<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 / / FILED BY A PARTY OTHER THAN THE REGISTRANT / /
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Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
A. T. Cross Company
(Name of Registrant as Specified In Its Charter)
A. T. Cross Company
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/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:
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> 2
[COMPANY LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 25, 1996
TO THE STOCKHOLDERS OF A.T. CROSS COMPANY:
Notice is hereby given that the annual meeting of stockholders of A.T.
Cross Company (the "Company") will be held on Thursday, April 25, 1996 at 10:00
a.m. at the offices of the Company, One Albion Road, Lincoln, Rhode Island
02865, for the following purposes:
1. Fixing the number of directors at nine, of which three shall be Class A
directors and six shall be Class B directors (by holders of Class A and Class B
common stock voting together as a single class).
2. Electing three Class A directors (by holders of Class A common stock
only) and six Class B directors (by holders of Class B common stock only) to
hold office until the next annual meeting of stockholders or until their
successors are duly elected and qualified.
3. Transacting such other and further business as may properly come before
said meeting upon which the holders of Class A common stock or Class B common
stock, respectively, are entitled to vote.
The stock transfer books will not be closed. The close of business on March
4, 1996 has been fixed as the record date for determining stockholders entitled
to vote at the annual meeting or any adjournment thereof, and only holders of
record of Class A common stock or Class B common stock as of that time are
entitled to receive notice of and to vote at said meeting or any adjournment
thereof.
A proxy statement is set forth on the following pages.
By order of the Board of Directors
/s/ Tina C. Benik
Tina C. Benik
Corporate Secretary
March 21, 1996
<PAGE> 3
[COMPANY LOGO]
PROXY STATEMENT
FOR ANNUAL STOCKHOLDERS' MEETING
APRIL 25, 1996
This statement is furnished in connection with the accompanying proxy
which is solicited by the Board of Directors of A.T. Cross Company (the
"Company") from holders of Class A common stock of the Company for use at the
annual meeting to be held April 25, 1996. Any stockholder giving a proxy may
revoke the same prior to its exercise by giving notice in writing or in person
to the Corporate Secretary. If not revoked, the committee named in the
accompanying proxy will vote such proxy in the manner specified therein and, in
the discretion of the committee, for or against any matter upon which holders of
Class A common stock are entitled to vote which properly comes before the
meeting and which has been omitted from the proxy and proxy statement. Where an
opportunity to vote by ballot is afforded to holders of Class A common stock,
the accompanying proxy will be voted in the manner specified in such ballot. The
cost of solicitation of proxies, including the cost of reimbursing brokerage
houses and other custodians, nominees or fiduciaries for forwarding proxies and
proxy statements to their principals, will be borne by the Company. Solicitation
may be made in person or by telephone or telegraph by officers or regular
employees of the Company, who will not receive additional compensation therefor.
In addition, the Company has retained Georgeson & Co., New York, N.Y., to aid in
the solicitation of proxies. The charges of such firm, estimated at $5,000,
excluding expenses, will be paid by the Company. This proxy statement and the
enclosed form of proxy are expected to be sent to stockholders on or about March
21, 1996.
A copy of the Company's annual report for the year 1995 containing
financial statements for the year ended December 31, 1995 is also enclosed, but
is not to be considered a part of the proxy soliciting material.
As of March 4, 1996, the Company had outstanding 14,755,677 shares of
Class A common stock and 1,804,800 shares of Class B common stock. Only
stockholders of record at the close of business on that date are entitled to
vote at the annual meeting. Stockholders shall be entitled to one vote for each
share held on the foregoing record date with respect to matters on which shares
of that class are eligible to vote.
STOCKHOLDERS' PROPOSALS
Any proposal of a stockholder intended to be presented at the next
annual meeting of the Company, scheduled to be held April 24, 1997, must be
received by the Company's Corporate Secretary not later than November 21, 1996
for inclusion in the proxy statement and form of proxy relating to that meeting.
VOTING RIGHTS
Holders of Class A common stock have the right to elect one-third of
the number of directors from time to time fixed by the holders of Class A and
Class B common stock voting together as a single class; provided, however, that
if the total number of directors is not evenly divisible by three, then the
holders of Class A common stock have the right to elect that number of directors
which is the nearest whole number when the total number of directors is divided
by three. Holders of Class B common stock have the right to elect the remaining
directors. It is proposed that the number of directors for the ensuing year be
fixed at nine (see "ELECTION OF DIRECTORS"), and if this proposal is adopted,
holders of Class A common stock will have the right to elect three directors.
In addition, holders of Class A and Class B common stock vote together
as a single class:
a) For the reservation in the future of shares to be issued pursuant
to options granted or to be granted to directors, officers or
employees; and
b) With respect to the acquisition of assets or shares of any other
company if:
(1) An officer, director or holder of ten percent or more of
either Class A or Class B common stock has an interest in the
transaction;
1
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(2) The transaction would, in the reasonable judgment of the
Board of Directors, presently or potentially increase by
nineteen and one-half percent or more the aggregate of the
Class A or Class B common stock outstanding immediately prior
to such transaction; or
(3) The transaction would involve the issuance of any Class A or
Class B common stock and in the reasonable judgment of the
Board of Directors the value of the consideration furnished
by the Company is nineteen and one-half percent or more of
the aggregate market value of all Class A and Class B common
stock outstanding immediately prior to such transaction.
Notwithstanding the foregoing, if the consummation of any transaction
described above would, with respect to either the Class A common stock or the
Class B common stock, result in a change in the designations, preferences,
limitations or relative rights of the shares of such class or have certain other
effects as specified in the Company's articles, the holders of Class A and Class
B common stock vote as separate classes on such transaction.
Except as stated above or otherwise required by law, all voting power
is vested in the holders of Class B common stock so long as any shares of Class
B common stock are outstanding.
VOTING PROCEDURES
The numbers of Class A and Class B directors will be fixed by vote of the
holders of a majority of the Class A and Class B shares present at the annual
meeting in person or represented by proxy, voting as a single class. The Class A
directors will be elected in each case by vote of the holders of a majority of
the Class A shares present or represented at the meeting, and the Class B
directors will be similarly elected by the holders of a majority of the Class B
shares.
Shares represented by proxies which are marked "abstain" with respect to
fixing the number of directors, "authority withheld" with respect to the
election of any particular nominee for director, or to deny discretionary
authority on any other matters will be counted as shares present and entitled to
vote, and accordingly any such marking of a proxy will have the same effect as a
vote against the proposal to which it relates.
Under the rules of the American Stock Exchange, on which the Class A shares
are listed, brokers who hold Class A shares in street name have the authority to
vote such shares on certain items, including fixing the number of and electing
directors, unless they have received instructions from the beneficial owners to
the contrary, in which case the shares are to be voted or the votes relating
thereto withheld, as directed by the beneficial owners. Such rules also provide
that brokers may not vote shares held in street name on certain other matters
without specific instructions from their customers. Shares subject to such
"broker non-votes" will not be treated as shares entitled to vote on the matters
to which they relate and therefore will be treated as not present at the meeting
for those purposes, but otherwise will have no effect on the outcome of the
voting on such matters. It is not presently anticipated that any matter which
might be the subject of a "broker non-vote" will come before the annual meeting.
2
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<TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The stockholders listed below were beneficial owners of more than 5% of the
outstanding Class A or Class B common stock of the Company at the close of
business January 12, 1996 (except as otherwise indicated) and may be deemed to
be "control persons" with respect to the Company.
<CAPTION>
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TITLE OF NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
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<S> <C> <C> <C>
A Bradford R. Boss 1,864,235 (202,925 directly; 480,000 indirectly as 12.1
11042 Turtle Beach co-trustee of W. Russell Boss, Jr. Trust A; 560,000
Road indirectly as co- trustee of W. Russell Boss, Jr. Trust
North Palm Beach, FL B; 500,000 indirectly as co-trustee of W. Russell Boss,
33408 Jr. Trust C; 117,584 indirectly (stock subject to
options); and 3,726 indirectly, held by a child)
B Bradford R. Boss 1,804,800 (902,400 indirectly as co-trustee of W. 100.0
Russell Boss, Jr. Trust A; and 902,400 indirectly as
co-trustee of
W. Russell Boss, Jr. Trust B)
A Russell A. Boss 1,755,213 (67,451 directly; 560,000 indirectly as 11.4
40 Peaked Rock Lane co-trustee of W. Russell Boss, Jr. Trust B; 480,000
Narragansett, RI indirectly as co- trustee of W. Russell Boss, Jr. Trust
02882 A; 500,000 indirectly as co-trustee of W. Russell Boss,
Jr. Trust C; 117,584 indirectly (stock subject to
options); 19,000 indirectly, held by his wife; 7,452
indirectly, held by his children; and 3,726 indirectly,
held as co-executor of an estate)
B Russell A. Boss 1,804,800 (902,400 indirectly as co-trustee of W. 100.0
Russell Boss, Jr. Trust B; and 902,400 indirectly as
co-trustee of
W. Russell Boss, Jr. Trust A)
A Edwin G. Torrance 480,500 (500 directly and 480,000 indirectly as 3.1
129 Nayatt Road co-trustee of W. Russell Boss, Jr. Trust A)
Barrington, RI 02806
B Edwin G. Torrance 902,400 indirectly as co-trustee of 50.0
W. Russell Boss, Jr. Trust A
A Noel M. Field, Jr. 564,026 (100 directly; 560,000 indirectly as co-trustee 3.6
50 Sakonnet Point of
Road W. Russell Boss, Jr. Trust B; 200 as trustee for
Little Compton, RI children and 3,726 indirectly, held as co-executor of an
02837 estate)
B Noel M. Field, Jr. 902,400 indirectly as co-trustee of 50.0
W. Russell Boss, Jr. Trust B
A Fleet Financial 1,657,920 indirectly as agent and as trustee of various 10.8
Group, Inc. trusts (as of December 31, 1995)
50 Kennedy Plaza
Providence, RI 02903
A John Hancock 1,482,204 (1,439,904 through its indirect, wholly owned 9.6
Mutual Life subsidiary NM Capital Management, Inc. and 42,300
Insurance Company, through its indirect, wholly owned subsidiary John
through Hancock Advisers, Inc.) (as of December 31, 1995)
indirect, wholly
owned subsidiaries
John Hancock Place
Post Office Box 111
Boston, MA 02117
A Radnor Capital 886,000 indirectly in its capacity as an investment 5.8
Management, Inc. advisor (as of December 31, 1995)
Two Radnor
Corporate Center
100 Matson Ford
Road, Suite 250
Radnor, PA 19087
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</TABLE>
Bradford R. Boss and Russell A. Boss are, together with Edwin G. Torrance,
the co-trustees of Trust A referred to above; they are, together with Noel M.
Field, Jr., the co-trustees of Trust B referred to above; and they are, together
with Fleet National Bank, the co-trustees of Trust C referred to above. The
co-trustees of each trust jointly exercise investment and voting powers with
respect to the assets of the trust.
3
<PAGE> 6
The Class B shares held by Trusts A and B are convertible into Class A
shares on a share-for-share basis. If the Class B shares were all converted into
Class A shares, Bradford R. Boss and Russell A. Boss would be the beneficial
owners of 21.3% and 20.7%, respectively, of the outstanding Class A shares.
If the Class B shares held by Trust A were so converted, Edwin G. Torrance
would be the beneficial owner of 8.5% of the outstanding Class A shares, and if
the Class B shares held by Trust B were so converted, Noel M. Field, Jr. would
be the beneficial owner of 9% of the outstanding Class A shares.
<TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table reflects as of January 12, 1996 the beneficial
ownership of shares of common stock of the Company by directors, nominees, and
officers:
<CAPTION>
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TITLE OF AMOUNT AND NATURE OF PERCENT
CLASS NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
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<S> <C> <C> <C>
A Bradford R. Boss 1,864,235 (202,925 directly; 480,000 indirectly as co-trustee 12.1
of W. Russell Boss, Jr. Trust A; 560,000 indirectly as
co-trustee of W. Russell Boss, Jr. Trust B; 500,000 indirectly
as co-trustee of W. Russell Boss, Jr. Trust C; 117,584
indirectly (stock subject to options exercisable within 60
days); and 3,726 indirectly, held by a child)
B Bradford R. Boss 1,804,800 (902,400 indirectly as co-trustee of W. Russell 100.0
Boss, Jr. Trust A; and 902,400 indirectly as co-trustee of W.
Russell Boss, Jr. Trust B)
A Russell A. Boss 1,755,213 (67,451 directly; 560,000 indirectly as co-trustee 11.4
of W. Russell Boss, Jr. Trust B; 480,000 indirectly as
co-trustee of W. Russell Boss, Jr. Trust A; 500,000 indirectly
as co-trustee of W. Russell Boss, Jr. Trust C; 117,584
indirectly (stock subject to options exercisable within 60
days); 19,000 indirectly, held by his wife; 7,452 indirectly,
held by his children and 3,726, held as co-executor of an
estate)
B Russell A. Boss 1,804,800 (902,400 indirectly as co-trustee of W. Russell 100.0
Boss, Jr. Trust B; and 902,400 indirectly as co-trustee of W.
Russell Boss, Jr. Trust A)
A H. Frederick 5,514 indirectly(1) *
Krimendahl II
A John E. Buckley 21,881 directly; 118,984 indirectly(1) *
A Bernard V. Buonanno, Jr. 500 directly; 5,584 indirectly(1) *
A Thomas C. McDermott 250 directly; 2,090 indirectly(1) *
A Terrence Murray 2,000 directly; 5,440 indirectly(1)(2) *
A James C. Tappan 1,000 directly; 2,000 indirectly(3) *
A Edwin G. Torrance 480,500 (500 directly and 480,000 indirectly as co-trustee of 3.1
W. Russell Boss, Jr. Trust A)
B Edwin G. Torrance 902,400 (indirectly as co-trustee of W. Russell Boss, Jr. 50.0
Trust A)
A Steven T. Henick 1,226 directly; 28,666 indirectly(1) *
A Michael El-Hillow 1,530 directly; 59,001 indirectly(1) *
A All directors and 304,729 directly and 2,224,448 indirectly (including shares 16.4
officers as a group subject to options exercisable within 60 days)
(19 persons)
B All directors and 1,804,800 100.0
officers as a group
(3 persons)
<FN>
(1) Shares subject to options exercisable within 60 days.
(2) Excludes shares held by Fleet Financial Group, Inc. in various fiduciary capacities.
(3) Held by spouse.
* Less than 1%
The Class B common stock is convertible share for share into Class A common stock.
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</TABLE>
4
<PAGE> 7
ELECTION OF DIRECTORS
It is proposed to fix the number of directors at nine, of which three will
be designated "Class A Directors" and six will be designated "Class B
Directors". Proxies will be voted for the nominees set forth below unless
authorization to do so is withheld. All nominees are currently directors of the
Company. Should any nominee become unavailable for any reason to accept
nomination or election as a director, the persons named in the proxy will vote
for the election of such other person or persons as management may recommend
unless the stockholders vote to reduce the authorized number of directors. The
terms of all directors will expire when their successors are duly elected at the
annual meeting of stockholders scheduled to be held April 24, 1997. The
following tables reflect information as of January 12, 1996.
<TABLE>
CLASS A DIRECTORS
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NOMINEE AGE DURING PAST FIVE YEARS SINCE OTHER DIRECTORSHIPS 1
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<S> <C> <C> <C> <C>
Terrence Murray 56 Chairman, President and Chief Ex- 1982 Fleet Financial Group, Inc.;
ecutive Officer, Fleet Financial Stop & Shop Companies, Inc.;
Group, Inc. (diversified financial Allmerica Financial
services corporation).3 5 Corporation
Thomas C. McDermott 59 President and Chief Operating Of- 1992 Goulds Pumps, Inc.
ficer of Bausch & Lomb, Inc. (1986
to 1993); President, TCM Associ-
ates, Inc. (1993 to 1994;
executive search consultants);
Chairman, Chief Executive Officer
& President, Goulds Pumps, Inc.
(since 1994).2
James C. Tappan 60 Group Vice President and Director, 1994 Columbian Mutual Life Insur-
General Foods Corporation (prior ance; The Milnot Company
to June 1988); President, Tappan
Capital Partners (June 1988 to
present; equity investment firm).2
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</TABLE>
5
<PAGE> 8
<TABLE>
CLASS B DIRECTORS
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NOMINEE AGE DURING PAST FIVE YEARS SINCE OTHER DIRECTORSHIPS 1
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bradford R. Boss 62 Chairman of the Board and, to April 1960 Fleet Financial Group, Inc.;
1993, Chief Executive Officer4 6 Bausch & Lomb, Inc.
Russell A. Boss 57 President and, to April 1993, Chief 1962 Eastern Utilities Associates;
Operating Officer; thereafter Brown & Sharpe Manufacturing
President and Chief Executive Co.
Officer4 6 7
John E. Buckley 55 Executive Vice President to April 1980
1993; thereafter Executive Vice
President and Chief Operating
Officer.4
Bernard V. Buonanno, 58 Chairman (to 1989) and Director, 1986 Old Stone Corporation
Jr. Old Fox, Inc., manufacturer of
fertilizers and other agricultural
products; counsel (1988 to 1990)
and thereafter partner, Edwards &
Angell, Providence, RI,
attorneys-at-law.5 7
Edwin G. Torrance 64 Partner, Hinckley, Allen & Snyder, 1995
Providence, RI, attorneys-at-law
and counsel for the Company.2 8
H. Frederick 67 Limited Partner, The Goldman Sachs 1972
Krimendahl II Group L.P.; Chairman (since March
1992) Petrus Partners Ltd., New
York, N.Y.5 9
<FN>
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The Board of Directors has an Audit Committee, consisting of Messrs.
McDermott, Tappan and Torrance, and a Compensation Committee, consisting of
Messrs. Buonanno, Jr., Krimendahl and Murray.
The Audit Committee has responsibility for overseeing the establishment and
maintenance of an effective financial control environment, for overseeing the
procedures for evaluating the system of internal accounting control, and for
evaluating audit performance. The Compensation Committee has responsibility for
developing, overseeing and implementing the overall compensation policy for the
Company including, subject to full Board approval, the implementation of an
incentive compensation plan for the Company.
During 1995 the Audit Committee and the Compensation Committee each held
two meetings.
The Board does not have a nominating committee.
1 Includes only companies with a class of securities registered pursuant
to Section 12 or subject to the requirements of Section 15(d) of the
Securities Exchange Act of 1934 and any company registered as an
investment company under the Investment Company Act of 1940.
2 Member of Audit Committee.
3 The Company has a demand line of credit as well as cash and short term
investments with, purchases gold and silver from and engages in other
transactions with Fleet National Bank, a wholly-owned subsidiary of
Fleet Financial Group, Inc., on substantially the same terms as those
prevailing at the time for comparable transactions with other persons.
4 Member of Executive Committee.
5 Member of Compensation Committee.
6 Bradford R. Boss and Russell A. Boss are brothers.
7 Russell A. Boss and Bernard V. Buonanno, Jr. are cousins by marriage.
8 Hinckley, Allen & Snyder performed legal services for the Company during
1995 and is expected to perform services for the Company in 1996.
9 Goldman, Sachs & Co., an affiliate of The Goldman Sachs Group L.P., is
assisting the Company with its stock buy back program.
</TABLE>
6
<PAGE> 9
DIRECTOR COMPENSATION
Members of the Company's Board of Directors were compensated for their
services during 1995 at the rate of $15,000 per annum, plus $900 for each Board
meeting attended. During 1995, the Board of Directors held five meetings. In
addition, members of the Audit and Compensation Committees received $500 ($750
in the case of the committee chairmen) for each committee meeting attended.
Directors also automatically participate in the Company's Non-Qualified
Stock Option Plan under a formula fixing the number of shares which are the
subject of annual option grants as the number derived by dividing, in each case,
the compensation payable to a director for his service to the Company as a
director during the preceding calendar year by the mean between the high and low
trading prices for the Company's Class A common stock on the last trading day of
such year. Options under the non-qualified plan are granted with exercise prices
equal to the fair market value of the Class A common stock on the date of grant.
REPORT TO STOCKHOLDERS ON
COMPENSATION MATTERS
The reports set forth below shall not be deemed incorporated by reference
by any general statement incorporating by reference this proxy statement into
any filing under the Securities Act of 1933 or under the Securities Exchange Act
of 1934, except to the extent that A. T. Cross Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
The 1995 compensation of the Chairman, President and Chief Executive
Officer, and Executive Vice President and Chief Operating Officer of the Company
was established by the members of the Compensation Committee of the Board of
Directors. None of the three directors comprising the Compensation Committee is
an employee of the Company. The compensation of the remaining executive officers
of the Company was recommended by the above-named officers, with input from the
Company's director of compensation, benefits and international human resources,
and approved by the Compensation Committee.
The elements of compensation for each executive officer consisted of base
pay and incentive bonus. In general, the decisions relating to the incorporation
of the several elements into the compensation of each executive officer were
based on three primary factors:
-- The performance of the executive in meeting key strategic objectives,
including increasing stockholder value.
-- The external competitiveness of the Company's pay levels with those of
other manufacturing companies with similar revenues and scope of
operations.
-- The internal pay equity that exists among individual executives and
other Company employees.
The Company is privy to external compensation data through its
participation in, and analysis of, periodic compensation surveys conducted by
independent consulting firms and associations, including but not limited to
Towers-Perrin and Hewitt Associates, which report on compensation paid to other
executives at companies of similar size. These companies, which include various
manufacturing companies with sales volumes generally less than $500 million, are
not represented in the peer group index used in the Performance Graph. The peer
group index is limited by the low number of publicly traded fine writing
instrument companies. The Company believes the larger sample size of the
compensation surveys provides more meaningful comparisons. There are
approximately 350 companies in the various survey groups. This number is subject
to occasional change from year to year. The Company extrapolates the survey
information using a combination of single and multiple regression analyses.
Factors used in the regression analyses include, but are not limited to,
corporate sales, company assets, stockholders' equity, return on equity, board
membership, and years of service. In addition, the Company also utilizes the
survey data to gauge its competitive position with other companies with respect
to bonus and stock option grants.
The Company also reviews its standing against other companies in a survey
that compares a number of financial performance criteria. The survey ranks
participating companies on one- and five-year returns on assets, equity and
capital. It also ranks their one-year return on sales and common stock
appreciation plus yield.
The Board has reviewed the Company's exposure with respect to qualifying
executive officer compensation for deduction under Section 162(m) of the
Internal Revenue Code. The Board has deferred adopting a policy on this issue as
it does not expect compensation to reach relevant levels in the near future.
The following is a more specific discussion of each compensation component:
BASE SALARY:
The Company targets its base pay for the Chief Executive Officer and senior
management at the 50th to 65th percentile of executive officers of manufacturing
organizations of approximately the same size (less than $500 million in annual
sales) and scope of operations as the Company. Based on survey data, the Company
believes the base pay for its executives has been within this range for the last
several years.
In considering a base salary adjustment for the three named officers, the
Compensation Committee took note of the significantly improved sales and
earnings achieved for 1994. The Committee also reviewed the pay of similar
level officers in the
7
<PAGE> 10
survey groups referred to above and the amount of merit pay budgeted for the
rest of the Company. The Committee approved base salary adjustments of 4.4% for
Bradford R. Boss, 4.3% for Russell A. Boss, and 4.4% for John E. Buckley. The
remaining two highest paid executive officers received a weighted average
increase of 7.5%. This action was taken in light of survey data indicating that
a more competitive base salary adjustment was appropriate for these two key
positions. The percentage increases for the five executive officers as a group
were within 1% of the average budgeted base salary increases granted to similar
level executives of companies included in the comparative survey groups.
BONUS:
Bonus payments to executives for 1995 were subject to the revised Executive
Compensation Program approved by the Compensation Committee to cover the period
1995-1997. The annual incentive payments to eligible executives are designed to
provide rewards based on substantially improved company profitability from year
to year as measured by the amount of increase in writing instrument operating
income before taxes (OIBT). Also factored into the formula is a measure of the
Company's effective use of capital.
The percentage increase in OIBT over 1994 levels and the excess of the
return on capital calculation over its benchmark figure generated a bonus of 66%
of base salary for each of the Messrs. Boss and Mr. Buckley. The formula also
resulted in a weighted average bonus of 48% of base salary for the next two most
highly compensated executive officers. Eighty-six percent of the bonus earned by
the Messrs. Boss and Mr. Buckley was paid in cash and the remainder was paid in
the form of restricted shares of the Company's Class A common stock; the next
two most highly compensated executive officers received 83% of their bonuses in
cash, with the balance paid in the form of restricted stock. The restricted
stock awards provide that restrictions as to 50% of the restricted shares will
lapse when OIBT equals at least $25 million and restrictions on the balance of
the shares will lapse when OIBT is double the OIBT attained in 1994. If the
specified OIBT levels have not been achieved by December 31, 1999, all shares
then subject to restrictions will be forfeited.
The Company also analyzes its total cash compensation (base salary plus
bonus) in relation to other similarly sized companies and targets the 75th
percentile as a competitive norm when the maximum percentage increase in OIBT
under the formula is achieved. Applying the most recent survey data available to
the Company (April 1995), the total cash compensation (which includes 1995 base
salary and the 1995 bonus as described in the Summary Compensation Table) for
each of the executive officers as a group was at or above the 75th percentile
compared to cash compensation received by executive officers at other companies
included in the survey.
LONG-TERM INCENTIVES:
The Company has relied upon grants under incentive and non-qualified stock
option plans to provide key officers and managers with an ownership position in
the Company, while fostering a longer-term incentive to increase stockholder
value.
As part of the three-year (1995-1997) Executive Compensation Program, the
Company granted stock options in December 1994 to its executive officers and
other members of management under a revised stock option plan, subject to
stockholder approval of the revised plan. This grant provided options
approximate to the number that would be granted over a three-year period and
provided for three-year cliff vesting of the options. The Program specifically
provides that no other options will be issued to continuing participants (other
than annual automatic grants to directors) until the completion of the
three-year compensation program. The revised stock option plan was approved by
the stockholders at the 1995 annual meeting.
The option price of $15.1875 per share represented the fair market value of
the Class A common stock on the date of the grants. The options granted to the
five most highly compensated executives were as follows: the Messrs. Boss:
40,000 shares each; Mr. Buckley: 80,000 shares; Messrs. Henick and El-Hillow:
35,000 shares each.
A comparison with the Company's survey sources indicates that the size of
the grants analyzed on an annualized basis places the three named officers all
below the 25th percentile versus other similarly compensated executives. The two
remaining most highly compensated executives placed between the 45th and 50th
percentiles of the comparison group.
In addition to the stock option plan, the Executive Compensation Program
includes a Performance Cash Plan. The Plan provides the opportunity for a
one-time cash bonus to be paid to each qualifying executive if the Company meets
or exceeds certain significant three-year cumulative compounded OIBT growth
goals. The award pool to be determined after the conclusion of the 1997 fiscal
year will represent a percentage of the three-year cumulative OIBT, not to
exceed 6% of the three-year OIBT. Awards will be made to the five most highly
compensated executives as well as other participants in the Executive
Compensation Program in amounts as determined by the Compensation Committee in
accordance with the Committee's assessment of each individual's performance and
contribution to the Company's overall results. The one-time cash bonuses will be
paid out in three equal annual installments beginning in the first quarter of
1998.
The foregoing report is presented by the following:
Bernard V. Buonanno, Jr.
H. Frederick Krimendahl II
Terrence Murray, Chairman
8
<PAGE> 11
EXECUTIVE COMPENSATION
<TABLE>
The following table sets forth certain information with respect to the
Company's Chief Executive Officer and the four other most highly compensated
executive officers during 1995:
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM
COMPENSATION
------------------------
ANNUAL COMPENSATION OTHER RESTRICTED SECURITIES
---------------------------- ANNUAL STOCK UNDERLYING ALL OTHER
NAME & SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(3) ($)(5) (#) ($)
- ------------------ ---- ------ ----- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Russell A. Boss 1995 $413,833(1) $216,884 $ 4,320 $45,327 1,485(6) $18,806(7)
President and 1994 392,792 119,192 4,320 61,310 17,763
Chief Executive Officer 1993 376,792 0 4,320 21,088 6,372
Bradford R. Boss 1995 291,583(1) 149,646 4,320 31,275 1,485(6) 14,996(8)
Chairman 1994 276,792 82,153 4,320 61,310 17,145
1993 302,833 0 2,775 21,088 6,713
John E. Buckley 1995 372,000(1) 193,875 4,320 40,519 1,485(6) 16,767(9)
Executive Vice President 1994 351,167 105,901 4,320 101,310 15,807
Chief Operating Officer 1993 334,708 0 4,320 21,088 4,497
Steven T. Henick, 1995 204,583 81,833 10,406(4) 17,103 0 11,720(10)
Vice President, Worldwide 1994 192,917 57,100 5,021 53,000 4,620
Marketing and Sales 1993 35,320(2) 2,000 677 25,000 0
Michael El-Hillow 1995 175,458 70,183 3,600 14,668 0 11,742(11)
Vice President, Finance 1994 159,520 47,100 3,600 53,000 9,401
Treasurer, Chief Financial 1993 148,750 35,700 3,600 39,000 4,497
Officer
<FN>
- --------------------------------------------------------------------------------
(1) Includes director fees of $19,500, which are also included in Salary for
1994 and 1993.
(2) Mr. Henick was hired on October 25, 1993.
(3) Amounts listed under Other Annual Compensation consist of tax
reimbursement payments made to the named individuals relating to amounts
paid to these individuals as car allowances.
(4) Mr. Henick's Other Annual Compensation includes a tax gross-up payment
related to reimbursement of relocation expenses ($6,806 for 1995 and
$1,421 for 1994).
(5) Annual incentive awards which exceeded target award levels were paid in
restricted Class A common stock under the A. T. Cross Company Restricted
Stock Plan. The restricted stock awards provide that restrictions as to
50% of the restricted shares will lapse when writing instrument OIBT
equals $25 million and restrictions on the balance of the shares will
lapse when writing instrument OIBT is double the OIBT attained in 1994. If
the specified OIBT levels have not been achieved by December 31, 1999, all
shares then subject to restrictions will be forfeited. Termination of
employment other than by reason of death or disability will also result in
forfeiture of any shares subject to restrictions. The number and year-end
value of the shares awarded for 1995, based on the December 29, 1995
closing market price of the Company's unrestricted Class A common stock of
$15.125 are: Mr. R. Boss, 2,984 shares and $45,133, Mr. B. Boss, 2,059
shares and $31,142, Mr. Buckley, 2,667 shares and $40,338, Mr. Henick,
1,126 shares and $17,031, and Mr. El-Hillow, 965 shares and $14,596.
Dividends will be paid on the shares of restricted stock if and to the
extent paid on the Class A and Class B common stock.
(6) Shares underlying formula option received as a director of the Company
pursuant to the Company's Non-Qualified Stock Option Plan.
(7) Mr. Boss's All Other Compensation for 1995 consists of 401(k)
contributions ($4,620); profit sharing trust contributions ($13,713); and
split dollar life insurance premiums ($473).
</TABLE>
9
<PAGE> 12
(8) Mr. Boss's All Other Compensation for 1995 consists of 401(k)
contributions ($4,620); profit sharing trust contributions ($9,500); and
split dollar life insurance premiums ($876).
(9) Mr. Buckley's All Other Compensation for 1995 consists of 401(k)
contributions ($4,620); and profit sharing trust contributions ($12,147).
(10) Mr. Henick's All Other Compensation for 1995 consists of 401(k)
contributions ($4,620); and profit sharing trust contributions ($7,100).
(11) Mr. El-Hillow's All Other Compensation for 1995 consists of 401(k)
contributions ($4,620); and profit sharing trust contributions ($7,122).
PERFORMANCE GRAPH
The following graph compares the market performance of the Company's Class
A common stock to the American Stock Exchange Market Value Index and Peer Group
Index over the Company's last five fiscal years. The graph assumes that the
value of the investment in the Company's Class A common stock and each index was
$100 at December 31, 1990 and that all dividends were reinvested.
[GRAPH]
<TABLE>
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
OF COMPANY, PEER GROUP AND BROAD MARKET
<CAPTION>
MEASUREMENT PERIOD A.T. CROSS PEER GROUP AMEX MARKET
(FISCAL YEAR COVERED) COMPANY INDEX INDEX
<S> <C> <C> <C>
1990 $100.00 $100.00 $100.00
1991 $112.36 $127.04 $123.17
1992 $ 89.16 $174.79 $124.86
1993 $ 74.26 $161.55 $148.34
1994 $ 69.72 $151.19 $131.04
1995 $ 80.80 $198.01 $168.90
</TABLE>
On a worldwide basis, A. T. Cross Company is the only major manufacturer of
quality writing instruments that is not either privately held or part of a
consolidated group. Therefore, relative performance data for the Company's
primary competition is not readily available. The peer group included in this
performance graph represents four publicly-traded companies (Bic Corp.; Hunt
Manufacturing Company; Pentech International, Inc.; A.T. CROSS Company) based in
the United States and included in Standard Industrial Classification (SIC) Code
3951 "Pens, Mechanical Pencils and Parts."
10
<PAGE> 13
<TABLE>
PENSION PLAN TABLE
<CAPTION>
AVERAGE YEARS OF SERVICE
PAY 15 20 25 30 35
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 25,000 $ 6,000 $ 8,000 $ 10,000 $ 10,000 $ 10,000
50,000 12,000 16,000 20,000 20,000 20,000
75,000 18,000 24,000 30,000 30,000 30,000
100,000 24,000 32,000 40,000 40,000 40,000
150,000 36,000 48,000 60,000 60,000 60,000
200,000 48,000 64,000 80,000 80,000 80,000
300,000 72,000 96,000 120,000 120,000 120,000
400,000 96,000 128,000 160,000 160,000 160,000
500,000 120,000 160,000 200,000 200,000 200,000
- --------------------------------------------------------------------------------
</TABLE>
The Company maintains a non-contributory qualified retirement plan for the
benefit of its employees, including the individuals named in the Summary
Compensation Table. In addition, participants in the plan whose retirement
benefits would exceed amounts permitted under the Internal Revenue Code
participate in a non-qualified excess retirement plan which provides a
supplemental unfunded benefit equal to the amount of any benefit that would have
been payable under the qualified retirement plan but for certain limitations
under the Internal Revenue Code. The benefits set forth in the Pension Plan
Table reflect the aggregate of the benefits under both the qualified and
non-qualified plans. In each case, the indicated benefit will be reduced by the
individual's social security credit. The qualified plan and the non-qualified
plan are collectively referred to as the "Plan".
Covered compensation under the Plan includes base salary, cash bonuses,
overtime pay, and amounts contributed by the employee to the A.T. Cross Savings
Plan maintained by the Company under Section 401(k) of the Internal Revenue
Code. The Salary and Bonus columns of the Summary Compensation Table set forth
previously, less director fees, reflect all covered compensation of executive
officers for 1995.
As of December 31, 1995, each of the individuals named in the Summary
Compensation Table was credited with twelve years of service under the Plan with
the exception of Steven T. Henick, who was credited with two years of service,
and Michael El-Hillow, who was credited with five years of service.
The amounts payable shown in the above Table are based on the following
assumptions:
(i) The individual shall have retired at the normal retirement age of
65,
(ii) "Average pay" is the average of the covered compensation paid to
such individual over the five consecutive years immediately preceding
retirement, and
(iii) Benefits are paid in the form of a straight-life annuity. Payment
options for spousal benefits are available.
11
<PAGE> 14
<TABLE>
STOCK OPTIONS
The following tables set forth, as to the Chief Executive Officer and the
four most highly compensated other executive officers of the Company,
information with respect to stock option grants in 1995, options exercised
during 1995 and year-end values of unexercised options. No options were
exercised by these officers in 1995. The Company does not grant any stock
appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR THE OPTION TERM
- --------------------------------------------------------------------------------------------------- ---------------------------
NUMBER PERCENTAGE
OF OF TOTAL MARKET
SECURITIES OPTIONS PRICE
UNDERLYING GRANTED TO EXERCISE PER SHARE
OPTIONS EMPLOYEES PRICE ON DATE EXPIRATION
NAME GRANTED IN 1994 PER SHARE OF GRANT DATE(2) 0% 5% 10%
---- ---------- ---------- --------- --------- ---------- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bradford R. Boss 1,485(1) 1.71% $16.75 $16.75 October 1, 2005 $0 $15,643 $39,642
Russell A. Boss 1,485(1) 1.71% $16.75 $16.75 October 1, 2005 $0 $15,643 $39,642
John E. Buckley 1,485(1) 1.71% $16.75 $16.75 October 1, 2005 $0 $15,643 $39,642
Steven T. Henick -- -- -- -- -- -- -- --
Michael El-Hillow -- -- -- -- -- -- -- --
<FN>
- ---------------
(1) These options are received as a director of the Company under the formula
provisions of the Company's Non-Qualified Stock Option Plan.
(2) Subject to earlier termination in the event of termination of the grantee's
office.
</TABLE>
<TABLE>
OPTION VALUES AT DECEMBER 31, 1995
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1995 DECEMBER 31, 1995(1)
ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bradford R. Boss........... -- -- 117,584 41,485 $ 44,675 $ 0
Russell A. Boss............ -- -- 117,584 41,485 44,675 0
John E. Buckley............ -- -- 118,984 81,485 49,522 0
Michael El-Hillow.......... -- -- 59,001 40,999 103,782 5,606
Steven T. Henick........... -- -- 28,668 49,332 62,777 31,386
<FN>
- ---------------
(1) Based on the mean between the high and low trading prices of the Class A
common stock on December 29, 1995 ($15.1875) minus the exercise price.
</TABLE>
12
<PAGE> 15
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER
PARTICIPATION
As indicated under "Report to Stockholders on Compensation Matters" at page
7, above, the 1995 compensation of Messrs. Bradford R. Boss, Russell A. Boss and
John E. Buckley, all of whom are members of the Board of Directors of the
Company, was fixed by the Compensation Committee. The Compensation Committee is
comprised of Terrence Murray, H. Frederick Krimendahl II, and Bernard V.
Buonanno, Jr. The compensation of the remaining executive officers of the
Company was recommended by the Messrs. Boss and Mr. Buckley and approved by the
Compensation Committee.
Bradford R. Boss is a member of the compensation committee of the board of
directors of Fleet Financial Group, Inc. Terrence Murray, a director of the
Company, is Chairman and Chief Executive Officer of Fleet Financial Group, Inc.
and is Chairman of the Company's Compensation Committee.
RELATIONSHIP WITH INDEPENDENT
PUBLIC ACCOUNTANTS
The Company's principal independent public accountant for 1995 was
Ernst & Young LLP. The Board of Directors has not yet nominated an accountant to
examine the Company's and its subsidiaries' financial statements for 1996. The
Company is in the process of soliciting bids from several independent public
accountants relating to this work. Once the bids have been obtained, the Board
of Directors will recommend an accountant to the holders of Class B common stock
for their approval. One or more representatives of Ernst & Young LLP plan to
attend the annual meeting and will be afforded the opportunity to make a
statement and answer questions.
At least twice a year the Audit Committee reviews and approves the
services that may be provided by its auditors during the year, considers the
effect that performing such services might have on audit independence, and
approves guidelines under which management may engage the auditors to perform
non-audit services. It also reviews the services performed to see that they are
consistent with its guidelines.
SECTION 16 COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10 percent of
the Company's Class A common stock ("Insiders"), to file with the Securities and
Exchange Commission and the American Stock Exchange reports of ownership and
changes in ownership of such stock. Insiders are required by Securities and
Exchange Commission regulations to furnish the Company with copies of all
Section 16(a) reports they file. Based solely on a review of the copies of such
reports furnished to the Company, the Company believes that during 1995 its
Insiders complied with all applicable Section 16(a) filing requirements.
OTHER MATTERS
The Board of Directors and management know of no matter of business to
be brought before the meeting which is not referred to above. However, if other
business upon which holders of Class A common stock are entitled to vote shall
properly come before the meeting, it is the intention of the persons named in
the enclosed proxy or any substitute to vote said proxy in accordance with their
best judgment.
IMPORTANT
NO MATTER HOW SMALL YOUR HOLDINGS, YOU ARE RESPECTFULLY REQUESTED TO
SIGN, DATE, AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED, PREPAID ENVELOPE AT
YOUR EARLIEST CONVENIENCE.
Tina C. Benik
Corporate Secretary
Dated: March 21, 1996
13
<PAGE> 16
<TABLE>
<S> <C>
PROXY
A.T. CROSS COMPANY ----------------------------------------------------------------
The undersigned holder of 1. NUMBER OF DIRECTORS: / / FOR / / AGAINST / / ABSTAIN
Class A common stock of A.T. fixing the number of Class A directors at three and
Cross Company does hereby Class B directors at six
constitute and appoint
Bradford R. Boss, Russell A. ----------------------------------------------------------------
Boss, and Edwin G. Torrance, 2. ELECTION OF CLASS A DIRECTORS:
or any one of them as Terrence Murray / / FOR / / AUTHORITY WITHHELD
attorneys and proxies of the James C. Tappan / / FOR / / AUTHORITY WITHHELD
undersigned, with full power Thomas C. McDermott / / FOR / / AUTHORITY WITHHELD
of substitution for, and in
the name and stead of, the ----------------------------------------------------------------
undersigned to appear and 3. OTHER BUSINESS: In their discretion, the proxies
vote all shares of Class A are authorized to vote upon such other business as
common stock of A.T. Cross may properly come before said meeting or any
Company held of record in adjournment thereof upon which Class A common
the name of the undersigned stockholders are entitled to vote.
at the annual meeting of This proxy when properly executed will be voted in
A.T. Cross Company to be the manner directed herein by the undersigned. If
held at the offices of the no direction is made, this proxy will be voted FOR
Company, One Albion Road, proposals 1 and 2. THIS PROXY IS BEING SOLICITED
Lincoln, Rhode Island 02865 ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS.
on Thursday, April 25, 1996 Please date, sign and mail promptly in the
at 10:00 A.M. and at any and enclosed envelope. This proxy will not be used if
all adjournments thereof as you attend the meeting in person and so request.
designated. (over)
</TABLE>
Dated 1996
-------------------------------------
Signature:
-------------------------------------
Signature:
-------------------------------------
Important: Please sign exactly as your name or names appear above. When signing
as attorney, executor, administrator, trustee, guardian, or in any other
representative capacity, give full title as such. Corporate stockholders sign
with full corporate name by a duly authorized officer. If a partnership, sign
in partnership name by authorized person.
