<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or Section240.14a-12
</TABLE>
DEL LABORATORIES, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant As Specified In Charter)
DEL LABORATORIES, INC.
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing the Information Statement)
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rules 14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
N/A
---------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
N/A
---------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:(1)
N/A
---------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
N/A
---------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
/ / 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:
N/A
---------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
N/A
---------------------------------------------------------------------------------
3) Filing Party:
N/A
---------------------------------------------------------------------------------
4) Date Filed:
N/A
---------------------------------------------------------------------------------
<FN>
- - ------------------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
</TABLE>
<PAGE>
DEL LABORATORIES, INC.
565 BROAD HOLLOW ROAD
FARMINGDALE, NEW YORK 11735
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 25, 1995
------------------------
April 18, 1995
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of DEL
LABORATORIES, INC. (the "Corporation") will be held at Harrison House, Dosoris
Lane and Old Tappan Road, Glen Cove, New York, 11542 on Thursday, May 25, 1995,
at 9:30 A.M. (local time) for the following purposes:
1. To elect two members of the Board of Directors of the Corporation for a
term of three years.
2. To consider and vote upon a proposal to amend the Corporation's
Certificate of Incorporation to increase the total number of authorized shares
of Common Stock, par value $1.00 per share, from 5,000,000 to 10,000,000 (the
"Charter Amendment").
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed March 31, 1995 as the record date for the
determination of the stockholders entitled to notice of and to vote at such
meeting or any adjournment thereof, and only stockholders of record at the close
of business on that date are entitled to notice of and to vote at such meeting.
A copy of the Annual Report for the year 1994 is enclosed herewith.
By Order of the Board of Directors,
Robert H. Haines
SECRETARY
YOU ARE REQUESTED TO COMPLETE AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED
ENVELOPE WHICH REQUIRES NO ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES. IF
YOU ATTEND THE MEETING, YOUR PROXY WILL BE RETURNED TO YOU AT THE MEETING UPON
REQUEST TO THE SECRETARY OF THE MEETING. YOU ARE URGED TO RETURN THE PROXY
PROMPTLY. THIS WILL HELP SAVE THE EXPENSE OF FOLLOW-UP LETTERS TO STOCKHOLDERS
WHO HAVE NOT RESPONDED AND THE EXPENSE OF HOLDING AN ADJOURNED ANNUAL MEETING IN
THE EVENT A QUORUM IS NOT REPRESENTED ON MAY 25TH.
<PAGE>
DEL LABORATORIES, INC.
565 BROAD HOLLOW ROAD
FARMINGDALE, NEW YORK 11735
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 25, 1995
------------------------
This Proxy Statement and accompanying form of proxy are furnished in
connection with the solicitation of proxies by the Board of Directors of Del
Laboratories, Inc., a Delaware corporation (the "Corporation"), for use at the
Annual Meeting of Stockholders to be held on May 25, 1995 or any adjournment
thereof (the "Annual Meeting").
A proxy in the accompanying form, which is properly executed, duly returned
to the Board of Directors and not revoked, will be voted in accordance with the
instructions contained in the proxy. If no instructions are given with respect
to any matter specified in the Notice of Annual Meeting to be acted upon at the
Annual Meeting, the proxy will be voted in favor of such matter. Each
stockholder who has executed a proxy and returned it to the Board of Directors
may revoke the proxy by notice in writing to the Secretary of the Corporation,
or by attending the Annual Meeting in person and requesting the return of the
proxy, in either case at any time prior to the voting of the proxy. The cost of
the solicitation of proxies will be paid by the Corporation. In addition to the
solicitation of proxies by the use of the mails, regularly engaged employees of
the Corporation may, without additional compensation therefor, solicit proxies
by personal interviews, telephone and telegraph. The Corporation will, upon
request, reimburse brokers and others who are only record holders of the
Corporation's Common Stock, par value $1.00 per share (the "Common Stock"), for
their reasonable expenses in forwarding proxy material to beneficial owners of
such stock and obtaining voting instructions from such owners.
The Board of Directors has fixed the close of business on March 31, 1995 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting (the "Record Date"). As of the Record Date, there
were outstanding and entitled to vote 2,099,626 shares of Common Stock. Each
share of Common Stock entitles the holder thereof to one vote. One-third of all
shares of Common Stock issued and outstanding and entitled to vote constitutes a
quorum. Election of directors (Proposal No. 1) is by plurality vote, with the
two nominees receiving the highest vote totals to be elected as directors of the
Corporation. Accordingly, abstentions and broker non-votes will not affect the
outcome of the election. The affirmative vote of the holders of a majority of
the shares of Common Stock issued and outstanding is required for the approval
of the Charter Amendment (Proposal No. 2). Accordingly, abstentions and broker
non-votes on this proposal will have the same effect as a negative vote.
If a stockholder is a participant in the Corporation's Employee Stock
Ownership Plan (the "ESOP"), the participant will receive, with respect to the
number of shares held for his or her account under the ESOP on the Record Date,
a separate card which will serve as a voting instruction to the Trustee of the
Employee Stock Ownership Trust, a trust that holds the shares acquired for the
ESOP, with respect to shares held for the participant's account. Unless the card
is signed and returned, shares held in the participant's account under the ESOP
will be voted in the same proportion as the shares for which signed cards are
returned by other participants.
This Proxy Statement and the proxy in the accompanying form are being sent
on or about April 18, 1995 to stockholders of record on the Record Date.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
5% STOCKHOLDERS
The following table sets forth information as to each person who, to the
knowledge of the Board of Directors, as of the Record Date, was the beneficial
owner of more than 5% of the issued and outstanding Common Stock:
<TABLE>
<CAPTION>
COMMON STOCK OWNED AS OF
MARCH 31, 1995
-----------------------------
AMOUNT AND
NAME AND ADDRESS OF NATURE OF
BENEFICIAL OWNER OR BENEFICIAL PERCENT
IDENTITY OF GROUP OWNERSHIP (1) OF CLASS
- - ------------------------------------------------------------------------- ------------- --------------
<S> <C> <C>
Dan K. Wassong
Del Laboratories, Inc.
565 Broad Hollow Road
Farmingdale, New York (2)............................................... 872,701(3) 35.0%(4)
Martin E. Revson
445 Park Avenue
New York, New York (2).................................................. 365,253 17.4%
Dimensional Fund Advisors Inc.
1299 Ocean Avenue Suite 650
Santa Monica, California................................................ 132,132(5) 6.3%
<FN>
- - ------------------------
(1) Except as noted below, each beneficial owner has sole voting power and sole
investment power.
(2) Mr. Wassong and Mr. Revson each has granted the other a right of first
refusal to purchase certain of his shares in the event one of them wishes
to dispose of such shares or upon his death, notwithstanding which each has
the right to dispose of a limited number of shares in any period of 12
consecutive months.
(3) Includes 458,170 shares owned individually by Mr. Wassong, 395,032 shares
issuable upon exercise of options held by Mr. Wassong and 19,499 shares
held for his account under the ESOP (as of December 31, 1994).
(4) Based on 2,099,626 shares outstanding on March 31, 1995 plus, with respect
to Mr. Wassong, the number of shares he may acquire pursuant to the
exercise of options (see footnote (3) above).
(5) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
adviser, is deemed to have beneficial ownership of 132,132 shares of Common
Stock, all of which 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 in
series of the DFA Investment Trust Company, a Delaware business trust, or
the DFA Group Trust and the DFA Participation Group Trust, investment
vehicles for qualified employee benefit plans. Dimensional serves as
investment manager for each of the foregoing. Dimensional disclaims
beneficial ownership of all such shares. The information provided herein is
based on a report on Schedule 13G dated January 30, 1995 prepared and filed
by Dimensional with respect to its ownership of Common Stock as of December
31, 1994.
</TABLE>
2
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information, as of the Record Date,
regarding the beneficial ownership of Common Stock by (i) each director of the
Corporation (other than Mr. Wassong and Mr. Revson, information with respect to
each of whom is presented above), (ii) each of the four most highly-compensated
executive officers of the Corporation during 1994 other than Mr. Wassong and
(iii) all directors and executive officers as a group:
<TABLE>
<CAPTION>
COMMON STOCK OWNED AS OF
MARCH 31, 1995
-----------------------------
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
OWNERSHIP (1) OF CLASS
--------------- ------------
<S> <C> <C>
Directors
Robert A. Kavesh........................................................... 7,630 0.4%
Steven Kotler.............................................................. 26,915(2) 1.3%
Robert H. Haines........................................................... 8,370(3) 0.4%
Marcella Maxwell........................................................... -- --
Executive Officers
Charles J. Hinkaty......................................................... 110,641 (4) 5.1 %
Harvey P. Alstodt.......................................................... 44,763 (5) 2.1 %
William McMenemy........................................................... 83,255 (6) 3.8 %
Melvyn C. Goldstein........................................................ 79,401 (7) 3.7 %
All Directors and Executive
Officers as a Group (11 persons)............................................ 1,604,929 (8) 58.5 %
<FN>
- - ------------------------
(1) Except as noted below, each beneficial owner has sole voting power and sole
investment power.
(2) Includes 472 shares of Common Stock owned by Mr. Kotler's wife and 1,777
shares owned by a pension trust for the benefit of Mr. Kotler.
(3) Includes 5,240 shares of Common Stock owned by Mr. Haines' wife.
(4) Includes 89,517 shares which Mr. Hinkaty may acquire through exercise of
options currently outstanding and 1,731 shares held for Mr. Hinkaty's
account under the ESOP as of December 31, 1994. Mr. Hinkaty is also a
director of the Corporation.
(5) Includes 38,000 shares which Mr. Alstodt may acquire through exercise of
options currently outstanding and 1,430 shares held for Mr. Alstodt's
account under the ESOP as of December 31, 1994.
(6) Includes 74,879 shares which Mr. McMenemy may acquire through exercise of
options currently outstanding and 4,984 shares held for Mr. McMenemy's
account under the ESOP as of December 31, 1994.
(7) Includes 41,099 shares which Mr. Goldstein may acquire through exercise of
options currently outstanding and 2,292 shares held for Mr. Goldstein's
account under the ESOP as of December 31, 1994.
(8) Includes (i) 644,527 shares which such persons have rights to acquire
through the exercise of options currently outstanding, (ii) 29,936 shares
held for the accounts of all executive officers and directors under the
ESOP as of December 31, 1994, (iii) 5,240 shares owned by the wife of
Robert H. Haines, (iv) 472 shares owned by the wife of Steven Kotler and
(v) 1,777 shares held by a pension trust for the benefit of Mr. Kotler.
</TABLE>
3
<PAGE>
Each director and executive officer of the Corporation and persons owning
more than 10% of the Corporation's equity securities are required by Section
16(a) of the Securities Exchange Act of 1934, as amended, to report to the
Securities and Exchange Commission, by a specified date, his or her beneficial
ownership of, or transactions in, the Corporation's equity securities. To the
Corporation's knowledge (based solely on a review of the copies of such reports
furnished to the Corporation and written representations that no other reports
were required during 1994), all of the Corporation's directors, executive
officers and owners of greater than 10% of the Corporation's equity securities
made all required filings.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Certificate of Incorporation currently provides for the Board of
Directors to be divided into two classes of two directors each (Class I and
Class II) and one class of three directors (Class III). The directors in Class I
are to serve until the Annual Meeting of Stockholders for 1997. The directors in
Class II are to serve until the Annual Meeting of Stockholders for 1995. The
directors in Class III are to serve until the Annual Meeting of Stockholders for
1996.
Two directors for Class II are to be elected at the Annual Meeting and, when
elected, will serve until the Annual Meeting of Stockholders for 1998 and until
the election and qualification of their successors.
It is the intention of the Board of Directors to nominate at the Annual
Meeting the individuals whose names are set forth in Class II below for election
to the Board of Directors for a three year term. In the event that either of
such nominees for election at the Annual Meeting should become unavailable for
election for any reason, at present unknown, it is intended that votes will be
cast pursuant to the accompanying proxy for such substitute nominee as the Board
of Directors may designate. The proxies in the accompanying form, duly returned
to the Board of Directors, can only be voted for two directors to be elected at
the Annual Meeting.
INFORMATION CONCERNING DIRECTORS
The information set forth below, furnished to the Board of Directors by the
respective individuals, shows as to each nominee and each director of the
Corporation (i) his or her name and age; (ii) his or her principal occupation,
including positions or offices held with the Corporation, at present and for the
past five years; (iii) the year in which he or she began to serve as a director;
and (iv) the class of director to which he or she belongs.
CLASS II
(NOMINEES TO SERVE UNTIL THE ANNUAL MEETING OF
STOCKHOLDERS FOR 1998)
TWO DIRECTORS ARE TO BE ELECTED TO THIS CLASS
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION OR EMPLOYMENT (1) SINCE
- - ---------------------------- -------------------------------------------------------------------------- -----------
<S> <C> <C>
Charles J. Hinkaty (45) Vice President and President of Del Pharmaceuticals, Inc. 1986
Robert H. Haines (75) Partner, Zimet, Haines, Friedman & Kaplan, attorneys at law; Secretary of 1970
the Corporation since October 1989 (2)
</TABLE>
4
<PAGE>
CLASS I
(TO SERVE UNTIL THE ANNUAL MEETING
OF STOCKHOLDERS FOR 1997)
NO DIRECTORS ARE TO BE ELECTED TO THIS CLASS
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION OR EMPLOYMENT (1) SINCE
- - ---------------------------- -------------------------------------------------------------------------- -----------
<S> <C> <C>
Martin E. Revson (84) Private investor since August 1992; Chairman of the Board of the 1963
Corporation from July 1963 to August 1992
Dan K. Wassong (64) President and Chief Executive Officer; Chairman of the Board since August 1968
1992
</TABLE>
CLASS III
(TO SERVE UNTIL THE ANNUAL MEETING
OF STOCKHOLDERS FOR 1996)
NO DIRECTORS ARE TO BE ELECTED TO THIS CLASS
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION OR EMPLOYMENT (1) SINCE
- - ---------------------------- -------------------------------------------------------------------------- -----------
<S> <C> <C>
Robert A. Kavesh (67) Marcus Nadler Professor of Finance and Economics, Graduate School of 1976
Business, New York University
Steven Kotler (48) President, Wertheim Schroder & Co., Incorporated, an investment banking 1987
firm (3)
Marcella Maxwell (57) Director of Public Affairs, Miracle Makers, since February 1995; Director 1994
of Special Projects, Community Affairs, Brooklyn Health Center, from July
1994 to February, 1995; Vice President, Community Affairs, New York City
Health and Hospital Corporation, from May 1992 to April 1994; Director of
Education, New York City Housing Authority, from August 1990 to April
1992; and Director of Corporate and Foundation Relations, NAACP Special
Contribution Fund, from April 1988 to August 1990
<FN>
- - ------------------------
(1) Executive officers of the Corporation, unless otherwise indicated.
(2) The Corporation during the past fiscal year has retained, and proposes in
the future to retain, Zimet, Haines, Friedman & Kaplan as its general
counsel.
(3) The Corporation during the past fiscal year has retained, and proposes in
the future to retain, Wertheim Schroder & Co., Incorporated and certain of
its affiliates to perform general financial advisory services.
</TABLE>
Mr. Wassong is also a director of Southern Union Company and Moore Medical
Corp. Mr. Kavesh is also a director of Neuberger & Berman Income Funds, Inc. and
Greater New York Insurance Group. Mr. Kotler is also a director of Moore Medical
Corp. and Oak Hill Sportswear Corporation.
In June 1992, Martin E. Revson, a director of the Corporation, was named in
a complaint brought by the Securities and Exchange Commission ("SEC") against
Edward R. Downe and certain other persons (SECURITIES AND EXCHANGE COMMISSION V.
DOWNE, ET AL., 92 CIV 4092 (PKL)), which complaint alleged violations of certain
federal securities laws in connection with trading activities of the defendants.
In October 1993, Mr. Revson consented to entry of a Final Judgment of Permanent
Injunction and Other Equitable Relief ("Final Judgment"), without admitting or
denying the relevant allegations of the complaint. Under the terms of the Final
Judgment, Mr. Revson is permanently enjoined from engaging in actions which
would constitute violations of Section 10(b) of the Securities Exchange
5
<PAGE>
Act of 1934, as amended (the "Exchange Act"), and Rule 10b-5 promulgated
thereunder in connection with the purchase and sale of securities, or which
would constitute violations of Section 14(e) of the Exchange Act and Rule 14e-3
promulgated thereunder in connection with trading in securities which are the
subject of any tender offers or related activities. Mr. Revson paid the profits
and a penalty resulting from trades in securities of one company.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors of the Corporation held seven meetings during 1994.
The Board of Directors currently has three committees, an Audit Committee, a
Compensation Committee and a Human Resources Committee. The Corporation has no
standing nominating committee or any committee performing similar functions. The
Board of Directors determines nominees for election to the Board.
The Audit Committee, which is comprised of Messrs. Haines, Kavesh and
Kotler, recommends to the Board of Directors the engaging of the independent
auditors, reviews with the independent auditors the plan and results of the
auditing engagement, reviews the independence of auditors and considers the
range of audit and non-audit fees. It held one meeting in 1994.
The Compensation Committee establishes the compensation of the Chief
Executive Officer and reviews with management on a periodic basis existing and
proposed compensation plans, programs and arrangements for executive officers
and other employees. The Compensation Committee is currently comprised of
Messrs. Haines, Kavesh and Kotler. During 1994, it met twice and acted four
times by unanimous consent.
The Human Resources Committee, which was established on March 30, 1995 by
the Board of Directors, is comprised of Ms. Maxwell and Mr. Kotler. The Human
Resources Committee is intended to review all aspects of employee benefits,
employment practices and other matters involving the welfare of employees or
prospective employees of the Corporation (other than negotiation of collective
bargaining agreements and individual employment contracts).
During 1994, no director attended fewer than 75% of the aggregate of the
total number of meetings of the Board of Directors or the total number of
meetings of the committees on which any individual director served.
DIRECTORS' FEES
Mr. Kavesh and Mr. Kotler each received the amount of $20,000 for services
rendered by them in 1994 as directors of the Corporation. Richard J. Soghoian,
who served as a director of the Corporation from December 16, 1993 to December
9, 1994, received a fee of $20,000 for serving as a director during 1994. No
other director received any fees for serving as such in 1994.
RECOMMENDATION OF BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR election of directors in Class
II of the nominees identified above. Those nominees who receive the highest and
second highest numbers of votes for their election as directors will be elected.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to the compensation
in 1994, 1993 and 1992 of the Corporation's Chief Executive Officer and each of
the four other most highly compensated executive officers in 1994 (collectively,
the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
--------------------
ANNUAL COMPENSATION SECURITIES
----------------------------------- UNDERLYING OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (1) COMPENSATION (2)
- - -------------------------------------- --------- ----------- ----------- -------------------- ----------------
<S> <C> <C> <C> <C> <C>
Dan K. Wassong 1994 $ 636,828 $ 500,000 14,000 $ 443,437
Chairman, President 1993 612,335 400,000 62,442(3) 403,357
and Chief Executive Officer 1992 587,335 360,000 -- 361,327
Charles J. Hinkaty 1994 $ 293,046 $ 86,000 10,624 $ 12,693
Vice President and President of 1993 283,657 70,000 -- 12,653
Del Pharmaceuticals, Inc. 1992 277,276 45,000 -- 11,775
Harvey P. Alstodt 1994 $ 235,000 $ 115,000 3,000 $ 14,305
Executive Vice President, 1993 210,000 85,000 -- 21,945
Sales -- Cosmetics Division, North 1992 200,000 65,000 -- 23,250
America
William McMenemy 1994 $ 225,000 $ 115,000 5,124 $ 13,740
Executive Vice President, 1993 201,333 85,000 -- 13,352
Marketing -- Cosmetics Division, 1992 199,000 65,000 -- 13,050
North America
Melvyn C. Goldstein 1994 $ 209,333 $ 85,000 3,000 $ 14,157
Vice President -- Finance 1993 201,500 70,000 -- 13,605
1992 195,667 60,000 -- 13,050
<FN>
- - ------------------------
(1) Stock options granted prior to June 29, 1994 have been adjusted to reflect
a four-for-three stock split paid on that date.
(2) Includes for each Named Executive Officer (i) the dollar amount of all
contributions made by the Corporation and all shares allocated to the
account of such officer in each year under the ESOP (in 1994 the amounts
contributed and allocated, calculated based on the closing price of the
Common Stock on December 31, 1994, were as follows: Mr. Wassong -- $2,963,
Mr. Hinkaty -- $2,963, Mr. Alstodt -- $2,963, Mr. McMenemy -- $2,963 and
Mr. Goldstein -- $2,963); (ii) the insurance premiums paid in each year in
respect of such officer under the Corporation's Executive Medical
Reimbursement Plan (in 1994, the amounts paid were as follows: Mr. Wassong
-- $7,714, Mr. Hinkaty -- $7,714, Mr. Alstodt -- $7,714, Mr. McMenemy --
$7,714 and Mr. Goldstein -- $7,714); and (iii) the dollar value (calculated
in accordance with SEC guidelines) of the premiums paid by the Corporation
with respect to "split dollar" life insurance policies maintained by the
Corporation for each of such officers (in 1994, the amounts were as
follows: Mr. Wassong -- $130,052, Mr. Hinkaty -- $2,016, Mr. Alstodt --
$3,628, Mr. McMenemy -- $3,063, and Mr. Goldstein -- $3,480). Also includes
for Mr. Wassong indebtedness owed by him to the Corporation which was
forgiven in each year ($302,708 in 1994). See "Certain Benefit Plans,"
"Description of Employment Agreements" and "Certain Transactions" below.
(3) This option was granted following surrender by Mr. Wassong of an equal
number of shares in payment for his exercise of options in 1993 and
satisfaction of payroll withholding tax resulting from such exercise.
</TABLE>
7
<PAGE>
ANNUAL INCENTIVE PLAN
Effective January 1, 1994, the Corporation adopted the Annual Incentive Plan
(the "Incentive Plan"). The Incentive Plan is intended to assist the Corporation
and its subsidiaries in attracting, retaining, motivating and rewarding
employees who occupy key positions and contribute significantly to the growth
and profitability of the Corporation. The Incentive Plan has been designed to
allow the continued tax deductibility of annual incentive awards under Section
162(m) of the Internal Revenue Code of 1986 as amended (the "Code"). That
section of the Code generally limits to $1 million the Corporation's tax
deduction for compensation paid in a year to its chief executive officer and its
four other highest paid executive officers unless such compensation is paid
under a qualified "performance-based" plan. Payments made under the Incentive
Plan are intended to constitute qualified performance-based compensation within
the meaning of Section 162(m) of the Code and, therefore, to be exempt from the
limitations on deductibility under Section 162(m).
The Incentive Plan provides for the payment of awards in cash to
participants based on performance during a performance period. The Incentive
Plan is administered by the Compensation Committee of the Board of Directors
(the "Committee"). The Committee may, with respect to participants other than
persons who are Covered Employees (as defined below), delegate its
responsibilities under the Incentive Plan to the Chief Executive Officer of the
Corporation or such other directors or officers as it may select (the Committee
and, if applicable, any person or persons designated by the Committee to perform
its responsibilities under the Incentive Plan are herein sometimes referred to
collectively as the "Administrator"). The Committee has delegated to the Chief
Executive Officer its responsibilities under the Incentive Plan with respect to
all participants who are not Covered Employees. A "Covered Employee" is an
executive officer of the Corporation deemed by the Committee as reasonably
likely, for a particular fiscal year, to be a "named executive officer" in the
Summary Compensation Table which is included in the Corporation's proxy
statement reporting the compensation of such person for such year, and whose
compensation in excess of $1 million paid in respect of such year would not be
deductible under Section 162(m) of the Code but for the provisions of the
Incentive Plan and other "performance-based" compensation plans maintained by
the Corporation.
Persons eligible to participate in the Incentive Plan are all full-time,
exempt salaried employees of the Corporation and any of its subsidiaries, with
actual participants for any performance period to be selected by the
Administrator. The length of the performance period shall be the fiscal year,
unless otherwise specified by the Administrator. The Administrator determines
the other terms and conditions of awards under the Incentive Plan, including
amounts or percents of salary payable to participants, the performance
objectives which may (but, except with respect to a Covered Employee, need not)
be employed in determining whether an award has been earned, and what portion of
the award has been earned. Furthermore, the Administrator may, in its
discretion, elect to pay to any participant in installments for a period of up
to five years any award that is earned. With respect to all participants other
than Covered Employees, the performance objectives (if used as criteria for
determining an award) may consist of any one or more measures of performance of
the Corporation as a whole, subsidiaries or other operating divisions or
business units within the Corporation, measures of individual performance of the
participant, or such other objectives (or combination of objectives) the
achievement of which is expected to benefit the Corporation and its
stockholders, all as determined at the discretion of the Administrator. In
addition, except with respect to Covered Employees, the Administrator may, in
its sole discretion, increase, decrease or reduce to zero the amount of any
award paid to a participant, notwithstanding the achievement of any applicable
performance objectives by such participant.
With respect to Covered Employees, the Incentive Plan provides that the
Committee, on or before the 90th day of any performance period, shall specify
awards that may be earned by such Covered Employees based on one or more of the
following business criteria: (1) pre-tax income from continuing operations
(calculated before payment of awards under the Incentive Plan), (2) net income
from continuing operations, (3) net sales, (4) earnings per share of Common
Stock or (5) return on common equity. The Committee shall establish, with
respect to each of the criterion chosen as a performance
8
<PAGE>
objective for the performance period, a targeted level of performance with
respect to such criterion, a range of performance which may extend above or
below such targeted level of performance, and amounts to be paid upon
achievement of such targeted level of performance or specified levels within the
range of performance. The maximum amount payable to a Covered Employee as an
award in respect of any one performance period shall be 180% of that person's
annual base salary for the year ended December 31, 1993 as disclosed in the
Proxy Statement dated April 25, 1994 relating to the 1994 Annual Meeting of
Stockholders (the "1994 Proxy Statement") or, if that Covered Employee's base
salary was not disclosed in the 1994 Proxy Statement, the maximum amount payable
to such Covered Employee shall be 180% of the base salary disclosed in the 1994
Proxy Statement for the person serving in the position then occupied by the
Covered Employee or, if no person occupied such position, 180% of the average of
the base salaries paid to the Named Executive Officers, other than the Chief
Executive Officer, as reflected in the Summary Compensation Table set forth in
the 1994 Proxy Statement. The Committee must certify in writing, as promptly as
practicable following the end of each performance period, whether and the extent
to which an award has been earned by any Covered Employee under the Incentive
Plan, including the extent to which performance objectives have been achieved
and the amounts or percents of salary payable to each participant.
The Committee shall have no discretion to increase the amounts paid under
the Incentive Plan to any Covered Employee based upon the achievement of
performance objectives, although the Committee may, in its discretion, reduce or
eliminate any amount payable to a Covered Employee with respect to an award. The
Committee may not employ as performance objectives for the determination of
awards to Covered Employees any criteria other than those expressly set forth in
(1) through (5) above, unless such change is approved by the stockholders of the
Corporation.
The Board of Directors may amend, modify, suspend or terminate the Incentive
Plan at any time, subject to obtaining any stockholder approval which may be
required by any applicable law or regulation or by the rules of any stock
exchange or automated quotation system on which the Common Stock may then be
listed or quoted or necessary to meet the requirements of Section 162(m) of the
Code.
In the event of a Change in Control of the Corporation (as defined), any
Covered Employee participating in the Incentive Plan will be entitled to receive
in cash, within five days after the effective date of the Change in Control, (1)
any portion of an award relating to the most recently completed performance
period which ended prior to the date of the Change in Control which was not
paid, whether or not such non-payment resulted from a failure to achieve fully
the performance objectives for such periods and (2) a pro rata portion of the
award that would have been paid for the year in which the Change in Control
occurred as if all performance objectives were fully met. Any such payment will
be made notwithstanding its eligibility for deduction pursuant to Section 162(m)
of the Code.
For 1994, the only persons selected to participate in the Incentive Plan
were five of the Corporation's executive officers, and the only Covered Employee
under the Incentive Plan in 1994 was Dan K. Wassong, Chairman of the Board,
President and Chief Executive Officer of the Corporation. The amounts set forth
in the Summary Compensation Table in this Proxy Statement under the column
heading "Bonus" reflect the amounts awarded to each of the Named Executive
Officers under the Incentive Plan for 1994. The Committee has determined that
the only Covered Employee in 1995 will be Mr. Wassong.
STOCK OPTIONS
The Corporation currently has three plans under which stock options are
currently outstanding, the 1994 Stock Plan (the "1994 Plan"), the 1984 Stock
Option Plan (the "1984 Plan") and the Restricted Stock Plan (1971) (the "1971
Plan"). Each of the plans is currently administered by the Committee. As of
March 31, 1995, options to purchase a total of 94,395 shares of Common Stock
were outstanding under the 1994 Plan, options to purchase a total of 561,481
shares were outstanding under the 1984 Plan and options to purchase a total of
52,541 shares were outstanding under the 1971
9
<PAGE>
Plan. As of that date, a total of 112,315 shares remained available for
additional grants under the 1994 Plan. No further options may be granted under
the 1971 Plan or the 1984 Plan; however, under the terms of the 1994 Plan,
shares subject to stock options granted under the 1984 Plan and the 1971 Plan,
if, as and when they expire, terminate or are surrendered unexercised, will
become available for awards under the 1994 Plan. In addition, if in connection
with any award under the 1994 Plan, the 1984 Plan or the 1971 Plan, shares of
Common Stock are tendered to the Corporation in payment of any exercise or
purchase price or in payment of taxes relating to any such award, an equal
number of shares shall be available for further awards under the 1994 Plan.
As of March 31, 1995, the market value of the shares of Common Stock
reserved for issuance upon exercise of options outstanding under the 1994 Plan,
1984 Plan and 1971 Plan was $31,170,348. Taking into account the aggregate
exercise price of such options of $13,652,511, the shares subject to such
options have a net value of $17,517,837. The closing sales price of the Common
Stock on the American Stock Exchange on March 31, 1995 was $43.00 per share.
DESCRIPTION OF 1994 PLAN
The 1994 Plan authorizes the grant to executives and other key employees of
the Corporation and its subsidiaries of stock options, restricted stock,
deferred stock, bonus shares, performance awards or any combination thereof.
During any calendar year, no person may be granted under the 1994 Plan awards
aggregating more than 100,000 shares of Common Stock (which number has been
adjusted to reflect a four-for-three stock split paid on June 29, 1994 and will
be subject to further adjustment to prevent dilution in the event of subsequent
stock splits, stock dividends or other changes in the capitalization of the
Corporation). Unless terminated earlier by action of the Board of Directors, no
awards may be granted under the 1994 Plan after March 31, 2004. As of the date
hereof, the only awards granted under the 1994 Plan have been stock options.
Options granted under the 1994 Plan may be "incentive stock options"
("Incentive Options") within the meaning of Section 422 of the Code or stock
options which are not incentive stock options ("Non-Incentive Options" and,
collectively with Incentive Options, hereinafter referred to as "Options"). The
Committee determines the persons to whom Options will be granted, the number of
shares subject to each Option granted, the prices at which Options may be
exercised (which shall not be less than the fair market value of shares of
Common Stock on the date of grant), whether an Option will be an Incentive
Option or a Non-Incentive Option, the time or times and the extent to which
Options may be exercised and all other terms and conditions of Options.
The exercise price of the shares to be purchased pursuant to each Option
shall be paid (i) in full in cash, (ii) by delivery (i.e., surrender) of shares
of Common Stock owned by the optionee at the time of the exercise of the Option,
(iii) in installments, payable in cash, if permitted by the Committee or (iv)
any combination of the foregoing. The stock-for-stock payment method permits an
optionee to deliver one or more shares of previously owned Common Stock of the
Corporation in satisfaction of the exercise price of subsequent Options. The
optionee may use the shares obtained on each exercise to purchase a larger
number of shares on the next exercise. (The foregoing assumes an appreciation in
value of previously acquired shares). The result of the stock-for-stock payment
method is that the optionee can generally avoid immediate tax liability with
respect to any appreciation in the value of the stock utilized to exercise the
Option.
Optionees who desire to sell shares received upon exercise of an Incentive
Option must first offer such shares to the Corporation at the fair market value,
and the Corporation has seven business days after receipt of such offer to
purchase all or a portion of such shares. If the Corporation does not accept the
offer in full, the optionee has 30 days in which to sell all of the shares
offered to and not acquired by the Corporation. Upon the expiration of such
30-day period, the optionee must again offer the shares to the Corporation in
the aforesaid manner prior to any subsequent resale.
Shares received by an optionee upon exercise of a Non-Incentive Option may
not be sold or otherwise disposed of for a period determined by the Committee
upon grant of the Option, which
10
<PAGE>
period shall be not less than six months nor more than three years from the date
of acquisition of the shares (the "Restricted Period"), except that, during the
Restricted Period (i) the optionee may offer the shares to the Corporation and
the Corporation may, in its discretion, purchase up to all the shares offered at
the exercise price and (ii) if the optionee's employment terminates during the
Restricted Period (except in limited instances), the optionee, upon written
request of the Corporation, must offer to sell the shares to the Corporation at
the exercise price within seven business days. The Restricted Period shall
terminate in the event of a Change in Control of the Corporation (as defined),
or at the discretion of the Committee. After the Restricted Period, an optionee
wishing to sell must first offer such shares to the Corporation at the fair
market value.
The Committee is authorized, in connection with any Option granted under the
1994 Plan, to grant the holder of such Option a limited stock appreciation right
("LSAR"), entitling the holder to receive, within 60 days following a Change in
Control (as defined), an amount in cash equal to the difference between the
exercise price of the Option and the fair market value of the Common Stock on
the effective date of the Change in Control. The LSAR may be granted in tandem
with an Option or subsequent to grant of the Option. The LSAR will only be
exercisable to the extent the related Option is exercisable and will terminate
if and when the Option is exercised.
The 1994 Plan also authorizes awards of restricted stock and deferred stock.
Restricted stock is subject to restrictions on transferability and other
restrictions as may be imposed by the Committee at the time of grant. In the
event the holder of restricted stock ceases to be employed by the Corporation
during the applicable restrictive period, restricted stock that is at the time
subject to restrictions shall be forfeited and reacquired by the Corporation.
Except as otherwise provided by the Committee at the time of grant, a holder of
restricted stock shall have all the rights of a stockholder including, without
limitation, the right to vote restricted stock and the right to receive
dividends thereon. An award of deferred stock is an award that provides for the
issuance of stock upon expiration of a deferral period established by the
Committee. Except as otherwise determined by the Committee, upon termination of
employment of the recipient of the award during the applicable deferral period,
all stock that is at the time subject to deferral shall be forfeited. Until such
time as the stock which is the subject of the award is issued, the recipient of
the award has no rights as a stockholder.
The Plan also authorizes the Committee to grant (i) dividend equivalent
rights that give the recipient the right to receive cash or other property equal
in value to the dividends that would be paid if the recipient held a specified
number of shares of Common Stock, (ii) shares as a bonus and (iii) shares or
other awards in lieu of obligations of the Corporation to pay cash under other
plans or compensatory arrangements, in each case upon such terms as shall be
determined by the Committee.
The 1994 Plan also permits the Committee to specify that the exercisability
or settlement of awards (other than an Option granted with an exercise price
equal to 100% of the fair market value of a share of Common Stock at the time of
grant) may be conditioned upon the achievement of certain specified performance
goals, if the award is granted to an executive officer of the Corporation whose
compensation, at the time of grant, is subject to the limit on deductible
compensation under Section 162(m) of the Code.
Upon a Change in Control of the Corporation, any award carrying a right to
exercise that was not previously exercisable shall become fully exercisable, the
restrictions, deferral limitations and forfeiture conditions applicable to any
other award granted shall lapse and any performance conditions imposed with
respect to awards shall be deemed to be fully achieved (except in certain
circumstances involving performance goals for any Covered Employee (as defined
in the Incentive Plan), in which case the performance goal shall be deemed
achieved to the extent of actual achievement on the date of the Change in
Control).
DESCRIPTION OF 1984 PLAN
The 1984 Plan authorizes the grant of stock options to executives and key
employees. Options issued under the 1984 Plan may be either "incentive stock
options" within the meaning of Section 422
11
<PAGE>
of the Code or non-incentive stock options. The 1984 Plan provides that the
exercise price of options granted thereunder may not be less than the fair
market value of a share of Common Stock at the time of grant. The exercise price
may be paid in cash, Common Stock, in installments in cash (if permitted by the
Committee) or any combination thereof.
Shares received by an optionee upon exercise of options granted under the
1984 Plan are subject to restrictions on disposition similar to those imposed on
shares subject to options under the 1994 Plan. Except as otherwise provided in
the 1984 Plan and unless otherwise specified by the Committee at the time it
granted an option, options granted under the 1984 Plan terminate at the close of
business on the tenth anniversary of the date of grant of the option (except
that a non-incentive stock option terminates at the close of business on the
first day following the tenth anniversary of the date of grant) and are
exercisable by the holder thereof at such time or times as are designated by the
Committee at the time the option was granted. Except in limited instances, if
the optionee's employment with the Corporation terminates, the options terminate
three months thereafter.
The 1984 Plan authorizes the Committee to grant limited stock appreciation
rights on terms similar to those in the 1994 Plan. Under the 1984 Plan, the
Committee may, in its sole discretion, also grant an optionee the right (a
"general stock appreciation right") to receive, in lieu of exercising an option,
an amount in cash equal to the amount by which the market value of the number of
shares as to which the stock appreciation right is exercised exceeds the
aggregate exercise price of the shares. This general stock appreciation right
may be exercised during any period beginning three days after the Corporation
releases for publication its regular quarterly or annual summary statement of
sales and earnings and ending 12 days after such release. No general stock
appreciation rights have been granted under the 1984 Plan.
DESCRIPTION OF 1971 PLAN
Options issued under the 1971 Plan are not intended to be "incentive stock
options" within the meaning of the Code. The exercise price of options granted
under the 1971 Plan may not be less than the fair market value of a share of
Common Stock at the time the option was granted.
Shares received by an optionee upon exercise of options are subject to the
same limitations imposed with respect to the disposition of shares issued upon
exercise of non-incentive options granted under the 1984 Plan. Options granted
under the 1971 Plan are eligible for limited and general stock appreciation
rights on substantially the same terms as provided in the 1984 Plan; no such
rights have been granted under the 1971 Plan.
Except as otherwise provided in the 1971 Plan and unless otherwise specified
by the Committee at the time it granted an option, an option terminates at the
close of business on the tenth anniversary of the date of grant of the option
and is exercisable by the holder thereof at such time or times as designated by
the Committee at the time the option was granted. Except in limited instances,
if the optionee's employment with the Corporation terminates, the options
terminate forthwith at the election of the Corporation.
12
<PAGE>
STOCK OPTION GRANTS DURING 1994
The following table sets forth for each of the Named Executive Officers
information regarding individual grants of options during the year ended
December 31, 1994 and the present value of these options on their grant date.
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANTED GRANT DATE
UNDERLYING TO EMPLOYEES IN EXERCISE OR EXPIRATION PRESENT
NAME OPTIONS GRANTED FISCAL YEAR BASE PRICE DATE VALUE (1)
- - --------------------------- --------------- ------------------- ----------- ----------------------- -----------
<S> <C> <C> <C> <C> <C>
Dan K. Wassong............. 14,000 29.1% $ 26.25 September 29, 2004 $ 141,488
Charles J. Hinkaty......... 7,624 15.9% $ 25.25 July 1, 2001 $ 60,062
3,000 6.2% $ 26.25 September 29, 2004 $ 30,319
Harvey Alstodt............. 3,000 6.2% $ 26.25 September 29, 2004 $ 30,319
William McMenemy........... 2,124 4.4% $ 26.25 September 29, 2001 $ 17,563
3,000 6.2% $ 26.25 September 29, 2004 $ 30,319
Melvyn C. Goldstein........ 3,000 6.2% $ 26.25 September 29, 2004 $ 30,319
<FN>
- - ------------------------
(1) These amounts were determined using the Black-Scholes option valuation
model. The assumptions underlying the Black-Scholes value include (a) an
expected volatility of .2405 with respect to the options granted on
September 29, 1994 and .2521 with respect to the options granted on July 1,
1994, both based on the average of the one, three and five year historical
volatility of the Common Stock, (b) a risk-free rate of 7.62%, which
approximates the ten year Treasury bond rate on the date of grant, with
respect to the options which expire in 2004, and a risk-free rate of 7.18%,
which approximates the seven year Treasury bond rate on the date of grant,
with respect to the options which expire in 2001, (c) a projected dividend
yield of .99% with respect to options granted on September 29, 1994 and
1.03% with respect to options granted on July 1, 1994, both based on an
annual dividend of $.26 per share (i.e., the annual dividend rate in effect
on the dates of grant) and assuming a $26.25 price of a share of Common
Stock with respect to grants made on September 29, 1994 and $25.25 with
respect to grants made on July 1, 1994, (d) a seven or ten year option term
(as applicable) with exercise at the end of the term and (e) the vesting
schedule for the options (one-third vesting six months after the date of
grant, one-third vesting 12 months after the date of grant and one-third
vesting 18 months after the date of grant), with an annualized discount
rate of 5.0%.
</TABLE>
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of stock options during 1994 and
unexercised stock options held as of December 31, 1994.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-
UNEXERCISED OPTIONS AT THE-MONEY OPTIONS AT
DEC. 31, 1994 DEC. 31, 1994 (2)
SHARES ACQUIRED VALUE ----------------------- ------------------------
NAME ON EXERCISE REALIZED (1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- - -------------------------------- --------------- ----------- ----------------------- ------------------------
<S> <C> <C> <C> <C>
Dan K. Wassong.................. -- -- 346,220/34,812 $ 7,115,168/$468,782
Charles J. Hinkaty.............. 17,777 $ 256,378 73,281/10,624 $ 1,464,307/$124,488
Harvey Alstodt.................. -- -- 32,000/3,000 $ 672,501/$33,000
William McMenemy................ 3,392 $ 38,825 66,755/5,124 $ 1,403,113/$56,364
Melvyn C. Goldstein............. 36,010 $ 528,546 35,099/3,000 $ 674,880/$33,000
<FN>
- - ------------------------
(1) The value realized is determined by multiplying the number of shares
acquired by the closing market price of the Common Stock on the date of
exercise, less the aggregate exercise price for said options.
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
(2) Based upon the closing price of the Common Stock on December 31, 1994 on
the American Stock Exchange ($37.25 per share), less the exercise price for
the aggregate number of shares subject to the options.
</TABLE>
CERTAIN BENEFIT PLANS
EMPLOYEE 401(K) SAVINGS PLAN
The Corporation's Employee 401(k) Savings Plan (the "401(k) Plan") became
effective on January 1, 1986. All non-union employees over the age of 21 are
eligible to participate in the 401(k) Plan after six months of service. For each
year of the 401(k) Plan, an eligible employee may defer at his or her election
up to 15% of the compensation actually paid to such employee by the Corporation,
up to the maximum amount permitted under the Code. The Corporation did not make
matching contributions under the 401(k) Plan in any of 1992, 1993 or 1994 but it
reserves the right to do so in the future.
PENSION BENEFITS
The Corporation's Employees Pension Plan ("Pension Plan") is a defined
benefit non-contributory pension plan covering substantially all non-union
employees of the Corporation. Employees are eligible to participate on the
January 1 following six months of credited service. The normal retirement age is
65 and the annual benefit is computed in accordance with the following formula
(effective as of January 1, 1995): 1.2% of the Final Average Compensation
multiplied by the number of years of credited service up to 30 years. The
maximum annual benefit is 36% of the Final Average Compensation for individuals
reaching their normal retirement date with 30 or more years of credited service,
subject to a limit of $120,000, which is the maximum currently allowable under
the Code. "Final Average Compensation" is the highest average compensation of a
participant for five consecutive years during the last 10 years of credited
service. "Compensation" includes all amounts paid to a participant by the
Corporation and subject to Federal income tax withholding for a calendar year,
excluding certain remuneration and further excluding any such compensation in
excess of the maximum amount permitted to be included under the Code (currently
$150,000).
The Corporation has adopted a supplemental executive retirement plan (the
"SERP") for the Named Executive Officers and certain other persons. The benefits
otherwise available under the Corporation's Pension Plan are limited by the Code
as described above. The SERP is designed to make available to senior executives
pension benefits in excess of those which are permitted by the Code to be paid
under the Corporation's Pension Plan. The annual benefit payable under the SERP
is the difference, if any, between the benefit payable to the Named Executive
Officer under the Pension Plan (subject to the Code limitations described) and
the amount that would be payable under the Pension Plan without respect to the
limits under the Code on the benefit payable under the Pension Plan and the
amount of compensation includable for purposes of calculating the benefit
payable under the Pension Plan, except that, for purposes of the SERP only, the
maximum annual benefit is 30% of the Final Average Compensation, the
compensation for 1993 paid to each of the Named Executive Officers will be
treated as the continuing compensation level for such participant in calculating
Final Average Compensation and any benefit payable under the SERP to any Named
Executive Officer will be reduced if such person's employment with the
Corporation terminates prior to age 65. The SERP is not a qualified plan under
the Code. Contributions to the SERP are not deductible by the Corporation or
taxable to the employee until a distribution is made to the employee, at which
time the distribution is taxable to the employee and deductible by the
Corporation. Assets of the SERP will be subject to claims of general creditors
of the Corporation. During 1994, the Board of Directors authorized contributions
aggregating $450,000 to the SERP.
14
<PAGE>
The following table shows the sum of the annual pension benefits payable to
the Named Executive Officers under the Pension Plan and the annual SERP benefits
assuming retirement at age 65 with election of a benefit payable as a life
annuity in various remuneration and years of service classifications:
<TABLE>
<CAPTION>
ANNUAL BENEFITS
YEARS OF CREDITED SERVICE AT RETIREMENT (2)
FINAL AVERAGE --------------------------------------------------------------
COMPENSATION (1) 15 20 25 30
- - ---------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
$ 75,000 $ 13,500 $ 18,000 $ 22,500 $ 27,000
$ 100,000 $ 18,000 $ 24,000 $ 30,000 $ 36,000
$ 150,000 $ 27,000 $ 36,000 $ 45,000 $ 54,000
$ 200,000 $ 36,000 $ 48,000 $ 60,000 $ 60,000
$ 300,000 $ 54,000 $ 72,000 $ 90,000 $ 90,000
$ 400,000 $ 72,000 $ 96,000 $ 120,000 $ 120,000
$ 500,000 $ 90,000 $ 120,000 $ 150,000(3) $ 150,000(3)
$ 600,000 $ 108,000 $ 144,000(3) $ 180,000(3) $ 180,000(3)
$ 800,000 $ 144,000(3) $ 192,000(3) $ 240,000(3) $ 240,000(3)
$ 900,000 $ 162,000(3) $ 216,000(3) $ 270,000(3) $ 270,000(3)
$ 1,000,000 $ 180,000(3) $ 240,000(3) $ 300,000(3) $ 300,000(3)
$ 1,100,000 $ 198,000(3) $ 264,000(3) $ 330,000(3) $ 330,000(3)
<FN>
- - ------------------------
(1) The Pension Plan benefits are based on the highest five consecutive years
out of final ten years of employment before normal retirement date. The
SERP benefits are currently based on the yearly compensation for 1993. The
compensation for 1993 for Messrs. Wassong, Hinkaty, Alstodt, McMenemy and
Goldstein was $1,094,735, $330,917, $309,544, $299,533 and $295,941,
respectively.
(2) Messrs. Wassong, Hinkaty, Alstodt, McMenemy and Goldstein have,
respectively, 29, 10, 8, 29 and 13 years of credited service under the
Pension Plan.
(3) The benefits payable under the Pension Plan are currently limited to
$120,000, which is the maximum currently allowable under the Code. Any
pension benefit payable in excess of the maximum permitted by the Code
would, if applicable, be payable under the SERP.
</TABLE>
EXECUTIVE MEDICAL REIMBURSEMENT PLAN
The Corporation's Executive Medical Reimbursement Plan pays 75% of all
expenses for medical care incurred by executive officers and certain other
employees of the Corporation (and their dependents) which are not reimbursed
under another insurance plan. Reimbursement during any 12 month period may not
exceed 10% of the base salary paid during such 12 month period by the
Corporation to the person claiming reimbursement.
EMPLOYEE STOCK OWNERSHIP PLAN
The Corporation maintains an Employee Stock Ownership Plan ("ESOP"),
pursuant to which benefits are allocated to all non-union employees, including
executive officers, who meet certain eligibility requirements based on length of
service. The Corporation may make contributions to the ESOP in cash or Common
Stock in an amount determined annually by the Board of Directors. For the year
1994, the Board of Directors authorized a contribution of $250,000 to the ESOP.
Any cash contributed or received is invested primarily in Common Stock. Except
in the case of death, disability or early retirement (age 55 and not less than
five years of service), or at the discretion of the plan administrator, ESOP
benefits begin to be paid to an eligible plan participant at the later of age 65
or the actual date of retirement. As of December 31, 1994, the approximate
number of shares allocated to the accounts of each of the Named Executive
Officers was as follows: Mr. Wassong, 19,499; Mr. Hinkaty, 1,731; Mr. Alstodt,
1,430; Mr. McMenemy, 4,984; and Mr. Goldstein, 2,292.
15
<PAGE>
DESCRIPTION OF EMPLOYMENT AGREEMENTS
DAN K. WASSONG
Dan K. Wassong, Chairman of the Board, President and Chief Executive Officer
of the Corporation, is party to an employment agreement with the Corporation
dated as of November 13, 1992, which restates and amends an employment agreement
originally entered into in December 1982. The agreement was further amended in
certain respects by an amendment dated March 21, 1994 (the "1994 Amendment").
The agreement, as currently in effect, provides for Mr. Wassong's full time
employment until December 31, 2003 at an annual base salary of not less than
$636,828. Mr. Wassong's current base salary is $660,000. The Board of Directors
may grant Mr. Wassong bonuses on a discretionary basis (in addition to bonuses
which Mr. Wassong may receive under the Incentive Plan). Upon termination of the
agreement except for death, disability or cause, Mr. Wassong has agreed to serve
as a consultant to the Corporation for a period of five years, although Mr.
Wassong may elect not to serve as a consultant if Mr. Wassong is terminated
without cause (the definition of which includes a "change in control" of the
Corporation, as defined), or if he retires with the consent of a majority of the
other directors after age 65 and before age 70, or retires at or after age 70
with or without the consent of the other directors (such retirement is
hereinafter referred to as a "Voluntary Retirement"). During such time as he
serves as a consultant, Mr. Wassong will be paid an annual amount equal to 60%
of his base salary at the time of termination of the agreement. In addition,
during that time, Mr. Wassong and his immediate family will be entitled to
continue to participate in the Corporation's medical reimbursement program or to
receive substantially equivalent medical insurance coverage, and Mr. Wassong
will be provided, at the Corporation's expense, with an office and support
services and use of an automobile.
The agreement also provides for payment, upon its termination for any reason
other than cause or voluntary termination prior to a Voluntary Retirement, of
compensation based on one month of compensation at the Adjusted Compensation
Rate (i.e., an annual rate of compensation equal to the base annual salary in
effect at the date of termination plus 110% of the previous year's bonus) for
each year of Mr. Wassong's employment by the Corporation since 1965. In the
event the agreement is terminated without cause Mr. Wassong will also receive a
lump sum payment equal to his base annual salary at the time of termination
multiplied by the greater of (i) the number of years remaining in the term of
the agreement and (ii) four years. If the agreement is terminated as a result of
Mr. Wassong's mental or physical disability, Mr. Wassong will continue to
receive his base annual salary in effect at the time of such disability for the
longer of (i) and (ii) above. If Mr. Wassong should die during the term of the
agreement, his designee (or legal representative) will receive payments for six
months after his death at the base salary rate in effect at the time of death.
Furthermore, if termination is a result of the death or disability of Mr.
Wassong or without cause, Mr. Wassong (or his representative, as the case may
be) may require the Corporation to pay as additional compensation the excess of
the market value of shares of stock which Mr. Wassong had an option to acquire
from the Corporation over the aggregate exercise price for those options (in
which case such options shall be cancelled).
Under the agreement, the Corporation has agreed to lend, or cause to be
loaned to Mr. Wassong (to the extent permitted by applicable law), amounts
sufficient to enable him to (i) exercise options and rights to purchase shares
of Common Stock of the Corporation heretofore or hereafter granted to him and
(ii) pay any applicable federal, state and local income taxes incurred by him as
a result of the exercise of such options and rights (see "Certain Transactions"
below). Mr. Wassong also has been granted certain rights for the registration of
shares for public offering under the Securities Act of 1933, as amended.
Pursuant to the terms of the agreement, during 1993 the Corporation
purchased $4,000,000 of life insurance policies payable on the death of Mr.
Wassong. Under the terms of a Life Insurance Agreement by and among the
Corporation and a trust established for the purpose of owning the policies, the
policies are subject to a "split dollar" arrangement under which the Corporation
will receive, upon Mr. Wassong's death, an amount equal to the premiums paid by
the Corporation, without interest. The Corporation has agreed to pay all
premiums due in respect of such insurance
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policies (and any additional policies that may be required to be purchased in
order to provide an aggregate death benefit of no less than $4,000,000). In
addition, in certain circumstances, the Corporation is required to pay
additional premiums to assure that the amount payable to Mr. Wassong's
beneficiaries will be no less than $2,000,000. The annual premium under the
policies is $170,363.24; it is anticipated that the annual premium will be
required to be paid until 2002, at which time it is estimated that the policies
will be fully paid up (although the period of time over which the premiums will
be required to be paid may vary depending upon the investment performance of the
insurers and other factors). Pursuant to the Life Insurance Agreement, the
Corporation will continue to be obligated to pay the premiums during Mr.
Wassong's employment with the Corporation and following termination of his
employment, unless termination is a result of a discharge for cause or if Mr.
Wassong voluntarily terminates employment other than by Voluntary Retirement.
Amounts payable to Mr. Wassong's beneficiaries upon his death pursuant to the
policies purchased under the Life Insurance Agreement are in addition to
benefits payable pursuant to the Corporation's general life insurance coverage
available to all employees.
OTHER NAMED EXECUTIVE OFFICERS
The Corporation has renewed an employment agreement with Charles J. Hinkaty,
Vice President and President of Del Pharmaceuticals, Inc., for a term expiring
on March 31, 1998. Under the employment agreement, Mr. Hinkaty's annual rate of
compensation shall not be less than $270,000.
The Corporation has renewed an employment agreement with Harvey Alstodt,
Executive Vice President, Sales -- Cosmetics Division, North America, for a term
expiring on March 31, 1998. Under the employment agreement, Mr. Alstodt's annual
rate of compensation shall not be less than $200,000.
The Corporation has renewed an employment agreement with William McMenemy,
Executive Vice President, Marketing -- Cosmetics Division, North America, for a
term expiring on March 31, 2000. Under the employment agreement, Mr. McMenemy's
annual rate of compensation shall not be less than $200,000.
The Corporation has renewed an employment agreement with Melvyn C.
Goldstein, Vice President -- Finance, for a term expiring on March 31, 1998.
Under the employment agreement, Mr. Goldstein's annual rate of compensation
shall not be less than $196,000.
The Corporation has agreed to provide to each of Messrs. Hinkaty, Alstodt,
McMenemy, and Goldstein $500,000 of life insurance (including the insurance
benefits payable under the Corporation's group benefit plans), payable upon
death to their respective designees.
Upon termination of their employment without cause, as defined, each of
Messrs. Hinkaty and Alstodt will be entitled to continue to receive compensation
at the annual rate of $270,000 and $200,000, respectively, for the greater of
six months or the balance of the term of their respective employment agreements,
so long as he acts as a consultant to the Corporation during such period. In
accordance with the Corporation's policy regarding executives who have been with
the Corporation for at least ten years, Messrs. McMenemy and Goldstein will,
upon termination of their employment without cause, be entitled to receive, as
severance compensation, one month's salary at the annual rate of $200,000 or
$196,000, respectively, for every year of service with the Corporation, up to a
maximum of 24 months; Mr. McMenemy has been with the Corporation for 30 years
and Mr. Goldstein has been with the Corporation for 13 years. Termination
without cause, for purposes of each of the compensation arrangements described
in this paragraph, is deemed to include a "change of control" as defined.
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CERTAIN TRANSACTIONS
In 1984, in connection with Mr. Wassong's exercise of stock options, the
Corporation loaned Mr. Wassong an aggregate of $367,000 to assist him in paying
taxes arising from the exercise of such options (the "1984 Loan"). The
Corporation also loaned Mr. Wassong $1,065,312.50 in 1988 (the "1988 Loan") and
$1,100,000 in 1990 (the "1990 Loan"), each in connection with the exercise of
stock options and the tax liability arising therefrom. Pursuant to the 1994
Amendment to Mr. Wassong's employment agreement, the 1984 Loan, the 1988 Loan
and the 1990 Loan were consolidated, effective as of January 1, 1994, with the
then aggregate principal amount of the three loans (the "Existing Balance") to
be repaid, with interest at the rate of 6% per annum, in annual amounts of
$130,000 in 1994, $140,000 for each year during the period from 1995 through
2003 and a final payment of $642,250 on January 20, 2004, provided that each
payment of principal and interest will be forgiven when due so long as Mr.
Wassong is then employed by, or then serves as a consultant to, the Corporation.
In addition, the 1994 Amendment permits the Corporation, at its option, to
forgive additional amounts in excess of the scheduled principal and interest
payments in any year, provided that the maximum amount of principal and interest
which may be forgiven in any calendar year (including the scheduled payments
during that year), other than 2004, may not exceed $360,000. Any amount forgiven
in any year in excess of the scheduled principal and interest will be applied in
inverse order against the remaining principal payments. During 1994, $130,000 of
principal and $172,708 of interest were forgiven by the Corporation.
Under the 1994 Amendment, Mr. Wassong's indebtedness is required to be
secured by shares of Common Stock of the Corporation having a market value equal
to not less than 110% of the principal amount of the Existing Balance then
outstanding. If Mr. Wassong leaves the Corporation or ceases to serve as a
consultant to the Corporation for any reason other than termination without
cause by the Corporation, disability, death or Voluntary Retirement, the portion
of the Existing Balance then outstanding, plus all accrued interest, will become
immediately due and payable. In the event of Mr. Wassong's death or disability
while employed by, or while serving as a consultant to, the Corporation, or in
the event his employment or consultancy is terminated without cause, the portion
of the Existing Balance then outstanding and accrued interest will be forgiven.
Mr. Wassong sold 12,000 shares of Common Stock to the Corporation at a price
of $25.25 per share in July 1994 and 25,000 shares to the Corporation at a price
of $35.50 per share in November 1994. In each case, the per share price was
equal to the closing sales price of the Common Stock on the American Stock
Exchange on the date of sale.
In 1985, the Corporation loaned Charles J. Hinkaty, Vice President of the
Corporation and President of Del Pharmaceuticals, Inc., $90,000 to assist him in
relocating his principal residence. The loan was for nine years, was secured by
a second mortgage on his residence, and bore interest at a rate of 10% per
annum. Interest and principal were paid quarterly. The last quarterly payment on
this loan was made during 1994. In October 1992, the Corporation loaned Mr.
Hinkaty $130,000 to enable him to exercise an option for 9,718 shares of Common
Stock. The loan, which bears interest at the prime rate of Chemical Bank, is
payable in 40 quarterly installments commencing on March 31, 1993. The loan is
secured by a pledge of 8,500 shares of Common Stock. If Mr. Hinkaty were to
leave the employment of the Corporation for any reason other than death or
disability, the loan will be payable in full within 30 days thereafter. The
current principal balance of this loan is $100,750.
In December 1992, the Corporation loaned Harvey P. Alstodt, Executive Vice
President, Sales -- Cosmetics Division, North America, $57,750 to enable him to
exercise an option for 5,333 shares of Common Stock. The loan, which bears
interest at the prime rate of Chemical Bank, is payable in 40 quarterly
installments commencing on December 31, 1993. The loan is secured by a pledge of
4,000 shares of Common Stock. If Mr. Alstodt were to leave the employment of the
Corporation for any reason other than death or disability, the loan will be
payable in full within 30 days thereafter. The current principal balance of the
loan is $49,088.
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<PAGE>
In December 1992, the Corporation loaned William McMenemy, Executive Vice
President, Marketing -- Cosmetics Division, North America, $53,437 to enable him
to exercise an option for 3,333 shares, upon the same terms and conditions as
the option exercise loan made to Mr. Alstodt as described above (except that the
loan to Mr. McMenemy is secured by 2,500 shares). The current principal balance
of all amounts owed by Mr. McMenemy to the Corporation is $92,921 (including
$47,500 from other outstanding loans).
In August 1994, Melvyn C. Goldstein, Vice President-Finance, sold 9,556
shares of Common Stock to the Corporation at a price of $25.25 per share, which
was equal to the closing sales price of the Common Stock on the American Stock
Exchange on the date of sale.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for establishing the compensation
of the Corporation's Chief Executive Officer and reviews with management on a
periodic basis existing and proposed compensation, plans and arrangements for
executive officers and other employees. It is also responsible for administering
the Corporation's stock-based incentive plans and the Incentive Plan. The
Committee is currently comprised of Robert H. Haines, Robert A. Kavesh and
Steven Kotler. The members of the Compensation Committee are "disinterested
persons" (within the meaning of Rule 16b-3 promulgated under Section 16 of the
Securities Exchange Act of 1934, as amended) and are "outside directors" (as
defined in Section 162(m) of the Code.)
As discussed below, the Committee considers a variety of factors in arriving
at the compensation paid to the Company's executive officers. No specific
weighting was assigned by the Committee to any of the factors considered in
determining the remuneration paid to the Chief Executive Officer and the other
Named Executive Officers for 1994.
GENERAL POLICIES
The Corporation's executive compensation program is intended to provide a
competitive total compensation package that enables the Corporation to attract
and retain key executives and that focuses executive behavior on the fulfillment
of both short- term (i.e., annual) and long-term business objectives and
strategy. The key components of the Company's executive compensation program
have been base salary, annual incentive compensation and stock options. In
addition, with respect to Dan K. Wassong, the Corporation's Chief Executive
Officer, consideration is given to forgiveness of indebtedness to the
Corporation which Mr. Wassong has incurred in the past in connection with his
exercise of stock options, which forgiveness is provided for under his
employment agreement on an annual basis through 2004 (subject, except in limited
circumstances, to his continued employment with the Corporation) and which is
deemed to be valuable to the Corporation by enabling and encouraging him to have
a substantial position as a stockholder of the Corporation.
In determining compensation for its executive officers, the Corporation
generally seeks to remain competitive with compensation levels for executives of
companies of comparable size and profitability engaged in health and beauty aid
businesses. Information collected by a compensation consultant retained by the
Corporation in 1993 concerning the compensation paid in 1992 to executive
officers of six public companies engaged in such businesses, with revenues
ranging from approximately $50 million to $300 million (including the four
companies which comprise the peer group index used in the stock performance
graph appearing below), indicates that the total annual compensation paid by the
Corporation (excluding the value of stock options) to its Named Executive
Officers as a whole, measured as a percentage of pre-tax profit of each of the
companies, was approximately 10% below the average of the companies within the
comparative group. The group of companies selected for this comparison was
larger than the group of companies which comprise the peer group index so that
more meaningful compensation data could be sampled.
Base salaries for each of the Named Executive Officers are (subject to
contractually stipulated minimums) based upon past and expected future
performance of the executive, the executive's responsibilities with the
Corporation and salaries for similar executive positions in companies that are
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competitive with, and comparable in size to, the Corporation (including a number
of companies in addition to those included in the Peer Group (as defined in the
"Stock Performance Graph" section appearing below) used for purposes of the
stock performance graph appearing below). The base salary of the Chief Executive
Officer is determined by the Committee. The base salaries of all other Named
Executive Officers are fixed by the Chief Executive Officer, subject to review
by the Committee. During 1994, the maximum increase in base salary for any of
the Named Executive Officers was approximately 12%. Annual incentive
compensation for each Named Executive Officer has been linked, generally, to
overall corporate performance and/or the performance of a particular subsidiary
or other business unit for which the executive may have responsibility, but has
also included a subjective assessment of the officer's success in fulfilling the
duties and responsibilities of his position. Generally, annual incentive
compensation has constituted approximately 15% to 40% of each Named Executive
Officer's total cash compensation in any year. Commencing in 1994, incentive
compensation for each Named Executive Officer in any year is established under
the Incentive Plan, pursuant to which the Committee, with respect to the Chief
Executive Officer, and the Chief Executive Officer, with respect to all other
executive officers, establishes performance objectives for use in determining
all or a portion of amounts payable to such persons. The annual incentive
bonuses for 1994 for the Named Executive Officers ranged from approximately 23%
to 44% of their total cash compensation.
The principal mechanism for rewarding executives for long- term performance
has been the grant of stock options under the Corporation's stock-based
incentive plans. The plan currently employed by the Corporation for this purpose
is the 1994 Stock Plan. The 1994 Stock Plan authorizes the Committee to grant to
executive officers and other key employees stock options, as well as other
stock-based awards, including restricted stock grants, deferred stock and
performance-based stock awards. To date, awards under the 1994 Stock Plan have
consisted only of stock options. Under the terms of the 1994 Stock Plan, all
grants of stock options must be made at no less than market value, so that the
person receiving options will benefit from appreciation of the price of the
stock to the same extent as other stockholders.
COMPENSATION FOR CHIEF EXECUTIVE OFFICER
In March 1994, the Corporation entered into the 1994 Amendment to its
employment agreement with Mr. Wassong, which was originally entered into in
November 1992. The 1992 agreement was a restatement and amendment of an
employment agreement entered into with Mr. Wassong in 1982. The 1994 Amendment
increased Mr. Wassong's minimum base salary to $638,828 for 1994, which
constituted a 4% increase over Mr. Wassong's base salary in 1993. The 1994
Amendment also included a restructuring of Mr. Wassong's indebtedness to the
Corporation through 2004; the 1992 agreement had provided for full repayment or
forgiveness of the indebtedness by 2001. In negotiating and approving the terms
of the 1994 Amendment with Mr. Wassong, the Committee took into account his
length of service, leadership qualities, involvement in all aspects of the
business of the Corporation, relationships with all significant customers and
suppliers, relative levels of compensation in the cosmetics industry as
disclosed in proxy statements of other public companies and the importance of
strongly motivating him through cash compensation and stock ownership. The
Committee also considered the improvement of the Corporation's sales and
earnings during 1992 and 1993. The Committee did not give consideration to the
performance of the Common Stock of the Corporation, since the Common Stock is
traded relatively infrequently and usually in small amounts and, as a result,
the Committee believes that the price of the Common Stock is affected by factors
other than the quality of management.
Mr. Wassong's base salary for 1994 was equal to his contractually required
minimum. His incentive compensation in 1994, which was based on the
Corporation's pre-tax income for continuing operations during the year, was
$500,000. Although the Committee believed that the financial results of the
Corporation for 1994 were indicative of superior performance by Mr. Wassong, the
amount of incentive compensation awarded was, at Mr. Wassong's request, set
substantially below the maximum
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amount that Mr. Wassong was eligible to receive under the Incentive Plan for
1994. During 1994, a total of $302,708 of Mr. Wassong's indebtedness to the
Corporation was forgiven in accordance with his employment agreement.
STOCK OPTIONS
Generally, stock options are granted to officers based upon their ability to
influence the Corporation's long-term growth and profitability. The Committee
receives recommendations from the Chief Executive Officer concerning option
grants for executive officers other than himself. All options have been granted
at exercise prices which are not less than the fair market value of the Common
Stock on the date of grant. Options to purchase a total of 38,748 shares were
granted to the Company's executive officers during 1994, including options for
14,000 shares granted to Mr. Wassong. In granting the new options, the Committee
considered that executive officers other than Mr. Wassong had not received any
stock options since 1991, and that options granted to Mr. Wassong in 1993 were
intended to replace shares of Common Stock which he utilized to pay for the
exercise of stock options previously issued to him. It also considered the
significantly improved performance of the Company during the past several years.
In addition, the Committee has recently adopted a practice of granting to
executive officers and other employees of the Corporation who utilize shares to
satisfy the exercise price of options previously granted to them (and the tax
liability arising therefrom, if any) options that are intended to replace the
shares utilized for exercise. Two of the Named Executive Officers were granted
options to purchase an aggregate of 9,748 shares on this basis during 1994.
COMPENSATION COMMITTEE
Robert A. Kavesh
Robert H. Haines
Steven Kotler
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Kotler, who served on the Compensation Committee during 1994, is
President of Wertheim Schroder & Co., Incorporated, an investment banking firm
which provided general financial advisory services to the Corporation in 1994.
Mr. Haines, who also served on the Compensation Committee during 1994, is a
partner of Zimet, Haines, Friedman & Kaplan, a law firm which is general counsel
to the Corporation and performed legal services for the Corporation in 1994.
STOCK PERFORMANCE GRAPH
The following graph charts the total stockholder return over a five-year
period commencing on December 31, 1989, with respect to an investment in the
Corporation's Common Stock as compared to the Amex Market Value Index and a peer
group of companies selected by the Company for purposes of comparison (the "Peer
Group"). The Peer Group consists of Maybelline, Inc., Neutrogena Corporation,
Dep Corporation and Mem Company, Inc. Dividend reinvestment has been assumed
and, with respect to companies in the Peer Group, the returns of each such
company have been weighted to reflect relative stock market capitalization.
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COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN TO STOCKHOLDERS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AMEX MARKET VALUE INDEX PEER GROUP DEL LABORATORIES
<S> <C> <C> <C>
1989 100 100 100
1990 82 43 51
1991 105 88 86
1992 106 53 97
1993 128 42 127
1994 115 54 218
</TABLE>
PROPOSAL NO. 2
INCREASING AUTHORIZED COMMON STOCK
On March 30, 1995, the Board of Directors of the Corporation adopted a
resolution providing that the Corporation's Certificate of Incorporation be
amended to increase the number of authorized shares of Common Stock from
5,000,000 shares to 10,000,000 shares, subject to stockholder approval. The
amendment to be presented to the stockholders to accomplish the foregoing
purpose is set forth in Annex A attached hereto in substantially the form to be
adopted. As of March 31, 1995, the Corporation had 2,099,626 shares of Common
Stock issued and outstanding, exclusive of 1,194,646 shares held in treasury.
The Corporation is currently authorized to issue 5,000,000 shares of Common
Stock and 1,000,000 shares of Preferred Stock. No shares of Preferred Stock are
currently issued or outstanding. The proposed increase in the authorized number
of shares of Common Stock to 10,000,000 is designed to provide the Corporation
with flexibility for funding its capital needs and corporate growth, for
potential acquisitions, for future stock dividends and splits and for possible
contributions to the ESOP. Such additional shares may be issued on such terms
and at such times as the Board of Directors may determine without further action
by the stockholders, unless otherwise required by the applicable rules of the
American Stock Exchange or other applicable laws or regulations. Except in
certain cases such as a stock dividend, the issuance of additional shares will
have the effect of diluting the voting power of existing stockholders.
Stockholders have no preemptive rights to subscribe for additional shares of the
Corporation's Common Stock.
RECOMMENDATION OF BOARD OF DIRECTORS
The Corporation's Board of Directors recommends a vote FOR approval of the
amendment to the Certificate of Incorporation of the Corporation. The
affirmative vote of a majority of the issued and outstanding shares of Common
Stock entitled to vote is required for approval of Proposal No. 2.
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AUDITORS
KPMG Peat Marwick LLP ("KPMG"), Certified Public Accountants, audit the
books and records of the Corporation and have served in such capacity since
1968. The Board of Directors has reappointed the same firm for the current
fiscal year. A representative of KPMG is expected to be present at the Annual
Meeting, and will have the opportunity to make a statement if he or she desires
to do so and will respond to appropriate questions.
OTHER BUSINESS
The Board of Directors does not know of any matter to be brought before the
Annual Meeting other than the matters specified in the Notice of Annual Meeting
accompanying this Proxy Statement. The persons named in the form of proxy
solicited by the Board of Directors will vote all proxies which have been
properly executed. If any matters not set forth in the Notice of Annual Meeting
are properly brought before the Annual Meeting, such persons will vote thereon
in accordance with their best judgment.
STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the proxy materials relating to the
1996 Annual Meeting of Stockholders must be received at the Corporation's
offices at 565 Broad Hollow Road, Farmingdale, New York 11735 by December 20,
1995.
By Order of the Board of Directors,
Robert H. Haines
SECRETARY
Farmingdale, N.Y.
April 18, 1995
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ANNEX A
PROPOSED AMENDMENT TO THE CERTIFICATE
OF INCORPORATION TO INCREASE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK TO 10,000,000
RESOLVED, that Paragraph A of Article FOURTH of the Certificate of
Incorporation of the Corporation, as amended to date, be further amended to read
in its entirety as follows:
"A. AUTHORIZED CAPITAL STOCK. The total number of shares of all
classes of stock which this Corporation shall have authority to issue is
ELEVEN MILLION (11,000,000) shares, consisting of TEN MILLION (10,000,000)
shares of Common Stock, par value $1.00 per share (hereinafter, the Common
Stock), and ONE MILLION (1,000,000) shares of Preferred Stock, par value
$.01 per share (hereinafter, the "Preferred Stock")."
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DEL LABORATORIES, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS, THURSDAY, MAY 25, 1995
The undersigned stockholder of DEL LABORATORIES, INC., a Delaware
corporation, hereby appoints Dan K. Wassong and Melvyn C. Goldstein, or either
of them voting singly in the absence of the other, attorneys and proxies, with
full power of substitution and revocation, to vote, as designated below, all
shares of Common Stock of Del Laboratories, Inc., which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of said Corporation to be
held at Harrison House, Dosoris Lane and Old Tappan Road, Glen Cove, New York,
on May 25, 1995, at 9:30 A.M. (local time) or any adjournment thereof, in
accordance with the following instructions:
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY
(EXCEPT AS WITHHELD IN THE SPACE TO VOTE FOR ALL NOMINEES LISTED
PROVIDED) / / BELOW / /
</TABLE>
Charles J. Hinkaty, Robert H. Haines
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
________________________________________
The Board of Directors recommends a vote "FOR" all nominees.
2. APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION INCREASING AUTHORIZED
COMMON STOCK
FOR / / AGAINST / / ABSTAIN / /
The Board of Directors recommends a vote "FOR" the Amendment.
(CONTINUED ON REVERSE SIDE)
<PAGE>
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder.
If no direction is made, the proxy will be voted "FOR" all nominees in
Proposal No. 1 and "FOR" Proposal No. 2.
Please sign exactly as name
appears hereon.
When shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or
guardian, please give full title
as such. If a corporation, please
sign in full corporate name by an
authorized officer. If a
partnership, please sign in
partnership name by an authorized
person.
Dated: ____________________ , 1995
__________________________________
Signature
__________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
