<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
[AMENDMENT NO. ___]
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
PH Group Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and O-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 O-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------
3) Filing Party:
-----------------------------------------------------------
4) Date Filed:
-------------------------------------------------------------
<PAGE> 2
PH GROUP INC.
2365 SCIOTO HARPER DRIVE
COLUMBUS, OHIO 43204
(614) 279-8877
1999 ANNUAL MEETING OF SHAREHOLDERS
April 13, 1999
Dear Shareholder:
You are invited to attend the 1999 Annual Meeting of Shareholders of PH
Group Inc. which will be held at 5:30 p.m., Eastern Time, on May 4, 1999, at our
corporate offices, 2365 Scioto Harper Drive, Columbus, Ohio. The matters on the
meeting agenda are described in the Notice of 1999 Annual Meeting of
Shareholders and Proxy Statement which accompany this letter.
We hope you will be able to attend the Annual Meeting, but whatever your
plans, we ask that you please complete, execute and date the enclosed proxy card
and return it in the envelope provided so that your common shares will be
represented at the Annual Meeting.
Very truly yours,
/s/Charles T. Sherman
Charles T. Sherman, President
<PAGE> 3
PH GROUP INC.
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 4, 1999
TO THE SHAREHOLDERS OF
PH GROUP INC.:
The Annual Meeting of Shareholders of PH Group Inc. (the "Company"),
will be held at 2365 Scioto Harper Drive, Columbus, Ohio, on Tuesday, May 4,
1999, at 5:30 p.m., Eastern Time, for the following purposes:
1. To elect three directors to serve for terms of two years.
2. To transact such other business as may properly come before the
Annual Meeting or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on March 5, 1999,
as the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting and any adjournment(s) thereof. A list of
shareholders will be available for examination by any shareholder at the Annual
Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN, DATE
AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED.
By Order of the Board of Directors,
/s/Charles T. Sherman
Charles T. Sherman
President and Chief Executive Officer
Columbus, Ohio
April 13, 1999
<PAGE> 4
PH GROUP INC.
----------------------------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 4, 1999
----------------------------------
PROXY STATEMENT
DATED APRIL 13, 1999
----------------------------------
GENERAL INFORMATION
Solicitation. This Proxy Statement is furnished to the shareholders of
PH Group Inc., an Ohio corporation (the "Company"), in connection with the
solicitation by the Board of Directors of the Company of proxies to be voted at
the Annual Meeting of Shareholders of the Company (the "Annual Meeting") to be
held on May 4, 1999 and any adjournment(s) thereof. This Proxy Statement and
the accompanying proxy card are first being mailed to shareholders on or about
April 13, 1999. The Annual Report to Shareholders of the Company for fiscal year
ended December 31, 1998 (the "1998 fiscal year") is enclosed herewith.
Voting Rights. Shareholders of record at the close of business on March
5, 1999 are entitled to notice of and to vote at the Annual Meeting. As of that
date, there were 1,620,386 common shares of the Company issued and outstanding.
Each shareholder of record on March 5, 1999 is entitled to one vote for each
common share with respect to all matters which may be brought before the Annual
Meeting. There is no cumulative voting in the election of directors.
Authorization. All common shares represented by properly executed
proxies received by the Company pursuant to this solicitation will be voted in
accordance with the shareholder's directions specified on the proxy card. If no
directions have been specified by marking the appropriate boxes on the
accompanying proxy card, the common shares represented by the proxy will be
voted in accordance with the recommendation of the Board of Directors, which is
FOR the election of Bob Binsky, Michael W. Gardner and Terry L. Sanborn as
directors of the Company. The proxy will also be voted at the discretion of the
person acting under the proxy to transact such other business as may properly
come before the Annual Meeting and any adjournment(s) thereof.
Revocation. Any shareholder returning the accompanying proxy has the
power to revoke it at any time before its exercise by giving written notice of
revocation to the Company (addressed to the attention of the Secretary), by
giving oral notice of revocation to the Company at the Annual Meeting, by duly
executing and delivering to the Company a proxy card bearing a later date, or by
voting in person at the Annual Meeting.
Tabulation. Under Section 1701.51 of the Ohio Revised Code and the
Company's Regulations, a quorum must be present at the Annual Meeting in order
for any valid action, other
<PAGE> 5
than adjournment, to be taken thereat. The Regulations provide that a quorum
consists of the holders of a majority of the common shares present in person or
by proxy. Common shares represented by signed proxies that are returned to the
Company will be counted toward the quorum in all matters even though they are
marked as "Withhold Authority" regarding the election of directors or they are
not marked at all. Broker/dealers, who hold their customers' common shares in
street name, may, under the applicable rules of the self-regulatory
organizations of which the broker/dealers are members, sign and submit proxies
for such common shares and may vote the common shares on routine matters, which,
under such rules, typically include the election of directors, but
broker/dealers may not vote the common shares on other matters, which typically
include amendments to the articles of incorporation or regulations of the
Company and the approval of stock compensation plans, without specific
instructions from the customer who owns the common shares. Proxies signed and
submitted by broker/dealers which have not been voted on certain matters as
described in the previous sentence are referred to as "broker non-votes". Broker
non-votes will be counted for quorum purposes but will not be counted toward the
election of directors or toward the election of the individual nominees
specified on the proxy.
Under Section 1701.55 of the Ohio Revised Code and the Regulations,
directors are elected by a plurality of the votes for the respective nominees.
Therefore, proxies that are marked "Withhold Authority" will not affect the
election of directors.
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
Three members of the Board of Directors of the Company will be elected
at the Annual Meeting. Directors elected at the Annual Meeting will hold office
for terms of two years or until their successors are duly elected and qualified.
The nominees of the Board of Directors for such positions are identified below.
The Company has no reason to believe that any of the nominees named below will
not stand for election or serve as a director if elected. In the event any
person nominated fails to stand for election, the proxies will be voted for the
election of such other person as is designated by the directors.
BUSINESS EXPERIENCE
Nominees of the Board of Directors for Election at the 1999 Annual
Meeting
BOB BINSKY, age 59, has served as a director of the Company since 1993.
Since 1985, Mr. Binsky has been President of TR Sport, Inc., a distributor of
maternity garments to the retail trade. Mr. Binsky has served as Chairman of the
Board of Cable Link, Inc., a cable television refurbisher, since July 31, 1995
and has served as a director of Cable Link, Inc. since 1992. Mr. Binsky first
joined Cable Link, Inc. as a consultant and Executive Vice President on October
1, 1992. On October 18, 1994, Mr. Binsky assumed the duties of Chief Executive
Officer of Cable Link, Inc. Mr. Binsky also serves on the Board of Directors of
Kahiki Foods, Inc., a restaurant and food products retailer, and on the advisory
board of Regional Reps of Cleveland.
2
<PAGE> 6
MICHAEL W. GARDNER, age 48, has served as a director of the Company
since 1996. Since July 1998, Mr. Gardner has served as Vice President Special
Press Group of the Company. From October 1996 until July 1998, Mr. Gardner
served as Vice President of Manufacturing of the Company. From 1987 until
October 1996, Mr. Gardner served as Vice President of Manufacturing of PH
Hydraulics and Automation, Inc. ("PH Hydraulics"), the wholly-owned subsidiary
of the Company that was merged into the Company in October 1996.
TERRY L. SANBORN, age 56, has served as a director of the Company since
1991. From 1993 to 1997, Mr. Sanborn served as Chief Operating Officer of Medex,
Inc., a medical device manufacturing company. Since his retirement from Medex,
Inc. in 1997, Mr. Sanborn has been a business consultant and advisor.
Directors Whose Terms Continue until the 2000 Annual Meeting
ALIDA L. BREEN, age 51, has served as a director of the Company since
1996. Since 1979, she has been the Vice President-Finance of Ohio Transmission &
Pump Co., a distributor of industrial products.
CHARLES T. SHERMAN, age 53, has served as a director of the Company
since 1987. Mr. Sherman was elected President of the Company in May 1996. From
1987 until 1996, Mr. Sherman served as Vice President of Operations of the
Company and as President of PH Hydraulics.
M. RICHARD SULSER, age 50, was appointed as a director of the Company on
January 26, 1999 to fill the vacancy created by the resignation of David H.
Montgomery, for the remainder of the unexpired term. Since 1978, Mr. Sulser has
been President of Sulser and Associates, Inc., a company which represents
various manufacturers.
EXECUTIVE OFFICERS OF THE COMPANY
All of the executive officers of the Company are named above, except
Kenneth P. Furlong, Treasurer of the Company.
KENNETH P. FURLONG, age 45, has been Treasurer of the Company since
November 1997. From 1977 to 1997, Mr. Furlong was employed as Supervisor, Cost
Accounting by The Marion Power Shovel Company, a manufacturer of surface mining
equipment.
MEETINGS OF BOARD OF DIRECTORS
The Board of Directors held seven meetings during the 1998 fiscal year,
and each of the directors attended at least 75 percent of the aggregate of the
total number of meetings held by the Board of Directors and the total number of
meetings held by all committees (if any) on which he or she served, in each case
during the period he or she served.
3
<PAGE> 7
COMMITTEES
The Company has a standing Audit Committee, Compensation Committee and
Nominating Committee.
The Audit Committee recommends the firm to be employed by the Company as
its independent auditors; consults with the firm so chosen to be the independent
auditors with regard to the plan of audit; reviews, in consultation with the
independent auditors, their report of audit, or proposed report of audit, and
the accompanying management letter, if any; and consults with the independent
auditors with regard to the adequacy of the internal accounting controls. The
Audit Committee held two meetings during the 1998 fiscal year. The Audit
Committee currently consists of Alida L. Breen (Chairman), Terry L. Sanborn and
Bob Binsky.
The Nominating Committee recommends candidates to fill vacancies on the
Board of Directors. The current purpose of the Nominating Committee is not to
consider nominees recommended by shareholders. Instead, the Nominating Committee
simply nominates directors to fill vacancies created from time to time on the
Board of Directors. The Nominating Committee did not hold any meetings during
the 1998 fiscal year. The Nominating Committee currently consists of the entire
Board of Directors, with Charles T. Sherman serving as Chairman.
The Compensation Committee establishes the compensation of all employees
and consultants of the Company, administers and interprets the Company's 1997
Stock Incentive Plan and takes any action that is permitted to be taken by a
committee of the Board of Directors under the terms of such plan, including the
granting of options. The Compensation Committee held one meeting during the 1998
fiscal year. The Compensation Committee currently consists of Terry L. Sanborn
(Chairman), Alida L. Breen and M. Richard Sulser.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS,
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth, as of March 5, 1999, certain information
with respect to the beneficial ownership of common shares by (i) each person,
including any group of persons, known to the Company to be the beneficial owner
of more than five percent of the outstanding common shares, (ii) each director
or nominee for election as a director of the Company, (iii) the executive
officers identified in the Summary Compensation Table, and (iv) the Company's
directors and executive officers as a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNER (1) PERCENT OF CLASS
---------------- -------------------- ----------------
<S> <C> <C>
Phoenix Management, Ltd. (2) 382,500 (2)(3) 23.6%
Charles T. Sherman, Director 231,097 (3)(4) 13.9%
and Chief Executive Officer (4)
Bob Binsky, Director (5) 164,792 (3)(5)(6) 10.0%
Theodore P. Schwartz (7) 116,435 (3)(7) 7.2%
</TABLE>
4
<PAGE> 8
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNER (1) PERCENT OF CLASS
---------------- -------------------- ----------------
<S> <C> <C>
Michael W. Gardner, Director 28,750 (3)(8) 1.7%
and Vice President Special Press
Group (8)
Kenneth J. Warren (9) 13,500 (3)(9) (10)
Alida L. Breen, Director (11) 14,500 (6)(11) (10)
Terry L. Sanborn, Director (12) 28,250 (6)(12) 1.7%
M. Richard Sulser, Director (13) 4,000 (6)(13) (10)
All directors and executive 471,739 (5) 27.2%
officers as a group (seven persons)
Phoenix and its Members 737,074 (14) 42.6%
</TABLE>
- -------------------
(1) Unless otherwise indicated, the beneficial owner has sole voting and
investment power over these common shares subject to the spousal rights, if any,
of the spouses of those beneficial owners who have spouses. Under the rules of
the Securities and Exchange Commission (the "SEC"), options which become
exercisable within 60 days of March 5, 1999 are deemed to be currently
exercisable options and the holder thereof is deemed to beneficially own the
underlying common shares.
(2) The address of Phoenix Management, Ltd. ("Phoenix") is c/o Charles T.
Sherman, 2365 Scioto Harper Drive, Columbus, Ohio 43204. The members of Phoenix,
an Ohio limited liability company, and their percentages of ownership in
Phoenix, are Bob Binsky (28.5 percent), Michael W. Gardner (5 percent), Theodore
P. Schwartz (31.667 percent), Charles T. Sherman (31.667 percent) and FSW
Investments LLC (3.167 percent) (collectively, the "Members"). Includes (a)
215,000 common shares owned outright by Phoenix, (b) 67,500 common shares as to
which Phoenix has the right to acquire (by virtue of assignment) but has yet to
purchase under the agreements dated September 11, 1996, to purchase common
shares from Lyman Brownfield, Candace Brownfield, Charlotte Brownfield (a.k.a.
Charlotte Huddle), individually and as Trustee of the Candace Brownfield Trust,
and Diane McBee (collectively, the "Brownfield Agreements"), and as to which
Phoenix has the power to vote by proxy, and (c) 100,000 common shares as to
which Phoenix has the right to acquire (by virtue of assignment) but has yet to
purchase under the agreement, dated June 6, 1996, to purchase common shares from
Paul M. Gillmor (the "Gillmor Agreement"). As to the 100,000 common shares
covered by the Gillmor Agreement, Mr. Sherman and Mr. Schwartz, individually,
have the power to vote by proxy; therefore, such 100,000 common shares are also
reported as beneficially owned by each of Mr. Schwartz and Mr. Sherman
individually.
(3) Each Member shares the power to vote or direct the voting and to dispose or
direct the disposition of the 215,000 block of common shares owned outright by
Phoenix by virtue of each Member being a member in Phoenix. Each of the Members
also shares the power to vote or direct the voting of the 67,500 common shares
as to which Phoenix has the power to vote by proxy. By virtue of assignment,
Phoenix has the right to acquire the 67,500 block of common shares under the
Brownfield Agreements and the right to acquire the 100,000 block of common
5
<PAGE> 9
shares under the Gillmor Agreement. Until the purchase of the 100,000 block of
common shares from Mr. Gillmor, Mr. Sherman and Mr. Schwartz share the power to
vote such common shares by virtue of a proxy granted by Mr. Gillmor, and such
common shares are also reported as beneficially owned by each of Mr. Schwartz
and Mr. Sherman. The common shares listed as beneficially owned by each Member
individually are exclusive of the common shares such Member may be deemed to
indirectly beneficially owned by virtue of his membership interest in Phoenix.
(4) Mr. Sherman's address is c/o PH Group Inc., 2365 Scioto Harper Drive,
Columbus, Ohio 43204. Includes 90,747 common shares owned outright by Mr.
Sherman, 100 common shares owned jointly by Mr. Sherman and his wife as to which
they share voting and dispositive power, and 40,000 common shares subject to
currently exercisable options. Also includes 100,000 common shares with respect
to which Mr. Sherman and Mr. Schwartz share the power to vote by virtue of a
proxy granted by Mr. Gillmor. Such common shares are also reported as
beneficially owned by Mr. Schwartz. Mr. Sherman's wife has sole voting and
dispositive power with respect to 250 common shares reported as beneficially
owned by Mr. Sherman. Mr. Sherman is a Member of Phoenix.
(5) Mr. Binsky's address is c/o Cable Link, Inc., 280 Cozzins Street, Columbus,
Ohio 43215. Includes 136,792 common shares owned outright by Mr. Binsky and
28,000 common shares subject to currently exercisable options. Mr. Binsky is a
Member of Phoenix.
(6) Does not include 250 common shares which the director will have the right to
receive at the Annual Meeting as additional director's compensation. See
"COMPENSATION OF MANAGEMENT - Compensation of Non-Employee Directors."
(7) Mr. Schwartz's address is 3817 Lyon Drive, Columbus, Ohio 43220. Includes
16,435 common shares owned outright by Mr. Schwartz. Also includes 100,000
common shares with respect to which Mr. Schwartz and Mr. Sherman share the power
to vote by virtue of a proxy granted by Mr. Gillmor. Such common shares are also
reported as beneficially owned by Mr. Sherman. Mr. Schwartz is a Member of
Phoenix.
(8) Mr. Gardner's address is c/o PH Group Inc., 2365 Scioto Harper Drive,
Columbus, Ohio 43204. Includes 1,250 common shares jointly owned by Mr. Gardner
and his wife as to which they share voting and dispositive power. Also includes
27,500 common shares subject to currently exercisable options. Mr. Gardner is a
Member of Phoenix.
(9) Mr. Warren's address is 5920 Cromdale Drive, Suite 1, Dublin, Ohio 43017.
Includes 250 common shares owned outright by Mr. Warren and 13,250 common shares
subject to currently exercisable options. Does not include 250 common shares
which Mr. Warren will have the right to receive at the Annual Meeting as
additional compensation.
(10) Less than 1 percent.
6
<PAGE> 10
(11) Ms. Breen's address is c/o Ohio Transmission & Pump Co., 666 Parsons
Avenue, Columbus, Ohio 43215. Includes 2,750 common shares owned outright by Ms.
Breen, and 11,750 common shares subject to currently exercisable options.
(12) Mr. Sanborn's address is 983 Loch Ness, Worthington, Ohio 43085. Includes
25,250 common shares which Mr. Sanborn owns outright, and 3,000 common shares
subject to currently exercisable options.
(13) Mr. Sulser's address is c/o Sulser and Associates, Inc., 77 East Wilson
Bridge Road, Worthington, Ohio 43085. Includes 1,000 common shares which Mr.
Sulser owns outright and 3,000 common shares subject to currently exercisable
options.
(14) Includes all common shares reported as beneficially owned by Phoenix and
all common shares reported as beneficially owned individually by the Members,
except that the 100,000 common shares listed as beneficially owned by each of
Phoenix, Mr. Sherman and Mr. Schwartz are included only once. Under the
Operating Agreement of Phoenix which expires December 31, 2016, (i) the common
shares owned by Phoenix are voted in accordance with the vote of a majority in
interest of its Members, and (ii) the Members are obligated to vote common
shares owned by them individually in the same manner as the common shares voted
by Phoenix.
COMPENSATION OF MANAGEMENT
SUMMARY COMPENSATION TABLE
The following table shows, for the last three fiscal years, cash
compensation and other benefits paid or provided by the Company to the chief
executive officer of the Company and the only other executive officer of the
Company whose salary and bonus totaled more than $100,000 during the 1998 fiscal
year. All dollar amounts are rounded to the nearest whole dollar.
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Awards
Annual Compensation ------
-------------------- Common Shares All Other
Name and Principal Position Year Salary($) Bonus($) Underlying Options (#) Compensation($)
--------------------------- ---- --------- -------- ---------------------- ---------------
<S> <C> <C> <C> <C> <C>
Charles T. Sherman 1998 $165,000 $50,000 25,000 $27,854 (2)
President (1) 1997 $150,000 $25,000 12,500 (3) $27,854
1996 $104,756 $13,965 0 --
Michael W. Gardner 1998 $ 95,300 $10,000 10,000 --
Vice President Special 1997 $ 76,000 $ 7,000 0 --
Press Group (4) 1996 $ 58,800 $ 5,000 25,000 (3) --
</TABLE>
- -------------------
(1) Mr. Sherman became President of the Company on May 28, 1996. Prior to that
time, he served as President of PH Hydraulics, the wholly-owned subsidiary of
the Company that was merged into the Company in October 1996.
7
<PAGE> 11
(2) Represents premiums paid by the Company for an insurance policy on the life
of Mr. Sherman in the face amount of $425,000 pursuant to a Split Dollar
Agreement entered into on September 11, 1997.
(3) Reflects adjustment for five-for-four share split on January 2, 1998.
(4) Mr. Gardner has served as Vice President Special Press Group of the Company
since July 1998. From October 1996 until July 1998, he served as Vice President
of Manufacturing of the Company. Prior to that time, he served as Vice President
of Manufacturing of PH Hydraulics.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning the grants of
options made under the Company's 1997 Stock Incentive Plan (the "1997 Plan")
during the 1998 fiscal year to the executive officers named in the Summary
Compensation Table:
<TABLE>
<CAPTION>
Number of
Common Shares % of Total
Underlying Options Granted
Options to Employees in Exercise Price
Name Granted (#) (1) Fiscal Year ($/Share) Expiration Date
---- --------------- ----------- --------- ---------------
<S> <C> <C> <C> <C>
Charles T. Sherman 25,000 42.3% $3.06 January 20, 2008
Michael W. Gardner 10,000 16.9% $3.06 January 20, 2008
</TABLE>
- -------------------
(1) These options vest in four equal annual installments beginning on January
21, 1999; however, each of these options becomes fully exercisable in the event
of certain defined changes-in-control of the Company.
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning the
options exercised during, and the unexercised options held as of the end of, the
1998 fiscal year by the executive officers named in the Summary Compensation
Table:
<TABLE>
<CAPTION>
Number of Common Shares Value of Unexercised
Common Underlying Unexercised In-the-Money Options
Shares Options at Fiscal Year-End(#) at Fiscal Year-End ($)(1)(2)
Acquired ----------------------------- -------------------------------
Name on Exercise (#) Value Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ------------------ --------------- --------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles T. Sherman 2,500 $5,500 33,750 25,000 $16,625 $0
Michael W. Gardner 0 N/A 25,000 10,000 $ 9,500 $0
</TABLE>
- -------------------
(1) Rounded to nearest whole dollar.
(2) "Value of Unexercised In-the-Money Options at Fiscal Year-End" is based upon
the fair market value of the Company's common shares on December 31, 1998
($1.50) less the exercise price of in-the-money options at the end of the 1998
fiscal year.
8
<PAGE> 12
EMPLOYMENT AGREEMENT
Charles T. Sherman entered into an Employment Agreement with the Company
effective January 23, 1997 (the "Employment Agreement") whereby Mr. Sherman
agreed to be employed by the Company as its President and Chief Executive
Officer for a term ending December 31, 2001, continuing thereafter on a
year-to-year basis until terminated by either party upon six months' notice
prior to December 31 of the year in which such party intends to have the
Employment Agreement terminate. Mr. Sherman is to receive a salary of $150,000
per year which may be increased or decreased by the Board of Directors (but not
below $150,000 per year), such annual bonus as the Board deems appropriate, and
such employee benefits as are generally available to all executives of the
Company. If Mr. Sherman's employment is terminated for any reason other than for
"cause", his voluntary resignation, his death or his disability, Mr. Sherman
will continue to receive his base salary in effect at such time until the
earlier of the start of Mr. Sherman's employment with another employer, or 12
months from the date of such termination; provided, that if Mr. Sherman's new
employment results in an annual base salary less than the annual base salary he
received at the time of termination of his employment with the Company, the
monthly difference (net of applicable taxes, if any) will be paid by the Company
to Mr. Sherman for any month that he was so employed during the period of 12
months from the date of termination of his employment with the Company. If Mr.
Sherman's employment is terminated for "cause" (as defined in the Employment
Agreement) or if he voluntarily resigns, his salary and benefits will
immediately cease. If Mr. Sherman's employment is terminated by reason of his
death or disability, his salary, benefits and other payments (not required by
statute to continue) will cease; however, the Company will provide such health,
dental and similar insurance or benefits as were being provided to Mr. Sherman,
immediately before such termination of employment, to Mr. Sherman or his family
for a period of 12 months on the same terms and conditions. The terms of any
then-existing benefit plan or stock option plan concerning the effect of a
termination of employment will control the benefits or stock options covered
thereby. As contemplated by the Employment Agreement, Mr. Sherman was granted an
option to purchase 12,500 common shares for $1.36 per share, the average of the
closing bid and asked prices of the common shares on January 23, 1997 (as
adjusted for the 5-for-4 stock split distributed on January 2, 1998). The
Employment Agreement provides that Mr. Sherman, during the term of employment
and for three years thereafter, will not compete with the Company.
COMPENSATION OF NON-EMPLOYEE DIRECTORS
Non-employee directors receive a fee of $500 for each board meeting
attended and $200 for each committee meeting attended, unless the director is a
chair of the committee, in which case the fee is $450 per committee meeting
attended. On January 21, 1998, the Board determined to increase the fees paid to
non-employee directors by authorizing the issuance of 250 common shares to each
non-employee director on the date of each annual meeting of shareholders.
The non-employee directors are also eligible to receive options under
the 1997 Plan. On the date of each annual meeting, an option covering 5,000
common shares will be granted automatically to each person who is first elected
as a non-employee director at such meeting.
9
<PAGE> 13
Each person who is first appointed as a non-employee director to fill a vacancy
on the Board is automatically granted an option covering a number of common
shares equal to 5,000 multiplied by a fraction, the numerator of which equals
the number of whole months remaining in the term for which the director is
appointed and the denominator of which is 24. If a new director receives an
option under the 1997 Plan and is not the beneficial owner of at least 1,000
common shares as of the first annual meeting following his election or
appointment, the director is required to exercise such option with respect to at
least 1,000 common shares on the date of such annual meeting, subject to
compliance with all applicable laws, rules and regulations. In addition, an
option will be granted automatically to each person whose term of office as a
non-employee director expires on such date or continues through such annual
meeting or who is re-elected for a subsequent term on such meeting date. The
number of common shares underlying these options is based upon the increase in
the Company's total income before taxes each year, and ranges from 0 to 3,000
common shares. Each option granted to a non-employee director has and will have
an exercise price equal to the fair market value of a common share on the date
of grant or with respect to options granted based on the increase in the
Company's total income before taxes, on the date of the annual meeting of
shareholders of the Company occurring during the applicable Performance Year, as
defined in the 1997 Plan. Each option is subject to the vesting schedule
outlined in the 1997 Plan. Each option will lapse and cease to be exercisable
upon the earliest to occur of: (a) ten years from the grant date; (b) nine
months after the option holder ceases to be a director because of death or
disability; (c) immediately upon resignation of the option holder as a director;
and (d) one year after the option holder ceases to be a director for any reason
other than death, disability or resignation. Directors employed by the Company
do not receive any separate compensation for their services as directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 29, 1997, the Company acquired substantially all of the
operating assets of St. Lawrence Press Company, Inc. The Company paid an
aggregate fee of $85,000 to Phoenix in exchange for certain services provided by
Phoenix and its Members in connection with the acquisition that were outside of
the scope of the customary duties of the officers and directors of the Company,
including negotiating in furtherance of the transaction, examining financing
alternatives and providing collateral for use in obtaining financing. The
Members of Phoenix are Bob Binsky, Michael W. Gardner and Charles T. Sherman,
all directors of the Company; FSW Investments LLC (as assignee of Kenneth J.
Warren, general counsel of the Company); and Theodore P. Schwartz, a former
director of the Company. See "SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS,
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS."
M. Richard Sulser, a director of the Company, is President of Sulser and
Associates, Inc., which served as a manufacturer's representative for the
Company in 1998 and 1997 and continues to so serve in 1999. The Company paid
Sulser and Associates, Inc. $222,699 and $158,601 for such services in 1998 and
1997, respectively.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who own
more than 10 percent of the
10
<PAGE> 14
Company's common shares, to file reports of ownership and changes in ownership
with the SEC. Executive officers, directors and greater than 10 percent
shareholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
the Company believes that, with respect to transactions occurring during the
1998 fiscal year, all filing requirements applicable to its executive officers,
directors and greater than 10 percent shareholders were complied with. During
the 1998 fiscal year, each of the Members of Phoenix (Bob Binsky, Charles T.
Sherman, Theodore P. Schwartz, Michael W. Gardner and Kenneth J. Warren) filed
late one report covering the entering into of the Brownfield Agreements on
September 11, 1996 and the Gillmor Agreement on June 6, 1996; and Kenneth P.
Furlong filed late one report covering his initial Form 3 holdings.
NOTIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
At a meeting held on July 10, 1998, the Board of Directors of the
Company agreed to dismiss, effective July 21, 1998, the accounting firm of
Greene & Wallace, Inc., which had served as independent public accountants for
the Company prior to and until July 21, 1998. At the same meeting, the Company
agreed to appoint the accounting firm of Deloitte & Touche LLP to serve as
independent public accountants for the Company effective July 21, 1998. The
decision to change accountants was recommended by the Audit Committee of the
Board of Directors, and approved by the Board.
The reports of Greene & Wallace, Inc. on the financial statements for
the fiscal years ended December 31, 1997 and December 31, 1996 contained no
adverse opinion or disclaimer of opinion and neither of such reports was
qualified or modified as to uncertainty, audit scope or accounting principles.
There were no disagreements between the Company and Greene & Wallace,
Inc. on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, during the fiscal years ending
December 31, 1997 and December 31, 1996, or in the interim period of January 1,
1998 through July 21, 1998, which disagreements, if not resolved to the
satisfaction of Greene & Wallace, Inc., would have caused it to make a reference
to the subject matter of the disagreements in connection with its report.
The Board of Directors of the Company has selected Deloitte & Touche LLP
to serve as independent public accountants for the Company for the 1999 fiscal
year. A representative of Deloitte & Touche LLP is expected to be present at the
Annual Meeting. The representative will have an opportunity to make a statement
if he so desires and is expected to be available to respond to appropriate
questions of shareholders.
OTHER BUSINESS
The Board of Directors does not intend to present, and has no knowledge
that others will present, any other business at the Annual Meeting. If, however,
any other matters are properly
11
<PAGE> 15
brought before the Annual Meeting, it is intended that the person named in the
enclosed proxy will vote the common shares represented thereby in accordance
with his best judgment.
COST OF SOLICITATION OF PROXIES
The cost of this solicitation will be paid by the Company. Proxies will
be solicited by mail and may be further solicited, for no additional
compensation, by officers, directors or employees of the Company by further
mailing, by telephone or by personal contact. The Company may request persons
holding common shares in their names for others to forward soliciting materials
to their principals to obtain authorization for the execution of proxies, and
the Company will reimburse such persons for their expenses in so doing.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 2000 Annual
Meeting of Shareholders must be received by the Company no later than December
15, 1999, to be included in the Company's proxy, notice of meeting and proxy
statement related to that Annual Meeting. Upon receipt of any such proposal, the
Company will determine whether or not to include such proposal in the proxy
statement and proxy in accordance with applicable rules and regulations
promulgated by the SEC. A shareholder who may be interested in submitting such a
proposal is advised to contact legal counsel familiar with the detailed
requirements of the applicable rules and regulations.
The SEC has promulgated rules relating to the exercise of discretionary
voting authority pursuant to proxies solicited by the Company's Board of
Directors. If a shareholder intends to present a proposal at the 2000 Annual
Meeting of Shareholders and does not notify the Company of the proposal by
February 28, 2000, the proxies solicited by the Company's Board of Directors for
use at the 2000 Annual Meeting may be voted on the proposal without any
discussion of the proposal in the Company's proxy statement for that Annual
Meeting.
In each case, written notice must be given to the President of the
Company, whose name and address are: Charles T. Sherman, President, PH Group
Inc., 2365 Scioto Harper Drive, Columbus, Ohio 43204.
FORM 10-KSB
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS
BEING SOLICITED, UPON THE REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998,
INCLUDING FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, AS FILED WITH
THE SEC. REQUESTS FOR COPIES OF SUCH REPORT SHOULD BE DIRECTED TO MISSY JACOB,
VICE PRESIDENT - CORPORATE DEVELOPMENT, 2365 SCIOTO HARPER DRIVE, COLUMBUS, OHIO
43204.
12
<PAGE> 16
PH GROUP INC.
PLEASE MARK YOUR VOTE IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF ALL NOMINEES NAMED IN
ITEM 1.
1. ELECTION OF DIRECTORS FOR TERMS OF TWO YEARS.
NOMINEES: Bob Binsky, Michael W. Gardner and Terry L. Sanborn
[ ] FOR All [ ] WITHHOLD All [ ] FOR All Except
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
"FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW:
- --------------------------------------------------------------------------------
Nominee Exception(s)
In his discretion, the Proxy is authorized to vote upon such other
matters (none known at the time of solicitation of this Proxy) as may properly
come before the Annual Meeting or any adjournment(s) thereof.
The undersigned hereby acknowledges receipt with this Proxy of a copy
of the Notice of Annual Meeting and Proxy Statement dated April 13, 1999 and a
copy of the Company's 1998 Annual Report to Shareholders.
Dated: , 1999
------------------------------
-------------------------------------------
(Signature)
-------------------------------------------
Signature (if held jointly)
IMPORTANT: Please sign exactly as name or names appear hereon. When common
shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
Corporations should sign in their full corporate name by their president or
other authorized officer. If a partnership or other entity, please sign in
partnership or entity name by an authorized person.
<PAGE> 17
PH GROUP INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Charles T. Sherman, with full power of
substitution, as proxy for the undersigned and hereby authorizes him to
represent and to vote, as designated below, all of the common shares of PH Group
Inc. (the "Company") held of record by the undersigned on March 5, 1999, at the
Annual Meeting of Shareholders to be held on May 4, 1999, or any adjournment(s)
thereof, with all the power the undersigned would possess if present in person.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED TO ELECT ALL NOMINEES LISTED IN ITEM 1 AS DIRECTORS OF THE COMPANY. IF
ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE ANNUAL MEETING OR ANY
ADJOURNMENT(S) THEREOF, OR IF A NOMINEE FOR ELECTION AS A DIRECTOR NAMED IN THE
PROXY STATEMENT IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE, THE COMMON
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE PROXY ON
SUCH MATTERS OR FOR SUCH SUBSTITUTE NOMINEE(S) AS THE DIRECTORS MAY RECOMMEND.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
