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 [ ] Preliminary Proxy Statement
appropriate box: [ ] 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 S/S 240.14a-11(c)
or S/S 240.14a-12
Alberto-Culver Company
(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>
ALBERTO-CULVER COMPANY
Melrose Park, Illinois
December 12, 1997
TO THE STOCKHOLDERS:
The annual meeting of stockholders will be held at the principal office
of the Company in Melrose Park, Illinois, on Thursday, January 22, 1998, at
10:00 a.m.
You are cordially invited to attend this meeting in person. The
principal business at the meeting will be to (i) elect four directors, (ii)
approve an amendment to the Employee Stock Option Plan of 1988 and (iii) approve
an amendment to the 1994 Stock Option Plan For Non-Employee Directors.
At your earliest convenience, please sign and return the enclosed proxy
card to assure that your shares will be represented at the meeting.
Sincerely,
/s/ Leonard H. Lavin
Leonard H. Lavin
Chairman
<PAGE>
NOTICE OF MEETING
The annual meeting of stockholders of Alberto-Culver Company will be
held on Thursday, January 22, 1998, at 10:00 a.m. Chicago time, at the principal
office of the Company, 2525 Armitage Avenue, Melrose Park, Illinois 60160 for
the following purposes:
1. To elect four directors.
2. To approve an amendment to the Employee Stock Option Plan of 1988.
3. To approve an amendment to the 1994 Stock Option Plan For
Non-Employee Directors.
4. To transact such other business as may properly come before the
meeting.
The board of directors has fixed the close of business on November 25,
1997 as the record date for determination of the stockholders entitled
to notice of and to vote at the meeting.
/s/ Bernice E. Lavin
Bernice E. Lavin
Secretary
December 12, 1997
<PAGE>
ALBERTO-CULVER COMPANY PROXY STATEMENT
2525 Armitage Avenue December 12, 1997
Melrose Park, Illinois 60160
Solicitation of Proxies
The board of directors of Alberto-Culver Company (the "Company")
solicits your proxy for use at the annual meeting of stockholders to be held on
January 22, 1998 and at any adjournment thereof.
On November 25, 1997, the record date for the meeting, the Company had
outstanding shares of common stock consisting of 22,850,658 shares of Class A
and 33,532,480 shares of Class B. This Proxy Statement and form of proxy are
being mailed to stockholders on or about December 12, 1997.
Each holder of record at the close of business on the record date is
entitled to one vote for each Class B share and one-tenth of a vote for each
Class A share then held. Any person submitting a proxy has the right to revoke
it at any time before it is voted, in person at the meeting or by written notice
to the Secretary of the Company or by delivery of a later-dated proxy.
The election of directors is decided by a plurality of the votes cast
by holders of all shares entitled to vote in the election. Accordingly, withheld
votes and broker non-votes will not affect the outcome of the election. The
affirmative vote of the majority of shares of stock present in person or by
proxy at the meeting and entitled to vote on such matter is required to approve
the amendment to the Employee Stock Option Plan of 1988 and the amendment to the
1994 Stock Option Plan For Non-Employee Directors. Although abstentions and
broker non-votes will be treated as present at the meeting for purposes of
determining a quorum, abstentions will have the effect of a vote against the
proposed amendments and broker non-votes will have no effect on such proposed
amendments.
Election of Directors
Unless otherwise instructed, proxies will be voted for the election as
directors of the four persons listed as nominees for a term of three years. All
of the nominees are currently serving as directors. Should any of the nominees
become unable to accept nomination or election (which the Company has no reason
to expect), it is the intention of the persons named in the enclosed proxy to
vote for a substitute in each case or the board of directors may make an
appropriate reduction in the number of directors to be elected.
1
<PAGE>
Nominees for Terms Expiring at the Annual Meeting in 2001 (Class I)
Robert P. Gwinn, age 90, has served as a director of the Company since
1988 and as the Chairman Emeritus of Encyclopaedia Britannica, Inc., a
publisher, since September 1993 and as Chairman and Chief Executive Officer of
Encyclopaedia Britannica, Inc. for more than five years prior to September 1993.
Mr. Gwinn is also a director of CNA Financial Corporation.
William W. Wirtz, age 68, has served as a director of the Company since
1978 and as President of Wirtz Corporation, a diversified operations and
investment company, for more than the past five years. Mr.
Wirtz is also a director of Firstar Corporation.
Lee W. Jennings, age 69, has served as a director of the Company since
1989 and as President and Chief Executive Officer of Jennings and Associates, a
strategic consulting firm, for more than the past five years. Mr. Jennings is
also a director of A. O. Smith Corporation, Fruit-of-the-Loom, Inc., Teppco
Partners, L.P. and Prime Capital Corporation.
A. G. Atwater, Jr., age 54, has served as a director of the Company
since October 1995 and has been President and Chief Executive Officer of Amurol
Confections Company, a wholly owned associated company of the Wm. Wrigley Jr.
Company, for more than the past five years.
The board of directors recommends that the stockholders vote FOR each
of the nominees for director.
Directors Whose Terms Expire at the Annual Meeting in 1999 (Class II)
Howard B. Bernick, age 45, has served as a director of the Company
since 1986, as President of the Company since November 1988 and as Chief
Executive Officer since October 1994. From November 1988 to October 1994, Mr.
Bernick served as Chief Operating Officer. Mr. Bernick is also a director of
AAR Corp. Mr. Bernick is the husband of Carol L. Bernick.
Bernice E. Lavin, age 72, has served as a director and Secretary and
Treasurer of the Company since 1955 and as Vice Chairman since July 1994. From
1955 to July 1994, Mrs. Lavin served as Vice President. Mrs. Lavin is the wife
of Leonard H. Lavin and the mother of Carol L. Bernick.
Harold M. Visotsky, M.D., age 73, has served as a director of the
Company since 1989 and has been the Owen L. Coon Professor of Psychiatry and
Behavioral Sciences at Northwestern University Medical School for more than the
past five years. Dr. Visotsky is also the Director of Asher Center,
Northwestern University.
Allan B. Muchin, age 61, has served as a director of the Company since
October 1995 and as Chairman of Katten, Muchin & Zavis, a Chicago-based law
firm, since November 1995. For more than five years prior to November 1995, Mr.
Muchin served as Co-Managing Partner and a Member of the Board of Directors and
Executive Committee of Katten, Muchin & Zavis.
2
<PAGE>
Directors Whose Terms Expire at the Annual Meeting in 2000 (Class III)
Carol L. Bernick, age 45, has served as a director of the Company since
1984, as Executive Vice President and Assistant Secretary of the Company since
October 1990 and as President of Alberto-Culver USA, Inc. since October 1994.
From November 1988 to October 1990, she served as Group Vice President.
Mrs. Bernick is the wife of Howard B. Bernick and the daughter of Mr. and Mrs.
Leonard H. Lavin.
Leonard H. Lavin, age 78, the founder of the Company, has served as a
director and Chairman of the Company since 1955. From 1955 to October 1994, Mr.
Lavin served as Chief Executive Officer of the Company. From 1955 to November
1988, Mr. Lavin served as President of the Company. Mr. Lavin is the husband of
Bernice E. Lavin and the father of Carol L. Bernick.
A. Robert Abboud, age 68, has served as a director of the Company since
March 1994 and as President of A. Robert Abboud and Company for more than the
past five years. Mr. Abboud is also a director of AAR Corp., Inland Steel
Industries, Inc. and Hartmarx Corporation.
Robert H. Rock, D.B.A., age 47, has served as a director of the Company
since October 1995 and as the President of MLR Holdings, L.L.C., an investment
company with holdings in publishing and information businesses, for more than
the past five years. Mr. Rock has also served as Chairman of Metroweek
Corporation, a publisher of weekly newspapers and specialty publications, for
more than the past five years. From 1991 to March 1995, Mr. Rock served as
Chairman of IDD Enterprises, a publisher and provider of on-line services. Mr.
Rock is also a director of Hunt Manufacturing Company, Quaker Chemical
Corporation, R.P. Scherer Corporation and Penn Mutual Life Insurance Company.
3
<PAGE>
Share Ownership of Directors and Executive Officers
The table below contains information concerning the number of shares of
Class A common stock and Class B common stock beneficially owned by each
director, each person named in the Summary Compensation Table and by all
directors and executive officers as a group.
Shares Beneficially Owned Percent
Name on November 25, 1997 (1)(2) of Class
Class A 23,250 (3) (4)
Robert P. Gwinn Class B 0
Class A 593,250 (5) 2.59 %
William W. Wirtz Class B 1,794,000 (5) 5.35 %
Class A 11,250 (6) (4)
Lee W. Jennings Class B 6,800 (6) (4)
Class A 9,500 (7) (4)
A.G. Atwater, Jr. Class B 0
Class A 634,300 (8) 2.75 %
Howard B. Bernick Class B 655,063 (8) 1.95 %
Class A 534,680 (9) 2.34 %
Bernice E. Lavin Class B 5,500,630 (9) 16.40 %
Class A 11,250 (10) (4)
Harold M. Visotsky Class B 1,000 (4)
Class A 9,500 (11) (4)
Allan B. Muchin Class B 0
Class A 573,608 (12) 2.47 %
Carol L. Bernick Class B 3,624,130 (12) 10.81 %
Class A 542,488 (13) 2.37 %
Leonard H. Lavin Class B 5,691,128 (13) 16.97 %
Class A 11,250 (14) (4)
A. Robert Abboud Class B 2,000 (4)
Class A 8,200 (15) (4)
Robert H. Rock Class B 0
Class A 452,836 (16) 1.96 %
Michael H. Renzulli Class B 165,170 (16) (4)
All Directors and
Executive Officers
as a Group (19 persons, Class A 3,577,661 (17) 14.93 %
including the above) Class B 17,484,418 (17) 52.14 %
4
<PAGE>
(1) All, but not less than all, of the Class A shares may at any time be
converted into Class B shares on a share-for-share basis at the option of
the Company. The Class B shares are convertible into Class A shares on a
share-for-share basis at the option of the holder.
(2) Such ownership is direct, with sole voting and investment power, except
as indicated in subsequent footnotes. Each person disclaims beneficial
ownership of any shares indicated as owned indirectly.
(3) Includes 11,250 Class A shares subject to stock options exercisable
currently or within 60 days.
(4) Less than 1.0% of the outstanding shares.
(5) Includes 11,250 Class A shares subject to stock options exercisable
currently or within 60 days. Also includes 582,000 Class A shares and
1,746,000 Class B shares owned by Wirtz Corporation, of which Mr. Wirtz
is president and a director; and 8,000 Class B shares owned by William
Wirtz Pension Trust, of which Mr. Wirtz is a trustee.
(6) Includes 11,250 Class A shares subject to stock options exercisable
currently or within 60 days. Does not include 800 Class B shares owned
by Mr. Jennings' wife.
(7) Includes 5,221 Class A shares subject to stock options exercisable
currently or within 60 days.
(8) Includes 224,300 Class A shares subject to employee stock options
exercisable currently or within 60 days; 11,103 Class B shares held as a
participant in the Alberto-Culver Company Employees' Profit Sharing Plan;
43,960 Class B shares held as co-trustee of a trust for the benefit of
Mr. and Mrs. Bernick's children, for which Mr. Bernick shares voting and
investment power; and 50,000 Class A shares held by the Bernick Family
Foundation of which Mr. Bernick is a director and an officer and shares
voting and investment power. In addition, does not include shares
reported as owned by Mrs.
Bernick.
(9) Includes 434,480 Class A shares and 653,728 Class B shares held as sole
trustee of trusts for the benefit of Mr. and Mrs. Lavin's children and
grandchildren; 954,948 Class B shares held as co-trustee with Mrs.
Bernick of a grantor annuity trust for the benefit of Mrs. Lavin; and
100,200 Class A shares and 300,600 Class B shares held as co-trustee with
Mrs. Bernick of a trust for the benefit of Mrs. Bernick, for which Mrs.
Lavin shares voting and investment power. Does not include 542,488 Class
A shares and 320,000 Class B shares owned by the Lavin Family Foundation
of which Mrs. Lavin is a director and an officer. In addition, does not
include shares reported as owned by Mr. Lavin or Mrs. Bernick.
(10) Includes 3,750 Class A shares subject to stock options exercisable
currently or within 60 days; and 7,500 Class A shares held as trustee of
a trust for the benefit of Dr. Visotsky's wife. Does not include 400
Class A shares held in a trust for the benefit of Dr. Visotsky, for which
trust Dr. Visotsky's wife has sole voting and investment power.
(11) Includes 7,500 Class A shares subject to stock options exercisable
currently or within 60 days.
(12) Includes 411,772 Class A shares subject to employee stock options
exercisable currently or within 60 days. Also includes 2,132,880 Class B
shares held as co-trustee of grantor annuity trusts for the benefit
5
<PAGE>
of Mrs. Bernick's siblings; 1,066,978 Class B shares held as co-trustee
of a grantor annuity trust for the benefit of Mrs. Bernick, for which
Mrs. Bernick shares voting and investment power; 100,000 Class B shares
held as trustee of an insurance trust for the benefit of Mr. and Mrs.
Lavin's children and grandchildren; and 8,024 Class B shares held as a
participant in the Alberto-Culver Company Employees' Profit Sharing Plan.
Does not include 50,000 Class A shares held by the Bernick Family
Foundation of which Mrs. Bernick is a director and the President; 100,200
Class A shares and 300,600 Class B shares held as co-trustee with Mrs.
Lavin of a trust for the benefit of Mrs. Bernick; 954,948 Class B shares
held as co-trustee with Mrs. Lavin of a grantor annuity trust for the
benefit of Mrs. Lavin; 954,948 Class B shares held as co-trustee with Mr.
Lavin of a grantor annuity trust for the benefit of Mr. Lavin; and
542,488 Class A shares and 320,000 Class B shares owned by the Lavin
Family Foundation of which Mrs. Bernick is a director and an officer. In
addition, does not include shares reported as owned by Mr. Bernick and
Mr. and Mrs. Lavin.
(13) Includes 954,948 Class B shares held as co-trustee with Mrs. Bernick of a
grantor annuity trust for the benefit of Mr. Lavin; and 542,488 Class A
shares and 320,000 Class B shares owned by the Lavin Family Foundation of
which Mr. Lavin is a director and the President and shares voting and
investment power. Does not include shares reported as owned by Mrs.
Lavin or Mrs. Bernick.
(14) Includes 3,750 Class A shares subject to options exercisable currently or
within 60 days.
(15) Includes 7,500 Class A shares subject to stock options exercisable
currently or within 60 days and 700 Class A shares held jointly with Mr.
Rock's wife.
(16) Includes 305,000 Class A shares subject to employee stock options
exercisable currently or within 60 days and 22,054 Class B shares as a
participant in the Alberto-Culver Company Employees' Profit Sharing Plan.
(17) Includes 1,112,643 Class A shares subject to stock options exercisable
currently or within 60 days; and 57,158 Class B shares as participants in
the Alberto-Culver Company Employees' Profit Sharing Plan. Such persons
have shared voting and investment power as to 702,678 Class A shares and
1,731,538 Class B shares.
Meetings and Committees of the Board of Directors
The board of directors of the Company held four regularly scheduled
meetings and no special meetings during fiscal year 1997. No director attended
fewer than three-fourths of the aggregate number of meetings of the board and of
the committees described below on which he or she served during the fiscal year.
There are four standing committees of the board of directors. The audit
committee, which is composed of William W. Wirtz, Chairman, A. G. Atwater, Jr.,
Robert P. Gwinn, Lee W. Jennings and Allan B. Muchin, held two meetings during
fiscal year 1997. The audit committee makes recommendations to the board
regarding the engagement of independent auditors each year and reviews with the
outside and internal auditors the scope and results of their audits.
6
<PAGE>
The executive committee, which is composed of Leonard H. Lavin, Chairman,
A.G. Atwater, Jr., Howard B. Bernick, Robert P. Gwinn and Bernice E. Lavin, held
one meeting during fiscal year 1997. The executive committee has many of the
powers of the board of directors and can act when the board is not in
session.
The compensation committee, which is composed of William W. Wirtz,
Chairman, A. Robert Abboud, Robert P. Gwinn, Robert H. Rock and Harold M.
Visotsky, held ten meetings during fiscal year 1997. The compensation committee
reviews executive performance and compensation and administers benefit plans
pursuant to which executive officers receive stock options and other incentive
awards.
The nominating committee, which is composed of Leonard H. Lavin,
Chairman, A. Robert Abboud, Carol L. Bernick, Bernice E. Lavin and Harold M.
Visotsky, held no meetings during fiscal year 1997. The function of the
nominating committee is to evaluate and recommend persons to fill vacancies or
newly created positions on the board of directors and to submit the names of
those persons so recommended to the full board of directors for approval.
Stockholders may submit recommendations for nominations for election to the
board of directors. Additional information regarding the stockholder
recommendation procedure will be provided upon request to the Secretary of the
Company. Stockholder nominations of directors are subject to the notice
requirements described under "Other Business" below.
7
<PAGE>
Executive Compensation
The table below summarizes certain information with respect to
compensation paid by the Company or its subsidiaries to the Chief Executive
Officer and the four other most highly compensated executive officers of the
Company for the past three fiscal years.
<TABLE>
SUMMARY COMPENSATION TABLE
====================================================================================================================================
<CAPTION>
Long-Term Compensation
Annual Compensation Awards Payouts
Number of SVIP All Other
Name and Principal Salary Bonus Stock Options Payouts Compensation
Position Year ($) ($) Granted ($) (1) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Leonard H. Lavin, 1997 $999,996 $1,225,000 - $1,115,000 $166,924 (2)
Chairman 1996 $999,996 $999,000 - - $150,827
1995 $999,996 $945,000 - - $136,376
- ------------------------------------------------------------------------------------------------------------------------------------
Bernice E. Lavin, 1997 $587,499 $576,000 - $ 223,000 $166,924 (3)
Vice Chairman, 1996 $549,996 $439,000 - - $150,827
Secretary and Treasurer 1995 $518,748 $390,000 - - $132,596
- ------------------------------------------------------------------------------------------------------------------------------------
Howard B. Bernick, 1997 $825,006 $1,010,000 114,000 $ 635,550 $ 8,410 (4)
President and Chief 1996 $725,001 $724,000 138,000 - $ 7,376
Executive Officer 1995 $631,254 $595,000 142,400 - $ 6,517
- ------------------------------------------------------------------------------------------------------------------------------------
Carol L. Bernick,
President, Alberto-Culver 1997 $636,252 $624,000 48,000 $ 278,750 $ 8,238 (4)
USA, Inc. and Executive 1996 $581,247 $464,000 60,000 - $ 7,196
V.P. and Assistant Secretary 1995 $517,500 $390,000 66,400 - $ 6,261
of the Company
- ------------------------------------------------------------------------------------------------------------------------------------
Michael H. Renzulli, 1997 $626,256 $705,000 48,000 $ 289,900 $ 20,132 (5)
President, Sally Beauty 1996 $567,750 $510,000 66,400 - $ 18,999
Company, Inc. 1995 $507,000 $500,000 66,400 - $ 16,336
====================================================================================================================================
<FN>
(1) For the three-year measurement period ended September 30, 1997, the total
shareholder return on the Company's Class A shares was 146%, placing it
in the 79th percentile of the S&P 500 with a corresponding payout per
SVIP unit of $2,230. 1997 was the first year in which any awards were
payable under the 1994 Shareholder Value Incentive Plan.
(2) The amount includes $25,013, $24,365 and $24,364 of imputed income from
life insurance for 1997, 1996 and 1995, respectively; annual
contributions to the Alberto-Culver Company Employees' Profit Sharing
Plan of $4,766, $4,700 and $3,973 in 1997, 1996 and 1995, respectively;
and $137,145, $121,762 and $108,039 of imputed income from split-dollar
life insurance policies for 1997, 1996 and 1995, respectively.
(3) The amount includes $25,013, $24,365 and $20,584 of imputed income from
life insurance for 1997, 1996 and 1995, respectively; annual
contributions to the Alberto-Culver Company Employees' Profit Sharing
Plan of $4,766, $4,700 and $3,973 in 1997, 1996 and 1995, respectively;
and $137,145,
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<PAGE>
$121,762 and $108,039 of imputed income from split-dollar
life insurance policies for 1997, 1996 and 1995, respectively.
(4) For Mr. and Mrs. Bernick, the amount for each includes $2,808, $1,836 and
$1,666 of imputed income from life insurance for 1997, 1996 and 1995,
respectively; annual contributions to the Alberto-Culver Company
Employees' Profit Sharing Plan of $4,766, $4,700 and $3,973 in 1997, 1996
and 1995, respectively; and $664, $660 and $622 of matching contributions
to the Alberto-Culver 401(k) Savings Plan for 1997, 1996 and 1995,
respectively, for Mrs. Bernick; and $836, $840 and $878 of matching
contributions to the Alberto-Culver 401(k) Savings Plan for 1997, 1996
and 1995, respectively, for Mr. Bernick.
(5) The amount includes $9,100, $8,100 and $6,891 of imputed income from life
insurance for each of 1997, 1996 and 1995, respectively; annual
contributions to the Alberto-Culver Company Employees' Profit Sharing
Plan of $9,532, $9,399 and $7,945 in 1997, 1996 and 1995, respectively;
and $1,500, $1,500 and $1,500 of matching contributions to the
Alberto-Culver 401(k) Savings Plan for 1997, 1996 and 1995, respectively.
</FN>
</TABLE>
Effective as of July 1, 1997, each non-employee director's annual
compensation was increased from $16,000 to $25,000. In addition, each
non-employee director received $1,000 for each meeting of the board of directors
attended in fiscal year 1997. Non-employee members of the executive, audit and
compensation committees received $1,000 per committee meeting attended in fiscal
year 1997. Effective October 1, 1997, (i) each non-employee director will
receive $1,500 for each meeting of the board of directors attended, (ii) each
non-employee member of the executive, audit and compensation committees will
receive $1,500 per committee meeting attended and (iii) the chairman of the
audit committee and the chairman of the compensation committee will receive an
additional annual retainer of $3,500. Employee directors receive no additional
compensation for serving on the board of directors or its committees.
In addition, each non-employee director participates in the 1994 Stock
Option Plan For Non-Employee Directors (the "Director Plan") which was approved
by the stockholders at the 1995 annual meeting. Under the Director Plan, a
non-qualified option to purchase 15,000 shares of Class A common stock (as
adjusted to reflect the 100% stock dividend paid on February 20, 1997) was
automatically granted to each incumbent non-employee director at the time of the
adoption of the Director Plan by the board of directors. On October 23, 1997 the
board of directors amended the Director Plan to reduce the number of Class A
shares that will automatically be granted to any new non-employee director upon
his or her initial election or appointment as a director of the Company from
15,000 shares to 7,500 shares. No person may receive more than one option grant
under the Director Plan. The exercise price of options granted under the
Director Plan is the fair market value on the date granted. Options are granted
for a ten-year term and are exercisable in four equal annual installments
commencing one year after the date of grant.
9
<PAGE>
Stock Option Grants
The table below sets forth certain information with respect to options
granted to the persons named in the Summary Compensation Table during the fiscal
year ended September 30, 1997.
<TABLE>
====================================================================================================================================
STOCK OPTION GRANTS IN LAST FISCAL YEAR
- ------------------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Number % of Total Potential realizable value at assumed
of Stock Options annual rates of stock price appreciation
Options Granted Exercise Expiration for option term (3)
Name Granted(1) to Employees Price Date
in Fiscal Year ($)(2) 5 % 10 %
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Leonard H. Lavin - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Bernice E. Lavin - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Howard B. Bernick 114,000 12.8% $19.75 10/30/06 $1,415,956 $3,588,311
- ------------------------------------------------------------------------------------------------------------------------------------
Carol L. Bernick 48,000 5.4% $19.75 10/30/06 $ 596,192 $1,510,868
- ------------------------------------------------------------------------------------------------------------------------------------
Michael H. Renzulli 48,000 5.4% $19.75 10/30/06 $ 596,192 $1,510,868
====================================================================================================================================
<FN>
(1) Options are granted under the Employee Stock Option Plan of 1988 which
permits the compensation committee of the board of directors to grant
non-qualified options to purchase shares of Class A common stock. All
options granted have a term of ten years from the date of grant. Options
become exercisable on a cumulative basis in annual increments of
one-fourth of the optioned shares, commencing one year after the date of
grant. Mr. and Mrs. Lavin have elected not to receive stock option grants
under the plan. The compensation committee may accelerate the
exercisability of any options subject to such terms and conditions as it
deems necessary and appropriate. In the event of a change in control of
the Company, as defined in the plan, all outstanding options become
immediately excercisable, or option holders become entitled to receive a
cash payment in lieu of the exercise of their options, as set forth in
the plan. The number of stock options granted have been adjusted to
reflect the 100% stock dividend paid on February 20, 1997.
(2) The exercise price has been adjusted to reflect the 100% stock dividend
paid on February 20, 1997.
(3) The dollar amounts in these columns assume that the market price per share
of the Class A common stock appreciates in value from the date of grant to
the expiration date of the option at the annualized rates indicated. These
rates are set by the Securities and Exchange Commission and are not
intended to forecast possible future appreciation, if any, of the price of
Class A common stock.
</FN>
</TABLE>
10
<PAGE>
Stock Option Exercises
The table below sets forth certain information with respect to the
exercise of options during the fiscal year ended September 30, 1997 by the
persons named in the Summary Compensation Table and the fiscal year-end value of
unexercised options.
<TABLE>
====================================================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE
Number of Value of
unexercised unexercised
Shares options at in-the-money
acquired on Value fiscal options at
exercise (1) Realized year-end fiscal year-end (2)
($) ($)
Name ------------------------------------------------------
Exercisable/ Exercisable/
unexercisable unexercisable
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Leonard H. Lavin - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Bernice E. Lavin - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Howard B. Bernick 194,000 $1,773,563 105,700/308,700 $1,463,288/$3,438,476
- ------------------------------------------------------------------------------------------------------------------------------------
Carol L. Bernick 9,360 $ 77,834 343,172/151,200 $5,319,228/$1,774,705
- ------------------------------------------------------------------------------------------------------------------------------------
Michael H. Renzulli - - 247,300/143,500 $3,791,860/$1,640,735
====================================================================================================================================
<FN>
(1) Adjusted to reflect the 100% stock dividend paid on February 20, 1997.
Mr. and Mrs. Lavin have elected not to receive stock option grants under
the Employee Stock Option Plan of 1988.
(2) Based on the average of the high and low trading price of the Class A
common stock of $26.1875 on September 30, 1997, the last trading day of
the fiscal year.
</FN>
</TABLE>
11
<PAGE>
Long-Term Incentive Awards
The table below sets forth certain information with respect to the grant
of performance units under the 1994 Shareholder Value Incentive Plan ("SVIP")
during the fiscal year ended September 30, 1997 to the persons named in the
Summary Compensation Table.
<TABLE>
====================================================================================================================================
LONG-TERM INCENTIVE PLAN --
AWARDS IN LAST FISCAL YEAR
====================================================================================================================================
<CAPTION>
Potential Future Payouts Under
Shareholder Value Incentive Plan
---------------------------------------------------------
Performance or
Number of Other Period
Shares, Units or Until Maturation Threshold Target Maximum
Other Rights (1) or Payout ($) ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Leonard H. Lavin 500 3 years $250,000 $500,000 $1,500,000
- ------------------------------------------------------------------------------------------------------------------------------------
Bernice E. Lavin 150 3 years $ 75,000 $150,000 $ 450,000
- ------------------------------------------------------------------------------------------------------------------------------------
Howard B. Bernick 375 3 years $187,500 $375,000 $1,125,000
- ------------------------------------------------------------------------------------------------------------------------------------
Carol L. Bernick 160 3 years $ 80,000 $160,000 $ 480,000
- ------------------------------------------------------------------------------------------------------------------------------------
Michael H. Renzulli 160 3 years $ 80,000 $160,000 $ 480,000
====================================================================================================================================
<FN>
(1) Awards under the SVIP are made in the form of performance units, each unit
having a payout value of $500 if the threshold performance is obtained,
$1,000 if the target performance is obtained and $3,000 if the maximum
performance is obtained. Units will have no value if the threshold
performance is not attained. Performance units were granted at the
beginning of fiscal year 1997 for the three-year performance period of
October 1, 1996 through September 30, 1999. At the time the performance
units were granted, objectives for the performance period were established
based on the percentile ranking of Class A common stock measured by total
shareholder return against companies comprising the Standard & Poor's 500
Index. Under amendments to the SVIP approved by the board of directors,
participants may elect to receive all or a portion of their award in Class
A common stock. Starting with grants given in fiscal year 1998,
participants owning shares of Class A and Class B common stock having a
value below a level determined by the compensation committee will be
required to take at least 50% of their award, less applicable withholding
taxes, in Class A common stock. In the event of a change in control of the
Company, as defined in the SVIP, all or a pro-rata portion, based on the
amount of the performance period then elapsed, of the outstanding
performance units will become payable as set forth in the plan.
</FN>
</TABLE>
12
<PAGE>
Deferred Compensation Agreements and Change in Control Arrangements
The board of directors approved severance agreements with the Company's
officers, including the officers named in the Summary Compensation Table on page
7 (the "named executive officers"). The severance agreement for each named
executive officer provides for a payment in the amount of 2.99 times the sum of
the officer's annual salary and highest annual bonus during the preceding five
fiscal years of the Company and continuation of health, life, disability and
similar insurance benefits for a three-year period if such officer's employment
with the Company terminates under the circumstances set forth in the severance
agreement within two years after a change in control. These agreements also
provide for payment to the named executive officer of accrued salary and
vacation pay, and of all amounts which he or she would be eligible to receive
under the Company's incentive plans applicable to the fiscal year in which the
termination occurs. The amounts payable to such an officer under each severance
agreement may be reduced so as to not exceed the limitation set forth in Section
280G of the Internal Revenue Code.
The vesting of stock option awards granted to named executive officers
under the Employee Stock Option Plan of 1988 will be accelerated upon the
occurrence of a change in control and all outstanding stock option awards will
either become options to purchase shares of the acquiring corporation or be
canceled and option holders will receive a cash payment in lieu of the exercise
of such option awards. In addition, the payment of awards granted under the 1994
Management Incentive Plan and the 1994 Shareholder Value Incentive Plan will be
accelerated, and all or a pro-rata portion of each such award will become
payable, upon the occurrence of a change in control, as provided in such plans.
Compensation Committee Report
The compensation committee of the board of directors is comprised of
William W. Wirtz, Chairman, A.Robert Abboud, Robert P. Gwinn, Robert H. Rock
and Harold M. Visotsky. The compensation committee is responsible for reviewing
executive performance and compensation, approving employment agreements with
executive officers and administering benefit plans pursuant to which executive
officers receive stock options, annual and long-term incentive awards,
retirement income and other compensation awards.
The Company's objectives for its executive compensation program are:
o To attract, motivate and retain highly qualified individuals.
o To link the interests of executive officers closely with stockholders.
o To increase the personal stake of the executive officers in the
continued success and growth of the Company by linking a significant
portion of executive officers' compensation to the performance of the
Company.
In order to achieve these objectives, executive compensation for the last
fiscal year was based principally on three components: base salary, annual bonus
and long-term incentive compensation.
13
<PAGE>
Base Salary
Base salaries of executive officers are reviewed from time to time by the
compensation committee and adjusted appropriately. The factors used in
determining an executive officer's base salary are the duties and level of
responsibility of the executive officer, the past performance of the executive
officer, the performance of the executive officer's principal business unit, if
any, and the performance of the Company. The compensation committee exercises
its judgment in making a determination of the impact which these factors have on
setting the executive officers' salaries, and in this connection, the committee
considers the recommendations of management.
Annual Bonus
Annual bonuses are awarded pursuant to the 1994 Management Incentive Plan
("MIP"). At the beginning of the fiscal year, the compensation committee, based
on competitive practices and the recommendations of management, established a
total incentive award opportunity, stated as a percentage of base salary, for
each executive officer. Each executive officer's total award opportunity was
allocated among one or more of the following: (i) consolidated sales and pre-tax
earnings growth objectives; (ii) sales and pre-tax earnings growth objectives of
a subsidiary or division, and (iii) individual business objectives.
For each of the financial objectives, the compensation committee
establishes three levels of performance: threshold, target and super bonus. The
Company exceeded its super bonus level for consolidated pre-tax earnings and
exceeded its threshold level for consolidated sales growth for fiscal year 1997.
As a result, all executive officers earned at least a portion of their total
incentive award opportunity. Actual bonuses paid to executive officers varied
depending on the level of achievement for sales and pre-tax earnings growth of
their subsidiary or division, and the achievement of their individual business
objectives, if applicable.
In December, 1996, the MIP was amended to permit the compensation
committee to increase or decrease annual bonuses paid to executive officers,
other than the Chief Executive Officer and the four other most highly
compensated executive officers of the Company, as the committee, in its
discretion, determines based on factors and circumstances that the committee
deems appropriate.
Long-Term Incentive Compensation
The Company's long-term incentive compensation program consists of grants
of stock options and performance units. Stock options were granted to executive
officers under the Employee Stock Option Plan of 1988 (the "ACSOP").
Non-qualified stock options were granted for a term of ten years with an option
price equal to the fair market value of the Class A common stock on the date of
grant. Stock options become exercisable in four equal annual increments
commencing one year after grant.
Executive officers were also granted performance units pursuant to the
1994 Shareholder Value Incentive Plan (the "SVIP"). Each performance level unit
has a payout value of $500 if the threshold performance level is obtained,
$1,000 if the target performance level is obtained and $3,000 if the maximum
performance level is obtained. Generally, the threshold, target and maximum
performance levels are obtained when the total shareholder return on Class A
shares meets or exceeds the performance of 50%, 60% and 90% of the companies in
the S&P 500, respectively. Under certain circumstances, such awards will be paid
in Class A
14
<PAGE>
common stock. Units will have no value if the threshold performance is not
attained. At the time performance units were granted, the compensation
committee, based on the recommendations of management and KPMG Peat Marwick LLP,
the Company's outside compensation consultants, established objectives for the
three-year performance period, October 1, 1996 through September 30, 1999, based
on the percentile ranking of the Class A common stock measured by total
shareholder return against companies comprising the Standard & Poor's 500 Index.
Decisions with respect to grants of stock options and performance units to
executive officers were made based on a formula proposed by KPMG Peat Marwick
LLP and recommendations from Hewitt Associates LLC. Under this formula,
executive officers received grants of stock options and performance units having
a value equal to a percentage of his or her base salary. The number of stock
options and performance units granted were then adjusted based on the same
factors for determining base salary. Since the adoption of the ACSOP, Leonard H.
Lavin and Bernice E. Lavin have elected not to receive stock options under the
plan.
In fiscal year 1997, the compensation committee established stock
ownership guidelines for all SVIP participants. Under these guidelines, the
Chief Executive Officer is required to have at least five times, and senior
officers are required to have at least three times, their annual base salary
invested in common stock of the Company. All other participants are required to
have at least 1.75 times their annual base salary invested in common stock of
the Company. Participants have until the year 2002 to achieve these ownership
guidelines. In addition, in fiscal year 1997 the compensation committee
established ownership guidelines for outside directors. Under these guidelines,
outside directors are required to have at least $100,000 invested in the common
stock of the Company by the year 2002.
Chief Executive Officer Compensation
Mr. Bernick's fiscal year 1997 total compensation was established
considering competitive market comparisons, Company performance and the
executive compensation philosophy established by the compensation committee.
This philosophy targets fixed compensation near competitive medians and provides
significant performance-based variable compensation opportunities. His 1997 base
salary increase took into consideration: (i) the range of base salaries paid to
the Chief Executive Officers at a comparison group of companies, (ii) the
Company's revenue size relative to the comparison group, and (iii) Mr. Bernick's
performance since he became Chief Executive Officer as primarily represented by
the Company's superior level of performance during this period.
Mr. Bernick's fiscal year 1997 annual incentive award reflected the annual
incentive formula previously described with pre-tax earnings exceeding the super
bonus level and sales growth exceeding the threshold level. Both fiscal year
1997 sales and pre-tax earnings were records for the Company.
The SVIP payouts and the number of stock options granted in fiscal year
1997 reflect the total shareholder return on the Company's Class A shares of
146% over the period of fiscal year 1995 through fiscal year 1997, placing it in
the 79th percentile of the companies in the S&P 500.
15
<PAGE>
Deductibility of Compensation
As part of the Omnibus Budget Reconciliation Act passed by Congress in
1993, the Internal Revenue Code of 1986 was amended to add Section 162(m) which
limits the deductibility for federal income tax purposes of compensation paid to
the Chief Executive Officer and the four other most highly compensated officers
of the Company. Under Section 162(m), compensation paid to each of these
officers in excess of $1.0 million per year is deductible by the Company only if
it is "performance-based."
It is the Company's intention that compensation paid to its executive
officers be deductible for federal income tax purposes, unless circumstances
warrant otherwise. The Company believes that all bonuses paid to executive
officers under the MIP and SVIP will be tax deductible and that any compensation
generated upon the exercise of non-qualified stock options granted under the
ACSOP will be tax deductible by the Company.
Compensation Committee Members
William W. Wirtz, Chairman
A. Robert Abboud
Robert P. Gwinn
Robert H. Rock
Harold M. Visotsky
16
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the Company's Class A common stock and Class B common stock, the S&P 500 Index,
and a selected peer group of companies for the last five fiscal years. During
1997, the Company changed its peer group by adding five companies. This change
was necessitated by a decrease in the Company's peer group from 14 companies to
8 companies over the last three years due to acquisitions or mergers, including
two in 1997, Tambrands Inc. and Cosmetic Center, Inc.
The remaining companies in the old peer group consists of Block Drug
Company, Inc., Church & Dwight Co., Inc., Claire's Stores, Inc., Del
Laboratories, Inc., DEP Corp., Helen of Troy Corp., Tandy Corp. and Windmere
Corp. The "new" peer group includes all the remaining companies in the "old"
peer group along with Carter-Wallace, Inc., Chattem, Inc., McCormick & Company,
Inc., Regis Corp., and Perfumania, Inc.
For the purpose of calculating the peer group average, the cumulative
total shareholder returns of each company have been weighted according to its
stock market capitalization at the beginning of the fiscal year. The graph
assumes $100 was invested on September 30, 1992 and that all dividends were
reinvested.
[Performance Graph]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Alberto-Culver Class A $ 83 103 124 173 247
Alberto-Culver Class B 96 100 132 190 268
S & P 500 Index 113 117 152 183 257
Peer Group - New 104 97 124 124 167
Peer Group - Old 112 124 167 159 235
</TABLE>
17
<PAGE>
Principal Stockholders
The table below contains information as of November 25, 1997 concerning
stock ownership by each person known to beneficially own 5% or more of either
class of the Company's outstanding shares of common stock based upon information
supplied to the Company by such persons.
<TABLE>
<CAPTION>
Shares Owned Beneficially
Name and Address on November 25, 1997 (1)(2) Percent of Class
- ---------------- --------------------------- ----------------
<S> <C> <C> <C>
Leonard H. Lavin Class A 542,488 (3) 2.37%
2525 Armitage Avenue Class B 5,691,128 (3) 16.97%
Melrose Park, IL 60160
Bernice E. Lavin Class A 534,680 (4) 2.34%
2525 Armitage Avenue Class B 5,500,630 (4) 16.40%
Melrose Park, IL 60160
Carol L. Bernick Class A 573,608 (5) 2.47%
2525 Armitage Avenue Class B 3,624,130 (5) 10.81%
Melrose Park, IL 60160
William W. Wirtz Class A 593,250 (6) 2.59%
680 North Lake Shore Drive Class B 1,794,000 (6) 5.35%
Chicago, IL 60611
FMR Corp. Class A 4,047,259 (7) 17.51%
82 Devonshire Street Class B 205,488 (7) (8)
Boston, MA 02109
NewSouth Capital Management, Inc. Class A 1,268,530 (9) 5.55%
1000 Ridgeway Loop Road, Suite 233
Memphis, TN 38120
<FN>
(1) All, but not less than all, of the Class A shares may at any time be
converted into Class B shares on a share-for-share basis at the option of
the Company. The Class B shares are convertible into Class A shares on a
share-for-share basis at the option of the holder.
(2) Such ownership is direct, with sole voting and investment power, except
as indicated in subsequent footnotes. Each individual disclaims
beneficial ownership of any shares indicated as owned indirectly.
(3) Includes 954,948 Class B shares held as co-trustee with Mrs. Bernick of a
grantor annuity trust for the benefit of Mr. Lavin; and 542,488 Class A
shares and 320,000 Class B shares owned by the Lavin Family Foundation of
which Mr. Lavin is a director and the President and shares voting and
investment power. Does not include shares reported as owned by Mrs.
Lavin or Mrs. Bernick.
(4) Includes 434,480 Class A shares and 653,728 Class B shares held as sole
trustee of trusts for the benefit of Mr. and Mrs. Lavin's children and
grandchildren; 954,948 Class B shares held as co-trustee with
Mrs. Bernick of a grantor annuity trust for the benefit of Mrs. Lavin;
and 100,200 Class A shares and 300,600 Class B shares held as co-trustee
with Mrs. Bernick of a trust for the benefit of Mrs. Bernick,
18
<PAGE>
for which Mrs. Lavin shares voting and investment power. Does not
include 542,488 Class A shares and 320,000 Class B shares owned by the
Lavin Family Foundation of which Mrs. Lavin is a director and an officer.
In addition, does not include shares reported as owned by Mr. Lavin or
Mrs. Bernick.
(5) Includes 411,772 Class A shares subject to employee stock options
exercisable currently or within 60 days. Also includes 2,132,880 Class B
shares held as co-trustee of grantor annuity trusts for the benefit of
Mrs. Bernick's siblings; 1,066,978 Class B shares held as co-trustee of a
grantor annuity trust for the benefit of Mrs. Bernick, for which Mrs.
Bernick shares voting and investment power; 100,000 Class B shares held
as trustee of an insurance trust for the benefit of Mr. and Mrs. Lavin's
children and grandchildren; and 8,024 Class B shares as a participant in
the Alberto-Culver Company Employees' Profit Sharing Plan. Does not
include 50,000 Class A shares held by the Bernick Family Foundation of
which Mrs. Bernick is a director and the President; 100,200 Class A
shares and 300,600 Class B shares held as co-trustee with Mrs. Lavin of a
trust for the benefit of Mrs. Bernick; 954,948 Class B shares held as
co-trustee with Mrs. Lavin of a grantor annuity trust for the benefit of
Mrs. Lavin; 954,948 Class B shares held as co-trustee with Mr. Lavin of a
grantor annuity trust for the benefit of Mr. Lavin; and 542,488 Class A
shares and 320,000 Class B shares owned by the Lavin Family Foundation of
which Mrs. Bernick is a director and an officer. In addition, does not
include shares reported as owned by Mr. Bernick or shares owned by Mr.
and Mrs. Lavin.
(6) Includes 11,250 Class A shares subject to stock options exercisable
currently or within 60 days. Also includes 582,000 Class A shares and
1,746,000 Class B shares owned by Wirtz Corporation, of which Mr. Wirtz
is president and a director; and 8,000 Class B shares owned by William
Wirtz Pension Trust, of which Mr. Wirtz is a trustee.
(7) Includes 3,797,359 Class A shares and 168,712 Class B shares beneficially
owned by Fidelity Management & Research Company, an affiliate of FMR
Corp., as a result of its serving as investment adviser to various
investment companies registered under Section 8 of the Investment Company
Act of 1940 and serving as investment adviser to certain other funds
which are generally offered to limited groups of investors; 249,900 Class
A shares and 36,776 Class B shares beneficially owned by Fidelity
Management Trust Company, an affiliate of FMR Corp., as a result of its
serving as trustee or managing agent for various private investment
accounts, primarily employee benefit plans, and serving as investment
adviser to certain other funds which are generally offered to limited
groups of investors. The number of Class A shares beneficially owned by
Fidelity Management & Research Company includes 259,459 shares as a
result of the assumed conversion of convertible debentures of the
Company. FMR Corp. has sole voting power with respect to 36,776 Class B
shares and sole investment power with respect to 4,047,259 Class A shares
and 205,488 Class B shares. This information is based on information
provided to the Company by FMR Corp. ("FMR") on November 11, 1997 and
reflects FMR's holdings as of November 10, 1997.
(8) Less than 1.0% of the outstanding shares.
(9) Includes 80,000 Class A shares as to which NewSouth Capital Management,
Inc. has shared voting power. This information is based on information
provided to the Company by New South Capital Management, Inc. ("New
South") on October 28, 1997 and reflects New South's holdings as of
October 20, 1997.
</FN>
</TABLE>
19
<PAGE>
Certain Business Relationships
During the last fiscal year, the Company retained the law firm of Katten
Muchin & Zavis, of which Allan B. Muchin is a senior partner. The Company has
retained the firm to perform legal services during the current fiscal year.
Amendment to the Employee Stock Option Plan of 1988
On October 23, 1997, the board of directors adopted, subject to
stockholder approval, an amendment to the Employee Stock Option Plan of 1988
(the "ACSOP"). The stockholders initially approved the ACSOP on January 20, 1988
and also approved amendments to the ACSOP on January 26, 1994 and January 26,
1995. On October 24, 1996, the ACSOP was amended by the board of directors. The
proposed October 23, 1997 amendment to the ACSOP will increase the number of
shares of Class A common stock authorized to be issued pursuant to options
granted under the ACSOP.
The board of directors believes that the number of shares of Class A
common stock available to be issued pursuant to options granted under the ACSOP
should be increased.
The following summary describes the material terms of the amended ACSOP,
including the material change discussed above.
The ACSOP permits the compensation committee of the board of directors to
grant non-qualified options to purchase shares of Class A common stock to
eligible key employees of the Company and its subsidiaries who perform services
which materially contribute to the management, operation and development of the
Company's business. As of November 1, 1997, there were approximately 1,235,000
Class A shares available to be granted under the ACSOP. The proposed amendment
to the ACSOP increases the total number of shares of Class A common stock
available for grant by 4,000,000 shares. Shares subject to options may be made
available from unissued or treasury shares. Shares subject to options which
terminate, are surrendered or expire unexercised may be subsequently used to
grant additional options under the amended ACSOP. No option may be granted under
the ACSOP after February 20, 2003. Approximately 325 key employees currently
participate in the ACSOP.
The price at which shares of Class A common stock may be purchased under
the amended ACSOP is determined by the compensation committee of the board of
directors, but may not be less than the fair market value of the Class A common
stock at the time the option is granted. In the event there is a change in the
outstanding Class A common stock by reason of a stock dividend,
recapitalization, merger, consolidation, split-up, combination or exchange of
shares, or the like, each option granted and the number and kind of shares
subject to future options will be adjusted, as may be determined to be equitable
by the compensation committee of the board of directors. On November 25, 1997,
the closing price of the Class A common stock, as reported on the composite tape
of the New York Stock Exchange, was $26.875 per share.
Options are granted for a term of ten years and become exercisable with
respect to 25% of the optioned shares one year after the date of grant and with
respect to an additional 25% at the end of each of the three years thereafter.
Notwithstanding the foregoing, the compensation committee of the board of
directors may (i) specifically provide at the date of grant for another time or
times of exercise; (ii) accelerate the
20
<PAGE>
exercisability of any option subject to such terms and conditions as the
compensation committee of the board of directors deems necessary and
appropriate; or (iii) at any time prior to the expiration or termination of any
option previously granted, extend the term of any option for such additional
period as the compensation committee of the board of directors may determine. In
no event, however, may the aggregate option period with respect to any option
exceed ten years.
The vesting of all outstanding stock option awards will be accelerated
upon the occurrence of a change in control and all outstanding stock option
awards will either become options to purchase shares of the acquiring
corporation or be canceled and option holders will receive a cash payment in
lieu of the exercise of such option awards.
An option granted under the ACSOP is not assignable or transferable other
than by will or the laws of descent and distribution, and an option shall be
exercisable during the lifetime of the optionee only by him or her. An option
transferred by will or the laws of descent and distribution may only be
exercised by the legatee or distributee during the one-year period following the
optionee's death and may only be exercised to the extent it was exercisable by
the optionee prior to his or her death.
Options may be exercised by giving written notice to the Secretary of the
Company, specifying the number of shares to be purchased, accompanied by the
full purchase price for the shares to be purchased either in cash, by check or
by delivery of shares of Class A common stock, or by a combination of these
methods. In addition, when an optionee is required to pay to the Company an
amount required to be withheld under applicable income tax or other laws in
connection with the exercise of an option, the optionee may satisfy this
obligation, in whole or in part, by making an election to have the Company
withhold shares of Class A common stock, or, if the compensation committee of
the board of directors so determines, by delivering shares of Class A common
stock having a value equal to the amount required to be withheld. Class A common
stock delivered or withheld will be valued at the fair market value on the date
of exercise.
The Company understands that under existing federal income tax law, there
will be no federal income tax consequences to either the optionee or the Company
on the grant of an option. Upon the exercise of a non-qualified option, the
optionee will have taxable ordinary income equal to the difference between the
option price and the fair market value of the shares received on the exercise.
The Company will be entitled to a tax deduction in an amount equal to such
difference, provided the Company complies with applicable tax withholding rules.
Any additional gain or loss realized on the sale or exchange of shares received
upon the exercise of a non-qualified option will be treated as long-term,
mid-term or short-term capital gain or loss, depending on how long the optionee
held the shares after the date of exercise.
Optionees may deliver previously-owned shares of Class A common stock in
payment of the option price. In such case, the Company understands that (i) with
respect to the evenly exchanged shares, no gain or loss will be recognized by
the optionee at the time of exercise, and the basis and holding period of the
equal number of new shares received in the exchange will be the same as the
basis and the holding period of the surrendered shares, and (ii) with respect to
the additional shares received upon exercise, the optionee will be required to
recognize as ordinary income in the year of exercise an amount equal to the fair
market value on the date of exercise less any cash paid upon exercise. The basis
of additional shares received will be equal to their fair market value on the
date of exercise.
21
<PAGE>
The ACSOP may be amended, suspended or discontinued by the board of
directors at any time, provided, however that no such amendment, suspension or
discontinuance may (i) adversely affect or impair any option previously granted
without the consent of the optionee or (ii) except as otherwise provided in the
ACSOP, increase the total number of shares which may be granted or decrease the
minimum price at which options may be granted without the approval of the
stockholders.
The board of directors recommends that the stockholders vote FOR the
amendment to the Employee Stock Option Plan of 1988.
Amendment to the 1994 Stock Option Plan For Non-Employee Directors
On October 23, 1997, the board of directors adopted, subject to
stockholder approval, an amendment to the 1994 Stock Option Plan For
Non-Employee Directors (the "Director Plan"). The stockholders initially
approved the Director Plan on January 26, 1995. On October 24, 1996 and October
23, 1997, the Director Plan was amended by the board of directors. The proposed
October 23, 1997 amendment to the Director Plan will increase the number of
shares of Class A common stock authorized to be issued pursuant to options
granted under the Director Plan.
The board of directors believes that the number of shares of Class A
common stock available to be issued pursuant to options granted under the
Director Plan should be increased.
The following summary describes the material terms of the Director Plan,
including the material change discussed above.
The Director Plan permits the granting of non-qualified options to
purchase shares of Class A common stock to eligible directors who are not
officers or employees of the Company or any of its subsidiaries. As of November
1, 1997, there were 30,000 Class A shares available to be granted under the
Director Plan. The proposed amendment to the Director Plan increases the total
number of shares of Class A common stock available for grant by 60,000 shares.
Shares subject to options may be made available from unissued or treasury
shares. Any shares released from any unexercised or expired options may be made
the subject of additional options granted under the Director Plan. No option may
be granted under the Director Plan after October 27, 2004.
The Director Plan provides that an option to purchase 7,500 shares of
Class A common stock will automatically be granted by the board of directors,
without further action, to each eligible director of the Company upon his or her
initial election or appointment as a director of the Company, provided, however,
that no person may be granted more than one such option under the plan.
Currently, eight directors participate in the Director Plan.
The exercise price of options granted under the Director Plan will be the
fair market value of the Class A common stock on the date of grant. In the event
there is any change in the outstanding Class A common stock by reason of a stock
dividend, recapitalization, merger, consolidation, split-up, combination or
exchange of shares, or the like, each option and the number and kind of shares
subject to future options under the Director Plan will be adjusted, as
determined by the board of directors. On November 25, 1997, the
22
<PAGE>
closing price of the Class A common stock, as reported on the composite tape of
the New York Stock Exchange, was $26.875 per share.
Each option granted under the Director Plan will be for a ten-year term
and will become exercisable with respect to 25% of the total number of shares
one year after the date of grant and with respect to an additional 25% at the
end of each of the three years thereafter.
The vesting of all outstanding stock option awards will be accelerated
upon the occurrence of a change in control and all outstanding stock option
awards will either become options to purchase shares of the acquiring
corporation or be canceled and option holders will receive a cash payment in
lieu of the exercise of such option awards.
Options are not transferable other than by will or the laws of descent
and distribution and an option may be exercised during the director's lifetime
only by the director. If the director dies without having fully exercised his or
her option, the executor or administrator or his or her estate or his or her
legatees or distributees may exercise the option during a one-year period
following the director's death (or at the expiration of the term of such option
if sooner) but only to the extent the director could have exercised the option
at the date of his or her death. If a director resigns from the board of
directors due to physical disability or retirement, the director's option shall
terminate three months after his or her resignation (or at the expiration of the
term of such option if sooner) and may be exercised only to the extent the
director could have exercised the option at the date of his or her resignation.
If a director resigns from the board of directors for any reason other than
physical disability or retirement, the director's option shall terminate upon
said resignation.
Options may be exercised by giving written notice to the Secretary of the
Company, specifying the number of shares to be purchased, accompanied by the
full purchase price for such number of shares, either in cash, by check, or in
shares of Class A common stock, or a combination thereof. Class A common stock
delivered in payment of the exercise price will be valued at its fair market
value on the date of exercise.
The Company understands that under existing federal income tax law, there
will be no federal income tax consequences to either the director or the Company
on the grant of the option. On the exercise of an option, the director will have
taxable ordinary income equal to the difference between the option price and the
fair market value of the shares received on the exercise. The Company will be
entitled to a tax deduction in an amount equal to such difference, provided the
Company complies with applicable tax reporting rules. Any additional gain or
loss realized on the sale or exchange of shares received upon exercise will be
long-term, mid-term or short-term capital gain or loss, depending on how long
the director held the shares after the date of exercise.
Directors may deliver previously-owned shares of Class A common stock in
payment of the option price. In such case, the Company understands that (i) with
respect to the evenly exchanged shares, no gain or loss will be recognized by
the director at the time of exercise, and the basis and holding period of the
equal number of new shares received in the exchange will be the same as the
basis and the holding period of the surrendered shares, and (ii) with respect to
the additional shares received upon exercise, the director will be required to
recognize as ordinary income in the year of exercise an amount equal to the fair
market value on
23
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the date of exercise less any cash paid upon exercise. The basis of additional
shares received will be equal to their fair market value on the date of
exercise.
The Director Plan may be amended or discontinued by the board of
directors at any time, provided, however, that no such amendment or
discontinuance shall (i) change or impair any option previously granted without
the consent of the director or (ii) except as otherwise provided in the plan,
without stockholder approval increase the maximum number of shares which may be
purchased by all eligible directors under the Director Plan, change the purchase
price, or change the option period or increase the time limitations on the grant
of options.
The board of directors recommends the stockholders vote FOR the amendment
to the 1994 Stock Option Plan For Non-Employee Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "Act") requires
the Company's executive officers, directors and persons who beneficially own
more than 10% of a registered class of the Company's equity securities to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission, the New York Stock Exchange and the Company. Based solely on its
review of such reports received by it, the Company believes that during fiscal
year 1997 all filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with except that Mr. David D.
DeTomaso, a former executive officer of the Company, and Dr. Harold M. Visotsky
and Mr. A. Robert Abboud, directors of the Company, all reported an option
exercise on a Form 4 after the required filing date.
Independent Public Accountants
The board of directors of the Company has selected KPMG Peat Marwick LLP
as independent public accountants for the Company for the fiscal year ending
September 30, 1998. KPMG Peat Marwick LLP has served the Company in the capacity
of independent public accountants since 1955. Representatives of that firm are
expected to be present at the annual meeting of stockholders with an opportunity
to make a statement if they so desire, and will be available to respond to
appropriate questions presented at the meeting by stockholders.
Other Business
Management knows of no other matters which will be brought before the
meeting. However, if other matters are properly brought before the meeting, the
persons named in the enclosed proxy will vote in accordance with their judgment
on such matters. For business to be properly brought before the meeting by a
stockholder, notice in proper written form must be given to the Secretary not
less than 30 days before the meeting and otherwise be in compliance with the
Company's By-Laws.
Stockholder Proposals
The deadline for receipt by the Company of stockholder proposals for
inclusion in the Company's 1998 proxy materials is August 13, 1998.
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Cost and Method of Proxy Solicitation
The cost of soliciting proxies will be borne by the Company. In addition
to solicitation by mail, brokerage houses, nominees and other custodians and
fiduciaries will be requested to send the proxy material to their principals and
the Company will reimburse them for their reasonable expenses.
By Order of the Board of Directors
/s/ Bernice E. Lavin
BERNICE E. LAVIN
Secretary
25
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DETACH HERE
P ALBERTO-CULVER COMPANY
R
O Annual Meeting, January 22, 1998
X
Y Proxy Solicited by Board of Directors
The undersigned hereby appoints HOWARD B. BERNICK, WILLIAM J.
CERNUGEL AND BERNICE E. LAVIN, each with power of substitution, to vote all
shares which the undersigned stockholder would be entitled to vote if personally
present and, if applicable, hereby directs the trustee of the Alberto-Culver
Company Employees' Profit-Sharing Plan to vote the shares of stock of
Alberto-Culver Company allocated to the account of the undersigned or otherwise
which the undersigned is entitled to vote pursuant to such employee benefit plan
at the Annual Meeting of Stockholders of Alberto-Culver Company to be held on
January 22, 1998, and at any adjournment thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED "FOR" THE ELECTION OF THE FOUR NOMINEES FOR DIRECTOR SET
FORTH ON THE REVERSE SIDE, "FOR" THE AMENDMENT TO THE COMPANY'S EMPLOYEE STOCK
OPTION PLAN OF 1988 TO INCREASE THE TOTAL NUMBER OF SHARES, AND "FOR" THE
AMENDMENT TO THE COMPANY'S 1994 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS TO
INCREASE THE TOTAL NUMBER OF SHARES.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
SEE REVERSE SIDE
<PAGE>
X PLEASE MARK
VOTES AS IN
THIS EXAMPLE
1. Election of Directors
Nominees: Robert P. Gwinn,William W. Wirtz,Lee W. Jennings and A. G. Atwater,Jr.
FOR WITHHELD
For all nominees except as noted above
2. Amendment to the Company's Employee Stock Option Plan of 1988 to increase the
number of shares by 4,000,000 shares.
FOR AGAINST ABSTAIN
3. Amendment to the Company's 1994 Stock Option Plan for Non-Employee Directors
to increase the number of shares by 60,000 shares.
FOR AGAINST ABSTAIN
4. In the discretion of the board of directors, on any other matters that may
properly come before the meeting.
MARK HERE
FOR ADDRESS
CHANGE AND
NOTE BELOW
The board of directors recommends a vote FOR the nominees for director listed
hereon, FOR the proposed amendment to the Company's Employee Stock Option Plan
of 1988 to increase the number of shares by 4,000,000 shares, and FOR the
proposed amendment to the Company's 1994 Stock Option Plan for Non-Employee
Directors to increase the number of shares by 60,000 shares.
Please sign here exactly as your name (or names) appear on this proxy. Persons
signing as executors, administrators, trustees, guardians or attorneys should so
indicate when signing. Where there is more than one owner, each must sign.
Signature: Date:
Signature: Date:
<PAGE>
December 12, 1997
Dear Profit Sharing Plan Participant:
The Annual Meeting of Stockholders of Alberto-Culver Company (Company) will be
held on January 22, 1998. The record date for determining stockholders entitled
to vote at the meeting was November 25, 1997. Through your participation in the
Alberto-Culver Company Employees' Profit Sharing Plan (Plan), you are the
beneficial owner of Alberto-Culver Company Class B Common Stock and have the
right to instruct the trustee of the Plan how to vote your shares.
The number of Alberto-Culver shares in your account appears at the top of the
enclosed proxy card and is identified by a specific suffix; PS1 (i.e.,
Alberto-Culver Company), PS2 (i.e., Sally Beauty Company) or PS3 (i.e.,
Alberto-Culver Puerto Rico). If you are the registered shareholder of either
Class A or Class B Common Stock outside of the Plan, these shares will be
identified on your proxy card by a suffix; CLA (i.e., Class A Common Stock) and
CLB (i.e., Class B Common Stock).
Please read the enclosed Notice of Annual Meeting and Proxy Statement carefully.
You need to mark your choices, sign the enclosed proxy card and return the card
in the enclosed postage-paid envelope to the Company's transfer agent, Bank of
Boston c/o Boston EquiServe L.P. before January 19, 1998 .
The trustee of the Plan will have the voting instructions of each participant in
the Plan tabulated and will vote the shares of the participants by submitting a
final proxy card for inclusion in the tally at the Annual Meeting. Proxy cards
for Plan shares that are not returned or are returned unsigned will be voted
proportionally according to all other votes received by the trustee.
Sincerely,
/s/ Kent E. Madlinger
Kent E. Madlinger
Manager, Retirement & Incentive Plans
<PAGE>
