes shares allocated to individual accounts in the
Courier Employee Stock Ownership Plan (the "ESOP") as follows:
Mr. Conway, 1,440; Mr. Nichols, 1,552; Mr. Osenton, 138; Mr.
Story, 1,010; and Mr. Folger, 643.
(4) Includes 143,818 shares owned by the James F. Conway, Jr.
Trusts of which Mr. Conway III is a trustee with shared voting
and investment power as to these shares.
(5) Does not include 1,000 shares owned by Mr. Lerner's wife or
5,000 shares owned by Mr. Lerner's adult children, as to which
shares Mr. Lerner disclaims beneficial ownership.
(6) Does not include 800 shares owned by Mr. Story's wife as to
which shares Mr. Story disclaims beneficial ownership.
(7) Includes 4,783 shares allocated to individual ESOP accounts
for Named Executive Officers. See (3). State Street Bank and
Trust Company is the trustee under the trust agreement relating
to the ESOP. The ESOP's address is c/o the Corporation, 165
Jackson Street, Lowell, MA 01852.
(8) Based upon information provided by The Killen Group, Inc.
("Killen Group") as of November 24, 1995. Killen Group is an
investment adviser with sole voting and investment power as to
71,700 of these shares. The clients of Killen Group exercise
sole voting and investment power as to the remaining 81,300
shares held in the portfolios. The address for Killen Group is
1189 Lancaster Avenue, Berwyn, PA 19312.
(9) Based upon information provided by T. Rowe Price Associates,
Inc. as of November 24, 1995. These shares are owned by T. Rowe
Price Small Cap Value Fund, for which T. Rowe Price Associates,
Inc. ("Price Associates") serves as investment adviser with power
to direct investments. For purposes of the reporting
requirements of the Securities Exchange Act of 1934, Price
Associates is deemed to be a beneficial owner of such securities;
however, Price Associates expressly disclaims that it is, in
fact, the beneficial owner of such securities. The address for
Price Associates is 100 East Pratt Street, Baltimore, MD 21202.
ITEM 1: ELECTION OF DIRECTORS
Pursuant to the By-Laws, the Corporation's directorships are
divided into three classes, consisting of Class A, Class B and
Class C Directors. The term of each directorship is three years
and the terms of the three classes are staggered in such a manner
that only one class is elected in any one year. Three Class A
Directors are to be elected at the 1996 Annual Meeting. Each of
the three Class A Directors will serve until the sooner of the
1999 Annual Meeting or his successor is elected and has
qualified. It is proposed that Proxies not limited to the
contrary will be voted to elect Richard K. Donahue, Edward J.
Hoff and Robert P. Story, Jr. as Class A Directors. Messrs.
Donahue, Hoff and Story are presently Class A Directors having
terms expiring at the 1996 Annual Meeting. If some unexpected
occurrence should make necessary in the judgement of the Board of
Directors the substitution of some other person for any of the
nominees, it is the intention of the persons named in the Proxy
to vote for the election of such other person as may be
designated by the Board of Directors.
Mr. Hoff was previously elected by the stockholders. Mr.
Story was elected by the Board of Directors on February 8, 1995
and Mr. Donahue was elected by the Board of Directors on June 28,
1995.
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<PAGE> 6
NOMINEES FOR ELECTION AS CLASS A DIRECTORS
EDWARD J. HOFF -- Mr. Hoff, age 40, has been a Director of the
Corporation since 1989. He has been a consultant and President
of Strategic Horizons Group, a management consulting firm, since
1989. He has been a Partner at The Center for Executive
Development since 1992. He was a doctoral candidate at Harvard
Business School from 1985 to 1989. If elected, Mr. Hoff will
serve as a Class A Director until the 1999 Annual Meeting.
ROBERT P. STORY, JR. -- Mr. Story, age 44, has been a Director of
the Corporation since February 1995. He is Senior Vice President
and Chief Financial Officer of Courier Corporation as well as
director of Courier's book manufacturing operations. He joined
Courier in 1986 as Vice President and Treasurer and was elected
Senior Vice President and Chief Financial Officer in April 1989.
If elected, Mr. Story will serve as a Class A Director until the
1999 Annual Meeting.
RICHARD K. DONAHUE -- Mr. Donahue, age 67, has been a Director of
the Corporation since June 1995. He is Vice Chairman of NIKE,
Inc. of Beavertown, Oregon and a member of the NIKE Board of
Directors since 1977. He previously served as President and
Chief Operating Officer of NIKE, Inc. from 1990 to 1994. He is a
partner in the law firm of Donahue & Donahue. He is currently a
director of Epitope, Inc. (a bio-technology firm). If elected,
Mr. Donahue will serve as a Class A Director until the 1999
Annual Meeting.
DIRECTORS CONTINUING IN OFFICE
The following persons are incumbent Directors and have
unexpired terms as Class B and Class C Directors as indicated.
JAMES F. CONWAY III -- Mr. Conway, age 43, has been a Director of
the Corporation since 1988. Mr. Conway was elected Chairman of
the Corporation on September 22, 1994 and continues as President
and Chief Executive Officer. He had been Acting Chairman,
President and Chief Executive Officer since December 1992, and
President and Chief Operating Officer from 1988 to 1992. He has
been President and Chief Executive Officer of Courier Westford,
Inc. (a wholly-owned subsidiary of the Corporation) from 1986 to
the present. He is a Director of Enterprise Bank and Trust
Company. Mr. Conway was previously elected as a Class B Director
to serve until the 1997 Annual Meeting.
W. NICHOLAS THORNDIKE -- Mr. Thorndike, age 62, has been a
Director of the Corporation since 1989. He serves as a Corporate
Director or Trustee of a number of organizations, including
Bradley Real Estate, Inc., Providence Journal Company, Eastern
Utilities Associates, The Putnam Funds, and Data General
Corporation. He has also served as a Trustee of Massachusetts
General Hospital since June 1969, and was the Chairman of the
Board from 1987 to 1992 and President from 1992 to 1994. Until
December 1988, he was Chairman and Managing Partner of Wellington
Management Company. In February 1994, he accepted appointment as
a successor Trustee of private trusts in which he had no
beneficial interest and concurrently became, serving until
October 1994, Chairman of the Board of two privately-owned
corporations controlled by such trusts. The two privately-held
corporations filed voluntary petitions under Chapter 11 of the
Federal Bankruptcy Code in August 1994. Mr. Thorndike was
previously elected as a Class B Director of Courier Corporation
to serve until the 1997 Annual Meeting.
KATHLEEN FOLEY CURLEY -- Ms. Curley, age 44, has been a Director
of the Corporation since February 1995. She has been an
Associate Professor at Northeastern University College of
Business Administration in Management Information Systems since
1986. Prior to her association with Northeastern University, she
was a visiting scholar at MIT - Center for Information Systems
Research and an instructor at the Harvard Graduate School of
Business Administration. Ms. Curley was previously elected as a
Class B Director to serve until the 1997 Annual Meeting.
ARNOLD S. LERNER -- Mr. Lerner, age 65, has been a Director of
the Corporation since 1989. He is a partner in eight radio
stations in the Northeast and a Director, Vice Chairman and Clerk
of Enterprise Bank and Trust Company. Mr. Lerner was previously
elected as a Class C Director to serve until the 1998 Annual
Meeting.
4
<PAGE> 7
CHARLES E. OTTO -- Mr. Otto, age 54, has been a Director of the
Corporation since 1987. He is a consultant and a retired
Corporate Officer and Senior Vice President, Field Operations,
United States Marketing Group of Xerox Corporation. Mr. Otto was
previously elected as a Class C Director to serve until the 1998
Annual Meeting.
GEORGE Q. NICHOLS -- Mr. Nichols, age 66, has been a Director of
the Corporation since March 1995. He is Vice President of
Courier Corporation and President of National Publishing Company,
a wholly-owned subsidiary of Courier Corporation. He has held
this position since 1976. Mr. Nichols was previously elected as
a Class C Director to serve until the 1998 Annual Meeting.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Corporation held a total of 9
meetings during the fiscal year ended September 30, 1995.
The Board of Directors has an Audit and Finance Committee,
and a Compensation and Management Development Committee. The
Corporation has no Nominating Committee.
The Audit and Finance Committee (the "Audit Committee")
consists of Messrs. Donahue, Hoff, Lerner, Otto and Thorndike,
and Ms. Curley, with Mr. Lerner serving as Chairman. The
functions of the Audit Committee include recommendation of
independent public accountants for the Corporation; consultation
with the Corporation's independent public accountants regarding
the plan of audit; review, in consultation with the independent
public accountants, of their report of audit and accompanying
management letter; review of reports and recommendations of the
Corporation's internal auditor; and consultation with the
independent public accountants regarding the adequacy of internal
accounting controls. The Audit Committee held two formal
meetings during the last fiscal year. A part of each meeting was
held with representatives of the Corporation's independent public
accountants out of the presence of management.
The Compensation and Management Development Committee (the
"Compensation Committee") consists of Messrs. Donahue, Hoff,
Lerner, Otto and Thorndike, and Ms. Curley, with Mr. Hoff serving
as Chairman of the Committee. The Compensation Committee
administers the Company's executive compensation programs and
approves the compensation of executive officers. The
Compensation Committee held two formal meetings during the last
fiscal year.
Each Director attended at least 75% of the total number of
meetings held by the Board of Directors and any committees on
which he served during fiscal year 1995.
DIRECTORS' COMPENSATION
The Corporation pays its non-employee Directors (Messrs.
Donahue, Hoff, Lerner, Otto and Thorndike and Ms. Curley) an
annual retainer of $12,000 and meeting fees of $800 per meeting
of the Board of Directors or any committee of the Board of
Directors attended. The Corporation pays annual retainer fees to
non-employee Directors who serve as Chairmen of committees of the
Board of Directors as follows: Compensation Committee, $10,000
and Audit Committee, $5,000. Non-employee Directors are allowed,
at their election, to receive all or one-half of their annual
retainer fees for services as Directors and as Chairmen of
Committees in the form of stock options pursuant to the Deferred
Income Plan discussed below.
5
<PAGE> 8
1989 DEFERRED INCOME STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
The 1989 Deferred Income Stock Option Plan for Non-Employee
Directors (the "Deferred Income Plan") provides for the issuance
of stock options for shares of the Corporation's Common Stock to
each non-employee Director of the Corporation who elects to
receive such options in lieu of 50 percent or 100 percent of each
annual retainer receivable by him for services as a Director and
as a Chairman of a Committee of the Board of Directors.
Elections under the Deferred Income Plan may be made only as to
compensation paid for services rendered six months after the date
of the election. Options are granted on the first day of each
fiscal year, or in the case of a newly elected Director, on the
first day of the seventh month after his election to participate
(the "Grant Date").
The per share exercise price for each option granted
pursuant to the Deferred Income Plan is $5 less than the average
of the closing sales prices per share of Common Stock for the
five consecutive trading days next preceding the Grant Date of
the option, but in no event less than $1 per share. The exercise
price is payable in cash, or in shares of Common Stock, or a
combination of the two. The number of shares of Common Stock for
which options will be granted to a participating Director as of
any Grant Date is one-fifth of the dollar amount by which his
stipend is reduced on account of his election to participate in
the Deferred Income Plan.
Each option granted under the Deferred Income Plan is
exercisable on and after its Grant Date to the extent of 25% of
the total number of shares subject to the option. Provided that
the optionee is then serving as a Director, an option becomes
exercisable as to an additional 25% of the shares subject to the
option on and after each January 1, April 1 and July 1 next
following its Grant Date. Each option granted under the Deferred
Income Plan expires five years after its Grant Date. Unexpired
options held by a Participating Director at the termination of
his service as a Director may be exercised, to the extent they
had become exercisable before such termination, within three
months after the date of such termination. Unexpired options
held by a participating Director at his death may be exercised
within one year after his death by his personal representative,
to the extent they had become exercisable before his death.
The Board of Directors has no authority under the Deferred
Income Plan to select optionees or to set the number of shares
covered by an option or the exercise price of an option, but
subject to the foregoing limitations the Board may administer and
construe the Deferred Income Plan and the stock option agreements
pursuant to the Deferred Income Plan. Unless sooner terminated
by the Board of Directors, the Deferred Income Plan will
terminate on September 28, 1999.
Of the six persons currently eligible to participate in the
Deferred Income Plan, Messrs. Donahue, Hoff, Otto and Thorndike
and Ms. Curley have elected to participate. Options for 2,400
shares to each of Messrs. Otto and Thorndike and for 4,400 shares
to Mr. Hoff were granted on October 1, 1994 at an exercise price
of $11.125 per share for the fiscal year which commenced
September 25, 1994 and ended September 30, 1995.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
The Compensation Committee is comprised entirely of non-
employee, independent members of the Board of Directors. It is
the responsibility of the Committee to review the performance and
set the compensation of the Chief Executive Officer; and to
review and approve all compensation arrangements for executive
officers, including cash compensation, stock awards,
employment/severance agreements and special benefits, where
applicable. Actions by the Committee are periodically reported
to and, in appropriate cases, ratified by the Board.
The Committee approved the Executive Compensation Program
for 1994 for all executives, and the program was continued in
1995. An independent compensation consultant was retained to
assist the Corporation in evaluating the Executive Compensation
Program to ensure it continued to match directly the strategy and
organizational focus that the Corporation has established for
achieving competitive success and higher profits, and for
maximizing shareholder returns.
6
<PAGE> 9
PHILOSOPHY
The Executive Compensation Program is designed to:
- attract and retain high quality management talent and to
motivate them to build and sustain value for shareholders,
- provide aggregate compensation opportunities that, when
performance goals are achieved, will be comparable to those
provided by other companies with revenues and operating
characteristics similar to the Corporation, and
- establish for employees in management positions a
significant risk/reward compensation structure through
incentive pay plans.
EXECUTIVE COMPENSATION PROGRAM
The executive compensation program consists of four
compensation components that together comprise a total
compensation amount established for each executive officer. In
determining total compensation amounts, the Corporation reviews
compensation survey data of other companies of a similar revenue
size, in similar markets as the Corporation, and in regional
areas in which the Corporation competes for executive talent.
There is no special attempt to set total compensation of
executive officers to particular levels (e.g., median, salary
midpoint, etc.) within the survey data. It is the opinion of the
Committee that when performance targets are achieved, total
compensation earned by executive officers will reach a level
competitive with other executive officers in companies with
similar size and characteristics.
Total compensation is comprised of base salary, an annual
cash bonus, a long-term stock incentive, and a long-term
performance incentive.
Base Salary - Increases in base salaries for fiscal 1995,
which had been frozen at their 1993 levels, ranged from 0% to 33%
for executive officers. The highest increase in base salary was
received by one executive officer, which reflected significantly
broadened levels of responsibility.
Annual Cash Bonus - The Committee approves annual cash bonus
targets and the performance targets upon which the bonus will be
earned by executive officers at the beginning of the fiscal year.
At least 50% of the annual cash bonus for all executive officers
is based upon the achievement of corporate earnings targets.
Some executive officers may also have a portion of their annual
cash bonus based upon achievement of individual business unit
earnings targets. If the annual cash bonus is based on both
corporate and individual business unit earnings, the weighting
given to the corporate measure ranges from 50% to 75% depending
upon the position of the executive officer; the weighting given
to the individual business unit measure, therefore, ranges from
25% to 50%. No annual cash bonus is earned unless minimum
earnings thresholds are achieved. The maximum that may be earned
is 150% of the annual cash bonus target when earnings targets are
exceeded by specified amounts.
In 1995, all executives earned 100% of the portion of their
annual cash bonus which was based upon the corporate earnings
measure since the corporate earnings target was achieved.
Executive officers earned from 0% to 150% of the portion of their
annual cash bonus based on individual business unit earnings. A
special discretionary bonus was awarded to Mr. Nichols for
specific accomplishments.
Long-Term Stock Incentive - The long-term stock incentive
represents a value, in terms of compensation, which is earned by
executives through awards of stock options. The Committee
believes that stock options are a valuable method of tying
executives' performance to the creation of shareholder value over
the long-term since the full benefit of the total compensation
package cannot be realized unless an appreciation in the price of
Common Stock of the Corporation occurs over a number of years.
Stock options for fiscal 1995 were awarded at the end of fiscal
1994. The stock option awards, which vest over a three-year
period, were granted to executive officers with an option
7
<PAGE> 10
exercise price equal to the fair market value, except in the case
of the Chief Executive Officer's award which was 110% of the fair
market value, of the Corporation's Common Stock as of the date of
the awards.
The Committee believes in encouraging share ownership by
executives. Therefore, the number of shares and/or options
currently held by executive officers is not a factor in
determining individual option awards.
Long-Term Performance Incentive - The long-term performance
incentive is earned by executive officers based upon the
Corporation achieving specific return on asset targets each year
within a three-year performance period. If the target is missed
in any of the three years, a portion of the award is forfeited.
Payouts under the fiscal year 1995 long-term performance
incentive will be made following the close of the 1997 fiscal
year. The first year's return on assets target was not achieved
for 1995. The second year of the 1994 long-term performance
incentive was achieved for 1995.
CHIEF EXECUTIVE OFFICER PAY
At the beginning of the fiscal year the Committee set Mr.
Conway's total compensation for 1995. Compensation survey data
of Chief Executive Officers of companies of similar revenue size
and in similar markets as the Corporation were used as a guide
for determining Mr. Conway's 1995 total compensation.
Mr. Conway's 1995 total compensation is comprised of a base
salary, the annual cash bonus, the long-term stock incentive, and
the long-term performance incentive. Mr. Conway's base salary,
which had remained the same since December 1991, was increased by
9.5%. Mr. Conway's annual cash bonus was based solely upon
achieving corporate earnings targets. He earned 100% of his 1995
bonus potential for achieving the earnings per share target
established by the Committee at the beginning of fiscal year
1995. A stock option award was granted to Mr. Conway at the end
of fiscal year 1994 as his long-term stock incentive for fiscal
year 1995. The stock option award, which vests over a three-year
period, was granted at an option price equal to 110% of the fair
market value of the Corporation's Common Stock as of the date of
the award. The Black-Scholes pricing model was used to determine
the number of option shares which corresponded to a specific
amount of compensation. As described above, the return on assets
target for the first year of the three-year performance period
was not achieved. The second year return on assets target for
the 1994 long-term performance incentive was achieved in 1995.
TAX LAW CHANGES
In 1993, the tax laws were amended to limit the deduction a
publicly-held company is allowed for compensation paid in 1994
and thereafter to the chief executive officer and to the four
most highly compensated executive officers other than the chief
executive officer. Generally, amounts paid in excess of $1
million to a covered executive, other than performance-based
compensation, cannot be deducted. In this regard, the Committee
must determine whether any actions with respect to this new limit
should be taken by the Corporation. At this time, it is not
anticipated that any executive officer of the Corporation will
receive any such compensation in excess of this new limit during
1995. At the recommendation of the Committee, the Board of
Directors voted on November 27, 1995 to amend the 1993 Stock
Incentive Plan to comply with Section 162(m) of the Internal
Revenue Code. The Committee will continue to monitor this
situation and will take additional actions if it is warranted in
the future.
8
<PAGE> 11
CLOSING
The Committee believes that the executive compensation
program implemented in 1995 successfully tied executive
compensation to the achievement of significant corporate earnings
and attainment of strategic goals. Furthermore, the program
enhanced the link among corporate performance, strategic
accomplishments, and increased shareholder value.
Kathleen Foley Curley Arnold S. Lerner
Richard K. Donahue Charles E. Otto
Edward J. Hoff W. Nicholas Thorndike
<TABLE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION INFORMATION
The following table (the "Summary Compensation Table") sets forth information concerning compensation paid for the
last three fiscal years to the Corporation's Chief Executive Officer and each of its four other most highly compensated
executive officers serving at the end of the fiscal year ended September 30, 1995 (collectively the "Named Executive
Officers") whose total annual salary and bonus exceeded $100,000.
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
----------------------------------- ----------------------------
Other Annual Restricted All Other
Name and Compensation Stock Awards Options/ Compensation
Principal Position Year Salary($) Bonus($) ($) ($)(1) SARs (#) ($)(2)
- ------------------ ---- --------- -------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
J. F. Conway III 1995 230,000 84,000 9,900 0 0 20,530
Chairman, President 1994 210,000 75,000 0 0 15,700 31,948
and Chief Executive 1993 210,000 30,000 1,050 0 30,000 23,420
Officer
G. Q. Nichols 1995 210,000 90,000 4,950 0 0 14,581
President of 1994 203,847 103,750 11,369 0 5,600 22,435
National Publishing 1993 191,058 70,000 1,050 0 5,000 22,225
Company
T. G. Osenton (3) 1995 195,000 52,500 0 0 5,000 11,849
Senior Vice President 1994 184,500 51,863 0 0 17,200 4,925
and Chief Marketing 1993 0 0 0 0 0 -
Officer
R. P. Story, Jr. 1995 182,000 60,225 4,950 0 3,050 8,862
Senior Vice President 1994 137,000 42,000 2,925 0 8,600 10,719
and Chief Financial 1993 135,654 21,250 1,050 0 10,000 9,891
Officer
P. M. Folger 1995 105,000 23,000 1,238 0 910 5,369
Vice President 1994 85,000 20,000 1,170 0 1,350 4,275
and Controller 1993 84,937 10,000 420 0 2,500 3,877
<FN>
(1) Values of Restricted Stock Awards shown in the Summary Compensation Table are based on the closing price of the
Common Stock on the date of grant. The number and value of the aggregate restricted stock holdings of each Named
Executive Officer as of September 30, 1995 were as follows: Mr. Conway, 4,000 shares valued at $79,000; Mr.
</TABLE>
9
<PAGE> 12
Nichols, 1,000 shares valued at $19,750; Mr. Osenton, 0 shares;
Mr. Story, 1,000 shares valued at $19,750; and Mr. Folger, 500
shares valued at $9,875. Values as of September 30, 1995 are
based on the closing price of the Common Stock on that day.
Dividends are paid on Restricted Stock at the same rate and at
the same time as on the Common Stock. All Restricted Stock
vests on the fifth anniversary of the date of grant.
(2) Includes payments made during fiscal 1995 under the
Corporation's 1989 Incentive Program for Purchase of Courier
Stock by executive officers as follows: Mr. Conway, $13,318; Mr.
Nichols, $0; Mr. Osenton, $4,028; Mr. Story, $1,590; and Mr.
Folger, $0. Also includes profit sharing contributions by the
Corporation to individual accounts in the Profit Sharing and
Savings Plan (PSSP) in fiscal year 1995 as follows: Mr. Conway,
$3,000; Mr. Nichols, $10,500; Mr. Osenton, $3,000; Mr. Story,
$3,000; and Mr. Folger, $2,207. Also includes matching
contributions by the Corporation to individual 401-K accounts in
the PSSP in fiscal year 1995 as follows: Mr. Conway, $1,968; Mr.
Nichols, $1,837; Mr. Osenton, $2,577; Mr. Story, $2,028; and Mr.
Folger, $1,512. Also includes the values of stock allocations to
the individual accounts in the ESOP in fiscal 1995 as follows:
Mr. Conway, $2,244; Mr. Nichols, $2,244; Mr. Osenton, $2,244; Mr.
Story, $2,244; and Mr. Folger, $1,650.
(3) Mr. Osenton joined the Corporation as an executive officer
in October 1993.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows the individual grants of stock options under the Courier Corporation 1993
Stock Incentive Plan (the "1993 Stock Incentive Plan") to each of the Named Executive Officers during
the fiscal year ended September 30, 1995.
<CAPTION>
Individual Grants
--------------------------------------------------------------
Number of % of Total
Shares Options/SARs
Underlying Granted to Exercise or Grant Date
Options/SARs Employees in Base Price Expiration Present Value
Name Granted (#)(1) Fiscal Year ($/Sh)(2) Date ($)(3)
---- -------------- -------------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
J. F. Conway III 0 - - - -
G. Q. Nichols 0 - - - -
T. G. Osenton 5,000 22.8% 19.75 9/29/02 33,300
R. P. Story, Jr. 3,050 13.9% 19.75 9/29/02 20,313
P. M. Folger 910 4.1% 19.75 9/29/02 6,061
<FN>
(1) All options granted and reported in this table were awarded on September 28, 1995 for fiscal 1996
and have the following terms: each option vests over a three year period, in three equal installments.
Options granted for fiscal 1995 were awarded and reported in fiscal 1994. Options granted are not
assignable, except by the laws of descent and distribution or by will. The 1993 Stock Incentive Plan
provides that the Board of Directors will determine the effect that the death of an option holder or
the termination of his employment will have upon the exercisability of the option. Option vesting may
be accelerated in the event of change in control of the Corporation.
</TABLE>
10
<PAGE> 13
(2) The exercise prices of the options awarded to Messrs.
Osenton, Story and Folger are the fair market values of the
Common Stock on the date of grant.
(3) The option values presented are based on the Black-Scholes
option pricing model adapted for use in valuing stock options.
The Black-Scholes model relies on several key assumptions to
estimate the present value of options, including the volatility
of and dividend yield on the security underlying the option, a
risk-free rate of return on the date of grant, and the term of
the option. In calculating the grant date present values set
forth in the table, a factor of 36.3% has been assigned to the
volatility of the Common Stock, based on the daily stock market
quotations for the twelve months preceding the date of grant; the
yield on the Common Stock has been set at 2.4%, based upon the
annual dividend rate in effect on the date of grant; the risk-
free rate of return has been fixed at 5.9%, the rate for a ten
year U.S. Treasury Note on the date of grant as reported in the
Federal Reserve Statistical Release, and the exercise of the
options has been assumed to occur at the end of the actual option
term of seven years. There is no assurance that these
assumptions will prove to be true in the future. Consequently,
the grant date present values set forth in the table are only
theoretical values and may not accurately determine present
value. The actual value, if any, that may be realized by each
individual will depend on the market price of Common Stock on the
date of exercise.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
The following table shows each stock option exercised during the fiscal year ended September 30, 1995 by each of the
Named Executive Officers and the year-end value of unexercised options on an aggregated basis.
<CAPTION>
Number of Value of Unexercised
Unexercised Options In-the-Money Options
at Fiscal Year End (#) at Fiscal Year End ($) (1)
-------------------------- ----------------------------
Shares Acquired Value
Name On Exercise (#) Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. F. Conway III 3,000 9,240 49,833 26,067 248,776 212,406
G. Q. Nichols 0 - 17,166 6,634 73,891 53,637
T. G. Osenton 0 - 5,316 16,884 25,834 59,178
R. P. Story, Jr. 0 - 23,166 13,984 107,384 91,137
P. M. Folger 0 - 5,499 3,261 26,675 21,410
<FN>
(1) The dollar values are calculated by determining the difference between the fair market value of the underlying Common
Stock and the exercise price of the options at exercise or fiscal year end, as the case may be.
</TABLE>
11
<PAGE> 14
LONG-TERM INCENTIVE PLANS - AWARDS IN FISCAL YEAR 1995
<TABLE>
The following table describes long-term incentives awarded for the fiscal year 1995 to 1997
performance period under the Corporation's Long-Term Incentive Plan to the Named Executive Officers.
<CAPTION>
Performance
Or Other Estimated Future Payouts Under Non-Stock Price Based Plans
Period Until ----------------------------------------------------------
Maturation or Threshold Target Maximum
Name Payout ($) ($) ($)
---- ------------- --------- ------ --------
<S> <C> <C> <C> <C>
J. F. Conway III 1995-1997 16,500 66,000 66,000
G. Q. Nichols 1995-1997 4,500 18,000 18,000
T. G. Osenton 1995-1997 5,000 20,000 20,000
R. P. Story, Jr. 1995-1997 8,250 33,000 33,000
P. M. Folger 1995-1997 1,750 7,000 7,000
</TABLE>
Long-term incentive awards provide participants with the
opportunity to earn an award based upon the Corporation achieving
specific return on asset targets in each of the three fiscal
years within the performance period. The threshold amount has
not been earned for achievement of the fiscal year 1995 goal,
which represents 25% of the target, because the first year's
return on assets target was not achieved. An additional 25% may
be earned for achievement of the fiscal year 1996 goal and 50%
may be earned for achievement of the fiscal year 1997 goal. The
target amount, which also represents the maximum amount, can only
be earned if the fiscal year 1995, 1996 and 1997 goals are
achieved. Awards earned for the 1995 to 1997 performance period
will be paid following the close of the 1997 fiscal year.
SENIOR EXECUTIVE SEVERANCE PROGRAM
Messrs. Conway, Nichols, Osenton and Story are parties to
agreements pursuant to the Corporation's Senior Executive
Severance Program (the "Severance Program") entered into by
Messrs. Conway, Nichols and Story in October 1988 and by Mr.
Osenton in November 1995. In accordance with the Severance
Program, if a "change in control" of the Corporation, as defined
in the Severance Program, occurs while one of these individuals
is an employee of the Corporation, and his employment is
subsequently terminated for reasons other than death, disability,
retirement or termination for cause, he shall be entitled to a
severance payment and continuation of participation for up to 36
months in certain medical, group life and similar benefit plans
of the Corporation. In addition, in the event of a change in
control each such individual shall receive a severance payment
and benefits if he terminates his employment for "good reason,"
defined in the Severance Program to include changes in his duties
or titles inconsistent with his duties or titles prior to the
change in control, reduction within a twelve-month period in his
base salary or failure to increase his base salary by at least
the average percentage increase for all officers of the
Corporation, or reductions or termination of incentive or benefit
plans or programs in which he participated prior to the change in
control. The severance payment, which is due in a lump sum, is
an amount equal to a multiple of 1 to 2.5 times the individual's
average annual salary and bonus paid during the five calendar
years preceding the change in control. The multiple is based
upon years of service with the Corporation; provided that a
minimum multiple of 2.0 is prescribed for the Chairman of the
Board of Directors, the Chief Executive Officer, the President
and the Chief Operating Officer prior to the change in control.
The multiple presently applicable to Mr. Conway is 2; to Messrs.
Nichols, Osenton and Story, 1.5.
12
<PAGE> 15
OTHER RETIREMENT BENEFITS
The Corporation and its subsidiaries Courier-Citizen
Company, Courier Westford, Inc. and National Publishing Company
previously maintained defined benefit pension plans to provide
retirement benefits for officers and all other non-union
employees. All of these defined benefit plans terminated on
December 31, 1988. Benefits under the terminated plans have been
provided by the purchase of individual annuity contracts from
insurance companies. The annual benefit payable at age 65 under
the annuity contract to Mr. Conway is $6,565; to Mr. Nichols is
$10,527; to Mr. Story is $1,595; and to Mr. Folger is $7,243.
In June 1992, the Board of Directors approved a Supplemental
Retirement Benefit Agreement with Mr. Nichols, providing for a
supplemental annual benefit payable after his retirement (his
"Benefit"). Mr. Nichols' Benefit will be paid as a single life
annuity in monthly installments from the date of Mr. Nichols'
retirement until his death. If Mr. Nichols retires at his
current age of 66, the annual amount of the Benefit will be
$12,000. Mr. Nichols' annual Benefit increases each year to a
maximum of $45,000 if he retires at age 70 or later. Mr. Nichols
may elect to have the Benefit paid in a different form of annuity
having an equivalent actuarial value. In the event that Mr.
Nichols dies before he retires and is survived by his spouse, a
monthly benefit will be paid to his spouse for her life in an
amount equal to the Benefit she would have received upon Mr.
Nichols' death had he retired on the day preceding his death. If
Mr. Nichols has not selected an alternative form of annuity
before his death, the spousal benefit will be determined as if he
had selected a joint and 100% survivor annuity. In the event of
a "change in control" of the Corporation (as defined in the
Supplemental Retirement Benefit Agreement) during Mr. Nichols'
employment or the payment period of the Benefit, the "commuted
value" of the Benefit will be paid to Mr. Nichols within 60 days
after the change in control. The commuted value of the Benefit
is the present value of the Benefit remaining to be paid at the
time of the change in control, assuming that Mr. Nichols will
survive for a period equal to his life expectancy, and applying a
rate of interest equal to the Internal Revenue Service applicable
federal rate for that period.
EMPLOYMENT AGREEMENTS
The Corporation has an employment agreement with Mr. Nichols
effective as of March 3, 1993 pursuant to which Mr. Nichols, who
is now the President of National Publishing Company, may become
the Chairman of such subsidiary. Mr. Nichols' employment
agreement provides for a base annual salary of $120,000 and a
bonus of $30,000 per year effective upon Mr. Nichols' assuming
the position as Chairman and sets out the responsibilities of Mr.
Nichols as Chairman. Mr. Nichols' employment agreement provides
that his current benefits will continue. The Corporation may not
terminate Mr. Nichols' employment other than for cause.
13
<PAGE> 16
FIVE YEAR STOCK PERFORMANCE GRAPH
The graph below compares the Corporation's cumulative total
stockholder return on its Common Stock with the cumulative total
return on the Standard & Poor's 500 stock index (the "S&P 500
Index") and a peer group of companies selected by the Corporation
for purposes of the comparison and described more fully below
(the "Peer Group"). This graph assumes the investment of $100 on
September 27, 1990 in each of Courier Common Stock, the S&P 500
Index and the Peer Group Common Stock, and reinvestment of
quarterly dividends at the monthly closing stock prices. The
returns of each company have been weighted annually for their
respective stock market capitalizations in computing the S&P 500
and Peer Group indices.
<TABLE>
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
COURIER CORPORATION, S&P 500 INDEX, AND PEER GROUP
<CAPTION>
CUMULATIVE TOTAL RETURN
--------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COURIER CORP $100 $ 88 $ 55 $104 $135 $160
S & P 500 $100 $131 $146 $165 $171 $221
PEER GROUP ONLY $100 $128 $147 $171 $174 $231
</TABLE>
The Peer Group is made up of the following printing
companies: American Business Products, Inc.; Banta Corporation;
Bowne & Co.; Cadmus Communications Corporation; Devon Group,
Inc.; Duplex Products, Inc.; Ennis Business Forms, Inc.; Graphic
Industries, Inc.; John H. Harland Company; Merrill Corporation;
New England Business Services, Inc.; The Standard Register
Company; American Banknote Corporation (formerly, United States
Banknote Corporation); Wallace Computer Services, Inc., and
Waverly, Inc.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Based on a review of the reports of changes in beneficial
ownership of the Corporation's Common Stock and written
representations furnished to the Corporation, the Corporation
believes that its executive officers and Directors filed on a
timely basis the reports required to be filed under Section 16(a)
of the Securities Exchange Act of 1934 during the fiscal year
ended September 30, 1995, with the following two exceptions:
Kathleen Foley Curley became a Director of the Corporation on
February 8, 1995 and filed Form 3 on March 3, 1995; and Richard
K. Donahue, who became a Director on June 28, 1995, filed a Form
4 on October 6, 1995 to report an open market purchase on July
11, 1995.
14
<PAGE> 17
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Donahue,
Hoff, Lerner, Otto and Thorndike and Ms. Curley. Mr. Conway is a
Director of Enterprise Bank and Trust Company ("Enterprise") in
Lowell, MA and a member of the Enterprise compensation committee.
Mr. Lerner is a Director and executive officer of Enterprise and
a member of its compensation committee.
ITEM 2. APPROVAL OF AMENDMENT TO COURIER CORPORATION
1993 STOCK INCENTIVE PLAN
DESCRIPTION OF THE 1993 PLAN AND AMENDMENT
The Board of Directors unanimously approved an amendment and
restatement (the "Amendment") to the Corporation's 1993 Stock
Incentive Plan (the "1993 Plan"), subject to stockholder
approval, which provides for the grant of stock options
("Options") and restricted stock ("Restricted Stock"). The
Amendment excludes non-employees such as Directors and
consultants to the Corporation from grants under the 1993 Plan,
eliminates the grant of stock appreciation rights, eliminates the
Committee's authority to reprice options, provides that all
Option grants will be made at fair market value and increases the
aggregate number of shares of Common Stock of the Corporation
available for grants under the 1993 Plan from 130,000 to 230,000.
The Amendment also limits the grant of Restricted Stock to no
more than 20% of the newly reserved shares. Finally, in order to
satisfy the performance-based compensation exception to the $1
million cap in the Corporation's tax deduction imposed by Section
162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), the Amendment also provides for all grants to be made by
a committee of outside directors and further provides that
Options with respect to no more than 25,000 shares of Common
Stock may be granted to any one individual in any one calendar
year. A summary of the principal features of the 1993 Plan and
the modifications made by the Amendment is set forth below.
Reasons for Board Recommendation. The Board of Directors
believes that compensation arrangements of key employees should
match directly the strategy and organizational focus that the
Corporation has established for achieving competitive success and
higher profits, and for maximizing shareholder returns. As such,
a new executive compensation program was implemented beginning in
fiscal year 1994 designed to achieve the following goals: (i)
attracting and retaining high quality management talent and
motivating them to build and sustain value for shareholders; (ii)
providing aggregate compensation opportunities that, when
performance goals are achieved, will be comparable to those
provided by other companies with revenues and operating
characteristics similar to the Corporation; and (iii)
establishing for employees in management positions a significant
risk/reward compensation structure through incentive pay plans.
The Board believes that stock options are a valuable method of
tying executives' performance to the creation of stockholder
value over the long-term since the full benefit of the total
compensation package cannot be realized unless an appreciation in
the price of Common Stock of the Corporation occurs over a number
of years.
The shares available for award under the 1993 Plan are
nearly exhausted following the granting of options for 19,930
shares awarded for fiscal 1996 on September 28, 1995. The Board
of Directors believes that the addition of 100,000 shares under
the 1993 Plan (which represents approximately 4.97% of the
current number of outstanding shares of Common Stock) is
necessary for the Corporation to continue its executive
compensation program, designed to attract and retain the key
employees necessary for its future growth.
No awards have been made which are contingent on approval of
the additional shares. As of November 24, 1995, Options to
purchase 120,880 shares were outstanding under the 1993 Plan.
The closing price of the Common Stock on November 24, 1995 was
$26.50 per share.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE AMENDMENT TO THE
1993 STOCK INCENTIVE PLAN BE APPROVED, AND THEREFORE RECOMMENDS A
VOTE FOR THIS PROPOSAL.
15
<PAGE> 18
Number of Shares Covered. Currently, the total number of
shares of Common Stock with respect to which Options and
Restricted Stock may be granted under the 1993 Plan may not
exceed in the aggregate 130,000 (the "Reserved Shares"). The
Amendment increases the Reserved Shares to 230,000. The Reserved
Shares may consist of shares of authorized but unissued Common
Stock, or shares of authorized and issued Common Stock reacquired
by the Corporation. If an outstanding Option expires for any
reason or terminates or any grant of Restricted Stock is
forfeited, the Reserved Shares subject to the unexercised Option,
or the forfeited Restricted Stock, may again be made subject to
an Option or Restricted Stock under the 1993 Plan.
Adjustments under the 1993 Plan. The number of Reserved
Shares covered by any outstanding Option or share of Restricted
Stock, and their price per share, will be proportionately
adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from any capital adjustment.
The 1993 Plan provides for certain other adjustments in the event
that the Corporation merges or consolidates with another
corporation, or sells substantially all of its assets. No
adjustments are made by reason of the Corporation's issuance of
securities convertible into shares of stock of any class, or upon
conversion of shares or obligations of the Corporation
convertible into such securities.
Administration. The 1993 Plan is administered by a Stock
Incentive Plan Committee (the "Committee") composed of at least
three members appointed by the Board of Directors of the
Corporation (the "Board"). All members of the Committee must be
members of the Board, and none of them may have received a
discretionary grant of an option or any other right under the
1993 Plan or any other plan of the Corporation for at least one
year preceding his acting as a member of the Committee. Pursuant
to the Amendment, each member of the Committee shall also be an
outside director within the meaning of Section 162(m) of the
Code.
The Committee has the authority to adopt, amend and rescind
such rules and regulations consistent with the provisions of the
1993 Plan as, in its opinion, may be advisable for the
administration of the 1993 Plan. The Committee has sole
authority to determine, as to persons who are subject to the
short swing profit rules of Section 16(b) of the Securities
Exchange Act of 1934 (the "Exchange Act") because they are
officers of the Corporation or a subsidiary, the following: (i)
the persons to whom Options and Restricted Stock shall be
granted; (ii) the number of Options or shares of Restricted Stock
granted to each such person; (iii) the price per share to be paid
upon exercise of each such Option; (iv) the period within which
each such Option or grant of Restricted Stock may be exercised;
and (v) the terms and conditions of each Option or grant of
Restricted Stock. As to persons who are not subject to the short
swing profit rules of the Exchange Act, the determinations
enumerated in the preceding sentence may be made by the Board.
Pursuant to the Amendment, the Committee no longer has the
authority to reprice Options. In the following discussion of the
administration and operation of the 1993 Plan, references are
made simply to the Committee, rather than to the Committee and
the Board.
Eligibility. Prior to the Amendment, the persons eligible
to receive Options and Restricted Stock are those key employees,
Directors and consultants who render or are expected to render
services of special importance to the Corporation or to any
subsidiary, who have contributed to the success of the
Corporation, and who are selected from time to time by the
Committee as participants in the 1993 Plan. Members of the
Committee are not eligible to participate in the 1993 Plan.
Pursuant to the Amendment, non-employee Directors and consultants
to the Corporation and its subsidiaries may no longer be awarded
Options or Restricted Stock under the 1993 Plan.
Incentive Stock Options. An Option granted to an employee
of the Corporation or a subsidiary may be an incentive stock
option ("ISO") eligible for favorable federal income tax
treatment under Section 422 of the Code, if it is so designated
in the written agreement between the Corporation and the optionee
that sets forth its terms and conditions (the "Stock Option
Agreement").
Nonqualified Stock Options. An Option granted to any person
may be a nonqualified stock option ("NSO") ineligible for
favorable federal income tax treatment under Section 422 of the
Code, if it is so designated in the Stock Option Agreement.
Option Price. The 1993 Plan does not provide for payment by
an optionee upon the grant of an Option. Prior to the Amendment,
the price at which Reserved Shares may be purchased upon exercise
of an Option is specified by the Committe at the time the Option
16
<PAGE> 19
is granted, and set forth in the Stock Option Agreement.
Pursuant to the Amendment, the exercise price of each Option
shall be not less than 100% of the fair market value on the date
of grant. In the case of an employee who owns (or is considered
to own under Section 424(d) of the Code) stock possessing more
than 10% of the total combined voting power of all classes of
stock of the Corporation or any subsidiary, the price at which
Reserved Shares may be purchased pursuant to an ISO may not be
less than 110% of the fair market value of the Common Stock on
the date the ISO is granted.
Duration of Options. The duration of any Option is as
specified by the Committee in the Stock Option Agreement, but no
ISO may be exercisable after the expiration of ten years from its
date of grant. In the case of an employee who owns (or is
considered to own under Section 424(d) of the Code) stock
possessing more than 10% of the total combined voting power of
all classes of stock of the Corporation or any subsidiary, no ISO
may be exercisable after the expiration of five years from its
date of grant. The Committee, in its discretion, may provide
that any Option is exercisable during its entire duration or
during any lesser period of time.
Exercise of Option. Options may be exercised by the
delivery of written notice to the Corporation setting forth the
number of Reserved Shares with respect to which the Option is to
be exercised and accompanied by payment of the exercise price of
those Reserved Shares. The Option price may be paid in any
lawful consideration. Payment of the Option price may be made,
in whole or in part, in shares of Common Stock owned by the
optionee, valued at their fair market value on the date of
exercise; provided, however, that the optionee may not make
payment in shares of Common Stock previously acquired by him
pursuant to the exercise of an ISO, unless such shares have been
held by him for at least two years from the date of grant of the
ISO and at least one year from the date the ISO was exercised.
Alternatively, the 1993 Plan permits a cashless exercise
procedure in which a broker (i) transmits to the Corporation the
Option price in cash or cash equivalents, either as a margin loan
or against the optionee's notice of exercise and confirmation by
the Corporation that it will issue and deliver to the broker
stock certificates for that number of Reserved Shares having an
aggregate fair market value equal to the Option price; or (ii)
agrees to pay the Option price to the Corporation in cash or cash
equivalents upon its receipt of stock certificates as described
in clause (i).
Transferability of Options. Options are not transferable by
the optionee otherwise than by will or under the laws of descent
and distribution, and are exercisable during his lifetime only by
him.
Other Terms and Conditions of Options. Each Option must be
evidenced by a Stock Option Agreement that specifies whether the
Option is an ISO or an NSO. The Stock Option Agreement shall
also contain provisions as to the time or times at which the
Option shall be exercisable, provisions addressing federal income
tax withholding upon exercise of an NSO, and such other terms and
conditions, consistent with the 1993 Plan, as the Committee shall
determine. Pursuant to the Amendment, Options with respect to no
more than 25,000 shares of Common Stock may be granted to any one
individual in any one calendar year.
Stock Appreciation Rights. Prior to the Amendment, the
Committee may grant stock appreciation rights ("SARs") to any
person eligible to participate in the 1993 Plan. Pursuant to the
Amendment, SARs shall no longer be granted.
Restricted Stock. The Committee may grant Restricted Stock
to any employee for a number of Reserved Shares to be determined
in its discretion, and subject to terms and conditions so
determined, including conditions that may require the holder to
forfeit the Common Stock for such payment as the Committee shall
determine, or for no payment, in the event that he ceases to
provide services to the Corporation or a subsidiary before a
stated time. Unlike holders of Options, a holder of Restricted
Stock has the rights of a stockholder of the Corporation to vote
and to receive payment of dividends on the Restricted Stock,
unless the Committee specifies to the contrary in the Restricted
Stock Agreement setting forth the terms on which the Restricted
Stock is granted. Pursuant to the Amendment, the Committee may
not grant more than 20% of the newly Reserved Shares in the form
of Restricted Stock.
Special Bonus Awards. The Committee may award in connection
with an NSO or a grant of Restricted Stock a cash bonus in an
amount not to exceed the lesser of (i) the combined federal,
state and local income tax liability incurred by the recipient by
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reason of the exercise of the NSO or the grant or vesting of the
Restricted Stock, or (ii) 30% of the imputed income realized by
the optionee on account of such exercise or vesting. Such
bonuses may be awarded simultaneously with a related NSO or
Restricted Stock, or awarded separately with respect to an NSO
or Restricted Stock awarded on an earlier date.
Use of Stock for Tax Withholding. The Committee may permit
the holder of an NSO or of Restricted Stock to pay to the
Corporation in the form of Common Stock, at its fair market
value, any amount that the Corporation must withhold as federal
or state taxes incurred with respect to income imputed on account
of the exercise of the Option or the vesting of Restricted Stock,
either by withholding a portion of the Reserved Shares to be
issued upon exercise of an NSO or by accepting delivery of Common
Stock previously acquired by the holder of an NSO or Restricted
Stock.
Amendments to 1993 Plan. The Board may modify, revise or
terminate the 1993 Plan at any time and from time to time, except
that approval of the stockholders of the Corporation is required
for any amendment to change the aggregate number of Reserved
Shares which may be issued under Options or granted pursuant to
the 1993 Plan, change the class of employees or other persons
eligible to receive Options or Restricted Stock, or increase
materially the benefits accruing to any person under the 1993
Plan.
New Plan Benefits. Approximately 100 employees are eligible
to participate in the 1993 Plan. As of November 27, 1995, no
Options or Restricted Stock have been granted under the 1993 Plan
with respect to the proposed increase in Reserved Shares.
TAX CONSEQUENCES OF THE 1993 PLAN
Tax Treatment of NSOs. Under Section 83 of the Code, an
optionee realizes no taxable income when an NSO is granted.
Instead, the difference between the fair market value of the
Common Stock subject to the NSO and the exercise price paid is
taxed as ordinary compensation income, on or after the date on
which the NSO is exercised. The difference is measured and taxed
as of the date of exercise if the stock is not subject at that
time to a substantial risk of forfeiture, as defined in Section
83. To the extent that the stock is subject to a substantial
risk of forfeiture, the difference is measured as of the date or
dates on which the risk terminates. The 1993 Plan permits the
Committee to impose repurchase rights on Reserved Shares which
may be acquired upon exercise of Options that would create a
substantial risk of forfeiture, for example, a right to
repurchase the Reserved Shares for their par value in the event
that the optionee's performance of services for the Corporation
ceases within two years after the date of exercise of the NSO.
Common Stock purchased by exercise of NSOs by officers who
are subject to the short swing profit rules of Section 16(b) of
the Exchange Act is treated under Section 83(c) of the Code as
being subject to a substantial risk of forfeiture during the
period in which the Common Stock could not be sold without
violating the Section 16(b) prohibitions. Since the sale of
option stock within six months after the date of grant of the
Option would violate Section 16(b), the income taxed by reason of
the exercise by such a person of an NSO within six months after
the date of grant of the Option generally would not be measured
until the date six months after the date of grant, and the
optionee's holding period for the Common Stock would not begin
until that date, unless he made the election described in the
following paragraph.
An optionee may elect, in accordance with Section 83(b) of
the Code, to be taxed on the difference between the exercise
price and the fair market value of the Common Stock on the date
of exercise, even though some or all of the Common Stock acquired
is subject to a substantial risk of forfeiture. Such an
election must be made in writing to the Internal Revenue Service
within 30 days after the date the Option is exercised, and an
election is irrevocable at the end of that period.
Shares of Common Stock acquired pursuant to an NSO and sold
after the optionee has recognized imputed income under Section 83
of the Code generally have a tax basis equal to the sum of (i)
the Option price paid and (ii) the amount of income imputed on
account of exercise of the Option. Gain on such a sale is taxed
as long-term capital gain if the Common Stock has been held more
than one year after the date on which the optionee recognized
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imputed income, and as short-term capital gain if the Common
Stock has been held for a shorter period. In the case of an
optionee who makes an election under Section 83(b), however, if
his Common Stock were repurchased by the Corporation pursuant to
repurchase rights constituting a substantial risk of forfeiture,
he would be entitled to a capital loss only to the extent that
the repurchase price is less than the exercise price he paid.
The Corporation receives no tax deduction on the grant of an
NSO, but is entitled to a tax deduction when the optionee
recognizes taxable income on or after exercise of the NSO, in the
same amount as the income recognized by the optionee.
Tax Treatment of ISOs. Except as noted below under the
heading Alternative Minimum Tax, Section 422 of the Code
provides that an optionee incurs no federal income tax liability
on either the grant or the exercise of an ISO. Provided that the
option stock is held for at least one year after the date of
exercise of the option and at least two years after its date of
grant, any gain realized on subsequent sale of the stock will be
taxed as long-term capital gain. If the stock is disposed of
within a shorter period of time, the optionee will be taxed as if
he had then received ordinary compensation income in an amount
equal to the difference between the fair market value of the
stock on the date of exercise of the option and its fair market
value on its date of grant. Section 424(c) of the Code defines
a disposition of stock for this purpose as any sale, gift or
transfer of legal title (except a transfer by will or
inheritance), and most types of exchanges.
The Corporation receives no tax deduction on the grant or
exercise of an ISO, but is entitled to a tax deduction if the
optionee recognizes taxable income on account of a premature
disposition of ISO stock, in the same amount and at the same time
as the optionee's recognition of income.
Alternative Minimum Tax. The alternative minimum tax is
payable by a taxpayer for a given year only to the extent that it
exceeds his tax liability determined by the regular method.
Taxable income for purposes of the alternative minimum tax
includes the excess of the fair market value of stock subject to
an ISO, at its date of exercise, over the option price.
Exercise by Delivery of Stock. In Revenue Ruling 80-244,
the Internal Revenue Service took the position that if an
optionee pays part or all of the exercise price of an option by
delivering shares of stock already owned, the optionee recognizes
no taxable gain on the shares delivered. The shares so received
upon exercise of the option are divided into two groups as to
their subsequent tax treatment. A number of shares equal to the
number of shares delivered in payment is considered to be
received by the optionee in an exchange subject to Section
1036(a) of the Code, so that the optionee's basis and holding
period in the new shares are identical to his basis and holding
period in the old shares. If the optionee receives more shares
than he delivers, the additional shares are taxed in accordance
with Section 83, as described above under the heading Tax
Treatment of NSOs. His basis in those shares is equal to the
sum of the cash, if any, paid on exercise of the option, and the
amount of ordinary income on which he is taxed with respect to
the shares under Section 83.
Tax Treatment of Restricted Stock. A person who receives a
grant of Restricted Stock generally will not recognize taxable
income at the time the award is received, but will recognize
ordinary compensation income when restrictions constituting a
substantial risk of forfeiture lapse. For example, if a person
is granted Restricted Stock that he must forfeit if he leaves
employment with the Corporation within two years, he will have
imputed income at the end of the two-year period. The amount of
imputed income will be equal to the excess of the aggregate fair
market value, as of the date the restrictions lapse, over the
amount (if any) paid by the holder for the Restricted Stock.
Alternatively, a recipient of Restricted Stock may elect, in
accordance with Section 83(b) of the Code, to be taxed on the
excess of the fair market value of the Restricted Stock at the
time of grant over the amount (if any) paid by the recipient for
the Restricted Stock, notwithstanding the restrictions on the
stock. All such taxable amounts are deductible by the
Corporation at the time and in the amount of the ordinary
compensation income recognized by the recipient of the Restricted
Stock. The full amount of dividends or other distributions of
property made with respect to Restricted Stock before the lapse
of the restrictions will constitute ordinary compensation income,
and the Corporation will be entitled to a deduction at the same
time and in the same amount as the income realized by the
Restricted Stockholder.
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ITEM 3: RATIFICATION OF SELECTION OF ACCOUNTANTS
Effective November 28, 1995, the Corporation informed the
accounting firm of Coopers & Lybrand, L.L.P., who has previously
audited the Corporation's financial statements (the "former
accountants"), that the former accountants would not be engaged
as the Corporation's principal accountants to audit the
Corporation's financial statements for the fiscal year 1996. The
former accountants neither resigned, nor declined to stand for re-
election. After having considered this matter from time to time,
the Corporation's Audit Committee and Board of Directors
determined that sound business practice suggested that it would
be appropriate to consider periodically whether the Corporation
would be able to reduce its overall accounting costs, while
maintaining or enhancing the efficiency of the audit process, by
seeking competitive proposals on its accounting work. After
reviewing the proposals received (including a proposal from its
former accountants), the Audit Committee of the Board recommended
to the full Board that the Corporation change accounting firms.
The full Board accepted this recommendation and made this
decision at a meeting held on November 27, 1995.
During the Corporation's two most recent fiscal years the
reports issued by the former accountants on the Corporation's
financial statements did not contain an adverse opinion or a
disclaimer of opinion, nor was any such opinion qualified or
modified as to uncertainty, audit scope, or accounting
principles, except for the adoption of Statements of Financial
Accounting Standards No. 109 in fiscal 1994. Likewise, during
the Corporation's two most recent fiscal years and during its
1996 fiscal year to the date preceding such change of
accountants, there have been no "disagreements", as defined in
applicable Securities and Exchange Commission rules, between the
Corporation and its former accountants concerning any matter of
accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements,
if not resolved to the satisfaction of Coopers & Lybrand, L.L.P.,
would have caused it to make a reference to the subject matter of
such disagreements in connection with any of its reports on the
Corporation's financial statements.
Subject to approval by the stockholders at this meeting, the
Corporation's Board of Directors appointed the accounting firm of
Deloitte & Touche LLP as the Corporation's new independent
accountants. At no time during the Corporation's two most recent
fiscal years, nor during its 1996 fiscal year to date, nor at any
other time prior to its appointment, had the Corporation, or
someone on its behalf, consulted with Deloitte & Touche LLP
regarding either the application of accounting principles to a
specified transaction, either completed or proposed, nor with
respect to the type of audit opinion that might be rendered on
the Corporation's financial statements, nor with respect to any
matter that was the subject of a "disagreement" or a "reportable
event" as those terms are defined in applicable Securities and
Exchange Commission rules.
Although the Corporation is not required to submit the
ratification and approval of the selection of its accountants to
a vote of stockholders, the Board of Directors believes it is
sound policy and in the best interests of the stockholders to do
so. In the event a majority of the votes cast are against the
selection of Deloitte & Touche LLP, the Directors will consider
the vote and the reasons therefore in future decisions on the
selection of accountants.
Representatives of Deloitte & Touche LLP will be present at
the meeting and will have an opportunity to make a statement if
they desire to do so. They will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SELECTION OF
DELOITTE & TOUCHE LLP AS INDEPENDENT ACCOUNTANTS FOR THE
CORPORATION BE APPROVED, AND THEREFORE RECOMMENDS A VOTE FOR THIS
PROPOSAL.
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MISCELLANEOUS
STOCKHOLDER PROPOSALS
The Corporation expects to hold its 1997 Annual Meeting on
January 16, 1997. Eligible stockholders may present proposals
for inclusion in the Corporation's 1997 Annual Meeting Proxy
Statement, provided the proposals comply with applicable
Securities and Exchange Commission regulations and are received
by the Corporation no later than September 9, 1996. Any proposal
intended to be presented at the 1997 Annual Meeting should be
sent to the Corporation at 165 Jackson Street, Lowell,
Massachusetts 01852, Attention: Robert P. Story, Jr., Senior
Vice President and Chief Financial Officer.
VOTING OF PROXIES
The persons named in the enclosed Proxy will vote as
directed in the Proxy, and in the absence of such direction will
vote in favor of the actions specified in Items 1, 2 and 3 of the
Proxy. The shares will be voted on such other matters as may
properly come before the meeting in accordance with the best
judgement of the Proxy holder.
The Board of Directors of the Corporation is not aware of
any other matters which may come before the meeting. It is the
intention of the persons named in the enclosed Proxy to vote the
Proxy in accordance with their best judgement if any other
matters shall properly come before the meeting, including voting
for election of a Director in place of any person named above who
may not be available for election.
By order of the Board of Directors
F. BEIRNE LOVELY, JR., Clerk
165 Jackson Street
Lowell, Massachusetts 01852
December 8, 1995
IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, IT
WOULD BE APPRECIATED IF YOU WOULD FILL IN AND SIGN THE ENCLOSED
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
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/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE.
For All
For Withhold Except
1.) Election of Directors. / / / / / /
Edward J. Hoff, Robert P. Story, Jr.
and Richard K. Donahue
(as Class A Directors)
If you do not wish your shares voted for a particular nominee, mark the "For
All Except" box and strike a line through that nominee(s) name. Your shares
will be voted for the remaining nominee.
2.) To approve an amendment to the Corporation's 1993 Stock Incentive Plan,
which would, among other things, increase the number of shares available
for grant under the Plan by 100,000 shares, representing 4.97% of the
number of outstanding shares, as described in the accompanying Proxy
Statement.
For Against Abstain
/ / / / / /
3.) Proposal to Approve the Appointment of Deloitte & Touche LLP as the
Independent Public Accountants of the Corporation.
For Against Abstain
/ / / / / /
4.) To transact such other business as may properly come before the meeting
and/or any adjournment or adjournments thereof.
The undersigned hereby ratifies and confirms all that said attorneys and
Proxies and each of them or their substitute or substitutes may lawfully
do or cause to be done by virtue hereof, revoking any proxy heretofore
given with respect to such shares.
IF NO INSTRUCTION IS GIVEN, THE SHARES WILL BE VOTED FOR PROPOSALS (1), (2)
AND (3) AND IN ACCORDANCE WITH THE BEST JUDGEMENT OF THE ATTORNEYS AND
PROXIES AS TO ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING.
Please be sure to sign and date this Proxy.
- --------------------------------------------------------------------------------
RECORD DATE SHARES:
-----------------------------
Date
- ---- Shareholder sign here ----------------------- Co-owner sign here ----------
Mark box at right if comments or address change have been noted on the reverse
side of this card. / /
DETACH CARD
COURIER CORPORATION
Dear Stockholder:
Please take note of the information enclosed with this Proxy Ballot. There are
a number of issues related to the management and operation of your Company that
require your immediate attention and approval. These are discussed in detail in
the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on the proxy card to indicate how your shares shall be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders of the
Corporation to be held on January 18, 1996.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
COURIER CORPORATION
<PAGE> 25
<TABLE>
COURIER CORPORATION
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS - JANUARY 18, 1996
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Courier Corporation (the "Corporation") hereby constitutes and appoints James F. Conway III, W.
Nicholas Thorndike and Edward J. Hoff, and each of them singly, with full power of substitution, the attorneys and Proxies of the
undersigned, for and in the name, place and stead of the undersigned, to attend the Annual Meeting of Stockholders of the
Corporation to be held on January 18, 1996, commencing at 11:00 a.m., and/or at any adjournment or adjournments thereof (the Proxy
Statement in connection therewith and due notice of the time, place and purposes of such a meeting have been received by the
undersigned) and at such meeting and/or any adjournment or adjournments thereof to vote and act with respect to all shares of
Common Stock of the Corporation standing in the name of the undersigned or in respect of which the undersigned is entitled to vote,
with all the powers the undersigned would possess if personally present at said meeting and/or any adjournment or adjournments
thereof and especially to vote as follows, a majority of said attorneys and Proxies, or any one if only one be present, to have
all the powers of said attorneys or proxies.
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- ------------------------- PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. -------------------------
----------------------------------------------------------------------------
Please sign this proxy exactly as your name appears on the books of the Corporation. Joint owners should each sign personally.
Trustees and other fiduciaries should indicate the capacity in which they sign, and where more than one name appears, a majority
must sign. If a corporation, this signature should be that of an authorized officer who should state his or her title.
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<S> <C>
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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</TABLE>
