<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (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 14, 1999
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 27, 2000, 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 and (ii) re-approve
the 1994 Shareholder Value Incentive Plan, as amended.
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 27, 2000, 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 re-approve the 1994 Shareholder Value Incentive Plan, as amended.
3. To transact such other business as may properly come before the
meeting.
The board of directors has fixed the close of business on December 1, 1999
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 14, 1999
<PAGE>
ALBERTO-CULVER COMPANY PROXY STATEMENT
2525 Armitage Avenue December 14, 1999
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
27, 2000 and at any adjournment thereof.
On December 1, 1999, the record date for the meeting, the Company had
outstanding shares of common stock consisting of 22,723,519 shares of Class A
and 32,957,471 shares of Class B. This Proxy Statement and form of proxy are
being mailed to stockholders on or about December 14, 1999.
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, 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
re-approve the 1994 Shareholder Value Incentive Plan, as amended ("SVIP").
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 re-approval of the SVIP and broker non-votes will have no
effect on such re-approval of the SVIP.
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 2003 (Class III)
Carol L. Bernick, age 47, has served as a director of the Company since
1984, as Assistant Secretary of the Company since 1990 and as Vice Chairman of
the Company and President of Alberto-Culver North America, a division of the
Company, since April 1998. From 1990 to April 1998, she served as Executive
Vice President of the Company and from October 1994 to April 1998, she served as
President of Alberto-Culver USA, Inc., a wholly-owned subsidiary of the Company.
Mrs. Bernick is the wife of Howard B. Bernick and the daughter of Leonard H.
Lavin and Bernice E. Lavin.
Leonard H. Lavin, age 80, 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 1988, Mr.
Lavin served as President of the Company. Mr. Lavin is the husband of Bernice
E. Lavin, the father of Carol L. Bernick and the father-in-law of Howard B.
Bernick.
A. Robert Abboud, age 70, has served as a director of the Company since
March 1994 and as President of A. Robert Abboud and Company, a private
investment firm, for more than the past five years. Mr. Abboud is also a
director of AAR Corp. and Hartmarx Corporation.
Robert H. Rock, D.B.A., age 49, has served as a director of the Company
since October 1995 and as the President of MLR Holdings, LLC, 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 Corporation (formerly known as Hunt
Manufacturing Company), Quaker Chemical Corporation and Penn Mutual Life
Insurance Company.
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 2001 (Class I)
Robert P. Gwinn, age 92, has served as a director of the Company since
1988, as Chairman and Chief Executive Officer of Gwinn Oil Company, a privately
owned oil company, for more than the past five years, and as the Chairman
Emeritus of Encyclopaedia Britannica, Inc., a publisher, since 1993. Mr. Gwinn
is also a director of CNA Financial Corporation.
William W. Wirtz, age 70, 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.
A. G. Atwater, Jr., age 56, has served as a director of the Company since
October 1995 and as President and Chief Executive Officer of Amurol Confections
Company, a special confectionary manufacturer and wholly owned associated
company of the Wm. Wrigley Jr. Company, for more than the past five years.
2
<PAGE>
Directors Whose Terms Expire at the Annual Meeting in 2002 (Class II)
Howard B. Bernick, age 47, has served as a director of the Company since
1986, as President of the Company since 1988 and as Chief Executive Officer of
the Company since October 1994. From 1988 to October 1994, Mr. Bernick served
as Chief Operating Officer of the Company. Mr. Bernick is also a director of
AAR Corp. Mr. Bernick is the husband of Carol L. Bernick and the son-in-law of
Leonard H. Lavin and Bernice E. Lavin.
Bernice E. Lavin, age 74, 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, the mother of Carol L. Bernick and the mother-in-law of
Howard B. Bernick.
Harold M. Visotsky, M.D., age 75, has served as a director of the Company
since 1989, as the Owen L. Coon Professor of Psychiatry and Behavioral Sciences
at Northwestern University Medical School for more than the past five years, as
a director of Education and Research Development at Northwestern University
Department of Psychiatry since 1994 and as a consultant for more than the past
five years in the areas of health planning and benefits management.
Allan B. Muchin, age 63, 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.
3
<PAGE>
Share Ownership of Directors and Executive Officers
The table below contains information as of November 15, 1999, 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.
<TABLE>
<CAPTION>
======================================================================================================
Name of Beneficial Owner Title of Amount and Nature of Beneficial Percent
Class Ownership (1)(2) of Class
======================================================================================================
<S> <C> <C> <C>
Class A 351,320 (3) 1.54%
Carol L. Bernick Class B 4,680,885 (3) 14.20%
- ------------------------------------------------------------------------------------------------------
Class A 495,888 (4) 2.18%
Leonard H. Lavin Class B 4,755,304 (4) 14.43%
- ------------------------------------------------------------------------------------------------------
Class A 15,000 (5) (6)
A. Robert Abboud Class B 2,000 (6)
- ------------------------------------------------------------------------------------------------------
Class A 15,700 (7) (6)
Robert H. Rock Class B 0
- ------------------------------------------------------------------------------------------------------
Class A 27,000 (8) (6)
Robert P. Gwinn Class B 0
- ------------------------------------------------------------------------------------------------------
Class A 597,000 (9) 2.63%
William W. Wirtz Class B 1,794,000 (9) 5.44%
- ------------------------------------------------------------------------------------------------------
Class A 17,000 (10) (6)
A.G. Atwater, Jr. Class B 0 (10)
- ------------------------------------------------------------------------------------------------------
Class A 886,200 (11) 3.85%
Howard B. Bernick Class B 655,267 (11) 1.99%
- ------------------------------------------------------------------------------------------------------
Class A 493,704 (12) 2.17%
Bernice E. Lavin Class B 4,192,242 (12) 12.72%
- ------------------------------------------------------------------------------------------------------
Class A 15,000 (13) (6)
Harold M. Visotsky Class B 1,000 (6)
- ------------------------------------------------------------------------------------------------------
Class A 17,000 (14) (6)
Allan B. Muchin Class B 0
- ------------------------------------------------------------------------------------------------------
Class A 494,136 (15) 2.14%
Michael H. Renzulli Class B 165,575 (15) (6)
- ------------------------------------------------------------------------------------------------------
All Directors and Executive Officers as a Class A 3,518,688 (16) 14.84%
Group (16 persons, including the above) Class B 16,290,834 (16) 49.43%
======================================================================================================
</TABLE>
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. Unless otherwise specifically
provided, each person disclaims beneficial ownership of any shares
indicated as owned indirectly (i.e., as trustee or co-trustee of a trust
or as an officer of a foundation).
(3) Includes 134,844 Class A shares subject to employee stock options
exercisable currently or within 60 days. Also includes 1,993,817 Class B
shares held as trustee of a trust for the benefit of Mrs. Bernick's
sister; 222,527 Class B shares held as trustee of a trust for the benefit
of Mrs. Bernick's nephew; 41,040 Class A shares and 45,768 Class B shares
held as trustee of a trust for the benefit of Mr. and Mrs. Bernick's son;
1,994,354 Class B shares held as co-trustee of a 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 8,171
Class B shares held as a participant in the Alberto-Culver Company
Employees' Profit Sharing Plan. Does not include 45,000 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;
and 495,888 Class A shares and 520,000 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, Mr.
Lavin or Mrs. Lavin.
(4) Includes 495,888 Class A shares and 520,000 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.
(5) Includes 3,750 Class A shares subject to stock options exercisable
currently or within 60 days.
(6) Less than 1.0% of the outstanding shares.
(7) Includes 15,000 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.
(8) Includes 15,000 Class A shares subject to stock options exercisable
currently or within 60 days.
(9) Includes 15,000 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.
(10) Includes 12,721 Class A shares subject to stock options exercisable
currently or within 60 days.
5
<PAGE>
(11) Includes 296,100 Class A shares subject to employee stock options
exercisable currently or within 60 days; 11,307 Class B shares held as a
participant in the Alberto-Culver Company Employees' Profit Sharing Plan;
43,960 Class B shares and 5,100 Class A 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 45,000 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. Does not include shares
reported as owned by Mrs. Bernick.
(12) Includes 393,440 Class A shares and 481,464 Class B shares held as trustee
of trusts for the benefit of Mr. and Mrs. Lavin's children and
grandchildren; 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 495,888 Class A shares and 520,000 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.
(13) Includes 7,500 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.
(14) Includes 15,000 Class A shares subject to stock options exercisable
currently or within 60 days.
(15) Includes 416,300 Class A shares subject to employee stock options
exercisable currently or within 60 days and 22,459 Class B shares held as
a participant in the Alberto-Culver Company Employees' Profit Sharing
Plan.
(16) Includes 980,515 Class A shares subject to stock options exercisable
currently or within 60 days; 57,779 Class B shares held as participants in
the Alberto-Culver Company Employees' Profit Sharing Plan; 6,199 Class B
shares held as participants in the Alberto-Culver 401(k) Savings Plan; and
5,000 Class A shares issued under the Company's 1994 Restricted Stock Plan
("Restricted Shares"). Such persons have shared voting and investment
power as to 647,504 Class A shares and 2,858,914 Class B shares. Holders
of Restricted Shares have sole voting rights and no dispositive rights
with respect to those shares that have not vested.
Meetings and Committees of the Board of Directors
The board of directors of the Company held four regularly scheduled
meetings and one special meeting during fiscal year 1999. No director attended
fewer than three-fourths of the aggregate number of meetings of the board of
directors and of the committees of the board of directors described below on
which he or she served during the fiscal year. There are four standing
committees of the board of directors.
6
<PAGE>
The audit committee, which is composed of A. Robert Abboud, Chairman, A. G.
Atwater, Jr., Robert P. Gwinn and Allan B. Muchin, held two meetings during
fiscal year 1999. The audit committee makes recommendations to the board of
directors regarding the engagement of independent auditors each fiscal year and
reviews with the outside and internal auditors the scope and results of their
audits.
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
no meetings during fiscal year 1999. The executive committee has many of the
powers of the board of directors and can act when the board of directors is not
in session.
The compensation committee, which is composed of Robert H. Rock, Chairman,
A. Robert Abboud, Robert P. Gwinn and Harold M. Visotsky, held four meetings
during fiscal year 1999. The compensation committee reviews executive
performance and compensation and administers benefit plans pursuant to which
executive officers receive stock options, incentive awards, retirement income
and other compensation awards.
The nominating committee, which is composed of Leonard H. Lavin, Chairman,
A. Robert Abboud, Carol L. Bernick, Howard B. Bernick, Bernice E. Lavin and
Harold M. Visotsky, held no meetings during fiscal year 1999. 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>
<CAPTION>
========================================================================================================================
SUMMARY COMPENSATION TABLE
========================================================================================================================
Annual Compensation Long-Term Compensation
----------------------------- ------------------------------
Awards Payouts
------------------------------
Name Securities
and Underlying LTIP
Principal Salary Bonus Options Payouts All Other
Position Year ($) ($) (#) ($)(1) Compensation
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Leonard H. Lavin, 1999 $1,200,000 $ 556,000 0 $ 0 $206,791 (2)
Chairman 1998 1,149,999 421,000 0 87,500 191,934
1997 999,996 1,225,000 0 115,000 166,276
- ------------------------------------------------------------------------------------------------------------------------
Bernice E. Lavin, 1999 $ 625,008 $ 262,000 0 $ 0 206,791 (2)
Vice Chairman, 1998 618,756 181,000 0 146,250 191,934
Secretary and Treasurer 1997 587,499 576,000 0 223,000 166,276
- ------------------------------------------------------------------------------------------------------------------------
Howard B. Bernick, 1999 $1,350,000 $ 625,000 $ 208,000 0 $ 15,664 (3)
President and Chief 1998 1,225,002 $ 449,000 165,000 316,875 14,796
Executive Officer 1997 825,006 1,010,000 114,000 635,550 8,410
- ------------------------------------------------------------------------------------------------------------------------
Carol L. Bernick, 1999 $ 641,674 $ 293,000 $ 60,000 0 $ 15,664 (3)
Vice Chairman, President, 1998 585,422 201,000 45,000 141,375 14,796
Alberto-Culver North 1997 636,252 624,000 48,000 278,750 8,238
America and Assistant
Secretary
- ------------------------------------------------------------------------------------------------------------------------
Michael H. Renzulli, 1999 $ 737,502 $ 655,000 $ 60,000 0 $ 20,632 (4)
President, Sally Beauty 1998 685,008 600,000 45,000 136,500 19,762
Company, Inc. 1997 626,256 705,000 48,000 289,900 19,132
========================================================================================================================
</TABLE>
(1) For the three-year performance period ended September 30, 1999, the total
shareholder return on the Company's Class A shares was 16%, placing it in
the 35th percentile of the Standard & Poor's 500 Index with no
corresponding payout per Shareholder Value Incentive Plan unit. For the
three-year performance period ended September 30, 1998, the total
shareholder return on the Company's Class A shares was 62%, placing it in
the 59.5th percentile of the Standard & Poor's 500 Index with a
corresponding payout per Shareholder Value Incentive Plan unit of $975. For
the three-year performance 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 Standard & Poor's 500 Index with a corresponding
payout per Shareholder Value Incentive Plan unit of $2,230.
8
<PAGE>
(2) For Mr. and Mrs. Lavin, the amount for each includes $24,365 of imputed
income from life insurance; an annual contribution to the Alberto-Culver
Company Employees' Profit Sharing Plan of $10,292; $169,894 of imputed
income from split-dollar life insurance policies; and $2,240 of matching
contributions to the Alberto-Culver 401(k) Savings Plan.
(3) For Mr. and Mrs. Bernick, the amount for each includes $3,132 of imputed
income from life insurance; an annual contribution to the Alberto-Culver
Company Employees' Profit Sharing Plan of $10,292; and $2,240 of matching
contributions to the Alberto-Culver 401(k) Savings Plan.
(4) The amount includes $8,100 of imputed income from life insurance; an annual
contribution to the Alberto-Culver Company Employees' Profit Sharing Plan
of $10,292; and $2,240 of matching contributions to the Alberto-Culver
401(k) Savings Plan.
Each non-employee director of the Company receives $25,000 annual
compensation plus $1,500 for each meeting of the board of directors attended.
Non-employee members of the executive, audit and compensation committees receive
$1,500 per committee meeting attended. The chairman of the audit committee and
the chairman of the compensation committee 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 (i) each incumbent non-employee director at the time of the adoption
of the Director Plan and (ii) each non-employee director elected or appointed
subsequent to the adoption of the Director Plan. On October 23, 1997 the board
of directors amended the Director Plan to reduce the number of options to
purchase 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 of a share of Class A
common stock on the date options are granted. Options are granted for a ten-
year term and become 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, 1999.
<TABLE>
<CAPTION>
======================================================================================================================
OPTION GRANTS IN LAST FISCAL YEAR
======================================================================================================================
INDIVIDUAL GRANTS
======================================================================================================================
Potential Realizable Value
Number of at Assumed Annual Rates
Securities Percent of Total of Stock Price Appreciation
Underlying Options for Option Term (2)
-----------------------------
Options Granted Exercise
Granted (1) to Employees Price Expiration
Name (#) in Fiscal Year ($/sh) Date 5%($) 10%($)
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Leonard H. Lavin 0 0 - - 0 0
- ----------------------------------------------------------------------------------------------------------------------
Bernice E. Lavin 0 0 - - 0 0
- ----------------------------------------------------------------------------------------------------------------------
Howard B. Bernick 208,000 17.5% $21.375 09/30/08 $2,796,066 $7,085,779
- ----------------------------------------------------------------------------------------------------------------------
Carol L. Bernick 60,000 5.1% $21.375 09/30/08 $ 806,557 $2,043,975
- ----------------------------------------------------------------------------------------------------------------------
Michael H. Renzulli 60,000 5.1% $21.375 09/30/08 $ 806,557 $2,043,975
======================================================================================================================
</TABLE>
(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
and summarized below under "Employment Contracts, Termination of Employment
and Change in Control Arrangements," the vesting of all stock option awards
will be accelerated and all outstanding stock option awards will, depending
on the type of consideration given to stockholders in connection with the
change in control, 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.
(2) The dollar amounts in these columns assume that the market price per share
of 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.
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, 1999 by the persons named
in the Summary Compensation Table and the fiscal year-end value of unexercised
in-the-money options.
<TABLE>
<CAPTION>
=========================================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
=========================================================================================================================
Number of Securities
Underlying Value of
Unexercised Unexercised
Options at In-The-Money
Fiscal Options at
Year-End Fiscal Year-End (2)
Shares Value (#) ($)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable
=========================================================================================================================
<S> <C> <C> <C> <C>
Leonard H. Lavin (1) 0 0 0/0 0/0
Bernice E. Lavin (1) 0 0 0/0 0/0
Howard B. Bernick 0 0 233,100/330,000 $ 510,660/$228,539
Carol L. Bernick 10,256 $132,943 107,844/106,500 $ 380,917/$99,291
Michael H. Renzulli 0 0 387,700/108,100 $2,831,915/$109,641
=========================================================================================================================
</TABLE>
(1) 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 Class A common
stock of $19.844 per share on September 30, 1999, the last trading day of
the fiscal year.
11
<PAGE>
Long-Term Incentive Awards
The table below sets forth certain information with respect to the grant of
performance units under the 1994 Shareholder Value Incentive Plan ("SVIP")
during the fiscal year ended September 30, 1999 to the persons named in the
Summary Compensation Table.
<TABLE>
<CAPTION>
================================================================================================================================
LONG-TERM INCENTIVE PLAN --
AWARDS IN LAST FISCAL YEAR
================================================================================================================================
Estimated Future Payouts Under Non-Stock Price-Based Plans
--------------------------------------------------------------
Performance or
Number of Other Period
Shares, Units or Until
Other Rights Maturation or Threshold Target Maximum
Name (#) (1) Payout ($) ($) ($)
================================================================================================================================
<S> <C> <C> <C> <C> <C>
Leonard H. Lavin 600 3 years $300,000 $600,000 $1,800,000
- --------------------------------------------------------------------------------------------------------------------------------
Bernice E. Lavin 190 3 years 95,000 190,000 570,000
- --------------------------------------------------------------------------------------------------------------------------------
Howard B. Bernick 675 3 years 337,500 675,000 2,025,000
- --------------------------------------------------------------------------------------------------------------------------------
Carol L. Bernick 210 3 years 105,000 210,000 630,000
- --------------------------------------------------------------------------------------------------------------------------------
Michael H. Renzulli 210 3 years 105,000 210,000 630,000
================================================================================================================================
</TABLE>
(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 level is
attained, $1,000 if the target performance level is attained and $3,000 if
the maximum performance level is attained. Units will have no value if the
threshold performance level is not attained. Starting with grants made
after September 22, 1998, awards may be reduced (but not below zero) so
that the present value, as determined in accordance with Section 280G(d)(4)
of the Internal Revenue Code (the "Code"), of such payments plus any other
payments relating to a participant under Section 280G(b)(2)(A)(ii) of the
Code shall not, in the aggregate, exceed 2.99 times such participant's
"base amount" as defined in Section 280G(b)(3) of the Code. No such
reduction, however, shall be applied to any payments which do not
constitute "excess parachute payments" within the meaning of the Code.
Performance units were granted at the beginning of fiscal year 1999 for the
three-year performance period of October 1, 1998 through September 30,
2001. At the time the performance units were granted, the compensation
committee established objectives for the for the next three consecutive
fiscal years based on the percentile ranking of the performance of the
Class A common stock among the performance of the companies comprising the
Standard & Poor's 500 Index. Participants may elect to receive all or a
portion of their award in Class A common stock. Starting with grants made
in fiscal year 1998, participants owning shares of Class A and Class B
common stock having a dollar 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
12
<PAGE>
in control of the Company, as defined in the SVIP and summarized below
under "Employment Contracts, Termination of Employment and Change in
Control Arrangements," all or a pro-rata portion of the outstanding
performance units, based on the number of fiscal years of each performance
period that have elapsed and the performance of the Company as of the date
of the change in control compared to the performance of the companies
comprising the Standard & Poor's 500 Index as of the end of the last
quarter for which such information is available, will become payable in
cash within 30 days following such change in control. If at least six full
calendar months of any fiscal year have elapsed, the entire fiscal year
shall be deemed to have elapsed.
Subject to shareholder re-approval, as of October 1, 1999 the SVIP will be
amended to (i) increase the maximum amount potentially payable to a single
participant from $2.5 million per fiscal year to $4.0 million per
performance period payable in cash or Class A common stock and (ii) add
five indexes, in addition to the Standard & Poor's 500 Index, that the
compensation committee can choose among at the beginning of a performance
period to measure the performance of the Class A common stock. The SVIP and
the material amendments are described in greater detail under "Re-Approval
of the Shareholder Value Incentive Plan, as Amended."
Employment Contracts, Termination of Employment and Change in Control
Arrangements
Other than agreements governing retirement or termination of employment as
described below, the Company has no employment agreements with the officers
named in the Summary Compensation Table (the "named executive officers").
The board of directors approved severance agreements with the Company's
officers, including the named executive officers, which provide payments and
benefits 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, as defined in the agreement and summarized below. The
severance agreement for each named executive officer provides for a payment in
the amount which, when added to any other payments subject to the limitation set
forth in Section 280G of the Code, equals 2.99 times such officer's "base
amount" as such term is defined in Section 280G(b)(3) of the Code. Such payment
shall be in lieu of any other amount of severance relating to salary or bonus
continuation to be received by such officer upon termination of employment under
any other severance plan or arrangement of the Company. The severance agreements
provide for continuation of such officer's health, life, disability and similar
insurance benefits for up to a three-year period. 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 otherwise 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 Code.
The vesting of stock options granted to named executive officers under the
Employee Stock Option Plan of 1988 ("ACSOP") will be accelerated upon the
occurrence of a change in control, as defined in the plan and summarized below,
and all outstanding stock options will, depending on the type of consideration
given to stockholders in connection with the change in control, either become
options to
13
<PAGE>
purchase shares of the acquiring corporation or be canceled and option holders
will receive a cash payment in lieu of the exercise of such options. In
addition, the payment of awards under the Management Incentive Plan ("MIP") and
the 1994 Shareholder Value Incentive Plan ("SVIP") will be accelerated, and all
or a pro-rata portion of each such award will become payable as provided in such
plans, upon the occurrence of a change in control, as defined in such plans and
summarized below. Under certain circumstances, awards paid pursuant to grants
made under the SVIP after September 22, 1998, may be reduced. See "Long-Term
Incentive Awards" above.
The definition of a change in control is the same for each of the severance
agreements, ACSOP, SVIP and MIP. Generally, a change in control is defined as
the occurrence of any of the following: (i) the acquisition by any individual,
entity or group of both 20% or more of the combined voting power of the
outstanding voting securities of the Company and combined voting power in excess
of the combined voting power held by the Exempt Persons, as defined below, (ii)
the cessation of the individuals who comprise the Incumbent Board, as defined
below, to constitute a majority of the board of directors of the Company, (iii)
except as provided in the next sentence, the approval by the stockholders of the
Company of any merger, reorganization, consolidation or sale or other
disposition (other than a tax-free spin-off of a subsidiary or other business
unit of the Company) of all or substantially all of the assets of the Company
(collectively, a "Fundamental Change") or (iv) the approval by the stockholders
of the Company of the complete liquidation or dissolution of the Company. A
Fundamental Change will not be a change in control if (a) immediately after such
Fundamental Change more than 60% of the combined voting power of the then
outstanding voting securities of the resulting corporation or the Company, as
the case may be, is then owned by all or substantially all of the individuals
and entities who were the owners of the combined voting power of the outstanding
voting securities of the Company immediately prior to such Fundamental Change
and (b) a majority of the members of the board of directors of the resulting or
acquiring corporation, as the case may be, were members of the Incumbent Board
at the time of the execution of the initial agreement or action of the board of
directors of the Company providing for such Fundamental Change.
A change in control will not be deemed to occur through the acquisition of
voting securities of the Company if they were acquired (i) by an Exempt Person,
an employee benefit plan or trust sponsored or maintained by the Company or any
corporation controlled by the Company or (ii) through an exercise, conversion or
exchange privilege acquired directly from the Company. In addition, a change in
control will not be deemed to occur if such change in control resulted from the
Company acquiring its own voting securities. Exempt Persons are defined as: (i)
Mr. and Mrs. Lavin, their descendants and spouses of their descendants, and (ii)
any estate of any such individuals or any trust or similar arrangement or
charitable organization established by or for the benefit of any such
individuals. Incumbent Board is defined as those individuals who comprised the
board of directors of the Company as of October 24, 1996 and any individual who
becomes a director subsequent to such date whose election or nomination was
approved by either a majority of the Incumbent Board or at least a majority of
the combined voting power held by the Exempt Persons.
14
<PAGE>
Key Executive Deferred Compensation Agreements
Upon retiring on or after reaching a specified retirement age, each of the
named executive officers will be entitled to receive the amount of compensation
as set forth in his or her deferred compensation agreement payable in equal
monthly installments. Payments range up to a maximum of $400,000 per year and
are payable over a maximum of 15 years. If the named executive officer is
terminated for any reason prior to his or her specified retirement age, such
executive shall not be entitled to receive any payments under his or her
deferred compensation agreement. In the event the executive dies (and was not
terminated by the Company) prior to reaching his or her retirement age, the
individual(s) designated by such executive may be entitled to 50% of the
deceased executive's deferred benefit. Executives retiring prior to their
specified retirement age may, at the discretion of a committee of the board of
directors, receive all or a portion of those benefits they would have been
entitled had they retired at their specified retirement age.
Payments are conditioned upon the named executive officer rendering such
reasonable business consulting and advisory services to the Company or any
subsidiary as the Chief Executive Officer deems desirable. No executive will be
obligated to provide more than eight hours of consulting and advisory services a
month without additional compensation. If the executive commits an act of
disloyalty to the Company or any of its subsidiaries, the executive shall have
no right to receive any payments under these agreements. The obligations of the
Company under these agreements are unfunded and unsecured promises to pay. The
Company has voluntarily elected to purchase insurance policies covering the life
of each named executive officer. The Company is the sole owner and beneficiary
of these policies which have a cash value well in excess of the amount payable
under all deferred compensation agreements combined.
Executive Deferred Compensation Plan
Effective January 1, 1999, the board of directors approved the Executive
Deferred Compensation Plan for all "highly compensated employees" within the
meaning of Section 414(q) of the Code, which includes all of the named executive
officers. All eligible employees may elect to defer all or a portion of their
salary and commissions ("Compensation"). Compensation may be deferred for any
period of time, provided it is no less than three years, and can be paid out to
the employee by a lump sum payment or annually over any period not to exceed
five years. The Compensation Committee may change the rate of interest earned on
money deferred under the plan. Such rate is currently 7% per annum. Commencing
in calendar year 2000, under certain circumstances, employees who are unable to
receive the maximum Company matching contribution they would have otherwise
received (the "Maximum Match") under the Alberto-Culver or Sally Beauty 401(k)
Savings Plans because of discrimination testing, will be credited a matching
contribution in this plan equal to the difference between the Maximum Match and
the amount of the matching contribution such employee actually received in such
401(k) plan. Such matching contribution will be immediately vested and will be
required to be deferred in this plan until the termination of such employee's
employment with the Company.
15
<PAGE>
Compensation Committee Report
The compensation committee of the board of directors is comprised of Robert
H. Rock, Chairman, A. Robert Abboud, Robert P. Gwinn, 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, incentive awards, retirement income and other compensation awards.
The Company's objectives for its executive compensation program are:
. To attract, motivate and retain highly qualified individuals.
. To link the interests of executive officers closely with stockholders.
. 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.
Base Salary
Base salaries of executive officers are reviewed annually by the
compensation committee and adjusted appropriately effective the beginning of
each calendar year. 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, the performance of the Company and
the recommendations of management. The compensation committee exercises its
judgment in making a determination of the impact which these factors have on
setting the executive officers' salaries.
Annual Bonus
Annual bonuses are awarded pursuant to the Management Incentive Plan
("MIP"). In consultation with the Company's outside compensation consultants,
the MIP was amended as of October 1, 1998. The primary objective of the
amendments was to strengthen the linkage between incentive awards and measurable
performance and provide higher rewards for exceptional performance.
An executive officer's bonus award opportunity is allocated among one or
more of the following criteria: (i) sales of the Company, a subsidiary or a
division; (ii) pre-tax earnings of the Company, a subsidiary or a division;
(iii) except for the named executive officers, any other measurements the
compensation committee may determine; and (iv) except for the named executive
officers, individual business objectives. The compensation committee may modify
the above criteria during the plan year as deemed appropriate; provided,
however, that the compensation committee may not modify such criteria for the
named executive officers so as to increase the award payable to such persons.
16
<PAGE>
Actual awards can range from 0% to 200% of an executive officer's base
salary depending on the level of performance achieved. The compensation
committee may increase or decrease an individual award to a participant, other
than the named executive officers, by up to 25% of such participant's base
salary based upon such factors and circumstances as the compensation 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
exercise price equal to the fair market value of a share 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 unit has a
payout value of $500 if the threshold performance level is attained, $1,000 if
the target performance level is attained and $3,000 if the maximum performance
level is attained. The threshold, target and maximum performance levels are
attained when the total shareholder return on Class A shares meets or exceeds
the performance of 50%, 60% and 90% of the companies in the Standard & Poor's
500 Index, respectively, over a three-year performance period. Under certain
circumstances, such awards will be paid in Class A 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 in consultation with the Company's outside compensation
consultants, established objectives for the three-year performance period,
October 1, 1998 through September 30, 2001, based on the percentile ranking of
the Class A common stock measured by total shareholder return among companies
comprising the Standard & Poor's 500 Index.
Subject to shareholder re-approval, as of October 1, 1999 the SVIP will be
amended to (i) increase the maximum amount potentially payable to a single
participant from $2.5 million per fiscal year of the Company to $4.0 million per
performance period payable in cash or Class A common stock and (ii) add five
indexes, in addition to the Standard & Poor's 500 Index, that the compensation
committee can choose among at the beginning of the performance period to measure
the performance of the Class A common stock. For the performance period ended
September 30, 2002, the performance of the Class A common stock will again be
measured among the companies comprising the Standard & Poor's 500 Index as has
been the case for each performance period since the original adoption of the
SVIP. The SVIP and the material amendments are described in greater detail under
"Re-Approval of the Shareholder Value Incentive Plan, as Amended."
Decisions with respect to grants of stock options and performance units to
executive officers were made based on formulas proposed by the Company's outside
compensation consultants. Under these formulas, 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 Chairman and
the Chief Executive Officer are required to have at least five times, and senior
officers, including the other named executive officers, are required to have
17
<PAGE>
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
five years 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 or
within five years of their initial election to the board of directors, whichever
is later.
Chief Executive Officer Compensation
Howard B. Bernick's fiscal year 1999 total compensation was established
considering competitive market comparisons, Company performance, which included
records in each of sales, pre-tax earnings, net earnings and earnings per share
for the eighth consecutive year, and the executive compensation philosophy
established by the compensation committee. This philosophy targets total
compensation at competitive levels and provides significant performance-based
variable compensation opportunities. Mr. Bernick elected not to accept an
increase in 1999 base salary that was proposed by the compensation committee.
Mr. Bernick's fiscal year 1999 annual incentive award under the MIP was
formula based and reflected record sales and record pre-tax earnings
performance.
The number of options and performance units granted to Mr. Bernick were
based on formulas proposed by the Company's outside compensation consultants and
reviewed and approved by the compensation committee. Under these formulas, Mr.
Bernick's grants were equal to a percentage of his base salary.
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 policy to take into account the deductibility for
federal income tax purposes of the compensation paid to its executive officers.
The Company believes that all bonuses and awards paid to executive officers
under the MIP and SVIP, respectively, 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
Robert H. Rock, Chairman
A. Robert Abboud
Robert P. Gwinn
Harold M. Visotsky
18
<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 Standard & Poor's
500 Index, and a selected peer group of companies for the last five fiscal
years. The selected peer group consists of Block Drug Company, Inc., Carter-
Wallace, Inc., Chattem, Inc., Church & Dwight Co., Inc., Claire's Stores, Inc.,
Del Laboratories, Inc., Helen of Troy Limited, McCormick & Company, Inc.,
Perfumania, Inc., Regis Corporation, Tandy Corporation and Windmere-Durable
Holdings, Inc. (formerly named Windmere Corporation).
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, 1994 and that all dividends were reinvested.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Alberto-Culver Class A $120 168 239 199 184
Alberto-Culver Class B 132 189 268 207 207
S & P 500 Index 130 156 219 239 305
Peer Group 129 128 173 204 297
</TABLE>
19
<PAGE>
Principal Stockholders
The table below contains information as of November 15, 1999, unless
otherwise specified in the footnotes, 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>
Name and Address Amount and Nature of
of Beneficial Owner Title of Class Beneficial Ownership (1)(2) Percent of Class
------------------- -------------- --------------------------- ----------------
<S> <C> <C> <C>
Leonard H. Lavin Class A 495,888 (3) 2.18%
2525 Armitage Avenue Class B 4,755,304 (3) 14.43%
Melrose Park, IL 60160
Bernice E. Lavin Class A 493,704 (4) 2.17%
2525 Armitage Avenue Class B 4,192,242 (4) 12.72%
Melrose Park, IL 60160
Carol L. Bernick Class A 351,320 (5) 1.54%
2525 Armitage Avenue Class B 4,680,885 (5) 14.20%
Melrose Park, IL 60160
Howard B. Bernick Class A 886,200 (6) 3.85%
2525 Armitage Avenue Class B 655,267 (6) 1.99%
Melrose Park, IL 60160
William W. Wirtz Class A 597,000 (7) 2.63%
680 North Lake Shore Drive Class B 1,794,000 (7) 5.44%
Chicago, IL 60611
Barclays Global Investors Class A 1,077 (8) (9)
46 Fremont Street, 17th Floor Class B 1,323,708 (8) 4.02%
San Francisco, CA 94105
FMR Corp. Class A 5,093,990 (10) 22.42%
82 Devonshire Street Class B 521,559 (10) 1.58%
Boston, MA 02109
Franklin Resources, Inc. Class A 1,229,500 (11) 5.41%
777 Mariners Island Blvd.
San Mateo, CA 94403
NewSouth Capital Management, Inc. Class A 1,355,887 (12) 5.97%
1000 Ridgeway Loop Rd., Suite 233
Memphis, TN 38120
</TABLE>
(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.
20
<PAGE>
(2) Such ownership is direct, with sole voting and investment power, except as
indicated in subsequent footnotes. Unless otherwise specifically provided,
each individual disclaims beneficial ownership of any shares indicated as
owned indirectly (i.e., as trustee or co-trustee of a trust or as an
officer of a foundation).
(3) Includes 495,888 Class A shares and 520,000 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 393,440 Class A shares and 481,464 Class B shares held as trustee
of trusts for the benefit of Mr. and Mrs. Lavin's children and
grandchildren; 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
495,888 Class A shares and 520,000 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 134,844 Class A shares subject to employee stock options
exercisable currently or within 60 days. Also includes 1,993,817 Class B
shares held as trustee of a trust for the benefit of Mrs. Bernick's sister;
222,527 Class B shares held as trustee of a trust for the benefit of Mrs.
Bernick's nephew; 41,040 Class A shares and 45,768 Class B shares held as
trustee of a trust for the benefit of Mr. and Mrs. Bernick's son; 1,994,354
Class B shares held as co-trustee of a 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 8,171 Class B shares held
as a participant in the Alberto-Culver Company Employees' Profit Sharing
Plan. Does not include 45,000 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; and 495,888 Class A
shares and 520,000 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, Mr. Lavin or Mrs. Lavin.
(6) Includes 296,100 Class A shares subject to employee stock options
exercisable currently or within 60 days; 11,307 Class B shares held as a
participant in the Alberto-Culver Company Employees' Profit Sharing Plan;
43,960 Class B shares and 5,100 Class A 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 45,000 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. Does not include shares
reported as owned by Mrs. Bernick.
(7) Includes 15,000 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,
21
<PAGE>
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.
(8) Includes 119,769 Class A shares and 176 Class B shares for which Barclays
Global Investors ("Barclays") has no voting power and shares voting power,
respectively. This information is based on information provided to the
Company by Barclays on November 3, 1999 and reflects Barclays' holdings as
of October 27, 1999.
(9) Less than 1.0% of the outstanding shares.
(10) The beneficial ownership of the Company's shares arises in the context of
passive investment activities only by various investment accounts managed
by Fidelity Management & Research Company and Fidelity Management Trust
Company and their affiliates on a discretionary basis (the "Fidelity
Accounts"). The Fidelity Accounts are institutional investors engaged in
the investment business. This information is based on information provided
to the Company by FMR Corp. on October 6, 1999 and reflects FMR's holdings
as of September 30, 1999.
(11) Includes 7,400 Class A shares for which Franklin Resources, Inc.
("Franklin") has no voting power. This information is based on information
provided to the Company by Franklin on October 27, 1999 and reflects such
holdings as of September 30, 1999.
(12) Includes 1,340,887 Class A shares for which NewSouth Capital Management,
Inc. ("NewSouth") has no voting power and 15,000 shares for which NewSouth
shares voting power and has no investment power. This information is based
on information provided to the Company by NewSouth on November 5, 1999 and
reflects such holdings as of October 27, 1999.
Certain Relationships and Related Transactions
On January 28, 1999, the Company purchased 190,000 shares of Class B common
stock from the SJL Grantor Annuity Trust, u/a/d 9/15/93 (the "SJL Trust") at a
price of $26.125 per share. Carol L. Bernick is a co-trustee of this trust and
has sole dispositive and voting power with respect to such shares. The assets of
the SJL Trust are held for the benefit of Mrs. Bernick's nephew and the grandson
of Mr. and Mrs. Leonard H. Lavin.
The decision to purchase the Class B shares from the SJL Trust as well as
the purchase price was determined by a committee of the board of directors of
the Company, which committee was established for this purpose. The committee
consisted of Messrs. Abboud, Atwater, Gwinn, Muchin, Rock, Visotsky and Wirtz.
The price per share was determined by taking the average closing price of such
shares from January 21, 1999 through January 27, 1999.
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.
22
<PAGE>
Re-Approval of the 1994 Shareholder Value Incentive Plan, as Amended
The 1994 Shareholder Value Incentive Plan, as amended (the "SVIP"), is
presented to shareholders for their re-approval. The SVIP was originally
approved by the shareholders on January 26, 1995. The material amendments that
have been made to the SVIP are to (i) increase the maximum amount potentially
payable to a single participant from $2.5 million per fiscal year to $4.0
million per performance period, as defined below, and (ii) add five indexes, in
addition to the Standard & Poor's 500 Index, which the compensation committee of
the board of directors can choose among at the beginning of the performance
period to measure the performance of the Class A common stock.
The SVIP is intended to provide key salaried employees of the Company and
its subsidiaries who have substantial responsibility for the Company's
management and growth with additional incentives through the grant of awards
based upon the Company's total shareholder return ("TSR"), as defined below,
thereby (i) more closely linking the interests of such employees with
stockholders, (ii) increasing the personal stake of such employees in the
continued success and growth of the Company, and (iii) encouraging them to
remain in the employ of the Company. Approximately 60 employees currently
participate in the SVIP. Below is a summary of the material terms of the SVIP.
The SVIP is administered by the compensation committee of the board of
directors. Under the SVIP, eligible employees selected by the compensation
committee will receive performance units having a target value at the time of
grant of $1,000 per unit. At the time performance units are granted, the
compensation committee will establish objectives for the next three consecutive
fiscal years based on the percentile ranking of the performance of the Class A
common stock among the performance of the companies comprising the (i) Standard
& Poor's 500 Index, (ii) Standard & Poor's MidCap 400 Index, (iii) Standard &
Poor's SmallCap 600 Index, (iv) Standard & Poor's SuperComposite 1500 Index, (v)
Russell 3000 Index, or (vi) Russell 2000 Index. The index chosen by the
compensation committee for a particular performance period shall be referred to
as the "Applicable Index." The Class A common stock is not included in any of
these indexes. Performance of the Company and the Applicable Index companies
will be measured by the TSR. For the performance period ended September 30,
2002, the Applicable Index is again the Standard & Poor's 500 Index as has been
the case for each performance period since the original adoption of the SVIP.
TSR is defined as the percentage by which the ending per share price of
common stock (determined by using the average closing price for the ten trading
days prior to and including the last day of the applicable performance period),
as adjusted for any stock split or other recapitalization, plus reinvested
dividends, exceeds the beginning per share price of the common stock (determined
by the average closing price for the ten days prior to and including the first
day of the applicable performance period). For purposes of the Company's
performance, TSR is computed using the Class A common stock. A performance
period is any three consecutive fiscal years of the Company, unless accelerated
pursuant to a change in control as described below.
Prior to or within 90 days following the beginning of a performance period,
the compensation committee will establish a matrix to determine the amount of
the awards payable upon the attainment of the objectives. As the Company's
ranking among the Applicable Index companies improves, the commensurate amount
of the award will increase to a maximum of $3,000 (300% of the target award) per
unit. No award will be payable if the Company's TSR compared to the TSR of the
companies comprising the Applicable Index would rank it at less than the 50/th/
percentile.
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At the end of the performance period, the compensation committee will
certify the Company's TSR ranking among the companies comprising the Applicable
Index and to what extent the objectives established by the compensation
committee for the performance period have been attained. The maximum award
payable to a single participant in cash or in Class A common stock for any
performance period may not exceed the lesser of 300% of the target award or $4.0
million. Awards will be distributed on or before the 15/th/ day of the third
month following the end of the applicable performance period.
Participants may elect to receive all or a portion of their award in Class
A common stock. Starting with grants made in fiscal year 1998, participants
owning shares of Class A and Class B common stock having a dollar
value below a level determined by the compensation committee will be required to
take at least 50% of their awards, less applicable withholding taxes, in Class A
common stock.
Starting with grants made after September 22, 1998, awards may be reduced
(but not below zero) so that the present value, as determined in accordance with
Section 280G(d)(4) of the Internal Revenue Code (the "Code"), of such payments
plus any other payments relating to a participant under Section
280G(b)(2)(A)(ii) of the Code shall not, in the aggregate, exceed 2.99 times
such participant's "base amount" as defined in Section 280G(b)(3) of the Code.
No such reduction, however, shall be applied to any payments which do not
constitute "excess parachute payments" within the meaning of the Code.
If a participant's employment is terminated prior to the end of a
performance period for any reason other than death, retirement, disability, or a
change in control as defined in the SVIP and summarized above under "Employment
Contracts, Termination of Employment and Change in Control Arrangements," any
performance units held by the participant shall be immediately cancelled. If a
participant's employment terminates due to death, disability or retirement, the
participant, or in the case of death, his or her estate or named beneficiary,
will receive a prorated cash award based on the number of full calendar months
the participant was employed during the performance period.
In the event of a change in control of the Company, all or a pro-rata
portion of the outstanding performance units, based on the number of fiscal
years of each performance period that have elapsed and the TSR for the Company
as of the date of the change in control compared to the TSR for the Applicable
Index companies as of the end of the last quarter for which such information is
available, will become payable in cash within 30 days following such change in
control. If at least six full calendar months of any fiscal year have elapsed,
the entire fiscal year shall be deemed to have elapsed.
A participant's rights in, and performance units granted under, the SVIP
may not be assigned or transferred except by will or the laws of descent and
distribution. A participant's benefits under the SVIP are reflected on the
Company's books as general, unsecured and unfunded obligations of the Company,
and the SVIP does not give any person any right or security interest in any
asset of the Company, nor does it imply a trust or segregation of assets by the
Company. The compensation committee or the board of directors may terminate or
amend the SVIP at any time, provided no such amendment may adversely affect or
impair previously granted performance units. There were no payouts under the
SVIP for the three year performance period ended September 30, 1999.
The board of directors recommends that the stockholders vote FOR the
re-approval of the Shareholder Value Incentive Plan, as Amended.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange 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 1999 its executive officers, directors and greater than
10% beneficial owners complied with all applicable filing requirements under
Section 16(a) of the Exchange Act.
Independent Public Accountants
The board of directors of the Company has selected KPMG LLP as independent
public accountants for the Company for the fiscal year ending September 30,
2000. KPMG 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 nor more than 60 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 2000 proxy materials is August 16, 2000.
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
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ANNEX A
ALBERTO-CULVER COMPANY
1994 SHAREHOLDER VALUE INCENTIVE PLAN
(as amended through October 1, 1999)
I. GENERAL
1.1 Purpose of the SVIP
The 1994 Shareholder Value Incentive Plan ("SVIP") of the Alberto-
Culver Company ("Company") is intended to advance the best interests of the
Company by providing key salaried employees who have substantial responsibility
for the Company's management and growth with additional incentives through the
grant of awards based upon Total Shareholder Return as defined in Section
1.2(o), thereby: (1) more closely linking the interests of key salaried
employees with shareholders, (2) increasing the personal stake of such key
salaried employees in the continued success and growth of the Company, and (3)
encouraging them to remain in the employ of the Company.
1.2 Definitions
The following definitions apply with respect to the SVIP:
(a) "Change in Control" shall have the meaning assigned to such
term in Section 3.8(b).
(b) "Code" shall have the meaning assigned to it in Section 1.2(c).
(c) "Committee" shall mean the Compensation Committee of the Board of
Directors of the Company or, if any member of the Compensation
Committee is not (i) an "outside director" within the meaning of
Section 162(m) of the Internal Revenue Code of 1986 and the rules
and regulations thereunder (the "Code") or (ii) a "non-employee
director" within the meaning of Section 16 of the Securities
Exchange Act of 1934 and the rules and regulations thereunder
("Section 16"), the Committee shall set up a subcommittee
comprised solely of outside directors and non-employee directors
for purposes of all matters arising under this SVIP involving
"Executive Officers" within the meaning of item 401(b) of
Regulation S-K ("Executive Officer") and Covered Employees as
defined herein.
(d) "Common Stock" shall mean the Class A common stock of the
Company, $.22 par value.
(e) "Covered Employee" shall mean a Participant who is a "covered
employee" within the meaning of Section 162(m) of the Code during
the plan year at issue.
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(f) "Disability" shall have the meaning provided in the Company's
applicable disability plan or, in the absence of such a
definition, when a Participant becomes totally disabled as
determined by a physician mutually acceptable to the Participant
and the Committee before attaining his or her 65th birthday and
if such total disability continues for more than three months.
Disability does not include any condition which is intentionally
self-inflicted or caused by illegal acts of the Participant.
(g) "Exempt Person" and "Exempt Persons" shall have the meaning
assigned to such terms in Section 3.8(c).
(h) "Incumbent Board" shall have the meaning assigned to such term in
Section 3.8(d).
(i) "Ownership Threshold" shall mean the required dollar value of
ownership of Common Stock and Class B common stock of the
Company, $.22 par value, by each Participant as set by the
Committee from time to time. In determining such ownership for
each Participant, the Committee may conclusively rely on the
books and records of the Company.
(j) "Participant" shall have the meaning assigned to it in Section
1.4.
(k) "Performance Period" shall mean any three consecutive fiscal
years as set forth in the Participant's Performance Unit
Agreement, unless accelerated pursuant to Section 3.8.
(l) "Performance Unit" shall have the meaning assigned to it in
Section 2.1(a).
(m) "Performance Unit Agreement" shall have the meaning assigned to
it in Section 2.1(b).
(n) "Retirement" shall have the meaning provided in the Company's
Employees' Profit Sharing Plan or, in the absence of such a
definition, the first day of the month following the month in
which the Participant attains his or her 65th birthday.
(o) "Total Shareholder Return" or "TSR" means the percentage by which
the ending per share price of common stock (determined as the
average closing price for the ten trading days prior to and
including the last date of the applicable Performance Period), as
adjusted for any stock split or other recapitalization, plus
reinvested dividends, exceeds the beginning per share price of
the common stock (determined as the average closing price for the
ten trading days prior to and including the first date of the
applicable Performance Period). For purposes of the Company, TSR
shall be computed using the Common Stock.
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1.3 Administration of the SVIP
The SVIP shall be administered by the Committee. The Committee shall have
full and final authority in its discretion to interpret conclusively the
provisions of the SVIP, to adopt such rules and regulations for carrying out the
SVIP and to make all other determinations necessary or advisable for the
administration of the SVIP.
The Committee shall meet at least once each fiscal year, and at such
additional times as it may determine to designate the eligible employees, if
any, to be granted Performance Units under the SVIP, the amount of such
Performance Units and the time when Performance Units will be granted. All
Performance Units granted under the SVIP shall be on the terms and subject to
the conditions hereinafter provided.
1.4 Eligible Participants
Key salaried employees of the Company and its subsidiaries as determined by
the Committee shall be eligible to participate in the SVIP (any employee
receiving a Performance Unit under the SVIP hereinafter referred to as a
"Participant").
1.5 Limitation on Grants
The maximum amount payable under the SVIP to a single Participant may not
exceed $4.0 million per Performance Period.
II. PERFORMANCE UNITS
2.1 Terms and Conditions of Grants
(a) Performance Units may be granted to Participants prior to or within the
first ninety (90) days following the beginning of a Performance Period.
Each Performance Unit shall have a target value at the time of the grant of
$1,000. Except as provided in the following sentence, each Participant
shall be eligible, in his or her sole discretion, to receive such
Participant's award in cash or shares of Common Stock or a combination
thereof as set forth in Section 2.2, payable in each case following the end
of a Performance Period, if the Common Stock of the Company has met the
objectives established by the Committee, as set forth below. For
Performance Periods which end on or after the year 2000, Participants
owning less than their Ownership Threshold shall be required to receive at
least 50% of their award in Common Stock ("Required Election").
Notwithstanding anything to the contrary contained in this Section 2.1(a),
each Participant shall be eligible to receive an award (payable only in
cash) in the event of a Change in Control at such time as set forth in
Section 3.8, if the Common Stock has met the objectives established by the
Committee as set forth below.
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(b) At the time Performance Units are granted to Participants, the Committee
shall establish objectives based on the percentile rank of the Common Stock
of the Company measured by Total Shareholder Return among the companies
comprising the (i) Standard & Poor's 500 Index, (ii) Standard & Poor's
MidCap 400 Index, (iii) Standard & Poor's Small Cap 600 Index, (iv)
Standard & Poor's Super Composite 1500 Index, (v) Russell 3000 Index, or
(vi) Russell 2000 Index. The index chosen by the Committee for a
particular Performance Period shall be referred to as the "Applicable
Index." In addition, the Committee shall establish a matrix to determine
the awards payable to Participants upon attainment of these objectives.
Within 90 days following the beginning of a Performance Period, each
Participant shall receive an agreement which shall set forth the
Performance Period, the number of Performance Units granted and the
objectives and matrix established by the Committee (hereinafter referred to
as a "Performance Unit Agreement").
(c) No award will be payable if the Company's TSR as a percentile among the
Applicable Index companies is less than the 50th percentile, and the
maximum award payable is 300% of the target value. If the Company's TSR as
a percentile among the Applicable Index companies is not specifically shown
in the matrix established by the Committee and set forth in the Performance
Unit Agreement the amount of the award shall be calculated by interpolating
between the amounts shown.
(d) At the end of each Performance Period, or earlier pursuant to Section
3.8(a) in the event of a Change in Control, the Common Stock of the Company
will be ranked based on Total Shareholder Return among the companies
comprising the Applicable Index. The Committee shall certify the Company's
ranking and the attainment of the objectives established by the Committee
for each Performance Period or, in the event of a Change in Control, the
elapsed portion of the Performance Period in which such Change in Control
shall have occurred. No award may be paid to Covered Employees under this
SVIP until the Committee has made such certification.
2.2 Payment
Awards approved by the Committee will be distributed on or before the 15th
day of the third month following the end of the Performance Period or, in
the event of a Change in Control, within 30 days following such Change in
Control (but in the event of a Change in Control, such award shall be
payable only in cash). Awards payable, in whole or in part, in Common
Stock shall be the number of shares of Common Stock that a Participant
could have purchased at the ending per share price of the Common Stock as
calculated pursuant to Section 1.2(o) had such Participant used the
relevant percentage (pursuant to any election to receive Common Stock) of
his or her award, less applicable withholding taxes, to purchase Common
Stock. Elections to receive Common Stock in lieu of cash shall be
submitted to the Committee at such time as specified by the Committee, but
in no case after the end of the relevant Performance Period. Except for
Required Elections, failure to make a timely election shall be conclusively
deemed to be an election to receive all cash. Failure to make a timely
election to receive more than 50% of an award in Common Stock pursuant to a
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Required Election shall be conclusively deemed to be an election to receive
50% of such award in Common Stock. To the extent necessary to secure an
exemption under Section 16(b), voluntary elections by Executive Officers to
receive Common Stock shall be approved by the Committee following the end
of the Performance Period and prior to the distribution of such stock.
2.3 Termination of Employment
(a) If a Participant's employment is terminated prior to the end of a
Performance Period because of death, Retirement or Disability, the extent
to which a Performance Unit shall be deemed to have been earned and payable
(solely in cash and without regard to any elections to the contrary) shall
be determined by multiplying (a) the cash value of the Performance Unit as
calculated in accordance with the matrix established by the Committee and
set forth in the Performance Unit Agreement by (b) a fraction, the
numerator of which is the number of full calendar months such Participant
was employed during the Performance Period and the denominator of which is
the total number of full calendar months in the Performance Period.
(b) If a Participant's employment terminates for any reason other than because
of death, Retirement or Disability, or a Change in Control (as defined in
Section 3.8), the Performance Unit and any and all rights to payment under
such Performance Unit shall be immediately canceled and the Performance
Unit Agreement with such terminated Participant shall be null and void.
III. ADDITIONAL PROVISIONS
3.1 Nature of Participant's Interests
A Participant's benefits under the SVIP shall at all times be reflected on
the Company's books and records as a general, unsecured and unfunded obligation
of the Company, and the SVIP shall not give any person any right or security
interest in any asset of the Company nor shall it imply a trust or segregation
of assets by the Company.
3.2 Amendments
The Committee or the Board of Directors of the Company may amend the SVIP
from time to time, as it deems advisable and in the best interests of the
Company, provided that no such amendment will adversely affect or impair
previously issued grants.
3.3 Withholding
The Company shall have the right to deduct from any distribution to any
Participant an amount equal to the federal, state and local income taxes and
other amounts as may be required by law to be withheld with respect to any grant
or distribution under the SVIP.
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3.4 Nonassignability
(a) Except as expressly provided in the SVIP, the rights of a Participant
and any awards under the SVIP may not be assigned or transferred except by will
and the laws of descent and distribution.
(b) A Participant may from time to time name in writing any person or
persons to whom his or her benefit is to be paid if he or she dies before
complete payment of such benefit has occurred. Each such beneficiary designation
will revoke all prior designations by the Participant with respect to the SVIP,
shall not require the consent of any previously named beneficiary, shall be in a
form prescribed by the Committee, and will be effective only when filed with the
Committee in care of the Secretary of the Company during the Participant's
lifetime.
(c) If the Participant fails to designate a beneficiary before his or her
death, as provided above, or if the beneficiary designated by the Participant
dies before the date of the Participant's death or before complete payment of
the Participant's benefit has occurred, the Company may pay the remaining unpaid
portion of the Participant's benefit to the legal representative or
representatives of the estate of the Participant.
3.5 Nonuniform Determinations
Determinations by the Committee under the SVIP regarding determinations of
the persons to receive grants, the form, amount and timing of such grants, and
the terms and provisions of such grants and the agreements evidencing the same
need not be uniform and may be made by it selectively among persons who receive,
or are eligible to receive, grants under the SVIP, whether or not such persons
are similarly situated.
3.6 No Guarantee of Employment
Neither grants under the SVIP nor any action taken pursuant to the SVIP
shall constitute or be evidence of any agreement or understanding, express or
implied, that the Company or its subsidiaries shall retain the Participant for
any period of time or at any particular rate of compensation.
3.7 Effective Date; Duration
The SVIP shall become effective as of October 1, 1994 subject to approval
by stockholders. The Committee will have the authority to terminate the SVIP at
any time. Termination of the SVIP will have no impact on Performance Units
granted prior to the SVIP termination date.
3.8 Change in Control
(a)(1) Notwithstanding anything herein to the contrary, in the event of a
Change in Control, all Performance Units awarded prior to October
24, 1996 shall become fully payable
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in cash at the TSR percentile rank of the Company calculated using
the TSR of the Company as of the date of the Change in Control as
compared to the TSR among the Applicable Index companies as of the
last quarterly period for which such TSR information is available.
(2) Notwithstanding anything herein to the contrary but subject to the
dollar limitation payable per Performance Period as set forth in
Section 1.5, in the event of a Change in Control, all Performance
Units awarded after October 24, 1996 shall become payable in cash
in accordance with the following sentence of this Section 3.8(a)(2)
at the TSR percentile rank of the Company calculated using the TSR
of the Company as of the date of the Change in Control as compared
to the TSR among the Applicable Index companies as of the last
quarterly period for which such TSR information is available. A
Performance Unit shall be payable pursuant to this Section
3.8(a)(2) in an amount equal to the cash value of such Performance
Unit calculated in accordance with the preceding sentence,
multiplied by a fraction, the numerator of which is the number of
full fiscal years of the Performance Period in which the Change in
Control shall have occurred which shall have elapsed prior to such
Change in Control, and the denominator of which is three. For
purposes of the preceding sentence of this Section 3.8(a)(2), if at
least six full calendar months of a fiscal year within a
Performance Period shall have elapsed, such entire fiscal year
shall be deemed to have elapsed.
(3) If any amount to be paid to a Participant (or beneficiary thereof)
pursuant to this Section 3.8(a) is not paid in full within 30 days
following the Change in Control (the "Payment Date"), then the
Company shall also pay to that Participant (or beneficiary)
interest on the unpaid amount for the period beginning on the
Payment Date and ending on the date that the amount is paid in
full. The amount of interest to be paid to a Participant (or
beneficiary thereof) pursuant to this Section 3.8(a)(3) shall be
computed using an annual rate equal to two percent above the prime
rate from time to time in effect, as published under "Money Rates"
in The Wall Street Journal, but in no event higher than the maximum
-----------------------
legal rate permissible under applicable law. Payments received by a
Participant (or beneficiary thereof) pursuant to this Section
3.8(a)(3) shall be credited first against accrued interest until
all accrued interest is paid in full before any such payment is
credited against the amount payable pursuant to Section 3.8(a)(1)
or (2).
(4) Solely for the purposes of the computation of payments under the
SVIP and notwithstanding any other provision of the SVIP, payments
to any Participant under the SVIP with respect to Performance Units
granted after September 22, 1998 shall be reduced (but not below
zero) so that the present value, as determined in accordance with
Section 280G(d)(4) of the Code, of such payments plus any other
payments that must be taken into account for purposes of any
computation relating to the Participant under Section
280G(b)(2)(A)(ii) of the Code, shall not, in the aggregate, exceed
2.99 times the Participant's "base amount," as such term is defined
in Section 280G(b)(3) of the Code. Notwithstanding any other
provision of the SVIP, no reduction in
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payments under the limitation contained in the immediately
preceding sentence shall be applied to payments under the SVIP
which do not constitute "excess parachute payments" within the
meaning of the Code. Any payments in excess of the limitation of
this Section 3.8(a)(4) or otherwise determined to be "excess
parachute payments" made to any Participant under the SVIP with
respect to Performance Units granted after September 22, 1998 shall
be deemed to be overpayments which shall constitute an amount owing
from the Participant to the Company with interest from the date of
receipt by the Participant to the date of repayment (or offset) at
the applicable federal rate under Section 1274(d) of the Code,
compounded semi-annually, which shall be payable to the Company
upon demand; provided, however, that no repayment shall be required
under this sentence if in the written opinion of tax counsel
satisfactory to the Participant and delivered to the Participant
and the Company such repayment does not allow such overpayment to
be excluded for federal income and excise tax purposes from the
Participant's income for the year of receipt or afford the
Participant a compensating federal income tax deduction for the
year of the repayment.
(b) "Change in Control" means:
(1) the occurrence of any one or more of the following events:
(A) The acquisition by any individual, entity or group (a
"Person"), including any "person" within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), of beneficial
ownership within the meaning of Rule 13d-3 promulgated under
the Exchange Act of both (x) 20% or more of the combined
voting power of the then outstanding securities of the
Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities") and
(y) combined voting power of Outstanding Company Voting
Securities in excess of the combined voting power of the
Outstanding Company Voting Securities held by the Exempt
Persons (as such term is defined in Section 3.8(c);
provided, however, that a Change in Control shall not
-------- -------
result from an acquisition of Company Voting Securities:
(i) directly from the Company, except as otherwise
provided in Section 3.8(b)(2)(A);
(ii) by the Company, except as otherwise provided in
Section 3.8(b)(2)(B);
(iii) by an Exempt Person;
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(iv) by an employee benefit plan (or related trust)
sponsored or maintained by the Company or any
corporation controlled by the Company; or
(v) by any corporation pursuant to a reorganization,
merger or consolidation involving the Company, if,
immediately after such reorganization, merger or
consolidation, each of the conditions described in
clauses (i) and (ii) of Section 3.8(b)(1)(C) shall be
satisfied.
(B) The cessation for any reason of the members of the Incumbent
Board (as such term is defined in Section 3.8(d)) to
constitute at least a majority of the Board of Directors.
(C) Approval by the stockholders of the Company of a
reorganization, merger or consolidation unless, in any such
case, immediately after such reorganization, merger or
consolidation:
(i) more than 60% of the combined voting power of the
then outstanding securities of the corporation
resulting from such reorganization, merger or
consolidation entitled to vote generally in the
election of directors is then beneficially owned,
directly or indirectly, by all or substantially all
of the individuals or entities who were the
beneficial owners of the combined voting power of all
of the Outstanding Company Voting Securities
immediately prior to such reorganization, merger or
consolidation; and
(ii) at least a majority of the members of the board of
directors of the corporation resulting from such
reorganization, merger or consolidation were members
of the Incumbent Board at the time of the execution
of the initial agreement or action of the Board of
Directors providing for such reorganization, merger
or consolidation.
(D) Approval by the stockholders of the Company of the sale or
other disposition of all or substantially all of the assets
of the Company other than (x) pursuant to a tax-free spin-
off of a subsidiary or other business unit of the Company or
(y) to a corporation with respect to which, immediately
after such sale or other disposition:
(i) more than 60% of the combined voting power of the
then outstanding securities thereof entitled to vote
generally in the election of directors is then
beneficially owned, directly or
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indirectly, by all or substantially all of the
individuals and entities who were the beneficial
owners of the combined voting power of all of the
Outstanding Company Voting Securities immediately
prior to such sale or other disposition; and
(ii) at least a majority of the members of the board of
directors thereof were members of the Incumbent Board
at the time of the execution of the initial agreement
or action of the Board of Directors providing for
such sale or other disposition.
(E) Approval by the stockholders of the Company of a plan of
complete liquidation or dissolution of the Company.
(2) Notwithstanding the provisions of Section 3.8(b)(1)(A):
(A) no acquisition of Company Voting Securities shall be subject
to the exception from the definition of Change in Control
contained in clause (i) of Section 3.8(b)(1)(A) if such
acquisition results from the exercise of an exercise,
conversion or exchange privilege unless the security being
so exercised, converted or exchanged was acquired directly
from the Company; and
(B) for purposes of clause (ii) of Section 3.8(b)(1)(A), if any
Person (other than the Company, an Exempt Person or any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company) shall, by reason of an acquisition of Company
Voting Securities by the Company, become the beneficial
owner of (x) 20% or more of the combined voting power of the
Outstanding Company Voting Securities and (y) combined
voting power of Outstanding Company Voting Securities in
excess of the combined voting power of the Outstanding
Company Voting Securities held by the Exempt Persons, and
such Person shall, after such acquisition of Company Voting
Securities by the Company, become the beneficial owner of
any additional Outstanding Company Voting Securities and
such beneficial ownership is publicly announced, such
additional beneficial ownership shall constitute a Change in
Control.
(c) "Exempt Person" (and collectively, the "Exempt Persons") means:
(1) Leonard H. Lavin or Bernice E. Lavin;
(2) any descendant of Leonard H. Lavin and Bernice E. Lavin or the
spouse of any such descendant;
10
<PAGE>
(3) the estate of any of the persons described in Section 3.8(c)(1)
or (2);
(4) any trust or similar arrangement for the benefit of any person
described in Section 3.8(c)(1) or (2); or
(5) the Lavin Family Foundation or any other charitable organization
established by any person described in Section 3.8(c)(1) or (2).
(d) "Incumbent Board" means those individuals who, as of October 24,
1996, constitute the Board of Directors, provided that:
--------
(1) any individual who becomes a director of the Company subsequent
to such date whose election, or nomination for election by the
Company's stockholders, was approved either by the vote of at
least a majority of the directors then comprising the Incumbent
Board or by the vote of at least a majority of the combined
voting power of the Outstanding Company Voting Securities held by
the Exempt Persons shall be deemed to have been a member of the
Incumbent Board; and
(2) no individual who was initially elected as a director of the
Company as a result of an actual or threatened election contest,
as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act, or any other actual or
threatened solicitation of proxies or consents by or on behalf of
any Person other than the Board of Directors or the Exempt
Persons shall be deemed to have been a member of the Incumbent
Board.
3.9 Stockholder Approval. The SVIP was approved and adopted at the annual
meeting of the stockholders held on January 26, 1995. The SVIP shall be
submitted to stockholders of the Company for their re-approval and re-adoption
at the annual meeting of stockholders to be held January 27, 2000, or any
adjournment thereof. No award shall be payable hereunder for grants made on or
after October 1, 1999 unless and until the SVIP has been so re-approved and re-
adopted. Unless otherwise determined by the Board of Directors, the SVIP shall
be resubmitted to the stockholders for re-approval and re-adoption no less often
than every five years thereafter.
11
<PAGE>
DETACH HERE
- --------------------------------------------------------------------------------
PROXY
ALBERTO-CULVER COMPANY
Annual Meeting, January 27, 2000
Proxy Solicited by the 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 each of the Alberto-Culver Company
Employees' Profit-Sharing Plan, the Alberto-Culver 401(k) Savings Plan and the
Sally Beauty 401(k) Savings Plan to vote the shares of stock of Alberto-Culver
Company allocated to the account of the undersigned 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 27, 2000, 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 AND "FOR" RE-APPROVAL OF THE COMPANY'S 1994 SHAREHOLDER VALUE
INCENTIVE PLAN, AS AMENDED.
<TABLE>
<S> <C> <C>
- ------------------ ------------------
SEE REVERSE SIDE (CONTINUED AND TO BE SIGNED ON REVERSE SIDE) SEE REVERSE SIDE
- ------------------ ------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
[X] Please mark
votes as in
this sample
1. Election of directors FOR AGAINST ABSTAIN
Nominees: Carol L. Bernick, Leonard H. Lavin,
A. Robert Abboud and Robert H. Rock, D.B.A. 2. Re-Approval of the Company's
1994 Shareholder Value [ ] [ ] [ ]
FOR WITHHELD Incentive Plan, as Amended.
[ ] [ ]
3. 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 AT LEFT [ ]
For all nominees except as noted above
The board of directors recommends a vote FOR each of the
nominees for director listed hereon and FOR the re-approval of
the Company's 1994 Shareholder Value Incentive Plan, as Amended.
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:__________
</TABLE>
<PAGE>
December 14, 1999
Dear Retirement Benefit Plan Participant:
The Annual Meeting of Stockholders of Alberto-Culver Company (the "Company")
will be held on January 27, 2000. The record date for determining stockholders
entitled to vote at the meeting was December 1, 1999. Through your participation
in the Alberto-Culver Company Employees' Profit Sharing Plan, the Alberto-Culver
401(k) Savings Plan and/or the Sally Beauty 401(k) Savings Plan (collectively,
the "Plans"), you are the beneficial owner of the Company's Class B Common Stock
and may instruct CG Trust Company, the trustee of each of the Plans, how to vote
your shares.
The number of Class B shares in your retirement benefit plan(s) appears at the
top of the enclosed proxy card and is identified by a suffix beginning with the
following letters: "PS" (Alberto-Culver Company Employees' Profit Sharing Plan),
"SB" (Sally Beauty 401(k) Savings Plan) or "AC" (Alberto-Culver 401(k) Savings
Plan). If you are the registered shareholder of either Class A or Class B Common
Stock outside of the Plans, these shares will be identified on your proxy card
by a suffix: "CLA" (Class A Common Stock) and "CLB" (Class B Common Stock).
Please read the enclosed Notice of Meeting and Proxy Statement carefully. Please
mark your choices, sign the enclosed proxy card and return the card in the
enclosed postage-paid envelope to the Company's transfer agent, EquiServe, Proxy
Department, P.O. Box 9381, Boston, MA 02205-9381 so that the card is received
before January 24, 2000.
The trustee of the Plans will have the voting instructions of each participant
in the Plans tabulated and will vote the shares of the participants by
submitting a final proxy card for inclusion in the tally at the Annual Meeting.
Sincerely,
/s/ Kent E Madlinger
Kent E. Madlinger
Manager, Retirement & Incentive Plans
