<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
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
ALCO STANDARD CORPORATION
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
ALCO STANDARD CORPORATION
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[X] 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:
Notes:
<PAGE>
ALCO STANDARD CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JANUARY 25, 1996
----------------
To the Shareholders of Alco Standard Corporation ("Alco"):
You are invited to be present either in person or by proxy at the annual
meeting of shareholders of Alco to be held at the People's Light and Theatre
Company, 39 Conestoga Road, Malvern, PA 19355 on Thursday, January 25, 1996 at
9:30 a.m. to consider and act upon the following proposals:
1. To elect 11 directors to serve during the year and until their
successors are elected;
2. To approve an amendment to the Amended Articles of Incorporation of
Alco to increase the number of shares of common stock that Alco shall have
authority to issue from 150 million to 300 million shares; and
3. To approve an amendment to the Code of Regulations of Alco which fixes
the minimum size of the Board at seven and the maximum size of the Board at
sixteen, and which permits the members of the current Board to change the
number of directors fixed by the shareholder (between seven and sixteen).
4. To transact such other business as may properly come before the
meeting.
Shareholders of Alco of record at the close of business on November 27, 1995
are entitled to vote at the annual meeting and any adjournments thereof. All
shareholders are urged to attend the meeting or to vote by proxy.
If you do not expect to attend the meeting in person, please sign and return
the accompanying proxy in the enclosed postage prepaid envelope. If you later
find that you can be present or for any other reason desire to revoke your
proxy, you can do so at any time before the voting.
/s/ John E. Stuart
Chairman, President and Chief
Executive Officer
Valley Forge, Pennsylvania
November 30, 1995
<PAGE>
ALCO STANDARD CORPORATION
P.O. Box 834
Valley Forge, Pennsylvania 19482-0834
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of Alco Standard Corporation ("Alco") of proxies to be
voted at its annual meeting of shareholders on January 25, 1996 and all
adjournments thereof. The proxy statement and proxy card will be first mailed
to shareholders on or about December 4, 1995.
Only holders of record of common stock and serial preferred stock at the
close of business on November 27, 1995 will be entitled to vote. On that date,
there were 112,559,912 shares of common stock and 77,102 shares of preferred
stock outstanding. The holders of all shares will vote together as a class.
Each share of common stock or preferred stock entitles the holder thereof to
one vote.
On November 9, 1995, Alco effected a two-for-one stock split of its common
stock in the form of a stock dividend to shareholders of record on October 27,
1995. All share amounts and option exercise prices set forth in this proxy
statement have been restated to reflect the stock split.
I. ELECTION OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
A board consisting of 11 directors is proposed to be elected for the ensuing
year and until their successors are elected. Unless authority to do so is
specifically withheld, the persons named in the accompanying proxy will vote
for the election as directors of the nominees named below. The 11 nominees who
receive the most votes at the meeting will be elected as directors. All of the
nominees are now directors of Alco, holding office until election of their
successors. In accordance with Alco's retirement policy for directors, J.
Mahlon Buck, Jr., who is now a director, is not standing for reelection.
Information regarding the nominees is set forth below.
<TABLE>
<CAPTION>
YEAR
PRINCIPAL OCCUPATION OR EMPLOYMENT FOR PAST FIVE YEARS BECAME
NAME (WITH ALCO UNLESS OTHERWISE INDICATED) DIRECTOR AGE
---- ------------------------------------------------------ -------- ---
<S> <C> <C> <C>
Paul J. Darling, II..... Chairman, President and Chief Executive Officer, Corey 1994 57
Steel Company (1984-Present) (also a director of Liberty
Mutual Insurance Company, Liberty Mutual Fire Insurance
Company and Liberty Financial Companies, Inc.)
William F. Drake, Jr. .. Attorney and Partner, Montgomery, McCracken, Walker & 1969 63
Rhoads (1984-Present); Vice Chairman (1984-Present)
(also a director of Nocopi Technologies, Inc.)
James J. Forese......... General Manager, IBM Customer Financing, and Chairman, 1994 60
IBM Credit Corporation (1993-Present); IBM Vice Presi-
dent, Finance (1990-1993); IBM Vice President and Group
Executive (1988-1990) (also a director of Lexmark Inter-
national, Inc., IBM Latin America, American Management
Systems, Inc. and NUI Corporation)
Frederick S. Hammer..... A director of United Student Aid Group, Inc., Tri-Arc Fi- 1986 59
nancial Services and National Media Corporation; Part-
ner, Inter-Atlantic Capital Partners, Inc. (1994-Pres-
ent); Chairman, Chief Executive Officer and a director,
Mutual of America Capital Management Corporation (1993-
1994); President, SEI Asset Management Services Group
(1989-1993); Mazur Fellow, The Wharton School, Univer-
sity of Pennsylvania (1989-1990)
Barbara Barnes
Hauptfuhrer............ A director of The Vanguard Group of Investment Companies
and of each of the mutual funds in the Group, The Great 1988 67
Atlantic and Pacific Tea Co., Inc., Knight-Ridder, Inc.,
Massachusetts Mutual Life Insurance Co. and Raytheon
Company
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
YEAR
PRINCIPAL OCCUPATION OR EMPLOYMENT FOR PAST FIVE YEARS BECAME
NAME (WITH ALCO UNLESS OTHERWISE INDICATED) DIRECTOR AGE
---- ------------------------------------------------------ -------- ---
<S> <C> <C> <C>
Dana G. Mead............ Chairman and Chief Executive Officer (1994-Present), 1994 59
President and Chief Operating Officer (1992-1994) and a
director (1992-Present), Tenneco, Inc.; Chairman (1992-
Present), Case Corporation; Chairman (1995-Present) and
a director, National Association of Manufacturers; Exec-
utive Vice President (1989-1992), Senior Vice President
(1986-1989), International Paper Company (also a direc-
tor of National Westminster Bancorp, Cummins Engine Com-
pany, Inc. and Baker Hughes Incorporated)
Ray B. Mundt............ Director (1971-Present); Chairman of the Board of Direc- 1971 67
tors (1986-1995), Chief Executive Officer (1980-1993),
President (1974-1988) (also a director of Liberty Mutual
Insurance Company, Liberty Mutual Fire Insurance Compa-
ny, Liberty Financial Companies, Inc., Nocopi Technolo-
gies, Inc., CoreStates Bank, N.A., and Clark Equipment
Company)
Paul C. O'Neill......... Private investor; Chairman, Ovington Securities Ltd. 1978 69
(1989-1991)
Rogelio G. Sada......... Private investor; Mayor, San Pedro, N.L., Mexico (1992- 1980 60
1994); Director, International Advisory Board of Secu-
rity Pacific National Bank (1980-1991); Director Gener-
al, VITRO, a glass and glass-related products manufac-
turer in Mexico (1972-1985)
John E. Stuart.......... Chairman (1995-Present); President and Chief Executive 1993 51
Officer (1993-Present); Vice President (1989-1993);
Group President, Alco Office Products (1985-1993)
James W. Stratton....... President, Stratton Management Company (1972-Present); 1988 59
Chairman (1993-Present) and a director, Stratton Small-
Cap Yield Fund; Chairman (1981-Present) and a director,
Stratton Monthly Dividend Shares; Chairman (1972-Pres-
ent) and a director, Stratton Growth Fund (also a direc-
tor of UGI Corporation, Gilbert Associates and Teleflex)
</TABLE>
SECURITY OWNERSHIP
As of November 24, 1995, shares of common stock of Alco were beneficially
owned (as determined by rules of the Securities and Exchange Commission,
although in certain cases the persons may disclaim beneficial ownership) by
the current directors, by each of the individuals named in the Summary
Compensation Table (on page 8) and by all current directors and executive
officers of Alco as a group, as follows:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-----------------------------------------------
SOLE VOTING SHARED VOTING ACQUIRABLE
AND AND/OR WITHIN
INVESTMENT POWER INVESTMENT POWER(1) 60 DAYS(2)
---------------- ------------------- ----------
<S> <C> <C> <C>
J. Mahlon Buck, Jr. ........ 42,635 0 36,642
J. Kenneth Croney........... 28,554 10,741 33,116
Paul J. Darling, II......... 286 0 4,638
William F. Drake, Jr........ 161,197 0 1,026
Kurt E. Dinkelacker......... 12,870 5,660 58,090
James J. Forese............. 6,290 0 4,638
Frederick S. Hammer......... 12,283 0 20,470
Barbara Barnes Hauptfuhrer.. 3,557 0 26,562
James E. Head............... 28,566 7,728 57,528
William T. Leith............ 18,262 3,299 22,887
Dana G. Mead................ 270 0 4,640
Hugh G. Moulton............. 51,000 39,863 80,608
Ray B. Mundt................ 287,878 50,468 5,898
Paul C. O'Neill............. 77,474 24,000 2,648
Rogelio G. Sada............. 12,738 0 31,422
James W. Stratton........... 4,028 0 7,564
John E. Stuart.............. 112,238 7,007 320,913
All current directors and
executive officers as a
group...................... 966,210 199,888 784,788
</TABLE>
--------
(1) Includes all shares held under Alco's Retirement Savings Plan and,
where applicable, shares owned by spouses or minor children.
(2) Represents shares which may be acquired within 60 days of November 24,
1995 through the exercise of stock options or vesting under Alco's
Partners' Stock Purchase Plan.
2
<PAGE>
As of November 27, 1995, for each of the individuals named above, the
percentage of common stock beneficially owned was less than 1%. The percentage
of common stock beneficially owned by all current directors and executive
officers as a group was approximately 1.7%. As of November 27, 1995, no person
beneficially owned more than 5% of the outstanding shares of common stock of
Alco, nor did any director, nominee or executive officer of Alco own any
shares of preferred stock of Alco. As of November 27, 1995, Alco employees,
through direct ownership or employee benefit plans, owned approximately 15% of
the outstanding shares of common stock of Alco.
For the fiscal year ended September 30, 1995, all reports required to be
filed by Section 16(a) of the Securities Exchange Act of 1934 on behalf of
Alco's directors and officers to reflect changes in beneficial ownership of
Alco's securities were timely filed.
COMMITTEES OF THE BOARD OF DIRECTORS; MEETINGS
There are four standing committees of the Board of Directors, including the
Audit Committee and the Human Resources Committee. Between meetings of the
Board of Directors, its powers may be exercised by the Executive Committee,
Human Resources Committee and Investment Committee, and they, as well as the
Board of Directors, sometimes act by unanimous written consent.
The Audit Committee (Messrs. Buck, Darling, Sada, and Stratton) met four
times during the fiscal year ended September 30, 1995. Its functions are to
review the report of Alco's independent auditors relating to their audit of
the financial statements of Alco, to review and discuss internal financial
controls with both the independent auditors and internal auditors, and to
direct that special studies relating to the adequacy of financial controls and
accounting procedures be made from time to time as the Committee deems
desirable.
The Human Resources Committee (Mrs. Hauptfuhrer and Messrs. Buck, Darling,
Hammer, Mead and Sada) met six times during the fiscal year. It is responsible
for reviewing and evaluating persons who are suggested as nominees for
election as members of the Board of Directors, and for making recommendations
to the Board of Directors concerning such nominees. The Human Resources
Committee is also responsible for setting policies regarding executive
compensation and for determining the salaries and other compensation of
each of the executive officers of Alco. (See "Human Resources Committee Report
on Executive Compensation," page 5). The Committee also has all of the powers
and exercises all of the duties of the Board of Directors as described in
Alco's stock option, stock purchase, deferred compensation and other similar
plans.
During the fiscal year, the Board of Directors met six times. Each director
attended at least 75% of the total number of the meetings of the Board of
Directors and the meetings of all committees on which he or she served, except
Mr. Mead, who attended 69% of such meetings.
3
<PAGE>
PERFORMANCE OF ALCO COMMON STOCK
The following graph compares the cumulative total shareholder return on
Alco's common stock with the cumulative total return of: (i) the Standard &
Poor's 500 Stock Index, and (ii) an industry peer group based on a combination
of the S&P 500 Paper and Forest Products Sub-Index and the S&P 500 Office
Equipment and Supplies Sub-Index (the "Composite Index"). Cumulative total
shareholder return is measured by assuming an investment of $100 made on
September 30, 1990 (with dividends reinvested).
ALCO STANDARD
vs. S&P 500
vs. COMPOSITE INDEX
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Date Alco Standard S&P 500 Composite
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
9/30/90 $100.00 $100.00 $100.00
9/90 - 9/91 $114.98 $131.05 $155.75
9/90 - 9/92 $124.87 $145.47 $179.90
9/90 - 9/93 $156.59 $164.29 $190.40
9/90 - 9/94 $225.05 $170.40 $242.96
9/90 - 9/95 $311.73 $220.90 $295.41
- --------------------------------------------------------------------------------
</TABLE>
The components of the Composite Index have been weighted on the basis of the
respective operating income contribution from each of Alco's two business
segments (Unisource and Alco Office Products), as follows:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Paper/Forest Products..................... 47.21% 44.87% 49.67% 53.39% 59.24%
Office Equipment/Supplies................. 52.79% 55.13% 50.33% 46.61% 40.76%
</TABLE>
4
<PAGE>
EXECUTIVE COMPENSATION
HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Alco's executive compensation program is administered by the Human Resources
Committee of the Board of Directors, which has responsibility for all aspects
of the compensation program for the executive officers of Alco. The Human
Resources Committee (the "Committee") is comprised of the six directors listed
at the end of this report, none of whom is an employee of Alco and each of
whom qualifies as a disinterested person for the purpose of Rule 16b-3 under
the Securities Exchange Act of 1934 and an outside director for purposes of
Section 162(m) of the Internal Revenue Code (the "Code").
The Committee's primary objective is to establish and administer programs
which attract and retain key executives, and to align their compensation with
Alco's performance, business strategies and growth in shareholder value. To
this end, the Committee has established and the Board of Directors has
endorsed an executive compensation philosophy which includes the following
elements:
--A "pay-for-performance" orientation under which compensation reflects
corporate, business unit and individual performance;
--An emphasis on stock incentives to closely align the interest of
executives with the long-term interests of shareholders;
--An emphasis on total compensation under which base salaries are generally
set at or near competitive levels but which motivates and rewards executives
with total compensation, including incentive programs, at or above competitive
levels if corporate or individual performance is superior;
--An appropriate balance of short and long-term compensation which
facilitates retention of talented executives, rewards long-term strategic
planning, and encourages Alco stock ownership; and
--Recognition that as an executive's level of responsibility increases, a
greater portion of the total compensation opportunity should be based on stock
and other performance incentives and less on salary and benefits.
As a matter of policy, the Committee recommends that its executive
compensation plans be structured so that payments under such plans will be
excluded from compensation subject to the $1,000,000 deduction limit of
Section 162(m) of the Code.
The primary components of Alco's executive compensation program are (a) base
salaries; (b) annual cash bonus opportunities; and (c) long term incentive
opportunities.
BASE SALARIES
Base salaries for executive officers are reviewed annually and are subject
to adjustment on the basis of individual, corporate, and business unit
performance, as well as competitive, inflationary and internal equity
considerations. Base salaries generally are fixed at or near the 50th
percentile of predicted executive salaries paid by comparable companies based
upon survey data compiled by Alco's compensation consultant. The Committee
does not consider the market for determining the compensation of Alco's
executives to be limited to the companies included in the industry performance
graph on page 4. The companies considered to be comparable to Alco for
compensation purposes include a broad cross-section of companies which are
representative of industry generally.
In setting the $850,000 base salary of Mr. Stuart as Chief Executive Officer
(for fiscal 1995), the Committee evaluated the factors described above which
are used for setting compensation generally, as well as Mr. Stuart's strong
record and leadership abilities as President and Chief Executive Officer of
Alco during fiscal 1994, including growth in Alco's revenues of 24% and growth
in Alco's operating income of 31% in fiscal 1994 compared with fiscal 1993.
ANNUAL BONUS
Annual bonus payments to executive officers are awarded pursuant to the Alco
Standard Corporation Annual Bonus Plan, and are based on corporate or business
unit performance compared to the targets established for the year. These
annual bonus payments are in amounts equal to a percentage of base salary.
They generally range
5
<PAGE>
from 0% for threshold, 30-50% for target, and 60-100% for maximum performance.
For the individuals named in the Summary Compensation Table, annual bonus
potential (as a percentage of base salary) is 0% for threshold, 45%-50% for
target and 90%-100% for maximum performance. For performance between threshold
and maximum levels, bonus awards are prorated on a straight line basis. For
corporate officers, targets for fiscal 1995 were based upon growth in
"economic value per share," a concept which measures growth in economic value
under a financial model which Alco utilizes. As used in this model, "economic
value" reflects the results of the performance factors and investment
variables which are within management's control. It disregards macro-economic
factors such as interest rates and taxes which also affect market prices for
Alco's stock. As a result, changes in "economic value per share" may not be
accompanied by corresponding increases or decreases in stock prices over the
measurement period. For fiscal 1995, the annual bonus plan for corporate
officers was based on increases in economic value per share over this value at
the end of fiscal 1994. The threshold, target and maximum increases were fixed
at 15%, 18% and 20%, respectively. For fiscal 1995, Alco achieved growth in
economic value per share of 27.3% over this value at the end of fiscal 1994.
Because of this performance, Messrs. Stuart, Dinkelacker, Moulton and Croney
received bonuses at the maximum level.
For officers of Unisource, annual bonus targets were based on increases in
operating income and growth in Unisource's "economic value" compared to
targets established for the year (determined by applying the same financial
model Alco utilizes to determine "economic value per share"). For fiscal 1995,
Unisource achieved operating income of $225 million compared to a $210 million
target, and achieved growth in economic value of 19% compared to a 17% target.
Because of this performance, Mr. Leith received a bonus at the maximum level.
For officers of AOP, annual bonus targets for fiscal 1995 were based on
increases in operating income and operating cash flow compared to the targets
established for the year. For fiscal 1995, AOP achieved operating income of
$251.8 million compared to a $237.7 million target, and operating cash flow of
$274.7 million compared to a $220.6 million target. Because of this
performance, Mr. Head received a bonus at the maximum level.
LONG TERM INCENTIVE COMPENSATION
LTIP Awards
The Alco Standard Corporation Long Term Incentive Compensation Plan ("LTIP")
is intended to align the long-term interests of Alco's executives with those
of Alco's shareholders. The LTIP motivates and rewards growth in shareholder
value by granting to eligible executives awards which vest only if certain
performance criteria are met. For corporate officers, the LTIP is based on
total shareholder return (stock price appreciation and dividends) compared
with the total shareholder return of the Standard & Poor's 500 Stock Index
(the "S&P 500"). Awards granted under the LTIP for corporate officers will not
vest unless growth in Alco's shareholder value exceeds the S&P 500 total
shareholder return over the plan period. Total shareholder return is measured
over successive three-year periods (with a new three-year period beginning
every fiscal year) and awards, if vested, will be paid at the end of each such
three-year period. The LTIP payout is dependent upon achievement of
performance targets, ranging from 0 (in the case of performance at or below
threshold) to 100% of the participant's base salary at the beginning of the
plan period (for maximum performance). For performance between threshold and
maximum, the payout will be prorated on a straight-line basis.
For the three-year plan period ending September 30, 1995, LTIP awards, to
the extent vested, were paid in shares of Alco common stock, with the maximum
number of shares determined by dividing an amount not exceeding 100% of the
participant's base salary at the beginning of the plan period by the price of
Alco common stock on September 30, 1992.
In November 1995, the Committee evaluated whether the corporation and
respective business groups had met the criteria for payment of LTIP awards for
the 1993-1995 plan period. For corporate officers, the September 30, 1995
value of a $100 investment made on September 30, 1992 in the S&P 500 (with
dividends reinvested) was compared to the value of a similar investment in
Alco common stock. In order for corporate officers to earn
6
<PAGE>
a maximum award, the value of the Alco common stock investment must have
exceeded the value of the S&P investment at the end of the period by 20%. In
fact, the Alco common stock investment exceeded the S&P 500 investment by
67.7%. For group officers, performance targets were based on compound growth
in the economic value and cash flow of the relevant business unit as
determined under Alco's shareholder value model ("Total Shareholder Return" or
"TSR"). The TSR targets for the 1993-1995 plan period were 12.87% for
threshold performance, 15.42% for target performance and 17.86% for maximum
performance. AOP achieved a three year TSR of 27.82% and Unisource achieved a
three-year TSR of 13.58%. Because of the corporate and AOP performance during
the 1993-1995 plan period, Messrs. Stuart, Dinkelacker, Moulton, Croney and
Head received LTIP payouts at the maximum levels. Mr. Leith's award was based
two-thirds on Unisource's Central Region, which achieved a three-year TSR of
17.95% and one-third on Unisource, which achieved a three-year TSR of 13.58%.
Therefore, Mr. Leith received an LTIP payout of 68.8% of the maximum level.
Stock Options
Stock options are granted under the corporation's stock option plans as a
reward for past performance and as motivation for future performance which
maximizes shareholder value. Stock options are generally granted for ten-year
terms and vest over a five-year employment period. The exercise price of these
stock options is the fair market value of Alco stock on the date of grant.
In fiscal 1995, Mr. Leith's receipt of an option to purchase 50,000 shares
reflected his promotion to the position of Vice President, and Mr. Croney's
receipt of an option to purchase 10,000 shares reflected his promotion to
General Counsel of Alco during fiscal 1994. The option grants took into
consideration outstanding awards and were at the fair market value on the
dates of the grants.
THE HUMAN RESOURCES COMMITTEE OF THE BOARD OF DIRECTORS
Barbara Barnes Hauptfuhrer (Chairman)
J. Mahlon Buck, Jr.
Paul J. Darling, II
Frederick S. Hammer
Dana G. Mead
Rogelio G. Sada
7
<PAGE>
SUMMARY OF EXECUTIVE COMPENSATION
The following table provides a summary of all compensation for the five most
highly compensated officers of Alco (and one additional former officer) during
the fiscal years ended September 30, 1995, 1994 and 1993:
SUMMARY COMPENSATION TABLE
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------- ----------------------------------
AWARDS(2)
----------
NAME ALL OTHER
AND SECURITIES COMPEN-
PRINCIPAL FISCAL UNDERLYING SATION LTIP
POSITION(1) YEAR SALARY($) BONUS($) OPTIONS ($)(3) PAYOUTS($)(4)
----------- ------ ---------- --------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
John E. Stu- 1995 850,000 850,000 0 253,427 826,821
art 1994 700,000 700,000 500,000 177,642 0
Chairman, 1993 393,750 350,000 1,000 100,533 0
President
and
Chief Exec-
utive Offi-
cer
Kurt E.
Dinkelacker 1995 350,000 350,000 0 102,980 354,340
Executive 1994 300,000 300,000 100,000 74,806 0
Vice Presi- 1993 168,750 150,000 0 42,066 0
dent and
Alco Office
Products
Group Pres-
ident
Hugh G. 1995 312,000 312,000 0 137,029 708,680
Moulton 1994 300,000 300,000 0 78,136 0
Executive 1993 300,000 0 40,000 34,097 0
Vice Presi-
dent
J. Kenneth 1995 245,000 220,500 10,000 56,178 347,306
Croney 1994 222,000 176,000 0 35,762 0
Vice 1993 210,000 0 0 13,945 0
President,
General
Counsel and
Secretary
William T. 1995 383,333 479,167 50,000 117,831 448,412
Leith 1994 288,003 266,656 50,000 69,246 0
Vice Presi- 1993 274,257 50,312 0 23,768 0
dent and
Unisource
Group
President
James E. 1995 325,000 325,000 0 82,121 366,205
Head 1994 300,000 300,000 100,000 80,954 0
Former Vice 1993 167,083 177,535 0 46,098 0
President
and
Alco Office
Products
Group Pres-
ident
</TABLE>
- --------
(1) In August 1995, Mr. Dinkelacker, who had been serving as Chief Financial
Officer and Executive Vice President of Alco, was named Group President of
AOP. In January 1995, Mr. Leith, who had been serving as Executive Vice
President of Unisource's U.S. operations (and who had previously served as
President of the Central Region of Unisource), became Group President of
Unisource and a vice president of Alco. In March 1995, Mr. Head resigned
his position as Group President of AOP. For fiscal 1995, Mr. Head was paid
the amounts set forth above. In consideration of his consulting services
and covenant not to compete, Mr. Head will receive payments through 1998
totalling $690,625. Subject to the requirement that AOP achieve its LTIP
performance goals for the relevant plan periods, Mr. Head is also eligible
to receive cash LTIP payouts equivalent to a maximum of 9,090 shares of
Alco common stock (valued at 9/30/96) in 1996 and a maximum of 3,488
shares of Alco common stock (valued at 9/30/97) in 1997.
(2) Does not include LTIP awards, which will only vest if certain performance
goals are met. LTIP awards made during fiscal 1995 are included in the
LTIP Awards Table on page 10.
(3) Includes the value of shares of Alco common stock purchased with matching
company contributions under Alco's stock purchase plans, calculated as of
the date of purchase, as follows: John E. Stuart--$247,967 (1995),
$176,356 (1994) and $99,703 (1993); Kurt E. Dinkelacker--$101,761 (1995),
$74,528 (1994) and
8
<PAGE>
$41,884 (1993); Hugh G. Moulton--$92,447 (1995), $69,374 (1994) and $27,367
(1993); J. Kenneth Croney--$51,784 (1995), $32,591 (1994) and $11,865
(1993); William T. Leith--$115,337 (1995), $67,446 (1994) and $22,588
(1993); James E. Head--$82,121 (1995), $80,954 (1994) and $46,098 (1993).
The remaining amounts represent above-market interest earned on deferred
compensation.
(4) There were no LTIP payouts in fiscal 1994 or 1993. The LTIP payouts for the
1993-1995 plan period were distributed in October 1995 in the form of
shares of Alco common stock. The values above are based on the fair market
value of Alco common stock on September 30, 1995, the last day of the plan
period.
OPTION GRANTS
The following table shows option grants to the six individuals named in the
Summary Compensation Table during the fiscal year ended September 30, 1995:
OPTION GRANTS IN LAST FISCAL YEAR(1)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OPTIONS
OF SECURITIES GRANTED TO EXERCISE GRANT
UNDERLYING EMPLOYEES OR BASE DATE
OPTIONS IN FISCAL PRICE EXPIRATION PRESENT
NAME GRANTED (#) YEAR (%) ($/SH) DATE VALUE ($)(2)
---- ------------- ---------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
John E. Stuart............ -- -- -- -- --
Kurt E. Dinkelacker....... -- -- -- -- --
Hugh G. Moulton........... -- -- -- -- --
J. Kenneth Croney......... 10,000 1.3 28.81 11/10/04 73,900
William T. Leith.......... 50,000 6.6 32.75 1/26/05 438,250
James E. Head............. -- -- -- -- --
</TABLE>
(1) All stock options were granted at an exercise price equal to fair market
value of Alco common stock on date of grant, and become exercisable 20% per
year from the date of grant.
(2) The present value of the option grant to Mr. Croney was calculated using
Black-Scholes option valuation methodology, based on the following
assumptions: (a) ten-year option term; (b) becomes exercisable 20% per year
from date of grant; (c) 7.96% expected risk-free rate of return; (d) 16.42%
expected volatility; and (e) 1.74% expected dividend yield. The present
value of the option grant to Mr. Leith was also calculated using the Black-
Scholes option valuation methodology, based upon the following assumptions:
(a) ten-year option term; (b) becomes exercisable 20% per year from date of
grant; (c) 7.78% expected risk-free rate of return; (d) 17.34% expected
volatility; and (e) 1.53% expected dividend yield.
9
<PAGE>
OPTION EXERCISES
The following table shows option exercises for each of the six individuals
named in the Summary Compensation Table for the fiscal year ended September
30, 1995:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF VALUE OF
SECURITIES SECURITIES UNEXERCISED VALUE OF
UNDERLYING UNDERLYING IN-THE- UNEXERCISED
SHARES UNEXERCISED UNEXERCISED MONEY IN-THE-MONEY
ACQUIRED OPTIONS AT OPTIONS AT OPTIONS AT OPTIONS AT
ON VALUE FY-END FY-END FY-END FY-END
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($)/(1) ($)/(1)
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John E. Stuart.......... 9,280 $151,200 232,200 419,320 $5,512,328 $7,662,110
Kurt E. Dinkelacker..... 14,900 287,831 34,480 87,320 742,665 1,625,885
Hugh G. Moulton......... -- -- 66,680 36,120 1,750,303 917,985
J. Kenneth Croney....... -- -- 36,000 16,520 1,042,450 309,610
William T. Leith........ -- -- 19,600 94,500 365,350 1,055,288
James E. Head........... -- -- 46,400 86,100 1,084,825 1,592,988
</TABLE>
(1) Value of unexercised options equals fair market value of Alco common stock
as of September 30, 1995, less exercise price, multiplied by the number of
shares underlying the stock options.
LONG TERM INCENTIVE COMPENSATION PLAN
The following table shows the LTIP awards granted to each of the named
individuals under the Long Term Incentive Compensation Plan during the fiscal
year ended September 30, 1995 and the number of shares of Alco common stock
which will become issuable after fiscal 1997 upon attainment of threshold,
target and maximum performance levels:
LONG TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE
NUMBER OF OR OTHER PAYOUTS (SHARES OF
SHARES, UNITS PERIOD UNTIL COMMON STOCK) (#)(2)
OR OTHER MATURATION OR --------------------
NAME RIGHTS (#)(1) PAYOUT THRESHOLD TARGET MAXIMUM
---- ------------- --------------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
John E. Stuart........ 27,364 10/1/94-9/30/97 0 13,682 27,364
Kurt E. Dinkelacker... 11,268 10/1/94-9/30/97 0 5,634 11,268
Hugh G. Moulton....... 10,044 10/1/94-9/30/97 0 5,022 10,044
J. Kenneth Croney..... 7,888 10/1/94-9/30/97 0 3,944 7,888
William T. Leith...... 11,268 10/1/94-9/30/97 0 5,634 11,268
James E. Head(3)...... 3,488 10/1/94-9/30/97 0 1,744 3,488
</TABLE>
(1) Represents the number of stock awards granted, which, if vested, will
entitle the participant to receive shares of common stock. For a
description of the LTIP and the basis for the awards shown in the above
table, see "Human Resources Committee Report on Executive Compensation" on
page 5.
(2) Represents the number of shares of common stock which will be received
upon attainment of threshold, target and maximum performance. For
performance between threshold and maximum, the number of shares to be
received will be prorated on a straight-line basis.
(3) Reflects a reduced award based upon services performed by Mr. Head prior
to his resignation as an executive officer in March 1995. Any LTIP payouts
to Mr. Head will be in the form of cash based on the fair market value (on
the last day of the plan period) of the number of shares earned.
10
<PAGE>
PENSION PLAN AND SUPPLEMENTAL RETIREMENT PLANS
Certain executive officers of Alco (including Messrs. Stuart, Dinkelacker,
Moulton, Croney, Leith and Head) are participants in a pension plan (the
"pension plan") for salaried employees which provides to eligible retired
employees at age 65 annual pension benefits equal to the number of years of
credited service multiplied by 1% of average annual compensation earned during
the three consecutive years within the employee's last ten years of
participation in the pension plan which yield the highest average. All pension
plan costs are paid by Alco and the pension plan and benefits are funded on an
actuarial basis. The years of credited service as of September 30, 1995 for
the individuals named in the Summary Compensation Table were: John E. Stuart--
9.9 years; Kurt E. Dinkelacker--10.3 years; Hugh G. Moulton--24.9 years; J.
Kenneth Croney--21.3 years; William T. Leith--3.6 years; and James E. Head--
5.0 years. In addition, Mr Leith has earned a past service benefit from his
former company (which was acquired by Alco in 1990) which entitles him to
receive a single life annuity of $1,738 per month beginning at age 65.
Alco also has a Supplemental Executive Retirement Plan ("SERP"). Coverage
under the SERP is limited to participants in the Alco pension plan who are not
commissioned sales employees and whose benefits under the pension plan are
limited because of (a) restrictions imposed by the Code on the amount of
benefits which may be paid from a tax-qualified plan, (b) restrictions imposed
by the Code on the amount of an employee's compensation that may be taken into
account in calculating benefits to be paid from a tax-qualified plan, or (c)
any reductions in the amount of compensation taken into account under the
pension plan because of an employee's participation in certain deferred
compensation plans sponsored by Alco or one of its subsidiaries. The SERP
provides for a supplement to the annual pension paid under the pension plan to
participants who attain early or normal retirement under the pension plan or
who suffer a total and permanent disability while employed by Alco or one of
its subsidiaries and to the pre-retirement death benefits payable under the
pension plan on behalf of such participants who die with a vested interest in
the pension plan. The amount of the supplement will be the difference, if any,
between the pension or pre-retirement death benefit paid under the pension
plan and that which would otherwise have been payable but for the restrictions
imposed by the Code and any reduction in the participant's compensation for
purposes of the pension plan because of his participation in certain deferred
compensation plans of Alco or one of its subsidiaries. The maximum amount of
annual compensation upon which such supplement may be based is $500,000 per
participant.
The following table shows estimated annual retirement benefits that would be
payable to participants under Alco's pension plan and, if applicable, the
SERP, upon normal retirement at age 65 under various assumptions as to final
average annual compensation and years of credited service and on the
assumption that benefits will be paid in the form of a single life annuity.
The benefits are not subject to any deduction for Social Security benefits.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
-----------------------------------------------------------------------------
YEARS OF CREDITED SERVICE
FINAL AVERAGE -------------------------------------------
COMPENSATION 5 10 20 30 35
------------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$200,000......................... $10,000 $ 20,000 $ 40,000 $ 60,000 $ 70,000
250,000......................... 12,500 25,000 50,000 75,000 87,500
300,000......................... 15,000 30,000 60,000 90,000 105,000
400,000......................... 20,000 40,000 80,000 120,000 140,000
500,000 or above................ 25,000 50,000 100,000 150,000 175,000
</TABLE>
Covered compensation under the pension plan and SERP of each of the named
individuals includes salary and bonus as set forth in the Summary Compensation
Table.
DIRECTORS' COMPENSATION
All independent directors are entitled to receive fees of $25,000 per year
for service on the Board of Directors and committees thereof, and attendance
fees of $1,000 for each board and committee meeting attended. Committee
members also receive $3,000 per committee per year and committee chairmen
receive $3,000 per
11
<PAGE>
chairmanship per year. In addition, independent directors who serve as
trustees for Alco's employee benefit plans receive $3,000 per year for
services rendered to the plans, $3,000 per year for trustee chairmanship, and
attendance fees of $1,000 for each trustees' meeting attended. In addition,
Mrs. Hauptfuhrer, who has been a member of the Board since 1988, is entitled
to receive $25,000 per year for her services as Chairman of the Independent
Directors. In this newly created position, Mrs. Hauptfuhrer coordinates an
annual evaluation of the performance of the Chief Executive Officer and holds
periodic meetings of the independent directors.
Certain directors have elected to receive a portion of their directors' fees
(excluding attendance fees) in the form of options to purchase Alco common
stock, pursuant to the terms of Alco's 1989 Directors' Stock Option Plan,
which enables directors of Alco to receive all or a portion of their
directors' fees in the form of options to purchase Alco common stock at
exercise prices equal to 75% of the fair market value on the date such options
are granted. The Directors' Plan provides for an automatic annual grant of
stock options to each director who has filed with Alco an election to receive
such options in lieu of all or a portion of his or her board, committee and
trustee fees. The options are exercisable for twenty years (except in the case
of death), but generally may not be exercised prior to the twelve-month
anniversary of the date of grant.
In addition to the above amounts, each independent director receives an
annual grant of options to purchase 800 shares of Alco common stock pursuant
to the 1993 Stock Option Plan for Non-Employee Directors. Options are granted
at an exercise price equal to the fair market value of Alco common stock on
the date of grant. Options are immediately exercisable and remain exercisable
for a period of ten years from the date of grant.
Independent directors who complete at least five full years of service as a
director and who are not otherwise entitled to receive a pension benefit from
Alco are entitled to receive a monthly retirement benefit after retiring from
Alco's Board of Directors. Payment of such benefit begins upon the later of
the director's 70th birthday or his or her separation from service on the
Board of Directors. The amount of such monthly benefit is equal to one-twelfth
of the annual retainer in effect for such director (excluding committee fees,
chairmanship fees, trustee fees and attendance fees) immediately preceding his
or her separation from service on the Board of Directors. Payment of the
monthly retirement benefit ceases upon the director's death.
CERTAIN TRANSACTIONS
Alco has adopted a loan program which encourages persons designated as
"partners" to purchase and retain Alco stock. It offers to make loans to
partners with the requirement that the loan be secured by the borrower's
pledge of Alco stock having a value at the time of the loan of not less than
twice the amount of the loan. The loans are payable upon demand and bear
interest at an annual rate of 6%. As of November 27, 1995, loans were
outstanding to 37 partners in an aggregate amount of approximately $4.5
million. From October 1, 1994 to November 27, 1995, the indebtedness of the
following individuals and groups under the loan program was as follows:
<TABLE>
<CAPTION>
LARGEST AMOUNT OUTSTANDING AMOUNT OUTSTANDING AT
NAME OR GROUP DURING PERIOD($) NOVEMBER 27, 1995($)
- -------------------------------------------------------------------------------
<S> <C> <C>
John E. Stuart.............. 713,000 713,000
Kurt E. Dinkelacker......... 233,000 233,000
Hugh G. Moulton............. 530,000 300,000
J. Kenneth Croney........... 269,000 229,000
William T. Leith............ 224,000 224,000
James E. Head............... 180,000 0
All current directors and
executive officers
as a group................. 2,649,000 2,199,000
</TABLE>
Mr. Drake, who serves as Vice Chairman and a director of Alco, is a partner
in the Philadelphia law firm of Montgomery, McCracken, Walker & Rhoads, which
rendered legal services to Alco and its subsidiaries during the 1995 fiscal
year, and is expected to continue performing legal services during fiscal
1996.
12
<PAGE>
II. AMENDMENT TO ARTICLES OF INCORPORATION TO INCREASE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK
The Board of Directors recommends that the shareholders approve the proposal
to amend the Amended Articles of Incorporation of Alco to increase the number
of authorized shares of common stock from 150 million to 300 million. At
November 27, 1995, there were outstanding 112,559,912 shares of common stock.
Thus, there were 37,440,088 shares of common stock available for issuance (or
delivery from the treasury of Alco), and if the current proposal is adopted,
this amount will be increased to 187,740,088 shares. If the proposed amendment
is adopted, the first paragraph of Article FOURTH of Alco's Amended Articles
of Incorporation will be amended to read as follows:
FOURTH: The number of shares which the Corporation is authorized to have
outstanding is 302,135,878, consisting of 2,135,878 shares of Serial
Preferred Stock of no par value (hereinafter called "Serial Preferred
Stock"), and 300,000,000 shares of Common Stock of no par value
(hereinafter called "Common Stock").
The shareholders last approved an amendment to increase the authorized
shares in January 1995. Alco's two-for-one stock split, which was effective
November 9, 1995, increased Alco's outstanding shares by approximately 56
million shares. The increase in authorized shares of common stock would permit
Alco to (i) make acquisitions which may involve issuance of a significant
number of shares, (ii) sell shares for cash, (iii) continue the issuance of
shares in connection with Alco's stock purchase and option plans, (iv)
authorize stock dividends and stock splits and (v) use the common stock for
other purposes, without the delay and expense of calling a special meeting of
shareholders for such purpose. Except for the issuance of shares for use in
connection with Alco's stock purchase and option plans, or for use in
acquisitions in the ordinary course of business pursuant to Alco's current
"shelf" registration statement registering 10 million common shares, or upon
the conversion of Alco's outstanding convertible securities, there is no
present intention to issue shares of stock and Alco does not have any
commitments, arrangements, understandings or agreements which would require
the issuance of shares. If the proposed increase in the amount of authorized
shares of common stock is approved, however, the shares could be issued by
action of the board of directors, at any time and for any purpose, without
further approval or action by the shareholders, subject to the provisions of
the Amended Articles of Incorporation and other applicable legal requirements.
The New York Stock Exchange, on which Alco's common stock is listed, currently
specifies shareholder approval as a prerequisite for listing shares in several
instances, including acquisition transactions where the present or potential
issuance of shares could result in an increase in the number of shares
outstanding by 20% or more.
The issuance of additional shares of common stock in certain transactions
and under certain circumstances could have the effect of discouraging or
impeding an unfriendly attempt to acquire control of Alco. Shares could be
issued to persons, firms or entities known to be more favorable to management,
thus creating possible voting impediments and assisting management to retain
their positions. The board of directors is unaware of any pending or proposed
effort to take control of Alco or to change management and there have been no
contacts or negotiations with the board of directors in this connection.
Shareholders have no preemptive rights to purchase any additional shares of
common stock which may be issued. Accordingly, the issuance of additional
shares would likely reduce the percentage interest of current shareholders in
the total outstanding shares. The terms of the additional shares of common
stock will be identical to those of the currently outstanding common stock.
The Board recommends that the shareholders approve this proposed amendment
to the Amended Articles of Incorporation. The favorable vote of a majority of
the votes entitled to be cast at the meeting is required for approval.
13
<PAGE>
III. AMENDMENT TO CODE OF REGULATIONS TO FIX THE MINIMUM AND MAXIMUM NUMBER OF
DIRECTORS AND TO PERMIT DIRECTORS TO CHANGE NUMBER OF DIRECTORS
The Board of Directors recommends that the shareholders approve the proposal
to amend Alco's Code of Regulations (more commonly known as its "By-Laws") to
set the minimum and maximum number of directors and to permit incumbent
directors to change the specific number of directors fixed by the
shareholders. The proposed amendment would allow the Board to fill any
vacancies created by reason of the Board's changing of such number of
directors and thereby would allow the Board to elect additional directors
between meetings of the shareholders (although the maximum number of directors
could not exceed sixteen). If the proposed amendment is adopted, Article III,
Section 1 of Alco's Code of Regulations will be amended to read as follows:
Section 1. Number The number of directors shall be such number as is
fixed by the shareholders, at any annual or special meeting called for the
purpose of electing directors at which a quorum is present, by the
affirmative vote of the holders of a majority of the shares which are
represented at the meeting and entitled to vote, but shall not be less than
seven or more than sixteen. If the shareholders at any meeting for the
election of directors shall fail to fix the number of directors to be
elected, the number elected shall be deemed to be the number of directors
so fixed. Notwithstanding the foregoing, the board of directors may change
the number of directors fixed by the shareholders, from time to time by
resolution adopted by a majority of the board of directors, provided,
however, that in no event shall the number of directors be less than seven
or more than sixteen.
Eleven directors are proposed for election by the shareholders at the 1996
annual meeting, all of whom are current directors of Alco. The directors
proposed for election have diverse backgrounds and extensive experience in
areas which are appropriate to Alco's businesses and needs. The Board believes
that, at present, an eleven-member Board is an appropriate size and that, as
evidenced by the quality of the directors currently serving on the Board, an
eleven-member Board can provide sufficient diversity and expertise to satisfy
Alco's needs. Given Alco's businesses and size, the Board believes that having
more than sixteen directors on the Board would be inappropriate. The Board
also believes that a minimum of seven directors is necessary to meet Alco's
needs.
Alco's Code of Regulations now specifies that a minimum of three directors
shall serve on Alco's Board and provides that the number of directors who
shall serve shall be the number fixed by the shareholders. The proposed
amendment would give the Board the flexibility to consider, within the minimum
and maximum numbers established by the Code of Regulations, what number of
directors is most appropriate from time to time, and to adjust that number to
accommodate resignations and retirements. The amendment would also allow the
Board to elect an additional director or directors to serve during the
transition period preceding any expected resignation or retirement, or at a
time when additional expertise is deemed necessary or appropriate.
The Board has no intention at this time to alter the current size of the
Board. The amendment to the Code of Regulations is not being proposed in
response to any specific resignation, threat of resignation or refusal to
serve by any director nor in response to any specific shareholder action or
proposal.
The Board of Directors recommends that the shareholders approve this
proposed amendment to the Code of Regulations. The favorable vote of the
holders of a majority of the votes entitled to be cast at the meeting is
required for the approval.
IV. GENERAL AND OTHER MATTERS
The Board of Directors knows of no matter, other than as referred to in this
proxy statement, which will be presented at the annual meeting of
shareholders. However, if other matters properly come before the meeting or
14
<PAGE>
any of its adjournments, the person or persons voting the proxies will vote
them in accordance with their judgment in such matters. The Board of Directors
is not aware that any nominee named herein will be unable or unwilling to
accept nomination or election. Should any nominee for the office of director
become unable to accept nomination or election, the persons named in the proxy
will vote for the election of such other person, if any, as the Board of
Directors may recommend.
As the independent auditors for Alco, Ernst & Young LLP audited the
financial statements of Alco for the fiscal year ended September 30, 1995 and
will audit certain of its employee benefit plans as of that date. The Audit
Committee of the Board of Directors has appointed Ernst & Young LLP as the
auditors for Alco for the 1996 fiscal year. Representatives of Ernst & Young
LLP are expected to be present at the meeting, and will have the opportunity
to make a statement if they desire to do so and are expected to be available
to respond to questions.
The cost of soliciting proxies will be borne by Alco. Employees of Alco may
solicit proxies personally or by telephone. In addition to solicitation by
mail and by employees, arrangements have been made with Corporate Investor
Communications, Inc. to solicit proxies, at an expected cost of $7,000 (plus
out-of-pocket expenses).
Votes are tabulated by National City Bank, Alco's transfer agent. Shares
represented by abstentions are counted in determining the number of shares
present at a meeting, but are not counted as a vote in favor of a proposal,
and therefore have the same effect as a vote against a proposal. Broker non-
votes are counted in determining the number of shares present at a meeting for
purposes of the proposal to elect directors, but not for purposes of any other
proposal. Broker non-votes have the effect of a vote against the proposal to
elect directors, a vote against the proposal to amend the Amended Articles of
Incorporation, and a vote against the proposal to amend the Code of
Regulations.
You are urged to sign and return your proxy promptly to make certain your
shares will be voted at the meeting. If you sign return your proxy, but do not
vote on any director nominee or proposal described on the proxy card, your
shares will be voted in accordance with the recommendation of the Board of
Directors. You may revoke the proxy at any time before it is voted by giving
notice to the Secretary of the corporation, and if you attend the meeting, you
may vote your shares in person. For your convenience, a return envelope is
enclosed, requiring no additional postage if mailed in the United States.
1997 ANNUAL MEETING
If a shareholder desires to propose a matter for inclusion in the proxy
material for the annual meeting of shareholders to be held in 1997, or to
recommend nominees for election to Alco's Board of Directors, the Secretary of
Alco must receive any such proposal or recommendation no later than August 2,
1996 at its principal office in Valley Forge, Pennsylvania.
J. Kenneth Croney
Secretary
November 30, 1995
15
<PAGE>
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