<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
DEL LABORATORIES, INC.
------------------------------------------------------------
(Name of Registrant As Specified In Charter)
DEL LABORATORIES, INC.
------------------------------------------------------------
(Name of Person(s) Filing the Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(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
-----------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and
state how it was determined.
/ / 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
-----------------------------------------------------------------
<PAGE>
DEL LABORATORIES, INC.
565 BROAD HOLLOW ROAD
FARMINGDALE, NEW YORK 11735
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1996
------------------------
April 23, 1996
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 Monday, June 3, 1996, at
9:30 A.M. (local time) for the following purposes:
1. To elect three 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
Restated Certificate of Incorporation to (i) amend Article SIXTH to change
the number of directors comprising the Board of Directors from a fixed
number of seven to a range of from three to ten, with the number to be fixed
from time to time by the Board of Directors and (ii) amend Article TENTH to
change the number of directors required to approve a resolution authorizing
the dissolution of the Corporation from four to a majority of the full Board
(collectively (i) and (ii) are hereinafter referred to as the "Board
Amendments").
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed April 8, 1996 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.
Stockholders are cordially invited to attend the meeting. If you are a
stockholder of record and plan to attend, please complete and return the
enclosed Request for Admission Card. If you are a stockholder whose shares are
not registered in your own name and you plan to attend, please request an
Admission Card by writing to Melvyn C. Goldstein, Vice President -- Finance, Del
Laboratories, Inc., 565 Broad Hollow Road, Farmingdale, New York 11735. Evidence
of your stock ownership, which you can obtain from your bank, stockbroker, etc.,
must accompany your letter.
A copy of the Annual Report for the year 1995 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 JUNE 3RD.
<PAGE>
DEL LABORATORIES, INC.
565 BROAD HOLLOW ROAD
FARMINGDALE, NEW YORK 11735
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1996
------------------------
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 June 3, 1996 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 April 8, 1996 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 4,184,932 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
three 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 not less
than 80% of the shares of Common Stock issued and outstanding is required for
the approval of the Board Amendments (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 23, 1996 to stockholders of record on the Record Date.
<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 APRIL 8, 1996
------------------------
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL BENEFICIAL PERCENT
OWNER OR IDENTITY OF GROUP OWNERSHIP (1) OF CLASS
- ------------------------------------------------------- ------------- --------
<S> <C> <C>
Dan K. Wassong ........................................ 1,709,869 34.7%(4)
Del Laboratories, Inc.
565 Broad Hollow Road
Farmingdale, New York (2)
Martin E. Revson ...................................... 709,906 17.0
445 Park Avenue
New York, New York (2)
Dimensional Fund Advisors Inc. ........................ 264,264(5) 6.3
1299 Ocean Avenue -- Suite 650
Santa Monica, California
</TABLE>
- ------------------------
(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 933,797 shares owned individually by Mr. Wassong, 736,707 shares
issuable upon exercise of options held by Mr. Wassong and 39,365 shares held
for his account under the ESOP (as of December 31, 1995).
(4) Based on 4,184,932 shares outstanding on April 8, 1996 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 264,264 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.
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
2
<PAGE>
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 1995 other than Mr. Wassong and (iii) all directors and executive
officers as a group:
<TABLE>
<CAPTION>
COMMON STOCK OWNED
AS OF APRIL 8, 1996
-------------------------
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
OWNERSHIP (1) OF CLASS
-------------- --------
<S> <C> <C>
Directors
Robert A. Kavesh..................................... 11,368 0.3%
Steven Kotler........................................ 38,830(2) 0.9
Robert H. Haines..................................... 16,739 0.4
Marcella Maxwell..................................... 100 *
Executive Officers
Charles J. Hinkaty................................... 216,813(3) 5.0
Harvey P. Alstodt.................................... 84,243(4) 2.0
William McMenemy..................................... 164,453(5) 3.8
Melvyn C. Goldstein.................................. 127,666(6) 3.0
All Directors and Executive Officers as a Group
(11 persons).......................................... 3,085,987(7) 57.6
</TABLE>
- ------------------------
* Less than .1%
(1) Except as noted below, each beneficial owner has sole voting power and sole
investment power.
(2) Includes 944 shares of Common Stock owned by Mr. Kotler's wife and 86 shares
owned by a pension trust for the benefit of Mr. Kotler.
(3) Includes 152,905 shares which Mr. Hinkaty may acquire through exercise of
options currently outstanding and 3,619 shares held for Mr. Hinkaty's
account under the ESOP as of December 31, 1995. Mr. Hinkaty is also a
director of the Corporation.
(4) Includes 67,558 shares which Mr. Alstodt may acquire through exercise of
options currently outstanding and 3,013 shares held for Mr. Alstodt's
account under the ESOP as of December 31, 1995.
(5) Includes 142,623 shares which Mr. McMenemy may acquire through exercise of
options currently outstanding and 10,163 shares held for Mr. McMenemy's
account under the ESOP as of December 31, 1995.
(6) Includes 71,180 shares which Mr. Goldstein may acquire through exercise of
options currently outstanding and 4,748 shares held for Mr. Goldstein's
account under the ESOP as of December 31, 1995.
(7) Includes (i) 1,176,973 shares which such persons have rights to acquire
through the exercise of options currently outstanding, (ii) 60,908 shares
held for the accounts of all executive officers and directors under the ESOP
as of December 31, 1995, (iii) 944 shares owned by Mr. Kotler's wife and
(iv) 86 shares held by a pension trust for the benefit of Mr. Kotler.
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), all of the Corporation's directors, executive
officers and owners of greater than 10% of the Corporation's equity securities
made all required filings.
3
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Article SIXTH of the Corporation's Restated Certificate of Incorporation
currently provides that the Board of Directors shall consist of seven directors,
and that the Board 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
1998. The directors in Class III are to serve until the Annual Meeting of
Stockholders for 1996.
Three directors for Class III are to be elected at the Annual Meeting and,
when elected, will serve until the Annual Meeting of Stockholders for 1999 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 III below for
election to the Board of Directors for a three year term. In the event that any
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 three directors to be
elected at the Annual Meeting.
The Board of Directors has approved a proposal, subject to the affirmative
vote of the requisite number of the outstanding shares entitled to vote at the
Annual Meeting, to amend Article SIXTH of the Restated Certificate of
Incorporation to change the provision regarding the composition of the Board of
Directors so as to provide for a minimum of three and a maximum of ten
directors, with the number to be fixed from time to time by the Board of
Directors and such number as fixed by the Board to be divided into three classes
that will be as nearly equal in number as possible. See "Proposal No. 2 --
Amendments to Restated Certificate of Incorporation." Notwithstanding the
submission of the proposal for a vote by stockholders at the Annual Meeting, the
Board of Directors has no current intention to alter the number of directors
constituting the Board in the event the proposal is approved.
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.
4
<PAGE>
CLASS III
(TO SERVE UNTIL THE ANNUAL MEETING
OF STOCKHOLDERS FOR 1999)
THREE 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 (68) Marcus Nadler Professor of Finance and Economics, 1976
Graduate School of Business, New York University
Steven Kotler (49) President and Chief Executive Officer, Schroder 1987
Wertheim & Co., Incorporated, an investment
banking firm (2)
Marcella Maxwell (58) Director of Development and Public Affairs, 1994
Miracle Makers, Inc., since February 1995;
Director 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; and
Director of Education, New York City Housing
Authority, from August 1990 to April 1992
</TABLE>
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 (85) Private investor since August 1992; Chairman of 1963
the Board of the Corporation from July 1963 to
August 1992
Dan K. Wassong (65) President and Chief Executive Officer of the 1968
Corporation; Chairman of the Board since August
1992
</TABLE>
CLASS II
(TO SERVE UNTIL THE ANNUAL MEETING OF
STOCKHOLDERS FOR 1998)
NO 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 of the Corporation and President of 1986
Del Pharmaceuticals, Inc.
Robert H. Haines (75) Partner, Zimet, Haines, Friedman & Kaplan, 1970
attorneys at law; Secretary of the Corporation
since October 1989 (3)
</TABLE>
- ------------------------
(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, Schroder Wertheim & Co., Incorporated and one or more
of its affiliates to perform investment advisory and other services.
(3) The Corporation during the past fiscal year has retained, and proposes in
the future to retain, Zimet, Haines, Friedman & Kaplan as its general
counsel.
5
<PAGE>
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 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 six meetings during 1995.
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 two meetings in 1995.
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 1995, it met once and acted twelve
times by unanimous written 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). It did not meet or
act by written consent during 1995.
During 1995, 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, Mr. Kotler and Ms. Maxwell each received the amount of $25,000
for services rendered by them in 1995 as directors of the Corporation. No other
director received any fees for serving as such in 1995.
RECOMMENDATION OF BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR election as directors in Class
III of the nominees identified above. Those nominees who receive the three
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 1995, 1994 and 1993 of the Corporation's Chief Executive Officer and each of
the four other most highly compensated executive officers in 1995 (collectively,
the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
---------------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (1) (2)
- ---------------------------------------------- ---- -------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Dan K. Wassong ............................... 1995 $660,000 $635,000 135,093 $ 358,211
Chairman, President and Chief 1994 636,828 500,000 28,000 443,437
Executive Officer 1993 612,335 400,000 124,884 403,357
Charles J. Hinkaty ........................... 1995 $302,461 $ 75,000 60,547 $ 12,677
Vice President and President 1994 293,046 86,000 21,256 12,708
of Del Pharmaceuticals, Inc. 1993 283,657 70,000 -- 12,653
Harvey P. Alstodt ............................ 1995 $247,500 $135,000 17,736 $ 13,999
Executive Vice President, Sales -- 1994 235,000 115,000 6,000 14,393
Cosmetics Division, North America 1993 210,000 85,000 -- 21,945
William McMenemy ............................. 1995 $249,500 $135,000 10,532 $ 13,598
Executive Vice President, Marketing -- 1994 225,000 115,000 10,248 13,761
Cosmetics Division, North America 1993 201,333 85,000 -- 13,352
Melvyn C. Goldstein .......................... 1995 $215,775 $100,000 6,000 $ 13,907
Vice President -- Finance 1994 209,333 85,000 6,000 14,234
1993 201,500 70,000 -- 13,605
</TABLE>
- ------------------------
(1) Stock options granted during 1995 prior to June 30, 1995 have been adjusted
to reflect a two-for-one stock split effective on that date (the "1995 Stock
Split"). Stock options granted during 1994 prior to June 29, 1994 have been
adjusted to reflect a four-for-three stock split effective on that date, as
well as the 1995 Stock Split.
(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 1995 the amounts
contributed and allocated, calculated based on the closing price of the
Common Stock on December 31, 1995, were as follows: Mr. Wassong -- $3,106,
Mr. Hinkaty -- $3,106, Mr. Alstodt -- $3,106, Mr. McMenemy -- $3,106 and Mr.
Goldstein -- $3,106); (ii) the insurance premiums paid in each year in
respect of such officer under the Corporation's Executive Medical
Reimbursement Plan (in 1995, 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 1995, the amounts were as follows:
Mr. Wassong -- $112,018, Mr. Hinkaty $1,857, Mr. Alstodt -- $3,179, Mr.
McMenemy -- $2,778, and Mr. Goldstein -- $3,087). Also includes for Mr.
Wassong indebtedness owed by him to the Corporation which was forgiven in
each year ($235,373 in 1995). See "Certain Benefit Plans," "Description of
Employment Agreements" and "Certain Transactions" below.
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,
7
<PAGE>
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 shall be 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. The amount of final awards actually paid may (except
with respect to the Covered Employees) be determined on a discretionary basis by
the Administrator. 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 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
8
<PAGE>
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 1995, 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 1995 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 1995. Mr. Wassong will be the only Covered
Person under the Incentive Plan in 1996.
STOCK OPTIONS
The Corporation currently has two plans under which stock options are
currently outstanding, the 1994 Stock Plan (the "1994 Plan") and the 1984 Stock
Option Plan (the "1984 Plan"). Each of the plans is currently administered by
the Compensation Committee. As of April 8, 1996, options to purchase a total of
381,025 shares of Common Stock were outstanding under the 1994 Plan and options
to purchase a total of 857,563 shares were outstanding under the 1984 Plan. As
of that date, a total of 253,990 shares remained available for additional grants
under the 1994 Plan. No further options may be granted under the 1984 Plan;
however, under the terms of the 1994 Plan, shares subject to stock options
granted under the 1984 Plan, if, as and when they expire, terminate or are
9
<PAGE>
surrendered unexercised, will become available for awards under the 1994 Plan.
In addition, if in connection with any award under the 1994 Plan or the 1984
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 April 8, 1996, the market value of the shares of Common Stock reserved
for issuance upon exercise of options outstanding under the 1994 Plan and 1984
Plan was $35,609,405. Taking into account the aggregate exercise price of such
options of $15,077,435, the shares subject to such options have a net value of
$20,531,970.
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 200,000 shares of Common Stock (which number has been
adjusted to reflect a two-for-one stock split paid on June 30, 1995 and 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 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
10
<PAGE>
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 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 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 and authorizes the Committee to grant shares as
a bonus, or to grant shares or other awards in lieu of obligations of the
Corporation to pay cash under other plans or compensatory arrangements, 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 executive officers whose
compensation exceeds $1,000,000, 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 of the Code or non-incentive stock
options. The 1984 Plan provides that the exercise price of options
11
<PAGE>
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.
STOCK OPTION GRANTS DURING 1995
The following table sets forth for each of the Named Executive Officers
information regarding individual grants of options during the year ended
December 31, 1995 and the present value of these options on their grant date.
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL GRANT
SECURITIES OPTIONS GRANTED EXERCISE DATE
UNDERLYING TO EMPLOYEES IN OR BASE PRESENT
NAME OPTIONS GRANTED FISCAL YEAR PRICE EXPIRATION DATE VALUE (1)
- ------------------------- --------------- --------------- -------- ----------------- --------
<S> <C> <C> <C> <C> <C>
Dan K. Wassong .......... 28,000 9.9% $ 22.00 March 31, 2005 $236,880
49,510 17.6 23.25 May 1, 2002 356,960
57,583 20.4 20.88 December 20, 2002 309,797
Charles J. Hinkaty ...... 5,224 1.9 18.50 January 3, 2002 31,501
6,000 2.1 22.00 March 31, 2005 50,760
28,664 10.2 21.75 April 24, 2002 192,335
20,659 7.3 19.50 November 7, 2002 107,014
Harvey P. Alstodt ....... 6,000 2.1 22.00 March 31, 2005 50,760
5,230 1.9 22.44 April 26, 2002 36,296
6,506 2.3 19.25 November 10, 2002 33,181
William McMenemy ........ 6,000 2.1 22.00 March 31, 2005 50,760
4,532 1.6 21.75 April 24, 2002 30,410
Melvyn C. Goldstein ..... 6,000 2.1 22.00 March 31, 2005 50,760
</TABLE>
- ------------------------
(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 22.03% with respect to the options which expire on
March 31, 2005, 22.43% with respect to the options which expire on January
3, 2002, 22.22% with respect to the options which expire in late April and
early May 2002, 21.81% with respect to the options which expire in November
2002, and 21.74% with respect to the options which expire on December 20,
2002 (all volatilities are based on the average of the one,
12
<PAGE>
three and five year historical volatilities of the Common Stock in effect on
the dates of grant) (b) a risk-free rate of 7.17% (which approximates the
seven year Treasury bond rate on the date of grant) with respect to the
options which expire on March 31, 2005, a risk-free rate of 7.83% (which
approximates the five year Treasury bond rate on the date of grant) with
respect to the options which expire on January 3, 2002, a risk-free rate of
6.88% with respect to the options which expire in late April and early May
2002, a risk-free rate of 5.81% with respect to the options which expire in
November 2002, and a risk-free rate of 5.38% with respect to the options
which expire on December 20, 2002, (c) a projected dividend yield of .64%
with respect to the options which expire on March 31, 2005; and projected
dividend yields of .76%, .64%, .62%, .60%, .72%, .73% and .67% with respect
to the options which expire on January 3, April 24, April 26, May 1,
November 7, November 10, and December 20, 2002, respectively, all based on
an annual dividend of $0.14 per share (i.e., the annual dividend rate in
effect on the dates of grant of such options), (d) a seven year expected
period to exercise for the options which expire on March 31, 2005 and a five
year expected period to exercise for the options which expire throughout
2002 and (e) the vesting schedule for the options which expire in November
and December 2002 (one-third vesting one year after the date of grant,
one-third vesting two years after the date of grant and one-third vesting
three years after the date of grant), with an annualized discount rate of
5.0%, and the vesting schedule for the remaining options (one-third vesting
six months after the date of grant, one-third vesting one year after the
date of grant and one-third vesting eighteen months after the date of
grant), with an annualized discount rate of 5.0%.
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 1995 and
unexercised stock options held as of December 31, 1995.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT DEC. 31, 1995 AT DEC. 31, 1995 (2)
ACQUIRED VALUE -------------------------- --------------------------
NAME ON EXERCISE REALIZED (1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------------ ------------ ---------- -------------------------- --------------------------
<S> <C> <C> <C> <C>
Dan K. Wassong................ 160,450 $2,219,629 618,117/118,590 $6,964,648/$68,833
Charles J. Hinkaty............ 75,452 1,017,658 98,571/54,334 928,796/82,400
Harvey P. Alstodt............. 20,178 335,398 51,565/15,993 525,694/22,883
William McMenemy.............. 6,800 89,688 137,053/11,124 1,622,637/37,790
Melvyn C. Goldstein........... -- -- 76,198/6,000 835,997/14,750
</TABLE>
- ------------------------
(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.
(2) Based upon the closing price of the Common Stock on December 31, 1995
($20.50 per share), less the exercise price for the aggregate number of
shares subject to the options.
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 1993, 1994 or 1995 but it
reserves the right to do so in the future.
13
<PAGE>
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 1995, the Board of Directors authorized a
contribution of $310,000 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)
</TABLE>
- ------------------------
(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, 30, 11, 9, 30 and 14 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.
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
1995, the Board of Directors authorized a contribution of $400,000 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, 1995, the approximate
number of shares allocated to the accounts of each of the Named Executive
Officers was as follows: Mr. Wassong, 39,365; Mr. Hinkaty, 3,619; Mr. Alstodt,
3,013; Mr. McMenemy, 10,163; and Mr. Goldstein, 4,748.
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 $674,000. In addition, 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
16
<PAGE>
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.
In accordance with the Corporation's policy regarding executives who have
been with the Corporation for at least ten years, Messrs. Hinkaty, 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
$270,000, $200,000 and $196,000, respectively, for every year of service with
the Corporation, up to a maximum of 24 months; Mr. Hinkaty has been with the
Corporation for 11 years, Mr. McMenemy has been with the Corporation for 31
years and Mr. Goldstein has been with the Corporation for 14 years. Upon
termination of his employment without cause, as defined, Mr. Alstodt will be
entitled to continue to receive compensation at the annual rate of $200,000 for
the greater of six months or the balance of the term of his employment
agreement, so long as he acts as a consultant to the Corporation during such
period. 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.
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
17
<PAGE>
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 1995, $140,000 of principal and $95,373 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 20,000 shares of Common Stock to the Corporation in June
1995 at a price of $25.00 per share (as adjusted for the 1995 Stock Split),
which was below the closing sales price of the Common Stock on the American
Stock Exchange on the date of sale.
In October 1992, the Corporation loaned Mr. Hinkaty $130,000 to enable him
to exercise an option to purchase 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
17,500 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 $87,750.
In December 1992, the Corporation loaned Mr. Alstodt $57,750 to enable him
to exercise an option to purchase shares of Common Stock. The loan, which bore
interest at the prime rate of Chemical Bank, was payable in 40 quarterly
installments commencing on December 31, 1993. The loan was repaid in full in
April 1995.
In December 1992, the Corporation loaned Mr. McMenemy $53,437 to enable him
to exercise an option to purchase shares of Common Stock, upon the same terms
and conditions as the option exercise loan made to Mr. Alstodt as described
above. The loan is secured by 5,000 shares of Common Stock. The current
principal balance of all amounts owed by Mr. McMenemy to the Corporation is
$82,578 (including $42,500 from other outstanding loans).
In June 1995, Mr. Goldstein sold 20,000 shares of Common Stock to the
Corporation at a price of $25.00 per share (as adjusted for the 1995 Stock
Split), which was below the closing sales price of the Common Stock on the
American Stock Exchange on the date of sale.
STOCKHOLDER DERIVATIVE LITIGATION
On August 9, 1995, two stockholder derivative actions were filed in the
Court of Chancery of the State of Delaware against members of the Corporation's
Board of Directors and a former director, as well as the Corporation as a
nominal defendant. The actions, which have been consolidated, allege breach of
fiduciary duty and waste of corporate assets by the directors in connection with
alleged acts
18
<PAGE>
and omissions relating to alleged sexual harassment of certain former employees
of the Corporation and the investigation and settlement of a lawsuit brought by
the Equal Employment Opportunity Commission against the Corporation on behalf of
the former employees (the "EEOC Lawsuit"). The EEOC Lawsuit was settled on
August 3, 1995. The consolidated stockholder derivative action seeks to compel
the directors to account to the Corporation for amounts paid in connection with
the defense and settlement of the EEOC Lawsuit and seeks certain other relief.
The Corporation believes that this derivative action is without merit. Counsel
for the directors has filed a motion to dismiss the action, which is currently
pending before the court.
Under the By-Laws of the Corporation, each present and former director of
the Corporation is entitled to be indemnified, to the full extent permitted by
Delaware law, for liability arising out of his or her service as a director of
the Corporation. The Corporation intends to indemnify each of the directors for
any loss or expense which such director may incur in connection with the
derivative action in accordance with the terms of the By-Laws. The Corporation
maintains directors and officers' liability insurance which it believes will be
adequate to satisfy the costs of defense and any liability which any director
may incur in connection with this action.
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. It is currently contemplated that, effective immediately prior to
the Annual Meeting, Mr. Haines will resign as a member of the Compensation
Committee in order that the Compensation Committee will continue to consist
solely of "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 Corporation'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 1995.
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 Corporation'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 three
companies which comprise the Peer Group index used in the graph appearing below
under the heading "Stock Performance Graph"), indicated 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
19
<PAGE>
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
competitive with, and comparable in size to, the Corporation (including a number
of companies in addition to those reflected in the peer group index used in the
stock performance graph appearing below). The base salary of the Chief Executive
Officer is determined by the Compensation Committee. The base salaries of all
other Named Executive Officers are fixed by the Chief Executive Officer, subject
to review by the Compensation Committee. During 1995, the maximum increase in
base salary for any of the Named Executive Officers was approximately 11%.
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
50% 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 has been established under the Incentive Plan, pursuant to which the
Compensation 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 1995 for the
Named Executive Officers ranged from approximately 20% to 49% 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
Mr. Wassong's base salary for 1995 was $660,000, which constituted a 3.6%
increase over his base salary for 1994. In approving this increase, the
Compensation Committee considered, in particular, the excellent financial
performance of the Corporation during 1994. His incentive compensation in 1995,
which was based on the Corporation's pre-tax income for continuing operations
during the year, was $635,000. Although the Committee believed that the
financial results of the Corporation for 1995 demonstrated superior performance
by Mr. Wassong, the amount of incentive compensation awarded was, at Mr.
Wassong's request, set substantially below the maximum amount that Mr. Wassong
was eligible to receive under the Incentive Plan for 1995. During 1995, a total
of $235,373 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 the officer's
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 235,908 shares
were granted to the Corporation's Named Executive Officers during 1995,
including options to purchase 135,093 shares granted to Mr. Wassong. Of the
options granted to the Named Executive Officers in 1995, options to
20
<PAGE>
purchase an aggregate of 177,908 shares were granted to replace shares utilized
by such persons to satisfy the exercise prices of options previously granted to
them by the Corporation (and the tax liability arising therefrom, if any),
including options to purchase 107,093 shares granted to Mr. Wassong on this
basis during 1995. The remaining options to purchase 58,000 shares granted to
the Named Executive Officers, including options to purchase 28,000 shares to Mr.
Wassong, were granted in March 1995 upon a periodic review of the Corporation's
stock option program.
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 1995, is
President and Chief Executive Officer of Schroder, Wertheim & Co., Incorporated,
an investment banking firm which (along with an affiliate of that firm) provided
certain investment advisory and other services to the Corporation in 1995. Mr.
Haines, who also served on the Compensation Committee during 1995, 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 1995.
STOCK PERFORMANCE GRAPH
The following graph charts the total stockholder return over a five-year
period commencing on December 31, 1990, 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 Corporation for purposes of comparison (the
"Peer Group"). The Peer Group consists of Maybelline, Inc., 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. Neutrogena Corporation, which
was part of the Peer Group included in the stock performance graph which
appeared in the proxy statement relating to the Annual Meeting of Stockholders
in 1995, is not part of the Peer Group included in the graph appearing below,
since that company was sold and its stock no longer traded during 1995.
21
<PAGE>
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 (3) DEL LABORATORIES
<S> <C> <C> <C>
1990 $100 $100 $100
1991 $128 $242 $167
1992 $130 $249 $189
1993 $155 $178 $247
1994 $141 $135 $424
1995 $178 $256 $468
</TABLE>
22
<PAGE>
PROPOSAL NO. 2
AMENDMENTS TO RESTATED CERTIFICATE OF INCORPORATION
The stockholders of the Corporation are being requested to consider and vote
upon this Proposal No. 2 to amend Articles SIXTH and TENTH of the Corporation's
Restated Certificate of Incorporation (hereinafter referred to as the "Restated
Certificate").
Article SIXTH of the Restated Certificate currently provides that the Board
shall be comprised of seven directors, who are divided into three classes, two
classes consisting of two directors and one class consisting of three directors.
The directors in each particular class serve for consecutive three year terms.
At a meeting held on February 1, 1996, the Board of Directors of the Corporation
approved a proposal, subject to the requisite approval by stockholders, to amend
Article SIXTH so as to establish a range for the number of persons who will
comprise the Board of Directors, from a minimum of three to a maximum of ten,
and to authorize the Board to fix the number within that range from time to
time, provided that no reduction in the number of directors would cause the
termination of services of any director before the end of such director's stated
term. The Article, as proposed to be amended, continues to provide for the
directors to be divided into three classes, with each class to be as nearly
equal in number as possible, and with each class to serve for three year terms.
If this Proposal No. 2 is approved at the Annual Meeting, Article SIXTH of the
Restated Certificate will be amended to read in its entirety as follows:
"SIXTH: THE NUMBER OF DIRECTORS CONSTITUTING THE BOARD OF
DIRECTORS SHALL NOT BE LESS THAN THREE NOR MORE THAN TEN. THE
BOARD OF DIRECTORS SHALL BE DIVIDED INTO THREE CLASSES IN AS NEAR
AS MAY BE EQUAL NUMBERS, ONE CLASS TO BE ELECTED EACH YEAR FOR A
TERM OF THREE YEARS AND UNTIL THE SUCCESSORS OF SUCH CLASS ARE
DULY ELECTED AND QUALIFY. THE NUMBER OF DIRECTORS SHALL BE FIXED
FROM TIME TO TIME BY THE BOARD OF DIRECTORS, PROVIDED THAT NO
REDUCTION IN THE NUMBER OF DIRECTORS SHALL CAUSE THE TERMINATION
OF SERVICE OF A DIRECTOR BEFORE THE END OF THE TERM FOR WHICH HE
OR SHE WAS LAST ELECTED."
The Board of Directors believes it is in the best interests of the
Corporation and its stockholders not to fix in the Restated Certificate the size
of its Board of Directors. The version of Article SIXTH currently in effect,
which fixes the number of directors at seven, was adopted in 1972 as part of a
series of amendments to the then existing Certificate of Incorporation which
were intended to deter potential takeovers by third parties. However, the Board
now believes it is important to have the flexibility to consider what number of
directors is most appropriate from time to time, so as to permit, for instance,
the addition of a new director without requiring a resignation or retirement of
a sitting director.
If the amendment is approved by stockholders, the Board will fix the
specific number of directors by resolution duly adopted at its next meeting,
which is scheduled to be held immediately following the Annual Meeting. The
amendment to the Restated Certificate is not being proposed in response to any
specific resignation, threat of resignation or refusal to serve by any director
nor in response to any specific stockholder action or proposal. Notwithstanding
the submission of the proposal for a vote by stockholders, the Board has no
intention at this time to alter the current size of the Board in the event the
amendment is approved.
The Board of Directors, at its meeting on February 1, 1996, also approved a
proposal to amend Article TENTH of the Restated Certificate. Article TENTH
currently provides that any resolution of the Board authorizing the dissolution
of the Corporation be approved by a vote of not less than four directors. In
view of the proposal to amend Article SIXTH of the Restated Certificate, the
Board recommended that Article TENTH be amended to provide that the required
vote in favor of a
23
<PAGE>
resolution authorizing the dissolution of the Corporation be not less than a
majority of the number of directors of the full Board. If Proposal No. 2 is
approved at the Annual Meeting, Article TENTH of the Restated Certificate will
be amended to read in its entirety as follows:
"TENTH: IF IT SHOULD BE DEEMED ADVISABLE IN THE JUDGMENT OF
THE BOARD OF DIRECTORS THAT THE CORPORATION BE DISSOLVED, THE
BOARD, AFTER THE ADOPTION OF A RESOLUTION TO THAT EFFECT BY NOT
LESS THAN A MAJORITY OF THE NUMBER OF DIRECTORS THEN CONSTITUTING
THE FULL BOARD, AT ANY MEETING CALLED FOR THAT PURPOSE, SHALL
CAUSE NOTICE TO BE MAILED TO EACH STOCKHOLDER ENTITLED TO VOTE
THEREON OF THE ADOPTION OF THE RESOLUTION AND OF A MEETING OF
STOCKHOLDERS TO TAKE ACTION UPON SUCH RESOLUTION. AT SUCH MEETING
OF STOCKHOLDERS, THE AFFIRMATIVE VOTE OF NOT LESS THAN 80% OF THE
ISSUED AND OUTSTANDING SHARES OF COMMON STOCK OF THE CORPORATION
SHALL BE REQUIRED TO AUTHORIZE SUCH DISSOLUTION."
The Restated Certificate provides that the affirmative vote of the holders
of not less than 80% of the outstanding shares of the Common Stock is required
for the approval of amendments to Articles SIXTH and TENTH of the Restated
Certificate. The amendments to Article SIXTH and Article TENTH approved by the
Board, because of their interrelated nature, are being submitted to the
stockholders as one proposal, and will not be voted on separately. Approval by
the requisite vote of stockholders of this Proposal No. 2 will result in
adoption of the proposed amendments to both Articles SIXTH and TENTH.
RECOMMENDATION OF BOARD OF DIRECTORS
The Corporation's Board of Directors recommends a vote FOR approval of
Proposal No. 2.
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, 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.
24
<PAGE>
STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the proxy materials relating to the
1997 Annual Meeting of Stockholders must be received at the Corporation's
offices at 565 Broad Hollow Road, Farmingdale, New York 11735 by December 24,
1996.
By Order of the Board of Directors,
Robert H. Haines
SECRETARY
Farmingdale, N.Y.
April 23, 1996
25
<PAGE>
DEL LABORATORIES, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS, MONDAY, JUNE 3 1996
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 June 3, 1996, 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>
Robert A. Kavesh, Steven Kotler, Marcella Maxwell
(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.
<TABLE>
<S> <C> <C> <C>
2. APPROVAL OF AMENDMENTS TO RESTATED CERTIFICATE OF INCORPORATION
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENTS TO THE RESTATED
CERTIFICATE OF INCORPORATION.
<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: ________________ , 1996
______________________________
Signature
______________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
