<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 Section 240.14a-11(c) or Section
240.14a-12
DEL LABORATORIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing 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)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
DEL LABORATORIES, INC.
178 EAB PLAZA
UNIONDALE, NEW YORK 11556-0178
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 1998
------------------------
April 28, 1998
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 28, 1998,
at 9:30 A.M. (local time) to consider the following matters:
1. To elect two members of the Board of Directors of the Corporation for a
term of three years;
2. To approve an amendment of the Corporation's Restated Certificate of
Incorporation to increase the number of authorized shares of common stock; and
3. To transact such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on April 6, 1998 as
the record date for the determination of the stockholders entitled to notice of
and to vote at such meeting or any adjournment thereof. A complete list of
Stockholders entitled to vote at the Annual Meeting will be maintained at the
Company's corporate offices at 178 EAB Plaza, Uniondale, New York 11556-0178,
for ten days prior to the 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--Chief Financial Officer, 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 1997 is enclosed herewith.
By Order of the Board of Directors,
Shawn A. Smith
SECRETARY
YOU ARE REQUESTED TO COMPLETE AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED POSTAGE-PAID RETURN ENVELOPE. THIS WILL ENSURE THAT YOUR SHARES ARE
VOTED IN ACCORDANCE WITH YOUR WISHES.
<PAGE>
DEL LABORATORIES, INC.
178 EAB PLAZA
UNIONDALE, NEW YORK 11556-0178
--------------
PROXY STATEMENT
--------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 1998
--------------
Your proxy is hereby solicited on behalf of the Board of Directors of Del
Laboratories, Inc., a Delaware corporation (the "Corporation") for use at the
1998 Annual Meeting of Stockholders, to be held on Thursday, May 28, 1998 at
9:30 a.m. at Harrison House, Dosoris Lane and Old Tappan Road, Glen Cove, New
York, 11542, and at any adjournments thereof. The purposes of the meeting are as
set forth herein and in the accompanying Notice of Annual Meeting. It is
anticipated that these materials will be mailed on or about April 28, 1998 to
all stockholders entitled to vote at 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 FOR 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, by executing a
later proxy or by attending the Annual Meeting in person and requesting the
return of the proxy, in any 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 either personally, by telephone or facsimile. The
Corporation will, upon request, reimburse banks, brokers and others for their
reasonable expenses incurred in handling proxy materials for beneficial owners.
The Board of Directors has fixed the close of business on April 6, 1998 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 7,616,041 shares of Common Stock, par
value $1.00 per share ("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 two nominees receiving the highest vote totals to be
elected as directors of the Corporation. Accordingly, abstentions and broker
non-votes will not affect the outcome of the election.
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--Chief Financial Officer, 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 may obtain them upon
verification of ownership at the Annual Meeting. Admission cards may be issued
to others at the discretion of the Corporation.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to each person who, to the
knowledge of the Corporation, 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 6, 1998
--------------------------
<S> <C> <C>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP (1) OF CLASS
- ----------------------------------------------------------------------------------- ------------- -----------
Dan K. Wassong
Del Laboratories, Inc.
178 EAB Plaza
Uniondale, New York (2).......................................................... 2,863,926(3) 32.8%(4)
Martin E. Revson
445 Park Avenue
New York, New York (2)........................................................... 1,186,966 15.6%
Dimensional Fund Advisors Inc.
1299 Ocean Avenue--Suite 650
Santa Monica, California......................................................... 455,579(5) 6.0%
</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 1,670,354 shares owned individually by Mr. Wassong, 3,110 shares
owned by Mr. Wassong's wife (as to which he disclaims beneficial ownership),
1,119,184 shares issuable upon exercise of options held by Mr. Wassong and
71,278 shares held for Mr. Wassong's account under the ESOP (as of December
31, 1997).
(4) Based on 7,616,041 shares outstanding on April 6, 1998 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 455,579 shares of the
Corporation's stock as of December 31, 1997, 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 Participating
Group Trust, investment vehicles for qualified employee benefit plans, with
respect to all of which Dimensional serves as investment manager.
Dimensional disclaims beneficial ownership of all such shares.
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
2
<PAGE>
highly-compensated executive officers of the Corporation during 1997 other than
Mr. Wassong and (iii) all directors and executive officers as a group:
<TABLE>
<CAPTION>
COMMON STOCK OWNED AS OF
APRIL 6, 1998
--------------------------
<S> <C> <C>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
OWNERSHIP (1) OF CLASS
------------- -----------
DIRECTORS
Robert A. Kavesh...................................................................... 16,244 0.2%
Steven Kotler......................................................................... 60,363(2) 0.8%
Marcella Maxwell...................................................................... 177 *
Jack Futterman........................................................................ 8,423 0.1%
George L. Lindemann................................................................... 82,133(3) 1.1%
EXECUTIVE OFFICERS
Charles J. Hinkaty.................................................................... 386,083(4) 4.9%
Harvey P. Alstodt..................................................................... 147,054(5) 1.9%
William McMenemy...................................................................... 281,124(6) 3.6%
James Lawrence........................................................................ 22,476(7) 0.3%
Melvyn C. Goldstein................................................................... 89,732(8) 1.2%
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP
(12 persons).......................................................................... 5,144,701(9) 55.6%
</TABLE>
- ------------------------
* Less than .1%
(1) Except as noted below, each beneficial owner has sole voting power and sole
investment power.
(2) Includes 1,677 shares of Common Stock owned by Mr. Kotler's wife, 152 shares
owned by a pension trust for the benefit of Mr. Kotler and 1,333 shares
owned by a family foundation which Mr. Kotler may be deemed to control.
(3) Shares are owned by a partnership controlled by Mr. Lindemann.
(4) Includes 235,055 shares which Mr. Hinkaty may acquire through exercise of
options currently outstanding and 7,069 shares held for Mr. Hinkaty's
account under the ESOP as of December 31, 1997. Mr. Hinkaty is also a
director of the Corporation.
(5) Includes 83,525 shares which Mr. Alstodt may acquire through exercise of
options currently outstanding and 5,980 shares held for Mr. Alstodt's
account under the ESOP as of December 31, 1997.
(6) Includes 193,804 shares which Mr. McMenemy may acquire through exercise of
options currently outstanding and 18,824 shares held for Mr. McMenemy's
account under the ESOP as of December 31, 1997.
(7) Includes 10,666 shares which Mr. Lawrence may acquire through exercise of
options currently outstanding and 1,143 shares held for Mr. Lawrence's
account under the ESOP as of December 31, 1997.
(8) Includes 9,098 shares held for Mr. Goldstein's account under the ESOP as of
December 31, 1997. Mr. Goldstein ceased to be an executive officer of the
Corporation on November 15, 1997.
(9) Includes (i) 1,642,235 shares which such persons have rights to acquire
through the exercise of options currently outstanding, (ii) 113,392 shares
held for the accounts of all executive officers and directors under the ESOP
as of December 31, 1997, (iii) 3,110 shares owned by Mr. Wassong's wife,
(iv) 1,667 shares owned by Mr. Kotler's wife, (v) 152 shares held by a
pension trust for the benefit of Mr. Kotler, (vi) 1,333 shares owned by a
family foundation which Mr. Kotler may be deemed to control, and (vii)
82,133 shares owned by a Partnership controlled by Mr. Lindemann.
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
3
<PAGE>
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 timely made all required filings.
ELECTION OF DIRECTORS
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 by the Board of Directors and such
number 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 term of office
of each class of directors is three years, with one class of directors expiring
each year in rotation so that one class is elected at each annual meeting.
Two directors for Class II are to be elected at the Annual Meeting and, when
elected, will serve until the Annual Meeting of Stockholders for 2001 and until
the election and qualification of their successors. Mr. George Lindemann was
nominated for election by the Board to fill the vacancy to be left by Mr. Robert
Haines, who is not standing for reelection due to his retirement.
It is the intention of the Board of Directors to nominate at the Annual
Meeting the individuals whose names are set forth in Class II below for election
to the Board of Directors for a three year term. In the event that 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 two directors to be elected at
the Annual Meeting.
INFORMATION CONCERNING DIRECTORS
The information set forth below, furnished to the Board of Directors by the
respective individuals, shows as to each nominee and each director of the
Corporation (i) his or her name and age; (ii) his or her principal occupation,
including positions or offices held with the Corporation, at present and for the
past five years; (iii) the year in which he or she began to serve as a director;
and (iv) the class of director to which he or she belongs.
CLASS I
(TO SERVE UNTIL THE ANNUAL MEETING OF STOCKHOLDERS FOR 2000)
NO DIRECTORS ARE TO BE ELECTED TO THIS CLASS
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION OR EMPLOYMENT (1) DIRECTOR SINCE
- ------------------------- ----------------------------------------------------------------------- ---------------
<S> <C> <C>
Martin E. Revson (87) Private investor since August 1992; Chairman of the Board of the
Corporation from July 1963 to August 1992 1963
Dan K. Wassong (67) President and Chief Executive Officer of the Corporation; Chairman of
the Board since August 1992 1968
Jack Futterman (67) Private investor since March 1996; Chairman and Chief Executive Officer
of Pathmark Stores, Inc. from September 1989 to March 1996 1996
</TABLE>
4
<PAGE>
CLASS II
(TO SERVE UNTIL THE ANNUAL MEETING OF STOCKHOLDERS FOR 2001)
TWO DIRECTORS ARE TO BE ELECTED TO THIS CLASS
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION OR EMPLOYMENT (1) DIRECTOR SINCE
- ------------------------------ ------------------------------------------------------------------ ---------------
<S> <C> <C>
Charles J. Hinkaty (48) Vice President of the Corporation and President of Del
Pharmaceuticals, Inc. 1986
George L. Lindemann (62) Chairman of the Board and Chief Executive Officer of Southern
Union Co. (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>
NAME AND AGE PRINCIPAL OCCUPATION OR EMPLOYMENT (1) DIRECTOR SINCE
- ------------------------------ ------------------------------------------------------------------ ---------------
<S> <C> <C>
Robert A. Kavesh (70) Marcus Nadler Professor of Finance and Economics, Graduate School 1976
of Business, New York University
Steven Kotler (51) President and Chief Executive Officer, Schroder & Co. Inc., an 1987
investment banking firm (3)
Marcella Maxwell (60) Director of Development and Public Affairs, Miracle Makers, Inc., 1994
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>
- ------------------------
(1) Executive officers of the Corporation, unless otherwise indicated.
(2) Mr. Lindemann was nominated for election to fill the vacancy left as a
result of Mr. Haines' retirement.
(3) The Corporation during the past fiscal year has retained, and proposes in
the future to retain Schroder & Co. Inc. 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.
5
<PAGE>
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 8 meetings during 1997 and
acted 4 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 presently comprised of Messrs. Haines, Kavesh
and Kotler, recommends to the Board of Directors the engaging of the independent
auditors, reviews with the independent auditors the plan and results of the
auditing engagement, reviews the independence of auditors and considers the
range of audit and non-audit fees. It held one meeting in 1997.
The Compensation Committee, comprised of Messrs. Kotler, Kavesh and
Futterman, 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
Stock Option Committee, a subcommittee of the Compensation Committee,
administers the Corporation's stock-based incentive plans. The Stock Option
Committee consists of Mr. Kavesh and Mr. Futterman. This Committee held four
meetings during 1997.
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
Committee held one meeting during 1997. 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 1997, 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, Ms. Maxwell and Mr. Futterman each received the
amount of $25,000 for services rendered by them in 1997 as directors of the
Corporation. No other director received any fees for serving as such in 1997.
6
<PAGE>
RECOMMENDATION OF BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR election as directors in Class
II the nominees identified above. Those nominees who receive the two 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 1997, 1996 and 1995 of the Corporation's Chief Executive Officer and each of
the other most highly compensated executive officers in 1997 (collectively, the
"Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------------
ANNUAL COMPENSATION SECURITIES
NAME AND PRINCIPAL --------------------------------- UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS OPTIONS(1) COMPENSATION(2)
- ------------------------------------------ --------- ---------- ---------- ------------------- ----------------
<S> <C> <C> <C> <C> <C>
Dan K. Wassong 1997 $ 688,000 $ 890,000 115,472 $ 353,747
Chairman, President and Chief Executive 1996 674,000 809,000 160,892 370,247
Officer 1995 660,000 635,000 240,165 358,211
Charles J. Hinkaty 1997 $ 320,500 $ 65,000 27,233 $ 14,070
Vice President and President of Del 1996 310,454 90,000 19,254 15,112
Pharmaceuticals, Inc. 1995 302,461 75,000 107,638 12,677
Harvey P. Alstodt 1997 $ 269,500 $ 200,000 27,688 $ 15,408
Executive Vice President, Sales- 1996 257,125 170,000 24,305 16,419
Cosmetics Division, North America 1995 247,500 135,000 31,529 13,999
William McMenemy
Executive Vice President, 1997 $ 269,500 $ 200,000 32,358 $ 14,970
Marketing-Cosmetics Division, North 1996 257,125 170,000 26,209 16,034
America 1995 249,500 135,000 18,722 13,598
James Lawrence 1997 $ 226,000 $ 160,000 0 $ 12,203
Group Vice-President, Operations 1996 216,000 130,000 0 13,245
1995 208,000 100,000 10,666 10,820
Melvyn C. Goldstein 1997 $ 231,800 $ 164,000 41,468 $ 15,055
Vice-President-Finance (until November 1996 223,175 134,000 44,764 16,309
15, 1997) 1995 215,775 100,000 10,666 13,907
</TABLE>
- ------------------------
(1) All stock options have been adjusted to reflect a four-for-three stock split
effective February 20, 1998. 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.
(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 1997 the amounts
contributed and allocated, calculated based on the closing price of the
Common Stock on December 31, 1997, were as follows: Mr. Wassong--$3,551, Mr.
Hinkaty--$3,551,
7
<PAGE>
Mr. Alstodt--$3,551, Mr. McMenemy--$3,551, Mr. Lawrence--$3,551, and Mr.
Goldstein--$3,551); (ii) the insurance premiums paid in each year in respect
of such officer under the Corporation's Executive Medical Reimbursement Plan
(in 1997, the amounts paid were as follows: Mr. Wassong-- $8,652, Mr.
Hinkaty--$8,652, Mr. Alstodt--$8,652, Mr. McMenemy--$8,652 , Mr.
Lawrence--$8,652 and Mr. Goldstein--$8,652); 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 certain of such officers (in 1997, the
amounts were as follows: Mr. Wassong--$104,209, Mr. Hinkaty $1,867, Mr.
Alstodt--$3,205, Mr. McMenemy--$2,767, and Mr. Goldstein--$2,852). Also
includes for Mr. Wassong indebtedness owed by him to the Corporation which
was forgiven in each year ($237,335 in 1997). See "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 6, 1998, options to purchase a total of 1,070,105 shares of Common Stock
were outstanding under the 1994 Plan and options to purchase a total of 684,887
shares were outstanding under the 1984 Plan. As of that date, a total of 275,801
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 1997
The following table sets forth for each of the Named Executive Officers
information regarding individual grants of options during the year ended
December 31, 1997 and the present value of these options on their grant date.
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO GRANT DATE
UNDERLYING EMPLOYEES IN EXERCISE OR EXPIRATION PRESENT
NAME OPTIONS GRANTED (1) FISCAL YEAR BASE PRICE DATE VALUE(2)
- ---------------------------- ------------------- --------------- ----------- ---------------------- -----------
<S> <C> <C> <C> <C> <C>
78,593 25.9% $ 21.938 May 23, 2004 $ 552,686
Dan K. Wassong.............. 36,879 12.1% 30.000 October 21, 2004 362,751
Charles J. Hinkaty.......... 27,233 9.0% $ 18.656 April 28, 2004 $ 150,238
20,888 6.9% $ 22.500 May 15, 2004 $ 137,814
Harvey P. Alstodt........... 6,800 2.2% 23.250 June 19, 2004 50,487
26,667 8.8% $ 18.656 April 28, 2004 $ 147,112
William McMenemy............ 5,692 1.9% 26.812 November 21, 2004 48,808
James F. Lawrence........... 0 0.0% N/A N/A N/A
21,468 7.1% $ 18.656 February 15, 1998 $ 118,433
Melvyn C. Goldstein......... 20,000 6.6% 23.250 February 15, 1998(3) 148,494
</TABLE>
8
<PAGE>
- ------------------------
(1) Each of the options granted during 1997 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 modified Black-Scholes option
pricing model. The assumptions underlying the Black-Scholes value include
(a) an expected volatility of 22.66%, 22.66% 27.40%, 27.98%, 29.53% and
29.30% with respect to the options which expire, respectively, on April 28,
May 15, May 23, June 19, October 21 and November 21, 2004 (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 (which approximates the five year Treasury bond rate on the
date of grant) of 6.79%, 6.51%, 6.57%, 6.28%, 6.06% and 5.76% with respect
to the options which expire, respectively, on April 28, May 15, May 23, June
19, October 21 and November 21, 2004; (c) projected dividend yield of .56%,
.47%, .48%, .45%, . 35% and .39% with respect to the options which expire,
respectively, on April 28, May 15, May 23, June 19, October 21 and November
21, 2004, 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) a discount
rate of 5% per annum during the vesting schedule for the options (one-third
vesting on each anniversary of the date of grant).
(3) Mr. Goldstein's options expired pursuant to the terms of the 1994 Plan three
months after he ceased to be an executive officer of the Corporation on
November 15, 1997.
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 1997 and
unexercised stock options held as of December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES ACQUIRED ON VALUE REALIZED DEC. 31, 1997 DEC. 31, 1997 (1)
NAME EXERCISE (1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ----------------------- ------------------ ---------------- ----------------------- ------------------------
<S> <C> <C> <C> <C>
Dan K. Wassong......... 199,502 $ 3,923,769 862,328/256,856 $ 19,186,203/2,807,469
Charles J. Hinkaty..... 45,154 619,179 190,158/52,312 3,943,397/722,126
Harvey P. Alstodt...... 35,122 582,380 35,777/47,748 611,779/505,206
William McMenemy....... 80,785 1,364,438 143,972/49,832 3,400,006/561,369
James Lawrence......... 10,666 241,234 10,666/0 188,000/0
Melvyn Goldstein....... 34,129 437,410 20,137/0 318,962/0
</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. Based upon the
closing price of the Common Stock on December 31, 1997 ($30.00 per share,
adjusted for split on February 20, 1998), less the exercise price for the
aggregate number of shares subject to the options.
9
<PAGE>
PENSION BENEFITS
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 1996. The
compensation for 1996 for Messrs. Wassong, Hinkaty, Alstodt, McMenemy,
Lawrence and Goldstein was $1,334,091, $387,957, $395,604, $396,509, 261,545
and $331,223, respectively.
(2) Messrs. Wassong, Hinkaty, Alstodt, McMenemy, Lawrence and Goldstein have,
respectively, 32, 13, 11, 32, 5 and 16 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 Code. Any
pension benefit payable in excess of the maximum permitted by the Code
would, if applicable, be payable under the SERP.
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. 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
10
<PAGE>
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 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.
11
<PAGE>
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 has renewed an employment agreement with Harvey Alstodt,
Executive Vice President, Sales-Cosmetics Division, North America, for a term
expiring on March 31, 2001. Under the employment agreement, Mr. Alstodt's annual
rate of compensation shall not be less than $250,000.
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, 2003. Under the employment agreement, Mr.
McMenemy's annual rate of compensation shall not be less than $250,000.
The Corporation has renewed an employment agreement with James Lawrence,
Group Vice President, Operations, for a term expiring on March 31, 2001. Under
the employment agreement, Jim Lawrence's annual rate of compensation shall not
be less than $208,000.
The Corporation has agreed to provide to each of Messrs. Hinkaty, Alstodt
and McMenemy $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 and
McMenemy 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, $250,000 or $250,000 respectively, for every year of service with the
Corporation, up to a maximum of 24 months; Mr. Hinkaty has been with the
Corporation for 13 years, Mr. Alstodt has been with the Corporation for 11 years
and McMenemy has been with the Corporation for 33 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 1997 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. 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 1997, $140,000 of
principal and $97,335 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
12
<PAGE>
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 Chemical Bank, is payable in 40 quarterly
installments commencing on March 31, 1993. The loan is secured by a pledge of
11,333 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 $65,000.
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 Incentive Plan. 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. The Stock Option Committee is comprised of Messrs. Kavesh
and Futterman.
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 1997.
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.
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 the health and beauty
business.
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
13
<PAGE>
Compensation Committee. During 1997, 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 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 an 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 1997 for the Named Executive Officers ranged from
approximately 17% to 56% 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 salary and bonus are determined in accordance with the same
general standards applied to other executives as outlined above. In determining
Mr. Wassong's 1997 base salary, the Committee considered the excellent financial
results of the Company in 1996 as well as Mr. Wassong's strong individual
performance. In 1997, Mr. Wassong's base salary was set at $688,000, which
represents a 2.1% increase over his 1996 base salary, and his bonus was set at
$890,000. Although, under the Corporation's executive salary criteria and its
Incentive Plan, Mr. Wassong was entitled to a significantly greater salary
increase and annual bonus, both amounts were set at lower levels at Mr.
Wassong's request. During 1997, a total of $237,335 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
244,219 shares were granted to the Corporation's Named Executive Officers during
1997, including options to purchase 115,472 shares granted to Mr. Wassong. All
of the options granted to the Named Executive Officers in 1997 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
Jack Futterman
Robert A. Kavesh
Steven Kotler
14
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph charts the total stockholder return over a five-year
period commencing on December 31, 1992, 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. 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. Tambrands, Inc., which was part of the peer group
included in the proxy statement relating to the Annual Meeting of Stockholders
in 1997, is not part of the peer group in the graph below since the company was
sold and the stock is no longer traded.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN TO
SHAREHOLDERS
<S> <C> <C> <C> <C> <C> <C>
December 31, 1992 to December 31, 1997
1992 1993 1994 1995 1996 1997
Del Laboratories, Inc $100 130.7 224.1 248.3 338.8 652.3
Peer Group 100 71.3 42.3 39.1 71.1 99.8
AMEX Market Value Index 100 119.5 108.6 137.3 146.1 177.2
</TABLE>
15
<PAGE>
INCREASE OF AUTHORIZED COMMON STOCK
The Restated Certificate of Incorporation of the Corporation currently
authorizes 10,000,000 shares of Common Stock. As of the Record Date there were
7,616,041 shares of Common Stock outstanding, and 2,383,959 Treasury Shares. Of
the Treasury Shares, 2,030,793 shares were reserved for issuance under the
Corporation's stock option plans. Therefore, the Corporation has only
approximately 353,166 Treasury Shares available for issuance from time to time
as may be necessary in connection with future stock option grants, financing,
investment opportunities, acquisitions or other corporate purposes.
Accordingly, the Board recommends the amendment of the Restated Certificate
of Incorporation of the Corporation to increase the authorized number of shares
of Common Stock from 10,000,000 to 20,000,000. If the proposed amendment to the
Certificate of Incorporation is adopted, there will be available for issuance by
the Corporation approximately 10,353,166 authorized and unreserved shares of
Common Stock.
The Corporation has no present understandings or agreements for issuing the
additional shares of Common Stock to be authorized by the proposed amendment,
but it is considered advisable to have authorization for such additional shares
to enable the Corporation, as the need may arise, to have such shares available
without the delay and expenses in connection with the holding of a special
meeting of shareholders of the Corporation. The issuance of shares of Common
Stock, including additional shares that would be authorized if the proposed
amendment to the Certificate of Incorporation is adopted, may dilute the equity
ownership position of current holders of shares of Common Stock.
The affirmation vote of a majority of the shares of Common Stock present and
voting at the meeting is necessary for the adoption of this amendment to the
Restated Certificate of Incorporation. The Board recommends a vote FOR the
adoption of the amendment.
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.
16
<PAGE>
STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the proxy materials relating to the
1999 Annual Meeting of Stockholders must be received at the Corporation's
offices at 178 EAB Plaza, Uniondale, New York 11556-0178 by December 21, 1998.
By Order of the Board of Directors,
Shawn A. Smith
SECRETARY
Uniondale, N.Y.
April 28, 1998
17
<PAGE>
PROXY DEL LABORATORIES, INC.
ANNUAL MEETING OF STOCKHOLDERS, THURSDAY, MAY 28, 1998
The undersigned stockholder of DEL LABORATORIES, INC., a Delaware
corporation, hereby appoints Shawn A. Smith and Charles Abdalian, or either of
them voting singly in the absence of the other, attorneys and proxies, with the
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 28, 1998, 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
IN PROPOSAL NO. 1 AND "FOR" PROPOSAL NO. 2.
1. ELECTION OF DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY
(EXCEPT AS WITHHELD IN THE TO VOTE FOR ALL
SPACE PROVIDED) / / NOMINEES LISTED
BELOW / /
Charles J. Hinkaty, George L. Lindemann
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW)
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES.
2. APPROVAL OF AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE RESTATED
CERTIFICATE OF INCORPORATION.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED ON REVERSE SIDE)
<PAGE>
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 ______________________, 1998
__________________________________
Signature
__________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN
THIS CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
