<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
Schuller Corporation
- - --------------------------------------------------------------------------------
(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):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 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.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
LOGO
SCHULLER CORPORATION
P.O. Box 5108
Denver, CO 80217-5108
(303) 978-2000
April 4, 1997
DEAR STOCKHOLDERS:
The 1997 Annual Meeting of Stockholders of Schuller Corporation (the
"Company") will be held on Friday, May 2, 1997 at 8:00 a.m., at the Holiday Inn
Crowne Plaza, 2 Seagate Street, Toledo, Ohio.
The business scheduled for the Annual Meeting is the election of Directors,
the approval of amendments to the Restated Certificate of Incorporation of the
Company to change the name of the Company to Johns-Manville Corporation and to
increase the authorized shares of common stock of the Company by 125,000,000
shares, and the ratification of the appointment of Coopers & Lybrand L.L.P. as
independent accountants of the Company. The Board of Directors recommends a vote
FOR the election of the Board's nominees for Directors, FOR approval of the
proposed amendments to the Restated Certificate of Incorporation, and FOR
ratification of the appointment of Coopers & Lybrand L.L.P. No business
presentations will be made at the Annual Meeting.
WE URGE YOU TO FILL IN, DATE AND SIGN THE ENCLOSED PROXY CARD AND PROMPTLY
RETURN IT IN THE ENCLOSED ENVELOPE SO THAT AS MANY SHARES AS POSSIBLE MAY BE
REPRESENTED AT THE MEETING. NO POSTAGE IS NEEDED IF THE PROXY CARD IS MAILED IN
THE UNITED STATES.
If you plan to attend the meeting in person, please check the appropriate
box on your proxy card.
Sincerely,
/s/ CHARLES L. HENRY
Charles L. Henry
Chairman of the Board, Chief
Executive Officer
and President
<PAGE> 3
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Holders of Schuller Corporation Common Stock:
The Annual Meeting of Stockholders of Schuller Corporation (the "Company")
will be held on Friday, May 2, 1997 at 8:00 a.m., at the Holiday Inn Crowne
Plaza, 2 Seagate Street, Toledo, Ohio, to:
(i) elect Directors of the Company to hold office until the next
Annual Meeting of Stockholders and until their respective
successors are elected and qualified;
(ii) amend the Restated Certificate of Incorporation of the Company to
change the name of the Company to Johns-Manville Corporation;
(iii) amend the Restated Certificate of Incorporation of the Company to
increase the authorized shares of Common Stock of the Company by
125,000,000 shares;
(iv) ratify the appointment of the firm of Coopers & Lybrand L.L.P. as
independent accountants of the Company for the year 1997; and
(v) transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only holders of record of the Common Stock at the close of business on
March 3, 1997, the record date, will be entitled to vote at the Annual Meeting.
This Notice, Proxy Statement and the enclosed proxy card are sent to you by
order of the Board of Directors.
April 4, 1997
/s/ RICHARD B. VON WALD
Richard B. Von Wald
Executive Vice President,
General Counsel and Secretary
Schuller Corporation
P. O. Box 5108
Denver, CO 80217-5108
IT IS IMPORTANT THAT STOCKHOLDERS, WHETHER OR NOT THEY EXPECT TO ATTEND THE
ANNUAL MEETING IN PERSON, FILL IN, DATE AND SIGN THE ENCLOSED PROXY CARD AND
PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS NEEDED IF THE PROXY
CARD IS MAILED IN THE UNITED STATES.
<PAGE> 4
SCHULLER CORPORATION
P.O. BOX 5108
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Introduction................................................ 1
Election of Directors (Proxy Item No. 1).................... 1
Board Attendance.......................................... 5
Committees of the Board of Directors...................... 6
Certain Relationships and Related Transactions............ 7
Compensation of Directors................................. 7
Executive Compensation...................................... 8
Report of the Compensation Committee...................... 8
Compensation Summary...................................... 12
Option/SAR Grants in Last Fiscal Year..................... 14
Aggregated Option/SAR Exercises in Last Fiscal Year and
Year-End Option/SAR Values............................. 15
Pension Plan.............................................. 15
Employment Agreements and Other Arrangements.............. 17
Compensation Committee Interlocks and Insider
Participation.......................................... 18
Performance Graph......................................... 19
Security Ownership of Certain Beneficial Owners and
Management................................................ 19
Security Ownership of Certain Beneficial Owners........... 19
Security Ownership of Management.......................... 20
Proposal to Change the Name of the Company (Proxy Item No.
2)........................................................ 21
Proposal to Increase the Number of Authorized Shares of
Common Stock (Proxy Item No. 3)........................... 22
Ratification of Appointment of Independent Accountants
(Proxy Item No. 4)........................................ 23
Other Business.............................................. 23
Voting Procedures........................................... 24
Stockholder Proposals for 1998 Annual Meeting............... 24
</TABLE>
The "Company" when used in this Proxy Statement refers to Schuller Corporation,
incorporated in the State of Delaware in 1981, as well as, where applicable, its
consolidated subsidiaries, including Schuller International Group, Inc.
("Schuller").
i
<PAGE> 5
SCHULLER CORPORATION
P. O. BOX 5108
717 17TH STREET (80202)
DENVER, CO 80217-5108
-------------------------------
PROXY STATEMENT
-------------------------------
INTRODUCTION
The enclosed proxy is solicited by the Board of Directors of Schuller
Corporation (the "Company") for use at the Company's Annual Meeting of
Stockholders, and is revocable at any time by the person giving it prior to its
use at the Annual Meeting. If signed and returned, it will authorize the persons
named as proxy to vote on the matters referred to therein. The authority
conferred by all properly executed proxies will be exercised by such persons as
specified therein.
Only holders of the Company's common stock, $.01 par value ("Common
Stock"), of record at the close of business on March 3, 1997, the record date
for the Annual Meeting, are entitled to notice of, and to vote at, the Annual
Meeting. At the close of business on that date, 161,531,765 shares of Common
Stock were outstanding, which constituted the only outstanding class of voting
securities of the Company. Each share of Common Stock is entitled to one vote.
Shares may not be voted on a cumulative basis.
Any stockholder giving a proxy in the form accompanying this Proxy
Statement has the power to revoke the proxy prior to its use at the Annual
Meeting. A stockholder may revoke a proxy by (i) delivering an instrument of
revocation before the Annual Meeting to the Secretary of the Company at the
Company's principal offices; (ii) duly executing a proxy bearing a later date or
time than the date or time of the proxy being revoked; or (iii) voting in person
at the Annual Meeting. A stockholder's attendance at the Annual Meeting will not
by itself revoke a proxy given by such stockholder.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation of proxies by mail, proxies may be solicited by the Company's
Directors, officers and other employees by personal interview, telephone and
telegram. Such persons will receive no additional compensation for such
services. The Company requests that brokerage houses and other custodians,
nominees and fiduciaries forward solicitation materials to the beneficial owners
of shares of Common Stock held of record by such persons and will reimburse such
brokers and other fiduciaries for their reasonable out-of-pocket expenses
incurred when the solicitation materials are forwarded.
This Proxy Statement and the enclosed proxy card are first being sent to
holders of Common Stock on or about April 4, 1997.
ELECTION OF DIRECTORS
(PROXY ITEM NO. 1)
Unless marked specifically to the contrary, proxies will be voted FOR the
election as Directors of the persons named below. Directors shall be elected by
a plurality of the votes cast at the Annual Meeting by the holders of shares
entitled to vote in the election. Each Director of the Company shall hold office
until the next Annual Meeting and until his or her successor is elected and duly
qualified. If any nominee should be unable to serve as Director, an event not
now anticipated, proxies may be voted in favor of substitute nominees designated
by the Board of Directors. All nominees have indicated their willingness to
serve as a Director.
Effective November 28, 1988, the Company consummated its Second Amended and
Restated Plan of Reorganization (the "Plan") under Chapter 11 of the United
States Bankruptcy Code. A copy of such Plan is available upon request from the
Company. In connection with the Plan, Manville Personal Injury Settlement Trust
(the "Trust"), formed to implement certain portions of the Plan, in particular,
those relating to the settlement of asbestos health claims against the Company
and certain of its affiliates, is entitled to approve two of the Company's
nominees for Director. Robert A. Falise, Chairman and Managing Trustee of the
Trust, and
1
<PAGE> 6
Louis Klein, Jr., Christian E. Markey, Jr. and Frank J. Macchiarola, Trustees of
the Trust, who are presently members of the Company's Board, are all nominees
for election to the Board at the Annual Meeting. Mr. Hanson has determined not
to stand for re-election to the Board of Directors due to the demands of his
existing business interests.
Your Board of Directors has approved the following nominees for Director
and recommends a vote FOR such nominees.
Leo Benatar
Associated Consultant
A. T. Kearney, Inc.
Director since 1996
Age: 67
In June 1996, Mr. Benatar became an Associated
Consultant at A. T. Kearney, Inc., a management
consulting firm. Prior to that, Mr. Benatar was a
Director of Sonoco Products Company and the
Chairman of Engraph, Inc., a wholly owned
subsidiary of Sonoco Products Company. He has
been a Director of Engraph, Inc. since October
1975, and was a Senior Vice President of Sonoco
Products Company. Before joining Engraph, Inc. in
February 1981, Mr. Benatar was President of Mead
Packaging, a division of Mead Corporation, for
nine years. Mr. Benatar also serves on the Boards
of Directors of Aaron Rents, Inc., Interstate
Bakeries Corporation, Mohawk Industries, Inc. and
Paxar Corporation, and is past Chairman of the
Federal Reserve Bank of Atlanta. In 1980, he
received the First Annual Achievement Award for
significant progress in race relations from the
Atlanta Community Relations Council. In the same
year, the Greek Orthodox Church recognized him
with the St. Paul Medal, which is awarded every
25 years, for efforts in the area of free
enterprise and international business
development. Mr. Benatar received his bachelor's
degree in Industrial Engineering from Georgia
Institute of Technology in 1951 and served in the
U.S. Navy from 1951 to 1953. He also graduated
from Harvard Business School's Program for
Management Development. Mr. Benatar is Chairman
of the Health, Safety and Environment Committee
and is a member of the Audit and Compensation
Committees.
Robert A. Falise
Chairman and Managing
Trustee,
Manville Personal Injury
Settlement Trust
Director since 1992
Age: 64
Mr. Falise was elected a Trustee of Manville
Personal Injury Settlement Trust in December
1991, and became its Chairman and Managing
Trustee in January 1992. Mr. Falise served as
Chairman of the Board of the Company from June to
September of 1996. From 1989 through December
1991, Mr. Falise was engaged in the private
practice of law specializing in corporate
restructuring and the enhancement of shareholder
value. From 1987 to 1989, he served as Executive
Vice President and Group Executive of Irving Bank
Corporation and Irving Trust Company of New York.
From 1980 to 1987, he was Vice President and
General Attorney of RCA Corporation. From 1966 to
1980, he was Vice President, General Counsel and
Secretary of Dictaphone Corporation. Prior to
that, Mr. Falise was in the private practice of
corporate law in New York City. In 1960-61, he
served as Assistant Director of the U.S.
Commission on Civil Rights in Washington, D.C.,
and, earlier, as an Army Judge Advocate Officer
specializing in international law in the
Pentagon. A graduate of Columbia College, Mr.
Falise received his J.D. degree from Columbia
University School of Law. Mr. Falise is also a
Director of the Caramoor Museum and Center for
the Performing Arts, Westchester County, New
York. Mr. Falise is Chairman of the Executive
Committee and is a member of the Audit, Committee
on Board Organization and Operation, Compensation
and Finance Committees.
2
<PAGE> 7
Todd Goodwin
General Partner,
Gibbons, Goodwin,
van Amerongen
Director since 1991
Age: 65
Mr. Goodwin is a General Partner of the New York
investment banking firm Gibbons, Goodwin, van
Amerongen ("GGvA"). Prior to joining GGvA in
1984, he was a managing director of Merrill Lynch
and a partner of White Weld. Mr. Goodwin is a
Director of Rival Company, Schult Homes, U.S.
Energy Systems and Wells Aluminum. He received
his A.B. degree from Harvard College in 1954. Mr.
Goodwin is Chairman of the Compensation Committee
and is a member of the Committee on Board
Organization and Operation, Executive and Finance
Committees.
Michael N. Hammes
Former Chairman and
Chief Executive Officer,
The Coleman Company, Inc.
Director since 1993
Age: 55
Prior to February 1997, Mr. Hammes was Chairman
of the Board and Chief Executive Officer of The
Coleman Company, Inc., a global marketer and
manufacturer of products used in the outdoor
recreation and hardware industries. Mr. Hammes
was Vice Chairman of The Black & Decker
Corporation, and prior to that was
President-International Operations for Chrysler
Corporation, as well as serving in a number of
positions at Ford Motor Corporation, with which
he was affiliated for 20 years. He was a
financial analyst with Equitable Investments
Company before joining Ford Motor Corporation. He
holds a bachelor's degree from Georgetown
University School of Foreign Service in
International Economics/Foreign Trade and an
M.B.A. degree in Finance from New York
University. Mr. Hammes is a Director of NAVISTAR
and is a member of the Board of Visitors of
Georgetown University Business School. Mr. Hammes
is a member of the Audit, Compensation, Executive
and Finance Committees.
Kathryn Rudie Harrigan
Henry R. Kravis Professor of
Business Leadership,
Columbia University Graduate
School of Business
Director since 1995
Age: 46
Ms. Harrigan is the Henry R. Kravis Professor of
Business Leadership at the Columbia University
Graduate School of Business, where she has been a
professor in the Management and Organizations
Division since 1981. Ms. Harrigan is also serving
as the Faculty Chair: Chazen International
Institute and the Core Course Coordinator for
Strategic Management of the Enterprise. Ms.
Harrigan regularly performs consulting projects
on strategic alliances and other strategic
management issues, and has authored several books
and numerous publications on these subjects. Ms.
Harrigan received her B.A. degree from Macalester
College, her M.B.A. degree from University of
Texas at Austin and her D.B.A. degree from
Harvard Business School. Ms. Harrigan is also a
Director of Cambrex Corporation and Technical
Chemicals and Products, Inc. and is a member of
the Advisory Board of Ronin Development and the
Editorial Boards of several business and
technical journals. Ms. Harrigan is a member of
the Finance and Health, Safety and Environment
Committees.
3
<PAGE> 8
Charles L. Henry
Chairman of the Board,
Chief Executive Officer
and President,
Schuller Corporation
Director since 1996
Age: 55
Mr. Henry was named Chairman of the Board, Chief
Executive Officer and President of the Company in
September 1996. Mr. Henry was most recently Chief
Financial Officer and Executive Vice President at
E.I. du Pont de Nemours and Company ("DuPont").
He joined DuPont in 1963 and held a number of
positions beginning with Process Engineer. Mr.
Henry graduated from the University of Tennessee
in 1963 with a bachelor's degree in engineering
physics. Mr. Henry is a member of the Committee
on Board Organization and Operation, Executive,
Finance and Health, Safety and Environment
Committees.
Louis Klein, Jr.
Manville Personal Injury
Settlement Trust
Director since 1992
Age: 61
Mr. Klein was elected a Trustee of Manville
Personal Injury Settlement Trust in December
1991. Previous positions included Chairman and
Chief Executive Officer of Stendig Inc., an
importer and national marketer of prestige
contract and residential furniture and textiles;
Chairman and Chief Executive Officer of Victoreen
Inc., a manufacturer and international marketer
of radiation detection and measurement equipment;
Managing Director-Corporate Finance of Neuberger
& Berman; and Managing Director of Ardshiel
Associates Inc. Mr. Klein also has been a
court-appointed trustee in the divestiture of
several businesses pursuant to consent decrees or
final orders involving the U.S. Department of
Justice and the Federal Trade Commission. Mr.
Klein received his A.B. degree from Harvard
College and J.D. degree from Columbia Law School
Mr. Klein serves on the Board of Trustees of The
CRM Funds. Mr. Klein is Chairman of the Audit
Committee and is a member of the Compensation and
Finance Committees.
Frank J. Macchiarola
President,
St. Francis College,
and Trustee,
Manville Personal Injury
Settlement Trust
Director since 1996
Age: 55
In July 1996, Mr. Macchiarola became President of
St. Francis College in New York. Prior to that,
he was Dean and Professor of the Benjamin N.
Cardozo School of Law, Yeshiva University. He has
also been a Trustee of Manville Personal Injury
Settlement Trust since 1992. For 32 years, Mr.
Macchiarola has taught in the law, business,
political science and public administration areas
at the undergraduate and graduate levels. In
addition to teaching duties, he has served from
1973 to 1974 as Assistant Vice President for
Academic Affairs at Columbia University and from
1975 to 1978 as Vice President for Institutional
Advancement at the Graduate School of City
University of New York. From 1983 to 1988 he was
President and Chief Executive Officer of The New
York City Partnership, Inc., a company devoted to
improving the economic and social conditions in
New York City. From 1978 to 1983, Mr. Macchiarola
served as Chancellor of the New York Public
School System. Mr. Macchiarola received his B.A.
Magna Cum Laude from St. Francis College in 1962.
He received his L.L.B from Columbia University in
1965 and his Ph.D. from Columbia's Department of
Public Law and Government in 1970. Mr.
Macchiarola also serves as a Director of
Jefferies Group, Inc. Mr. Macchiarola is a member
of the Health, Safety and Environment Committee.
4
<PAGE> 9
Christian E. Markey, Jr.
Trustee,
Manville Personal Injury
Settlement Trust
Director since 1992
Age: 67
A graduate of U.C.L.A. School of Law and a
veteran of the United States Marine Corps, Judge
Markey served as Vice President and General
Counsel of the University of Southern California
from 1988 until his retirement in 1993. A Trustee
of Manville Personal Injury Settlement Trust
since its inception, Judge Markey served as a
California Superior Court judge from 1974 to
1988, following his appointment by Ronald Reagan,
then governor of California. Prior to 1974, he
was engaged in the private practice of law in
California. For the past 20 years, Judge Markey
has lectured and taught at the Whittier College
School of Law, the University of Southern
California Law Center and at various national and
international institutes. He is a former member
of the Board of Regents of the University of
California. In addition, Judge Markey has been
appointed to the Commission on Judicial
Performance by the California Supreme Court.
Judge Markey was founding Chairman of the Board
of the Southern California Center for Law in the
Public Interest. He received the Chief Justice
Roger Traynor Award from the Los Angeles Trial
Lawyers for his extraordinary devotion to
justice. Judge Markey is Chairman of the
Committee on Board Organization and Operation and
is a member of the Health, Safety and Environment
Committee.
William E. Mayer
Founder,
Development Capital L.L.C.
Director since 1996
Age: 56
In December 1996, Mr. Mayer formed Development
Capital L.L.C., a company which invests in
private and public companies. From October 1992
to December 1996, Mr. Mayer was Dean of the
College of Business and Management of the
University of Maryland at College Park. He was
Dean of the William E. Simon Graduate School of
Business Administration at the University of
Rochester (New York) from September 1991 to July
1992. From January 1990 to January 1991, he was
Chairman and Chief Executive Officer of CS First
Boston Merchant Bank, and from December 1988 to
January 1990, Mr. Mayer was President and Chief
Executive Officer of the First Boston
Corporation. From 1977 to 1988 he was a Managing
Director of the First Boston Corporation. Mr.
Mayer received his bachelor's and master's of
Business Administration degrees from the
University of Maryland, College Park. He serves
as a Director on the Boards of American Trading
and Production Corporation, Chart House
Enterprises, Inc., Hambrecht & Quist, Inc. and
Premier, Inc., and as Trustee for the Aspen
Institute, the Cancer Research Institute and
Colonial Group of Mutual Funds. Mr. Mayer also
serves on the Board of TechnoServe, an
organization providing business help to
developing nations. Mr. Mayer serves on the
Boards of Administrators of Tulane University and
the University of Maryland Foundation. Mr. Mayer
is Chairman of the Finance Committee and is a
member of the Audit, Committee on Board
Organization and Operation and Executive
Committees.
BOARD ATTENDANCE
During 1996, the Board of Directors of the Company had eight regular
meetings and six special meetings. In 1996, each Director attended a minimum of
75 percent of the total number of meetings of the Board of Directors and of the
Committees of which the Director was a member except for Mr. Hammes who attended
72% of such meetings and Mr. Hanson who attended 73% of such meetings.
5
<PAGE> 10
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has six standing Committees: Audit,
Board Organization and Operation, Compensation, Executive, Finance and Health,
Safety and Environment.
AUDIT COMMITTEE
The Audit Committee is currently comprised of Messrs. Benatar, Falise,
Hammes, Hanson, Klein (Chairman) and Mayer. The Audit Committee met three times
during 1996 and, during such meetings, met with the Company's internal auditors,
independent public accountants and operating and financial management. The
principal functions of the Audit Committee are to review and report to the Board
with respect to: (i) the annual financial statements and filings with the
Securities and Exchange Commission; (ii) accounting issues significant to the
Company; (iii) internal auditing, accounting and financial controls; (iv) the
appointment of independent public accountants, the annual audit by the
independent public accountants, including the scope of the audit, and the
compensation of the independent public accountants for both audit and non-audit
services; (v) the Company's policies governing compliance with laws and
regulations, ethics and conflicts of interest and any significant instances of
employee misconduct; and (vi) travel and entertainment expenses of all officers
of the Company.
COMMITTEE ON BOARD ORGANIZATION AND OPERATION
The Committee on Board Organization and Operation is currently comprised of
Messrs. Falise, Goodwin, Henry, Markey (Chairman) and Mayer. The Committee on
Board Organization and Operation met five times during 1996. The Committee on
Board Organization and Operation considers and makes recommendations to the
Board with respect to the composition of the Board and matters relating to the
organization, operation, function, compensation and procedures of the Board and
its Committees.
Persons recommended by stockholders of the Company as suitable nominees for
the position of Director are referred to the Committee on Board Organization and
Operation for its consideration. Stockholders wishing to recommend to the Board
persons for nomination to the position of Director should send their
recommendations to the Secretary of the Company.
COMPENSATION COMMITTEE
The Compensation Committee is currently comprised of Messrs. Benatar,
Falise, Goodwin (Chairman), Hammes and Klein. The Compensation Committee met
seven times during 1996. The principal functions of the Compensation Committee
are to: (i) approve and report to the Board with respect to executive
compensation, subject to the approval of the full Board in the case of
compensation of the Chief Executive Officer; (ii) review employee benefit
programs and approve or recommend changes therein to the Board; and (iii) review
with the Chief Executive Officer matters with respect to management development
and succession.
EXECUTIVE COMMITTEE
The Executive Committee is currently comprised of Messrs. Falise
(Chairman), Goodwin, Hammes, Henry and Mayer. The Executive Committee did not
meet in 1996. The Executive Committee is delegated the authority of the full
Board during the intervals between Board meetings insofar as may be lawful,
except for actions relating to the declaration or payment of dividends. The
Executive Committee has the responsibility to report actions taken by it to the
full Board at the next meeting of the Board.
FINANCE COMMITTEE
The Finance Committee is currently comprised of Messrs. Falise, Goodwin,
Hammes, Henry, Klein and Mayer (Chairman) and Ms. Harrigan. The Finance
Committee met one time during 1996. The principal functions of the Finance
Committee are to review and report to the Board with respect to: (1) significant
tax issues and treasury matters; (2) the Company's capital structure; (3) the
composition and actions of the Investment Committee; (4) the actuaries for the
Company's retirement, thrift, health and welfare and other benefit plans,
including reviewing actuarial assumptions used for funding and financial
reporting purposes and the actuaries' periodic valuations of the trusteed
benefit plans; and (5) the contributions to the Company's retirement, thrift and
health and welfare plans.
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<PAGE> 11
HEALTH, SAFETY AND ENVIRONMENT COMMITTEE
The Health, Safety and Environment Committee is currently comprised of
Messrs. Benatar (Chairman), Hanson, Henry, Macchiarola and Markey and Ms.
Harrigan. The Health, Safety and Environment Committee met three times during
1996. The principal functions of the Health, Safety and Environment Committee
are to provide oversight and to report and make recommendations to the Board
with respect to the Company's activities relating to health, safety and
environmental issues and product safety.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Trust owns approximately 80 percent of the Common Stock and by virtue
of such stock ownership is able to nominate and elect Directors of the Company
as the Trust determines. Four of the Company's current Directors, Messrs.
Falise, Klein, Macchiarola and Markey, are Trustees of the Trust. Under the
Plan, the Trust was funded with assets, including (i) fifty percent of the
Common Stock and convertible preferred stock entitling the Trust to increase its
Common Stock holdings to approximately eighty percent (which increase took place
in December 1992), (ii) bonds, and (iii) the right to receive up to 20 percent
of the Company's annual profits (as defined). The Company completed prepayment
of substantially all of the bonds in 1994. On April 5, 1996, the Company issued
32,527,110 shares of Common Stock to the Trust in exchange for the elimination
of the Trust's right to receive 20 percent of the Company's annual profits (the
"Exchange"). For further discussion of the Plan and the Exchange see Note 19 to
the Company's Financial Statements contained in the Company's 1996 Annual Report
previously mailed to security holders.
COMPENSATION OF DIRECTORS
Charles L. Henry is the only Director who is employed by the Company. He
receives no fees for serving as a Director in addition to his regular
compensation.
Except for Messrs. Falise, Klein, Macchiarola and Markey, all non-employee
Directors receive an annual retainer of $25,000, $1,000 for each Board meeting
attended, $1,000 for each Committee of the Board meeting attended, and
reimbursement for travel expenses related to attendance at Board and Committee
meetings. Each Director (other than Messrs. Falise, Henry, Klein and Markey) who
serves as a Committee Chairman is paid an additional $2,500 per year. Director's
fees earned by the Company's Directors who are Trustees of the Trust are paid
directly to the Trust pursuant to the Manville Personal Injury Settlement Trust
Agreement, as amended (the "Trust Agreement").
Messrs. Falise, Goodwin and Hammes served on a special committee to effect
a search for a new chief executive officer in 1996. For Mr. Falise's services on
the special committee, the Company paid the Trust $35,000 and Messrs. Goodwin
and Hammes each were paid $25,000 in connection with their service on the
special committee. Mr. Goodwin also received $15,000 for additional services in
connection with the decision and implementation of the 1996 Executive Incentive
Compensation Plan and other compensation matters. Mr. Falise also received
$41,000 in connection with his services as Chairman of the Board between June
and September 1996.
In June 1996, the Company offered all retired Directors a lump-sum payment
of the present value of the retirement payments owed to such Directors under the
Company's retirement program for non-employee Directors which was adopted in
1988. The retirement program provided for continued payment of the annual
retainer in effect at the time of a Director's retirement. Under the retirement
program, a Director who retired after attaining age 70 received continued
payment of the retainer for life, and a Director who retired before attaining
age 70 received continued payment of the retainer for a period of years equal to
the number of years of service or for life, whichever was less, except that no
retirement benefits were paid to any Director retiring with less than five years
of service. The Company paid an aggregate amount of $2,213,192 for such lump-sum
payments to retired Directors from amounts contributed to the trust established
in 1992 in connection with the retirement program and from general corporate
funds. In connection with such payments, the Company satisfied its obligations
under the retirement program to all retired Directors except for one retired
Director who did not elect to receive the lump-sum payment.
Effective February 7, 1997, the Company terminated its retirement program
for non-employee Directors with respect to the current non-employee Directors
and adopted a new Non-Employee Directors' Deferred Compensation Plan (the
"Directors' Plan"). The retirement program is still in effect and has not been
7
<PAGE> 12
terminated with respect to the one remaining retired Director who did not elect
to receive the June 1996 payout.
For purposes of terminating the retirement program, the Company vested all
accrued benefits and credited the present value of each current non-employee
Director's accrued benefit under the retirement program (the "Retirement Program
Payouts"), based on years of service through February 1997 (except as noted), to
deferred accounts under the Directors' Plan, as follows: Mr. Benatar, $18,153;
Mr. Falise, $90,252; Mr. Goodwin, $110,401; Mr. Hammes, $83,018; Mr. Hanson,
$83,018; Ms. Harrigan, $41,479; Mr. Klein, $91,253; Mr. Macchiarola, $18,259;
Mr. Markey, $121,331; and Mr. Mayer, $18,368. In consideration of the fact that
termination of the program would eliminate Mr. Markey's otherwise likely
lifetime benefit and due to Mr. Markey's time remaining until retirement, the
Company added to the amount of his Retirement Program Payout a compensating
adjustment of $32,371 (included in the amount set forth in the previous
sentence) based on years of service.
Under the Directors' Plan, an account was established for each Director for
a non-forfeitable deferral of the Retirement Program Payout until termination of
services as a Director or later, if so elected by such Director. For Directors
other than the Trustee Directors, the amounts deferred are deemed to be invested
in Common Stock. Because the Trust Agreement prohibits Trustee Directors from
direct ownership of Common Stock, each Trustee Director's deferral account will
be deemed to be invested in non-Common Stock investment alternatives as provided
under the Directors' Plan.
In connection with the termination of the retirement program, the Board
also modified its Directors' compensation policy so that under the Directors'
Plan, non-employee Directors (other than Trustee Directors) will be granted
$12,500 annually in deferred shares of Common Stock. Trustee Directors will be
granted $12,500 annually to be deemed invested in non-Common Stock investment
alternatives under the Directors' Plan. The Plan provides that if Trustee
Directors become eligible to own Common Stock, the deferred amounts of the
Retirement Program Payout and annual grants will automatically be deemed to be
invested in Common Stock. The Directors' Plan also provides for elective
deferral of annual retainers, Board and Committee meeting fees and Committee
Chairman fees.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of Directors who are not employees of the Company or any of
its subsidiaries. The Board of Directors has delegated to the Committee the
responsibility for establishing and administering the Company's executive
compensation plans subject to the Board's final approval of major new
compensation systems and the Chief Executive Officer's compensation. The
Committee consults with outside compensation consultants, attorneys and other
specialists. The Committee's unanimous approval of the Company's executive
compensation programs in 1996 was based on each Committee member's judgment and
evaluation of the various factors underlying the overall compensation philosophy
described below.
A primary objective of the Committee is to work with management to design
and implement compensation systems that both attract and retain a top quality
management team and motivate that team to create long-term stockholder value.
The guiding principle of the Company's compensation system is "Pay for
Performance," with an emphasis on variable pay tied to the attainment of
performance goals. Under the Pay for Performance philosophy used throughout the
organization, the combination of annual incentive bonuses, which are dependent
on performance, equity related long-term awards and base salary offers the
opportunity for executives' average total compensation from all sources over a
number of years to reach competitive levels of total compensation. However,
actual total compensation levels of executive officers may range well below or
above competitive levels in any one year or period of years. The design of the
compensation system is intended to align the interests of the executives with
the interests of stockholders and to encourage employees to anticipate and
respond to business challenges and opportunities while avoiding an entitlement
attitude.
8
<PAGE> 13
Together with its outside experts, the Committee reviews compensation
practices of other companies and the prevailing salary and total compensation
levels for various levels of performance. Comparisons are made with compensation
levels for a broad group of companies, including all of the companies included
in the Standard & Poor's Building Materials Index, which reflects the Company's
principal lines of business ("Comparable Companies"). Competitive levels are
determined based upon the 50th to 75th percentile levels of compensation among
companies in the various surveys utilized. The Company's mix of businesses, its
unique stock ownership and its strategic and tactical objectives are considered
by the Committee when compensation policies are established.
Section 162(m) of the Internal Revenue Code (the "Code") generally
disallows a tax deduction to public companies for compensation over $1 million
paid to the Chief Executive Officer and the other four most highly compensated
individuals who are executive officers as of the end of the year. Qualifying
performance-based compensation is not subject to the deduction limit if certain
requirements are met. While it is the Committee's policy to preserve corporate
tax deductions by qualifying compensation paid over $1 million to named
executive officers, it also maintains the flexibility to approve compensation
arrangements that it deems to be in the best interests of the Company and its
stockholders but which may not always qualify for full tax deductibility.
COMPENSATION PHILOSOPHY
The discussion below outlines the Committee's philosophy for administering
the three major components of executive pay: base salary, annual incentive and
long-term incentive.
Base Salaries. The Committee determines base salaries of executives in
accordance with the following factors listed in order of importance: the
significance of the executive's position to the Company, the executive's
experience and expertise in his or her position, and competitive marketplace
salaries for similar positions. Individual salary increases are based on each
person's performance as evaluated and approved by the Committee. Base salaries
for current executive officers increased, on average, 8.5 percent in 1996,
following no increases in base salaries for persons who were executive officers
in 1995. The Committee's policy is to position base salaries at or below
competitive levels for similarly qualified executives in comparable positions.
Annual Incentive Bonus. Since 1987, the Company has utilized an annual
incentive pay plan that provides above average bonus opportunities when Company
performance merits such awards. Target bonuses for executive officers in 1996
range from 65 percent to 100 percent of their respective base salaries.
For 1996, the maximum bonus potential, according to the formula in the
plan, would be triggered at achievement of 130 percent of targeted income from
operations, and the minimum bonus award required the achievement of 70 percent
of targeted income from operations. Achievements in excess of 130 percent of
income from operations targets or personal achievements of particular
significance could result in bonuses in excess of 200 percent of target bonuses.
The annual performance target, other performance objectives, and maximum and
minimum performance levels, are reviewed and approved by the Committee at the
beginning of each year.
In 1996, the Committee weighted 75 percent of the bonus on financial goals
and 25 percent of the bonus on the Committee's assessment of an individual
executive's performance. In determining individual awards, the Committee
considered the following factors: achievement of record levels of income from
operations at the Company which exceeded targets; the completion of the sale of
Riverwood International Corporation and the subsequent payment to stockholders
of a $6.00 per share dividend; and completion of several acquisitions and
strategic alliances during 1996. For 1996, the Company's various business
divisions achieved between 81 percent and 119 percent of their respective income
from operations targets while the Company, as a whole, achieved 102 percent of
its income from operations target. The Committee also took into account the
Chief Executive Officer's appraisal of each senior officer. The Committee made
its decision regarding individual awards without expressly weighting any of the
foregoing criteria higher than any other of such criteria. Based on the
achievements described above, aggregate annual incentive compensation for
executive officers in 1996 was 119 percent of target bonuses.
9
<PAGE> 14
Long-Term Incentive Plans. To attract and retain top quality management,
the Company has used several types of long-term, equity-related incentives for
the Company's executive officers: stock options, stock appreciation rights
("SARs"), restricted stock, and cash payments based on dividends and other
distributions on its Common Stock. In 1996, the Company adopted the Schuller
Corporation 1996 Executive Incentive Compensation Plan (the "Stock Plan"), which
was approved by stockholders at the 1996 Annual Meeting.
Effective January 1, 1996, the Committee granted ten-year stock options and
deferred stock awards to its executive officers in amounts representing a
five-year long-term incentive grant. These options and awards were granted under
the Stock Plan and are intended to recognize the joint commitment of the Board
of Directors and key management to a new five-year growth strategy and the
creation of stockholder value. The exercise price of 60 percent of the options
was established at $10.625 per share, the market price of the Common Stock (the
"Market Price") on June 7, 1996, the actual date of grant, and the exercise
price of the remaining 40 percent of the options was established at $13.281 per
share, which represents a twenty-five percent premium over the Market Price.
Fifty percent of the options vested at December 31, 1996 and 50 percent will
vest on December 31, 1997. The deferred stock awards represent the right to
receive Common Stock or the value thereof and current dividends thereon. Sixty
percent of the deferred stock will vest on December 31, 1998, and the remainder
will vest in equal amounts on December 31, 1999 and December 31, 2000.
In 1996, the Company made payments to certain executive officers with
respect to awards previously made under the Schuller International Group, Inc.
1994 Long Term Cash Incentive Compensation Plan (the "Schuller Plan"). Awards
under the Schuller Plan are in the form of performance units. The value of
performance units paid in 1996 was determined based on Schuller's performance
over the 1994 to 1996 period against a financial goal of cumulative earnings
before interest, taxes, depreciation and amortization or "EBITDA." The Committee
established EBITDA performance minimums, targets and maximums corresponding with
the 50th percentile, 75th percentile and 90th percentile, respectively, of the
historical performance of Comparable Companies. Consistent with this range of
performance, awards for the 1994 to 1996 performance period were intended to
provide target long-term incentive opportunities at the 75th percentile of the
long-term compensation paid by Comparable Companies. Executive officers who
elected to defer receipt of their awards for the 1994 to 1996 performance
period, and to have such awards deemed to be invested in Common Stock for at
least two years, will receive a 15% matching premium grant of deferred stock
awards at the end of the two-year period.
CEO Compensation. Mr. Henry's total compensation has been determined in
accordance with the principles described above which are applicable to all
executive officers of the Company. Mr. Henry's 1996 base salary of $650,000 was
well below the average of annual salaries for chief executive officers of
Comparable Companies. Mr. Henry's employment agreement entered into in
connection with his hiring by the Company on September 9, 1996, obligated the
Company to pay Mr. Henry an annual incentive bonus for 1996 of $650,000 less the
annual incentive bonus paid to Mr. Henry by DuPont in respect of 1996. DuPont
paid Mr. Henry an annual incentive bonus in respect of 1996 of $320,000.
Accordingly, the Company paid Mr. Henry $330,000 as an annual incentive bonus
for 1996. The employment agreement also provides for the Company to pay Mr.
Henry an annual incentive bonus of not less than $650,000 with respect to 1997.
In addition, similar to other executive officers, Mr. Henry received a five-year
long-term incentive grant consisting of options to purchase 519,500 shares at
$10.625 per share and 346,330 shares at $13.281 per share, as well as deferred
stock awards representing the right to receive 235,294 shares of Common Stock.
The vesting conditions and other terms and conditions of Mr. Henry's long-term
incentive grant are the same as described above with respect to other executive
officers.
Mr. Stephens resigned as Chief Executive Officer effective September 9,
1996. The compensation payable to Mr. Stephens for 1996 was in accordance with
an agreement between the Company and Mr. Stephens dated April 12, 1996, which is
described on page 18. In addition, Mr. Stephens was paid an annual incentive
bonus of $468,197 for 1996, which represented a pro rata payment of his 1995
bonus amount through the date of his resignation.
10
<PAGE> 15
The Committee believes the design of its total compensation system
accomplishes the Company's goals of attracting new management talent, retaining
the Company's high quality ongoing management team and aligning the interests of
these executives with those of stockholders.
1996 COMPENSATION COMMITTEE
Todd Goodwin, Chairman
Leo Benatar
Robert A. Falise
Michael N. Hammes
Louis Klein, Jr.
11
<PAGE> 16
COMPENSATION SUMMARY
The following Summary Compensation Table sets forth the compensation earned
from the Company during 1994 through 1996 by Charles L. Henry, the Company's
current Chief Executive Officer, W. Thomas Stephens, the Company's Chief
Executive Officer from January 1, 1996 through September 9, 1996, and by each of
the other four most highly compensated executive officers of the Company during
1996 (the "Named Executive Officers"). Bonuses are shown for the year earned,
although these are generally (except for Mr. Stephens' 1996 bonus) paid at the
beginning of the subsequent year.
SCHULLER CORPORATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------- -----------------------------------
AWARDS PAYOUTS
----------------------- ---------
OTHER RESTRICTED SECURITIES LTCIP
ANNUAL STOCK UNDERLYING PAYOUTS ALL OTHER
NAME AND COMP. AWARD(S) OPTIONS/ --------- COMP.
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) (1) ($) (2) SARS(#) ($) (3) ($) (4)
------------------ ---- ---------- --------- ------------ ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles L. Henry(5).............. 1996 203,125 330,000 1,519 2,499,999 865,830 -0- 80,575
Chairman of the Board, 1995 -0- -0- -0- -0- -0- -0- -0-
CEO & President 1994 -0- -0- -0- -0- -0- -0- -0-
Kenneth L. Jensen................ 1996 210,000 170,000 6,345 412,463 208,620 804,372 9,000
Senior Vice President and 1995 200,000 175,000 2,381 -0- -0- -0- 9,000
Chief Financial Officer 1994 163,333 185,000 14,244 -0- -0- -0- 9,000
Harvey L. Perry, Jr.............. 1996 210,000 200,000 1,379 412,463 208,620 273,381 9,000
Senior Vice President, 1995 168,750 175,000 226 -0- -0- -0- 9,000
Global Engineered 1994 143,750 140,000 1,860 -0- -0- -0- 9,000
Products Group
Richard B. Von Wald.............. 1996 275,000 250,000 5,232 1,244,049 295,660 70,560 9,000
Executive Vice 1995 275,000 300,000 -0- -0- -0- -0- 9,000
President, General 1994 245,833 275,000 5,925 (6) -0- -0- 9,000
Counsel and Secretary
Dixon R. Walker.................. 1996 275,000 225,000 2,597 584,481 295,660 1,075,951 9,000
Senior Vice President, 1995 250,000 215,000 1,909 -0- -0- -0- 9,000
Global Insulation Group 1994 212,917 286,867 2,810 -0- -0- -0- 9,000
W. Thomas Stephens(7)............ 1996 412,500 468,197 287 -0- -0- 403,200 5,913,431
Retired 1995 600,000 680,000 2,096 -0- 100,000 -0- 9,000
1994 600,000 650,000 2,506 (6) -0- -0- 9,000
</TABLE>
(1) Other Annual Compensation represents amounts reimbursed by the Company to
the Named Executive Officers in respect of the taxable value of perquisites
provided to such officers.
(2) The number and value of aggregate restricted and deferred Common Stock
holdings for each of the Named Executive Officers at the end of 1996, based
on the net fair market value of the Common Stock on December 31, 1996, are
as follows: Mr. Henry -- 235,294 shares with a value of $2,499,999; Mr.
Jensen -- 38,820 shares with a value of $412,463; Mr. Perry -- 38,820 shares
with a value of $412,463; Mr. Von Wald -- 93,211 shares with a value of
$990,367; Mr. Walker -- 55,010 shares with a value of $584,481 and Mr.
Stephens -- 0 shares. The restricted shares of Common Stock awarded to Mr.
Stephens and Mr. Von Wald in 1994 related to certain retirement benefits.
See note (6) below.
12
<PAGE> 17
The following table shows the vesting schedule of all shares awarded which,
as of December 31, 1996, had not previously vested for the Named Executive
Officers:
<TABLE>
<CAPTION>
1997 1998 1999 2000 TOTAL
------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C>
C. L. Henry............................. -- 141,176 47,059 47,059 235,294
K. L. Jensen............................ -- 23,292 7,764 7,764 38,820
H. L. Perry, Jr......................... -- 23,292 7,764 7,764 38,820
D. R. Walker............................ -- 33,006 11,002 11,002 55,010
R. B. Von Wald.......................... 23,876 47,331 11,002 11,002 93,211
</TABLE>
Each share of deferred stock is entitled to receive a payment equal to
dividends declared and paid on shares of the Common Stock. Upon the
occurrence of certain events which constitute a Change in Control (as
defined under "Employment Agreements and Other Arrangements") and upon the
occurrence of certain events described in the award agreements (including
certain terminations of employment) all outstanding shares of restricted
and deferred stock become immediately vested and, in the case of deferred
stock, their value may be paid in cash to the holders.
(3) Amounts include payments made under the Company's 1991 Long-Term Cash
Incentive Plan, paid in consideration of the forfeiture by participants of
their rights to participate in divided payments under such plan. For Messrs.
Jensen, Perry and Walker, amounts also include payments made under the
Schuller International Group, Inc. 1994 Long Term Cash Incentive
Compensation Plan.
(4) Amounts in this column represent the Company's contribution to each of the
Named Executive Officers' accounts in the Schuller Corporation Thrift Plan.
For Mr. Henry, amounts include relocation expenses. In addition, for Mr.
Stephens, amounts include certain payments made in connection with the
agreement relating to Mr. Stephens' termination. See "Employment Agreements
and Other Arrangements.
(5) Mr. Henry joined the Company effective September 9, 1996.
(6) Messrs. Stephens and Von Wald received restricted stock awards, as well as
cash payments, in 1994 as a partial offset to certain supplemental
retirement benefits. See "Employment Agreements and Other Arrangements."
(7) Mr. Stephens resigned from the Company effective September 9, 1996.
13
<PAGE> 18
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information concerning options granted to the
Named Executive Officers during 1996. The hypothetical present value on date of
grant shown in the last column below for stock options granted in 1996 are
presented pursuant to the rules of the Securities and Exchange Commission and
are calculated under the modified Black-Scholes model for pricing options. The
Company is not aware of any model or formula that will determine with reasonable
accuracy a present value for stock options. The actual before-tax amount, if
any, realized upon the exercise of stock options will depend upon the excess, if
any, of the market price of the Common Stock over the exercise price of the
stock option at the time the stock option is exercised. There is no assurance
that the hypothetical present values of the stock options reflected in the
following table will be realized.
SCHULLER CORPORATION
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE OR
UNDERLYING GRANTED TO BASE PRICE GRANT DATE
OPTIONS/SARS EMPLOYEES IN PER SHARE EXPIRATION PRESENT VALUE
NAME GRANTED(1) FISCAL YEAR (2) DATE ($)(3)
---- ------------ ---------------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Charles L. Henry........ 519,500 16.5% $10.625 12/31/2005 1,940,100
346,330 $13.281 1,010,000
Kenneth L. Jensen....... 125,170 4.0% $10.625 12/31/2005 443,500
83,450 $13.281 225,900
Harvey L. Perry, Jr..... 125,170 4.0% $10.625 12/31/2005 443,500
83,450 $13.281 225,900
Richard B. Von Wald..... 177,400 5.6% $10.625 12/31/2005 628,600
118,260 $13.281 320,200
Dixon R. Walker......... 177,400 5.6% $10.625 12/31/2005 628,600
118,260 $13.281 320,200
W. Thomas Stephens(4)... -0- -- -- -- -0-
</TABLE>
(1) The options granted in 1996 to Mr. Henry vest and become exercisable on
December 31, 1997. The options granted in 1996 to the other Named Executive
Officers (the "1996 Options") vest and become exercisable in two equal
installments on each of December 31, 1996 and December 31, 1997. Upon the
occurrence of certain events which constitute a Change in Control (as
defined under "Employment Agreements and Other Arrangements"), all 1996
Options immediately vest and become exercisable.
(2) The exercise price of 60 percent of the 1996 Options was established at
$10.625 per share, and the exercise price of 40 percent of the 1996 Options
was established at $13.281 per share.
(3) Mr. Henry was granted options on September 9, 1996; the other named
executive officers were granted options on June 7, 1996. The hypothetical
present values on grant date are calculated under the modified Black-Scholes
Model, which is a mathematical formula used to value options traded on stock
exchanges. This formula considers a number of factors in hypothesizing an
option's present value. Factors used to value 1996 Options include the
stock's expected volatility rate (32%), risk free rate of return (6.73%),
expected dividend yield (1.1%), expected time of exercise (5 years) and
projected risk of forfeiture or non-marketability during the vesting period
(3.75%). Factors used to value options granted on June 7, 1996 include the
stock's expected volatility rate (30%) risk free rate of return (6.64%),
expected dividend yield (1.1%), expected time to exercise (5 years), and
projected risk of forfeiture or non-marketability during the vesting period
(5%).
(4) Mr. Stephens resigned from the Company effective September 9, 1996.
14
<PAGE> 19
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
YEAR-END OPTION/SAR VALUES
The following table provides information concerning the exercise of stock
options and SARs by the Named Executive Officers during 1996 and the value of
unexercised options and SARs.
SCHULLER CORPORATION
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION/SAR VALUES
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FY-END(#) FY-END($)(1)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Charles L. Henry............ None None 432,915/432,915 0/0
Kenneth L. Jensen........... 7,000 51,625(2) 104,310/104,310 0/0
Harvey L. Perry, Jr......... None None 104,310/104,310 0/0
Richard B. Von Wald......... 42,400 280,900(3) 173,830/197,330 255,500/495,000
Dixon R. Walker............. 7,000 58,625(4) 147,830/147,830 0/0
W. Thomas Stephens(5)....... 104,000 1,378,000(6) 0/0 0/0
</TABLE>
- - ---------------
(1) Based upon the closing price of the Common Stock of $10.00 on December 31,
1996, none of the options were in-the-money, except for an aggregate of
75,000 options for Mr. Von Wald which had an exercise price of $4.00 per
share.
(2) On April 1, 1996, Mr. Jensen exercised 7,000 options with a weighted
exercise price of $6.875 per share at which time the fair market value of
the Common Stock was $14.25 per share.
(3) On April 8, 1996, Mr. Von Wald exercised 42,400 options with a weighted
exercise price of $7.625 per share at which time the fair market value of
the Common Stock was $14.25 per share.
(4) On April 2, 1996, Mr. Walker exercised 7,000 options with a weighted
exercise price of $6 per share at which time the fair market value of the
Common Stock was $14.375 per share.
(5) Mr. Stephens resigned from the Company effective September 9, 1996.
(6) On April 8, 1996, Mr. Stephens exercised 104,000 options with a weighted
exercise price of $7.625 per share at which time the fair market value of
the Common Stock was $14.25 per share. On March 28, 1996, Mr. Stephens
exercised 104,000 SARs and received $689,000.
PENSION PLAN
Salaried employees and employees at designated non-union locations of the
Company and its subsidiaries are participants in the Schuller International
Employees Retirement Plan (the "Retirement Plan"). Pension benefits under the
Retirement Plan are limited to the amounts allowed by the provisions of the
Code. The Company has adopted a Supplemental Pension Plan ("Supplemental Plan")
that provides for payment of the difference between the benefits earned pursuant
to the Retirement Plan, without regard to Code limits, and the amounts actually
available from the Retirement Plan. Former and current executive officers (other
than Messrs. Stephens and Von Wald), and other employees, are eligible to
participate in the Supplemental Plan. In addition, Mr. Henry is entitled to an
individual retirement arrangement under the terms of his employment agreement
and Messrs. Stephens and Von Wald were parties to individual supplemental
retirement arrangements adopted in 1994 in connection with which they received
restricted stock awards and cash payments in 1994 as a partial offset to certain
supplemental retirement benefits. See "Employment Agreements and Other
Arrangements." The Supplemental Plan may be funded by contributions to an
irrevocable Supplemental Pension Plan Trust ("Pension Trust") for the accounts
of participants or to the
15
<PAGE> 20
Schuller Corporation Master Rabbi Trust ("Rabbi Trust"). No contributions were
made to the Pension Trust in 1996. Contributions, if any, to the Pension Trust
to fund the Supplemental Plan and earnings thereon are fully taxable to the
individual, deductible by the Company and are reduced by applicable withholding
taxes. Contributions of $2.2 million were made to the Rabbi Trust in 1996.
Contributions to the Rabbi Trust to fund the Supplemental Plan are not taxable
to the individual nor deductible by the Company until made available to the
individual. Rabbi Trust earnings are taxable to the Company.
The following Pension Plan Table sets forth the estimated annual benefits
payable upon retirement, including amounts attributable to the Supplemental
Plan, for specified remuneration levels and years of service.
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------
REMUNERATION 15 25 30 35 20
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 125,000................................... $ 24,678 $ 32,904 $ 41,130 $ 49,356 $ 57,582
150,000................................... 29,929 39,905 49,881 59,857 69,833
175,000................................... 35,177 46,903 58,629 70,355 82,081
200,000................................... 40,428 53,904 67,380 80,856 94,332
250,000................................... 50,927 67,903 84,879 101,855 118,831
300,000................................... 61,429 81,905 102,381 122,857 143,333
400,000................................... 82,427 109,903 137,379 164,855 192,331
500,000................................... 103,428 137,904 172,380 206,856 241,332
600,000................................... 124,429 165,905 207,381 248,857 290,333
700,000................................... 145,427 193,903 242,379 290,855 339,331
800,000................................... 166,428 221,904 277,380 332,856 388,332
900,000................................... 187,429 249,905 312,381 374,857 437,333
1,000,000.................................. 208,427 277,903 347,379 416,855 486,331
</TABLE>
- - ---------------
NOTES:
(1) Had the Named Executive Officers retired as of December 31, 1996, their
respective five-year average salaries plus bonus, for purposes of the table
set forth above, would have been as follows: Mr. Jensen, $288,750; Mr.
Perry, $288,833; Mr. Stephens, $933,181; Mr. Von Wald, $430,167; Mr. Walker,
$388,413. Mr. Henry is not eligible to participate in the retirement plan
until he has completed one full year of service with the Company.
(2) On December 31, 1996, the Named Executive Officers had the following years
of credited service under the Retirement Plan: Mr. Henry, 0; Mr. Jensen, 13;
Mr. Perry, 18; Mr. Stephens, 30; Mr. Von Wald, 23; and Mr. Walker, 26.
(3) The Retirement Plan provides for payment of a retirement allowance based on
1.02 percent of the participant's five-year average final salary up to
Covered Compensation (as defined in the Retirement Plan) plus 1.4 percent of
the participant's average final salary greater than Covered Compensation
multiplied by the participant's years of benefit service up to a maximum of
35 years plus 1.33 percent of the participant's average final salary
multiplied by the participant's years of service over 35 plus 2.5 percent of
the value of the participant's refunded contributions and interest
compounded at 5.0 percent until normal retirement age. Covered Compensation
in 1996 was $25,920 and will be $27,576 in 1997. Salary, as defined in the
Retirement Plan, includes payments under the Company's annual incentive pay
plan, but excludes payments under the Company's Stock Plan. The benefits are
determined by using straight-life annuity amounts and are not subject to
reduction for Social Security benefits.
16
<PAGE> 21
EMPLOYMENT AGREEMENTS AND OTHER ARRANGEMENTS
Each of the Named Executive Officers and certain other salaried executives
of the Company have entered into three-year employment agreements that provide
for lump sum separation payments upon any termination of employment other than
termination for cause, voluntary resignation without "good reason" as defined in
the employment agreements, or termination as a result of death, disability or
retirement. In connection with Mr. Stephens' resignation effective June 7, 1996
as Chairman of the Board, his three-year employment agreement was terminated.
For the Named Executive Officers, prior to a Change in Control, as defined
below, separation payments under such contracts generally would have equaled a
total of two times the annual salary, the full year bonus at target levels of
performance under the Company's annual incentive pay plan and certain other
benefits. Following a Change in Control, the definitions of "cause" and "good
reason" are liberalized and benefits payable are enhanced. Following a Change in
Control, upon a termination of employment other than (i) for cause, (ii) a
voluntary resignation without "good reason," or (iii) as a result of death,
disability or retirement, benefits include two years' annual salary, two years'
target annual bonus, two years' additional credit in certain cases under the
Supplemental Plan, a pro-rata portion of the target annual bonus for the year of
termination, 36 months of continued welfare benefits and 24 months of continued
perquisites. Change in Control is defined in the employment agreements to
include a variety of events, including significant changes in the Company's
stock ownership or board of directors and sales of significant assets by the
Company.
In order to provide Mr. Henry with retirement benefits comparable to the
retirement benefits he would have earned at DuPont, Mr. Henry's employment
agreement also provides for certain supplemental retirement benefits, generally
equal in value to a single life annuity of $932,740 per year less the amount of
all annual payments which Mr. Henry is entitled to receive under all defined
benefit plans maintained by the Company and by DuPont. The retirement benefits
are subject to reduction in the event Mr. Henry's employment terminates prior to
his attaining the age of 62.
The Company has agreed that the Riverwood Disposition constitutes both a
Change in Control and an event of "good reason" for purposes of Mr. Von Wald's
compensation arrangements. The Company and Mr. Von Wald also entered into an
amendment to his employment agreement pursuant to which the Company agreed that
if Mr. Von Wald is determined to be subject to any Excise Tax (as defined below)
as a result of any payments made to him following termination of his employment
by the Company other than for cause or other than voluntary termination for
"good reason" (other than relating to the Company's sale of Riverwood
International Corporation in 1996), or following a Change in Control occurring
after March 27, 1996, the Company shall pay Mr. Von Wald an amount which, after
taking into account any federal, state and local income taxes and excise taxes
upon such amount, is equal to the amount of the Excise Tax.
The Company has entered into supplemental retirement agreements with
Messrs. Stephens and Von Wald in replacement of prior supplemental retirement
arrangements. The supplemental retirement agreement for each of them provides
for the Company to pay each upon his termination of employment a lump sum
benefit (the "Supplemental Benefit") equal to the present value of a single life
annuity commencing at the time of such termination ranging from 30 percent to 60
percent of his highest average base salary plus cash bonus for three consecutive
years during the preceding ten years ("Average Pay"), offset by amounts payable
under the Retirement Plan plus certain other amounts, including the restricted
stock awards granted in 1994 of 340,000 shares and 150,000 shares, respectively,
and cash payments made during 1994 of $1,300,000 and $500,000, respectively, and
other payments previously made and to be made in connection with the executives'
retirement arrangements. The 1994 restricted stock awards have a five-year
vesting schedule, subject to acceleration on a Change in Control, and had a fair
market value on the date of grant of $3,099,100 and $1,367,250, respectively.
The vesting of the restricted stock and payment of dividends thereon are subject
to a cap related to the supplemental retirement arrangements. If termination
were to occur (i) after attaining age 62, (ii) without cause, (iii) for "good
reason," (iv) for death or "disability," or (v) after the occurrence of a Change
in Control, the Supplemental Benefit would be 60 percent of Average Pay, and
would be increased to
17
<PAGE> 22
compensate for the impact of the timing of taxation of the Supplemental Benefit
(and the offsets thereto) as compared with the tax treatment of a single life
annuity. The sale by the Company of Riverwood International Corporation in 1996
constituted a Change in Control for the foregoing purposes, resulting in the
vesting of both the 1994 restricted stock awards and the full Supplemental
Benefits described above.
Pursuant to an agreement entered into in connection with Mr. Stephens'
resignation from the Company, the Company (i) paid Mr. Stephens an aggregate of
$6,887,416 which includes payment of the balance of his Supplemental Benefit and
amounts payable under his employment agreement and (ii) agreed to continue to
provide Mr. Stephens with welfare benefits and perquisites for 36 months and to
continue to compensate Mr. Stephens at a rate of $50,000 per month through no
later than December 31, 1997, subject to earlier termination in certain
circumstances. The Company also agreed that if Mr. Stephens is determined to be
subject to any excise tax under Code Section 4999 and related interest and
penalties as a result of any payments made to him ("Excise Tax"), the Company
shall pay Mr. Stephens an amount which, after taking into account any federal,
state and local income taxes and excise taxes upon such amount, is equal to the
amount of the Excise Tax.
From time to time, the Company repurchases up to 45 percent of the Common
Stock that certain key executives from the Company upon the vesting of such
stock in order to provide such executives with funds for related income tax
obligations. Pursuant to a repurchase program approved by the Company's Board of
Directors in September 1995, in connection with the sale of a subsidiary of the
Company and related transactions, the Company repurchased 746,869 shares of
Common Stock from Messrs. Stephens and Von Wald on April 8, 1996, at a price of
$14.175 per share. The closing sales price for the Common Stock on the New York
Stock Exchange, Inc. on April 8, 1996 was $14.50 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is currently comprised of Messrs. Benatar,
Falise, Goodwin (Chairman), Hammes and Klein. No interlocks existed and no
insider participation occurred during 1996 between the Compensation Committee
and the officers or employees of the Company.
18
<PAGE> 23
PERFORMANCE GRAPH
Presented below is a graph comparing the total stockholder return on Common
Stock, assuming full dividend reinvestment, with the Standard & Poor's 500 Index
(S&P 500) and the Standard & Poor's Building Materials Index (S&P Building
Materials). The graph compares the Company's performance to the other indices
for the five-year period ended December 31, 1996.
SCHULLER CORPORATION
[GRAPH]
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the identity of beneficial owners believed
by the Company to own more than five percent of the outstanding shares of Common
Stock as of March 31, 1997.
<TABLE>
<CAPTION>
AMOUNT OF BENEFICIAL PERCENT OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS
-------------- ------------------------------------ -------------------- ----------
<S> <C> <C> <C>
Common Stock............ Manville Personal Injury Settlement Trust(1) 128,527,110 shares 79.7%
8260 Willow Oaks Corporate Drive
Sixth Floor
P. O. Box 10415
Fairfax, Virginia 22031
</TABLE>
- - ---------------
(1) At March 3, 1997, the Trustees of the Trust were: Robert A. Falise, Chairman
and Managing Trustee, Louis Klein, Jr., Frank J. Macchiarola and Christian
E. Markey, Jr., each of whom serves on the Company's Board of Directors.
19
<PAGE> 24
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of Common Stock
beneficially owned by all Directors and Named Executive Officers, and all
Directors and executive officers as a group as of March 31, 1996. As of March
31, 1996, the percentage of Common Stock beneficially owned by any Director,
Named Executive Officer or by all Directors, and executive officers as a group,
did not exceed 1.0 percent of the outstanding shares of the Common Stock,
excluding the 128,527,110 shares of Common Stock owned by the Trust
(constituting 79.7% of the outstanding shares of Common Stock) and attributed to
certain directors who disclaim beneficial ownership of such shares.
<TABLE>
<CAPTION>
COMMON STOCK
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED
------------------------ ------------------
<S> <C>
Leo Benatar................................................. 6,701(1)
Robert A. Falise............................................ 128,527,110(2)
Todd Goodwin................................................ 30,166(3)
Michael N. Hammes........................................... 7,298(4)
John N. Hanson.............................................. 9,298(4)
Kathryn R. Harrigan......................................... 3,646(5)
Charles L. Henry............................................ 695,031(6)
Kenneth L. Jensen........................................... 158,630(7)
Louis Klein, Jr. ........................................... 128,527,110(2)
Frank J. Macchiarola........................................ 128,527,110(2)
Christian E. Markey, Jr. ................................... 128,527,110(2)
William E. Mayer............................................ 22,270(8)
Harvey L. Perry, Jr. ....................................... 143,130(9)
W. Thomas Stephens.......................................... 0(10)
Richard B. Von Wald......................................... 367,137(11)
Dixon R. Walker............................................. 202,840(12)
All Directors and executive officers as a group (15
persons).................................................. 130,173,257(13)
</TABLE>
- - ---------------
(1) Includes 2,201 deferred shares issuable under the Non-Employee Directors'
Deferred Compensation Plan.
(2) All of these 128,527,110 shares of Common Stock are owned by the Trust, of
which Mr. Falise is the Chairman and Managing Trustee, and Messrs. Klein,
Macchiarola and Markey are Trustees. Voting power with respect to such
shares is shared by all four Trustees of the Trust, and none of Messrs.
Falise, Klein, Macchiarola or Markey can vote the shares alone. Each of
Messrs. Falise, Klein, Macchiarola and Markey disclaims beneficial
ownership of any shares of Common Stock. Pursuant to the Trust Agreement,
no Trustee may individually own any securities of the Company or its
affiliates or have any other direct or indirect financial interest in the
Company or its affiliates.
(3) Includes 11,066 deferred shares issuable under the Non-Employee Directors'
Deferred Compensation Plan.
(4) Includes 7,298 deferred shares issuable under the Non-Employee Directors'
Deferred Compensation Plan.
(5) Includes 3,646 deferred shares issuable under the Non-Employee Directors'
Deferred Compensation Plan.
(6) Includes options to purchase 432,915 shares, 235,294 deferred shares
granted under the Stock Plan and 26,822 deferred shares issuable under the
Schuller Corporation Deferred Compensation Plan.
(7) Includes options to purchase 107,310 shares and 38,820 deferred shares
granted under the Stock Plan.
(8) Includes 2,270 deferred shares issuable under the Non-Employee Directors'
Deferred Compensation Plan.
(9) Includes options to purchase 104,310 shares and 38,820 deferred shares
granted under the Stock Plan.
(10) Mr. Stephens resigned from the Company on September 9, 1996.
20
<PAGE> 25
(11) Includes options to purchase 253,340 shares and 93,211 deferred shares
granted under the Stock Plan.
(12) Includes options to purchase 147,830 shares and 55,010 deferred shares
granted under the Stock Plan.
(13) Includes 33,779 deferred shares issuable under the Non-Employee Directors'
Deferred Compensation Plan; 26,822 deferred shares under the Schuller
Corporation Deferred Compensation Plan, options to purchase 1,045,705
shares and 461,155 deferred shares granted under the Stock Plan; and
128,527,110 shares owned by the Trust. See note (2) above.
PROPOSAL TO CHANGE THE NAME OF THE COMPANY
(PROXY ITEM NO. 2)
INTRODUCTION
The Board has unanimously adopted a resolution approving a proposed
amendment to change the Company's name in the form set forth in paragraph 3 of
the Certificate of Amendment to the Company's Restated Certificate of
Incorporation attached as Annex I hereto and incorporated herein by reference.
The Company intends that the Certificate of Amendment will be filed with the
Secretary of State of the State of Delaware, subject to prior authorization by
stockholders, and become effective promptly following the Annual Meeting,
provided that the Board may abandon such proposed amendment at any time prior to
filing, whether or not such proposed amendment is approved at the Annual
Meeting.
NAME CHANGE
The proposed amendment provides that the name of the Company will be
changed to "Johns-Manville Corporation."
REASONS FOR THE NAME CHANGE
The Company has a 138-year heritage as a major manufacturer of high quality
building products. For most of its history, the Company has been known as
Johns-Manville Corporation. Despite prior changes of the Company's name, the
marketplace has continued to view the Company as Johns-Manville Corporation.
Survey research conducted with customers, suppliers, employees and the general
public confirm that the name "Johns-Manville" has greater awareness and
favorability ratings than the names "Schuller Corporation" or "Manville
Corporation." The Company believes that a return to the Johns-Manville
Corporation name will facilitate the Company's sales and marketing efforts
domestically and internationally. Therefore, the Company believes the name
change is in the best interests of its stockholders.
CERTAIN EFFECTS OF THE PROPOSED AMENDMENT
The proposed name change will not affect the operations or businesses, or
the rights of stockholders, of the Company. As soon as practicable following
effectiveness of the Certificate of Amendment, the Company will cause
transmittal letters to be mailed to stockholders for use in forwarding their
stock certificates for surrender and exchange for new stock certificates.
STOCKHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH THEIR PROXY
CARDS.
RECOMMENDATION OF THE BOARD
The Board unanimously recommends that stockholders vote FOR approval of the
proposed amendment to change the name of the Company as proposed to be effected
pursuant to the Certificate of Amendment.
21
<PAGE> 26
PROPOSAL TO INCREASE THE NUMBER
OF AUTHORIZED SHARES OF COMMON STOCK
(PROXY ITEM NO. 3)
INTRODUCTION
The Board has unanimously adopted a resolution approving a proposed
amendment to increase the number of authorized shares of Common Stock in the
form set forth in paragraph 4 of the Certificate of Amendment to the Company's
Restated Certificate of Incorporation attached as Annex I hereto and
incorporated herein by reference. The Company intends that the Certificate of
Amendment will be filed with the Secretary of State of the State of Delaware,
subject to prior authorization by stockholders, and become effective promptly
following the Annual Meeting, provided that the Board may abandon such proposed
amendment at any time prior to filing, whether or not such proposed amendment is
approved at the Annual Meeting. Currently, the Company's Certificate of
Incorporation authorizes the issuance of 175,000,000 shares of Common Stock.
INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors of the Company proposes to amend the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock for issuance by the Company to 300,000,000 shares. The Board of
Directors believes that the proposed increase in the number of authorized shares
of Common Stock is necessary for the various reasons discussed below.
REASONS FOR INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors believes that it is in the best interest of the
Company to have authorized and available 300,000,000 shares of Common Stock in
order to have sufficient authorized but unissued and unreserved shares for
future issuance to meet the possible needs of the Company without the delay and
expense of obtaining prior approval of the stockholders of the Company,
including:
- issuances in connection with acquisitions, mergers, raising additional
equity capital and other financing transactions involving the issuance of
securities;
- issuances under employee benefit plans or pursuant to management
compensation arrangements; and
- issuances in connection with exchanges of stock, stock splits, stock
dividends and for other corporate purposes.
As of the Record Date for the Annual Meeting, there were 161,531,765 shares
of Common Stock issued and outstanding. In addition, 9,216,202 shares are
reserved for issuance for awards under the Schuller Corporation Deferred
Compensation Plan, the Schuller Corporation 1996 Stock Award Plan and the
Schuller Corporation 1996 Executive Incentive Compensation Plan and for other
purposes. Taking into account the foregoing reserved shares, as of the Record
Date, a total of 170,747,967 shares of Common Stock are issued and outstanding
and reserved for future issuance, leaving available only 4,005,310 shares for
future issuance. The Board of Directors believes that the authorization of an
additional 125,000,000 shares of Common Stock is appropriate and desirable to
serve the Company's possible needs in the foreseeable future. The Company does
not have any present intention with respect to the issuance of additional shares
of Common Stock in connection with any acquisitions, public or private
offerings, employee benefit plans, stock dividends or any other transaction
involving equity securities of the Company.
The authorized shares of Common Stock will be available for issuance from
time to time in connection with the types of transactions noted above for such
consideration as the Board of Directors may approve without further vote of the
stockholders of the Company, except as may be required under applicable law,
rules or regulations.
22
<PAGE> 27
RECOMMENDATION OF THE BOARD
Your Board of Directors recommends a vote FOR approval of the proposal to
amend the Company's Certificate of Incorporation to increase the number of
authorized shares of Common Stock as proposed to be effected pursuant to the
Certificate of Amendment.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(PROXY ITEM NO. 4)
The Board of Directors, acting upon the recommendation of the Audit
Committee, has appointed, subject to ratification by the stockholders at the
forthcoming Annual Meeting, the firm of Coopers & Lybrand L.L.P. as independent
accountants of the Company for the year 1997. Coopers & Lybrand L.L.P. has acted
as the independent accountants of the Company for more than fifty years and, the
Company is advised, has had no financial interest, direct or indirect, in the
Company or any affiliate thereof, nor, other than providing certain non-audit
services, any other connection with the Company during the past three years.
For 1996, the Company paid Coopers & Lybrand L.L.P. approximately
$1,863,400 for audit services and approximately $283,200 for non-audit services.
Audit services rendered in 1996 included services related to recurring audit
activities and non-recurring audit activities principally for acquisition
reviews. Non-audit services consisted primarily of tax consultations.
Although the submission of this proposal to a vote of the stockholders is
not legally required, the Board of Directors believes that such action follows
sound corporate practice and is in the best interest of the stockholders, to
whom the independent accountants are ultimately responsible. In the event of a
negative vote on this proposal by a majority of the votes cast at the meeting by
the holders of shares entitled to vote thereon, or the termination of the
appointment of Coopers & Lybrand L.L.P. during the year by the Board of
Directors, management will recommend a different firm of independent accountants
for approval by the Board of Directors.
Your Board of Directors recommends a vote FOR ratification of the
appointment of Coopers & Lybrand L.L.P. as independent accountants of the
Company.
OTHER BUSINESS
Management knows of no business that will be presented for consideration
other than the matters described in the Notice of Annual Meeting. If other
matters are presented, it is the intention of the persons designated as Proxies
to vote in accordance with their judgment on such matters.
23
<PAGE> 28
VOTING PROCEDURES
The affirmative vote of the holders of a plurality of the shares of the
Common Stock present or represented by proxy at the Annual Meeting and entitled
to vote is required for the election of each Director nominee. Approval of the
proposals to adopt the proposed amendments to the Restated Certificate of
Incorporation to change the name of the Company and to increase the authorized
number of shares of Common Stock and to ratify the appointment of Coopers &
Lybrand L.L.P. may be authorized by a majority of the votes cast in person or by
proxy at the Annual Meeting by holders of shares of Common Stock entitled to
vote thereon. On all matters presented to stockholders, votes may be cast in
favor or against such matter, or a stockholder may abstain from voting.
Abstentions are counted for the purpose of determining the presence of a quorum
for the transaction of business. Abstentions are also counted in the tabulation
of the total number of shares entitled to vote on matters presented to
stockholders, and thus have the effect of a vote against the proposal. Brokers
who hold shares in street name for beneficial owners have the authority to vote
on certain routine matters, including without limitation, the election of
Directors and ratification of the appointment of accountants, when brokers have
not received voting instructions from the beneficial owners. As to other
matters, brokers may not vote shares held for beneficial owners without specific
instructions from such beneficial owners ("broker non-votes"). Broker non-votes
are counted for determining the presence of a quorum. Broker non-votes are not
counted, however, in the tabulation of the total number of shares entitled to
vote on matters presented to stockholders. The inspectors of election appointed
by the Company will count all votes cast, in person or by submission of a
properly executed proxy, before the closing of the polls at the Annual Meeting.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Company's 1998
Annual Meeting must be received by the Secretary of the Company no later than
December 1, 1997. Proposals received after that date may be excluded from the
Company's proxy materials. No stockholder proposals have been received by the
Secretary of the Company for presentation at the Company's 1997 Annual Meeting.
By Order of the Board of Directors
/s/ RICHARD B. VON WALD
Richard B. Von Wald
Executive Vice President,
General Counsel and Secretary
April 4, 1997
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, WITHOUT
EXHIBITS, MAY BE OBTAINED BY A STOCKHOLDER OF THE COMPANY, WITHOUT CHARGE, BY
WRITING TO SCHULLER CORPORATION, C/O INVESTOR RELATIONS, P. O. BOX 5108, DENVER,
COLORADO 80217-5108.
24
<PAGE> 29
ANNEX I
FORM OF CERTIFICATE OF AMENDMENT
TO
RESTATED CERTIFICATE OF INCORPORATION
OF
SCHULLER CORPORATION
---------------------
PURSUANT TO SECTION 103 AND SECTION 242 OF THE GENERAL CORPORATION
LAW OF THE STATE OF DELAWARE
---------------------
The undersigned, Charles L. Henry and Richard B. Von Wald, certify that
they are the President and Secretary, respectively, of Schuller Corporation, a
corporation organized and existing under the laws of the State of Delaware (the
"Company"), and do hereby further certify as follows:
1. The name of the Company is Schuller Corporation.
2. This Certificate of Amendment was unanimously approved by the Board
of Directors of the Company and thereafter duly adopted by the stockholders
thereof, in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware.
3. Article FIRST of the Restated Certificate of Incorporation of the
Company is hereby amended to read in its entirety as follows:
FIRST: The name of the corporation is Johns-Manville Corporation
(hereinafter the "Company").
4. The first sentence of Article FOURTH of the Restated Certificate of
Incorporation of the Company is hereby amended to read in its entirety as
follows:
FOURTH: The total number of shares of all classes of capital stock which
the Company shall have authority to issue is three hundred and eighteen million,
three hundred and nine thousand one hundred and seventy (318,309,170) shares, of
which three hundred million (300,000,000) shares shall be Common Stock with a
par value of $.01 per share, seven million two hundred thousand (7,200,000)
shares shall be Convertible Preferred Stock, Series A with a par value of $1.00
per share, and eleven million one hundred and nine thousand one hundred and
seventy (11,109,170) shares shall be Cumulative Preference Stock, Series B with
a par value of $1.00 per share.
IN WITNESS WHEREOF, Schuller Corporation has caused this Certificate of
Amendment to be signed by Charles L. Henry, its President, and attested by
Richard B. Von Wald, its Secretary, this day of , 1997.
SCHULLER CORPORATION
------------------------------------
Charles L. Henry
ATTEST:
- - ------------------------------------
Richard B. Von Wald
<PAGE> 30
SCHULLER CORPORATION
PROXY FOR 1997 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Charles L. Henry and Richard B. Von Wald
or either of them as Proxies, each with the power to appoint a substitute,
and hereby authorizes them to represent and to vote as designated hereon,
all the shares of common stock of Schuller Corporation held of record by
the undersigned on March 3, 1997, at the Annual Meeting of Stockholders to
be held on May 2, 1997 in Toledo, Ohio or any adjournment thereof.
P Change of Address
R
--------------------------------------------------------
O
--------------------------------------------------------
X
--------------------------------------------------------
Y
--------------------------------------------------------
(If you have written in the above space, please mark the
corresponding box on the reverse side of this card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES. SEE REVERSE SIDE, BUT YOU NEED NOT MARK -----------
ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD SEE REVERSE
OF DIRECTORS' RECOMMENDATIONS. PLEASE SIGN THIS CARD ON THE SIDE
REVERSE. A RETURN ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE -----------
IN RETURNING THIS CARD.
<PAGE> 31
<TABLE>
<CAPTION>
/ x / PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BELOW.
IF NO DIRECTION GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.
- - ------------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4.
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Election of FOR WITHHELD NOMINEES: FOR AGAINST ABSTAIN
Directors. / / / / Leo Benatar, Robert A. Falise, Todd 2. Approval to amend the / / / / / /
Goodwin, Michael N. Hammes, Kathryn Rudie Company's Restated Certificate
Harrigan, Charles L. Henry, Louis Klein, of Incorporation to change the
Jr., Frank J. Macchiarola, Christian E. name of the Company to Johns-
Markey, Jr., William E. Mayer. Manville Corporation.
For, except vote withheld from the following nominee(s): 3. Approval to amend the / / / / / /
Company's Restated Certificate
______________________________________________________ of Incorporation to increase
the authorized shares of Common
Stock of the Company by
125,000,000 shares.
4. Approval of appointment of / / / / / /
Coopers & Lybrand, L.L.P. as
Independent Accountants.
If you plan / /
to attend the
1997 Annual
Meeting please
check this box.
Change of / /
address on
reverse side.
SIGNATURE(S) ____________________________________ DATE ________
NOTE: Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title
as such.
- - ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
SCHULLER CORPORATION
YOUR VOTE IS IMPORTANT TO US. PLEASE COMPLETE,
DATE AND SIGN THE ABOVE PROXY CARD AND RETURN
IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
</TABLE>
