SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CROWN CENTRAL PETROLEUM CORPORATION
(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:
<PAGE>
( L O G O )
CROWN CENTRAL PETROLEUM CORPORATION
ONE NORTH CHARLES STREET
BALTIMORE, MARYLAND 21201
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 22, 1999
-------------------------
To the Stockholders of CROWN CENTRAL PETROLEUM CORPORATION:
Notice is hereby given that the Annual Meeting of Stockholders of Crown
Central Petroleum Corporation (the "Company") will be held at the Turf Valley
Conference Center, 2700 Turf Valley Road, Ellicott City, Maryland on Thursday,
the 22nd day of April, 1999 at two o'clock in the afternoon, Eastern Daylight
Time, for the following purposes:
1. ELECTION OF DIRECTORS. To elect a Board of eight (8) directors, each to
serve for the next succeeding year and until his or her successor is
elected and has qualified. Six (6) directors will be elected by the
holders of the Class A Common Stock and two (2) directors will be
elected by the holders of the Class B Common Stock.
2. SHAREHOLDER PROPOSAL. To vote upon a shareholder proposal, if properly
presented at the meeting.
3. OTHER BUSINESS. To transact such other business as may properly come
before the meeting. The Board of Directors of the Company knows of no
other business which will be presented for consideration at the Annual
Meeting.
Details respecting these matters are set forth in the Proxy Statement.
Only stockholders of record at the close of business on March 11, 1999 will be
entitled to notice of and to vote at the Annual Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTAGE PAID,
ADDRESSED ENVELOPE AS PROMPTLY AS POSSIBLE. YOU MAY REVOKE THE PROXY BY GIVING
WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY AT THE ADDRESS ABOVE OR BY
EXECUTION AND DELIVERY OF A LATER DATED PROXY.
By order of the Board of Directors,
/s/ Dolores B. Rawlings
-----------------------------------
Dolores B. Rawlings,
VICE PRESIDENT - SECRETARY
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CROWN CENTRAL PETROLEUM CORPORATION
ONE NORTH CHARLES STREET
BALTIMORE, MARYLAND 21201
-------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 22, 1999
-------------------------
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Crown Central Petroleum
Corporation ("Crown" or the "Company") for use at the Company's Annual Meeting
of Stockholders (the "Annual Meeting") to be held at the Turf Valley Conference
Center, 2700 Turf Valley Road, Ellicott City, Maryland on Thursday, the 22nd day
of April, 1999 at two o'clock in the afternoon. This Proxy Statement and a form
of Proxy will first be mailed to stockholders on or about March 29, 1999.
The Board of Directors of the Company has fixed the close of business on
March 11, 1999 as the record date (the "Record Date") for the determination of
Company stockholders entitled to notice of and to vote at the Annual Meeting.
Accordingly, only holders of record of Class A Common Stock, par value $5.00 per
share ("Class A Stock"), and holders of record of Class B Common Stock, par
value $5.00 per share ("Class B Stock"), at the close of business on the Record
Date ("Record Holders") are entitled to notice of the Annual Meeting and to
attend and vote at the Annual Meeting. The holder of a valid proxy will be
permitted to attend the Annual Meeting and to vote the stock of a Record Holder.
To be valid, a proxy must either be in writing and be signed by the Record
Holder or be authorized by an electronic transmission from the Record Holder. In
addition, to be valid, a proxy cannot have been revoked or superseded by a valid
proxy with a later date.
The Proxy Card provided with this Proxy Statement is for completion both
by holders of Class A Stock and by holders of Class B Stock. If a stockholder
owns shares of Class A Stock, the stockholder should vote on the election of the
directors to be elected by the holders of Class A Stock. If a stockholder owns
shares of Class B Stock, the stockholder should vote on the election of the
directors to be elected by the holders of Class B Stock. If a stockholder owns
shares of both Class A Stock and Class B Stock, the stockholder should vote on
the election of all directors. All properly executed proxies delivered pursuant
to this solicitation will be voted at the Annual Meeting, or any adjournments
thereof, in accordance with instructions contained therein, if any. IF NO
INSTRUCTIONS ARE INDICATED, SHARES OF CLASS A STOCK AND CLASS B STOCK FOR WHICH
EXECUTED PROXIES ARE RECEIVED WILL BE VOTED:
o FOR THE ELECTION OF THE NOMINEES NAMED IN THE PROXY AS DIRECTORS OF
THE COMPANY,
o AGAINST THE SHAREHOLDER PROPOSAL, AND
o IN THE DISCRETION OF THE PROXY HOLDER AS TO ANY OTHER MATTER WHICH
MAY PROPERLY COME BEFORE THE MEETING.
Execution and return of the accompanying Proxy Card will not in any way
affect a stockholder's right to attend the Annual Meeting and, if such
stockholder's proxy is revoked, to vote in person. The stockholder giving the
proxy has the power to revoke it at any time before it is exercised by filing
with the Secretary of the Company a written revocation or a duly executed proxy
bearing a later date. Presence at the Annual Meeting will not, of itself, revoke
the proxy.
The expense of the solicitation of proxies for the Annual Meeting,
including the cost of preparing and mailing this Proxy Statement, will be borne
by the Company. Proxies may be solicited by use of the mails, by personal
interview or by telephone or other electronic means and may be solicited, to a
limited extent, by officers and directors and by other employees of the Company.
Brokers, nominees, fiduciaries and other custodians will be requested to forward
soliciting material to the beneficial owners of shares and to request authority
for the execution of proxies and will be reimbursed by the Company for their
expenses in forwarding such material.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, DATE, EXECUTE AND RETURN THE PROXY CARD
SENT TO THEM WITH THIS PROXY STATEMENT.
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<PAGE>
MATTERS TO BE VOTED ON AT THE ANNUAL MEETING
ELECTION OF DIRECTORS. Eight (8) directors are to be elected, each to
serve until the next annual meeting of stockholders and until his or her
successor is duly elected and has qualified. Six (6) directors will be elected
by the holders of the Class A Stock, and two (2) directors (who may not be
employees of the Company or any subsidiary of the Company) will be elected by
the holders of the Class B Stock. See "Voting at the Annual Meeting Voting
Rights of Class A and Class B Stock" for a description of the voting rights of
the Class A Stock and of the Class B Stock in the election of directors. A
plurality of all votes cast by the applicable class will be sufficient to elect
each such director. For purposes of the election of directors, abstentions will
not be counted as votes cast and will have no effect on the result of the vote.
SHAREHOLDER PROPOSAL. If properly presented, a shareholder proposal will
be voted on at the Annual Meeting. Two-thirds of all of the votes cast on the
proposal will be necessary to approve the shareholder proposal. See "Voting at
the Annual Meeting - Voting Rights of Class A and Class B Stock" for a
description of the voting rights of the Class A Stock and Class B Stock as to
the approval of the shareholder proposal. For purposes of the vote on the
shareholder proposal, abstentions and broker non-votes will not be counted as
votes cast and will have no effect on the result of the vote.
VOTING AT THE ANNUAL MEETING
OUTSTANDING SHARES; QUORUM. At the close of business on the Record Date,
there were 4,817,394 shares of Class A Stock outstanding and 5,221,687 shares of
Class B Stock outstanding. The presence, in person or by a properly executed and
delivered proxy, of the holders of a majority of the votes of Class A Stock and
Class B Stock entitled to vote at the Annual Meeting, taken together, is
necessary to constitute a quorum at the Annual Meeting. For information with
respect to stockholders who own more than 5% of the outstanding Class A Stock or
Class B Stock, see "Security Ownership by Certain Beneficial Owners and
Management."
VOTING RIGHTS OF CLASS A AND CLASS B STOCK. The holders of record of the
Class A Stock are entitled, voting separately as a class, to elect and to remove
all directors other than directors to be elected by any other class or classes
or series of stock. The holders of record of the Class B Stock may elect and
remove two (2) directors, who may not be employees of the Company or of any
subsidiary of the Company. There are no classes of stock other than Class A
Stock and Class B Stock currently outstanding.
Except with respect to the election of directors as described above, in
all proceedings in which action of the stockholders of the Company is to be
taken, each share of Class A Stock shall entitle the holder of record thereof to
one vote, and each share of Class B Stock shall entitle the holder of record
thereof to one-tenth (1/10) vote. Except with respect to the election of
directors, holders of Class A Stock vote together with holders of Class B Stock
as a single class.
THE COMPANY SAVINGS PLAN. A unit of T. Rowe Price serves as the trustee
for the Company's Employees Savings Plan and the Employees Supplemental Savings
Plan (collectively the "Savings Plans"). Each plan participant with an
investment in Class A Stock or Class B Stock will be given a form of proxy by
the trustee to be used to instruct the trustee how to vote the Company stock
held in the Savings Plans for the benefit of the participant. Shares for which
no instructions are timely given will be voted as provided in the Savings Plans
by the trustee in the same proportion as the votes cast with respect to those
shares for which the trustee receives proper instructions. There is no provision
in the Savings Plans to permit the trustee to grant a proxy to a plan
participant, and as a result, all shares of Class A Stock and Class B Stock held
in the Savings Plans will be voted by the trustee in accordance with the
procedures described in this paragraph.
ELECTION OF DIRECTORS
At the Annual Meeting, eight (8) directors will be elected, each to
serve until the next annual meeting of the stockholders and until his or her
successor is duly elected and has qualified. Six (6) directors will be elected
by the holders of the Class A Stock, and two (2) directors (who may not be
employees of the Company or any subsidiary of the Company) will be elected by
the holders of the Class B Stock.
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<PAGE>
INFORMATION CONCERNING THE NOMINEES
The names and ages (as of December 31, 1998) of those persons nominated
to be directors of the Company, as well as their principal occupations for the
last five years, directorships held by them in certain other publicly held
companies, the year in which they became a director of the Company and certain
other information with respect to such nominees are set forth below. The first
six (6) nominees listed are presented for election by the holders of Class A
Stock, and the last two (2) nominees listed are presented for election by the
holders of Class B Stock. All of the nominees are presently directors of the
Company, and all of the nominees were elected at the Annual Meeting of
Stockholders on April 23, 1998.
There are no family relationships among any of the directors. Edward L.
Rosenberg, the former Executive Vice President - Supply and Transportation, and
Frank B. Rosenberg, Senior Vice President - Marketing, are sons of Henry A.
Rosenberg, Jr., Chairman of the Board, President and Chief Executive Officer.
There are no other family relationships among the directors and the executive
officers, and there is no arrangement or understanding between any director and
any other person pursuant to which the director was elected.
Proxies received will be voted in the manner directed in the proxy or,
if no direction is made, for the election of the nominees named below. Although
it is not expected that such a contingency will occur, if any nominee declines
or is unable to serve, the proxies will be voted for a substitute nominee and,
unless otherwise directed, for the other nominees named below.
<TABLE>
<CAPTION>
NAME AND AGE ON PRINCIPAL OCCUPATION FOR LAST 5 YEARS; DIRECTOR
DECEMBER 31, 1998 DIRECTORSHIPS IN PUBLIC CORPORATIONS SINCE
----------------- ------------------------------------ --------
TO BE ELECTED BY THE HOLDERS OF THE CLASS A STOCK:
<S> <C> <C>
JACK AFRICK (70) President and Chief Operating Officer, North Atlantic Trading 1991
Company, Inc. since January 1998; Formerly, Vice Chairman, UST,
Inc. Also a director of Tanger Factory Outlet Centers, Inc. and
Transmedia Network, Inc.
GEORGE L. BUNTING, JR. President and Chief Executive Officer, Bunting Management Group 1992
(58) since July 1991. Also a director of Guilford Pharmaceuticals Inc.
and Mercantile Bankshares Corporation.
MICHAEL F. DACEY (54) President, The Evolution Consulting Group, Inc. since March 1995; 1991
Executive Vice President, The Chase Manhattan Bank, N.A. from
September 1987 through September 1994.
PATRICIA A. GOLDMAN Retired. Formerly, Senior Vice President - Corporate 1989
(56) Communications, USAir, Inc. from February 1988 through January
1994. Also a director of Erie Family Life Insurance Company and
Erie Indemnity Company.
WILLIAM L. JEWS (46) President and Chief Executive Officer, CareFirst, Inc. since 1992
January 1998; President and Chief Executive Officer, Blue Cross and
Blue Shield of Maryland from April 1993 through December 1997. Also
a director of Municipal Mortgage and Equity, L.L.C. and The Ryland
Group, Inc.
HENRY A. ROSENBERG, Chairman of the Board and Chief Executive Officer of the 1955
JR. (69) Company since May 1975 and President since March 1996.
TO BE ELECTED BY THE HOLDERS OF THE CLASS B STOCK:
THOMAS M. GIBBONS Retired. Formerly, Chairman of the Board, Chesapeake and 1988
(73) Potomac Telephone Companies, part of Bell Atlantic Corporation.
THE REVEREND HAROLD President, Loyola College in Maryland since July 1994; Professor of 1995
RIDLEY, S.J. (59) English and Department Chair, LeMoyne College from September 1985
through June 1994.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE NOMINEES
PRESENTED HEREIN.
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<PAGE>
BOARD OF DIRECTORS
ATTENDANCE. The Board of Directors held nine meetings during the past
year. All of the directors, except for Mr. Jews, attended in person or
telephonically at least 75% of the aggregate of the total number of meetings of
the Board of Directors and the committees on which he or she served during the
year.
COMPENSATION OF DIRECTORS. Each director who is not an employee of the
Company or a subsidiary of the Company is paid $12,000 per year for serving as a
director and a meeting fee of $750, plus travel expenses, for attendance at each
meeting. The meeting fee was $600 prior to April 1998. Each non-employee
director who is a member of any committee of the Board of Directors other than
the Executive Committee is paid $3,000 per year for serving on each such
committee. The chairman of any committee other than the Executive Committee is
paid a fee of $1,000 for serving in that capacity. Directors who are employees
receive no separate compensation for serving on the Board, on any Board
committee or as Chairman of any committee. See "Interest of Management and
Others in Transactions with the Company and its Subsidiaries" for a description
of Mr. Africk's consulting agreement under which he is paid a fee of $3,000 per
month.
Under a Deferred Compensation Plan for non-employee directors, a
director may defer all or a portion of his or her compensation for payment after
his or her termination as a director. The plan provides for the accrual of
interest quarterly on the funds at the 90-day Treasury Bill rate in effect at
the beginning of the quarter. The director may elect to receive the deferred
compensation in one lump sum payment or in a number of annual installments (not
exceeding ten).
BOARD COMMITTEES
EXECUTIVE COMMITTEE. The Executive Committee has the authority to act on
behalf of the Board of Directors between meetings of the Board. Mr. Rosenberg
serves as Chairman and Messrs. Africk and Gibbons are members of the Committee.
The Executive Committee met five times during the past year.
AUDIT COMMITTEE. Mr. Africk serves as Chairman and Messrs. Bunting,
Dacey, and Schmidt served in 1998 as members of the Audit Committee. The Audit
Committee met five times during the past year. The functions which this
Committee performs under its charter include: (i) recommending the selection of
independent public accountants and reviewing with such accountants the audit
scope and the results of the audit engagement, (ii) reviewing matters pertaining
to internal audit and other internal control procedures, (iii) reviewing the
audited and the unaudited statements to be submitted to the Board for approval,
(iv) reviewing substantial claims by or against the Company, (v) reviewing the
Company's financing plans and its compliance with debt covenants, (vi) reviewing
current accounting related matters affecting the Company, and (vii) reviewing
the effect of the scope of non-audit services rendered by the independent public
accountants on their independence.
EXECUTIVE COMPENSATION AND BONUS COMMITTEE. Mr. Gibbons serves as
Chairman and Ms. Goldman, Mr. Jews and Father Ridley are members of the
Executive Compensation and Bonus Committee (the "Compensation Committee"). The
Compensation Committee met eight times during the past year. The Compensation
Committee has the principal responsibility for the administration of the
Company's annual incentive plan which is known as the Performance Incentive
Plan, the 1994 Long-Term Incentive Plan (the "Long-Term Plan") and the 1999
Long-Term Incentive Plan (the "1999 Long-Term Plan"). The Compensation Committee
also has the authority and duty to submit recommendations to the Board with
respect to the salaries of the Chairman of the Board and President and with
respect to plans for the compensation of executives of the Company, including
amendments to any plans for compensation.
SUCCESSION PLANNING COMMITTEE. In 1996, the Board of Directors
established the Succession Planning Committee as a special committee of the
Board. The Succession Planning Committee has been directed to report to and make
recommendations to the Board with regard to the line of succession within Senior
Management. Mr. Africk serves as Chairman and Messrs. Bunting, Gibbons and
Rosenberg are members of the Committee. The Committee met once during the past
year.
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REPORT OF EXECUTIVE COMPENSATION AND BONUS COMMITTEE
On an annual basis, the Company engages an internationally known
management consulting firm to assist it in performing a review of its executive
compensation practices. Compensation philosophy, the Company's objectives and
Crown's total direct compensation package which consists of base salary and
annual and long-term incentives are reviewed. The results of this study are
carefully considered by the Compensation Committee in connection with its
approval of the compensation to be paid to the Company's executive officers.
The following objectives and guiding principles have been identified in
establishing the Company's executive compensation program: (1) provide a strong
link between management and shareholder interests by rewarding executives for
the creation of shareholder value, (2) attract and retain key executive talent
by providing competitive total reward opportunities based on the Company's
performance, (3) provide an appropriate balance between short and long-term
reward opportunities, and (4) ensure there is a clear line-of-sight between
reward opportunities and performance controlled or directly influenced by the
executive.
Specifically, base salaries are targeted to the median or fiftieth
percentile of overall competitive practices. Recommendations for base salary
adjustments for officers are determined by considering the executive's position,
experience, knowledge, skills, job performance and the strategic importance of
the individual and the position, as reflected in the Chairman's recommendations
to the Compensation Committee. Annual incentive and long-term incentive awards
are each targeted to generate total cash compensation between the fiftieth and
seventy-fifth percentile of competitive practices and are based on the Company's
performance.
The Company's competitive position is determined by conducting an annual
survey of the practices at other companies, both national and regional,
including companies of similar size and focus within the petroleum industry.
Seven of the eleven companies most recently selected as industry comparables are
included in the twenty-seven companies in the Value Line Integrated Petroleum
Index shown on the Performance Graph in this Proxy Statement.
The Company's most recent survey analysis of compensation practices
shows that officers' base salaries, total cash compensation (base salary and
annual incentives) and total direct compensation (total cash compensation plus
the estimated annualized present value of long-term incentive awards) are below
the median. The Compensation Committee is, to the extent practicable, attempting
to insure that increases in base salaries and total cash compensation are
targeted to median levels. During 1998, there was no increase in the base salary
previously established for Mr. Henry A. Rosenberg, Jr. The Committee believes
that Mr. Rosenberg is in the comparable median salary range for chief executive
officers.
In 1994, the Company adopted, with stockholder approval, the Long-Term
Plan. In 1996, it adopted the Performance Incentive Plan and in 1999, the new
1999 Long-Term Plan which is a stock performance plan with cash payments based
on stock appreciation. These Plans are intended to provide additional incentives
to officers and senior managers for improvements in Company-wide performance.
The 1998 Performance Incentive Plan is a cash plan offered to officers,
senior management and other salaried employees. Minimum, target and maximum
awards are established by the Compensation Committee for the Plan year.
Executive officers can earn a target award of 35-65% of base salary based upon
the Company's performance, as measured by EBITDAAL which is defined as earnings
before interest, taxes, depreciation, amortization, abandonments and LIFO
accounting provisions. EBITDAAL must meet the annual minimum threshold approved
by the Compensation Committee for any awards to be earned in a Plan year. The
Company's 1998 actual operating performance did not meet the minimum threshold
and no incentive awards were earned under the 1998 Performance Incentive Plan.
The 1999 Performance Incentive Plan also establishes target awards of 35-65% of
base salary, but awards will be based on a combination of EBITDAAL and
performance goals established for each operating unit and corporate department.
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<PAGE>
The Long-Term Plan is designed to provide incentives to officers and key
employees who have significant responsibilities for the successful
implementation of the Company's long-term business strategies. The Long-Term
Plan provides for awards of non-qualified stock options ("Options") for the
purchase of the Company's Class B Stock and for Performance Vested Restricted
Stock ("PVR Stock") which is also awarded in shares of Class B Stock. Awards are
made by the Compensation Committee, and no participant may receive Options for
more than 150,000 shares of stock or more than 50,000 shares of PVR Stock in any
one year.
PVR Stock is issued to a participant subject to the attainment of
performance goals and the satisfaction of various restrictions established by
the Compensation Committee. The performance goals are currently based upon the
Company's operating performance as measured by EBITDAAL. In addition, three-year
Net Income on a FIFO Basis must meet the minimum threshold approved by the
Compensation Committee for any awards of PVR Stock to vest at the end of the
performance cycle. In 1996, the Compensation Committee amended the Plan to
permit PVR Stock that has not vested at the end of the performance cycle to vest
at the end of five years rather than being forfeited by the participant. This
feature is intended to help the Company retain the services of participants in
the Long-Term Plan and to simplify the accounting treatment of PVR Stock. In
1998, the definition of "Change of Control" in the Long-Term Plan was amended to
address the transfer of ownership of the Company's stock held by the Atapco
Group as described in "Interest of Management and Others in Transactions with
the Company and Its Subsidiaries." That transaction resulted in a Change of
Control as previously defined by the Long-Term Plan. The executive officers (but
not other key employees) waived the acceleration of vesting of options and the
elimination of restrictions on the PVR Stock arising from the transaction.
The new 1999 Long-Term Plan is also designed to provide incentives to
officers and key employees and to encourage the retention of these executives.
The 1999 Long-Term Plan is a stock performance plan that provides for cash
payments based upon stock appreciation during a three-year performance period.
Participants will be granted a number of Units which will be based upon
competitive long-term incentive awards available to executives in similar
positions. A $14.91 Unit Strike Price has been established for the Plan. The
Unit Strike Price is based on the average stock price of the Class B Stock
during the past three years, and it is significantly above the current market
price of the Class B Stock. Cash awards will be calculated by multiplying the
number of Units granted to the Participant times the appreciation in the stock
price at the end of three-year performance period over the Unit Strike Price of
$14.91. Participants in this Plan are, therefore, rewarded for results that
directly contribute to increases in shareholder value over the performance
period.
The Company's Supplemental Retirement Income Plan for Senior Executives
(the "SRI Plan") and the Executive Severance Plan (the "Severance Plan") are
designed to provide competitive executive benefits which are consistent with
current practices. All officers at the Vice President level and above are
participants in the SRI Plan and benefits vest after five years of service. All
current officers at the Vice President level and above have been designated as
participants in the Severance Plan; however, Mr. Henry A. Rosenberg, Jr.
voluntarily withdrew from the Severance Plan prior to the Change of Control
arising from the Atapco Group transaction. Prior to the transaction, the
definition of "Change of Control" in the Severance Plan was amended to address
the transfer of ownership of the Company's stock by the Atapco Group and to
provide certain enhanced benefits in consideration for a limited waiver of the
change of control benefits arising from the Atapo Group transaction. Under the
Severance Plan, as amended, if a participant is terminated without good reason
within two years of a change of control, as defined in the Severance Plan, the
participant receives credit for enhanced age and service under the SRI Plan and
the immediate payment of SRI Plan benefits. In addition, the participant
receives a payment of three times the executive's annual salary, full payment
under the annual Performance Incentive Plan, an additional contribution equal to
a three-year Company match for participants in the Savings Plans, the
continuation of certain welfare benefits for a three-year period, a payment
equal to the excise tax on the basic severance benefits and certain other
miscellaneous benefits. The Committee views the Severance Plan as a typical
executive benefit that will help insure stability and continuity of employment
of key management personnel at the time of a proposed or threatened change of
control, if any.
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<PAGE>
It is not currently anticipated that any officer could earn annual
compensation in excess of one million dollars under the existing compensation
plans. Stockholder approval of the Performance Incentive Plan would be required
for compensation under this plan to qualify for deductibility under Section
162(m) of the Internal Revenue Code. Some additional limitations on the PVR
Stock portion (but not the portion relating to Options) of the Long-Term Plan
might also be required to qualify that compensation for deductibility. The
Compensation Committee will consider recommending such steps as may be required
to qualify either annual or long-term incentive compensation for deductibility
if that appears appropriate at some time in the future.
This Report has been submitted by the Compensation Committee: Thomas M.
Gibbons, Chairman; Patricia A. Goldman; William L. Jews; and Reverend Harold
Ridley, S.J.
INTEREST OF MANAGEMENT AND OTHERS IN TRANSACTIONS WITH THE COMPANY AND ITS
SUBSIDIARIES
CONSULTING AGREEMENT. Effective November 1, 1993, Mr. Africk became a
general business adviser and consultant to the Company for which he is paid a
consultancy fee of $3,000 per month. His work in this capacity is in addition to
his service as a director, member of the Executive Committee, Chairman of the
Audit Committee and Chairman of the Succession Planning Committee.
ROSEMORE. Pursuant to an Agreement and Plan of Reorganization as
described in Amendment No. 3 to a Schedule 13D filed by American Trading and
Production Corporation ("Atapco"), the Atapco Group's controlling interest in
Crown was transferred to Rosemore Holdings, Inc. ("Rosemore Holdings"), a
Maryland corporation and a wholly owned subsidiary of Gateway Gathering and
Marketing Company, a Maryland corporation, which has subsequently changed its
name to Rosemore, Inc. ("Rosemore"). Trusts for the benefit of Henry A.
Rosenberg, Jr. and for members of his immediate family and for the benefit of
his sisters, Ruth R. Marder and Judith R. Hoffberger and for members of their
immediate families, hold all of the Rosemore stock. Rosemore, Rosemore Holdings
and various individuals who are beneficial owners of Rosemore stock are a
"group" as that term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934 (the "Exchange Act"); and accordingly, the Rosemore Group has filed
Schedule 13D's to report their holdings of Class A and Class B Stock.
Rosemore has recently agreed to participate in the Company's working
capital and letter of credit facility established pursuant to a Loan and
Security Agreement by and among Congress Financial Corporation, as
Administrative Agent for First Union National Bank and Congress Financial
Corporation, as Lenders, and Crown and various Crown subsidiaries, as Borrowers.
Rosemore's participation will result in an increased credit limit under this
facility. Documentation is currently being prepared. It is anticipated that
Rosemore will be compensated at competitive rates for its participation in the
facility.
The Company has recently terminated its aircraft lease with General
Electric Capital Corporation. Crown understands that Rosemore intends to enter
into an aircraft lease with General Electric Capital Corporation. Crown has,
therefore, assigned its lease with the Maryland Aviation Administration of
hangar space at Martin State Airport to Rosemore, and Rosemore has agreed to
purchase from the Company the leasehold improvements, furniture and various
supplies and spare parts formerly used by the Company in connection with its
operation of the aircraft and the related charter activities.
ADDITIONAL INFORMATION WITH RESPECT TO COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
None
-7-
<PAGE>
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
OWNERS OF MORE THAN FIVE PERCENT. The following table sets forth the
class of shares of the Company's stock, and the amount and percentage of that
class, owned by all persons known by the Company to be the beneficial owners of
more than 5% of the shares of any class of the Company's stock on December 31,
1998:
<TABLE>
<CAPTION>
Name and Address Percent
of Beneficial Owner Title of Class Amount of Class
------------------- -------------- ------ ---------
<S> <C> <C> <C>
Rosemore Group (a) Class A Stock 2,401,232 49.85
Blaustein Building Class B Stock 912,758 16.71
23rd Floor
One North Charles Street
Baltimore, MD 21201
A.I.C. Limited "group" (b) Class A Stock 448,900 9.32
7930 Clayton Road
St. Louis, MO 63117
FMR Corp. (c) Class A Stock 440,000 9.13
82 Devonshire Street
Boston, MA 02109
Franklin Resources, Inc. (c) Class B Stock 500,000 9.55
777 Mariners Island Boulevard
P.O. Box 7777
San Mateo, CA 94403
Heartland Advisors, Inc. (c) Class B Stock 800,000 15.28
790 North Milwaukee Street
Milwaukee, WI 53202
Donald Smith & Co., Inc. (c) Class B Stock 453,400 8.66
East 80 Route 4
Paramus, NJ 07652
</TABLE>
- --------------
(a) See "Interest of Management and Others in Transactions with the Company and
Its Subsidiaries" for a description of the Rosemore Group. Rosemore Holdings
is the holder of 2,366,526 shares of Class A Stock and 591,629 shares of
Class B Stock, and other members of the Rosemore Group are the holders of
34,706 shares of Class A Stock and 321,129 shares of Class B Stock. The
Class B Stock shown in the table includes 82,270 shares of stock granted to
members of the Rosemore Group as PVR Stock under the Long-Term Plan and
225,728 shares that members of the Rosemore Group have a right to acquire
pursuant to Options granted under the Long-Term Plan that vested on or
before March 1, 1998 ("Vested Option"). The percentage calculation is based
on the shares outstanding plus the shares that may be acquired pursuant to
Vested Options granted to members of the Rosemore Group.
(b) This information was obtained from a report on Schedule 13D dated January
14, 1983 and Amendment No. 7 dated June 18, 1990, which were filed with the
Securities and Exchange Commission (the "Commission"). A.I.C. Limited is the
record owner of 275,000 shares of Class A Stock. A.I.C. Limited and two
associates, who have no record ownership of Class A Stock, are a "group" as
that term is used in Section 13(d)(3) of the Exchange Act.
(c) Information concerning the stock holdings of FMR Corp.; Franklin Resources,
Inc.; Heartland Advisors, Inc. and Donald Smith & Co. Inc. was obtained from
reports on Schedule 13G and amendments to those schedules that have been
filed with the Commission. Each of these four entities reports that it is
registered as an investment adviser. The percentage calculation for each is
based on the shares outstanding as shown on the Company's financial
statements for the fiscal year ended December 31, 1998.
-8-
<PAGE>
DIRECTORS AND OFFICERS. The following table sets forth the number of
shares of each class of the Company's stock and the percentage of each class
owned by each of the directors and nominees, by certain executive officers and
by all directors and officers as a group on December 31, 1998:
Shares of Securities Beneficially Owned
on December 31, 1998 (a)
Class A Common Stock Class B Common Stock
-------------------- --------------------
Name Amount % Amount %
------ --- ------ ---
Jack Africk -- -- 500 (b)
George L. Bunting, Jr. -- -- 1,000 (b)
Michael F. Dacey 1,000 (b) -- --
Thomas M. Gibbons 200 (b) -- --
Patricia A. Goldman 100 (b) --
William L. Jews -- -- 200 (b)
Thomas L. Owsley 100 (b) 43,739(c) (b)
Rev. Harold Ridley, S.J. -- -- 100 (b)
Edward L. Rosenberg (d) 3,712 (b) 37,079(c) (b)
Henry A. Rosenberg, Jr.(e) 2,397,520 49.77 875,679 16.13
Randall M. Trembly 11,774 (b) 74,413(c) (b)
John E. Wheeler, Jr 3,264 (b) 55,507(c) (b)
All Directors, Nominees and 2,423,896 50.32 1,234,965(f) 21.73
Officers as agroup including
those listed above (20 individuals)
----------------------
(a) Each director holds sole voting and investment power over the shares
listed; however, in one or more cases the stock may be registered in the
name of a trust or retirement fund for the benefit of the director. In the
case of officers of the Company, the table includes interest in shares held
by the trustee under the Savings Plans, the Class B Stock granted as PVR
Stock under the Long-Term Plan (but not shares of PVR stock granted but
subsequently forfeited) and shares subject to Options. See footnote(c).
(b) Represents less than one percent of the shares outstanding.
(c) Includes Vested Options as follows: Mr. Owsley, 32,953; Mr. Edward L.
Rosenberg, 34,019 shares; Mr. Trembly, 43,702 shares and Mr. Wheeler, 37,060
shares.
(d) Mr. Edward L. Rosenberg resigned as an officer of the Company effective
December 31, 1998. He currently serves as President, Chief Executive Officer
and a Director of Rosemore, and he is a member of the Rosemore Group. Shares
owned by the Rosemore Group other than those owned directly by Mr. Edward L.
Rosenberg are listed on the table as held by Mr. Henry A. Rosenberg, Jr.
(e) Mr. Henry A. Rosenberg, Jr. is Chairman of the Board of Rosemore. The
shares listed are the shares owned by the Rosemore Group other than shares
reported separately in the table as owned by Edward L. Rosenberg. Of the
shares listed above, Mr. Rosenberg holds 22,525 shares of Class A Stock and
239,961 shares (including PVR Stock) of Class B Stock individually and in
the Company's Savings Plans. The Class B Stock shown on the table also
includes 160,826 shares that may be acquired by Mr. Rosenberg upon the
exercise of Vested Options granted under the Long-Term Plan. The percentage
calculation is based on the shares outstanding plus the shares that may be
acquired pursuant to Vested Options granted to members of the Rosemore
Group other than Edward L. Rosenberg.
(f) Includes 447,630 shares that may be acquired pursuant to Vested Options
granted under the Long-Term Plan or under the 1995 Management Stock Option
Plan. The percentage calculation is based on the shares outstanding plus the
shares that may be acquired pursuant to Vested Options.
-9-
<PAGE>
COMPLIANCE WITH SECTION 16(A). Based upon a review of the Forms 3, 4 and
5 and any amendments thereto, filed with the Commission and furnished to the
Company as well as letters provided to the Company by various reporting persons,
the Company is of the opinion that no reporting person has failed to file on a
timely basis the reports required by Section 16(a) of the Exchange Act during
the Company's most recent fiscal year.
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation awarded to, earned by or
paid to the Chief Executive Officer and the other four most highly compensated
executive officers for all services rendered in all capacities to the Company
and its subsidiaries during the last three fiscal years. The positions shown on
the table are those held by the officers on December 31, 1998:
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
--------------------------
Name and Other Securities All
Principal Annual Underlying Other
Position Year Salary Bonus Compensation(a) Options(b) Compensation(c)
-------- ---- -------- -------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Henry A. Rosenberg, Jr 1998 $600,000 $ -- $ 21,659 43,900 $ 19,847
Chairman of the Board, 1997 591,668 321,390 20,519 50,000 20,799
President and Chief 1996 575,004 97,248 19,832 30,360 21,770
Executive Officer
Edward L. Rosenberg 1998 $218,918 $ -- $ 19,538 14,000 $ 45,917
Executive Vice 1997 176,676 86,621 17,239 6,600 43,974
President - Supply and 1996 168,840 21,526 16,717 4,620 10,808
Transportation
Randall M. Trembly 1998 $255,008 $ -- $ 18,600 16,400 $ 12,837
Executive Vice President 1997 236,680 163,391 17,250 17,600 12,170
1996 208,758 33,826 16,250 6,520 11,594
John E. Wheeler, Jr 1998 $241,671 $ -- $ 21,761 15,500 $ 10,607
Executive Vice President - 1997 201,672 79,868 18,913 7,800 9,974
Chief Financial Officer 1996 188,754 23,985 18,783 5,150 10,023
Thomas L. Owsley 1998 $210,008 $ -- $ 18,891 7,300 $11,641
Senior Vice President - 1997 188,008 55,514 17,112 5,800 10,455
Legal 1996 177,340 16,975 16,391 4,540 10,541
</TABLE>
- ---------------
(a) These amounts include automobile allowances, gasoline allowances, and the
tax gross-ups applicable to the gasoline allowances. Perquisites below the
required reporting levels are not included in this table.
(b) The Options are for the purchase of shares of Class B Stock.
(c) These amounts include imputed income related to excess life insurance,
payments for executive medical insurance and the Company's matching
payments under the Savings Plans. In 1998, the imputed income for Mr. Henry
A. Rosenberg, Jr. was $8,640; for Mr. Trembly, $846 and for Mr. Owsley,
$1,134. The executive medical payments for each of the officers listed in
the table were $2,207. The Company's matching payments under the Savings
Plans were for Mr. Henry A. Rosenberg, Jr., $9,000; for Mr. Edward L.
Rosenberg, $8,633; for Mr. Trembly, $9,766; for Mr. Wheeler, $8,400 and for
Mr. Owsley, $8,300. The amounts shown for Mr. Edward L. Rosenberg include
the payment of $18,000 as a housing allowance and a payment of $17,077 for
accrued vacation in 1998, $5,000 for moving expenses and $20,000 as a
housing allowance in 1997 and the reimbursement of moving expenses of
$1,560 in 1996.
-10-
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
<TABLE>
<CAPTION>
% of Total
Number of Options
Securities Granted to
Underlying Employees Grant Date
Options in Fiscal Exercise Expiration Present
Name Granted (a) Year Price Date Value (b)
- ---- ---------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Henry A. Rosenberg, Jr 43,900 26.5 $15.00 May 1, 2008 $167,485
Edward L. Rosenberg (c) 14,000 8.4 15.00 May 1, 2008 53,413
Randall M. Trembly 16,400 9.9 15.00 May 1, 2008 62,569
John E. Wheeler, Jr 15,500 9.3 15.00 May 1, 2008 59,135
Thomas L. Owsley 7,300 4.4 15.00 May 1, 2008 27,851
</TABLE>
- -------------------
(a) All of the grants shown are for the purchase of Class B Stock and were made
on May 1, 1998. For each grant, one-third of the Options granted are
exercisable one year from the date of the grant; an additional one-third
will be exercisable on the second anniversary of the grant; and the final
one-third will be exercisable on the third anniversary of the grant. Tax
withholding obligations may be satisfied upon exercise by the deduction of
Option shares.
(b) For the purposes of this presentation, the Company valued its Options based
upon the Black-Scholes model, a widely used and accepted formula for valuing
traded stock options. The actual increase in value will occur directly with
the appreciation of the per share market price of the Company's Class B
Stock as stockholders' return on investment increases. There is no gain to
the executives, however, if the per share market price of the Company's
Class B Stock does not increase or if it declines. The following assumptions
were used to calculate the Black-Scholes value: an expected option life of
approximately one year, a 27.45 percent stock price volatility, a 5.625
percent risk free rate of return, an annual dividend yield of 0 percent, and
an exercise price equal to the stock price on the date of grant. This
resulted in an Option value of $3.82 per share. The Company has used the
historical annual dividend yield and stock prices as assumptions for the
Black-Scholes model. These calculations are not projections; and there is,
therefore, no guarantee that the assumptions will be the actual annual
dividend yield or stock price volatility rate over the next year.
(c) Mr. Rosenberg's 1998 option grants were not vested on the date of his
resignation as an officer and employee of the Company and were, therefore,
forfeited.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR,
AND FISCAL YEAR-END OPTION VALUES (a)
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at FY-End Options at FY-End
--------------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Henry A. Rosenberg, Jr. 150,706 87,354 $0 $0
Edward L. Rosenberg (b) 34,019 0 0 0
Randall M. Trembly 42,162 30,308 0 0
John E. Wheeler, Jr. 35,563 22,417 0 0
Thomas L. Owsley 31,439 12,681 0 0
</TABLE>
- --------------
(a) The Options are for the purchase of Class B Stock.
(b) All options that were not vested on the date of Mr. Edward L. Rosenberg's
resignation as an officer and employee of the Company were forfeited.
-11-
<PAGE>
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR (a)
<TABLE>
<CAPTION>
Estimated Future Payouts
------------------------
Maximum
(Shares)
Number Performance Threshold Target and
Name of Shares Period (Shares) (Shares) Cash (b)
- ---- --------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Henry A. Rosenberg, Jr. 24,100 Jan. 1, 1998- 12,050 24,100 24,100
Dec. 31, 2000
Edward L. Rosenberg (c) 7,700 Jan. 1, 1998- 3,850 7,700 7,700
Dec. 31, 2000
Randall M. Trembly 9,000 Jan. 1, 1998- 4,500 9,000 9,000
Dec. 31, 2000
John E. Wheeler, Jr. 8,500 Jan. 1, 1998- 4,250 8,500 8,500
Dec. 31, 2000
Thomas L. Owsley 4,000 Jan. 1, 1998- 2,000 4,000 4,000
Dec. 31, 2000
</TABLE>
- -----------------
(a) The shares listed are Class B Stock which was issued as PVR Stock and was
awarded to participants under the Long-Term Plan. The performance goals
applicable to these awards are based upon EBITDAAL. See "Report of Executive
Compensation and Bonus Committee." Net Income on a FIFO Basis must meet the
minimum threshold established for the cycle for any of this PVR Stock to be
earned during the Performance Period.
(b) The cash earned at the maximum level is equal to 50% of the value of the
stock earned on the Performance Period date that the restrictions lapse.
(c) Mr. Edward L. Rosenberg's 1998 PVR Stock Award grants were restricted on
the date of his resignation as an officer and employee of the Company and
were, therefore, forfeited.
PENSION PLAN TABLE (a)
<TABLE>
Years of Service
-----------------
Remuneration 15 20 25 30 35 40 45
- ------------ -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C>
$150,000 $ 54,000 $ 72,000 $ 94,500 $117,000 $139,500 $162,000 $184,500
200,000 72,000 96,000 126,000 156,000 186,000 216,000 246,000
250,000 90,000 120,000 157,500 195,000 232,500 270,000 307,500
300,000 108,000 144,000 189,000 234,000 279,000 324,000 369,000
400,000 144,000 192,000 252,000 312,000 372,000 432,000 492,000
500,000 180,000 240,000 315,000 390,000 465,000 540,000 615,000
600,000 216,000 288,000 378,000 468,000 558,000 648,000 738,000
</TABLE>
- --------------------
(a)The table above reflects the retirement benefits (life annuity with 60
months certain) which would be payable under the Company's Retirement Plan at
various base salary levels and years of service projected to normal
retirement. The table assumes that the participant has earned the annual
remuneration shown in the table in every year of credited service. The
Retirement Plan is a career average plan with benefits based on taxable
compensation. Limitations imposed by the Internal Revenue Code or any other
statute are not reflected in the table since the Company's Supplemental
Retirement Income Plan for Senior Executives is designed to provide or
restore to participants the benefits that would have been received under the
Retirement Plan if calculated without regard to such limitations. All
officers at the Vice President level and above participate in the
Supplemental Retirement Income Plan. Mr. Henry A. Rosenberg, Jr.'s normal
retirement date was December 1, 1994. His credited service at that time was
42 years and 4 months. The estimated credited service projected to normal
retirement for the other current executives listed in the Summary
Compensation Table is: Mr. Trembly, 27 years and 10 months; Mr. Wheeler, 41
years and 8 months and Mr. Owsley, 23 years and 6 months.
-12-
<PAGE>
PERFORMANCE GRAPH
(The Performance Graph appears here. See the table below for plot points)
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
Crown Common 100 84 100 83 144 48
AMEX Market Value Index 100 91 115 122 148 151
Value Line Int. Petr. Index 100 107 139 181 233 256
The graph above plots the cumulative shareholder's return on a $100
investment in Crown Common Stock (Class A and Class B Stock combined on a
weighted market value basis) over a five-year period assuming that all dividends
are reinvested. The American Stock Exchange Market Value Index and the Value
Line Integrated Petroleum Index are also shown on the graph for comparative
purposes. It should be noted that the Value Line Index includes a number of
major oil companies that are significantly larger than Crown. Many of these
companies are also engaged in the upstream production of both crude oil and
natural gas and are in other lines of business in addition to their petroleum
refining and marketing activities.
-13-
<PAGE>
SHAREHOLDER PROPOSAL
Ava L. Free of 14018 CP 556, Pearland, Texas 77581 has advised the
Company that she is the owner of 4,100 shares of Class A Stock and approximately
2,000 shares of Class B Stock and that she intends to present the following
shareholder proposal for consideration at the Annual Meeting:
SHAREHOLDER PROPOSAL. [SUBMITTED BY MS. FREE]
BE IT RESOLVED: That the shareholders of Crown Central Petroleum
Corporation ("Crown" ) request that Crown's Board of Directors (the "Board")
commission an independent study to evaluate the system by which Crown determines
the compensation of its top five executive officers. The study would explore
ways to more effectively link Crown's executive compensation to company
performance, and would make recommendations as to standards and procedures that
the Board's Executive Compensation and Bonus Committee (the "Committee") should
adopt in bringing Crown's compensation policies more in line with overall
company performance, especially stock performance. A written report of the study
and recommendations would be included in that next annual report, proxy
statement and/or other appropriate filing, with a copy made available to
shareholders on request.
SUPPORTING STATEMENT. [SUBMITTED BY MS. FREE]
Crown's shareholders should be concerned about the effect of the
company's executive compensation on their investment. The factors currently
considered by the Committee do not adequately measure the performance of the
executives and do not effectively link executive compensation to company
performance. Tellingly, while company performance has declined throughout the
1990s, Crown CEO Henry Rosenberg, Jr. and other Crown executives have, for the
most part, been rewarded with increased total compensation packages, including
higher salaries, bonuses and/or stock options.
Throughout this decade, Crown stock has consistently ranked as one of
the poorest performers among oil refining and marketing companies in the United
States, dramatically declining in value even as stock of other oil refining
companies has increased significantly. From the beginning of 1990 to November
1998, Crown's Class A Common Stock plummeted from over $31/share to below
$10/share, and Crown's Class B Common Stock similarly fell from over $29/share
to $10/share. As of November 1998, Crown's Class A and Class B Common Stock had
each declined in value by more than 50% since the beginning of the year.
Moreover, during five of the past six years, Crown's operations annually have
posted net losses.
Market analysts have commented throughout the period of this dismal
performance. Jeff Rosenberg, a fund manager for Clover Capital Management,
stated, "These guys can't execute--they're the Mets" (Baltimore Sun, Apr. 1,
1995). Marc Perkins of Perkins Capital Advisors blamed Crown's management,
observing, "They just don't understand the Oil business...people around them
make money; they don't make any money" (Baltimore Daily Record, February 1,
1996).
Crown's current executive compensation program has four guiding
principles that purport to link executive compensation to "shareholder value."
Nevertheless, these principles are vague and do not clearly direct the Committee
as to how they should be implemented. As a result, executives are not held
accountable to shareholders for their performance.
Accordingly, independent, third-party scrutiny of Crown's executive
compensation system, followed by a written report available to the shareholders,
is both overdue and critical to enforcing management accountability. Only when
measures are implemented that better link executive compensation to company
performance will Crown's current practice of rewarding management failure end.
BOARD OF DIRECTORS STATEMENT IN OPPOSITION.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE SHAREHOLDER
PROPOSAL.
As noted in the Report of Executive Compensation and Bonus Committee in
this Proxy Statement, the Company annually "engages an internationally known
management consulting firm to assist it in performing a review of its executive
compensation practices....The results of this study are carefully considered by
the Compensation Committee in connection with its approval of the compensation
to be paid to the Company's executive officers." The Compensation Committee is
an independent committee of outside directors, advised by an independent
management consultant. As the Report of the Compensation Committee clearly
states, Company performance and increased shareholder value are key factors
considered by the Compensation Committee in its administration of the Company's
executive compensation program. The Company's performance as measured by
EBITDAAL is determinative of the awards earned by senior executives under both
the
-14-
<PAGE>
Company's annual incentive plan and its long-term incentive plan. The study
requested in the Free shareholder proposal would, therefore, simply duplicate
work currently done for and by the Compensation Committee. Furthermore,
information concerning the compensation of the five most highly compensated
executive officers is fully disclosed in this Proxy Statement in accordance with
the Commission's proxy rules. The Board of Directors believes that further
public disclosure of confidential, competitive and proprietary information
developed by the management consulting firm employed to assist the Compensation
Committee would be inappropriate. The Board of Directors recommends a vote
AGAINST the shareholder proposal. See "OCAW's Corporate Campaign."
OCAW'S CORPORATE CAMPAIGN.
For over three years, the Company has been involved in a protracted
labor dispute with the Oil Chemical and Atomic Workers International Union
("OCAW") bargaining unit at the Company's Pasadena, Texas refinery. In February
1996, following incidents of sabotage at the refinery, Crown locked out
approximately 250 OCAW employees. Since that time, OCAW has waged an
orchestrated corporate campaign against the Company.
At the time of the lockout, Ms. Free was an OCAW member in the Pasadena
refinery bargaining unit, and she was actively involved in OCAW's attempt to
have Crown submit to demands made prior to the lockout.
The Board of Directors believes that it is important for stockholders to
have this additional information available when considering the shareholder
proposal that may be voted upon at the Annual Meeting.
OTHER MATTERS
Management does not know of any business other than the election of
directors and the vote on the shareholder proposal that may come before the
meeting. However, if any other business should properly come before the meeting,
the proxies will be voted with respect thereto in accordance with the direction
of the stockholders.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The principal independent public accountant for the Company and its
subsidiaries since the organization of the Company has been Ernst & Young LLP or
its predecessors, and such firm has been selected again for the current fiscal
year. A representative of Ernst & Young LLP will be present at the Annual
Meeting. Their representative does not intend to make any formal statement but
will respond to any questions.
INFORMATION INCORPORATED BY REFERENCE
The Company's Financial Statements and Supplementary Data (Item 8),
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Item 7) and supplementary financial information with respect to
Quarterly Results of Operations are set forth in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998 and are hereby
incorporated by reference.
STOCKHOLDERS' PROPOSALS FOR THE 1999 ANNUAL MEETING
Proposals of stockholders of the Company intended to be presented at the
Annual Meeting of stockholders of the Company in 2000 must be received by the
Secretary of the Company, One North Charles Street, P.O. Box 1168, Baltimore,
Maryland 21203 on or before November 29, 1999 and must otherwise comply with the
rules of the Commission and the Bylaws of the Company to be eligible for
inclusion in the Proxy Statement for the Annual Meeting in 2000.
By order of the Board of Directors,
/s/ Dolores B. Rawlings
-----------------------------------
Dolores B. Rawlings
VICE PRESIDENT - SECRETARY
March 26, 1999
-15-
<PAGE>
[ CROWN LOGO ]
DETACH HERE
PROXY
CROWN CENTRAL PETROLEUM CORPORATION
P. O. BOX 1168
BALTIMORE, MARYLAND 21203
PROXY FOR CLASS A COMMON STOCK AND CLASS B COMMON STOCK
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS - APRIL 22, 1999
Reserving the right of revocation, the undersigned hereby appoints as his or
her proxy or proxies, with full power of substitution, Thomas L. Owsley, Dolores
B. Rawlings, and Henry A. Rosenberg, Jr., or any one or more of them, to vote
all Class A Common Stock and Class B Common Stock of the undersigned at the
Annual Meeting of Stockholders of Crown Central Petroleum Corporation, a
Maryland corporation, to be held at Turf Valley Conference Center, 2700 Turf
Valley Road, Ellicott City, Maryland on Thursday, April 22, 1999 or at any
adjournment of said meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES NAMED, AND AGAINST THE SHAREHOLDER PROPOSAL,
AND AT THE PROXY HOLDER'S DISCRETION ON ANY OTHER MATTER OR MATTERS WHICH MAY
PROPERLY COME BEFORE THE MEETING.
[SEE REVERSE ] [ SEE REVERSE ]
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
LOGO
CROWN CENTRAL PETROLEUM CORPORATION
Refiners/marketers of petroleum products & petrochemicals
One North Charles Street P.O. Box 1168 Baltimore, Maryland 21203
This proxy card is provided for completion both by holders of Class A Stock and
by holders of Class B Stock.
If a stockholder owns shares of Class A Stock, the stockholder should vote on
the election of the directors to be elected by the holders of Class A Stock.
If a stockholder owns shares of Class B Stock, the stockholder should vote on
the election of the directors to be elected by the holders of Class B Stock.
If a stockholder owns shares of both Class A Stock and Class B Stock, the
stockholder should vote on the election of all directors.
DETACH HERE
Please mark
votes as in
X this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED.
<TABLE>
<CAPTION>
<S> <C> <C>
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE AGAINST THE SHAREHOLDER PROPOSAL
1. Election of six (6) Directors. Election of two (2) Directors AND TO GRANT DISCRETION UNDER ITEM 3.
CLASS A COMMON STOCK NOMINEES: CLASS B COMMON STOCK NOMINEES: 2. Shareholder Proposal concerning
executive compensation.
Jack Africk, George L. Bunting, Thomas M. Gibbons and Rev. Harold
Jr., Michael F. Dacey, Patricia Ridley, S.J. FOR AGAINST ABSTAIN
A. Goldman, William L. Jews,
and Henry A. Rosenberg, Jr. --- --- ---
WITHHELD
FOR WITHHELD FOR FROM
ALL FROM ALL BOTH BOTH 3. In their discretion on any other
NOMINEES__ NOMINEES__ NOMINEES__ NOMINEES__ matter or matters which may
properly come before said meeting
or any adjournment thereof.
____________________________________ _____________________________________ GRANTED WITHHELD
For, except vote withheld from the For, except vote withheld from
nominee(s) listed above. the nominee(s) listed
above. ___ ___
MARK HERE MARK HERE
FOR ADDRESS IF YOU PLAN TO
CHANGE AND ATTEND THE
NOTE AT LEFT ___ ___ MEETING
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY IN THE
ENCLOSED ENVELOPE.
This proxy should be signed by the stockholder in
person. If a joint account, all joint owners should
sign.
Signature: __________________________ Date: ___________ Signature:____________________________ Date: ____________
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