<PAGE>
Culbro Corporation
[LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 7, 1994
PLEASE TAKE NOTICE that the Annual Meeting of Shareholders of Culbro
Corporation (the "Corporation") will be held at 2 Waterside Crossing of the
Corporation's Griffin Center Office Park in Windsor, Connecticut, on the 7th day
of April 1994, at 10:00 A.M., local time, to consider and act upon:
1. The election of directors of the Corporation;
2. The approval of the selection of the Corporation's independent
accountants for 1994;
3. The approval of an employment agreement with the Corporation's chief
financial officer, Jay M. Green;
4. A shareholders' proposal relating to cumulative voting; and
5. Such other business as may properly be brought before the Meeting or any
adjournment thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE.
PLEASE NOTE THAT THE ANNUAL MEETING IS IN CONNECTICUT, RATHER THAN IN NEW
YORK CITY AS HAS BEEN OUR PRACTICE FOR MANY YEARS. IF YOU PLAN TO ATTEND PLEASE
SO SIGNIFY WHERE NOTED ON THE PROXY CARD AND DIRECTIONS WILL BE SENT TO YOU.
Only shareholders of record at the close of business on February 28, 1994
are entitled to notice of, and to vote at, the Annual Meeting.
A. ROSS WOLLEN
SECRETARY
Dated: March , 1994
<PAGE>
CULBRO CORPORATION
387 Park Avenue South
New York, New York 10016-8899
------------------------
PROXY STATEMENT
This Proxy Statement is furnished to the shareholders of Culbro Corporation
(the "Corporation") in connection with the solicitation by the Board of
Directors of proxies for the Annual Meeting of Shareholders to be held on April
7, 1994 at 10:00 A.M., local time, at 2 Waterside Crossing of the Corporation's
Griffin Center Office Park in Windsor, Connecticut, for the purposes set forth
in the accompanying notice of meeting.
GENERAL
This solicitation is being made on behalf of the Board of Directors of the
Corporation. The initial distribution of proxy materials is expected to be made
on or about March 4, 1994. Any proxy received in the accompanying form may be
revoked by the person executing it at any time before the authority thereby
granted is exercised. Proxies received by the Board of Directors in such form
will be voted at the meeting or any adjournment thereof as specified therein by
the person giving the proxy; if no specification is made the shares represented
by such proxy will be voted (i) for the election of directors as described in
this Proxy Statement; (ii) for approval of an employment agreement with the
Corporation's chief financial officer, Jay M. Green; (iii) for approval of the
selection of Price Waterhouse as independent accountants for the Corporation for
1994; and (iv) against a shareholders' proposal relating to cumulative voting.
Management expects that the proposal will be presented by the shareholders at
the meeting. If the proposal is not presented by the shareholders, management
does not intend to present it and in that event no vote on the proposal will be
taken. Proposals by shareholders for the Corporation's 1995 Annual Meeting of
Shareholders must be received by the Corporation before November 15, 1994.
Management knows of no matters which may be brought before the Annual
Meeting or any adjournment thereof other than those described in the
accompanying notice of meeting and routine matters incidental to the conduct of
the meeting. However, if any other matter should come before the meeting or any
adjournment thereof, it is the intention of the persons named in the
accompanying form of proxy or their substitutes to vote the proxy in accordance
with their judgment on such matters.
The cost of solicitation of proxies by the Board of Directors will be borne
by the Corporation. Such solicitation will be made by mail and in addition may
be made by officers and employees of the Corporation personally or by telephone,
facsimile machine or telegram. Proxies and proxy material will also be
distributed through brokers, custodians and other like parties.
Each holder of a share of Common Stock of the Corporation will be entitled
to one vote for each share held of record by such person at the close of
business on February 28, 1994, which is the record date fixed by the Board of
Directors for the determination of shareholders entitled to notice of, and to
vote at, the meeting or any adjournment thereof. As of such date the Corporation
had outstanding 4,308,288 shares of Common Stock (excluding 240,902 shares of
treasury stock).
<PAGE>
ELECTION OF DIRECTORS
At the 1994 Annual Meeting of Shareholders, eleven (11) directors (which
will comprise the entire Board) are to be elected. The Board of Directors
proposes the nominees listed below for election as directors to serve until the
1995 Annual Meeting of Shareholders and until their successors are duly elected
and qualified. All of the nominees have served as directors since the last
Annual Meeting. The directors must be elected by a plurality of the votes cast
in person or by proxy by shareholders entitled to vote at the meeting. If for
any reason any nominee or nominees become unavailable for election, the proxy
holders will vote for such substitute nominee or nominees as may be designated
by the Board of Directors.
INFORMATION CONCERNING DIRECTORS
<TABLE>
<CAPTION>
(AGE) AND
DATE SINCE WHICH
NAME HAS CONTINUOUSLY
(LETTERS REFER TO SERVED AS A PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIPS, DIRECTOR OF THE BUSINESS EXPERIENCE ALSO SERVES AS A DIRECTOR
IDENTIFIED BELOW) CORPORATION DURING PAST FIVE YEARS (1) OF THE FOLLOWING CORPORATIONS
- --------------------------- ---------------- -------------------------------- --------------------------------
<S> <C> <C> <C>
Bruce A. Barnet (48) 1990 President and Chief Executive
(a), (b), (f) Officer of Cowles Magazines --
publishing (1993); Private
investor (1991-1992);
President, Family Media
Publications (1990); President,
Riordan Publishing Company
(1990); Vice President, Time,
Inc.'s Magazine Group
(1987-1990)
John L. Bernbach (50) 1988 Vice Chairman of DDB Needham Omnicom Group, Inc., North
(a), (f) Worldwide, Inc., Director and American Television, Inc.,
President of DDB Needham Northbridge Programming, Inc.
Worldwide, Inc. -- advertising
Edgar M. Cullman (2) (76) 1961 Chairman of the Board of Centaur Communications Limited,
(b), (c), (d), (e) Directors Bloomingdale Properties, Inc.,
The Eli Witt Company
Edgar M. Cullman, Jr.(2) (48) 1982 President; President of Culbro First Financial Caribbean
(c), (d), (f) Land Resources, Inc. Corporation, Bloomingdale
(1992-1993) Properties, Inc., The Eli Witt
Company
Frederick M. Danziger (2) (54) 1975 Member of the Firm of Mudge Rose Affinity Bio Tech, Inc., Monro
(c), (d) Guthrie Alexander & Ferdon -- Muffler/Brake Inc., Ryan
attorneys Instruments, L.P. (general
partner), Bloomingdale
Properties, Inc., First
Financial Caribbean
Corporation,
Centaur Communications Limited
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
(AGE) AND
DATE SINCE WHICH
NAME HAS CONTINUOUSLY
(LETTERS REFER TO SERVED AS A PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIPS, DIRECTOR OF THE BUSINESS EXPERIENCE ALSO SERVES AS A DIRECTOR
IDENTIFIED BELOW) CORPORATION DURING PAST FIVE YEARS (1) OF THE FOLLOWING CORPORATIONS
- --------------------------- ---------------- -------------------------------- --------------------------------
<S> <C> <C> <C>
John L. Ernst (3) (53) 1983 Chairman of the Board and First Financial Caribbean
(b), (c), (e) President of Bloomingdale Corporation
Properties, Inc. -- investments
and real estate
Thomas C. Israel (50) 1989 A Director and Chairman of A.C. Chase N.B.W., Glenayre
(a), (f) Israel Enterprises, Inc. -- Technologies, Inc., Noel Group,
investments Inc.
Dan W. Lufkin (61) 1976 Private investor American Medical International,
(a), (b), (c), (d), (e) Syratech, Inc., Savoy Pictures,
Inc., Allen & Co., Inc., London
Fog Industries
Graham V. Sherren (56) 1987 Chairman and Chief Executive ARIS, Hundred Acre Securities
(f) Officer, Centaur Communications Ltd., Input Type Setting Ltd.,
Limited -- publisher of Gieves Group Ltd., Vexford
magazines and trade periodicals Holdings Ltd., Stace-Barr Ltd.
in the United Kingdom
Peter J. Solomon (55) 1980 Chairman, Peter J. Solomon Centenniel Cellular Corp.,
(b), (d) Company Limited -- investment Century Communications Inc.,
bankers; Vice Chairman of Bradlee's, Monro Muffler/Brake,
Shearson Lehman Brothers Inc. Inc., Office Depot, Inc.,
-- investment bankers Phillips-Van Heusen Corp.,
(1985-1989) Ralphs Grocery Co.
Francis T. Vincent, Jr. (55) 1992 Private investor; senior advisor The Continental Insurance
(a), (b), (f) to Peter J. Solomon Company Company, Oakwood Homes Corp.
Limited -- investment bankers Time Warner, Inc.
Commissioner, Major League
Baseball (1989-1992)
<FN>
- ------------------------------
Member of the: (a) Audit Committee; (b) Compensation Committee; (c)
Executive Committee; (d) Finance Committee; (e) Nominating Committee; and
(f) Strategic Planning Committee
(1) Except as otherwise indicated each director has had the same principal
occupation during the past five years. Positions not otherwise identified
are with the Corporation.
(2) Mr. Cullman is the father of Mr. Cullman, Jr., and the father-in-law of Mr.
Danziger.
(3) Mr. Ernst is the nephew of Mr. Edgar M. Cullman.
</TABLE>
The Board of Directors held 9 meetings during 1993. The Corporation has the
following Committees of the Board of Directors: Audit, Compensation, Executive,
Finance, Nominating and Strategic Planning. Committee memberships of the Board
of Directors are indicated in the above table. Directors as a whole attended
approximately 92% of the aggregate of all Board and Committee meetings (of
Committees of which they were members). Mr. Lufkin attended less than 75% of
combined Board and Committee meetings (of Committees of which he is a member).
3
<PAGE>
Effective January 1, 1991 the annual retainer paid to Members of the Board
of Directors and amounts paid per meeting were reduced by 10% from previous
years. In 1993 such retainer and amounts were not increased. Members of the
Board of Directors who are not employees of the Corporation received $16,200 per
year and $720 for each Board and Committee meeting attended in 1993. Committee
chairmen received $1,080 for each Committee meeting attended, except for the
chairmen of the Audit and Compensation Committees who received $1,350. Reduced
amounts were paid if more than one meeting was held on any day. Non-employee
Directors who are not members of the Cullman-Ernst group (See "Principal
Holders") participate in the Stock Option Plan for Non-employee Directors.
The Audit Committee, whose Chairman is Mr. Israel, reviews audit reports and
the scope of audit by both the Corporation's internal audit staff and its
independent accountants and related matters pertaining to the preparation and
examination of the Corporation's financial statements. From time to time such
Committee makes recommendations to the Board of Directors with respect to the
foregoing matters as well as with respect to the appointment of the
Corporation's independent accountants. The Audit Committee held two meetings in
1993 and recommended to the Board of Directors the selection of Price Waterhouse
(See "Selection of Independent Accountants").
The Nominating Committee, whose Chairman is Mr. Ernst, held two meetings in
1993 and at its December 1993 meeting recommended to the Board of Directors the
election of the director-nominees proposed in this Proxy Statement for election
by the shareholders. The Nominating Committee reviews incumbent directors and
the qualifications of candidates suggested from all sources, including Board
members, management and shareholders. Shareholders desiring to recommend
candidates for election as directors at the Corporation's 1995 Annual Meeting of
Shareholders should submit names and appropriate biographical information to the
Secretary of the Corporation before November 1, 1994.
For information about the Compensation Committee, see Compensation Committee
Interlocks and Insider Participation on page 12.
4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL HOLDERS
MANAGEMENT
The following table lists the number of shares of Common Stock of the
Corporation beneficially owned by the nominees for election as directors (who
are all current directors) and by all directors and officers of the Corporation
collectively:
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME SHARES(1) OUTSTANDING
- ------------------------------------------------------------------- ----------- ----------------
<S> <C> <C>
Bruce A. Barnet.................................................... 100 *
John L. Bernbach................................................... 600 *
Edgar M. Cullman................................................... 996,348 23%(2)
Edgar M. Cullman, Jr............................................... 875,954 20%(2)
Frederick M. Danziger.............................................. 164,120 4%(2)
John L. Ernst...................................................... 440,463 10%(2)
Thomas C. Israel................................................... 5,000 *
Dan W. Lufkin...................................................... 10,000 *
Graham V. Sherren.................................................. 500 *
Peter J. Solomon................................................... 1,000 *
Francis T. Vincent, Jr............................................. 1,000 *
All directors and officers collectively, consisting of seventeen 1,817,415 42%(1)
persons............................................................
<FN>
- ------------------------
* Less than 1%
(1) This information reflects the definition of beneficial ownership adopted by
the Securities and Exchange Commission. Beneficial ownership shown is sole
investment and voting power, except as reflected in footnote 2. Where more
than one person shares investment and voting power in the same shares such
shares may be shown more than once. Such shares are reflected only once,
however, in the total for all directors and officers. Excluded are shares
held by charitable foundations and trusts of which members of the Cullman
and Ernst families, including persons referred to in footnote 2, are
officers and directors.
(2) See "Principal Holders". Included within the shares shown as beneficially
owned by Mr. Cullman are 874,150 shares in which he holds shared investment
and/or voting power; included within the shares shown as beneficially owned
by Mr. Ernst are 416,321 shares in which he holds shared investment and/or
voting power; included within the shares shown as beneficially owned by Mr.
Danziger are 147,578 shares in which he holds shared investment and/or
voting power; and included within the shares shown as beneficially owned by
Mr. Cullman, Jr. are 728,564 shares in which he holds shared investment
and/or voting power. Excluded in each case are shares held by charitable
foundations and trusts in which such persons or their families or trusts for
their benefit are officers and directors. Messrs. Cullman, Ernst, Danziger,
and Cullman, Jr. disclaim beneficial interest in all shares over which there
is shared investment and/or voting power and in all excluded shares.
</TABLE>
5
<PAGE>
PRINCIPAL HOLDERS
As of December 31, 1993, a group consisting of Messrs. Cullman, direct
members of their families and trusts for their benefit; Mr. Ernst, his sister
and direct members of their families and trusts for their benefit; a partnership
in which members of the Cullman and Ernst families hold substantial direct and
indirect interests and charitable foundations and trusts of which members of the
Cullman and Ernst families are directors or trustees, owned an aggregate of
approximately 2,233,000 shares of the Corporation's Common Stock (approximately
52%). Among others, Messrs. Cullman and their wives, Mr. Ernst and to a lesser
extent Mr. Danziger (who is a member of the Cullman and Ernst group), hold
investment and voting power or shared investment and voting power over such
shares. Certain of such shares are pledged as security for loans payable under
standard pledge arrangements.
A form filed with the Securities and Exchange Commission on behalf of the
Cullman and Ernst group states that there is no formal agreement governing the
group's holding and voting of such shares but that there is an informal
understanding that the persons and entities included in the group will hold and
vote together the shares owned by each of them in each case subject to any
applicable fiduciary responsibilities.
The Gabelli Group, Inc., One Corporate Center, Rye, New York, NY 10580,
through certain wholly-owned subsidiaries, is the owner of an aggregate of
519,200 shares of the Corporation's Common Stock (approximately 12%). A form
filed with the Securities and Exchange Commission on September 18, 1991 by
Gabelli Funds, Inc. states that the securities have been acquired by GAMCO
Investors, Inc., a wholly-owned subsidiary of Gabelli Funds, Inc. and Gabelli
Funds, Inc., on behalf of their investment advisory clients. The Corporation has
been informed that no individual client of The Gabelli Group, Inc. has ownership
of more than 5% of the Corporation's Common Stock. An affiliate of the Gabelli
Group provides investment advisory services to the Corporation's pension fund
for which it receives customary advisory fees.
Heine Securities Corporation, 51 J.F.K. Parkway, Short Hills, N.J. 07078, is
the owner of an aggregate of 180,200 shares of the Corporation's Common Stock
(approximately 4.2%).
Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 299,900 shares of the
Corporation's Common Stock (approximately 7%) as of February 9, 1994. All of
such shares are held in portfolios of DFA Investment Dimensions Group Inc., a
registered open-end investment company, the DFA Investment Trust Company, a
registered open-end investment company, or the DFA Group Trust and the DFA
Participating Group Trust, investment vehicles for qualified employee benefit
plans, all of which Dimensional serves as investment manager. Dimensional
disclaims beneficial ownership of such shares.
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation's officers and directors, and persons who own more than ten
percent of its Common Stock, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the New York Stock
Exchange. Such persons are required by regulation to furnish the Corporation
with copies of all Section 16(a) forms they file. Based upon its involvement in
the preparation of certain of such forms, a review of the copies of other such
forms received by it and the written representation from one reporting entity
that no Form 5 was required for such entity, the Corporation believes that with
respect to 1993 all such Section 16(a) filing requirements were satisfied,
except that Mr. Bernbach failed to file a Form 4 in a timely fashion respecting
his purchase of 500 shares of the Corporation's Common Stock in April 1993.
6
<PAGE>
INTERESTS IN CERTAIN TRANSACTIONS
For the information of shareholders, attention is called to the following
transactions between the Corporation and other parties in which the persons
mentioned below might have had a direct or indirect interest.
1. Mr. Danziger is a member of the law firm of Mudge Rose Guthrie Alexander
& Ferdon. During the Corporation's 1993 fiscal year, such firm received for
services rendered approximately $895,394 from the Corporation, including
approximately $365,230 for services rendered relating to the acquisition of
Certified Grocers of Florida, Inc. by the Corporation's Eli Witt subsidiary.
2. The Corporation has a Directors and Officers Liability and Corporate
Reimbursement insurance policy with the Chubb Group of Insurance Companies. The
policy period is from February 19, 1993 through February 19, 1994 at a premium
of $122,000. The Corporation maintains a separate Pension Trust Liability
insurance policy covering employees acting in fiduciary capacities. The policy
period is from February 19, 1993 through February 19, 1994 at a premium of
$22,300.
See Interlocks and on page for certain other interests.
The information given in this Proxy Statement with respect to the five-year
business experience of each director, beneficial ownership of stock, interlocks
and the respective interests of persons in transactions to which the Corporation
or any of its subsidiaries was a party (other than as appears from the records
of the Corporation), is based upon statements furnished to the Corporation by
its directors and officers.
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION(1) ----------------------------
--------------------------------------- (G)
(E) ----------- (I)
(A) (C) --------------- (F) STOCK OP- -------------
- ------------------------------ (B) --------- (D) OTHER ANNUAL --------------- TIONS ALL OTHER
NAME AND --------- SALARY ----------- COMPENSATION RSTRICTED STOCK (NUMBER OF COMPENSATION
PRINCIPAL POSITION YEAR ($) BONUS ($) ($) AWARDS ($) SHARES) ($)
- ------------------------------ --------- --------- ----------- --------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Edgar M. Cullman.............. 1991 360,000 -- 19,038 -- --
Chairman of the Board 1992 360,000 -- 18,465 -- --
1993 360,000 -- 17,242 -- --
Edgar M. Cullman, Jr.......... 1991 252,000 -- 25,290 -- --
President 1992 276,523 193,900 25,776 -- --
1993 277,000 75,000 25,510 -- -- 75,000(2)
Jay M. Green.................. 1991 240,000 -- 25,290 -- 20,600
Executive Vice President 1992 264,512 132,500 25,390 -- 14,700
Chief Financial Officer 1993 340,000 120,000 25,510 -- 14,900
A. Ross Wollen................ 1991 156,000 -- 25,020 -- 12,300
Senior Vice President 1992 168,260 58,975 26,415 -- 9,400
General Counsel & Secretary 1993 176,900 55,000 27,573 -- 10,000
Peggy L. Kelston.............. 1991 116,000 -- 22,220 -- 6,000
Vice President 1992 120,471 31,325 25,325 -- 3,900
Human Resources 1993 128,500 10,000 25,646 -- 4,200
<FN>
- ------------------------------
(1) In December of 1990 the Corporation changed its fiscal year end from
December to November. However, the Annual Compensation column reflects
amounts paid during the calendar year. Amounts shown also include matching
contributions made by the Corporation under the Savings Plan and other
miscellaneous cash benefits, but do not include funding for or receipt of
retirement plan benefits (See "Employee Benefit Plans").
(2) Mr. Green is paid $75,000 as Chairman of the Corporation's wholesale
tobacco subsidiary, Eli Witt.
</TABLE>
EMPLOYEE BENEFIT PLANS
RETIREMENT PLAN
Retirement benefits are payable under the Corporation's Employees Retirement
Plan for officers and other employees of the Corporation and its participating
subsidiaries. Directors who are not employees do not participate. Benefits are
accrued under the Plan on a career-average earnings basis and through 1993 the
pension credit is 1.1% for annual compensation up to the individual's covered
compensation as determined from published Social Security tables and 1.65% for
annual compensation above said amounts. Compensation is the base rate of
earnings as of the first business day of each Plan Year payable for service
during the Plan Year, excluding overtime, bonuses, incentive compensation or
other additional compensation. An updating formula has been periodically applied
to adjust for inflation. The estimated annual benefits payable as a life annuity
upon retirement at normal retirement age, which assumes service will continue
until age 65 at 1994 base salaries, for Messrs. Cullman, Jr., Green, Wollen and
Ms. Kelston are $99,825, $54,322, $63,563 and $45,538, respectively. The
retirement benefit for Mr. Cullman, Sr., reflecting the fact that he deferred
receipt since age 65, is $169,356, which under tax law he was required to begin
receiving April 1, 1989.
8
<PAGE>
STOCK OPTION PLANS
In January of 1991 the Board of Directors approved the adoption of the 1991
Employees Incentive Stock Option Plan (the "1991 Plan") which was approved by
the Corporation's shareholders on May 9, 1991. Options granted pursuant to the
1991 Plan in 1991 and 1992 have substantially exhausted the options available
for grant thereunder and in December 1992 the Board of Directors approved the
adoption of the Culbro Corporation 1992 Stock Plan (the "1992 Plan") which was
approved by the Corporation's shareholders on April 8, 1993. Options to purchase
a total of 79,900 shares were granted under the 1992 Stock Plan to 13 employees
on January 27, 1993 at $16.75 per share. Such options are not exercisable until
three years from the date of grant. The Board of Directors has also approved a
stock option plan for non-employee Directors pursuant to which options to
purchase 2,000 shares are granted at each Annual Meeting to non-employee
Directors who are not members of the Cullman-Ernst group. In April 1993 options
to purchase 14,000 shares were granted to 7 non-employee Directors at the
exercise price of $16.69 per share.
Options currently outstanding were granted either under the 1991 Plan or the
1992 Plan (collectively the "Plans"). The Plans are administered by the
Compensation Committee of the Board of Directors (the "Committee"), none of
whose members may hold options granted pursuant to the Plans. The Committee
determines the form of the option agreements to be used under the Plans and the
terms and conditions to be included in such option agreements.
Under the 1992 Plan an aggregate 300,000 shares of Common Stock were
authorized to be made subject to options; of such shares 79,900 shares were
subject to unexercised options as of March 1, 1993. As of such date no shares
were available for grant under the 1991 Plan since the 1992 Plan has replaced
the 1991 Plan. Options are granted under the Plans at prices equal to 100% of
the fair market value of the shares of Common Stock on the date of grant.
Options granted under the Plans were intended to be incentive stock options
or nonqualified options. Options granted in 1990, 1991 and 1992 are 100%
exercisable three years after the date of grant and not before such date and
terminate eight years (six in the case of the 1990 grant) from such date. All
options permit the delivery, with the consent of the Committee, of previously
owned Common Stock of the Corporation in payment, in lieu of cash, for the
purchase of shares upon exercise. The Plans also contain a limitation on the
dollar amount of incentive stock options which may be granted to any employee
and restrictions pertaining to any grant to a 10% shareholder. Messrs. Cullman
do not participate in the Plans.
The Plans permit the grant together with an option of a stock appreciation
right payable in cash. If granted, such a right entitles the holder to receive
in cash upon exercise the difference between the option exercise price and the
market value of the Corporation's Common Stock in lieu of exercising the
attached option.
The 1992 Plan also permits the grant of shares of the Corporation's Common
Stock. No such grants have been made.
9
<PAGE>
STOCK OPTION INFORMATION
No options have been exercised since 1990 by any executive officer of the
Corporation. Information pertaining to options granted to certain executive
officers named under "Summary Compensation Table" since January 1, 1991 is as
follows:
<TABLE>
<CAPTION>
OPTIONS TO PURCHASE
SHARES OF THE
CORPORATION'S JAY M. A. ROSS PEGGY
COMMON STOCK GREEN WOLLEN KELSTON
- ------------------------------------------------------------------------------------ --------- --------- -----------
<S> <C> <C> <C>
Granted on January 31, 1991 at $14.00 per share..................................... 20,600 12,300 6,000
Granted on February 20, 1992 at $18.00 per share.................................... 14,700 9,400 3,900
Granted on January 27, 1993 at $16.75 per share..................................... 14,900 10,000 4,200
</TABLE>
STOCK OPTION GRANTS IN 1993 FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
ASSUMED ANNUAL RATES
OF STOCK
NUMBER OF PERCENTAGE OF PRICE APPRECIATION
SHARES TOTAL OPTIONS/ FOR TEN YEAR
UNDERLYING SARS GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/SARS EMPLOYEES IN 1993 BASE PRICE EXPIRATION --------------------
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE 5% 10%
- ----------------------------------- ------------- ----------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Jay M. Green....................... 14,900 18.6 $ 16.75 1/27/01 406,472 647,256
A. Ross Wollen..................... 10,000 12.5 $ 16.75 1/27/01 272,280 434,400
Peggy Kelston...................... 4,200 5.3 $ 16.75 1/27/01 114,576 182,448
</TABLE>
ANNUAL INCENTIVE COMPENSATION PLAN
The Committee meets during the first quarter of each year to assess the
performance during the preceding fiscal year of the officers of the Corporation
and senior officers of its subsidiaries and to recognize and reward meritorious
performance by payment of incentive compensation with respect to such year.
Pursuant to a plan approved for 1993 by the Board of Directors such annual
incentive compensation was limited to predetermined percentages of each
recipient's annual salary and depended upon the achievement of specified
financial and subjective goals. Incentive compensation is payable in cash
subject to deferral under the Corporation's Deferred Incentive Compensation
Plan. Amounts paid as annual incentive compensation with respect to the
Corporation's 1993 fiscal year are included in the Summary Compensation Table
with respect to the individuals listed thereunder. Employees who do not
participate in the incentive compensation plan may be eligible for annual bonus
payments depending upon operating unit results. Mr. Cullman, Sr. did not
participate in the plan.
LONG TERM PERFORMANCE PLAN
In 1988 the Committee and the Board of Directors approved the Long Term
Performance Plan which is intended to provide additional cash compensation to
certain officers of the Corporation and senior officers of its subsidiaries
selected by the Committee. Payments under the Plan were based on the financial
performance of the subsidiaries and the Corporation over three-year performance
cycles, beginning in 1989 and every other year thereafter. The performance
measurements which determined
10
<PAGE>
the payments to subsidiary officers were based generally on cumulative net
income and cumulative cash flow for each subsidiary. Target goals in each
category were set and incentive compensation, as a percentage of salary, was
paid depending upon percentage of goal achieved. In 1992 the first payment under
this Plan was made only to participants from the Corporation's General Cigar
Co., Inc. subsidiary based on performance during the period 1989 through 1991.
Corporate executives' participation depended upon consolidated results in both
categories exceeding by 10% subsidiary targets and no such incentive
compensation was paid to any Corporate executive. Approximately eight corporate
executive officers and four to nine senior officers at each subsidiary
participate in the Plan. Mr. Cullman, Sr. did not participate in the Plan.
Subject to certain conditions, an employee may defer all or a portion of the
payment pursuant to the Corporation's Deferred Incentive Compensation Plan.
The second three-year performance cycle began with fiscal year 1991. The
award of compensation for officers of the Corporation's subsidiaries under this
second three-year performance cycle is based upon achievement of a predetermined
formula based upon the return on net assets for their respective subsidiaries.
Officers of the Corporation selected by the Committee will participate in the
Plan at the discretion of the Committee. The second performance cycle resulted
in no incentive compensation being paid. A similar third three-year performance
cycle began with fiscal year 1993. Mr. Cullman, Sr. will not participate in the
Plan.
DEFERRED INCENTIVE COMPENSATION PLAN
In 1982 the Board of Directors adopted the Deferred Incentive Compensation
Plan to be administered by the Committee, pursuant to which recipients of
incentive compensation and directors' fees may elect to defer receipt thereof.
Under a defined contribution arrangement amounts deferred earn interest,
compounded quarterly, at the prime rate less 1%. Such amounts are not intended
to be recognized for tax purposes until receipt. Participating recipients may
designate the amount and the time periods of deferral. Participants have no
vested rights in deferred amounts credited to their accounts and are general
creditors of the Corporation until such amounts are actually paid.
SAVINGS PLAN
The Board of Directors adopted a Savings Plan in 1982. The Savings Plan
covers salaried and hourly employees of the Corporation and its participating
subsidiaries who are employed in the United States, are over age 21 and have six
months of service. In 1993 a participating employee could have (i) saved up to
5% of annual base salary through payroll deductions, with the Corporation
contributing $0.40 on each dollar contributed; and (ii) saved an additional 10%
of annual base salary without receiving any matching contributions.
Contributions made in 1992 through payroll deductions not in excess of $8,994
per year may have been accumulated as before-tax savings pursuant to Section
401(k) of the Internal Revenue Code. Participants are permitted to choose to
allocate their contributions among several alternative investment options.
During the period from January 1, 1993 to December 31, 1993 the
Corporation's matching contributions under the Savings Plan for the accounts of
the individuals named under "Summary Compensation Table" are included in the
Summary Compensation Table.
INSURANCE AND HEALTH PROGRAMS
The Corporation maintains a variety of employee welfare benefit plans
providing life, hospitalization, medical and long-term disability insurance for
its salaried and certain hourly paid employees. In
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addition the Corporation provides life, hospitalization and medical insurance
for certain of its retired employees. The Corporation's aggregate contributions
for such employee welfare benefit plans through November 27, 1993 amounted to
approximately $7,484,000.
In 1976 the Corporation adopted an Executive Life Insurance Program (the
"Program") pursuant to which insurance was purchased for middle and senior level
officers and employees. Insurance coverage of $20,000 was provided for each
$10,000 salary increment in excess of $50,000 and additional coverage of $10,000
was provided for each $10,000 salary increment in excess of $100,000 up to a
maximum insurance coverage of $250,000. As of July 1, 1988 the Program was
suspended and all benefits remain as they were as of that date. No new
participants have been offered benefits under this Program since its suspension.
The aggregate face amount of such coverage through November 30, 1993 was
approximately $3,600,000. The amounts paid by the Corporation in such year as
premiums totaled approximately $122,000, which was paid in part from a loan
against the cash value of said insurance and the balance in cash.
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee, whose Chairman is Mr. Ernst, supervises
management compensation and employee benefits and administers the Corporation's
pension, stock option, savings, health, incentive compensation and other
employee benefit plans. It held five meetings in 1993.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
Pursuant to Article III, Section 11 of the Corporation's By-Laws, the
Compensation Committee of the Board of Directors annually recommends "to the
Board compensation for officers and principal employees and agents, and its
recommendations for their participation in any compensation or other plan for
the benefit of employees... and shall administer all such plans...". It has been
the practice of the Committee to review, consider and approve the
recommendations of management as to all compensation paid by the Corporation and
its subsidiaries exceeding $75,000 per annum.
The chief executive officer and president, Messrs. Cullman, Sr. and Cullman,
Jr., respectively, are members of the Cullman and Ernst Group which owns
approximately 52% of the Corporation's Common Stock (see "Principal Holders").
They have declined to participate in the Corporation's Stock Option Plans and
Mr. Cullman, Sr. also does not participate in the Annual Plan or the Long Term
Plan (see below).
POLICIES
The Committee intends that stock options and cash performance awards serve
as a significant part of executives' (other than the chief executive) total
compensation package, and thus they are granted and awarded in consideration of
present and anticipated performance as well as past performance. Moreover, the
stock options and cash performance awards are intended to offer the top
executives significant long-term incentives to increase their efforts on behalf
of the Corporation and its subsidiaries and to focus managerial efforts on
enhancing shareholder value. As indicated above, the Committee's compensation
philosophy is to have long-term incentives that pay more for superior
performance and less if performance does not achieve that level. The Committee,
in making its
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determinations with respect to stock option and performance award grants and
awards to the individual senior executives, was guided by the percentage of the
individual's base salary that the estimated value of the stock options and cash
performance awards would comprise. In the case of the Messrs. Cullman incentives
are to be achieved through potential payments of incentive compensation. Mr.
Cullman, Jr. participates in the annual and long-term performance plans. Mr.
Cullman, Sr.'s incentive compensation could be substantial, based upon results,
through appropriate ad hoc recognition for significant accomplishment.
SALARY AND CASH BONUSES
The chief executive officer's salary has not been increased since 1990 and
will not be increased in 1994. The salaries of the four next highest paid
executive officers have increased an average of 8.2% per annum since 1990 and
will not increase in 1994. Special cash bonuses were paid in 1993 (other than to
the chief executive officer) to the four next highest paid executive officers
aggregating $260,000, all in connection with the merger of one of the
Corporation's subsidiaries which resulted in a payment of $89,000,000 to the
Corporation. The Committee does not believe it need now adopt any policy with
respect to the recently enacted $1,000,000 deduction cap of Internal Revenue
Code Section 162.
STOCK OPTION PLANS
The Committee administers the Plans described under "Stock Option Plans". In
recent years options have been granted to approximately 15 employees including
the Corporation's senior management (other than Messrs. Cullman who have
declined to participate) and one or two senior officers at each of the
Corporation's operating companies. The Committee has determined that options be
granted to Messrs. Green and Wollen and operating company presidents at 100% of
their annual salaries. Effective in 1994, Mr. Green's compensation will be
determined in accordance with his employment contract (See "Employment Agreement
of Jay M. Green" on page ). He will no longer participate in the Corporation's
regular Stock Option Plans. Other corporate staff and operating company
executive officers are awarded options at 60% and 40% of annual salary depending
upon relative seniority and responsibilities. No options have been exercised
since 1990 by any executive officer of the Corporation.
LONG TERM PERFORMANCE PLAN
The Committee administers the Long Term Performance Plan which is based upon
financial performance of the operating companies and the Corporation over
three-year cycles. The performance measurements which determined the payments to
subsidiary officers were based generally on cumulative net income and cumulative
cash flow for each subsidiary. Target goals in each category were set and
incentive compensation, as a percentage of salary, was paid depending upon
percentage of goal achieved. The first cycle (1989-91) resulted in payments to
the officers of only one operating company. The second cycle (1991-93) resulted
in no incentive compensation being paid.
ANNUAL INCENTIVE COMPENSATION PROGRAM
The Committee established and administers the Annual Incentive Compensation
Program which is designed to recognize and reward meritorious performance during
the previous fiscal year. Such compensation is limited to predetermined
percentages of each recipient's annual salary and depends upon the achievement
of specified financial and subjective goals. Mr. Cullman, Sr. does not
participate
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in this Program. A total of $416,700 was paid in 1993 with respect to fiscal
year 1992 to the four next highest paid executive officers. No such payments
were made to any of the Corporation's executive officers with respect to fiscal
year 1993.
INTERLOCKS AND INSIDER PARTICIPATION
Mr. Cullman, Chairman and chief executive officer of the Corporation, is a
member of the Compensation Committee. Messrs. Cullman are members of the Board
of Bloomingdale Properties, Inc., of which Mr. Ernst, Chairman of the
Corporation's Compensation Committee, is Chairman and President. Mr. Cullman,
Sr. is Chairman of the Compensation Committee of Centaur Communications Limited,
of which Mr. Sherren is chief executive officer. Mr. Sherren is a Member of the
Corporation's Board but does not serve on its Compensation Committee.
Mr. Solomon is Chairman of Peter J. Solomon Company Limited which provides
the Corporation strategic planning and long-range financial advice pursuant to
an engagement letter effective June 1, 1989. Such agreement provides for
payments of $18,750 per quarter, plus expenses, and additional amounts for
specified projects. In 1993 such firm was paid $601,306 for services rendered
relating to the acquisition of Certified Grocers of Florida, Inc. by the
Corporation's Eli Witt subsidiary. Mr. Vincent is a senior advisor to Peter J.
Solomon Company Limited.
Real estate management and advisory services have been provided to the
Corporation by an affiliate of Bloomingdale Properties, Inc., with which members
of the Cullman and Ernst group (see "Principal Holders") are associated. A fee
of approximately $193,321 was paid by the Corporation in 1993 for management of
the Corporation's New York office building and for other real estate advisory
services. Mr. Ernst is Chairman and President of Bloomingdale Properties, Inc.
COMPENSATION COMMITTEE
John L. Ernst, Chairman
Bruce A. Barnet
Edgar M. Cullman
Dan W. Lufkin
Peter J. Solomon
Francis T. Vincent, Jr.
The Board Compensation Committee Report on Executive Compensation 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 the Securities Exchange Act of 1934, except to the extent that the
Corporation specifically incorporates this information by reference, and shall
not otherwise be deemed filed under such Acts.
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STOCK PERFORMANCE GRAPHS
The following graph compares the yearly percentage changes in the cumulative
total shareholder return on Culbro Stock with the cumulative total return of the
Standard and Poor's 500 Composite Index and the Russell 2000 Index from December
1983 to November 1993. It is assumed that the value of each investment is $100
at December 1988.
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PROPOSAL TO APPROVE THE EMPLOYMENT AGREEMENT
BY AND BETWEEN CULBRO CORPORATION AND JAY M. GREEN
On February 10, 1994 the Board of Director approved for submission to the
Corporation's shareholders the Employment Agreement (the "Employment Agreement")
by and between the Corporation and Jay M. Green, the Corporation's chief
financial officer.
EMPLOYMENT AGREEMENT OF JAY M. GREEN
The Corporation has approved the Employment Agreement, whereby Mr. Green
will be employed by the Corporation as Executive Vice President -- Finance and
Administration and Treasurer for a period of five years at a base salary of
$340,000 (subject to increases annually as determined by the Compensation
Committee) and will be eligible for a bonus of up to 50% of his annual base
salary (to be determined at the sole discretion of the Compensation Committee).
If Mr. Green should be terminated by the Corporation without cause, he will
receive a cash severance payment of 150% of his annual salary.
The Employment Agreement also provides for a grant of an option (the
"Option") to purchase 125,000 shares of the Corporation's Common Stock at a
fixed exercise price of $4 per share. The Option vests and becomes exercisable
with respect to 25,000 shares of common stock per year, on each of the five
anniversaries of the date of the grant. The Option expires on and after the
tenth anniversary date of the Employment Agreement, on or after the date Mr.
Green ceases to be an employee of the Corporation or its subsidiaries, within
one year following Mr. Green's death or a disability, within three months
following a voluntary termination, immediately upon a termination for cause and
within 30 days following a termination without cause. If Mr. Green is terminated
without cause during the first 30 months of the Employment Agreement, the Option
shall immediately become exercisable with respect to 87,500 shares (less the
number of shares which had already vested) and if Mr. Green is terminated
without cause during the last 30 months of the Employment Agreement, the Option
shall immediately become exercisable with respect to all shares of stock covered
thereby. The shares purchased pursuant to the Option may be paid for in cash, or
at the discretion of the Compensation Committee of the Board, by delivery of
outstanding shares of the Corporation's Common Stock owned by Mr. Green and
endorsed to the Corporation, or by such other arrangement as the Compensation
Committee deems advisable. No further options will be granted to Mr. Green
during the period of the Employment Agreement; however any options previously
granted will be retained by Mr. Green.
The Board of Directors urges approval by the shareholders of the Employment
Agreement with Jay M. Green. An affirmative vote of the holders of a majority of
the shares of the Corporation's Common Stock entitled to vote at the Annual
Meeting either in person or by proxy is required to approve the Employment
Agreement. Proxies will be voted in favor of the Employment Agreement, unless
otherwise instructed by the shareholder.
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of Price Waterhouse as
independent accountants to audit the financial statements of the Corporation for
the fiscal year ending November 26, 1994. This selection was recommended by the
Audit Committee of the Board of Directors. Price Waterhouse has been the
independent accountants for the Corporation for many years. Price Waterhouse
fees approximated $554,100 for all services rendered to the Corporation with
respect to its 1993 fiscal year.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE SELECTION OF PRICE
WATERHOUSE.
The submission of this proposal to a vote of shareholders is not legally
required. If this selection of Price Waterhouse is not approved, the Board of
Directors will reconsider its selection. A vote of the majority of the shares of
Common Stock of the Corporation represented (in person or by proxy) and voting
at the meeting, provided that at least a majority of such stock is represented
at the meeting, is required to adopt this proposal.
A representative of Price Waterhouse is expected to be present at the Annual
Meeting and will be given an opportunity to make a statement if so desired and
to respond to appropriate questions.
SHAREHOLDERS' PROPOSAL
John J. Gilbert, 1165 Park Avenue, New York, N.Y., who owns or represents in
the aggregate 400 shares of the Corporation's Common Stock, has notified the
Corporation that he intends to present at the Annual Meeting the following
resolution:
"RESOLVED. That the stockholders of Culbro Corporation, assembled in annual
meeting in person and by proxy, hereby request the Board of Directors to take
the steps necessary to provide for cumulative voting in the election of
directors, which means each stockholder shall be entitled to as many votes as
shall equal the number of shares he or she owns multiplied by the number of
directors to be elected, and he or she may cast all of such votes for a single
candidate, or any two or more of them as he or she may see fit."
REASONS
Continued very strong support along the lines we suggest were shown at the
last annual meeting when 21%, 127 owners of 768,658 shares, were cast in favor
of this proposal.
Many successful corporations have cumulative voting. For example, Pennzoil
having cumulative voting defeated Texaco in that famous case. Another example,
in spite of still having a stagger system, Ingersoll-Rand, which has cumulative
voting, won two awards. In FORTUNE magazine it was ranked second as "America's
Most Admired Corporations" and WALL STREET TRANSCRIPT noted "on almost any
criteria used to evaluate management, Ingersoll-Rand excels." We believe Culbro
should follow their example.
In urging cumulative voting from the floor of the Campbell Soup 1984
meeting, Sr. Margaret Dewey, representing the Adrian Dominican Sisters and the
Conference of Corporate Responsibility of Indiana, Michigan observed:
"I think it is important for shareholders to use their voting power in the
most effective way."
If you agree, please mark your proxy for this resolution; otherwise it is
automatically cast against it, unless you have marked to abstain.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
In the opinion of the Board of Directors and its Nominating Committee,
cumulative voting may well benefit a particular special interest by electing
directors with a specific bias, allegiance or loyalty. Directors should be
chosen based upon their capacity and commitment to represent the best interests
of the Corporation and of its shareholders as a whole. Contrary to the opinion
of the proponents of this proposal, cumulative voting does not protect everyone
but favors the minority over the majority.
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In recognition of this proposal's adverse potential to their interests, the
shareholders of the Corporation have continued to reject this proposal every
time it has been proposed.
A vote of the holders of a majority of the shares of Common Stock of the
Corporation represented (in person or by proxy) and voting at the meeting,
provided that at least a majority of such stock is represented at the meeting,
is required to adopt the proposed resolution. Your proxy in the enclosed form
will be voted as you specify or, if you do not specify a choice, it will be
voted AGAINST the proposal.
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A copy of the Corporation's Annual Report on Form 10-K is available without
charge to the Corporation's shareholders. A written request should be sent to:
Culbro Corporation
387 Park Avenue South
New York, New York 10016-8899
Attention: Corporate Secretary
Dated: March , 1994
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Culbro Corporation
CULBRO CORPORATION NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS,
THURSDAY,
APRIL 7, 1994
387 Park Avenue South AND PROXY STATEMENT
New York, N.Y. 10016-8899