<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
American Classic Voyages Co.
- -------------------------------------------------------------------------------
(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)(4) 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> 2
AMERICAN CLASSIC VOYAGES CO.
TWO NORTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
(312) 258-1890
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
ON JUNE 11, 1997
------------------------
TO: The Stockholders of American Classic Voyages Co.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of American
Classic Voyages Co. (the "Company") will be held at Two North Riverside Plaza,
Suite 200, Chicago, Illinois 60606, on Wednesday, June 11, 1997 at 10:00 A.M.,
Central Daylight Time, for the following purposes:
1. To elect eight Directors to serve one-year terms, commencing immediately
upon their election, or until their respective successors are duly
elected and qualified;
2. To make certain amendments to the 1992 Stock Option Plan; and
3. To transact such other business as may properly come before the meeting
or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on April 9, 1997, as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting. You are cordially invited to attend the meeting.
Whether you plan to attend the meeting or not, you are respectfully requested to
fill in, date, sign and return the enclosed proxy at your earliest convenience
in the enclosed return envelope.
By Order of the Board of Directors
Jordan B. Allen
Jordan B. Allen
Secretary
April 28, 1997
------------------------
IMPORTANT:
PLEASE FILL IN, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY CARD IN THE
POSTPAID ENVELOPE PROVIDED TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE
MEETING. IF YOU ATTEND THE MEETING YOU MAY VOTE IN PERSON EVEN THOUGH YOU HAVE
SENT IN YOUR PROXY.
<PAGE> 3
AMERICAN CLASSIC VOYAGES CO.
TWO NORTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
(312) 258-1890
------------------------
PROXY STATEMENT
------------------------
INTRODUCTION
This Proxy Statement is being mailed or otherwise furnished to stockholders
of American Classic Voyages Co., a Delaware corporation (the "Company"), on or
about April 28, 1997, in connection with the solicitation of proxies by the
Board of Directors of the Company of proxies to be voted at the annual meeting
of stockholders of the Company (the "Annual Meeting") to be held at Two North
Riverside Plaza, Suite 200, Chicago, Illinois 60606 at 10:00 A.M., Central
Daylight Time, on Wednesday, June 11, 1997, and at any adjournment(s) thereof.
Stockholders who, after reading this Proxy Statement, have any questions should
contact Jordan B. Allen, Secretary of the Company, in Chicago, Illinois at (312)
258-1890.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
At the Annual Meeting, stockholders of the Company will consider and vote
upon:
(i) the election of eight Directors of the Company who will serve
one-year terms commencing immediately upon their election, or until their
respective successors are duly elected and qualified;
(ii) certain amendments to the 1992 Stock Option Plan; and
(iii) such other business as may properly come before the meeting or
any adjournment(s) thereof.
-----------------------------------
The date of this Proxy Statement is April 28, 1997.
PROXY SOLICITATION
The enclosed proxy is solicited by the Board of Directors of the Company.
The cost of this proxy solicitation is anticipated to be nominal and will be
borne by the Company, including charges and expenses of brokerage firms and
others for forwarding solicitation material to beneficial owners of the
Company's common stock. The solicitation generally will be effected by mail and
such cost will include the cost of preparing and mailing these proxy materials.
In addition to the use of the mails, proxies also may be solicited by personal
interview, telephone, telegraph, telecopy, or other similar means. Although
solicitation will be made primarily through the use of the mail, officers,
Directors or employees of the Company may solicit proxies personally or by the
above-described means without additional remuneration for such activity.
ANNUAL REPORTS
Stockholders are concurrently being furnished with a copy of the Company's
Annual Report for 1996 which contains its audited financial statements at
December 31, 1996. Additional copies of the Annual Report and of the Company's
Annual Report on Form 10-K for the year ended December 31, 1996 as filed with
the Securities and Exchange Commission (the "SEC") may be obtained by any
stockholder who has not received an Annual Report by contacting Karen Brown,
Investor Relations Coordinator of the Company, at Two North Riverside Plaza,
Chicago, Illinois 60606, (312) 258-1890, and such copies will be furnished
promptly at no additional expense.
<PAGE> 4
VOTING SECURITIES AND PROXIES
Only stockholders of record at the close of business on April 9, 1997 (the
"Record Date"), have the right to receive notice of and to vote at the Annual
Meeting and any adjournment(s) thereof. As of the Record Date, 7,179,747 shares
of the Company's common stock, $.01 par value ("Common Stock"), were issued and
outstanding. Each share outstanding on the Record Date entitles the holder
thereof to one vote upon each matter to be voted upon at the Annual Meeting. The
stockholders of a majority of the Company's issued and outstanding Common Stock,
present in person or represented by proxy, shall constitute a quorum at the
Annual Meeting. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
If, however, a quorum is not present or represented at the Annual Meeting, the
stockholders entitled to vote at the Annual Meeting, whether present in person
or represented by proxy, shall only have the power to adjourn the Annual Meeting
until such time as a quorum is present or represented. At such time as a quorum
is present or represented by proxy, the Annual Meeting will reconvene without
notice to stockholders, other than an announcement at the prior adjournment of
the Annual Meeting, unless the adjournment is for more than thirty (30) days or
a new record date has been set. One stockholder of the Company, Equity-DQSB,
Inc. ("Equity"), can direct the vote of approximately 51.5% of the outstanding
shares of Common Stock. See "Security Ownership of Certain Beneficial Owners"
for more information about Equity.
If a proxy in the form enclosed is duly executed and returned, the shares
of Common Stock represented thereby will be voted in accordance with the
specifications made thereon by the stockholder. If no such specifications are
made, such proxy will be voted: (i) for election of the Management Nominees (as
hereinafter defined) for Directors; (ii) to make certain amendments to the 1992
Stock Option Plan; and (iii) at the discretion of Proxy Agents (as hereinafter
defined) with respect to such other business as may properly come before the
Annual Meeting or any adjournment(s) thereof. Abstentions are counted in
tabulations of the votes cast on proposals presented to stockholders, whereas
broker non-votes are not counted for purposes of determining whether a proposal
has been approved. Under applicable Delaware law, a broker non-vote will have no
effect on the outcome of the election of Directors, but will have the effect, as
will an abstention, as a vote against the proposed amendments to the 1992 Stock
Option Plan. A proxy is revocable prior to its exercise by either a subsequently
dated, properly executed, proxy appointment or by a stockholder giving notice of
revocation to the Company in writing. The mere presence at the Annual Meeting of
a stockholder who appointed a proxy does not itself revoke the appointment.
ELECTION OF DIRECTORS
(PROPOSAL 1)
VOTING AND THE MANAGEMENT NOMINEES
At the Annual Meeting, eight Directors will be elected to serve one-year
terms commencing immediately upon their election, and will hold office until the
next Annual Meeting or until their respective successors are duly elected and
qualified. Management's nominees for the eight Director positions to be filled
by vote at the Annual Meeting are (the "Management Nominees"):
Corinne C. Boggs
Philip C. Calian
Arthur A. Greenberg
Jerry R. Jacob
Jon E.M. Jacoby
Ann Lurie
Sheli Z. Rosenberg
Samuel Zell
All of the Management Nominees are currently serving as Directors of the
Company. For information regarding the Management Nominees, see "Directors and
Executive Officers of the Company" in this section. According to the Company's
By-laws, the number of Directors of the Company shall be not less than two (2)
2
<PAGE> 5
and not more than nine (9). By resolution, on March 19, 1997, the Board of
Directors determined that the number of Directors shall be eight (8).
At the Annual Meeting, if a quorum is present, the vote of a majority of
the Company's Common Stock held by stockholders present in person or represented
by proxy shall elect the Directors. It is the present intention of Samuel Zell
and Philip C. Calian, who will serve as the Company's proxy agents at the Annual
Meeting (the "Proxy Agents"), to vote the proxies which have been duly executed,
dated and delivered and which have not been revoked in accordance with the
instructions set forth thereon or if no instruction had been given or indicated
to elect the Management Nominees as Directors. The Board of Directors does not
believe that any of the Management Nominees will be unwilling or unable to serve
as a Director. However, if prior to the election of Directors any of the
Management Nominees becomes unavailable or unable to serve, the Board of
Directors reserves the right to name a substitute nominee or nominees and the
Proxy Agents expect to vote the proxies for the election of such substituted
nominee(s).
RECOMMENDATION OF BOARD OF DIRECTORS
WITH RESPECT TO THE MANAGEMENT NOMINEES
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE MANAGEMENT
NOMINEES. IF A CHOICE IS SPECIFIED ON THE PROXY BY A STOCKHOLDER, THE SHARES
WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE
VOTED "FOR" THE MANAGEMENT NOMINEES.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the name, age, position and offices with the
Company, present principal occupation or employment and material occupations and
employment for the past five years of each person who has been nominated for
election as a Director or is presently an executive officer of the Company.
<TABLE>
<CAPTION>
PRINCIPAL POSITIONS WITH THE COMPANY;
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME AGE FIVE-YEAR EMPLOYMENT HISTORY
---- --- --------------------------------------
<S> <C> <C>
Honorable Corinne C. "Lindy" Boggs........... 81 Director of the Company since March 1992;
Retired; Congresswoman for the Second District
of Louisiana in the United States House of
Representatives from 1973 through 1990.
Philip C. Calian............................. 34 Director, President and Chief Executive Officer
of the Company since February 1995; Executive
Vice President and Chief Operating Officer of
the Company from December 1994 until February
1995; Chairman of the Board of CFI Industries,
Inc. ("CFI") from March 1995 until August 1996;
Co-Chairman and Chief Executive Officer of CFI
from September 1994 until March 1995; Acting
President and Chief Executive Officer of CFI
from January 1994 until September 1994; Vice
President, Chief Financial Officer and Treasurer
of CFI from September 1993 until September 1994;
Director of Mergers and Acquisitions of Great
American Management and Investment, Inc. from
May 1990 until December, 1994.
</TABLE>
3
<PAGE> 6
<TABLE>
<S> <C> <C>
Arthur A. Greenberg.......................... 56 Director of the Company since 1982; Vice President and
Assistant Treasurer of the Company from January 1990 until
June 1994; Member of the accounting firm of Greenberg &
Pociask, Ltd. since 1971; and Executive Vice President of
Equity Group Investments, Inc. ("EGI") since 1986.
Jerry R. Jacob............................... 63 Director of the Company since 1991 and a private investor;
Chairman of the Board of Midway Airlines Corporation from
August 1994 until February 1997; Vice President of American
Airlines, Inc. from 1974 to June 1993; Director of the
Company from 1981 through 1986; and Director of Syratech
Corp.
Jon E. M. Jacoby............................. 59 Director of the Company since March 1992; Director and
Senior Executive Vice President of Stephens Inc. and
Stephens Group, Inc., since February 1997; Executive Vice
President and Chief Financial Officer of Stephens Inc., and
Stephens Group, Inc., from 1986 until February 1997; and
Director of Beverly Enterprises, Inc., Delta and Pine Land
Company, Inc., and Medicus Systems, Inc.
Ann Lurie.................................... 52 Director of the Company since April 1992 and a private
investor. See "Security Ownership of Certain Beneficial
Owners" for a discussion of Mrs. Lurie's relationship with
Equity.
Sheli Z. Rosenberg........................... 55 Director of the Company since December 1991 and Vice
President and Assistant Secretary of the Company since
January 1990 and July 1991, respectively; Director,
President and Chief Executive Officer of EGI since November
1994 and Director and Executive Vice President of EGI from
1986 until November 1994; Principal of the law firm of
Rosenberg & Liebentritt, P.C.; Board Chair of Jacor
Communications, Inc. ("Jacor"); Director of Anixter
International Inc. ("Anixter"), Capsure Holdings Corp.
("Capsure"); Falcon Building Products, Inc., Manufactured
Home Communities, Inc. ("MHC"), Quality Food Centers, Inc.
("Quality Food"), Revco D.S., Inc. ("Revco"), Sealy
Corporation ("Sealy"), Illinova Corporation/ Illinois Power
Co.; Trustee of Equity Residential Properties Trust
("ERPT"); and Vice President of First Capital Benefits
Administrators, Inc. ("Benefits Administrators") from July
1987 until November 1995. Benefits Administrators filed a
petition under the Federal bankruptcy laws on January 3,
1995 which resulted in its liquidation on November 15, 1995.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL POSITIONS WITH THE COMPANY;
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME AGE FIVE-YEAR EMPLOYMENT HISTORY
- ---- --- --------------------------------------
<S> <C> <C>
Samuel Zell.................................. 55 Chairman of the Board of the Company since August 1993;
Director of the Company since 1980; previously Chairman of
the Board from 1984 through 1988; Chairman of the Board of
Anixter, EGI, and MHC; Chairman of the Board and Chief
Executive Officer of Capsure; Co-Chairman of the Board of
Revco; Chairman of the Board of Trustees of ERPT; and
Director of Chart House Enterprises, Inc., Quality Food,
Sealy, Ramco Energy plc and TeleTech Holdings, Inc. See
"Security Ownership of Certain Beneficial Owners" for a
discussion of Mr. Zell's relationship with Equity.
Jordan B. Allen.............................. 34 Senior Vice President and General Counsel of the Company
since June 1995; Secretary of the Company since February
1997; Vice President and General Counsel of the Company from
August 1993 until June 1995; and a member of Rosenberg &
Liebentritt, P.C. from September 1990 until December 1996.
Kathryn F. Gray.............................. 33 Controller, Chief Accounting Officer, and Treasurer of the
Company since March 1996; Assistant Controller and Assistant
Treasurer of the Company from October 1995 until March 1996;
Director of Accounting of the Company from January 1995
until October 1995; Manager of Accounting of the Company
from January 1994 until January 1995; Senior Accountant of
the Company from August 1993 until January 1994; Internal
Auditor of Equity Asset Management, Inc., a subsidiary of
EGI, from September 1992 until August 1993; and Business
Manager of Dealer Operating Control Service, Inc. from July
1988 until May 1992.
R. Anthony McKinnon.......................... 57 Executive Vice President -- Operations of the Company and
President of The Delta Queen Steamboat Co. ("Delta Queen")
and Great Hawaiian Cruise Line, Inc., the Company's primary
operating subsidiary for American Hawaii Cruises ("American
Hawaii"), since June 1996; Executive Vice President --
Operations of the Company and President and Chief Operating
Officer of American Hawaii from February 1994 through June
1996; Principal of Graycon Group, Inc., from October 1992
through February 1994, which provides marketing and
strategic planning services to travel clientele; Senior Vice
President -- International Alliances of USAir, Inc.
("USAir") from May 1992 through October 1992; and Senior
Vice President -- Corporate Planning of USAir from May 1991
through May 1992.
J. Scott Young............................... 46 Executive Vice President and Chief Operating Officer of
Delta Queen since July 1992; Executive Vice President and
Chief Operating Officer of American Hawaii since June 1996;
and Executive Vice President of Delta Queen from August 1989
through July 1992.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
PRINCIPAL POSITIONS WITH THE COMPANY;
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME AGE FIVE-YEAR EMPLOYMENT HISTORY
- ---- --- --------------------------------------
<S> <C> <C>
Russel Varvel................................ 52 Executive Vice President and General Sales Manager of Delta
Queen and American Hawaii since June 1996; Senior Vice
President -- Sales and Marketing of Delta Queen from June
1995 through June 1996; and Senior Vice President -- Sales
of Delta Queen from January 1991 through June 1995.
James Nobles................................. 49 Executive Vice President -- Honolulu Operations of American
Hawaii since July 1995; and various positions with American
Airlines, Inc. from 1969 through May 1995, including
Managing Director -- Kennedy International Airport.
</TABLE>
BOARD COMMITTEES AND BOARD OF DIRECTOR AND COMMITTEE MEETINGS
The Board of Directors has an Executive Committee which during 1996
consisted of Messrs. Calian and Zell and Mrs. Rosenberg. The Executive Committee
possesses and may exercise the full and complete authority of the Board of
Directors in the management and business affairs of the Company during the
intervals between the meetings of the Board of Directors. All action by the
Executive Committee is reported to the Board of Directors at its next meeting
and such actions are subject to revision and alteration by the Board of
Directors, provided that no rights of third persons can be prejudicially
affected by the subsequent action of the Board of Directors. Vacancies on the
Executive Committee are filled by the Board of Directors. However, during the
temporary absence of a member of the Executive Committee, due to illness or
inability to attend a meeting for other cause, the remaining member(s) of the
Executive Committee may appoint a member of the Board of Directors to act in the
place, and with all the authority, of such absent member. The current members of
the Executive Committee will continue in office until the Committee is
dissolved, terminated or reorganized, or if such members are replaced. The
Executive Committee did not hold any meetings in 1996.
The Company has an Audit Committee which consists of Messrs. Jacob and
Jacoby and the Honorable Mrs. Boggs. The Audit Committee has the power to (i)
recommend to the Board of Directors the independent certified public accountants
to be selected to serve the Company, (ii) review with the independent certified
public accountants the planned scope and results of the annual audit, their
reports and recommendations, (iii) review with the independent certified public
accountants matters relating to the Company's system of internal controls, and
(iv) review all transactions between the Company and related parties. The Audit
Committee held two meetings in 1996.
The Company has a Compensation Committee which consists of Mr. Jacob and
Mrs. Lurie. The Compensation Committee exercises certain powers of the Board of
Directors in connection with compensation matters, including incentive
compensation and benefit plans. The Compensation Committee did not hold any
meetings in 1996, but did approve various actions by unanimous written consents
in lieu of a meeting.
During 1996, the Company's Board of Directors held four meetings. All
Directors, other than Mr. Jacoby, were present for at least 75% of the meetings
of the Board and committees they were eligible to attend. Mr. Jacoby was present
for 50% of such meetings.
6
<PAGE> 9
EXECUTIVE COMPENSATION
GENERAL
The following table sets forth all compensation awarded to, earned by, or
paid to the Chief Executive Officer during 1996 and to those persons who were,
at December 31, 1996, the other four most highly compensated executive officers
of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION ---------------------
-------------------- SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS/SARS(#)(1) COMPENSATION($)(2)
--------------------------- ---- --------- -------- --------------------- ------------------
<S> <C> <C> <C> <C> <C>
Philip C. Calian 1996 200,000 129,050 202,180/0 8,250
President and Chief 1995 201,446 0 70,000/0 5,895
Executive Officer 1994 -- -- 30,000/0 --
R. Anthony McKinnon 1996 209,530 166,400 120,000/0 9,000
Executive Vice President - 1995 200,000 0 0/100,000 5,895
Operations; President of 1994 180,000 100,000 100,000/0 0
American Hawaii
and Delta Queen
James Nobles 1996 161,153 89,600 12,000/0 2,584
Executive Vice President - 1995 69,231 50,000 25,000/0 4,253
Honolulu Operations 1994 -- -- -- --
of American Hawaii
J. Scott Young 1996 167,077 46,817 75,000/0 7,500
Executive Vice President 1995 140,000 9,450 0/45,000 5,895
and Chief Operating Officer of 1994 131,538 30,339 0/0 5,262
American Hawaii and Delta Queen
Russel Varvel 1996 156,682 46,081 60,000/0 7,500
Executive Vice President/ 1995 143,138 9,390 0/40,000 5,895
General Sales Manager of American 1994 136,398 21,616 0/0 6,000
Hawaii and Delta Queen
</TABLE>
- ---------------
(1) In December 1996 the Company terminated 100,000, 45,000 and 40,000 Options
and an equal number of Share Appreciation Rights ("SARs") previously granted
to Messrs. McKinnon, Young and Varvel, respectively, and issued replacement
Options to such individuals for the same number of underlying securities
with vesting over the same period as the SARs.
(2) Reflects amounts paid under the Advantage Savings Retirement Plan, a plan
qualified under Section 401 of the Internal Revenue Code of 1986, as amended
(the "Code"), for both the discretionary profit sharing component and
matching contribution. Also reflects, for Mr. Nobles, $4,253 of reimbursable
moving expenses paid by the Company in 1995.
7
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
NAME GRANTED (#) FISCAL YEAR(2) ($/SH) DATE 5%($)(3) 10%($)(4)
---- ----------- -------------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Philip C. Calian............ 202,180(5) 23.49 8.75 10/18/06 1,112,562 2,819,450
R. Anthony McKinnon......... 5,000(6) 0.58 9.50 02/01/06 29,872 75,703
15,000(7) 1.74 9.25 12/03/06 87,259 221,132
100,000(8) 11.62 10.25 12/12/06 644,617 1,633,586
James Nobles................ 5,000(6) 0.58 9.50 02/01/06 29,872 75,703
7,000(7) 0.81 9.25 12/03/06 40,721 103,195
J. Scott Young.............. 5,000(6) 0.58 9.50 02/01/06 29,872 75,703
25,000(7) 2.90 9.25 12/03/06 145,432 368,553
45,000(8) 5.23 10.25 12/12/06 290,078 735,114
Russel Varvel............... 5,000(6) 0.58 9.50 02/01/06 29,872 75,703
15,000(7) 1.74 9.25 12/03/06 87,259 221,132
40,000(8) 4.65 10.25 12/12/06 257,847 653,434
</TABLE>
- ---------------
(1) These numbers are for presentation purposes only and are not predictions of
future stock price.
(2) Does not include options granted to non-employee Directors. If grants to
non-employee Directors were included, the percentages would be 22.57% for
Mr. Calian; 13.40% for Mr. McKinnon; 1.34% for Mr. Nobles; 8.37% for Mr.
Young; and 6.70% for Mr. Varvel.
(3) Assumes a stock price of: $14.25 at the end of ten years for options granted
to Mr. Calian; $15.47 at the end of ten years for the options granted at an
exercise price of $9.50 to Messrs. McKinnon, Nobles, Young and Varvel;
$15.07 at the end of ten years for the options granted at an exercise price
of $9.25 to Messrs. McKinnon, Nobles, Young and Varvel; and $16.70 at the
end of ten years for the options granted at an exercise price of $10.25 to
Messrs. McKinnon, Young and Varvel.
(4) Assumes a stock price of: $22.70 at the end of ten years for options granted
to Mr. Calian; $24.64 at the end of ten years for the options granted at an
exercise price of $9.50 to Messrs. McKinnon, Nobles, Young and Varvel;
$23.99 at the end of ten years for the options granted at an exercise price
of $9.25 to Messrs. McKinnon, Nobles, Young and Varvel; and $26.59 at the
end of ten years for the options granted at an exercise price of $10.25 to
Messrs. McKinnon, Young and Varvel.
(5) Options were granted to Mr. Calian on October 18, 1996. One-third are
exercisable one year after the initial grant, one-third are exercisable two
years after the initial grant and one-third are exercisable three years
after the initial grant; unless the Company's common stock price appreciates
by more than 30%, compounded annually, for any 30-day period, at which time
all the options are exercisable.
(6) Options were granted to Messrs. McKinnon, Nobles, Young and Varvel on
February 1, 1996. One-third are exercisable one year after the initial
grant, one-third are exercisable two years after the initial grant and
one-third are exercisable three years after the initial grant.
(7) Options were granted to Messrs. McKinnon, Nobles, Young and Varvel on
December 3, 1996; one-third are exercisable one year after the initial
grant, one-third are exercisable two years after the initial grant and
one-third are exercisable three years after the initial grant.
(8) Reflects replacement Options granted to Messrs. McKinnon, Young and Varvel
on December 12, 1996. One-third were immediately exercisable, one-third are
exercisable one year after the initial grant and one-third are exercisable
two years after the initial grant.
8
<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END(#) AT FY-END($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- --------------------- --------------------
<S> <C> <C> <C> <C>
Philip C. Calian..................... 0 0 58,333/258,847 36,282/957,105
R. Anthony McKinnon.................. 0 0 33,333/ 86,667 95,832/267,917
James Nobles......................... 0 0 8,333/ 28,667 43,125/201,250
J. Scott Young....................... 0 0 25,000/ 60,000 38,332/152,918
Russel Varvel........................ 0 0 20,000/ 46,667 12,958/ 71,167
</TABLE>
TEN-YEAR OPTION/SAR REPRICINGS
In December 1996, the Company terminated 100,000, 45,000 and 40,000
Options, with an exercise price of $20.42, and an equal number of SARs, with an
exercise price of $10.25, previously granted to Messrs. McKinnon, Young and
Varvel, respectively. At the same time, the Company issued 100,000, 45,000 and
40,000 replacement Options to Messrs. McKinnon, Young and Varvel, respectively,
with an exercise price of $10.25.
<TABLE>
<CAPTION>
NUMBER OF MARKET PRICE LENGTH OF
SECURITIES OF STOCK AT EXERCISE PRICE ORIGINAL OPTION
UNDERLYING TIME OF AT TIME OF NEW TERM REMAINING
OPTIONS/SARS REPRICING OR REPRICING OR EXERCISE AT DATE OF
REPRICED OR AMENDMENT AMENDMENT PRICE REPRICING
NAME DATE AMENDED(#) ($) ($) ($) AMENDMENT
- ---- ---- ------------ ------------ -------------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Philip C. Calian...... -- -- -- -- -- --
R. Anthony McKinnon... 12/12/96 100,000/100,000 10.25/10.25 20.42/10.25 10.25 70 mos./86 mos.
James Nobles.......... -- -- -- -- -- --
J. Scott Young........ 12/12/96 45,000/45,000 10.25/10.25 20.42/10.25 10.25 70 mos./86 mos.
Russel Varvel......... 12/12/96 40,000/40,000 10.25/10.25 20.42/10.25 10.25 70 mos./86 mos.
</TABLE>
COMPENSATION OF DIRECTORS
In 1996, the Company paid its non-employee Directors an annual retainer of
$15,000, paid quarterly. In addition, in June 1996, the Company granted to the
non-employee Directors options to purchase 5,000 shares at the then current
market price of $7.97 per share. Directors who are also employees of the Company
did not receive any additional remuneration for serving as Directors in 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
For the 1996 year, the members of the Compensation Committee of the Board
of Directors were Mr. Jacob and Mrs. Lurie. During 1996, the following
relationships existed:
Mrs. Rosenberg was an executive officer and director of the Company and a
director and member of the Compensation Committee of Anixter and Mr. Zell was an
executive officer and director of Anixter and an executive officer and director
of the Company.
Mrs. Rosenberg was an executive officer and director of the Company and was
a trustee and member of the Compensation Committee of ERPT and Mr. Zell was an
executive officer and director of the Company and an executive officer and
trustee of ERPT.
Mr. Zell and Mrs. Rosenberg also served as members of the Board of
Directors of numerous non-public companies owned in whole or in part by Mr. Zell
or his affiliates which did not have compensation
9
<PAGE> 12
committees, and in many cases the executive officers of those companies included
Mr. Zell and/or Mrs. Rosenberg.
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, that might incorporate future filings, including the
Proxy Statement, in whole or in part, the Compensation Committee Report
presented below and the Performance Graph following shall not be incorporated by
reference into any such filings.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors is
responsible for recommending to the Board of Directors the Company's
compensation policy for executive officers. As a rule, the Company's policy is
to pay base salaries and bonuses that are both competitive in the marketplace
and which will attract and retain highly qualified personnel. In addition,
through grants of stock options, the Company provides meaningful incentives
intended to reward both individual and corporate performance as well as linking
its executive officers' interests with those of the Company's stockholders. To
the extent consistent with its compensation policy, it is the Company's intent
to structure its compensation in a manner which will comply with the limitations
imposed by the Omnibus Budget Reconciliation Act of 1993 regarding the
deductibility of executive compensation under Section 162(m) of the Code.
ANNUAL COMPENSATION
The Company has adopted a competitive salary and bonus structure for its
executive officers based on a review of local and national peer group salary
surveys. Base salaries for executive officers are reviewed annually and are
designed to be competitive with other well-managed companies in the travel,
leisure and entertainment industry, as adjusted by sales volume and
profitability. This group includes, but is not limited to, the companies
contained in the Peer Group Index selected by the Company for purposes of the
Performance Graph set forth below. Annual increases are based, in part, on an
executive officer's responsibilities, performance evaluations and expected
future contributions. Factors considered in evaluating the performance of an
executive officer include the achievement of pre-established quantitative goals
that are specific to an individual's and the Company's performance.
Incentive compensation, in the form of annual bonuses, is closely tied to
the Company's performance, provided that certain overall corporate goals are
met. This form of compensation, available to the Company's managers, including
its executive officers, is set in a manner that is intended to encourage
continued profitability and to enhance stockholder value. The Company has two
bonus plans, the Performance Management Objectives ("PMO") Bonus Plan and the
Executive Bonus Plan, which are available to employees based on their position
within the Company. Under the Company's bonus plans, each participant receives
an annual review to determine what, if any, bonus should be paid, and awards are
based on the Company's performance during the year as compared to budgeted
operating income approved by the Board. The Company made payments to employees
under each bonus plan for 1996.
LONG-TERM COMPENSATION
The Compensation Committee believes that whereas bonus programs provide
rewards for positive short-term individual and corporate performance, the
interests of stockholders are best served by giving executive officers the
opportunity to participate in the appreciation of the Company's stock through
the granting of stock options. The Compensation Committee believes that over an
extended period of time, stock performance will, to a meaningful extent, reflect
individual performance, and that such arrangements further reinforce management
goals and incentives to achieve stockholder objectives. Under the Company's 1992
Stock Option Plan, the Compensation Committee determines those officers to whom,
and the time or times at which, stock options will be awarded as well as the
number of shares. The number of shares granted to an individual is based upon
established guidelines relating to the recipient's position, salary and the
Company's stock price.
10
<PAGE> 13
During 1996, the Company granted options to purchase 860,680 shares to officers
and management employees of the Company and its subsidiaries.
Due to the adverse cash impact and accounting treatment resulting from
outstanding Stock Appreciation Rights ("SARs"), and to ensure consistency among
long-term compensation granted to senior management, in 1996, the Company
terminated all SARs previously granted to Messrs. McKinnon, Young and Varvel. At
the same time, the Company terminated Options with an exercise price of $20.42
previously granted to Messrs. Young and Varvel in 1993 and Mr. McKinnon in 1994.
In December 1996, the Company issued 100,000, 45,000 and 40,000 replacement
Options to Messrs. McKinnon, Young and Varvel, respectively, with an exercise
price of $10.25.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Compensation Committee believes that the compensation of the Company's
Chief Executive Officer should be both competitive and based on Company
performance. In 1996, Mr. Calian was paid a salary of $200,000, approximately
the same salary he received in 1995. In addition, Mr. Calian received a bonus
totaling $129,500 in 1996 under the Company's various bonus plans. The
Compensation Committee believes that Mr. Calian's salary and bonus are less than
those of Chief Executive Officers at companies of similar size in the travel
industry and otherwise below market given the Company's performance. Consistent
with Mr. Calian's desire to receive a significant portion of his compensation in
the form of stock options and the Company's desire to establish a long-term,
incentive compensation arrangement with Mr. Calian, in 1996, the Company granted
to Mr. Calian options to purchase 202,180 shares at the then current market
price.
COMPENSATION COMMITTEE
JERRY R. JACOB
ANN LURIE
11
<PAGE> 14
PERFORMANCE GRAPHS
Below is a graph comparing total stockholder return on the Company's Common
Stock, from March 1992 through 1996, with a peer group comprised of 22
entertainment and leisure companies and a published industry index, the S&P 500,
as required by the rules of the SEC. The graph begins for the peer group and the
S&P 500 at February 29, 1992 and for the Company at March 6, 1992, the date of
its initial public offering of Common Stock.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD AMERICAN S&P 500 ($) PEER PEERS +
(FISCAL YEAR COVERED) CLASSIC GROUP YOUR
($) ONLY ($) COMP ANY
($)
<S> <C> <C> <C> <C>
MARCH 1992 100.00 100.00 100.00 100.00
1992 98.15 108.26 113.71 113.64
1993 130.00 119.17 130.37 130.36
1994 102.03 120.74 130.89 130.74
1995 82.89 166.12 158.54 158.20
1996 100.04 204.26 165.95 165.65
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Under the rules of the SEC, the Company is required to report, based on its
review of reports to the SEC, about transactions in its Common Stock furnished
to the Company and written representations of its Directors, officers and 10%
stockholders that: Equity-DQSB, Inc., Mmes. Lurie and Rosenberg and Messrs. Zell
and Greenberg filed a Form 4 late for October 1996 late on November 12, 1996
which reported the acquisition by Equity-DQSB, Inc. of 20,000 shares of common
stock. In addition Messrs. Varvel and Nobles filed Form 3's late which reported
the ownership of stock options.
12
<PAGE> 15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of April 9, 1997, except as noted,
certain information with respect to each person or entity who is known by the
management of the Company to be the beneficial owner of more than 5% of the
outstanding shares of the Company's Common Stock:
<TABLE>
<CAPTION>
NAME OF ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
------------------ ----------------------- --------
<S> <C> <C>
Equity-DQSB, Inc.(2)................................... 7,179,747(3) 51.5%
Two N. Riverside Plaza
Chicago, IL 60606
</TABLE>
- ---------------
(1) The number of shares of the Company's Common Stock indicated as beneficially
owned are reported on the basis of regulations of the SEC governing the
determination of beneficial ownership of securities.
(2) Equity is an Illinois corporation and a wholly owned subsidiary of EGI.
EGI's stockholders are, directly or indirectly, trusts created for the
benefit of Mr. Zell and Mrs. Lurie, both Directors of the Company, and their
respective families.
(3) Shares are held at seven financial institutions as collateral for loans to
Equity. Under the various loan agreements, the institutions cannot vote or
exercise any ownership rights relating to the pledged shares unless there is
an event of default.
13
<PAGE> 16
SECURITY OWNERSHIP BY MANAGEMENT
The following information is furnished as of April 9, 1997, with respect to
the shares of the Company's Common Stock beneficially owned by each Director and
the executive officers named in the Summary Compensation Table and by all
Directors and executive officers as a group. Information concerning the
Directors and officers and their security holdings has been furnished by them to
the Company.
<TABLE>
<CAPTION>
SHARES UPON
NAME OF SHARES OF EXERCISE OF
BENEFICIAL OWNER COMMON STOCK STOCK OPTIONS(1) TOTAL(2) PERCENT
---------------- ------------ ---------------- -------- -------
<S> <C> <C> <C> <C>
Corinne C. Boggs(3)............................ 600 25,645 26,245 *
Philip C. Calian(4)............................ 13,410 210,823 224,233 1.6%
Arthur A. Greenberg(3)(5)...................... 7,250,347 40,645 7,290,992 52.2%
Jerry R. Jacob(3).............................. 10,600 25,645 36,245 *
Jon E. M. Jacoby(3)(6)......................... 10,600 25,645 36,245 *
Ann Lurie(3)(5)................................ 7,180,347 20,000 7,200,347 51.6%
R. Anthony McKinnon............................ -- 34,999 34,999 *
James Nobles................................... -- 9,999 9,999 *
Sheli Z. Rosenberg(3)(5)....................... 7,250,347 40,645 7,290,992 52.2%
Russel Varvel.................................. -- 21,666 21,666 *
J. Scott Young................................. 104 26,666 26,770 *
Samuel Zell(3)(5).............................. 7,180,347 120,000 7,300,347 51.9%
All Directors and Executive Officers as a
Group(3) (14 persons)........................ 7,357,914 602,378 7,960,292 54.8%
</TABLE>
- ---------------
* Less than 1%.
(1) Represents beneficial ownership of shares that may be acquired by the
exercise of stock options which are currently exercisable or exercisable
within 60 days of the date of this table.
(2) The amounts of the Company's Common Stock and stock options beneficially
owned are reported on the basis of regulations of the SEC governing the
determination of beneficial ownership of securities.
(3) Includes 600 stock units which convert to Common Stock (on a 1 for 1 basis)
at the time determined at the date of grant. Holders of such stock units do
not vote the shares. Assumes the approval of the amendments to the Company's
1992 Stock Option Plan included as Proposal 2 of this Proxy Statement.
(4) Includes Options for 202,180 shares which vested in 1997.
(5) Includes 7,179,747 shares of Common Stock owned by Equity. Equity is a
wholly owned subsidiary of EGI. EGI's stockholders are, directly or
indirectly, trusts created for the benefit of Mrs. Lurie and Mr. Zell and
their respective families. Additionally, Mmes. Lurie and Rosenberg and Mr.
Greenberg are trustees or co-trustees for certain of such trusts. Mmes.
Lurie and Rosenberg and Messrs. Greenberg and Zell each disclaim beneficial
ownership of the shares held by Equity.
(6) Shares are owned by Jacoby Enterprises, Inc., a Wyoming corporation, which
is owned by Mr. Jacoby and members of his family. Mr. Jacoby is the
controlling stockholder and President of Jacoby Enterprises, Inc.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
EGI and its affiliates provided certain administrative support services for
the Company, including, but not limited to, tax advisory, investor relations,
corporate secretarial and benefit services, for which the Company has been
charged by EGI. In 1996, the Company paid approximately $1,019,000 for such
services performed by EGI and its affiliates. Additionally, the Company and
certain of its subsidiaries lease office space from a company affiliated with
EGI at Two North Riverside Plaza, Chicago, Ill. 60606. The Company paid
approximately $166,956 during 1996 for such office space.
14
<PAGE> 17
The Company paid approximately $402,300 during 1996 to the law firm,
Rosenberg & Liebentritt, P.C. of which Mrs. Rosenberg is a member and Jordan B.
Allen, Senior Vice President, General Counsel and Secretary of the Company was a
member through 1996. This amount included approximately $315,200 in salary,
benefits and payroll expenses which the Company reimbursed at cost for Mr.
Allen, a full-time administrative assistant and a part-time paralegal. Beginning
in January 1997, Mr. Allen became a full-time employee of the Company. For 1996,
the Company paid approximately $71,000 to the accounting firm of Greenberg &
Pociask Ltd., of which Mr. Greenberg was a member. This amount included
approximately $25,000 in salary and expenses which the Company reimbursed at
cost for the salary of a tax accountant. The Company paid approximately $14,100
to Seyfarth, Shaw, Fairweather & Geraldson ("Seyfarth"), during 1996 for legal
services. Mrs. Rosenberg's husband is a partner at Seyfarth.
These arrangements with EGI and its affiliates were approved by a majority
of the non-affiliated members of the Board of Directors, and were conducted on
terms no less favorable to the Company than could be obtained from unaffiliated
third parties.
As of March 31, 1997, Mr. McKinnon, an executive officer of the Company,
owed $120,000 on a loan made by the Company during 1995 for relocation related
and miscellaneous expenses. The loan bears interest at the prime rate plus 2%,
payable quarterly in arrears. The largest amount owed and the balance at
December 31, 1996 was $150,000 plus accrued interest. The loan is due and
payable on the first to occur of July 1, 2000, and the six (6) month anniversary
of the date Mr. McKinnon is no longer employed by the Company.
APPROVAL OF AMENDMENTS TO THE COMPANY'S
1992 STOCK OPTION PLAN
(PROPOSAL 2)
The Company seeks stockholder approval of amendments to the Company's 1992
Stock Option Plan (the "Plan") to: (i) increase the number of shares of common
stock authorized under the Plan; (ii) expand the type of awards permitted under
the Plan to include stock units or grants, performance shares and reload options
to purchase additional shares if shares are delivered in payment for any other
interest, in addition to the non-qualified stock options ("NQSO"), incentive
stock options ("ISO") and stock appreciation rights already authorized under the
Plan; (iii) grant stock units to non-employee directors as annual compensation;
and (iv) ratify performance objectives under the Plan established by the
Compensation Committee to comply with Section 162(m) of the Code and ensure the
Company can maximize the income tax deductions for grants made under the Plan.
The Board approved the amendments to the Plan as of December 31, 1996 as set
forth on Exhibit A attached to this Proxy Statement and recommended that they be
submitted to the stockholders of the Company for approval.
As of December 31, 1996, there were 495,763 shares available for issuance
under the Plan. One amendment to the Plan will increase the number of shares
eligible under the Plan from 2,000,000 to 3,000,000. Such amendment will not
result in any new plan benefits to participants under the Plan. The exercise
price for all Options granted under the Plan, subsequent to the initial grants
on March 5, 1992, shall not be less than the fair market value of the underlying
Common Stock at the time the Option is granted. As of April 18, 1997, the price
of the Common Stock was $9.88.
At the same time, the Company believes that additional forms of awards
under the Plan may be beneficial. These additional awards include stock units or
grants, performance shares and reload options to purchase additional shares if
shares are delivered in payment for any other interest. Any awards granted under
the Plan must be approved by the Compensation Committee of the Board of
Directors. The additional types of authorized awards can be summarized as
follows:
Stock Units or Grants
A stock unit is a right to receive a share of Common Stock. When a stock
unit is granted, the Compensation Committee will determine the conditions that
need to be satisfied before the unit is vested and
15
<PAGE> 18
a share is issued, and will specify the number of units (corresponding to shares
of Common Stock) covered by the grant. No shares are actually issued unless the
applicable conditions are satisfied; however, the Compensation Committee may
provide that the grantee will receive credit for dividends paid on shares to
which the stock units correspond, with such dividend equivalents payable to the
extent that shares are actually issued.
A stock grant involves actual Common Stock issued to the grantee. Such
stock may be "restricted," in which case it will be subject to conditions that
could cause it to be forfeited by the grantee. The Compensation Committee may
instead provide that the stock is "unrestricted," in which case it will not be
subject to such conditions. In either case, the Compensation Committee will
determine whether the grantee must make any payment for the stock, and whether
the grantee's rights as a stockholder (e.g., voting and dividend rights) will be
subject to any special restrictions.
Performance Shares
Performance Shares may be like stock units or a restricted stock grant.
Under them, the condition that determines whether stock is issued (if they are
structured like stock units) or whether it is forfeited (if they are structured
like restricted stock) is related to performance. This may involve the Company's
performance, the grantee's performance, or a combination of factors.
Reload Options
A reload option is a stock option automatically granted under the Plan any
time that a grantee thereunder exercises an Option and pays the exercise price
by surrendering already owned shares of Common Stock. Under a reload option, the
number of shares covered by the grant is equal to the number of shares
surrendered in payment and the exercise price is the fair market value of the
Common Stock on the date of exercise. Reload options ensure that the ownership
percentage of a grantee using shares to pay for stock is not diluted; the
combined number of shares actually owned and subject to option before and after
the exercise remains the same for a grantee receiving a reload grant.
Beginning in January 1997, the Company began paying its non-employee
Directors through the grant of stock units. For the six-month period from
January through June 1997, the Company granted to each non-employee Director 600
stock units which will vest upon, and be subject to, stockholder approval. For
the twelve-month period beginning July 1997, and each twelve-month period
thereafter, the Company will pay its non-employee Directors stock units with a
market value of $30,000 at the time of the grant. This will replace the $15,000
annual retainer and annual grant of 5,000 options previously paid to Directors.
Directors who are also employees of the Company have not and will not receive
any additional renumeration for serving as Directors.
The Company desires to make the Plan, to the extent possible, comply with
Section 162(m) of the Code to ensure the Company can maximize the income tax
deductions for grants made under the Plan. Section 162(m) of the Code limits the
deduction a publicly held corporation may take to the extent compensation
exceeds $1,000,000 for certain employees. This limit does not apply to
compensation paid solely from Options granted with exercise prices at or above
fair market value on the grant date, or compensation paid due to meeting stated
performance goals, provided the goals are determined by the Compensation
Committee and approved by the stockholders of the Company. Therefore, the
Compensation Committee has identified certain performance based objectives which
may be used and the Board of Directors has approved amendments to the Plan to
include such measures. By approving the amendments to the Plan, the stockholders
will be approving the performance goals identified by the Compensation Committee
of the Board.
There will be no federal income tax consequences to a participant or the
Company upon the grant of either an ISO or an NQSO under the Plan. Upon exercise
of a NQSO, a participant will recognize ordinary income in an amount equal to
(i) the fair market value on the date of the exercise of the acquired shares of
common stock, less (ii) the exercise price of the NQSO, and the Company will be
entitled to a tax deduction in the same amount. Upon exercise of an ISO, a
participant recognizes no immediate taxable income. Income recognition is
deferred until the participant sells the shares of common stock. If the Option
is exercised no
16
<PAGE> 19
later than three (3) months after the termination of the participant's
employment, and the participant does not dispose of the shares acquired pursuant
to the exercise of the Option within two (2) years from the date of the Option
was granted and within one (1) year after the exercise of the Option, the gain
on the sale will be treated as long term capital gain. The excess of the fair
market value of the common stock acquired upon exercise over the option price
constitutes a tax preference item for purposes of computing the "alternative
minimum tax" under the Code. The Company is not entitled to any tax deduction at
the time of the exercise of an ISO. If the participant sells the shares received
upon the exercise of an ISO in less than the required holding period, the
participant will recognize ordinary income in an amount equal to the lesser of
(i) the fair market value of the common stock on the date of exercise minus the
option price, or (ii) the amount realized on disposition minus the option price,
and the Company will be entitled to a deduction in the same amount.
The amendments to the Plan shall not take effect until approved by the
stockholders of the Company. The affirmative vote of the holders of a majority
of the shares of the Company's Common Stock present or represented and voting is
required for approval of the Amendment.
THE BOARD RECOMMENDS A VOTE "FOR" THE PROPOSED AMENDMENT TO THE 1992 STOCK
OPTION PLAN. IF A CHOICE IS SPECIFIED ON THE PROXY BY A STOCKHOLDER, THE SHARES
WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE
VOTED "FOR" APPROVAL.
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick, L.L.P. have been the principal auditors for the Company
for the past year. Representatives of KPMG Peat Marwick, L.L.P. are expected to
be present at the Annual Meeting, will be given an opportunity to make a
statement if they desire to do so, and will be available to respond to
appropriate questions from stockholders.
STOCKHOLDERS' PROPOSALS FOR 1997 ANNUAL MEETING
A proposal submitted by a stockholder for the 1997 Annual Meeting of the
Company must be received by the Secretary of the Company, Two North Riverside
Plaza, Suite 200, Chicago, Illinois 60606, by December 29, 1997, in order to be
eligible to be included in the Company's proxy statement for that meeting.
CONCLUSION
The Company knows of no other business which will be presented at the
Annual Meeting. However, if other matters properly come before the meeting, it
is the intention of the Proxy Agents to vote upon such matters in accordance
with their good judgment in such matters.
By Order of the Board of Directors
Jordan B. Allen
Jordan B. Allen
Secretary
April 28, 1997
Chicago, Illinois
17
<PAGE> 20
EXHIBIT A
AMENDMENT TO THE 1992 STOCK OPTION PLAN
WHEREAS, it is the intent of the Corporation to pay its non-employee
members of the Board of Directors a sum of Thirty Thousand Dollars ($30,000.00)
per year, payable in the form of stock units in the Corporation's common stock;
and
WHEREAS, in order to effect the foregoing, certain amendments must be made
to the Corporation's 1992 Stock Option Plan, as amended (the "Plan").
RESOLVED, that the second paragraph of Section 1 of the Plan shall be
deleted in its entirety and replaced with the following text:
Pursuant to the 1992 Plan as amended, certain directors, officers, key
employees and consultants will be offered the opportunity to acquire common
stock through the grant of certain interests, including: (a)
"non-qualified" stock options ("NQSOs"); (b) for key employees only,
"incentive stock options" ("ISOs") (which term, when used herein, shall
have the meaning ascribed thereto by Section 422(b) of the Internal Revenue
Code of 1986, as amended (the "Code"); (c) stock appreciation rights
("SARs") or phantom shares; and (d) stock units or grants; (e) performance
shares; and (f) reload options to purchase additional shares if shares are
delivered in payment for any other interest. The term "Options" hereinafter
shall refer to all of the foregoing interests. The term "Subsidiary"
hereinafter shall mean any present or future corporation which is or would
be a "subsidiary corporation" of the Corporation as the term is defined in
Section 424 of the Code determined as if the Corporation were the employer
corporation. The Options designated as ISOs and the provisions of the 1992
Plan applicable thereto shall be interpreted in a manner consistent with
Section 422 of the Code and all valid regulations issued thereunder.
FURTHER RESOLVED, that Section 4 of the Plan shall be deleted in its
entirety and replaced with the following text:
Except as provided in Subparagraphs 7(i) and 7(j) and Paragraph 9, the
number of shares that may be issued or transferred pursuant to the exercise
of NQSOs, ISOs, or stock units granted under the 1992 Plan as amended shall
not exceed 3,000,000 shares of the common stock of the Company (the "Common
Stock"). Such shares may be authorized and unissued shares or previously
issued shares acquired or to be acquired by the Company and held in
treasury. The number of shares subject to SARs shall not exceed 3,000,000
less the number of shares that may be issued or transferred pursuant to the
exercise of NQSOs, ISOs or stock units granted under the 1992 Plan. The
number of shares that may be subject to Options granted to any director,
officer, employee or consultant in any year cannot exceed 500,000 shares.
Any shares subject to an Option, which, for any reason, expires or is
terminated unexercised, may again be subject to an Option under the 1992
Plan.
FURTHER RESOLVED, that Section 8 shall be deleted in its entirety,
including the heading, and replaced with the following text:
8. Special Provisions Under Code Section 162(m).
(a) The provisions of this Section 8 shall apply only to persons
designated by the Committee as individuals who are or who are likely to
become "covered employees," within the contemplation of Section 162(m)
of the Code; provided that, if an individual is so designated and the
Committee determines that such individual is not a covered employee for
the year in which the Company is entitled to a deduction with respect to
income he recognizes for Federal income tax purposes in connection with
an Option, the provisions of this Section 8 shall not apply to such
Option. The provisions of this Section 8 shall only apply to conditions,
restrictions and limitations applicable to Options that are related to
the performance of the Company and if the provisions of this Section 8
are necessary so that the Option qualifies as "qualified
performance-based compensation" as defined in Treasury Regulation
Section 1.162-27(e)(2). In the event of any inconsistencies between this
A-1
<PAGE> 21
Section 8 and the other Plan provisions within the scope of the
foregoing, the provisions of this Section 8 shall control with respect
to covered employees.
(b) As soon as practicable following the grant of an Option subject
to this Section 8 (but in no event more than ninety (90) days after the
date of grant), the Committee shall establish the performance-related
goals to be used in connection with conditions, restrictions and
limitations applicable to such Option. The performance-related goals
shall be chosen from among the following factors, or any combination of
the following, as the Committee deems appropriate: total stockholder
return; growth in revenues, sales, net income, stock price, and/or
earnings per share; return on assets, net assets, and/or capital; return
on stockholders' equity; or the Company's financial performance versus
peers. The Committee may select among the goals specified, which need
not be the same for each participant or each Option.
(c) With respect to each Option described in paragraph (b), the
Committee shall (at the same time it is making the determinations under
paragraph (b)) determine the relationship between the
performance-related goals and the conditions, restrictions and
limitations applicable to the Option.
(d) In connection with the Options described in paragraph (b), no
performance-related goal will be considered to be satisfied until the
Committee has certified the extent to which the performance-related
goals and any other material terms were satisfied.
(e) Once established, performance-related goals shall not be
changed, except to the extent that the Committee has specified
adjustments as part of the determinations made under paragraph (b) and
(c). Except as provided in the preceding sentence, no
performance-related goal applicable to a condition, restriction or
limitation shall be considered to be satisfied if the minimum
performance-related goals applicable thereto are not achieved.
(f) Individual performance shall not be reflected in a
performance-related goal under this Section 8. However, the Committee
may retain the discretion to treat a performance-related goal as not
having been satisfied due to the failure of a Participant to meet
individual performance goals.
(g) If, on advice of the Company's tax counsel, the Committee
determines that Code Section 162(m) and the regulations thereunder will
not adversely affect the deductibility for federal income tax purposes
of any amount paid under the Plan by applying provisions of this Plan
(including this Section 8(g)) that conflict with this Section 8 to a
covered employee, then the Committee may, in its sole discretion, apply
such Section or Sections to the covered employee without regard to the
exceptions to such Section or Sections that are contained in this
Section 8.
FURTHER RESOLVED, that Section 13 shall be deleted in its entirety,
including the heading, and replaced with the following text:
Non-Employee Board of Director Stock Units. Notwithstanding anything
herein to the contrary, effective January 1, 1997, the Corporation will pay
each non-employee member of the Board, as of the first day of each
applicable period, a certain number of stock units as an annual retainer,
subject to the provisions hereof. The number of stock units for each
Director will be determined as follows: (a) for the period of January 1,
1997 through June 30, 1997, the sum of $7,500 will be divided by the
"Market Value" of the common stock of the Corporation, as set forth below
(the "Partial Year Grant"); and (b) for every twelve (12) month period
commencing July 1, 1997 and thereafter, the sum of $30,000 will be divided
by the Market Value. The Market Value of the common stock of the
Corporation will be the average closing price for the five (5) trading days
preceding any grant date. The number of stock units so determined will be
rounded to the nearest one-hundred (100) shares. The stock units will be
converted into an equal number of shares of common stock at any time or
times after the stock units are fully vested, as selected by each Director
prior to each grant of such stock units. Any distribution on the common
stock will either be distributed to the holder of the stock units or will
result in an equitable adjustment in the number of stock units as
determined by the Committee. The number of stock units will also be
equitably adjusted for stock splits and similar events. No stock units
shall be deemed vested prior to stockholder approval hereof, after which
the Partial Year Grant shall be deemed vested. Subsequent
A-2
<PAGE> 22
grants of stock units will vest at the rate of 25% on the first day of each
calendar quarter. Any unvested stock units will be forfeited if the holder
is not a director at the time of vesting and any previous distributions on
forfeited shares will be subject to recapture upon determination of the
Committee.
A-3
<PAGE> 23
0747-PS-97
<PAGE> 24
DETACH HERE
AMERICAN CLASSIC VOYAGES CO.
TWO NORTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 11, 1997
R
O
X The undersigned hereby appoints SAMUEL ZELL and PHILIP C. CALIAN, or
Y either of them, with individual power of substitution, proxies to vote all
shares of Common Stock of American Classic Voyages Co. (the "Company")
which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of the Company to be held in Chicago, Illinois, on June 11,
1997, and any adjournment thereof.
1. Authority to vote for the election as directors of the group of
eight nominees proposed by the Board of Directors listed below:
Corinne C. Boggs, Philip C. Calian, Arthur A. Greenberg, Jerry
R. Jacob, Jon E.M. Jacoby, Ann Lurie, Sheli Z. Rosenberg and
Samuel Zell
2. To approve Certain Amendments to the Company's 1992 Stock Option
Plan.
3. In their discretion, the Proxy Agents are authorized to vote
such other matters as may properly come before the meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES ON THE REVERSE SIDE. IF YOU DO NOT MARK ANY BOXES, YOUR PROXY WILL
BE VOTED IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE
PROXY AGENTS CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE [SEE REVERSE SIDE]
<TABLE>
<CAPTION>
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE.
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 AUTHORITY TO VOTE FOR THE ELECTION AS DIRECTORS OF THE GROUP OF EIGHT
NOMINEES PROPOSED BY THE BOARD OF DIRECTORS LISTED ON THE OTHER SIDE, AND FOR
AUTHORITY TO VOTE FOR PROPOSAL 2.
<S> <C> <C> <C> <C>
FOR AGAINST ABSTAIN
1. Election of Directors (see reverse). 2. Approve Certain Amendments to / / / / / /
the Company's 1992 Stock Option
FOR WITHHELD Plan.
/ / / /
3. In their discretion, the Proxy Agents are authorized to vote
upon such other matters as may properly come before the
meeting.
/ /
--------------------------------------
For all nominees except as noted above MARK HERE
FOR ADDRESS / /
CHANGE AND
NOTE AT LEFT
Note: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
Signature: Date: Signature: Date:
------------------------------------- -------------- ---------------------------------- -------------
</TABLE>
