<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:
[_] 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 23, 1997
----------------
To the Shareholders of Alco Standard Corporation ("Alco" or the "Company"):
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 Millennium Broadway, 145
West 44th Street, New York, NY 10036 on Thursday, January 23, 1997 at 9:00
a.m. to consider and act upon the following proposals:
1. To elect seven directors to serve during the year and until their
successors are elected;
2. To approve an amendment to the Articles of Incorporation to change the
name of the corporation from Alco Standard Corporation to IKON Office
Solutions, Inc.; and
3. To transact such other business as may properly come before the
meeting.
Shareholders of Alco of record at the close of business on November 25, 1996
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.
LOGO
Chairman and Chief Executive Officer
Valley Forge, Pennsylvania
November 30, 1996
<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 23, 1997 and all
adjournments thereof. The proxy statement and proxy card will be first mailed
to shareholders on or about December 13, 1996.
Only holders of record of common stock and serial preferred stock at the
close of business on November 25, 1996 will be entitled to vote. On that date,
there were 133,216,564 shares of common stock and 38,772 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 seven 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 seven
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, Paul C. O'Neill, who is now a director, is not standing for
reelection. In addition, Messrs. Darling, Forese, Mead, Mundt, Sada and
Stratton, who are currently serving as directors, will not stand for
reelection because they have agreed to serve as directors of Unisource
Worldwide, Inc. ("Unisource"), Alco's wholly-owned subsidiary. On December 31,
1996, Alco will distribute 100% of the common stock of Unisource to Alco's
shareholders, thereby making Unisource an independent public company.
<TABLE>
<CAPTION>
YEAR
BECAME
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT FOR PAST FIVE YEARS DIRECTOR AGE
---- ------------------------------------------------------ -------- ---
<S> <C> <C> <C>
James R. Birle.......... Chairman, Resolute Partners, Inc. (a private merchant 1996 60
bank) (1994-Present); General Partner, The Blackstone
Group (1988-1994) (also a director of Massachusetts Mu-
tual Life Insurance Company, Drexel Industries, Inc.,
The Connecticut Health and Education Facilities Author-
ity and Transparency International, and a trustee of
Villanova University and The Sea Research Foundation)
Kurt E. Dinkelacker..... President (1995-Present) and Chief Operating Officer 1996 43
(1996-Present) IKON Office Solutions, Inc. (a subsidiary
of Alco Standard Corporation); Executive Vice President
(1993-Present), Chief Financial Officer (1993-1995),
Alco Standard Corporation; Executive Vice President Fi-
nance, Alco Office Products (1989-1991) (also a member
of the Finance Committee of Crozer-Keystone Health Sys-
tem)
William F. Drake, Jr. .. Vice Chairman (1984-Present) and General Counsel (1996- 1969 64
Present), Alco Standard Corporation; Of Counsel (1996-
Present), Partner (1984-1996), Montgomery, McCracken,
Walker & Rhoads (also a director of Nocopi Technologies,
Inc.)
Frederick S. Hammer..... Partner, Inter-Atlantic Capital Partners, Inc. (1994- 1986 60
Present); Chairman, Chief Executive Officer and a direc-
tor, Mutual of America Capital Management Corporation
(1993-1994); President, SEI Asset Management Services
Group (1989-1993) (also a director of United Student Aid
Group, Inc., Tri-Arc Financial Services and National Me-
dia Corporation)
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
YEAR
BECAME
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT FOR PAST FIVE YEARS DIRECTOR AGE
---- ------------------------------------------------------ -------- ---
<S> <C> <C> <C>
Barbara Barnes
Hauptfuhrer............ Chairman of Independent Directors, Alco Standard Corpora- 1988 68
tion (also a director of The Vanguard Group of Invest-
ment Companies and of each of the mutual funds in the
Group (1972-Present), The Great Atlantic and Pacific Tea
Co., Inc. (1975-Present), Knight-Ridder Inc. (1979-Pres-
ent), Massachusetts Mutual Life Insurance Co. (1979-
Present) and Raytheon Company (1987-Present))
Richard A. Jalkut....... President and Group Executive (1992-Present), Nynex Tele- 1996 51
communications Group; President and Chief Executive Of-
ficer, New York Telephone (predecessor to Nynex Telecom-
munications) (1991-1992) (also Chairman of the Board of
New York City Partnership, a trustee of Boston College,
and a director of Marine Midland Bank, Business Council
of New York State, American Women's Economic Development
Corporation and American Museum of Natural History)
John E. Stuart.......... Chairman (1995-Present) and Chief Executive Officer 1993 52
(1993-Present), President (1993-1996), Vice President
(1989-1993), Alco Standard Corporation; Group President,
Alco Office Products (1985-1993)
</TABLE>
SECURITY OWNERSHIP
As of November 25, 1996, 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>
James R. Birle.......... 2,000 0 0
J. Kenneth Croney....... 43,306 5,093 27,284
Paul J. Darling, II..... 470 0 11,147
Kurt E. Dinkelacker..... 30,161 5,871 78,656
William F. Drake, Jr.... 145,561 0 1,055
James J. Forese......... 75,448 57 60,056
Frederick S. Hammer..... 13,119 0 27,020
Barbara Barnes
Hauptfuhrer............ 3,930 0 35,298
Richard A. Jalkut....... 0 0 0
William T. Leith........ 26,732 3,548 55,521
Dana G. Mead............ 420 0 10,880
Hugh G. Moulton......... 71,476 39,663 55,175
Ray B. Mundt............ 214,345 53,608 2,749
Paul C. O'Neill......... 77,947 24,000 3,435
Rogelio G. Sada......... 13,232 0 37,622
James W. Stratton....... 4,454 0 11,746
John E. Stuart.......... 122,304 39,049 434,366
All directors and
executive officers as a
group.................. 993,326 239,388 906,817
</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 25,
1996 through the exercise of stock options or vesting under Alco's
Partners' Stock Purchase Plan.
2
<PAGE>
As of November 25, 1996, for each of the individuals named on the previous
page, 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 .9%. As of November 25, 1996,
no person beneficially owned more than 5% of the outstanding shares of common
or preferred stock of Alco, except American Express Financial Corporation,
which owned 6.98% of Alco's common stock, and Janis Capital Corporation, which
owned 7.57% of Alco's common stock. As of November 25, 1996, Alco employees,
through direct ownership or employee benefit plans, owned approximately 11.6%
of the outstanding shares of common stock of Alco.
For the fiscal year ended September 30, 1996, 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
During fiscal 1996, there were 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. Darling, Sada, and Stratton) met four times
during the fiscal year ended September 30, 1996. 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. Darling, Hammer,
Mead and Sada) met four 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 nine 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 50% of such meetings.
3
<PAGE>
PERFORMANCE OF ALCO COMMON STOCK
The following graph compares the cumulative total shareholder return of
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, 1991 (with dividends reinvested).
Alco vs. S&P 500 vs. Composite
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
Date Alco Standard S&P 500 Composite
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
9/30/91 $100.00 $100.00 $100.00
9/91 - 9/92 $108.56 $111.04 $113.86
9/91 - 9/93 $136.22 $125.42 $119.73
9/91 - 9/94 $195.85 $130.04 $151.23
9/91 - 9/95 $271.34 $167.67 $183.88
9/91 - 9/96 $322.96 $202.94 $212.39
- - --------------------------------------------------------------------------------
</TABLE>
The components of the Composite Index have been weighted on the basis of the
respective historical operating income contribution from IKON Office Solutions
and Unisource as follows:
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Office Equipment/Supplies................. 62.70% 52.79% 55.13% 50.33% 46.61%
Paper/Forest Products..................... 37.30% 47.21% 44.87% 49.67% 53.39%
</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 five 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 $900,000 base salary of Mr. Stuart for fiscal 1996, 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 Chairman, President and Chief Executive Officer of Alco during
fiscal 1995, including growth in Alco's revenues of 24% and growth in Alco's
operating income of 31% in fiscal 1995 compared with fiscal 1994.
5
<PAGE>
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 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 1996 were
based upon growth in "economic value per share," a concept which measures
growth in economic value under a variation of the Holt financial model. 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 1996, the annual bonus
plan for corporate officers was based on increases in economic value per share
over this value at the end of fiscal 1995. The threshold, target and maximum
increases were fixed at 15%, 17.5% and 20%, respectively. For fiscal 1996,
Alco achieved growth in economic value per share of 28.7% over this value at
the end of fiscal 1995. Because of this performance, Messrs. Stuart, Forese,
Moulton and Croney received bonuses at the maximum level.
For officers of IKON and Unisource, annual bonus targets for fiscal 1996
were based one-quarter on the same targets as those set for corporate
officers, and three-quarters on increases in operating income and economic
value compared to the targets established for the year (determined by applying
the same financial model Alco uses to determine "economic value per share").
For fiscal 1996, IKON achieved operating income of $359 million compared to a
$345 million target, and economic value of $4.4 billion compared to a $4.0
billion target. Because of this performance, Mr. Dinkelacker received a bonus
at the maximum level. For fiscal 1996, Unisource achieved operating income of
$206 million compared to a $303 million target, and achieved economic value of
$2.3 billion compared to a $2.5 billion target. Because the Unisource targets
were not met, Mr. Leith received a bonus of 25% of maximum (the portion of his
bonus attributable to corporate performance).
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, 1996, 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, 1993.
6
<PAGE>
In November 1996, the Committee evaluated whether the corporation and
respective business groups had met the criteria for payment of LTIP awards for
the 1994-1996 plan period. For corporate officers, the September 30, 1996
value of a $100 investment made on September 30, 1993 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 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 10%. In fact, the Alco common
stock investment exceeded the S&P 500 investment by 35.9%. For officers of
IKON and Unisource, performance targets were based one-half on the same
targets as those set for corporate officers and one-half on compound growth in
the economic value and cash flow of the relevant business unit as determined
under Alco's shareholder value model ("TSR"). The TSR targets for the 1994-
1996 plan period were 15.15% for threshold performance, 16.49% for target
performance and 17.80% for maximum performance. IKON achieved a three-year TSR
of 29.65% and Unisource achieved a three-year TSR of 10.70%. Because of the
corporate and IKON performance during the 1994-1996 plan period, Messrs.
Stuart, Dinkelacker, Moulton and Croney received LTIP payouts at the maximum
levels. Because the Unisource LTIP targets were not met, Mr. Leith received an
LTIP payment of one-half of maximum (the portion of his LTIP attributable to
corporate performance).
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 employment periods ranging from three to five years. The
exercise price of these stock options is the fair market value of Alco stock
on the date of grant.
In fiscal 1996, Mr. Stuart's receipt of an option to purchase 20,000 shares
reflected his outstanding performance as Chairman, President and Chief
Executive Officer of Alco during fiscal 1995, Mr. Forese's receipt of an
option to purchase 300,000 shares reflected his acceptance of his position as
Alco's Executive Vice President and Chief Operating Officer, and Mr.
Dinkelacker's receipt of an option to purchase 9,000 shares reflected his
promotion to the position of President of IKON. Each of Mr. Moulton's and Mr.
Croney's receipt of an option to purchase 2,000 shares reflected his
performance as a corporate officer during fiscal 1995.
THE HUMAN RESOURCES COMMITTEE OF THE BOARD OF DIRECTORS
Barbara Barnes Hauptfuhrer (Chairman)
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, 1996, 1995 and 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
- - --------------------------------------------------------------------------------
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------------------------------
AWARDS
NAME ---------- ALL OTHER
AND SECURITIES COMPEN-
PRINCIPAL FISCAL UNDERLYING SATION LTIP
POSITION(1) YEAR SALARY($) BONUS($) OPTIONS ($)(2) PAYOUTS($)(3)
----------- ------ ---------- --------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
John E. Stu- 1996 900,000 900,000 20,000 249,092 1,586,923
art 1995 850,000 850,000 0 201,516 826,821
Chairman and 1994 700,000 700,000 500,000 127,889 0
Chief Execu-
tive Officer
Kurt E. 1996 350,000 350,000 9,000 100,403 680,096
Dinkelacker 1995 350,000 350,000 0 84,146 354,340
President 1994 300,000 300,000 100,000 53,960 0
and Chief
Operating
Officer,
IKON Office
Solutions
James J. 1996 487,500 487,500 300,000 46,411 0
Forese 1995 0 0 3,706 18,200 0
Executive 1994 0 0 3,816 8,750 0
Vice Presi-
dent and
President of
International
Operations
Hugh G. 1996 250,000 250,000 2,000 98,211 453,414
Moulton 1995 312,000 312,000 0 78,631 708,680
Executive 1994 300,000 300,000 0 37,006 0
Vice Presi-
dent
J. Kenneth 1996 252,000 252,000 2,000 63,249 498,750
Croney 1995 245,000 220,500 10,000 37,624 347,306
Former Vice 1994 222,000 176,000 0 13,016 0
President,
General
Counsel and
Secretary
William T. 1996 400,000 100,000 0 113,815 319,699
Leith 1995 383,333 479,167 50,000 76,758 448,412
Former 1994 288,003 266,656 50,000 30,413 0
President,
Unisource
Worldwide
</TABLE>
- - --------
(1) In January 1996, Mr. Forese who had been serving as an independent
director of Alco, was named Executive Vice President and Chief Operating
Officer of Alco, and in November 1996, he assumed the position described
above. On October 1, 1996, Mr. Croney resigned his position as Alco's Vice
President, General Counsel and Secretary. For fiscal 1996, Mr. Croney was
paid the amounts set forth above. In consideration of his consulting
services and covenant not to compete, Mr. Croney will receive payments
through 1999 totalling $1,330,000, subject to reduction if Mr. Croney
accepts new employment. In addition, Mr. Croney will receive full vesting
of stock options no later than December 1999. On July 31, 1996, Mr. Leith,
who had been serving as Group President of Unisource, resigned all
positions with Alco. For fiscal 1996, Mr. Leith was paid the amounts set
forth above. In consideration of his consulting services and his covenant
not to compete, Mr. Leith will receive payments through 1999 totalling
$1,660,000, subject to reduction if Mr. Leith accepts new employment. In
addition, Mr. Leith will receive full vesting of stock options no later
than August 1999. Fifty percent of Mr. Leith's stock options will be
converted into Unisource stock options after the Unisource spin-off.
(2) 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--$247,073 (1996),
$200,356 (1995), and $126,603 (1994); Kurt E. Dinkelacker--$99,907 (1996),
$83,878 (1995), and $53,682 (1994); James J. Forese--$46,411 (1996),
$4,924 (1995), and $1,752 (1994); Hugh G. Moulton--$86,600 (1996); $73,227
(1995), and $28,244 (1994); J. Kenneth Croney--$61,568 (1996), $36,724
(1995), and $11,990 (1994); William T. Leith--$112,851 (1996); $76,225
(1995), and $29,831 (1994). For Messrs, Stuart, Dinkelacker, Moulton,
Croney and Leith, the remaining amounts represent above-market interest
earned on deferred compensation. For Mr. Forese, the remaining amounts
represent independent director's fees earned in fiscal 1995 and 1994.
(3) The LTIP payouts in 1995 and 1996 were distributed in the form of shares
of Alco common stock. The values above are based on the fair market value
of Alco common stock on September 30, 1996 and September 30, 1995, the
last day of the respective plan periods.
8
<PAGE>
OPTION GRANTS
The following table shows option grants to the six individuals named in the
Summary Compensation Table during the fiscal year ended September 30, 1996:
OPTION GRANTS IN LAST FISCAL YEAR(1)
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OPTIONS
OF SECURITIES GRANTED TO EXERCISE GRANT
UNDERLYING EMPLOYEES OR BASE DATE
OPTIONS IN FISCAL PRICE EXPIRATION PRESENT
NAME GRANTED (#) YEAR (%) ($/SH) DATE VALUE ($)(2)
---- ------------- ---------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
John E. Stuart..... 20,000 1.3 $38.875 1/25/06 $ 202,400
Kurt E.
Dinkelacker....... 9,000 0.6 38.875 1/25/06 91,080
James J. Forese.... 300,000 17.4 46.250 1/02/06 3,336,000
15,000 1.0 38.875 1/25/06 151,800
Hugh G. Moulton.... 2,000 0.1 38.875 1/25/06 20,240
J. Kenneth Croney.. 2,000 0.1 38.875 1/25/06 20,240
William T. Leith... -- -- -- -- --
</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 33
1/3% per year from the date of grant, except that the grant of 300,000
stock options to Mr. Forese becomes exercisable 20% per year from the date
of grant.
(2) The present value of all option grants, except the grant of 300,000 stock
options to Mr. Forese was calculated using the Black-Scholes option
valuation methodology, based on the following assumptions: (a) ten-year
option term; (b) becomes exercisable 33 1/3% per year from date of grant;
(c) 5.65% expected risk-free rate of return; (d) 23.194% expected
volatility; and (e) 1.44% expected dividend yield. The present value of
the grant of 300,000 stock options to Mr. Forese 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) 5.65% expected risk-free rate of return; (d)
19.763% expected volatility; and (e) 1.21% expected dividend yield.
9
<PAGE>
OPTION EXERCISES
The following table shows option exercises for each of the individuals named
in the Summary Compensation Table for the fiscal year ended September 30,
1996:
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.......... 22,000 $732,875 322,920 326,600 $9,400,538 $8,055,300
Kurt E. Dinkelacker..... 5,000 154,375 54,800 71,000 1,520,675 1,689,750
James J. Forese......... 7,522 165,804 0 315,000 0 1,252,500
Hugh G. Moulton......... 15,400 512,938 67,400 22,000 2,259,500 674,500
J. Kenneth Croney....... 8,000 271,000 34,120 12,400 1,195,560 272,400
William T. Leith........ -- -- 49,900 71,200 984,188 1,292,200
</TABLE>
(1) Value of unexercised options equals fair market value of Alco common stock
as of September 30, 1996, less exercise price, multiplied by the number of
shares underlying the stock options.
LONG TERM INCENTIVE COMPENSATION PLAN
No LTIP awards were granted to any of the individuals named in the Summary
Compensation Table for the three-year plan period from October 1, 1996 through
September 30, 1999. LTIP awards are expected to be granted in January 1997
(after the Unisource spin-off) for this plan period.
10
<PAGE>
PENSION PLAN AND SUPPLEMENTAL RETIREMENT PLANS
Certain executive officers of Alco (including the individuals named in the
Summary Compensation Table on page 8) 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, 1996 for
the individuals named in the Summary Compensation Table were: John E. Stuart--
10.9 years; Kurt E. Dinkelacker--11.3 years; James J. Forese--.75 years; Hugh
G. Moulton--25.9 years; J. Kenneth Croney--22.3 years; William T. Leith--3.6
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 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 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 25, 1996, loans were
outstanding to 47 partners in an aggregate amount of approximately $5.2
million. From October 1, 1995 to November 25, 1996, the indebtedness of the
following individuals and groups under the loan program was as follows:
<TABLE>
<CAPTION>
LARGEST AMOUNT OUTSTANDING AMOUNT OUTSTANDING AT
NAME OR GROUP DURING PERIOD($) NOVEMBER 25, 1996($)
- - -------------------------------------------------------------------------------
<S> <C> <C>
John E. Stuart.............. 713,000 713,000
Kurt E. Dinkelacker......... 393,000 393,000
James J. Forese............. 0 0
Hugh G. Moulton............. 530,000 300,000
J. Kenneth Croney........... 269,000 239,000
William T. Leith............ 224,000 224,000
All current executive
officers
as a group................. 2,621,000 2,351,000
</TABLE>
Mr. Drake, who has served as Vice Chairman and a director of the Company,
was also elected its General Counsel effective October 1, 1996. He became Of
Counsel to Montgomery, McCracken Walker & Rhoads following his resignation as
a Partner of that firm on September 30, 1996. Montgomery, McCracken, Walker &
Rhoads rendered legal services to Alco and its subsidiaries during the 1996
fiscal year, and is expected to continue performing legal services during
fiscal 1997.
12
<PAGE>
II. PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO CHANGE NAME OF
CORPORATION FROM ALCO STANDARD CORPORATION TO IKON OFFICE SOLUTIONS, INC.
Alco's shareholders are being asked to approve the name change of the
Company to IKON Office Solutions, Inc., which is currently the name of Alco's
analog copier, networking and outsourcing business. On December 31, 1996, Alco
is expected to complete a tax-free spin-off of its paper distribution
business, Unisource Worldwide, Inc. ("Unisource") through a distribution of
100% of Unisource's common stock to Alco's common shareholders. The completion
of the spin-off will allow the Company to align its corporate name with the
name of the sole business in which it will now operate.
The Board of Directors believes that the name change will be beneficial to
the Company and its shareholders. The Company has consulted with independent
marketing consultants, who have agreed that the new name provides an
attractive marketing advantage to the Company because customers will now be
able to identify the IKON Office Solutions name with the Company's products
and services. In addition, adoption of the IKON name is an important step in
the Company's strategy to build and expand its office technology business. The
IKON name embraces both the Company's traditional analog copier business and
its growing presence in digital networking and outsourced document services.
The name IKON Office Solutions, Inc. is currently being used by the Alco
subsidiary which, until the spin-off, will operate Alco's copier, networking
and outsourcing business. The IKON name has been well-received by the
Company's existing customer base and the Company believes that advertisements
using the IKON name have successfully appealed to new customers. After
shareholder approval of the Company's name change, the subsidiary will cease
using the name and will be merged into the Company. Nikon Camera has sued the
Alco subsidiary currently using the IKON Office Solutions, Inc. name, claiming
that the subsidiary's use of the name infringes on Nikon's proprietary rights.
The Company believes that the lawsuit is without merit and is vigorously
defending.
The Board of Directors recommends that the shareholders approve the proposed
amendment to the Articles of Incorporation to change the name of the
corporation to IKON Office Solutions, Inc. The affirmative vote of the holders
of a majority of the votes entitled to be cast at the meeting is required for
the approval.
13
<PAGE>
III. 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
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, 1996 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 1997 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 or, in the
case of a proposal to elect directors, a vote withheld. Broker non-votes are
counted in determining the number of shares present at a meeting, and have the
effect of a vote against the proposal to amend the Articles of Incorporation.
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.
1998 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 1998, 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 15,
1997 at its principal office in Valley Forge, Pennsylvania.
Karin M. Kinney
Secretary
November 30, 1996
14
<PAGE>
PROMPTLY COMPLETE AND RETURN THE
PROXY/VOTING INSTRUCTION FORM BELOW
IN THE ENVELOPE PROVIDED
Carefully fold & detach along perforation
- - --------------------------------------------------------------------------------
PROXY/VOTING INSTRUCTION CARD
ALCO STANDARD CORPORATION
The undersigned hereby appoints O. Gordon Brewer,
Jr., William F. Drake, Jr. and Karin M. Kinney, or
any of them, each with power of substitution, as
proxies for the undersigned to vote all shares of
Common Stock or Preferred Stock of Alco Standard
Corporation which the undersigned is entitled to
vote at the Annual Meeting of Shareholders to be
held on January 23, 1997, and any adjournments
thereof, as hereinafter specified and, in their
discretion, upon such other matters as may
properly come before the meeting. The undersigned
hereby revokes all proxies heretofore given.
For employers of Alco Standard Corporation, this
proxy also provides voting instructions for shares
held for the account of the undersigned in the
Alco Standard Corporation Retirement Savings Plan.
The trustees for the Plan will vote these shares
as directed provided you sign and return a proxy
containing your voting instructions by January 21,
1997. IF NO VOTING INSTRUCTIONS ARE RECEIVED, THE
TRUSTEES OF THE PLAN MAY VOTE YOUR SHARES IN THEIR
DISCRETION (IN THE ABSENCE OF VOTING INSTRUCTIONS,
THE TRUSTEES WILL GENERALLY VOTE YOUR SHARES IN
ACCORDANCE WITH THE RECOMMENDATION OF THE BOARD OF
DIRECTORS). SHARES OWNED BY YOU OTHER THAN THOSE
HELD IN THE PLAN WILL BE VOTED ONLY IF YOU SIGN
AND RETURN A PROXY, OR ATTEND THE MEETING AND VOTE
BY BALLOT. IF YOU RETURN A PROXY AND FAIL TO
SPECIFY A CHOICE ON ANY MATTER, YOUR SHARES WILL
BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF
THE BOARD OF DIRECTORS.
1. Election of Directors (Mark only one)
[_] Vote FOR all nominees listed below and
recommended by the Board of Directors
[_] Vote WITHHELD from all nominees
(except as directed to the contrary below)
James R. Birle, Kurt E. Dinkelacker, William F.
Drake, Jr., Frederick S. Hammer, Barbara Barnes
Hauptfuhrer, Richard A. Jalkut, John E. Stuart
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME IN
THE SPACE PROVIDED BELOW.
---------------------------------------------------
(continued, and to be signed, on other side)
<PAGE>
PROMPTLY COMPLETE AND RETURN THE
PROXY/VOTING INSTRUCTION FORM BELOW
IN THE ENVELOPE PROVIDED
Carefully fold & detach along perforation
- - --------------------------------------------------------------------------------
(continued from other side)
2. The Board of Directors recommends a vote "FOR" the proposal to
amend Alco's Articles of Incorporation to change the name of NO.
the corporation from Alco Standard Corporation to IKON Office
Solutions, Inc.:
FOR AGAINST ABSTAIN
[_] [_] [_]
PLEASE SIGN, DATE, DETACH AND RETURN THIS PROXY,
USING THE ENCLOSED POSTAGE PREPAID REPLY ENVELOPE.
Dated ______ SIGN HERE _________________________________
When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If the signer is a
corporation, sign the full corporate name by duly authorized
officer.
