<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 [ ]
- - --------------------------------------------------------------------------------
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)
(Name of Person(s) Filing Proxy Statement if other than Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] 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
[A.T. Cross Company Logo]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 24, 1997
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 24, 1997 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. Appointing independent public accountants to audit the Company's books
and accounts for the year ending December 31, 1997 (by holders of Class B common
stock only).
4. 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
3, 1997 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, 1997
<PAGE> 3
[A.T. CROSS Logo]
PROXY STATEMENT
FOR ANNUAL STOCKHOLDERS' MEETING
APRIL 24, 1997
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 24, 1997. 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. 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 $5,500,
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, 1997.
A copy of the Company's annual report for the year 1996 containing
financial statements for the year ended December 31, 1996 is also enclosed, but
is not to be considered a part of the proxy soliciting material.
As of March 3, 1997, the Company had outstanding 15,288,042 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 23, 1998, must be
received by the Company's Corporate Secretary not later than November 21, 1997
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;
(2) The transaction would, in the reasonable judgment of the
Board of Directors, presently or potentially increase by
nineteen and
1
<PAGE> 4
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
<PAGE> 5
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 December 31, 1996 (except as otherwise indicated).
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<TABLE>
<CAPTION>
TITLE OF NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
A Bradford R. Boss 1,793,621 (150,826 directly; 480,000 indirectly as 12.2%
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; 99,069 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. 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 1,736,717 (68,401 directly; 560,000 indirectly as 11.8
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; 99,069 indirectly (stock subject to options
exercisable within 60 days); 19,931 indirectly, held by
his wife; and 9,316 indirectly, held by his children)
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 3.3
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 W. Russell Boss, Jr. 50.0
Trust A
A Noel M. Field, Jr. 560,100 (100 directly and 560,000 indirectly as 3.8
50 Sakonnet Point co-trustee of W. Russell Boss, Jr. Trust B)
Road
Little Compton, RI
02837
B Noel M. Field, Jr. 902,400 indirectly as co-trustee of W. Russell Boss, Jr. 50.0
Trust B
A Fleet Financial 1,265,978 indirectly as agent and as trustee of various 8.6
Group, Inc. trusts
One Federal Street
Boston, MA 02110
A John Hancock Mutual 1,093,620 (1,051,320 through its indirect, wholly owned 7.4
Life Insurance Com- subsidiary NM Capital Management, Inc. and 42,300
pany, through indi- through its indirect, wholly owned subsidiary John
rect, wholly owned Hancock Advisers, Inc.)
subsidiaries John
Hancock Place Post
Office Box 111 Bos-
ton, MA 02117
A Galal P. Doss 1,633,900 directly (as of February 6, 1997) 11.1
P.O. Box 45
Tenth of Ramadan
Egypt
</TABLE>
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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.
The Class B shares held by Trusts A and B are convertible into Class A
shares on a share-for-share basis at any time. 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 21.8% and 21.5%, respectively, of the outstanding Class A
shares.
3
<PAGE> 6
If the Class B shares held by Trust A were so converted, Edwin G. Torrance
would be the beneficial owner of 8.9% 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 9.4% of the outstanding Class A shares.
SECURITY OWNERSHIP OF MANAGEMENT
The following table reflects as of December 31, 1996 the beneficial
ownership of shares of common stock of the Company by directors, nominees, and
officers:
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<TABLE>
<CAPTION>
TITLE OF AMOUNT AND NATURE OF PERCENT
CLASS NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- - ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
A Bradford R. Boss 1,793,621 (150,826 directly; 480,000 indirectly as co-trustee 12.2 %
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; 99,069
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 1,736,717 (68,401 directly; 560,000 indirectly as co-trustee 11.8
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; 99,069
indirectly (stock subject to options exercisable within 60
days); 19,931 indirectly, held by his wife; and 9,316
indirectly, held by his children)
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 6,999 indirectly(1) *
Krimendahl II
A John E. Buckley 21,904 directly; 120,469 indirectly(1) *
A Bernard V. Buonanno, Jr. 500 directly; 7,069 indirectly(1) *
A Thomas C. McDermott 250 directly; 3,575 indirectly(1) *
A Terrence Murray 7,000 directly; 6,925 indirectly(1)(2) *
A James C. Tappan 1,131 indirectly(1) *
A Edwin G. Torrance 480,500 (500 directly and 480,000 indirectly as co-trustee of 3.3
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 1,434 directly; 43,000 indirectly(1) *
A Michael El-Hillow 1,546 directly; 65,000 indirectly(1) *
A All directors and 257,977 directly and 2,193,843 indirectly (including shares 16.7
executive officers as a subject to options exercisable within 60 days)
group (19 persons)
B All directors and 1,804,800 100.0
executive officers as a
group (3 persons)
</TABLE>
(1) Shares subject to options exercisable within 60 days.
(2) Excludes shares held by Fleet Financial Group, Inc. in various fiduciary
capacities.
* Less than 1%
The Class B common stock is convertible share for share into Class A common
stock at any time.
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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". It is also proposed to elect 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. 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 23, 1998. The following tables reflect information as
of December 31, 1996.
CLASS A DIRECTORS
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NOMINEE AGE DURING PAST FIVE YEARS SINCE OTHER DIRECTORSHIPS1
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Terrence Murray 57 Chairman, President and Chief Ex- 1982 Fleet Financial Group, Inc.;
ecutive Officer, Fleet Financial Allmerica Financial Corpora-
Group, Inc. (diversified financial tion; CVS Corporation
services corporation).4
Thomas C. McDermott 60 President and Chief Operating Of- 1992 Goulds Pumps, Inc.; Thomas &
ficer of Bausch & Lomb, Inc. (1986 Betts Corporation
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 61 Group Vice President and Director, 1994 Pragma Providence Fund
General Foods Corporation (prior
to June 1988); President, Tappan
Capital Partners (since June 1988;
equity investment firm).2
</TABLE>
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See footnotes on page 6.
5
<PAGE> 8
CLASS B DIRECTORS
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NOMINEE AGE DURING PAST FIVE YEARS SINCE OTHER DIRECTORSHIPS1
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bradford R. Boss 63 Chairman of the Board and, to April 1960 Fleet Financial Group, Inc.
1993, Chief Executive Officer3 5
Russell A. Boss 58 President and, to April 1993, Chief 1962 Eastern Utilities Associates;
Operating Officer; thereafter Brown & Sharpe Manufacturing
President and Chief Executive Co.
Officer3 5 6
John E. Buckley 56 Executive Vice President to April 1980
1993; thereafter Executive Vice
President and Chief Operating
Officer.3
Bernard V. Buonanno, Jr. 58 Chairman (to 1989) and Director, 1986 Old Stone Corporation
Old Fox, Inc., manufacturer of
fertilizers and other agricultural
products; counsel (1988 to 1990)
and thereafter partner, Edwards &
Angell, Providence, RI,
attorneys-at-law.4 6 7
Edwin G. Torrance 64 Partner, Hinckley, Allen & Snyder, 1995
Providence, RI, attorneys-at-law
and counsel for the Company
(retired July 1996).2 8
H. Frederick Krimendahl II 68 Limited Partner, The Goldman Sachs 1972
Group L.P.; Chairman (since March
1992) Petrus Partners Ltd., New
York, N.Y.4 9
</TABLE>
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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 1996 the Audit Committee held four meetings and the Compensation
Committee 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 Member of Executive Committee.
4 Member of Compensation Committee.
5 Bradford R. Boss and Russell A. Boss are brothers.
6 Russell A. Boss and Bernard V. Buonanno, Jr. are cousins by marriage.
7 Edwards & Angell is expected to perform legal services for the Company
in 1997.
8 Hinckley, Allen & Snyder performed legal services for the Company during
1996 and is expected to perform legal services for the Company in 1997.
9 Goldman, Sachs & Co., an affiliate of The Goldman Sachs Group L.P., is
assisting the Company with its stock buy back program.
6
<PAGE> 9
DIRECTOR COMPENSATION
Members of the Company's Board of Directors were compensated for their
services during 1996 at the rate of $15,000 per annum, plus $1,000 for each
Board meeting attended. During 1996, 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 paid 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.
During 1996, each director received options to purchase 1,283 shares under this
plan with the exception of Mr. Tappan, who received options to purchase 1,224
shares, and Mr. Torrance, who received options to purchase 977 shares. The
exercise price for all options was $11.50 per share.
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 1996 compensation of the Chairman, President and Chief Executive
Officer, and Executive Vice President and Chief Operating Officer of the Company
(the "three named officers") 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 three 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 consist of base
pay, annual incentive bonus and long-term incentives. The compensation of each
executive officer was 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 Compensation Committee is privy to external compensation data through
the Company's 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 on page 11. The peer group index is limited by the low number
of publicly traded writing instrument companies. The Compensation Committee
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 Compensation Committee extrapolated the survey information using a
combination of single and multiple regression analyses. Factors used in the
regression analyses included, but were not limited to, corporate sales, company
assets, stockholders' equity, return on equity, board membership, and years of
service. In addition, the Compensation Committee also utilized the survey data
to gauge the Company's competitive position with other companies with respect to
bonus and stock option grants.
The Compensation Committee also reviewed 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 capi-
7
<PAGE> 10
tal. 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 Compensation Committee 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 Compensation Committee believes the base pay for its
executives has been within this range for the last several years.
In considering a 1996 base salary adjustment for the three named officers,
the Compensation Committee took note that 1995 was the second consecutive year
of significantly improved sales and earnings. The Committee also reviewed the
pay of similar level officers in the 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 4.0% for Bradford R. Boss, 4.0% for Russell A. Boss,
and 3.9% for John E. Buckley. The remaining two highest paid executive officers
received a weighted average increase of 1.9%. The percentage increases for the
five executive officers as a group placed them at a competitive rate versus
amounts paid to similar level executives of companies included in the
comparative survey groups.
BONUS:
Bonus payments to executives for 1996 performance were again governed by
the 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.
Under the Program, the OIBT benchmarks for 1996 were increased
significantly over 1995. Based on this formula and the resulting OIBT, no
bonuses were earned for 1996 performance by the five highest paid executives.
Because the OIBT benchmarks will also significantly increase for 1997 under
the existing Executive Compensation Program, it is unlikely that any amounts
would be payable to management, including the five most highly compensated
executives, for 1997 performance. Based on this assumption, the Compensation
Committee recommended and implemented a one year incentive plan (the "Addendum
Plan") as an overlay to the existing Executive Compensation Program in order to
provide incentive to management to improve Company profitability in 1997. Under
the Addendum Plan, members of management (including the five most highly
compensated executives) will have an opportunity to earn a reduced bonus
(compared to the potential bonus provided under the original Executive
Compensation Program) if certain earnings targets are met for 1997. In the event
that Company performance triggers payments under the original Executive
Compensation Program that exceed those to be paid under the Addendum Plan, then
no payments will be made under the Addendum Plan.
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
8
<PAGE> 11
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 grant
value (number of shares multiplied by option price) 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 25th and 35th 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. If the OIBT growth goals are met, 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, if awarded, will be paid out in three equal annual
installments beginning in the first quarter of 1998. At the end of 1996, the
Company was below the OIBT benchmarks required to trigger a payment under this
Plan.
The foregoing report is presented by the following:
Bernard V. Buonanno, Jr.
H. Frederick Krimendahl II
Terrence Murray, Chairman
9
<PAGE> 12
EXECUTIVE COMPENSATION
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 the last three completed fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION -------------------------
---------------------------------------- NUMBER OF
OTHER RESTRICTED SECURITIES
NAME & ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION(2) AWARDS(4) OPTIONS COMPENSATION
- - ----------------------------- ----- ----------- -------- --------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Russell A. Boss 1996 $ 430,233 $ -- $ 4,320 $ -- 1,283(5) $ 22,732(6)
President and 1995 413,833 216,884 4,320 45,327 1,485(5) 18,806
Chief Executive Officer 1994 392,792 119,192 4,320 -- 61,310 17,763
Bradford R. Boss 1996 303,067 -- 4,320 -- 1,283(5) 17,820(7)
Chairman 1995 291,583 149,646 4,320 31,275 1,485(5) 14,996
1994 276,792 82,153 4,320 -- 61,310 17,145
John E. Buckley 1996 386,567 -- 4,320 -- 1,283(5) 20,292(8)
Executive Vice President 1995 372,000 193,875 4,320 40,519 1,485(5) 16,767
Chief Operating Officer 1994 351,167 105,901 4,320 -- 101,310 15,807
Steven T. Henick, 1996 206,500 -- 3,600 -- -- 13,591(8)
Vice President, Worldwide 1995 204,583 81,833 10,406(3) 17,103 -- 11,720
Marketing and Sales 1994 192,917 57,100 5,021(3) -- 53,000 4,620
Michael El-Hillow 1996 183,917 -- 3,600 -- -- 12,282(8)
Vice President, Finance 1995 175,458 70,183 3,600 14,668 -- 11,742
Treasurer, Chief Financial 1994 159,520 47,100 3,600 -- 53,000 9,401
Officer
</TABLE>
- - --------------------------------------------------------------------------------
(1) Messrs. R. Boss, B. Boss and Buckley's salary includes director fees of
$19,900 for 1996 and directors fees of $19,500 for 1995 and 1994.
(2) 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.
(3) 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).
(4) Annual incentive awards which exceeded target award levels were paid in
1995 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 31, 1996 closing market price of the Company's unrestricted Class
A common stock of $11.625 are: Mr. R. Boss, 2,984 shares and $34,689, Mr.
B. Boss, 2,059 shares and $23,936, Mr. Buckley, 2,667 shares and $31,004,
Mr. Henick, 1,126 shares and $13,090, and Mr. El-Hillow, 965 shares and
$11,218. 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. No restricted
stock awards were earned for 1996.
(5) Shares underlying formula option received as a director of the Company
pursuant to the Company's Non-Qualified Stock Option Plan.
(6) Mr. Boss's All Other Compensation for 1996 consists of 401(k)
contributions ($4,750); profit sharing trust contributions made in 1996
for 1995 ($17,450); and split dollar life insurance premiums ($532).
(7) Mr. Boss's All Other Compensation for 1996 consists of 401(k)
contributions ($4,750); profit sharing trust contributions made in 1996
for 1995 ($12,082); and split dollar life insurance premiums ($988).
(8) Messrs. Buckley, Henick and El-Hillow's All Other Compensation for 1996
consists of 401(k) contributions ($4,750); and profit sharing trust
contributions made in 1996 for 1995 ($15,542, $8,841 and $7,532,
respectively).
10
<PAGE> 13
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, 1991 and that all dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) A.T. CROSS COMPANY PEER GROUP INDEX AMEX MARKET INDEX
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 79.36 137.59 101.37
1993 66.09 127.17 120.44
1994 62.05 119.01 106.39
1995 71.91 155.87 137.13
1996 57.96 146.54 144.70
</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 three publicly-traded companies (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."
11
<PAGE> 14
PENSION PLAN TABLE
<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 1996.
As of December 31, 1996, each of the individuals named in the Summary
Compensation Table was credited with thirteen years of service under the Plan
with the exception of Steven T. Henick, who was credited with three years of
service, and Michael El-Hillow, who was credited with six 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 highest average of the covered compensation
paid to such individual over five consecutive years preceding retirement,
and
(iii) Benefits are paid in the form of a straight-life annuity. Payment
options for spousal benefits are available.
12
<PAGE> 15
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 1996, options exercised
during 1996 and year-end values of unexercised options. No options were
exercised by these officers in 1996. The Company does not grant any stock
appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<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 1996(2) PER SHARE OF GRANT DATE(3) 0% 5% 10%
- - ------------------- ---------- ----------- ----------- ----------- ------------------- --- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bradford R. Boss 1,283(1) 2.65% $ 11.50 $ 11.50 September 30, 2006 $ 0 $ 9,279 $ 23,515
Russell A. Boss 1,283(1) 2.65% $ 11.50 $ 11.50 September 30, 2006 $ 0 $ 9,279 $ 23,515
John E. Buckley 1,283(1) 2.65% $ 11.50 $ 11.50 September 30, 2006 $ 0 $ 9,279 $ 23,515
Steven T. Henick -- -- -- -- -- -- -- --
Michael El-Hillow -- -- -- -- -- -- -- --
</TABLE>
- - ---------------
(1) These options are received as a director of the Company under the formula
provisions of the Company's Non-Qualified Stock Option Plan, further
described herein under "Director Compensation."
(2) For purposes of this table, the total number of options granted to employees
in 1996 was 48,432, consisting of 37,250 options granted to employees of the
Company's foreign subsidiaries under the Company's Incentive Stock Option
Plan and 11,182 options granted to the Company's directors under the formula
provisions of the Company's Non-Qualified Stock Option Plan.
(3) Subject to earlier termination in the event of termination of the grantee's
office.
OPTION VALUES AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1996 DECEMBER 31, 1996(1)
ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - --------------------------- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bradford R. Boss........... -- -- 99,069 41,283 $ -- $--
Russell A. Boss............ -- -- 99,069 41,283 -- --
John E. Buckley............ -- -- 120,469 81,283 -- --
Michael El-Hillow.......... -- -- 65,000 35,000 225 --
Steven T. Henick........... -- -- 43,000 35,000 -- --
</TABLE>
- - ---------------
(1) Based on the mean between the high and low trading prices of the Class A
common stock on December 31, 1996 ($11.4375) minus the exercise price.
13
<PAGE> 16
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER
PARTICIPATION
As indicated under "Report to Stockholders on Compensation Matters" at page
7, above, the 1996 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, President and Chief Executive Officer of Fleet Financial
Group, Inc. and is Chairman of the Company's Compensation Committee.
RELATIONSHIP WITH INDEPENDENT
PUBLIC ACCOUNTANTS
At the annual meeting, holders of Class B common stock will appoint
auditors to examine the financial statements of the Company and its subsidiaries
for the year 1997. Deloitte & Touche LLP has been nominated by the Board of
Directors as such auditors. One or more representatives of Deloitte & Touche LLP
plan to attend the annual meeting and will be afforded the opportunity to make a
statement and answer questions.
At a meeting held on July 11, 1996 the Audit Committee recommended and
the Board of Directors approved the engagement of Deloitte & Touche LLP as its
independent auditors for the year ending December 31, 1996 to replace the firm
of Ernst & Young LLP, who were dismissed as auditors of the Company effective
July 11, 1996. The appointment of Deloitte & Touche LLP as the Company's
independent accountants for 1996 was effective upon the dismissal of Ernst &
Young LLP, subject to the approval of the Company's Class B shareholders which
was obtained on July 11, 1996. The reports of Ernst & Young LLP on the Company's
financial statements for the past two years did not contain an adverse opinion
or a disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope, or accounting principles. In connection with the audits of the
Company's financial statements for each of the two years ended December 31,
1996, there were no disagreements with Ernst & Young LLP on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope and procedures which, if not resolved to the satisfaction of Ernst & Young
LLP, would have caused Ernst & Young LLP to make reference to the matter in its
report.
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(a) BENEFICIAL OWNERSHIP REPORTING 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 1996 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, 1997
14
<PAGE> 17
PROXY
A.T. CROSS COMPANY
The undersigned holder of
Class A common stock of A.T.
Cross Company does hereby
constitute and appoint
Bradford R. Boss, Russell A.
Boss, and Edwin G. Torrance,
or any one of them as
attorneys and proxies of the
undersigned, with full power
of substitution for, and in
the name and stead of, the
undersigned to appear and
vote all shares of Class A
common stock of A.T. Cross
Company held of record in
the name of the undersigned
at the annual meeting of
A.T. Cross Company to be
held at the offices of the
Company, One Albion Road,
Lincoln, Rhode Island 02865
on Thursday, April 24, 1997
at 10:00 A.M. and at any and
all adjournments thereof as
designated.
<TABLE>
<S> <C> <C>
------------------------------------------------------
1. NUMBER OF DIRECTORS: [ ] FOR [ ] AGAINST [ ] ABSTAIN
fixing the number of Class A directors at three and
Class B directors at six
------------------------------------------------------
2. ELECTION OF CLASS A DIRECTORS:
Terrence Murray [ ] FOR [ ] AUTHORITY WITHHELD
James C. Tappan [ ] FOR [ ] AUTHORITY WITHHELD
Thomas C. McDermott [ ] FOR [ ] AUTHORITY WITHHELD
------------------------------------------------------
3. OTHER BUSINESS: In their discretion, the proxies
are authorized to vote upon such other business as
may properly come before said meeting or any
adjournment thereof upon which Class A common
stockholders are entitled to vote.
This proxy when properly executed will be voted in
the manner directed herein by the undersigned. If
no direction is made, this proxy will be voted FOR
proposals 1 and 2. THIS PROXY IS BEING SOLICITED
ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS.
Please date, sign and mail promptly in the
enclosed envelope. This proxy will not be used if
you attend the meeting in person and so request.
(over)
Dated 1997
-------------------------------------
Signature:
-------------------------------------
Signature:
-------------------------------------
</TABLE>
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.
