<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-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:
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<PAGE>
ALBERTO-CULVER COMPANY
Melrose Park, Illinois
December 12, 2000
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 25, 2001, 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 three directors, (ii) re-approve
the Alberto-Culver Company Employee Stock Option Plan of 1988, as amended, and
(iii) re-approve the Alberto-Culver Company 1994 Restricted Stock 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 (the
"Company") will be held on Thursday, January 25, 2001, 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 three directors.
2. To re-approve the Alberto-Culver Company Employee Stock Option Plan of
1988, as amended.
3. To re-approve the Alberto-Culver Company 1994 Restricted Stock Plan,
as amended.
4. 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, 2000
as the record date for determination of the stockholders entitled to notice of
and to vote at the meeting.
/s/ Bernice E. Lavin
Bernice E. Lavin
Secretary
December 12, 2000
<PAGE>
ALBERTO-CULVER COMPANY PROXY STATEMENT
2525 Armitage Avenue December 12, 2000
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
25, 2001 and at any adjournment thereof.
On December 1, 2000, the record date for the meeting, the Company had
outstanding shares of common stock consisting of 23,340,939 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 12, 2000.
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 matters is required to re-
approve the Alberto-Culver Company Employee Stock Option Plan of 1988, as
amended ("ACSOP"), and the Alberto-Culver Company 1994 Restricted Stock Plan, as
amended ("RSP"). 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 ACSOP and the RSP and
broker non-votes will have no effect on the re-approval of the ACSOP and the
RSP.
Election of Directors
Unless otherwise instructed, proxies will be voted for the election as
directors of the three persons listed as nominees for a term of three years.
All of the nominees, except Sam J. Susser, 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 2004 (Class I)
A. G. Atwater, Jr., age 57, has served as a director of the Company since
October 1995 and as President and Chief Executive Officer of Amurol Confections
Company, a specialty confections manufacturer and a wholly-owned associated
company of the Wm. Wrigley, Jr. Company, for more than the past five years.
Sam J. Susser, age 61, has served as Chairman of the Board of SSP Partners,
an operator of convenience stores under the brand name "Circle K", since May
1995. From 1988 to May 1995, Mr. Susser served as Chairman of the Board of
Southguard Corporation. SSP Partners is the successor of Southguard Corporation.
William W. Wirtz, age 71, 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.
The board of directors recommends that the stockholders vote FOR the
election of each of the nominees for director.
Directors Whose Terms Expire at the Annual Meeting in 2002 (Class II)
Howard B. Bernick, age 48, 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 1994. 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 75, has served as a director and Secretary and
Treasurer of the Company since 1955 and as Vice Chairman since 1994. Mrs. Lavin
is the wife of Leonard H. Lavin, the mother of Carol L. Bernick and the mother-
in-law of Howard B. Bernick.
Allan B. Muchin, age 64, 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.
Harold M. Visotsky, M.D., age 76, has served as a director of the Company
since 1989, as the Owen L. Coon Professor of Psychiatry and Behavioral Sciences
Emeritus at Northwestern University Medical School for more than the past five
years, and as a consultant for more than the past five years in the areas of
health planning and benefits management.
2
<PAGE>
Directors Whose Terms Expire at the Annual Meeting in 2003 (Class III)
A. Robert Abboud, age 71, has served as a director of the Company since
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.
Carol L. Bernick, age 48, has served as a director of the Company since
1984, as Assistant Secretary of the Company since 1990, as Vice Chairman of the
Company and President of Alberto-Culver North America, a division of the
Company, since April 1998 and as President of Alberto-Culver USA, Inc., a
wholly-owned subsidiary of the Company, from 1994 to April 1998 and since
January 1999. From 1990 to April 1998, she served as Executive Vice President
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 81, the founder of the Company, has served as a
director and Chairman of the Company since 1955. Mr. Lavin is the husband of
Bernice E. Lavin, the father of Carol L. Bernick and the father-in-law of Howard
B. Bernick.
Robert H. Rock, D.B.A., age 50, 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. Mr. Rock is also a director of Hunt Corporation
(formerly known as Hunt Manufacturing Company), Quaker Chemical Corporation and
Penn Mutual Life Insurance Company.
3
<PAGE>
Share Ownership of Directors and Executive Officers
The table below contains information as of November 17, 2000, 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 ("named executive officers") and by all directors and
executive officers as a group.
<TABLE>
<CAPTION>
======================================================================================================================
Title of Amount and Nature of Beneficial Percent
Name of Beneficial Owner Class Ownership (1)(2) of Class
======================================================================================================================
<S> <C> <C> <C>
Class A 15,000 (3) (4)
A. Robert Abboud Class B 2,000 (4)
----------------------------------------------------------------------------------------------------------------------
Class A 17,000 (5) (4)
A. G. Atwater, Jr. Class B 0
----------------------------------------------------------------------------------------------------------------------
Class A 449,618 (6) 1.91%
Carol L. Bernick Class B 4,672,337 (6) 14.18%
----------------------------------------------------------------------------------------------------------------------
Class A 878,950 (7) 3.70%
Howard B. Bernick Class B 689,794 (7) 2.09%
----------------------------------------------------------------------------------------------------------------------
Class A 23,000 (8) (4)
Robert P. Gwinn Class B 0
----------------------------------------------------------------------------------------------------------------------
Class A 454,656 (9) 1.95%
Bernice E. Lavin Class B 4,150,482 (9) 12.59%
----------------------------------------------------------------------------------------------------------------------
Class A 449,378 (10) 1.93%
Leonard H. Lavin Class B 4,755,304 (10) 14.43%
----------------------------------------------------------------------------------------------------------------------
Class A 17,000 (11) (4)
Allan B. Muchin Class B 0
----------------------------------------------------------------------------------------------------------------------
Class A 15,700 (12) (4)
Robert H. Rock Class B 0
----------------------------------------------------------------------------------------------------------------------
Class A 0
Sam J. Susser Class B 0
----------------------------------------------------------------------------------------------------------------------
Class A 15,000 (13) (4)
Harold M. Visotsky Class B 1,000 (13) (4)
----------------------------------------------------------------------------------------------------------------------
Class A 597,000 (14) 2.56%
William W. Wirtz Class B 1,754,000 (14) 5.32%
----------------------------------------------------------------------------------------------------------------------
Class A 534,153 (15) 2.25%
Michael H. Renzulli Class B 165,828 (15) (4)
----------------------------------------------------------------------------------------------------------------------
All Directors and Executive Officers as a Class A 3,565,275 (16) 14.53%
Group (17 persons, including the above) Class B 16,235,119 (16) 49.26%
======================================================================================================================
</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 3,750 Class A shares subject to stock options exercisable
currently or within 60 days.
(4) Less than 1.0% of the outstanding shares.
(5) Includes 12,721 Class A shares subject to stock options exercisable
currently or within 60 days.
(6) Includes 194,094 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; 80,088 Class A shares and 87,528 Class B shares held as
trustee of trusts for the benefit of Mr. and Mrs. Bernick's sons; 1,943,954
Class B shares held as co-trustee of a trust for the benefit of Mrs.
Bernick; 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 8,263
Class B shares held as a participant in the Alberto-Culver Company
Employees' Profit Sharing Plan (the "Profit Sharing Plan"). Does not
include 40,000 Class A shares and 32,000 Class B 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 449,378 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.
(7) Includes 473,850 Class A shares subject to employee stock options
exercisable currently or within 60 days; 11,434 Class B shares held as a
participant in the Profit Sharing Plan; 46,360 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 40,000 Class A shares and 32,000 Class B shares held by the
Bernick Family Foundation of which Mr. Bernick is a director and an officer
and shares voting and investment power with Mrs. Bernick. Does not include
shares reported as owned by Mrs. Bernick, Mr. Lavin or Mrs. Lavin.
(8) Includes 15,000 Class A shares subject to stock options exercisable
currently or within 60 days.
(9) Includes 354,392 Class A shares and 439,704 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
5
<PAGE>
Mrs. Lavin shares voting and investment power with Mrs. Bernick. Does not
include 449,378 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, Mr.
Bernick or Mrs. Bernick.
(10) Includes 449,378 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 with Mrs. Lavin and Mrs. Bernick.
Does not include shares reported as owned by Mrs. Lavin, Mr. Bernick or
Mrs. Bernick.
(11) Includes 15,000 Class A shares subject to stock options exercisable
currently or within 60 days.
(12) 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.
(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. 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.
(15) Includes 437,050 Class A shares subject to employee stock options
exercisable currently or within 60 days and 22,712 Class B shares held as a
participant in the Profit Sharing Plan.
(16) Includes 1,239,715 Class A shares subject to stock options exercisable
currently or within 60 days; 57,994 Class B shares held as participants in
the Profit Sharing Plan; 6,269 Class B shares held as participants in the
Alberto-Culver 401(k) Savings Plan; and 5,000 Class A shares issued under
the RSP ("Restricted Stock"). Such persons have shared voting and
investment power as to 596,810 Class A shares and 898,960 Class B shares.
Holders of Restricted Stock have sole voting rights and no dispositive
rights with respect to those shares that have not vested.
6
<PAGE>
Meetings and Committees of the Board of Directors
The board of directors of the Company held four regularly scheduled meetings
during fiscal year 2000. 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.
The audit committee, which is composed of A. Robert Abboud, Chairman, A. G.
Atwater, Jr., Robert P. Gwinn and Allan B. Muchin, all of whom are independent
as defined in Sections 303.01(B)(2)(a) and (3) of the New York Stock Exchange's
listing standards, held eight meetings during fiscal year 2000. The audit
committee assists the board of directors in fulfilling its oversight
responsibilities relating to accounting, reporting practices, and the quality
and integrity of the financial reports and other publicly disseminated financial
information of the Company. The board of directors has adopted a written
charter for the audit committee, a copy of which is attached hereto as Annex A.
The executive committee, which is composed of Leonard H. Lavin, Chairman, A.
G. Atwater, Jr., Carol L. Bernick, Howard B. Bernick, Robert P. Gwinn and
Bernice E. Lavin, held no meetings during fiscal year 2000. 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 2000. 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 2000. 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 written 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 All Other
Principal Salary Bonus Options Payouts Compensation
Position Year ($) ($) (#) ($)(1) ($)
===================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Leonard H. Lavin, 2000 $1,200,000 $ 821,000 0 $ 0 $217,827 (2)
Chairman 1999 1,200,000 556,000 0 0 206,791
1998 1,149,999 421,000 0 487,500 191,934
-------------------------------------------------------------------------------------------------------------------
Bernice E. Lavin, 2000 $ 625,008 $ 346,000 0 $ 0 $217,827 (2)
Vice Chairman, 1999 625,008 262,000 0 0 206,791
Secretary and Treasurer 1998 618,756 181,000 0 146,250 191,934
-------------------------------------------------------------------------------------------------------------------
Howard B. Bernick, 2000 $1,425,000 $ 975,000 224,000 $ 0 $16,249 (3)
President and Chief 1999 1,350,000 625,000 208,000 0 15,664
Executive Officer 1998 1,225,002 449,000 165,000 316,875 14,796
-------------------------------------------------------------------------------------------------------------------
Carol L. Bernick, 2000 $ 775,005 $ 429,000 84,000 $ 0 $16,249 (3)
Vice Chairman, President, 1999 641,674 293,000 60,000 0 15,664
Alberto-Culver North 1998 585,422 201,000 45,000 141,375 14,796
America and Assistant
Secretary
-------------------------------------------------------------------------------------------------------------------
Michael H. Renzulli, 2000 $ 806,250 $1,000,000 90,000 $ 0 $21,523 (4)
President, Sally Beauty 1999 737,502 655,000 60,000 0 20,632
Company, Inc. 1998 685,008 600,000 45,000 136,500 19,762
===================================================================================================================
</TABLE>
(1) For the three-year performance period ended September 30, 2000, the total
shareholder return on the Company's Class A shares was -2%, placing it in
the 49th percentile of the Standard & Poor's 500 Index with no corresponding
payout per unit under the 1994 Shareholder Value Incentive Plan ("SVIP").
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 SVIP unit. For the three-year performance period ended September
30, 1998, the total shareholder return on the Company's Class A shares
8
<PAGE>
was 62%, placing it in the 59.5th percentile of the Standard & Poor's 500
Index with a corresponding payout per SVIP unit of $975.
(2) For Mr. and Mrs. Lavin, the amount for each includes $14,462 of imputed
income from life insurance; an annual contribution to the Profit Sharing
Plan of $11,429; $188,736 of imputed income from split-dollar life insurance
policies; and $3,200 of matching contributions to the Alberto-Culver 401(k)
Savings Plan.
(3) For Mr. and Mrs. Bernick, the amount for each includes $1,620 of imputed
income from life insurance; an annual contribution to the Profit Sharing
Plan of $11,429; and $3,200 of matching contributions to the Alberto-Culver
401(k) Savings Plan.
(4) The amount includes $6,894 of imputed income from life insurance; an annual
contribution to the Profit Sharing Plan of $11,429; and $3,200 of matching
contributions to the Alberto-Culver 401(k) Savings Plan.
Director Compensation
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 $3,500. Employee directors receive no additional compensation for serving on
the board of directors or its committees.
In addition, each non-employee director participates in the 1994 Stock
Option Plan For Non-Employee Directors (the "Director Plan") which was approved
by the stockholders at the 1995 annual meeting. Under the Director Plan, a non-
qualified option to purchase 7,500 shares of Class A common stock is
automatically granted to each new non-employee director. No person may receive
more than one option grant under the Director Plan. The exercise price of
options granted under the Director Plan is the fair market value of a share of
Class A common stock on the date options are granted. Options are granted for a
ten-year term and become exercisable in four equal annual installments
commencing one year after the date of grant. No options were awarded under this
plan during the fiscal year ended September 30, 2000.
9
<PAGE>
Stock Option Grants
The table below sets forth certain information with respect to options
granted to the named executive officers during the fiscal year ended September
30, 2000.
<TABLE>
<CAPTION>
=============================================================================================================
OPTION GRANTS IN LAST FISCAL YEAR
=============================================================================================================
INDIVIDUAL GRANTS
============================================================================
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation for
Number of Option Term (2)
Securities Percent of Total
Underlying Options -------------------------------
Options Granted Exercise
Granted (1) to Employees Price Expiration
Name (#) in Fiscal Year ($/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 224,000 14.1% $19.844 09/30/09 $2,795,472 $7,084,274
-------------------------------------------------------------------------------------------------------------
Carol L. Bernick 84,000 5.3% $19.844 09/30/09 $1,048,302 $2,656,603
-------------------------------------------------------------------------------------------------------------
Michael H. Renzulli 90,000 5.7% $19.844 09/30/09 $1,123,181 $2,846,360
=============================================================================================================
</TABLE>
(1) Options are granted under the ACSOP which permits the compensation committee
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 and an
exercise price per share equal to the fair market value of a share of Class
A common stock on 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, as defined in the ACSOP 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 and Fiscal Year-End Option Values
The table below sets forth certain information with respect to the exercise
of options during the fiscal year ended September 30, 2000 by the named
executive officers and the fiscal year-end value of unexercised in-the-money
options held by such officers.
<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 0 445,350/341,750 $2,215,365/$1,374,052
----------------------------------------------------------------------------------------------
Carol L. Bernick 0 0 182,094/116,250 $ 1,188,740/$490,016
----------------------------------------------------------------------------------------------
Michael H. Renzulli 40,000 $557,500 425,050/120,750 $ 4,468,825/$512,936
==============================================================================================
</TABLE>
(1) Mr. and Mrs. Lavin have elected not to receive stock option grants under the
ACSOP.
(2) Based on the average of the high and low trading price of Class A common
stock ($24.9375 per share) on September 29, 2000, the last trading day of
the fiscal year.
11
<PAGE>
Long-Term Incentive Awards
The table below sets forth certain information with respect to the grant of
performance units under the SVIP during the fiscal year ended September 30, 2000
to the named executive officers.
<TABLE>
<CAPTION>
============================================================================================================================
LONG-TERM INCENTIVE PLAN --
AWARDS IN LAST FISCAL YEAR
============================================================================================================================
Estimated Future Payouts Under Non-Stock Price-Based Plans
----------------------------------------------------------
Number Of Performance Or
Shares, Units Or Other Period
Other Rights Until Maturation Threshold Target Maximum
Name (#) (1) Or Payout ($) ($) ($)
============================================================================================================================
<S> <C> <C> <C> <C> <C>
Leonard H. Lavin 600 3 years $300,000 $600,000 $1,800,000
----------------------------------------------------------------------------------------------------------------------------
Bernice E. Lavin 250 3 years 125,000 250,000 750,000
----------------------------------------------------------------------------------------------------------------------------
Howard B. Bernick 675 3 years 337,500 675,000 2,025,000
----------------------------------------------------------------------------------------------------------------------------
Carol L. Bernick 280 3 years 140,000 280,000 840,000
----------------------------------------------------------------------------------------------------------------------------
Michael H. Renzulli 300 3 years 150,000 300,000 900,000
============================================================================================================================
</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. Payouts of 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 payouts plus any other payments relating to a participant
which are deemed to be "parachute payments" under Section 280G(b) 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 2000 for the
three-year performance period ending September 30, 2002. At the time the
performance units were granted, the compensation committee established
objectives for such three-year performance period based on the percentile
ranking of the total shareholder return of the Class A common stock among
the total shareholder returns 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. 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
12
<PAGE>
withholding taxes, in Class A common stock. In the event of a change in
control, 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
percentile ranking of the Company based on the total shareholder return of
the Class A common stock as of the date of the change in control compared to
the total shareholder return of the companies comprising the index chosen
for each such performance period by the compensation committee from among
those indexes specified in the next paragraph 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, subject to any reduction of
such payment pursuant to the preceding paragraph. If at least six full
calendar months of any fiscal year have elapsed, the entire fiscal year
shall be deemed to have elapsed.
As of October 1, 1999 the SVIP was 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 five indexes added were the (i) Standard & Poor's MidCap
400 Index, (ii) Standard & Poor's SmallCap 600 Index, (iii) Standard &
Poor's SuperComposite 1500 Index, (iv) Russell 3000 Index and (v) Russell
2000 Index.
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 contracts with the named
executive officers.
Starting in 1996, 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 on tax
deductibility of such payments set forth in Section 280G of the Code.
13
<PAGE>
The vesting of stock options granted to named executive officers under the
ACSOP will be accelerated upon the occurrence of a change in control, as defined
in the ACSOP 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 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 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 will 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 to receive 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, as defined in the deferred compensation agreements, 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 face value in excess of the present value of all of the
amounts 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 in a lump sum payment or annually over any period not to exceed
five years. The compensation committee determines the rate of interest earned
on money deferred under the plan, and may change that rate as it deems
appropriate. 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 limitations under the Code, will be credited in this plan with an
amount 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
contribution will be (i) made by the Company, (ii) immediately vested and (iii)
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 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 those of the
Company's 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 may be 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 each of these factors has
on setting the executive officers' salaries.
Annual Bonus
Annual bonuses are awarded pursuant to the 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
16
<PAGE>
as deemed appropriate; but may not modify these criteria for the named executive
officers so as to increase the award payable to such persons.
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.
The named executive officers' fiscal year 2000 annual incentive awards under the
MIP were formula based and reflected the ninth consecutive year of record sales
and record pre-tax earnings performance for the Company. Each of the named
executive officers elected not to take the full bonus awarded to them by the
compensation committee under the formula. Mr. Renzulli's bonus was reduced by
approximately 15% of his base salary, and each of Mr. and Mrs. Bernicks' and Mr.
and Mrs. Lavins' bonuses were reduced by approximately 25% of their respective
base salaries.
Long-Term Incentive Compensation
The Company's long-term incentive compensation program consists of grants of
stock options and performance units. In addition, during the last fiscal year
and for the first time since the inception of the RSP, an executive officer (not
included in the Summary Compensation Table) was granted Restricted Stock under
the RSP.
Stock options were granted to executive officers under 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 the date of grant.
Executive officers were also granted performance units pursuant to 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. Since the SVIP's inception, the
threshold, target and maximum performance levels have been attained when the
total shareholder return on Class A shares meets or exceeds the total
shareholder return 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. See "Long-Term
Incentive Awards" above. Units will have no value if the threshold performance
level is not attained for a given performance period.
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, 1999 through September 30, 2002, 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. There were
no payouts under the SVIP for the performance period ended September 30, 2000
because the threshold performance level was not attained.
17
<PAGE>
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 for certain executive officers
based on the same factors used 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 at
least three times, their annual base salary invested in common stock of the
Company. All other participants in the SVIP are required to have at least 1.75
times their annual base salary invested in common stock of the Company.
Participants have until the year 2002 or within five years of first becoming a
participant in the SVIP, whichever is later, to achieve these stock ownership
guidelines. In addition, in fiscal year 1997 the compensation committee
established stock 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 2000 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 ninth 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's fiscal year 2000 annual incentive award under the MIP was
formula based and reflected record sales and record pre-tax earnings
performance. Mr. Bernick elected not to take the full bonus awarded to him by
the compensation committee under the formula. His bonus was reduced by
approximately 25% of his base salary.
The number of stock options and performance units granted to Mr. Bernick was
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 Code 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
18
<PAGE>
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
19
<PAGE>
Audit Committee Report
The primary purpose of the audit committee is to assist the board of
directors in fulfilling its oversight responsibilities relating to accounting,
reporting practices and the quality and integrity of the financial reports and
other publicly disseminated financial information of the Company. In this
context, the audit committee has met with management (including the Chief
Executive Officer, Chief Financial Officer and Director of Internal Audit) and
KPMG LLP, the Company's independent public accountants ("Independent Auditors").
The audit committee held meetings with the Company's internal auditors and
Independent Auditors, both in the presence of management and privately, to
discuss the overall scope and plans for their respective audits, the results of
their examinations, the evaluations of the Company's internal controls, and the
overall quality of the Company's financial reports.
The audit committee has reviewed and discussed the audited consolidated
financial statements with management and the Independent Auditors. The audit
committee also discussed with the Independent Auditors the matters required by
Statement on Auditing Standards No. 61 (Communication With Audit Committees).
With respect to independence, the audit committee has received the written
disclosures and the letter from the Independent Auditors required by the
Independence Standards Board Standard No. 1 (Independence Discussions With Audit
Committees) and has discussed with the Independent Auditors their independence.
Based upon the reviews and discussions referred to above, the audit committee
recommended to the board of directors, and the board has approved, (i) the
selection of the Independent Auditors for the 2001 fiscal year and (ii) that the
audited financial statements be included in the Company's Annual Report on Form
10-K for the year ended September 30, 2000 for filing with the Securities and
Exchange Commission.
Audit Committee Members
A. Robert Abboud, Chairman
A.G. Atwater, Jr.
Robert P. Gwinn
Allan B. Muchin
20
<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 Applica, Incorporated (formerly
named Windmere-Durable Holdings, Inc.), Block Drug Company, Inc., Carter-
Wallace, Inc., Chattem, Inc., Church & Dwight Co., Inc., Claire's Stores, Inc.,
Del Laboratories, Inc., E Com Ventures, Inc. (formerly named Perfumania, Inc.),
Helen of Troy Limited, McCormick & Company, Incorporated, Radio Shack
Corporation (formerly named Tandy Corporation) and Regis 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, 1995 and that all dividends were reinvested.
[PERFORMANCE GRAPH APPEARS HERE]
1996 1997 1998 1999 2000
---- ---- ---- ---- ----
Alberto-Culver Class A $140 199 166 154 199
Alberto-Culver Class B 144 203 157 157 198
S & P 500 Index 130 156 219 239 305
Peer Group 100 134 158 231 261
21
<PAGE>
Principal Stockholders
The table below contains information as of November 17, 2000, 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> <C>
Leonard H. Lavin Class A 449,378 (3) 1.93%
2525 Armitage Avenue Class B 4,755,304 (3) 14.43%
Melrose Park, IL 60160
Bernice E. Lavin Class A 454,656 (4) 1.95%
2525 Armitage Avenue Class B 4,150,482 (4) 12.59%
Melrose Park, IL 60160
Carol L. Bernick Class A 449,618 (5) 1.91%
2525 Armitage Avenue Class B 4,672,337 (5) 14.18%
Melrose Park, IL 60160
Howard B. Bernick Class A 878,950 (6) 3.70%
2525 Armitage Avenue Class B 689,794 (6) 2.09%
Melrose Park, IL 60160
William W. Wirtz Class A 597,000 (7) 2.56%
680 North Lake Shore Drive Class B 1,754,000 (7) 5.32%
Chicago, IL 60611
Barclays Global Investors Class B 1,380,940 (8) 4.19%
46 Fremont Street, 17th Floor
San Francisco, CA 94105
FMR Corp. Class A 5,026,390 (9) 21.57%
82 Devonshire Street Class B 502,850 (9) 1.53%
Boston, MA 02109
Franklin Resources, Inc. Class A 1,677,450 (10) 7.20%
777 Mariners Island Blvd.
San Mateo, CA 94403
Neuberger Berman, LLC Class A 1,512,400 (11) 6.49%
605 Third Avenue
New York, NY 10158
NewSouth Capital Management, Inc. Class A 1,950,955 (12) 8.37%
1000 Ridgeway Loop Rd., Suite 233
Memphis, TN 38120
</TABLE>
22
<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 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 449,378 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 with Mrs. Lavin and Mrs. Bernick.
Does not include shares reported as owned by Mrs. Lavin, Mr. Bernick or Mrs.
Bernick.
(4) Includes 354,392 Class A shares and 439,704 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 with Mrs. Bernick. Does
not include 449,378 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, Mr.
Bernick or Mrs. Bernick.
(5) Includes 194,094 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; 80,088 Class A shares and 87,528 Class B shares held as
trustee of trusts for the benefit of Mr. and Mrs. Bernick's sons; 1,943,954
Class B shares held as co-trustee of a trust for the benefit of Mrs.
Bernick; 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 8,263
Class B shares held as a participant in the Profit Sharing Plan. Does not
include 40,000 Class A shares and 32,000 Class B 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 449,378 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 473,850 Class A shares subject to employee stock options
exercisable currently or within 60 days; 11,434 Class B shares held as a
participant in the Profit Sharing Plan; 46,360 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 40,000 Class A shares and 32,000 Class B shares held by the
Bernick Family Foundation of which Mr. Bernick is a director and an officer
and shares voting and investment power with Mrs. Bernick. Does not include
shares reported as owned by Mrs. Bernick, Mr. Lavin or Mrs. Lavin.
23
<PAGE>
(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, 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 103,132 Class B shares for which Barclays Global Investors
("Barclays") has no voting power. This information is based on information
provided to the Company by Barclays on November 10, 2000 and reflects
Barclays' holdings as of October 26, 2000.
(9) The beneficial ownership of the Company's shares arises in the context of
passive investment activities only by various investment accounts managed
by various Fidelity companies 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 27, 2000 and reflects FMR Corp.'s
holdings as of October 26, 2000.
(10) Includes 5,200 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 November 3, 2000 and reflects
Franklin's holdings as of September 30, 2000.
(11) Neuberger Berman, LLC ("NB") is a registered investment advisor. In its
capacity as investment advisor, NB may have discretionary authority to
dispose of or to vote shares that are under its management. As a result,
NB may be deemed to have beneficial ownership of such shares. NB does not,
however, have any economic interest in the shares. NB's clients are the
actual owners of the shares and have the sole right to receive and the
power to direct the receipt of dividends from or proceeds from the sale of
such shares. As of October 26, 2000, of the shares as set forth in the
table, NB had shared dispositive power with respect to 1,512,400 Class A
shares, sole voting power with respect to 609,500 Class A shares and shared
voting power with respect to 902,900 Class A shares. With regard to the
shared voting power, Neuberger Berman Management, Inc. and Neuberger Berman
Funds are deemed to be beneficial owners for purposes of Rule 13(d) since
they have shared power to make decisions whether to retain or dispose of
the securities. NB is the sub-advisor to the above referenced Funds. It
should be further noted that the above mentioned shares are also included
with the shared power to dispose calculation. This information is based on
the information provided to the Company by NB's on October 30, 2000 and
reflects NB's holdings as of October 26, 2000.
(12) Includes 15,000 Class A shares for which NewSouth Capital Management, Inc.
("NewSouth") has no voting power. This information is based on information
provided to the Company by NewSouth on November 7, 2000 and reflects
NewSouth's holdings as of October 31, 2000.
24
<PAGE>
Certain Business Relationships
During the last fiscal year, the Company retained the law firm of Katten
Muchin Zavis, of which Allan B. Muchin is a senior partner. The Company has
retained the firm to perform legal services during the current fiscal year.
Re-Approval of the Employee Stock Option Plan of 1988, As Amended
The Alberto-Culver Company Employee Stock Option Plan of 1988, as amended
(the "ACSOP"), is presented to stockholders for their re-approval. The
stockholders originally approved the ACSOP on January 20, 1988 and approved
amendments to the ACSOP on January 26, 1994, January 26, 1995 and January 22,
1998. The material amendments now proposed to be made to the ACSOP are to (i)
increase the number of shares of Class A common stock authorized to be issued
pursuant to options granted under the ACSOP by 5,000,000 shares, (ii) increase
the maximum number of shares of Class A common stock for which options may be
granted to one individual under the ACSOP to 400,000 shares in any fiscal year
and (iii) eliminate the January 20, 2003 plan termination date.
The ACSOP permits the compensation committee to grant non-qualified options
to purchase shares of Class A common stock to eligible key employees of the
Company and its subsidiaries who perform services which materially contribute to
the management, operation and development of the Company's business. As of
November 1, 2000, there were approximately 1,412,000 Class A shares available to
grant options under the ACSOP. In addition, approximately 6,514,000 Class A
shares were subject to options currently outstanding under the ACSOP. Shares
subject to options may be made available from unissued or treasury shares.
Shares subject to options which terminate, are surrendered or expire
unexercised, in whole or in part, may be subsequently used to grant additional
options under the ACSOP. In addition, any Class A shares withheld to pay, in
whole or in part, the amount required to be withheld under applicable tax laws
may be subsequently used to grant additional options under the ACSOP.
Approximately 390 key employees currently participate in the ACSOP.
The price at which shares of Class A common stock may be purchased under the
ACSOP is determined by the compensation committee, but may not be less than the
fair market value of a share of Class A common stock at the time the option is
granted. Each option and the number and kind of shares subject to future
options may be adjusted, as may be determined to be equitable in the sole and
absolute discretion of the compensation committee, in the event there is any
change in the outstanding Class A common stock, or any event that could cause a
change in the outstanding Class A common stock, including, without limitation,
by reason of a stock dividend, recapitalization, reclassification, issuance of
Class A common stock, issuance of rights to purchase Class A common stock,
issuance of securities convertible into or exchangeable for Class A common
stock, merger, consolidation, stock split, reverse stock split, spin-off,
combination, exchange or conversion of shares, or any other similar type of
event. On November 28, 2000, the closing price of the Class A common stock, as
reported on the composite tape of the New York Stock Exchange, was $29.8125 per
share.
Options are granted for a term of ten years (or such shorter period as the
compensation committee determines) and generally become exercisable with respect
to 25% of the optioned shares one year after the date of grant and with respect
to an additional 25% at the end of each of the three years thereafter, although
the compensation committee may provide at the date of grant for another time or
times of exercise, accelerate the exercisability of any option subject to any
terms and conditions that it deems
25
<PAGE>
necessary and appropriate, or extend the term of any option previously granted
(but not beyond ten years from the date of grant).
If a participant's employment is terminated for any reason other than death,
retirement, disability, or a change in control as defined in the ACSOP and
summarized under "Employment Contracts, Termination of Employment and Change in
Control of Arrangements," the participant's options terminate upon his or her
termination of employment. If a participant dies, the executors or
administrators of his or her estate have the right for one year following his or
her death (but not after the expiration of the option's term) to exercise the
option, but only to the extent the participant could have done so prior to his
or her death. If a participant's employment terminates due to retirement or
disability, the option shall terminate three months after his or her termination
of employment (but not after the expiration of the option) and may be exercised
only to the extent that the participant could have exercised it at the date of
his or her termination of employment.
The vesting of all outstanding stock option awards will be accelerated upon
the occurrence of a change in control, as defined in the ACSOP, 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.
An option granted under the ACSOP is not assignable or transferable other
than by will or the laws of descent and distribution, and an option shall be
exercisable during the lifetime of the optionee only by him or her. An option
transferred by will or the laws of descent and distribution may only be
exercised by the legatee or distributee during the one-year period following the
optionee's death and may only be exercised to the extent it was exercisable by
the optionee prior to his or her death.
Options may be exercised (subject to the receipt of payment) by giving
written notice to the Secretary of the Company, specifying the number of shares
to be purchased. The full purchase price for such shares may be paid either in
cash, by check or by delivery of shares of Class A common stock, or by a
combination of these methods. In addition, when an optionee is required to pay
to the Company an amount required to be withheld under applicable tax laws in
connection with the exercise of an option, the optionee may satisfy this
obligation, in whole or in part, by making an election to have the Company
withhold shares of Class A common stock, or, if the compensation committee so
determines, by delivering shares of Class A common stock having a value equal to
the amount required to be withheld. Class A common stock delivered or withheld
will be valued at its fair market value on the date of exercise.
The Company understands that under existing federal income tax law, there
will be no federal income tax consequences to either the optionee or the Company
on the grant of an option. Upon the exercise of a non-qualified option, the
optionee will have taxable ordinary income equal to the difference between the
option price and the fair market value of the shares received on the exercise.
The Company will be entitled to a tax deduction in an amount equal to such
difference, provided the Company complies with applicable tax withholding rules.
The optionee will have a tax basis in the shares acquired equal to the fair
market value of the shares on the exercise date. Any additional gain or loss
realized on the sale or exchange of shares received upon the exercise of a non-
qualified option will be treated as long-term or short-term capital gain or
loss, depending on how long the optionee held the shares after the date of
exercise.
26
<PAGE>
Optionees may deliver previously-owned shares of Class A common stock in
payment of the option price. In such case, the Company understands that (i)
with respect to the evenly exchanged shares, no gain or loss will be recognized
by the optionee at the time of exercise, and the basis and holding period of the
equal number of new shares received in the exchange will be the same as the
basis and the holding period of the surrendered shares, and (ii) with respect to
the additional shares received upon exercise, the optionee will be required to
recognize as ordinary income in the year of exercise an amount equal to the fair
market value of the additional shares received on the date of exercise less any
cash paid upon exercise. The tax basis of additional shares received will be
equal to their fair market value on the date of exercise.
The ACSOP may be amended, suspended or discontinued by the compensation
committee or the board of directors at any time, provided, however that no such
amendment, suspension or discontinuance may (i) adversely affect or impair any
option previously granted without the consent of the optionee or (ii) except as
otherwise provided in the ACSOP, increase the total number of shares which may
be granted or decrease the minimum price at which options may be granted without
the approval of the stockholders.
The board of directors recommends that the stockholders vote FOR the re-
approval of the Alberto-Culver Company Employee Stock Option Plan of 1988, as
Amended.
Re-Approval of the 1994 Restricted Stock Plan, As Amended
The Alberto-Culver Company 1994 Restricted Stock Plan, as amended (the
"RSP"), is presented to stockholders for their re-approval. The stockholders
originally approved the RSP on January 26, 1995. The material amendment now
proposed to be made to the RSP is to increase the number of shares of Class A
common stock authorized to be granted under the RSP by 500,000 shares.
The purpose of the RSP is to enable the Company to attract, retain, motivate
and reward key employees by providing them with a means to acquire an equity
interest or to increase such interest in the Company in return for high levels
of individual contribution and continued service.
Key employees of the Company and its subsidiaries who perform services which
contribute materially to the management, operation and development of the
Company's business are eligible to receive shares of Class A common stock under
the RSP ("Restricted Stock"). The compensation committee administers the RSP and
designates the key employees to receive Restricted Stock, the time or times and
the size and terms of each individual grant of Restricted Stock under the RSP.
As of November 1, 2000, there were approximately 81,000 Class A shares available
to be granted under the RSP. In addition, approximately 377,000 shares of
Restricted Stock are currently outstanding under the RSP. Approximately 60
employees were granted Restricted Stock under the RSP during the last fiscal
year.
Shares granted under the RSP consist of authorized but unissued shares or
treasury shares. If, at any time, shares of Class A common stock issued
pursuant to the RSP are forfeited to the Company in
27
<PAGE>
connection with the restrictions imposed on such shares, such reacquired shares
will become available for issuance under the RSP at any time prior to its
termination. In addition, any shares of Class A common stock withheld to pay, in
whole or in part, the amount required to be withheld under applicable tax laws,
shall become available for issuance under the RSP at any time prior to its
termination.
The compensation committee may take such action with regard to adjusting the
number of shares that may be granted under the RSP as it considers to be
equitable in its sole and absolute discretion in the event there is any change
in the outstanding Class A common stock, or any event that could cause a change
in the outstanding Class A common stock, including, without limitation, by
reason of a stock dividend, stock split, reverse stock split, spin-off,
recapitalization, reclassification, merger, consolidation, combination, exchange
or conversion of shares, or any other similar type of event.
Restricted Stock granted under the RSP will vest on a cumulative basis in
equal annual increments of one-fourth of the shares granted commencing four
years after the date of grant and ending seven years after the date of grant.
The compensation committee may accelerate the vesting of any shares of
Restricted Stock granted under the RSP as the compensation committee deems
necessary and appropriate to effectuate the purpose of the RSP. An employee may
not assign his or her rights in the RSP and Restricted Stock granted thereunder
may not be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated so long as the shares are subject to forfeiture and other
restrictions under the RSP.
In the event a participant's employment terminates for any reason other than
death, retirement, disability, or a change in control as defined in the RSP and
summarized above under "Employment Contracts, Termination of Employment and
Change in Control Arrangements," any shares of Restricted Stock which have not
vested or are still subject to other forfeiture conditions will be automatically
forfeited to the Company. In the event a participant's employment terminates
due to death, retirement or disability, the compensation committee may waive any
forfeiture conditions on any shares of Restricted Stock granted to such
participant, including any uncompleted portion of the time restriction.
In the event of the occurrence of a change in control, as defined in the RSP,
all outstanding shares of Restricted Stock shall immediately become fully
vested.
A participant granted Restricted Stock under the RSP will have full voting
and, unless otherwise determined by the compensation committee, dividend rights
with respect to such shares of Restricted Stock. Any stock dividends will be
subject to the same restrictions on transferability as the shares of Restricted
Stock. In connection with the grant of Restricted Stock, a participant may be
required to grant to the Company a security interest in the Restricted Stock to
secure payment of any sums becoming due to the Company.
When a participant is required to pay to the Company an amount required to be
withheld under applicable tax laws in connection with the vesting of Restricted
Stock, the participant may satisfy this obligation, in whole or in part, by
making an election to have the Company withhold shares of Class A common stock,
having a value equal to the amount required to be withheld.
28
<PAGE>
The RSP may be amended at any time by the compensation committee or the board
of directors, provided, however, that no such amendment may increase the maximum
number of shares which may be granted under the RSP, except as otherwise
provided in the RSP, or permit the granting of Restricted Stock to anyone other
than key employees of the Company and its subsidiaries.
The board of directors recommends that the stockholders vote FOR the re-
approval of the Alberto-Culver Company 1994 Restricted Stock Plan, as amended.
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 2000 its executive officers, directors and greater than
10% beneficial owners complied with all applicable filing requirements under
Section 16(a) of the Exchange Act except that Mr. Thomas J. Pallone, a former
executive officer, filed one Form 4 late covering one transaction.
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,
2001. 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
more than 120 days and not less than 90 days in advance of the anniversary date
of the immediately preceding annual meeting and otherwise be in compliance with
the Company's Bylaws.
Stockholder Proposals
Any stockholder proposals intended to be included in the Company's 2001 proxy
materials must be received by August 14, 2001 and must otherwise comply with the
requirements of Rule 14a-8 of the Securities and Exchange Commission.
29
<PAGE>
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 materials 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
30
<PAGE>
ANNEX A
ALBERTO-CULVER COMPANY
THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
CHARTER
The primary purpose of the Audit Committee ("Committee") of the Board of
Directors ("Board") is to assist the Board in fulfilling its oversight
responsibilities relating to accounting, reporting practices, and the quality
and integrity of the financial reports and other publicly disseminated financial
information of the Company.
COMPOSITION
The Audit Committee shall be comprised of three or more directors, as
determined by the Board, each of whom shall be independent of the Company and
management, and free from any relationship that, in the opinion of the Board,
would interfere with the exercise of his or her independent judgement as a
member of the Committee.
All members of the Committee shall have a basic understanding of finance and
accounting and be able to read and understand financial statements, and at least
one member of the Committee shall have accounting or related financial
management expertise.
Each member of the Committee shall satisfy the eligibility requirements for
membership on an audit committee established by the New York Stock Exchange.
The Board shall appoint the members of the Committee annually who shall serve
until their successors are appointed and qualify, and shall designate the
chairman. The Board shall have the power at any time to change the membership
of the Committee and to fill vacancies, subject to such new member(s) satisfying
the qualification requirements established by the New York Stock Exchange.
Except as expressly provided in this charter or the bylaws of the Company, the
Committee shall fix its own rules of procedure.
RESPONSIBILITIES
The Audit Committee will meet four times per year, or more frequently as
circumstances require at the discretion of the Committee. The Chairman of the
Committee will approve the agenda for each meeting. Minutes of each meeting
shall be recorded. In certain circumstances, the Chairman of the Committee may
represent or act on behalf of the entire Committee. Attendees at Committee
meetings will generally include, at the request of the Committee, the Public
Accountants, the Director of Corporate Audit, and any member(s) of management or
others who may provide pertinent information. At these meetings, as
appropriate, the Committee will:
1
<PAGE>
Financial Information and Reports
---------------------------------
(1) Review and discuss with management the Company's year-end audited financial
statements and related footnotes and the opinion rendered by the Public
Accountants prior to filing or distribution.
(2) Discuss with the Public Accountants prior to releasing year-end earnings the
matters required to be discussed by Statement on Auditing Standards (SAS)
No. 61 - Communication With Audit Committees, as amended by SAS No. 90 -
Audit Committee Communication, or as may be further modified or
supplemented, including the quality of accounting principles and financial
reporting and other matters that should be communicated to the Committee
under the professional standards of the American Institute of Certified
Public Accountants.
(3) Prepare a report to be included in the Company's annual Proxy Statement
stating whether the Committee has (i) reviewed and discussed the audited
financial statements with management, (ii) discussed with the Public
Accountants the matters required by SAS No. 61, as amended by SAS No. 90, or
as may be further modified or supplemented, (iii) received from the Public
Accountants disclosures regarding their independence required by the
Independence Standards Board Standard No. 1 - Independence Discussions with
Audit Committees, (iv) discussed with the Public Accountants their
independence, and (v) based on the review and discussions referred to in (i)
through (iv), recommend to the Board that the audited Financial Statements
be included in the Annual Report on Form 10-K.
(4) Review significant financial reports released to the public, or filed with
the Securities and Exchange Commission.
Public Accountants
------------------
(1) Ensure that the Public Accountant remains ultimately accountable to the
Board and the Committee, and that the Board and the Committee have ultimate
authority and responsibility to (a) select the Public Accountant,
considering such factors as independence, objectivity and effectiveness, (b)
to evaluate the performance of the Public Accountant and, (c) where
appropriate, to replace the Public Accountant.
(2) Review and approve the annual audit plan and compensation arrangements of
the Public Accountants.
(3) Ensure that the Committee receives periodic reports from the Public
Accountants regarding relationships between the Public Accountant and the
Company, including all matters required by Independence Standards Board
Standard No. 1. Discuss with the Public Accountant any relationships or
services that may affect their objectivity and independence and, when
appropriate, recommend that the Board take appropriate action to satisfy
itself of the independence of the Public Accountant.
2
<PAGE>
Risk Management and Controls
----------------------------
(1) Inquire of management, the Public Accountants, and the Director of Corporate
Audit about significant liability risks or exposures and assess the steps
which management has taken to minimize such risks and monitor control of
these areas.
(2) Review with the Public Accountants and the Director of Corporate Audit their
findings on the adequacy and effectiveness of internal controls and their
recommendations for improving the internal control environment.
(3) Conduct private sessions as deemed necessary with the Public Accountants,
the Director of Corporate Audit, financial management or any other party or
person so as to ensure that information is adequately flowing to the
Committee.
(4) Review with the Director of Corporate Audit the annual internal audit plan,
significant findings from specific audits and the coordination of audit
coverages with the Public Accountants.
(5) Periodically review with the Company's legal counsel any matters that could
have a significant impact on the Company's financial statements, such as
compliance with laws and regulation, and inquiries received from
governmental agencies and regulators.
(6) Review management's monitoring of adherence to the Company's Compliance
Policy Manual.
(7) Review and approve the appointment, replacement, reassignment, or dismissal
of the Director of Corporate Audit. The Committee also will periodically
review the Corporate Audit Department's charter.
General
-------
(1) Perform any other action necessary to comply with the regulations of the
Securities and Exchange Commission, the New York Stock Exchange or
applicable law.
(2) Review and reassess the adequacy of the Audit Committee Charter annually and
recommend changes, if any, to the Board.
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements are complete and accurate and
are in accordance with generally accepted accounting principles. This is the
responsibility of management and the Public Accountants. The Committee's
recommendation to the Board that the audited Financial Statements be included in
the Company's Annual Report on Form 10-K is therefore not a representation that
such audited Financial Statements are presented fairly in accordance with
generally accepted accounting principles or that the audit complied with
generally accepted auditing standards.
3
<PAGE>
DETACH HERE
--------------------------------------------------------------------------------
PROXY
ALBERTO-CULVER COMPANY
Annual Meeting, January 25, 2001
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 25, 2001, 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 THREE NOMINEES FOR DIRECTOR SET FORTH ON THE
REVERSE SIDE, "FOR" RE-APPROVAL OF THE COMPANY'S EMPLOYEE STOCK OPTION PLAN OF
1988, AS AMENDED, AND "FOR" RE-APPROVAL OF THE COMPANY'S 1994 RESTRICTED STOCK
PLAN, AS AMENDED.
----------------- -----------------
SEE REVERSE SIDE (CONTINUED AND TO BE SIGNED ON REVERSE SIDE) SEE REVERSE SIDE
----------------- -----------------
<PAGE>
[X] Please mark
votes as in
this example
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. Election of directors FOR AGAINST ABSTAIN
Nominees: A. G. Atwater, Jr., Sam J. 2. Re-Approval of the Company's Employee Stock
Susser, and William W. Wirtz. Option Plan of 1988, as Amended. [_] [_] [_]
FOR WITHHELD 3. Re-Approval of the Company's 1994 FOR AGAINST ABSTAIN
Restricted Stock Plan, as Amended.
[_] [_] [_] [_] [_]
4. In the discretion of the board of directors, on any other matters that may
[_] properly come before the meeting.
_____________________________________
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
The board of directors recommends a vote FOR election of each of the nominees
for director listed hereon, FOR the re-approval of the Company's Employee
Stock Option Plan of 1988, as Amended, and FOR the re-approval of the
Company's 1994 Restricted Stock 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 12, 2000
Dear Retirement Benefit Plan Participant:
The Annual Meeting of Stockholders of Alberto-Culver Company (the "Company")
will be held on January 25, 2001. The record date for determining stockholders
entitled to vote at the meeting was December 1, 2000. 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 L.P.,
Proxy Department P.O. Box 9381, Boston, MA 02205-9381 so that the card is
received before January 22, 2001.
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
<PAGE>
ALBERTO-CULVER COMPANY
EMPLOYEE STOCK OPTION PLAN OF 1988
(as amended through January 25, 2001)
1. Purpose of ACSOP
The Alberto-Culver Company Employee Stock Option Plan of 1988 (hereinafter
called the "ACSOP") is intended to encourage ownership of the Class A common
stock of Alberto-Culver Company (hereinafter called the "Company") by eligible
key employees of the Company and its subsidiaries and to provide incentives for
them to make maximum efforts for the success of the business. Options granted
under the ACSOP will be non-qualified options (not incentive options as defined
in Section 422 of the Internal Revenue Code of 1986 and the rules and
regulations promulgated thereunder (the "Code")).
2. Eligibility
Key employees of the Company and its subsidiaries who perform services
which contribute materially to the management, operation and development of the
business ("Optionees") will be eligible to receive options under the ACSOP. At
their request, Mr. Leonard H. Lavin and Mrs. Bernice E. Lavin are ineligible to
receive options under the ACSOP.
3. Administration
The Compensation Committee of the Board of Directors of the Company (the
"Committee") shall have full power and authority, subject to the express
provisions of the ACSOP, to determine the purchase price of the stock covered by
each option, the Optionees to whom and the time or times at which options shall
be granted, the terms and conditions of the options, including the terms of
payment therefor, and the number of shares of stock to be covered by each
option. The Committee shall have full power to construe, administer and
interpret the ACSOP, and full power to adopt such rules and regulations as the
Committee may deem desirable to administer the ACSOP. No member of the
Committee shall be liable for any action or determination made in good faith
with respect to the ACSOP or any option thereunder. The determination of the
Committee as to any disputed question arising under the ACSOP, including
questions of construction and interpretation, shall be final, conclusive and
binding.
The Committee may, in its discretion, delegate to a committee of member(s)
of the Committee its authority with respect to such matters under the ACSOP and
options granted under the ACSOP as the Committee may specify.
<PAGE>
The Committee shall be comprised solely of members each of whom shall be an
"outside director" within the meaning of Section 162(m) of the Code, and 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"),
provided, however, that if any member of the Committee is not (i) an "outside
director" within the meaning of Section 162(m) of the Code or (ii) a "non-
employee director" within the meaning of 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 ACSOP involving "officers" within
the meaning of Rule 16a-1(f) under Section 16, and "covered employees" within
the meaning of Section 162(m) of the Code for the plan year at issue.
4. Number of Shares of Stock to be Offered
The Committee may authorize from time to time the issuance pursuant to the
ACSOP of shares not to exceed 15,400,000 of the Company's Class A common stock
in the aggregate, subject to adjustment under paragraph 10 hereof. Such shares
of Class A common stock which may be issued pursuant to options granted under
the ACSOP may be authorized and unissued shares or issued and reacquired shares
as the Committee from time to time may determine. If any option granted under
the ACSOP shall terminate or be surrendered or expire unexercised in whole or in
part, the shares of stock so released from such option may be made the subject
of additional options granted under the ACSOP. In addition, any shares of Class
A common stock withheld to pay, in whole or in part, the amount required to be
withheld under applicable tax laws in accordance with paragraph 7(d) hereof, may
be made the subject of additional options granted under the ACSOP.
5. Option Price
The purchase price under each option granted pursuant to the ACSOP shall be
determined by the Committee but shall not be less than the Fair Market Value (as
defined below) of the Company's Class A common stock at the time the option is
granted. For purposes of the ACSOP, "Fair Market Value" shall mean the average
of the high and low transaction prices of a share of Class A common stock as
reported in the New York Stock Exchange Composite Transactions on the date as of
which such value is being determined or, if there shall be no reported
transactions for such date, on the next preceding date for which transactions
were reported.
6. Grant of Options
The Committee may not grant to any individual Optionee in any fiscal year
an option or options with respect to more than 400,000 shares of Class A common
stock.
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7. Term and Exercise of Options
(a) Each option granted shall provide that it is not exercisable after the
expiration of ten (10) years from the date the option is granted, or such
shorter period as the Committee determines, and each option shall be subject to
the following limitations upon its exercise:
(i) Except as otherwise provided in paragraph 11(a) hereof, no option may
be exercised until the day preceding the anniversary date of the grant
of the option.
(ii) Except as otherwise provided in paragraph 11(a) hereof, on the day
preceding the anniversary date of the grant of the option in each of
the four calendar years immediately following the year of the grant of
the option, the right to purchase twenty-five percent (25%) of the
total number of shares of stock specified in the option shall accrue
to the Optionee. Subject to paragraph 8 hereof, each such right to
purchase such twenty-five percent (25%) may be exercised, in whole or
in part, at any time after such right accrues and prior to the
expiration of the term of the option.
(b) Notwithstanding the foregoing or paragraph 8 hereof, the Committee may
in its discretion (i) specifically provide at the date of grant for another time
or times of exercise; (ii) accelerate the exercisability of any option subject
to such terms and conditions as the Committee deems necessary or appropriate to
effectuate the purpose of the ACSOP including, without limitation, a requirement
that the Optionee grant to the Company an option to repurchase all or a portion
of the number of shares acquired upon exercise of the accelerated option for
their Fair Market Value on the date of grant; or (iii) at any time prior to the
expiration or termination of any option previously granted, extend the term of
any option (including such options held by officers or directors) for such
additional period as the Committee, in its discretion, shall determine. In no
event, however, shall the aggregate option period with respect to any option,
including the original term of the option and any extensions thereof, exceed ten
years.
(c) An option may be exercised (subject to the receipt of payment) by
giving written notice to the Secretary of the Company specifying the number of
shares to be purchased. The full purchase price for such shares may be paid
either in cash, by check or by delivery of previously owned shares of Class A
common stock, or by a combination of these methods of payment. Payment must be
received by the Secretary of the Company before any exercise is consummated.
For purposes of the delivery of previously owned shares of Class A common stock,
the per share value of such shares shall be the Fair Market Value on the date of
exercise.
(d) At any time when an Optionee is required to pay to the Company an
amount required to be withheld under applicable tax laws in connection with the
exercise of an option, the Optionee may satisfy this obligation in whole or in
part by making an election ("Election") to have the Company withhold shares of
Class A common stock of the Company, or, if the Committee so determines, by
delivering previously owned shares of Class A common stock of
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the Company ("Delivery") having a value equal to the amount required to be
withheld. The value of the shares to be withheld or delivered shall be based on
the Fair Market Value of the Class A common stock of the Company on the date of
exercise (the "Tax Date"). Each Election or Delivery must be made on or prior to
the Tax Date and shall be irrevocable. The Committee may disapprove any Election
or Delivery or may suspend or terminate the right to make Elections or
Deliveries.
8. Continuity of Employment
(a) Each option shall be subject to the following in addition to the
restrictions set forth in paragraphs 6 and 7 hereof:
(i) If an Optionee dies without having fully exercised his or her
option, the executors or administrators of his or her estate or
legatees or distributees shall have the right during the one (1)
year period following his or her death (but not after the expiration
of the term of such option) to exercise such option in whole or in
part but only to the extent that the Optionee could have exercised
it at the date of his or her death.
(ii) If an Optionee's termination of employment is due to retirement or
disability, the Optionee's option shall terminate three (3) months
after his or her termination of employment (but not after the
expiration of the term of such option) and may be exercised only to
the extent that such Optionee could have exercised it at the date of
his or her termination of employment. For purposes of the ACSOP, (i)
"retirement" shall have the meaning provided in the Company's
Employees' Profit Sharing Plan or, in the absence of such a
definition, termination of employment that occurs on or after the
first day of the month following the month in which the Optionee
attains his or her 65/th/ birthday and (ii) "disability" shall have
the meaning provided in the Company's applicable long-term
disability plan and such disability continues for more than three
months or, in the absence of such a definition, when an Optionee
becomes totally disabled as determined by a physician mutually
acceptable to the Optionee and the Committee before attaining his or
her 65/th/ 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
Optionee.
(iii) If an Optionee's termination of employment is for any reason other
than death, retirement or physical disability, the Optionee's option
shall terminate upon said termination of employment and the Company
shall have the right within a period of one year after said
termination of employment to reacquire at the option price any stock
acquired by the Optionee by exercise of an option within ninety (90)
days prior to said termination of employment; provided, however,
that if such termination of employment occurs following a Change in
Control (as such term is
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defined in paragraph 11(b) hereof), the Optionee's option shall
terminate three (3) months after his or her termination of
employment (but not after the expiration of the term of such option)
and may be exercised to the extent that such Optionee could have
exercised it at the date of his or her termination of employment and
the Company shall have no right to reacquire any stock acquired by
the Optionee by exercise of an option.
(b) Nothing contained in the ACSOP or any option granted pursuant to the
ACSOP shall confer upon any Optionee any right to be continued in the employment
of the Company or any subsidiary or shall prevent the Company or any subsidiary
from terminating an Optionee's employment at any time, with or without cause.
The determination by the Committee of whether an authorized leave of absence
constitutes a termination of employment shall be final, conclusive and binding.
9. Non-Transferability of Options
An option granted under the ACSOP shall not be assignable or transferable
by an Optionee otherwise than by will or the laws of descent and distribution,
and an option shall be exercisable during the lifetime of the Optionee only by
him or her. An option transferred by will or the laws of descent and
distribution may only be exercised by the legatee or distributee during the one
year period following the Optionee's death and may only be exercised to the
extent it was exercisable by the Optionee prior to his or her death.
10. Adjustment upon Change in Stock
Each option and the number and kind of shares subject to future options
under the ACSOP may be adjusted, as may be determined to be equitable in the
sole and absolute discretion of the Committee, in the event there is any change
in the outstanding Class A common stock, or any event that could cause a change
in the outstanding Class A common stock, including, without limitation, by
reason of a stock dividend, recapitalization, reclassification, issuance of
Class A common stock, issuance of rights to purchase Class A common stock,
issuance of securities convertible into or exchangeable for Class A common
stock, merger, consolidation, stock split, reverse stock split, spin-off,
combination, exchange or conversion of shares, or any other similar type of
event. The Committee's determination of any adjustment pursuant to this
paragraph10 shall be final, conclusive and binding.
11. Change in Control
(a) (1) Notwithstanding any provision of the ACSOP, in the event of a
Change in Control, all outstanding options shall immediately be exercisable
in full and shall be subject to the provisions of paragraph 11(a)(2) or
11(a)(3), to the extent that either such paragraph is applicable.
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(2) Notwithstanding any provision of the ACSOP, in the event of a
Change in Control in connection with which the holders of shares of the
Company's Class A common stock receive shares of common stock that are
registered under Section 12 of the Exchange Act, all outstanding options
shall immediately be exercisable in full and there shall be substituted for
each share of the Company's Class A common stock available under the ACSOP,
whether or not then subject to an outstanding option, the number and class
of shares into which each outstanding share of the Company's Class A common
stock shall be converted pursuant to such Change in Control. In the event
of any such substitution, the purchase price per share of each option shall
be appropriately adjusted by the Committee or the committee to which
authority has been delegated pursuant to paragraph 3 hereof, such
adjustments to be made without an increase in the aggregate purchase price.
(3) Notwithstanding any provision in the ACSOP, in the event of a
Change in Control in connection with which the holders of the Company's
Class A common stock receive consideration other than shares of common
stock that are registered under Section 12 of the Exchange Act, each
outstanding option shall be surrendered to the Company by the holder
thereof, and each such option shall immediately be cancelled by the
Company, and the holder shall receive, within ten (10) days of the
occurrence of such Change in Control, a cash payment from the Company in an
amount equal to the number of shares of the Company's Class A common stock
then subject to such option, multiplied by the excess, if any, of (i) the
greater of (A) the highest per share price offered to stockholders of the
Company in any transaction whereby the Change in Control takes place or (B)
the Fair Market Value of a share of the Company's Class A common stock on
the date of occurrence of the Change in Control over (ii) the purchase
price per share of the Company's Class A common stock subject to the
option. The Company may, but is not required to, cooperate with any person
who is subject to Section 16 of the Exchange Act to assure that any cash
payment in accordance with the foregoing to such person is made in
compliance with Section 16 of the Exchange Act and the rules and
regulations thereunder.
(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 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)
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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
paragraph 11(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 paragraph 11(b)(2)(A);
(ii) by the Company, except as otherwise provided in
paragraph 11(b)(2)(B);
(iii) by an Exempt Person;
(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 paragraph
11(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 paragraph 11(d)) to constitute at
least a majority of the Board of Directors of the Company (hereinafter
called the "Board").
(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
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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 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
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
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 paragraph 11(b)(1):
(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 paragraph 11(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 paragraph 11(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
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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;
(3) the estate of any of the persons described in paragraph 11(c)(1)
or (2);
(4) any trust or similar arrangement for the benefit of any person
described in paragraph 11(c)(1) or (2); or
(5) the Lavin Family Foundation or any other charitable organization
established by any person described in paragraph 11(c)(1) or (2).
(d) "Incumbent Board" means those individuals who, as of October 24, 1996,
constitute the Board, 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
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other actual or threatened solicitation of proxies or consents by or on
behalf of any Person other than the Board or the Exempt Persons shall be
deemed to have been a member of the Incumbent Board.
12. Amendment and Discontinuance
The Committee or the Board, without further approval of the stockholders,
may, at any time and from time to time, suspend or discontinue the ACSOP in
whole or in part or amend the ACSOP in such respects as the Committee or the
Board may deem proper and in the best interests of the Company or as may be
advisable, provided, however, that no suspension or amendment shall be made
which would:
(i) Adversely affect or impair any option previously granted under the
ACSOP without the consent of the Optionee, or
(ii) Except as specified in paragraph 10, increase the total number of
shares for which options may be granted under the ACSOP or decrease
the minimum price at which options may be granted under the ACSOP.
13. Stockholder Approval
The ACSOP, as amended through January 25, 2001, shall be submitted to the
stockholders of the Company for their re-approval at the annual meeting of
stockholders to be held on January 25, 2001, or any adjournment thereof, and as
so amended shall be subject to the re-approval of the stockholders at such
meeting.
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ALBERTO-CULVER COMPANY
1994 RESTRICTED STOCK PLAN
(as amended through January 25, 2001)
SECTION 1. ESTABLISHMENT AND PURPOSE
1.1 Establishment The Alberto-Culver Company (the "Company") hereby
establishes a restricted stock plan for Key Employees, as defined herein, which
shall be known as the Alberto-Culver Company 1994 Restricted Stock Plan (the
"RSP").
1.2 Purpose The purpose of the RSP is to enable the Company to attract,
retain, motivate, and reward Key Employees by providing them with a means to
acquire an equity interest or to increase such interest in the Company in return
for high levels of individual contribution and continued service.
1.3 Definitions Whenever used herein, the following terms shall have the
meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Change in Control" shall have the meaning set forth in Section 7.2(a).
(c) "Committee" means the Compensation Committee of the Board 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 RSP involving "officers"
within the meaning of Rule 16a-1(f) under Section 16, and "covered
employees" within the meaning of Section 162(m) of the Code for the
plan year at issue.
(d) "Disability" shall have the meaning provided in the Company's
applicable long-term disability plan and such disability continues for
more than three months 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 Company 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.
<PAGE>
(e) "Exempt Person" and "Exempt Persons" shall have the meaning set forth
in Section 7.2(b).
(f) "Fair Market Value" shall mean the average of the high and low
transaction prices of a share of Class A common stock as reported in
the New York Stock Exchange Composite Transactions on the date as of
which such value is being determined or, if there shall be no reported
transactions for such date, on the next preceding date for which
transactions were reported.
(g) "Key Employee" means an active, salaried employee (including officers
and directors who also are employees) of the Company or its
subsidiaries with direct impact on the performance of the Company.
(h) "Incumbent Board" shall have the meaning set forth in Section 7.2(c).
(i) "Participant" means a Key Employee designated by the Committee who is
awarded and holds Restricted Stock pursuant to the RSP.
(j) "Restricted Stock" shall mean the Class A common stock of the Company,
$.22 par value, with restrictions as described in Section 6.
(k) "Restricted Stock Agreement" shall have the meaning set forth in
Section 6.1.
(l) "Retirement" shall have the meaning provided in the Company's
Employees' Profit Sharing Plan or, in the absence of such a
definition, termination of employment that occurs on or after the
first day of the month following the month in which the Participant
attains his or her 65th birthday.
SECTION 2. ADMINISTRATION
2.1 Administration The RSP shall be administered by the Committee. The
Committee shall have full power to construe, administer and interpret the RSP,
and full power to adopt such rules and regulations as the Committee may deem
desirable to administer the RSP. No member of the Committee shall be liable for
any action or determination made in good faith with respect to the RSP or any
Restricted Stock thereunder.
2.2 Finality of Determination The determination of the Committee as to
any disputed questions arising under this RSP, including questions of
construction and interpretation, shall be final, conclusive and binding.
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SECTION 3. ELIGIBILITY AND PARTICIPATION
3.1 Eligibility Key Employees of the Company and its subsidiaries are
eligible to receive Restricted Stock under the RSP, in such amounts and on as
many occasions as the Committee in its sole discretion may determine.
3.2 Participation The Committee shall designate the Key Employees to
receive Restricted Stock, the time or times and the size and terms of each
individual grant of Restricted Stock under the RSP.
SECTION 4. STOCK SUBJECT TO THE RSP
4.1 Number The total number of shares of Restricted Stock that may be
granted under the RSP shall not exceed 1,000,000. These shares may consist, in
whole or in part, of authorized but unissued shares of stock or shares of stock
reacquired by the Company and not reserved for any other purpose.
4.2 Reacquired and Withheld Shares If, at any time, shares of Restricted
Stock issued pursuant to the RSP shall have been reacquired by the Company in
connection with the restrictions herein imposed on such shares, such reacquired
shares again shall become available for issuance under the RSP at any time prior
to its termination. In addition, any shares of Restricted Stock withheld to pay,
in whole or in part, the amount required to be withheld under applicable tax
laws in accordance with Section 6.12 hereof, shall become available for issuance
under the RSP at any time prior to its termination.
4.3 Adjustment upon Change in Stock The Committee may take such action
with regard to adjustment of the number of shares of Restricted Stock that may
be granted hereunder as it considers to be equitable in its sole and absolute
discretion in the event there is any change in the outstanding Class A common
stock, or any event that could cause a change in the outstanding Class A common
stock, including, without limitation, by reason of a stock dividend, stock
split, reverse stock split, spin-off, recapitalization, reclassification,
merger, consolidation, combination, exchange or conversion of shares, or any
other similar type of event. The Committee's determination of any adjustment
pursuant to this Section 4.3 shall be final, conclusive and binding.
SECTION 5. DURATION OF THE RSP
The RSP shall continue until all Restricted Stock subject to it shall have
been granted under the RSP, subject to the provisions of the RSP regarding
amendments thereto and termination thereof.
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SECTION 6. SHARES OF RESTRICTED STOCK
6.1 Grant of Shares of Restricted Stock Awards of Restricted Stock to
Participants shall be granted under a Restricted Stock Agreement between the
Company and the Participant which shall provide that the shares subject to any
such award shall be subject to such forfeiture and other conditions, including
the provisions of Section 6.7 hereof, as the Committee shall designate.
6.2 Vesting Except as otherwise provided in Section 7.1 hereof,
Restricted Stock granted to Participants will vest on a cumulative basis in
equal annual increments of one-fourth of the shares granted, commencing on the
day preceding the fourth anniversary of the grant of the Restricted Stock. The
shares will be fully vested after a period of seven (7) years from the day
preceding the date of grant. The Committee, however, may accelerate the vesting
of any Restricted Stock granted hereunder subject to such terms and conditions
as the Committee deems necessary and appropriate to effectuate the purpose of
the RSP.
6.3 Transferability Subject to Section 6.8 hereof, a Participant's
rights under the RSP may not be assigned and any Restricted Stock granted to a
Participant may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated as long as the shares are subject to forfeiture or
other conditions as provided in this RSP, and as set forth in the Restricted
Stock Agreement pursuant to which such shares were granted.
6.4 Removal of Restrictions Except as otherwise provided herein, or as
may be required by applicable law, shares of Restricted Stock covered by each
Restricted Stock Agreement made under this RSP will become freely transferable
by the Participant upon vesting in accordance with Section 6.2 or Section 7.1.
6.5 Other Restrictions The Committee may impose such other restrictions
on any shares granted pursuant to this RSP as it may deem advisable, including,
without limitation, restrictions required by (1) federal securities laws, (2)
requirements of any stock exchange upon which such shares of the same class are
listed and (3) any state securities laws applicable to such shares.
6.6 Certificates In addition to any legends placed on certificates
pursuant to Section 6.5, the Company reserves the right to place on each
certificate representing shares of Restricted Stock a restrictive legend, which
legend may be in the following form:
"The sale or other transfer of shares of stock represented by this
certificate, whether voluntary, involuntary, or by operation of law,
is subject to the restrictions on transfer and forfeiture conditions
(which include the satisfaction of certain employment service
requirements) set forth in the Alberto-Culver Company 1994 Restricted
Stock Plan and Restricted Stock Agreement. A copy of such agreement
may be inspected at the offices of the Secretary of the Company.
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All certificates representing shares of Restricted Stock shall be held by the
Secretary of the Company in escrow on behalf of the Participant awarded such
shares, together with a Power of Attorney (if any) executed by the Participant,
in the form satisfactory to the Committee and authorizing the Company to
transfer such shares as provided in the Restricted Stock Agreement, until such
time as all restrictions imposed on such shares pursuant to the RSP and the
Restricted Stock Agreement have expired or been earlier terminated.
6.7 Termination of Employment In the event that, prior to the removal of
restrictions on shares of Restricted Stock as contemplated by Section 6.4, a
Participant's employment with the Company terminates for any reason other than
death, Retirement, Disability, or a Change in Control, any shares subject to
time period restrictions or other forfeiture conditions at the date of such
termination shall automatically be forfeited to the Company. A Participant
shall not forfeit any rights to Restricted Stock previously granted to him,
solely because he ceases to qualify as a Key Employee.
6.8 Death, Retirement or Disability
(a) In the event that, prior to the removal of restrictions on shares of
Restricted Stock as contemplated by Section 6.4, a Participant's employment with
the Company terminates because of death, Retirement or Disability, any
uncompleted portion of a time period restriction or other forfeiture conditions,
as set forth in the terms of the Restricted Stock Agreement, may be waived by
the Committee. The shares released from such restrictions pursuant to this
Section 6.8 thereafter shall be freely transferable by the Participant, subject
to any applicable legal requirements.
(b) A Participant may from time to time name in writing any person or
persons to whom his or her Restricted Stock should be given if the Participant
dies, subject to the waiver of any applicable forfeiture conditions by the
Committee pursuant to Section 6.8(a) hereof. Each such beneficiary designation
will revoke all prior designations by the Participant with respect to the RSP,
shall not require the consent of any previously named beneficiary, shall be in a
form prescribed by the Committee (if the Committee so prescribes), 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 a Participant fails to designate a beneficiary before his or her
death, as provided above, or if the beneficiary designated by the Participant
dies prior to receiving the Restricted Stock hereunder, the Company may transfer
the Restricted Stock to the legal representative or representatives of the
estate of the Participant.
6.9 Voting Rights Participants shall have full voting rights with
respect to shares of Restricted Stock.
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6.10 Dividend Rights Except as the Committee may otherwise determine,
Participants shall have full dividend rights with any such dividends being paid
currently. Dividends paid on shares of Restricted Stock prior to the shares
vesting will be treated as wages for federal income tax purposes and will be
subject to withholding taxes by the Company. If all or part of a dividend is
paid in shares of stock, the dividend shares shall be subject to the same
restrictions on transferability as the shares of Restricted Stock that are the
basis for the dividend.
6.11 Security Interest in Shares In connection with the execution of any
Restricted Stock Agreement, the Committee may require that a Participant grant
to the Company a security interest in the shares of Restricted Stock issued or
granted pursuant to this RSP to secure the payment of any sums (e.g.: income
withholding taxes due when restrictions lapse) then owing or thereafter coming
due to the Company by such Participant. This security interest shall continue
for such period of time as the certificates representing shares of Restricted
Stock are held by the Secretary of the Company in escrow on behalf of the
Participant pursuant to Section 6.6.
6.12 Withholding Taxes Due At any time when a Participant is required to
pay to the Company an amount required to be withheld under applicable tax laws
in connection with the vesting of Restricted Stock, the Participant may satisfy
this obligation in whole or in part by making an election to have the Company
withhold shares of Restricted Stock having a value equal to the amount required
to be withheld. The value of shares to be withheld shall be based on the Fair
Market Value of the Restricted Stock on the date the Participant vests in such
shares.
SECTION 7. CHANGE IN CONTROL
7.1 Vesting Upon Change in Control Notwithstanding any provision of the
RSP, all outstanding shares of Restricted Stock shall immediately become fully
vested upon the occurrence of a Change in Control.
7.2 Definitions
(a) The term "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
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
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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 7.2(b)); 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 7.2(a)(2)(A);
(ii) by the Company, except as otherwise provided in
Section 7.2(a)(2)(B);
(iii) by an Exempt Person;
(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 7.2(a)(1)(C) shall be satisfied.
(B) The cessation for any reason of the
members of the Incumbent Board (as such term is
defined below) to constitute at least a majority of
the Board.
(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
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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 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 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 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 7.2(a)(1):
(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 7.2(a)(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
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(B) for purposes of clause (ii) of Section
7.2(a)(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.
(b) The term "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;
(3) the estate of any of the persons described in Section
7.2(b)(1) or (2);
(4) any trust or similar arrangement for the benefit of any
person described in Section 7.2(b)(1) or (2); or
(5) the Lavin Family Foundation or any other charitable
organization established by any person described in Section 7.2(b)(1) or
(2).
(c) The term "Incumbent Board" means those individuals who, as of October
24, 1996, constitute the Board, 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
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(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 or the Exempt
Persons shall be deemed to have been a member of the Incumbent Board.
SECTION 8. EMPLOYMENT RIGHTS OF EMPLOYEES
Nothing in this RSP or in any grant of Restricted Stock shall interfere
with or limit in any way the right of the Company to terminate any Key
Employee's or Participant's employment at any time, or confer upon any Key
Employee or Participant any right to continue in the employ of the Company or
its subsidiaries.
SECTION 9. STOCKHOLDER APPROVAL, AMENDMENT AND TERMINATION
9.1 Stockholder Approval The RSP, as amended through January 25, 2001,
shall be submitted to the stockholders of the Company for their re-approval at
the annual meeting of stockholders to be held on January 25, 2001, or any
adjournment thereof, and as so amended shall be subject to the re-approval of
the stockholders at such meeting.
9.2 Amendment This RSP may be amended at any time by the Committee or the
Board; provided that no such amendment shall permit the granting of Restricted
Stock to anyone other than as provided in Section 3 hereof, or increase the
maximum number of shares of stock that may be granted pursuant to this RSP
except pursuant to Section 4.3 hereof, without the further approval of the
Company's stockholders.
9.3 Termination The Company reserves the right to terminate the RSP at
any time by action of the Committee or the Board.
9.4 Existing Restrictions Neither amendment nor termination of this RSP
shall adversely affect any shares previously granted or issued pursuant to this
RSP.
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