<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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
DEL LABORATORIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing the Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(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 (set forth the amount on which the
filing fee is calculated and state how it was determined):
N/A
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
-----------------------------------------------------------------------
(5) Total fee paid:
N/A
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
N/A
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(2) Form, Schedule or Registration Statement No.:
N/A
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(3) Filing Party:
N/A
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(4) Date Filed:
N/A
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<PAGE>
DEL LABORATORIES, INC.
565 BROAD HOLLOW ROAD
FARMINGDALE, NEW YORK 11735
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1997
------------------------
April 18, 1997
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of DEL
LABORATORIES, INC. (the "Corporation") will be held at Harrison House, Dosoris
Lane and Old Tappan Road, Glen Cove, New York, 11542 on Thursday, May 22, 1997,
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 transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed April 7, 1997 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 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 1996 is enclosed herewith.
By Order of the Board of Directors,
Robert H. Haines
SECRETARY
YOU ARE REQUESTED TO COMPLETE AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED
ENVELOPE WHICH REQUIRES NO ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES. IF
YOU ATTEND THE MEETING, YOUR PROXY WILL BE RETURNED TO YOU AT THE MEETING UPON
REQUEST TO THE SECRETARY OF THE MEETING. YOU ARE URGED TO RETURN THE PROXY
PROMPTLY. THIS WILL HELP SAVE THE EXPENSE OF FOLLOW-UP LETTERS TO STOCKHOLDERS
WHO HAVE NOT RESPONDED AND THE EXPENSE OF HOLDING AN ADJOURNED ANNUAL MEETING IN
THE EVENT A QUORUM IS NOT REPRESENTED ON MAY 22ND.
<PAGE>
DEL LABORATORIES, INC.
565 BROAD HOLLOW ROAD
FARMINGDALE, NEW YORK 11735
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1997
------------------------
This Proxy Statement and accompanying form of proxy are furnished in
connection with the solicitation of proxies by the Board of Directors of Del
Laboratories, Inc., a Delaware corporation (the "Corporation"), for use at the
Annual Meeting of Stockholders to be held on May 22, 1997 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 7, 1997 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 5,627,147 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 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.
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.
Attendance at the Annual Meeting will be limited to stockholders as of the
Record Date, their authorized representatives and guests of the Corporation.
Admission will be by admission card only. For stockholders of record who wish to
obtain an admission card, please complete and return the enclosed Request for
Admission Card. Beneficial owners with shares held through an intermediary, such
as a bank or stockbroker, should request admission cards by writing to Vice
President - Finance, Del Laboratories, Inc., 565 Broad Hollow Road, Farmingdale,
New York 11735, and include proof of ownership, such as a bank or brokerage firm
account statement or a letter from the broker, trustee, bank or nominee holding
their stock, confirming beneficial ownership. Stockholders who do not obtain
admission cards in advance
<PAGE>
may obtain them upon verification of ownership at the Annual Meeting. Admission
cards may be issued to others at the discretion of the Corporation.
This Proxy Statement and the proxy in the accompanying form are being sent
on or about April 18, 1997 to stockholders of record on the Record Date.
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 7, 1997
------------------------
AMOUNT AND
NATURE OF
BENEFICIAL
OWNERSHIP PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER (1) OF CLASS
- ----------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Dan K. Wassong
Del Laboratories, Inc.
565 Broad Hollow Road
Farmingdale, New York (2)...................................... 2,243,379(3) 34.4%(4)
Martin E. Revson
445 Park Avenue
New York, New York (2)......................................... 943,225 16.8
Dimensional Fund Advisors Inc.
1299 Ocean Avenue--Suite 650
Santa Monica, California....................................... 341,684(5) 6.1
</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 1,285,593 shares owned individually by Mr. Wassong, 2,333 shares
owned by Mr. Wassong's wife (as to which he disclaims beneficial ownership),
902,411 shares issuable upon exercise of options held by Mr. Wassong and
53,042 shares held for Mr. Wassong's account under the ESOP as of December
31, 1996.
(4) Based on 5,627,147 shares outstanding on April 7, 1997 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 341,684 shares of Common
Stock, all of which shares are held in portfolios of DFA Investment
Dimensions Group Inc., 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
2
<PAGE>
February 7, 1997 prepared and filed by Dimensional with respect to its
ownership of Common Stock as of December 31, 1996.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information, as of the Record Date,
regarding the beneficial ownership of Common Stock by (i) each director of the
Corporation (other than Mr. Wassong and Mr. Revson, information with respect to
each of whom is presented above), (ii) each of the four most highly- compensated
executive officers of the Corporation during 1996 other than Mr. Wassong and
(iii) all directors and executive officers as a group:
<TABLE>
<CAPTION>
COMMON STOCK OWNED AS OF
APRIL 7, 1997
------------------------
AMOUNT AND
NATURE OF
BENEFICIAL
OWNERSHIP PERCENT
(1) OF CLASS
----------- -----------
<S> <C> <C>
DIRECTORS
Robert A. Kavesh.................................................. 13,670 0.2%
Steven Kotler..................................................... 51,772(2) 0.9
Robert H. Haines.................................................. 22,318 0.4
Marcella Maxwell.................................................. 133 *
Jack Futterman.................................................... 6,317 0.1
EXECUTIVE OFFICERS
Charles J. Hinkaty................................................ 289,367(3) 5.0
Harvey P. Alstodt................................................. 112,603(4) 2.0
William McMenemy.................................................. 215,558(5) 3.7
Melvyn C. Goldstein............................................... 156,912(6) 2.8
ALL DIRECTORS AND EXECUTIVE
OFFICERS AS A GROUP
(12 persons)...................................................... 4,071,940(7) 57.7
</TABLE>
- ------------------------
* Less than .1%
(1) Except as noted below, each beneficial owner has sole voting power and sole
investment power.
(2) Includes 1,258 shares of Common Stock owned by Mr. Kotler's wife, 114 shares
owned by a pension trust for the benefit of Mr. Kotler and 2,500 shares
owned by a family foundation which Mr. Kotler may be deemed to control.
(3) Includes 195,294 shares which Mr. Hinkaty may acquire through exercise of
options currently outstanding and 5,109 shares held for Mr. Hinkaty's
account under the ESOP as of December 31, 1996. Mr. Hinkaty is also a
director of the Corporation.
(4) Includes 68,220 shares which Mr. Alstodt may acquire through exercise of
options currently outstanding and 4,297 shares held for Mr. Alstodt's
account under the ESOP as of December 31, 1996.
(5) Includes 181,673 shares which Mr. McMenemy may acquire through exercise of
options currently outstanding and 13,885 shares held for Mr. McMenemy's
account under the ESOP as of December 31, 1996.
(6) Includes 67,170 shares which Mr. Goldstein may acquire through exercise of
options currently outstanding and 6,624 shares held for Mr. Goldstein's
account under the ESOP as of December 31, 1996.
3
<PAGE>
(7) Includes (i) 1,430,768 shares which such persons have rights to acquire
through the exercise of options currently outstanding, (ii) 83,643 shares
held for the accounts of all executive officers and directors under the ESOP
as of December 31, 1996, (iii) 2,333 shares owned by Mr. Wassong's wife,
(iv) 1,258 shares owned by Mr. Kotler's wife, (v) 114 shares held by a
pension trust for the benefit of Mr. Kotler and (vi) 2,500 shares owned by a
family foundation which Mr. Kotler may be deemed to control.
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.
ELECTION OF DIRECTORS
Article SIXTH of the Corporation's Restated Certificate of Incorporation
provides that the Board of Directors shall consist of a minimum of three
directors 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 nearly as equal as possible. The Board
currently consists of eight directors, three of whom are designated as members
of Class I, two of whom are designated as members of Class II and three of whom
are designated as members of 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 1999.
Three directors for Class I are to be elected at the Annual Meeting and,
when elected, will serve until the Annual Meeting of Stockholders for 2000 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 I 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.
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) I
(TO SERVE UNTIL THE ANNUAL MEETING
OF STOCKHOLDERS FOR 2000)
THREE 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 (86) Private investor since August 1992; Chairman of the Board of the 1963
Corporation from July 1963 to August 1992
Dan K. Wassong (66) President and Chief Executive Officer of the Corporation; Chairman of 1968
the Board since August 1992
Jack Futterman (66) Private investor since March 1996; Chairman and Chief Executive Officer 1996
of Pathmark Stores, Inc. from September 1989 to March 1996
</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 (46) Vice President of the Corporation and President of Del 1986
Pharmaceuticals, Inc.
Robert H. Haines (76) Partner, Zimet, Haines, Friedman & Kaplan, attorneys at law; Secretary 1970
of the Corporation since October 1989 (2)
</TABLE>
CLASS III
(TO SERVE UNTIL THE ANNUAL MEETING
OF STOCKHOLDERS FOR 1999)
NO DIRECTORS ARE TO BE ELECTED TO THIS CLASS
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION OR EMPLOYMENT (1) SINCE
- ------------------------------ ----------------------------------------------------------------------- -----------
<S> <C> <C>
Robert A. Kavesh (69) Marcus Nadler Professor of Finance and Economics, Graduate 1976
School of Business, New York University
Steven Kotler (50) President and Chief Executive Officer, Schroder Wertheim & Co., 1987
Incorporated, an investment banking firm (3)
Marcella Maxwell (59) Director of Development and Public Affairs, Miracle Makers, Inc., since 1994
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>
- ------------------------
(1) Executive officers of the Corporation, unless otherwise indicated.
5
<PAGE>
(2) The Corporation during the past fiscal year has retained, and proposes in
the future to retain, Zimet, Haines, Friedman & Kaplan as its general
counsel.
(3) The Corporation during the past fiscal year has retained, and proposes in
the future to retain, Schroder Wertheim & Co., Incorporated and certain of
its affiliates to perform investment advisory and other services.
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. Mr.
Kotler is also a director of Moore Medical Corp. and Schroders plc. Mr.
Futterman is also a director of The Hain Foods Group, Inc.
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 eight meetings during 1996
and acted three times by unanimous written consent.
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 1996.
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. Kavesh, Kotler and Futterman; Mr. Futterman became a member of the
Committee in March 1997. During 1996, it held one meeting and acted nine times
by unanimous written consent. In March 1997, a subcommittee of the Compensation
Committee, the Stock Option Committee, was formed to administer the
Corporation's stock-based incentive plans. The Stock Option Committee consists
of Mr. Kavesh and Mr. Futterman.
The Human Resources Committee is comprised of Ms. Maxwell and Mr. Kotler.
The Human Resources Committee deals with all aspects of employee benefits,
complaints, employment practices and other matters involving the welfare of
employees and prospective employees of the Corporation (other than negotiation
of collective bargaining agreements and individual contracts of employment and
other matters expressly reserved for action by the Compensation Committee). The
Human Resources Committee also has authority with respect to compliance with a
Consent Decree entered into by the Corporation
6
<PAGE>
in 1995 with the Equal Employment Opportunity Commission ("EEOC") which is
referred to elsewhere herein. See "Stockholder Derivative Litigation" below. The
Committee held one meeting during 1996. The members of the Committee also
received monthly written reports prepared during the year by counsel in
connection with the Corporation's EEOC compliance activities.
During 1996, no director attended fewer than 75% of the aggregate of the
total number of meetings of the Board of Directors and the total number of
meetings of the committees on which such director served, except Mr. Kavesh, who
did not attend three of the eight meetings of the Board of Directors and one of
the two meetings of the Audit Committee held in 1996.
DIRECTORS' FEES
Mr. Kavesh, Mr. Kotler, Ms. Maxwell and Mr. Futterman each received the
amount of $25,000 for services rendered by them in 1996 as directors of the
Corporation. No other director received any fees for serving as such in 1996.
RECOMMENDATION OF BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR election as directors in Class
I of the nominees identified above. Those nominees who receive the three highest
numbers of votes for their election as directors will be elected.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to the compensation
in 1996, 1995 and 1994 of the Corporation's Chief Executive Officer and each of
the four other most highly compensated executive officers in 1996 (collectively,
the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------
ANNUAL COMPENSATION SECURITIES
--------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(1) COMPENSATION(2)
- --------------------------------------------- --------- ---------- ---------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Dan K. Wassong............................... 1996 $ 674,000 $ 809,000 120,669 $ 370,247
Chairman, President 1995 660,000 635,000 180,124 358,211
and Chief Executive Officer 1994 636,828 500,000 37,333 443,437
Charles J. Hinkaty........................... 1996 $ 310,454 $ 90,000 14,441 $ 15,112
Vice President and President of Del 1995 302,461 75,000 80,729 12,677
Pharmaceuticals, Inc. 1994 293,046 86,000 28,341 12,708
Harvey P. Alstodt............................ 1996 $ 257,125 $ 170,000 18,229 $ 16,419
Executive Vice President, 1995 247,500 135,000 23,647 13,999
Sales--Cosmetics Division, 1994 235,000 115,000 8,000 14,393
North America
William McMenemy............................. 1996 $ 257,125 $ 170,000 19,657 $ 16,034
Executive Vice President, Marketing-- 1995 249,500 135,000 14,042 13,598
Cosmetics Division, North America 1994 225,000 115,000 13,664 13,761
Melvyn C. Goldstein.......................... 1996 $ 223,175 $ 134,000 33,573 $ 16,309
Vice President--Finance 1995 215,775 100,000 8,000 13,907
1994 209,333 85,000 8,000 14,234
</TABLE>
7
<PAGE>
- ------------------------
(1) Stock options granted during 1996 prior to November 29, 1996 have been
adjusted to reflect a four-for-three stock split effective on that date (the
"1996 Stock Split"). 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"), as well as the 1996 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 and the 1996 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 1996 the amounts
contributed and allocated, calculated based on the closing price of the
Common Stock on December 31, 1996, were as follows: Mr. Wassong-$5,531, Mr.
Hinkaty-$5,531, Mr. Alstodt-$5,531, Mr. McMenemy-$5,531 and Mr.
Goldstein-$5,531); (ii) the insurance premiums paid in each year in respect
of such officer under the Corporation's Executive Medical Reimbursement Plan
(in 1996, 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 1996, the amounts were as follows: Mr.
Wassong-$111,267, Mr. Hinkaty-$1,867, Mr. Alstodt-$3,174, Mr.
McMenemy-$2,789, and Mr. Goldstein-$3,064). Also includes for Mr. Wassong
indebtedness owed by him to the Corporation which was forgiven in each year
($245,735 in 1996). See "Certain Benefit Plans," "Description of Employment
Agreements" and "Certain Transactions" below.
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 Stock Option Committee, a subcommittee of the Compensation Committee. As of
April 7, 1997, options to purchase a total of 710,446 shares of Common Stock
were outstanding under the 1994 Plan and options to purchase a total of 812,125
shares were outstanding under the 1984 Plan. As of that date, a total of 326,820
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 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.
STOCK OPTION GRANTS DURING 1996
The following table sets forth for each of the Named Executive Officers
information regarding individual grants of options during the year ended
December 31, 1996 and the present value of these options on their grant date.
8
<PAGE>
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANTED GRANT DATE
UNDERLYING TO EMPLOYEES IN EXERCISE OR EXPIRATION PRESENT
NAME OPTIONS GRANTED(1) FISCAL YEAR BASE PRICE DATE VALUE(2)
- ------------------------ ------------------- ------------------- ----------- ---------------------- -------------
<S> <C> <C> <C> <C> <C>
Dan K. Wassong.......... 42,092 17.6% $ 20.44 October 2, 2003 $ 263,238
78,577 32.8 20.88 December 24, 2003 470,765
Charles J. Hinkaty...... 14,441 6.0 21.28 July 25, 2003 94,957
Harvey P. Alstodt....... 11,664 4.9 21.28 July 25, 2003 76,697
6,565 2.7 21.00 October 25, 2003 41,084
William McMenemy........ 8,148 3.4 22.13 March 1, 2003 November 62,916
11,509 4.8 21.28 1, 2003 73,229
Melvyn C. Goldstein..... 21,309 8.9 21.56 April 2, 2003 140,583
12,264 5.1 21.50 December 6, 2003 77,521
</TABLE>
- ------------------------
(1) Each of the options granted during 1996 has an exercise price equal to the
fair market value of a share of Common Stock on the date of grant, expires
seven years from the date of grant and vests in one-third annual increments
commencing one year after the date of grant.
(2) These amounts were determined using the Black-Scholes option valuation
model. The assumptions underlying the Black-Scholes value include (a) an
expected volatility of 35.81% with respect to the options which expire on
March 1, 2003, 27.53% with respect to the options which expire on April 2,
2003, 26.50% with respect to the options which expire on July 25, 2003,
26.43% with respect to the options which expire on October 2, 2003, 26.28%
with respect to the options which expire on October 25, 2003, 26.28% with
respect to the options which expire on November 1, 2003, 26.16% with respect
to the options which expire on December 6, 2003, and 23.99% with respect to
the options which expire on December 24, 2003 (all volatilities are based on
the average of the one, three and five year historical volatilities of the
Common Stock in effect on the dates of grant); (b) a risk-free rate of 5.67%
(which approximates the five year Treasury bond rate on the date of grant)
with respect to the options which expire on March 1, 2003, a risk-free rate
of 6.06% with respect to the options which expire on April 2, 2003, a
risk-free rate of 6.56% with respect to the options which expire on July 25,
2003, a risk-free rate of 6.45% with respect to the options which expire on
October 2, 2003, a risk-free rate of 6.07% with respect to the options which
expire on October 25, 2003 and on November 1, 2003, a risk-free rate of
5.84% with respect to the options which expire on December 6, 2003 and a
risk-free rate of 6.21% with respect to the options which expire on December
24, 2003; (c) projected dividend yields of .63%, .65%, .66%, .69%, .67%,
.66%, .65% and .67% with respect to the options which expire on March 1,
April 2, July 25, October 2, October 25, November 1, December 6, and
December 24, 1996, 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 five year expected period to exercise for the options; and (e) the
vesting schedule for the options (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%.
9
<PAGE>
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 1996 and
unexercised stock options held as of December 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES ACQUIRED VALUE REALIZED DEC. 31, 1996 DEC. 31, 1996
NAME ON EXERCISE (1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(2)
- ------------------------------ --------------- ---------------- ----------------------- --------------------------
<S> <C> <C> <C> <C>
Dan K. Wassong................ 200,533 $ 3,125,325 730,557/171,854 $ 8,814,638/285,534
Charles J. Hinkaty............ 23,021 338,170 162,490/32,804 1,644,098/114,769
Harvey P. Alstodt............. 40,086 574,555 44,208/24,012 423,850/37,228
William McMenemy.............. 34,637 531,044 162,016/19,657 2,210,133/0
Melvyn C. Goldstein........... 75,999 1,124,257 33,597/33,573 370,022/0
</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, 1996
($20.875 per share), less the exercise price for the aggregate number of
shares subject to the options.
PENSION BENEFITS
The following table shows the sum of the annual pension benefits payable to
the Named Executive Officers under the Corporation's Employees' Pension Plan
("Pension Plan") and Supplemental Executive Retirement Plan ("SERP"), 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
FINAL AVERAGE YEARS OF CREDITED SERVICE AT RETIREMENT(2)
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 1995. The
compensation for 1995 for Messrs. Wassong, Hinkaty, Alstodt, McMenemy and
Goldstein was $1,180,136, $387,672, $362,545, $354,726 and $305,097,
respectively.
(2) Messrs. Wassong, Hinkaty, Alstodt, McMenemy and Goldstein have,
respectively, 31, 12, 10, 31 and 15 years of credited service under the
Pension Plan.
(3) The benefits payable under the Pension Plan are currently limited to
$125,000, which is the maximum currently allowable under the Internal
Revenue Code of 1986, as amended (the "Code"). Any pension benefit payable
in excess of the maximum permitted by the Code would, if applicable, be
payable under the SERP.
10
<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") and
by an amendment dated March 31, 1997 (the "1997 Amendment"). The agreement, as
currently in effect, provides for Mr. Wassong's full time employment until
December 31, 2005 at an annual base salary of not less than $688,000, which is
Mr. Wassong's current base salary. 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 Corporation's Annual 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 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. 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 policies (and any additional policies
that may
11
<PAGE>
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 is currently party to an employment agreement with Charles
J. Hinkaty, Vice President and President of Del Pharmaceuticals, Inc., for a
term expiring on March 31, 1999. Under the employment agreement, Mr. Hinkaty's
annual rate of compensation shall not be less than $270,000.
The Corporation is currently party to an employment agreement with Harvey
Alstodt, Executive Vice President, Sales-Cosmetics Division, North America, for
a term expiring on March 31, 1999. Under the employment agreement, Mr. Alstodt's
annual rate of compensation shall not be less than $200,000.
The Corporation is currently party to an employment agreement with William
McMenemy, Executive Vice President, Marketing-Cosmetics Division, North America,
for a term expiring on March 31, 2001. Under the employment agreement, Mr.
McMenemy's annual rate of compensation shall not be less than $200,000.
The Corporation is currently party to an employment agreement with Melvyn C.
Goldstein, Vice President- Finance, for a term expiring on March 31, 1999. 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, Alstodt,
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, $200,000 or $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 12 years, Mr. Alstodt has been with the
Corporation for ten years, Mr. McMenemy has been with the Corporation
for 32 years and Mr. Goldstein has been with the Corporation for 15 years.
Termination without cause, for purposes of each of the compensation arrangements
described in this paragraph, is deemed to include a "change of control" as
defined.
CERTAIN TRANSACTIONS
Pursuant to the 1994 Amendment to Mr. Wassong's employment agreement, three
outstanding loans made by the Corporation to Mr. Wassong 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
12
<PAGE>
serves as a consultant to, the Corporation. Pursuant to the 1997 Amendment to
Mr. Wassong's employment agreement, the period during which the Existing Balance
is to be repaid was extended from January 20, 2004 to January 20, 2006, and the
schedule of principal payments which are to be made was changed so that payments
of $140,000 are to be made in each of 2004 and 2005 and a final payment of
$362,250 is to be made on January 20, 2006. The Corporation may, at its option,
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 2006, 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 1996, $140,000 of
principal and $105,735 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.
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 Chase Manhattan Bank, is payable in 40 quarterly
installments commencing on March 31, 1993. The loan is secured by a pledge of
8,500 shares of Common Stock. If Mr. Hinkaty were to leave the employment of the
Corporation for any reason other than death or disability, the loan will be
payable in full within 30 days thereafter. The current principal balance of this
loan is $74,750.
In December 1992, the Corporation loaned Mr. McMenemy $53,437 to enable him
to exercise an option to purchase shares of Common Stock. The loan bears
interest at the prime rate of Chase Manhattan Bank and is payable in 40
quarterly installments commencing on December 31, 1993. 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 $72,492 (including $37,758 from other
outstanding loans).
STOCKHOLDER DERIVATIVE LITIGATION
In August 1995, two stockholder derivative actions were filed in the State
of Delaware Chancery Court 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 were consolidated, alleged breach of fiduciary
duty and waste of corporate assets by the directors in connection with alleged
acts and omissions relating to alleged sexual harassment of certain former
employees of the Corporation and the settlement on August 3, 1995 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 pursuant to a Consent Decree entered into on August 3, 1995. The
consolidated stockholder derivative action sought to compel the directors to
account to the Corporation for amounts paid in connection with the defense and
settlement of the EEOC Lawsuit and certain other relief. In March 1997, the
parties agreed, subject to Court approval, to a proposed settlement of the
action in which the Corporation's insurance carrier, on behalf of the individual
defendants, will pay $400,000 to the Corporation, and the Board of Directors
will make the Human Resources Committee a permanent committee of the Board to be
composed only of "independent" directors (as defined in the Internal Revenue
Code). The Human Resources Committee will be charged with review and oversight
of the Corporation's compliance with the requirements of Title VII relating to
employment practices, including discrimination, wrongful discharge and
retaliation. The Corporation has agreed not to oppose an application to the
Court by the plaintiffs' attorneys for an attorneys' fee of $150,000. The
defendants continue to deny all allegations of wrongdoing and have advised
13
<PAGE>
the Corporation that they are entering into the proposed settlement to eliminate
the burden and expense of further litigation.
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 Annual Incentive Plan, pursuant to which bonuses for executive officers are
determined. The Stock Option Committee, a subcommittee of the Compensation
Committee, administers the stock-based incentive plans. The Compensation
Committee is currently comprised of Robert A. Kavesh, Steven Kotler and Jack
Futterman; Mr. Futterman was first appointed to the Compensation Committee in
March 1997. The Stock Option Committee is comprised of Messrs. Kavesh and
Futterman. Robert H. Haines also served on the Compensation Committee during
1996 until June 3, 1996.
As discussed below, the Compensation 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 Compensation Committee to
any of the factors considered in determining the remuneration paid to the Chief
Executive Officer and the other Named Executive Officers for 1996.
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 (as amended) on an annual basis through 2006 (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.
The Compensation Committee's policy is to compensate executive officers at
levels between the 50th and 75th percentile of total compensation (excluding the
value of stock options) paid to officers in comparable companies with comparable
responsibilities, although there may be variations above or below this range
depending on corporate results and individual executive officer performance. For
this purpose, the Compensation Committee references a peer group of six public
companies (which are the same six companies comprising the Peer Group used in
the stock performance graph appearing elsewhere herein), each of which
manufactures and/or sells personal care products to the mass market. These
companies range in revenues from approximately $165 million to $660 million. In
addition, general compensation survey information supplied by a compensation
consulting firm and published survey and proxy data concerning overall
compensation levels and structures, as well as stock option grant levels, are
evaluated by the Compensation Committee in making its executive officer
compensation determinations.
Subject to the foregoing, 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 and the executive's
responsibilities with the Corporation. 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 1996, the maximum increase in
base salary for any of the Named Executive Officers was approximately 4%. 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
14
<PAGE>
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 Annual 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 1996 for the Named Executive Officers
ranged from approximately 22% to 55% 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. Under the 1994 Stock Plan, the Stock Option Committee
may 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 1996 was $674,000, which constituted a 2.1%
increase over his base salary for 1995. In approving this increase, the
Compensation Committee considered, in particular, the excellent financial
performance of the Corporation during 1995. His incentive compensation in 1996,
which was based on the Corporation's pre-tax income for continuing operations
during the year, was $809,000. Although the Corporation's revenues and profits
attained record levels for the third consecutive year under Mr. Wassong's
leadership and the Compensation Committee believed that the financial results of
the Corporation for 1996 were indicative of superior performance by Mr. Wassong,
the amount of incentive compensation awarded was, at Mr. Wassong's request, set
substantially below the maximum amount that Mr. Wassong was eligible to receive
under the Annual Incentive Plan for 1996. During 1996, a total of $245,735 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
Stock Option 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
206,570 shares were granted to the Corporation's Named Executive Officers during
1996, including options to purchase 120,669 shares granted to Mr. Wassong. All
of the options granted to the Named Executive Officers in 1996 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).
COMPENSATION COMMITTEE
Robert H. Haines (for the period from
January 1, 1996 to June 3, 1996)
Robert A. Kavesh
Steven Kotler
15
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Kotler, who served on the Compensation Committee during 1996 and
continues to serve on such Committee, 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 1996. Mr. Haines, who also served on the
Compensation Committee until June 3, 1996, 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 1996.
STOCK PERFORMANCE GRAPH
The following graph charts the total stockholder return over a five-year
period commencing on December 31, 1991, 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 Dep Corporation, Carter-Wallace, Inc.,
Helen of Troy Limited, NBTY, Inc., Tambrands, Inc. and Windmere Corporation.
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. Maybelline, Inc. and Mem Company, Inc.,
which (along with Dep Corporation) were 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 1996, are not part of the Peer Group included
in the graph appearing below, since those companies were sold and their stock no
longer traded during 1996. Carter-Wallace, Inc., Helen of Troy Limited, NBTY,
Inc., Tambrands, Inc. and Windmere Corporation, each of which manufactures
and/or sells personal care products to the mass market, have been added to the
Peer Group for the first time in view of the inclusion of those companies in the
group of companies to which the Corporation generally compares itself for
purposes of determining compensation for executive officers and in order to make
the Peer Group comparison more meaningful.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN TO STOCKHOLDERS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Del Laboratories, Inc. $100.0 $113.2 $147.9 $252.8 $280.0 $382.1
Peer Group 100.0 98.9 70.7 53.5 60.7 74.3
AMEX Market Value Index 100.0 101.1 120.8 109.8 138.8 147.7
</TABLE>
16
<PAGE>
AUDITORS
KPMG Peat Marwick ("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.
STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the proxy materials relating to the
1998 Annual Meeting of Stockholders must be received at the Corporation's
offices at 565 Broad Hollow Road, Farmingdale, New York 11735 by December 19,
1997.
By Order of the Board of Directors,
Robert H. Haines
SECRETARY
Farmingdale, N.Y.
April 18, 1997
17
<PAGE>
DEL LABORATORIES, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders, Thursday, May 22, 1997
The undersigned stockholder of DEL LABORATORIES, INC., a Delaware
corporation, hereby appoints Dan K. Wassong and Melvyn C. Goldstein, or
either of them voting singly in the absence of the other, attorneys and
proxies, with full power of substitution and revocation, to vote, as
designated below, all shares of Common Stock of Del Laboratories, Inc., which
the undersigned is entitled to vote at the Annual Meeting of Stockholders of
said Corporation to be held at Harrison House, Dosoris Lane and Old Tappan
Road, Glen Cove, New York, on May 22, 1997, at 9:30 A.M. (local time) or any
adjournment thereof, in accordance with the instructions on the reverse side:
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 listed on the reverse side of this proxy
card.
(Continued on reverse side)
<PAGE>
ELECTION OF DIRECTORS
FOR all nominees WITHHOLD AUTHORITY
listed below (except to vote for all
as withheld in the nominees listed
space provided) / / below / /
Dan K. Wassong, Martin E. Revson, Jack Futterman
(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.
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: ----------------------------, 1997
-----------------------------------------
Signature
------------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE>
DEL LABORATORIES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
CONFIDENTIAL VOTING INSTRUCTIONS
INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders, Thursday, May 22, 1997
The undersigned hereby instructs the Trustee of Del Laboratories,
Inc. Employee Stock Ownership Plan ("ESOP") to vote all shares of Common
Stock of Del Laboratories, Inc. allocated to the undersigned's account number
under the ESOP at the Annual Meeting of Stockholders of said Corporation to
be held at the Harrison House, Dosoris Lane and Old Tappan Road, Glen Cove,
New York, on May 22, 1997, at 9:30 A.M. (local time) or any adjournment
thereof, in accordance with the instructions on the reverse side (or, if no
instructions are given, "FOR" all nominees listed on the reverse side of this
card.)
(Continued on reverse side)
<PAGE>
ELECTION OF DIRECTORS
FOR all nominees WITHHOLD AUTHORITY
listed below (except to vote for all
as withheld in the nominees listed
space provided) / / below / /
Dan K. Wassong, Martin E. Revson, Jack Futterman
(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.
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: ----------------------------, 1997
-----------------------------------------
Signature
------------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
