<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
United Stationers Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $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:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
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<PAGE>
[LOGO]
December 7, 1994
Dear Stockholder:
On behalf of United Stationers Inc., I cordially invite you to attend the Annual
Meeting of Stockholders on Wednesday, January 11, 1995, in Chicago, Illinois.
At the meeting, stockholders will vote on the election of three nominees to the
Board of Directors, on an amendment to the 1981 Stock Incentive Award Plan, and
on an amendment to the Management Incentive Plan. Further information concerning
the meeting and the nominees for election as directors can be found in the
accompanying Notice and Proxy Statement.
The directors and officers of the Company hope that as many stockholders as
possible will be present at the meeting. Because the vote of each stockholder is
important, we ask that you sign and return the enclosed proxy card in the
envelope provided, whether or not you now plan to attend the meeting. This will
not limit your right to attend the meeting or to change your vote at the
meeting.
We appreciate your cooperation and interest in United Stationers. To assist us
in preparation for the meeting, please return your proxy card at your earliest
convenience.
Sincerely yours,
[PASTEUP SIG]
JOEL D. SPUNGIN
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
<PAGE>
UNITED STATIONERS INC. [LOGO]
2200 EAST GOLF ROAD
DES PLAINES, ILLINOIS 60016-1267
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD
JANUARY 11, 1995
- ----------------------------
TO THE STOCKHOLDERS OF
UNITED STATIONERS INC.
The Annual Meeting of Stockholders of United Stationers Inc. will be held on
Wednesday, January 11, 1995 at 1:30 p.m., Chicago time, in the Assembly Room,
Sixth Floor, of The Northern Trust Company, 50 South LaSalle Street, Chicago,
Illinois, for the following purposes:
1. To elect three directors to serve for a three-year term expiring in 1998;
2. To approve an amendment to the 1981 Stock Incentive Award Plan;
3. To approve an amendment to the Management Incentive Plan; and
4. To transact such other business as may properly come before the meeting.
The stock transfer books of the Company will not be closed but only stockholders
of record at the close of business on November 14, 1994 will be entitled to
notice of, and to vote, at the meeting.
A copy of the Company's Annual Report to Stockholders for the fiscal year ended
August 31, 1994 is enclosed.
WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE MEETING, PLEASE MARK,
SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors,
OTIS H. HALLEEN
SECRETARY
December 7, 1994
Des Plaines, Illinois
<PAGE>
UNITED STATIONERS INC. [LOGO]
Executive Offices
2200 EAST GOLF ROAD
DES PLAINES, ILLINOIS 60016-1267
- ---------------------------------------------
December 7, 1994
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 11, 1995
- --------------------------
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of United Stationers Inc. (the "Company") for use at
the Annual Meeting of Stockholders to be held on January 11, 1995. This
statement and the accompanying form of proxy are being mailed to stockholders
commencing on or about December 7, 1994.
If the enclosed proxy is properly executed and returned to the Company in time
for the annual meeting, the shares represented thereby will be voted in
accordance with the instructions of the stockholder giving the proxy. A
stockholder giving a proxy may revoke it at any time prior to its exercise by
written notice of revocation to the Secretary of the Company or by the execution
of a proxy bearing a later date or by attending the meeting and voting in
person.
The cost of this solicitation of proxies will be paid by the Company. In
addition to the use of the mails, proxies may be solicited by personal
interview, telephone or telegram by directors, officers and regular employees of
the Company, without special compensation therefor. The Company will also
reimburse banks, brokers and other persons holding stock in their names, or in
the names of their nominees, for their expenses in sending proxy materials to
their principals.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The close of business on November 14, 1994 has been fixed by the Board of
Directors as the record date for determining the stockholders entitled to vote
at the annual meeting. As of that date, there were 18,594,357 shares of the
Company's Common Stock, $.10 par value, issued and outstanding. The Company has
no other class of voting securities outstanding. Each share of Common Stock is
entitled to one vote. A majority of the outstanding shares of Common Stock must
be represented in person or by proxy.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information concerning the Common Stock
ownership as of November 14, 1994 of each person who is known to the Company to
be the beneficial owner of more than five percent of the Company's Common Stock:
<TABLE>
<CAPTION>
Percent
Amount and Nature of of
Name and Address of Beneficial Owner Beneficial Ownership Class
- --------------------------------------------------------------------------------------------------- -------------------- -------
<S> <C> <C>
HW Associates and its Managing Agents, Jerold A. Hecktman, 4,904,640(1) 26.2%
Melvin L. Hecktman, Joel D. Spungin, Barbara (Wolf) Giampaolo,
Joan Fishman and Barbara Mills
c/o Joel D. Spungin
2200 East Golf Road
Des Plaines, IL 60016
Ariel Capital Management, Inc. 3,453,420(2) 18.6%
307 N. Michigan Ave.
Chicago, IL 60601
<FN>
- --------
(1) HW Associates is a general partnership of seven partners which holds of
record and beneficially 4,712,600 shares of Common Stock of the Company. Each
partner is a partnership comprised of members of the families of Jerold A.
Hecktman, Melvin L. Hecktman, Joel D. Spungin, Barbara (Wolf) Giampaolo, Joan
Fishman and Barbara Mills, respectively, and trusts for the benefit of certain
of such family members. Each of Jerold A. Hecktman, Melvin L. Hecktman, Joel D.
Spungin, Barbara (Wolf) Giampaolo, Joan Fishman and Barbara Mills is a Managing
Agent (but not a partner) in HW Associates. Melvin L. Hecktman and Jerold A.
Hecktman are brothers. Joan Fishman and Barbara Mills are sisters. Jerold A.
Hecktman, Melvin L. Hecktman and Joel D. Spungin are also directors of the
Company. HW Associates shares with its six Managing Agents the right to vote,
sell, purchase and otherwise deal with the shares of the Company's Common Stock
shown above, held of record by HW Associates. The number of shares listed also
includes: (a) 126,910 shares covered by options which are exercisable within 60
days following the date hereof (of which options for 95,710; 8,800 and 22,400
shares are held respectively by Messrs. Spungin, M. Hecktman and J. Hecktman);
(b) 800 shares owned by Mrs. Giampaolo in joint tenancy with her mother and
18,748 shares owned by a revocable trust of which Mrs. Giampaolo is trustee and
beneficiary; and (c) 32,866; 6,667 and 6,049 shares held of record and
beneficially by Messrs. Spungin, M. Hecktman and J. Hecktman, respectively.
(2) As to all of such shares, Ariel Capital Management, Inc. ("Ariel") serves
as investment advisor with shared, sole or no investment or voting power as
directed by each client owning said shares. Ariel disclaims beneficial ownership
of any of the 3,453,420 shares referred to in this Note (2).
</TABLE>
2
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of the Company's Common
Stock by each of the directors and nominees, each of the executive officers
named in the Summary Compensation Table, and all of the Company's directors and
executive officers as a group as of November 14, 1994.
<TABLE>
<CAPTION>
Percent of
Common Stock Exercisable Common Stock
Name Beneficially Owned Options (1) Outstanding
- ---------------------------------------------------------------------------------- ------------------ ----------- ------------
<S> <C> <C> <C>
Douglas K. Chapman 87,200(3)(4) 1,500(2) *
E. David Coolidge III 72,200(4) 13,500(2) *
Ira A. Eichner 10,175(5) 13,500(2) *
David R. Smith 235,241(4) 3,000(2) *
Jack Twyman 53,200(4) 9,500(2) *
Jerold A. Hecktman 4,718,649(6)(7) 22,400 25.5%
Joel D. Spungin 4,745,466(6)(8) 95,710 25.9%
Melvin L. Hecktman 4,719,267(6)(9) 8,800 25.4%
Jeffrey K. Hewson 32,755 43,000 *
Allen B. Kravis 27,661 50,150 *
Steven R. Schwarz 9,922(10) 32,350 *
Ronald W. Weissman 11,100 -0- *
All current directors and officers as a group 422,413(11) 382,270(2) 4.2%
<FN>
- --------
*Less than 1%
(1) Options exercisable within 60 days of the date of this Proxy Statement.
(2) Does not include 1,500 shares covered by options which will be granted
under the Company's Directors' Stock Option Plan to each eligible director who
is a director at the end of the Annual Meeting on January 11, 1995; such shares
are exercisable at any time after grant for a maximum period of 10 years.
(3) Includes 7,000 shares owned by Mr. Chapman's wife, as to which beneficial
ownership by Mr. Chapman is disclaimed.
(4) Includes 52,200 shares held of record by PNC Bank, N.A., as trustee of the
United Stationers Inc. Profit Sharing Trust , as to which Douglas K. Chapman, E.
David Coolidge III, David R. Smith and Jack Twyman share voting power as members
of the Investment Committee of such Trust, and as to which beneficial ownership
by Messrs. Chapman, Coolidge, Smith and Twyman is disclaimed.
(5) Includes 1,000 shares owned by Mr. Eichner's wife, as to which beneficial
ownership by Mr. Eichner is disclaimed.
(6) Includes the 4,712,600 of the shares of Common Stock, representing 25.3% of
the Common Stock outstanding, owned by HW Associates and its Managing Agents.
For further information as to HW Associates and its Managing Agents, see Note
(1) under "Security Ownership of Certain Beneficial Owners" on page 2 of this
Proxy Statement.
(7) Includes 6,049 shares owned of record and beneficially by Jerold A.
Hecktman and the 4,712,600 shares owned by HW Associates and its Managing Agents
(referred to in Note (6) of which 1,105,195 shares represent the pro rata equity
interest in HW Associates owned by Jerold A. Hecktman Family
</TABLE>
3
<PAGE>
<TABLE>
<S><C>
Investment Partnership, an Illinois limited partnership in which Jerold A.
Hecktman is the sole general partner ("JAHFIP"). JAHFIP is one of seven partners
in HW Associates. Mr. Hecktman disclaims beneficial ownership of any of such
4,712,600 shares in excess of the 1,105,195 referred to in this Note.
(8) Includes 32,866 shares owned of record and beneficially by Mr. Spungin and
the 4,712,600 shares reported above as being owned by HW Associates and its
Managing Agents (referred to in Note (6) of which 173,121 shares represent the
pro rata equity interest in HW Associates owned by Spungin Family Investment
Partnership, an Illinois limited partnership in which Mr. Spungin is the sole
general partner ("SFIP"). SFIP is one of seven partners in HW Associates. Mr.
Spungin disclaims beneficial ownership of any of such 4,712,600 shares in excess
of the 173,121 referred to in this Note.
(9) Includes 6,667 shares owned of record and beneficially by Melvin L.
Hecktman, and the 4,712,600 share owned by HW Associates and its Managing Agents
(referred to in Note (6) above) of which 1,149,505 share represent the pro rata
equity interest in HW Associates owned by Melvin L. Hecktman Family Investment
Partnership, an Illinois limited partnership in which Melvin L. Hecktman is the
sole general partner ("MLHFIP") and by MLH Investment Partnership, a general
partnership in which Melvin L. Hecktman is the sole Managing Partner ("MLH")
(285,835 shares for MLHFIP and 863,670 shares for MLH). MLHFIP and MLH are two
of seven partners in HW Associates. Mr. Hecktman disclaims beneficial ownership
of any of such 4,712,600 shares in excess of the 1,149,505 shares referred to in
this Note.
(10) Includes 2,500 restricted shares owned of record by Steven R. Schwarz,
which were granted under the Company's 1981 Stock Incentive Award Plan. Such
shares are subject to restrictions against sale or transfer for a stated period
and are subject to forfeiture if the grantee is not continuously employed for
the period of the restriction.
(11) Of the 422,413 shares shown as owned by all current directors and officers
as a group, 272,120 shares are held with sole voting and investment power and
150,293 shares are held with shared voting and investment power, including
52,200 shares held of record by PNC Bank, N.A., as trustee of the United
Stationers Inc. Profit Sharing Trust, as to which Douglas K. Chapman, E. David
Coolidge III, David R. Smith and Jack Twyman share voting power as members of
the Investment Committee of such Trust, and as to which beneficial ownership by
Messrs. Chapman, Coolidge, Smith and Twyman is disclaimed; but does not include
the 4,712,600 shares of Common Stock reported as being owned by HW Associates
and its Managing Agents (see Note (6) above). The number of shares shown as
owned by all directors and officers as a group also includes 2,500 shares of
restricted stock (referred to in Note (10) above) granted under the Company's
1981 Stock Incentive Award Plan which are subject to restrictions against sale
or other transfer for the specified period of the restrictions.
</TABLE>
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation provides that the Board of
Directors shall be divided into three classes, each class as nearly equal in
number as possible, and each term consisting of three years.
The Board of Directors presently consists of nine members, three in each class.
Three members, the Class II directors, have terms expiring at, and are nominees
for election at, the January 11, 1995 Annual Meeting of Stockholders. (In order
to balance the representation of inside and outside directors within each class,
David R. Smith, who had been a Class II director, was changed to a Class III
director and Jerold A. Hecktman, who had been a Class III director, was changed
to a Class II director.)
4
<PAGE>
The persons named as proxies intend to vote for the election of the nominees as
directors, unless such authority is withheld by the stockholder giving the
proxy. If any nominee becomes unavailable for election for any reason the shares
represented by the proxies will be voted for any substitute nominee designated
by the Board of Directors. The nominees and certain information furnished or
confirmed by them are as follows:
E. DAVID COOLIDGE III (51)
Mr. Coolidge is a partner in the investment banking firm of William Blair &
Company and has been affiliated with that company since 1969. He has been a
director of the Company since September 22, 1981. He is a member of the Audit
Committee, the Finance Committee, the Nominating Committee, and the Compensation
Committee, of which he is Chairman.
JEROLD A. HECKTMAN (57)
Jerold A. Hecktman has been Vice President, Advertising of the Company since
1981. Mr. Hecktman also is employed by, and is an executive officer of United
Stationers Supply Co., the wholly-owned subsidiary of the Company ("United").
Mr. Hecktman has been a director of the Company since August 18, 1981, and is
the Chairman of the Nominating Committee.
JACK TWYMAN (60)
Mr. Twyman is Chairman of the Board of Directors, Chief Executive Officer and a
director since 1972 of Super Food Services, Inc., a wholesale grocery company in
Cincinnati, Ohio. He has been a director of the Company since November 16, 1987.
He is a member of the Compensation Committee, the Nominating Committee and the
Audit Committee, of which he is Chairman.
5
<PAGE>
OTHER DIRECTORS
The other directors, whose terms of office as a director will continue after the
Annual Meeting, and certain information concerning them are as follows:
<TABLE>
<CAPTION>
Served as
a
Director
of the
Principal Occupation and Company
Name (Age) Positions with the Company Since
- ----------------------- ---------------------------------------------------- ---------
<S> <C> <C>
CLASS III DIRECTORS--TERM EXPIRING IN JANUARY 1996
Ira A. Eichner (62) Chairman of the Board of Directors and Chief Executive Officer of AAR Corp. 9/22/81
David R. Smith (65) President of Andlinger & Company. 6/25/92
Joel D. Spungin (56) Chairman of the Board of Directors and Chief Executive Officer of the Company. 8/18/81
CLASS I DIRECTORS--TERM EXPIRING IN JANUARY 1997
Douglas K. Chapman (66) Former Chairman of the Board and Chief Executive Officer of ACCO World Corporation. 1/12/94
Melvin L. Hecktman (54) President of Hecktman Management. 8/18/81
Jeffrey K. Hewson (51) President and Chief Operating Officer of the Company. 4/10/91
</TABLE>
Mr. Eichner is Chairman of the Board of Directors since 1973 and Chief Executive
Officer since 1955 of AAR Corp., a diversified aviation and aerospace company.
Mr. Smith is President of the private investment firm of Andlinger & Company,
Inc. and has been affiliated with that company since 1984. He was Chairman of
the Board of Directors and Chief Executive Officer of SDC Distributing Corp. and
Stationers Distributing Company, Inc. prior to the merger of those companies
with United in June 1992.
Mr. Spungin has been Chairman of the Board of Directors and Chief Executive
Officer of the Company since August 24, 1988, and from October 12, 1989 until
April 10, 1991, he was also President of the Company. Prior to that, since March
1987, he was Vice Chairman of the Board and Chief Executive Officer of the
Company. Previously, since August 1981, he was President and Chief Operating
Officer of the Company. Mr. Spungin also is employed by and is an officer of
United. He also serves as a director of AAR Corp.
Mr. Chapman was Chairman of the Board and Chief Executive Officer of ACCO World
Corporation, a manufacturer of office products, until it was sold to American
Brands, Inc. in 1987. From 1987 to 1991, he served as vice president of American
Brands, Inc., a global consumer products holding company.
6
<PAGE>
Mr. Melvin L. Hecktman is President of Hecktman Management, an investment
management and consulting firm. Mr. Hecktman served as Vice Chairman of the
Company from September 1, 1989 through August 31, 1993. For several years prior
to January 1984, he had served in various executive capacities. Mr. Hecktman
also serves as a director of Gulf South Medical Supply, Inc.
Mr. Hewson has been President and Chief Operating Officer of the Company since
April 10, 1991. He had been Executive Vice President of the Company since March
1990. Prior to that, he had been President of ACCO International's U.S. Division
since 1989 and President of its Canadian Division since 1987. ACCO International
is a manufacturer of traditional office products and a subsidiary of American
Brands, Inc. American Brands is a global consumer products holding company. He
is also employed by and is an executive officer of United.
CONCERNING THE BOARD OF DIRECTORS AND BOARD COMMITTEES
During the fiscal year ended August 31, 1994, the Board of Directors held eight
meetings and took action by unanimous written consent in lieu of meeting on five
occasions. Each director attended all of (1) the meetings of the Board of
Directors held during the last full fiscal year and (2) the meetings held by all
committees of the board on which he served (during the periods that he served)
during the last fiscal year.
Directors who are not officers or employees of the Company receive an annual
retainer fee of $18,000, plus a fee of $1,000 for each board meeting attended
and a fee of $600 for each committee meeting attended. An additional fee of $250
per committee meeting is paid to the chairman of each committee. When Company
business requires an overnight stay for a board or committee meeting, an
additional $600 is paid. Certain of such fees may be deferred under the
Directors' Deferred Compensation Plan. The Company also has a retirement program
for its outside directors who have served at least one year as a director. Under
the program, directors are entitled to receive, upon their retirement from the
board after the age of 65, 50% of their last annual retainer per year of service
for those directors with less than seven years of service and 100% of their last
annual retainer per year of service as a director for those with 7 or more years
of service. In addition, all directors are reimbursed for travel expenses
incurred in attending meetings. The Company also maintains a term life insurance
policy in the amount of $100,000 for the benefit of each director.
The Board of Directors has an Executive Committee, an Audit Committee, a
Compensation Committee, a Finance Committee and a Nominating Committee.
During the fiscal year ended August 31, 1994, the Executive Committee consisted
of Joel D. Spungin (Chairman), Melvin L. Hecktman and Jack J. Crocker through
January 1994. Upon Jack Crocker's retirement from the Board of Directors in
January 1994, Jeffrey K. Hewson was appointed in his place. The Executive
Committee met three times during the last fiscal year. The Executive Committee
is authorized to exercise the powers of the Board of Directors in the management
of the business and affairs of the Company with certain exceptions. The
Executive Committee also serves as the administrative committee for the
Company's Voluntary Employees' Beneficiary Association.
During the fiscal year ended August 31, 1994, the Audit Committee consisted of
Jack Twyman (Chairman), E. David Coolidge III, Jack J. Crocker, Ira A. Eichner
and David R. Smith. Douglas K. Chapman replaced Jack Crocker as a member of the
Audit Committee in January 1994. The Audit Committee met four times during the
last fiscal year. The functions of the Audit Committee are to recommend the
independent public accountants to the Board of Directors; review the scope of
the
7
<PAGE>
independent public accountants' examination; review the compensation of the
independent public accountants; consider the results of the independent public
accountants' review of internal accounting controls and suggestions for
improvements; discuss matters of concern to the independent public accountants
resulting from the audit; review changes in accounting principles in the
financial statements; and review nonauditing services performed for the Company
by the independent public accountants.
During the fiscal year ended August 31, 1994, the Compensation Committee
consisted of E. David Coolidge III (Chairman), Jack J. Crocker, David R. Smith
and Jack Twyman. Douglas K. Chapman replaced Jack J. Crocker upon his retirement
in January 1994. The Compensation Committee met three times during the last
fiscal year. The Compensation Committee reviews and makes recommendations upon
proposals by management as to compensation, bonuses, employment agreements and
other benefits, and policies respecting such matters, for the officers of the
Company and its subsidiaries. The members of the Compensation Committee also
serve as the Plan Administrative Committee for the Company's 1981 Stock
Incentive Award Plan, as the Incentive Committee of the Management Incentive
Plan, as the Committee administering the Executive Bonus Plan, as the
Administrative Committee for the 1985 Nonqualified Stock Option Plan and as the
Investment Committee for the United Stationers Inc. Profit Sharing Trust.
During the fiscal year ended August 31, 1994, the Finance Committee consisted of
Joel D. Spungin (Chairman), E. David Coolidge III, Ira A. Eichner, Melvin L.
Hecktman and David R. Smith. The Finance Committee met two times during the last
fiscal year. The function of the Finance Committee is to review management's
proposed policies and actions, and make appropriate recommendations to the Board
of Directors regarding: the Company's basic capital structure and long-term
financial goals; the type, timing, amount and cost of long-term debt and equity
financing; acquisition and divestiture opportunities; the repurchase of the
Company's shares; the annual operating and capital expenditure plans; liquidity
management; capital acquisitions and dispositions in excess of $1.5 million; and
dividend policy and quarterly payments.
During the fiscal year ended August 31, 1994, the Nominating Committee consisted
of Jerold A. Hecktman (Chairman), Jack J. Crocker, E. David Coolidge III and Ira
A. Eichner. Jack Twyman was named to replace Jack Crocker at the January 1994
meeting. The Nominating Committee met once during the fiscal year ended August
31, 1994. The Nominating Committee was formed to seek nominees for the Board of
Directors. The Nominating Committee will consider nominees recommended by
stockholders. Any stockholder wishing to submit a recommendation to the
Nominating Committee should send a signed letter of recommendation to United
Stationers Inc., 2200 East Golf Road, Des Plaines, Illinois 60016-1267,
Attention: Otis H. Halleen, Secretary. Recommendation letters should state the
full name and address of each proposed nominee, a brief resume, a brief
biographical history including past and current directorships and employment,
and the reasons for recommendation. Nominations for election at the Company's
Annual Meeting to be held in January 1996 must be submitted no later than
October 13, 1995.
PROPOSAL TO APPROVE AN AMENDMENT TO THE 1981 STOCK INCENTIVE AWARD PLAN
The 1981 Stock Incentive Award Plan (the "1981 Plan") became effective in 1981
and is due to expire on September 22, 2001. The 1981 Plan is administered by a
plan administrative committee consisting of the members of the Board's
Compensation Committee. The committee is authorized
8
<PAGE>
to grant non-qualified stock options and/or restricted stock to such key
managerial employees, at such times, in such amounts, and on such terms and
subject to such restrictions as the committee deems appropriate to accomplish
the purposes of the Plan.
As of August 31, 1994, the end of the Company's fiscal year, there were
approximately 177 employees eligible to participate in the 1981 Plan;
approximately 170 employees hold options under the Plan as of that date. During
the fiscal year ended August 31, 1994, options for 224,800 shares were granted
to 134 employees on October 22, 1993 at an exercise price of $16.25 per share,
an option for 7,000 shares was granted to one officer on April 13, 1994 at an
exercise price of $12.50 per share, and options for 169,250 shares were granted
to 121 employees on August 24, 1994 at an exercise price of $10.00.
On October 11, 1994, the Board of Directors adopted an amendment to the 1981
Plan, and directed that the amendment be submitted to the stockholders for
approval at the next annual meeting. The amendment (i) increases the number of
shares of common stock available for award by 10% or 162,000 shares, from
1,620,000 shares to 1,782,000 shares, subject to anti-dilution adjustments, and
(ii) authorizes the committee, at the time of making a grant, to specify that a
portion of the exercise price may be paid by delivery of a promissory note to
the Company.
The specific proposed amendment to the 1981 Plan is attached as Appendix A to
this Proxy Statement.
The reasons for the amendment are as follows:
Of the 1,620,000 shares previously covered by the 1981 Plan, as of October 11,
1994 options were outstanding for a total of 1,114,000 shares at exercise prices
ranging from $8.64 to $19.39 per share. A total of 420,306 shares have been
issued upon the exercise of options (and 56,750 shares of restricted stock have
been issued), and 28,944 shares remain available for grant of additional awards.
It is anticipated that certain of the presently outstanding options will expire
or lapse without exercise. The shares reserved for issuance upon exercise of
those options will then become available for future grants. Nevertheless, the
Company believes that the shares available and to become available will be
insufficient to cover the remaining term of the Plan (until 2001), and it will
be necessary and appropriate to adopt a new option plan within the next year or
two. The purpose for increasing the number of authorized shares by 10%, or
162,000 shares, is to make available a sufficient number of shares for a special
option grant (described below) and to cover anticipated needs until a new plan
is adopted.
Management and the Board of Directors deem it to be in the best interests of the
Company and its stockholders for officers of the Company and its subsidiary to
have a substantial equity investment in the Company. To assist the officers, the
Board of Directors also adopted an amendment to Section 5(g) of the 1981 Plan to
permit participants in the Plan, when specifically authorized by the
Compensation Committee, to pay for shares in part by delivery of a promissory
note to the Company.
Section 5(g) of the 1981 Plan, as amended, states:
"METHOD OF EXERCISE"
"Options may be exercised by giving written notice to the Treasurer of
the Company, stating the number of shares of Common Stock with respect
to which the option is being exercised and tendering payment therefor.
Payment for Common Stock, whether in cash, other shares of Common Stock
or other property, shall be made in full at the time that an
9
<PAGE>
option, or any part thereof, is exercised, or in such other manner and
at such other time as the Committee shall authorize at the time of
grant, including, without limitation, by delivery of a note of the
individual exercising the option."
The amendment added the underlined language.
The Committee thereafter, on October 13, 1994, granted special short-term
options to the officers of the Company and its subsidiary, exercisable only
after approval of the Plan amendment by the stockholders and no later than
February 1, 1995. The exercise price for these special options is $10.50 per
share, the fair market value of the stock on the date of grant. Shares acquired
upon exercise of these options must be held for at least two years. Up to 50% of
the exercise price may be paid by a full-recourse promissory note being
delivered to the Company. The notes will bear interest, payable quarterly, at
the Company's borrowing rate. 15% of the principal will be payable annually, and
the entire remaining principal will become due in 5 years or earlier if the
officer's employment terminates or in the event of the transfer or sale of the
shares.
Options for a total of 100,000 shares were granted to 23 officers under this
special grant, including options for 1,500, 5,000 and 5,000 shares, respectively
for Messrs. Hewson, Kravis and Schwarz, and options for a total of 18,000 shares
for six other executive officers of the Company.
The Committee has no present plans to grant any further options permitting the
use of promissory notes as partial payment for exercise of the options, but the
amendment will permit them to do so, should circumstances warrant.
The Board of Directors recommends a vote FOR approval and ratification of the
amendment to the 1981 Stock Incentive Award Plan.
The affirmative vote of the holders of not less than a majority of the
outstanding common stock present in person or represented by proxy and entitled
to vote at the meeting is required to adopt the proposal, which reads as
follows:
"RESOLVED: that the amendment to the Company's 1981 Stock Incentive
Award Plan, as adopted by the Board of Directors, is hereby approved and
ratified.
PROPOSAL TO APPROVE AN AMENDMENT TO THE MANAGEMENT INCENTIVE PLAN
The Company's Management Incentive Plan ("MIP") provides annual incentive
compensation opportunities to officers and upper management level participants
based on Company performance, region and/or division performance and, for
certain participants, personal performance. Under the MIP, annual targets are
set by the Board of Directors and bonuses are awarded based on percentage
attainment of the targets.
Bonuses earned under the MIP have been payable in cash after the end of each
fiscal year. On October 11, 1994, the Board of Directors, in order to encourage
management employees to acquire ownership interests in the Company, adopted an
amendment to the MIP permitting participants to elect to receive up to one-half
of their earned bonus in Company common stock, and directed that the amendment
be submitted for approval by the stockholders at the next annual meeting.
A copy of the Amendment is attached as Appendix B to this proxy statement.
10
<PAGE>
Under the amendment, participants who so elect may receive Company common stock
having a value equal to 120% of the cash value. Elections to receive common
stock in lieu of cash as part of the bonus must be made prior to the end of the
fiscal year (except that executive officers of the Company must make their
election, if any, by February 28 of each fiscal year).
Any shares of common stock awarded under the MIP must be held for at least two
years. No more than 300,000 shares may be issued under the MIP.
As of August 31, 1994, approximately 177 management employees were eligible to
participate in the MIP. All of the eligible participants will be entitled to
elect to receive common stock as part of their bonus. Common stock received as
part of the bonus will be taxable to the participant based on the value of the
stock received. Any taxes required to be withheld will be withheld from the cash
portion of the participant's bonus.
The Board of Directors recommends a vote FOR approval and ratification of the
amendment to the Management Incentive Plan, in order to encourage management
employees to acquire a further equity interest in the Company to align their
interests with those of the other stockholders of the Company.
The affirmative vote of holders of not less than a majority of the outstanding
common stock present in person or represented by proxy and entitled to vote at
the meeting is required for the adoption of the proposal, which reads as
follows:
"RESOLVED: that the amendment to the Company's Management Incentive
Plan, in the form adopted by the Board of Directors on October 11, 1994,
be and it is hereby approved and ratified."
11
<PAGE>
EXECUTIVE COMPENSATION
The table and notes below show the compensation paid to the Chief Executive
Officer and the four other highest-paid officers of the Company who served as
such executive officers on August 31, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-term Compensation
Annual Compensation Awards Long-Term
Fiscal Other Restricted Incentive
year annual stock Plan All other
Name and principal ended Salary (1) Bonus compensation Award(s) Options payouts compensation
Position 8/31 ($) ($) ($) (2) ($) (4) (#) ($) (5) ($) (2)(6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joel D. Spungin 1994 431,667 -- (3 ) -- 45,000 41,198 11,416
CHAIRMAN AND CHIEF 1993 420,500 201,344 (3 ) -- -- 37,683 13,243
EXECUTIVE OFFICER 1992 401,975 262,006 -- 30,000 12,088
Jeffrey K. Hewson 1994 309,167 -- (3 ) -- 38,000 23,169 5,076
PRESIDENT AND CHIEF 1993 286,250 119,074 (3 ) -- -- 14,283 6,382
OPERATING OFFICER 1992 268,750 158,125 85,000 50,000 --
Ronald W. Weissman 1994 216,500 19,530 (3 ) -- -- 12,902 5,199
EXECUTIVE VICE PRES. 1993 213,750 74,810 (3 ) -- -- 14,833 7,378
1992 207,500 107,625 -- 7,500 4,489
Allen B. Kravis 1994 188,469 -- (3 ) -- 21,000 11,451 4,559
SR. VICE PRES., CHIEF 1993 175,250 65,260 (3 ) -- -- 9,834 6,494
FINANCIAL OFFICER 1992 158,583 81,488 21,250 25,000 2,105
Steven R. Schwarz 1994 181,890 15,818 (3 ) -- 21,000 9,677 822
SR. VICE PRESIDENT 1993 169,875 57,279 (3 ) -- -- 8,226 2,861
1992 152,250 66,500 34,375 15,000 918
<FN>
- --------
(1) Includes compensation amounts earned during the fiscal year but deferred
pursuant to Section 401(k) of the Internal Revenue Code under the Company's
Profit Sharing PluSavings Plan.
(2) Disclosure of "Other annual compensation" and "All other compensation" is
not required for the fiscal year ended August 31, 1992.
(3) No amounts of "Other annual compensation" were paid to any named executive
officer, except for perquisites and other personal benefits which for each
executive officer did not exceed the lesser of $50,000 or 10% of such
individual's salary plus bonus.
(4) Restricted stock awards are valued at the market price on date of grant.
Grants are made under the 1981 Stock Incentive Award Plan, and include tax
withholding rights which permit the officer to elect to have shares
withheld to satisfy federal, state and local tax withholding requirements
when the shares become unrestricted, generally three years after the grant
date.
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
Dividends are paid on restricted shares at the same rate paid to all
shareholders. On August 31, 1994, Mr. Schwarz held 2,500 shares of
restricted stock valued at year-end market value for Common Stock of $9.50
per share, or a total value of $23,750.
(5) Includes payments from Executive Bonus Plan (as described within the
Compensation Committee Report on page 14) of awards earned in prior years
payable in three annual installments as shown below. Awards are partly
(30%) in cash and partly (70%) in Share Units which are converted to and
paid out in common stock. Cash payments include earnings on the cash
amounts based on the Company's ROE or the treasury bill rate. Stock
payments are valued at the stock price as of the date of the award of Share
Units:
</TABLE>
<TABLE>
<CAPTION>
Spungin Hewson Weissman Kravis Schwarz
------- ------- -------- ------ -------
<S> <C> <C> <C> <C> <C>
1994:
Cash $15,789 $ 8,885 $4,975 $4,402 $3,730
Stock $25,409 $14,284 $7,927 $7,049 $5,947
1993:
Cash $13,224 $ 4,478 $5,173 $3,328 $2,687
Stock $24,460 $ 9,805 $9,659 $6,506 $5,539
1992:
Cash $ 5,059 0 $1,878 $ 880 $ 386
Stock $ 7,029 0 $2,611 $1,225 $ 532
<FN>
(6) Includes (a)Company contributions to the Company's Profit Sharing
PluSavings Plan (Mr. Spungin -0-, Mr. Hewson -0-, Mr. Weissman -0-, Mr.
Kravis -0-and Mr. Schwarz -0-; and (b) premiums paid during 1994 for Split
Dollar Life, Group Life and Accidental Death insurance policies (Mr.
Spungin $11,416, Mr. Hewson $5,076, Mr. Weissman, $5,199, Mr. Kravis $4,559
and Mr. Schwarz $822.)
</TABLE>
LONG-TERM INCENTIVE PLAN
For Fiscal 1994, no bonuses were earned under the Company's long-term incentive
plan, the Executive Bonus Plan (described in the Compensation Committee Report
on page 17).
13
<PAGE>
Options were granted during the fiscal year ended August 31, 1994 to all of the
executives named in the Summary Compensation Table on October 22, 1993 and
August 24, 1994. The following table contains information concerning such
grants:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential realizable
value at assumed
Individual Grants annual rates of
---------------------------------------------------------- stock price
Percent of total appreciation for
Options options granted to Exercise or option term (5)
Granted (1) employees in fiscal base price Expiration --------------------
Name (#) year (4) ($/Sh) Date 5%($) 10%($)
- ---------------------------------- ------------ ------------------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Joel D. Spungin 25,000(2) 6.2% 16.25 10/21/99 138,164 313,447
20,000(3) 5.0% 10.00 08/23/98 43,101 92,820
Jeffrey K. Hewson 20,000(2) 5.0% 16.25 10/21/99 110,531 250,757
18,000(3) 4.5% 10.00 08/23/98 38,791 83,538
Ronald W. Weissman -0- -- -- -- -- --
Allen B. Kravis 12,000 (2) 3.0 % 16.25 10/21/99 66,319 150,454
9,000 (3) 2.2 % 10.00 08/23/98 19,396 41,769
Steven R. Schwarz 12,000 (2) 3.0 % 16.25 10/21/99 66,319 150,454
9,000 (3) 2.2 % 10.00 08/23/98 19,396 41,769
<FN>
- --------
(1) Options are granted under the 1981 Stock Incentive Award Plan at market
price on the date of grant.
(2) Options granted October 22, 1993 become exercisable in four equal annual
increments commencing October 21, 1994.
(3) Options granted August 24, 1994 become exercisable in three equal annual
increments commencing August 23, 1995.
(4) Based on 401,050 options granted to employees during the fiscal year.
(5) The amounts under the columns labeled "5%" and "10%" are included pursuant
to certain rules of the Securities and Exchange Commission, and are not
intended to forecast future appreciation, if any, in the price of the
Company's stock. The actual value of the options will vary in accordance
with the market price of the Company's common stock; any such variance will
affect all stockholders commensurately.
</TABLE>
14
<PAGE>
The following table contains information concerning option exercises during the
last fiscal year by each of the named executive officers and the fiscal year end
values:
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised in-the-Money
Shares Options at FY-End Options at FY-End (1)
acquired on Value --------------------------- ---------------------------
Name exercise (#) realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joel D. Spungin -- -- 88,310 67,800 $6,192 $4,128
Jeffrey K. Hewson -- -- 47,000 71,000 $8,310 $5,540
Ronald W. Weissman -- -- 71,610 12,500 $5,160 $3,440
Allen B. Kravis -- -- 44,750 38,000 $3,840 $2,560
Steven R. Schwarz -- -- 26,450 35,000 $3,870 $2,580
<FN>
- --------
(1) The values given are based on the closing price of the Company's Common
Stock on August 31, 1994 which was $9.50, less the exercise price, before
payment of applicable income taxes.
</TABLE>
EMPLOYMENT AGREEMENTS
Joel D. Spungin has an employment and consulting agreement under which Mr.
Spungin is to be employed at a salary of not less than $425,000, plus
participation in all bonus, stock option and other benefit plans generally
available to executive officers of the Company. The term of employment is until
August 31, 1995, unless the agreement is extended or amended. Upon termination
of the term of employment, other than by the Company for cause, the Company will
retain Mr. Spungin as a consultant for a ten-year period commencing at the
completion of the term of employment, to render such advisory and consulting
services as the Company may reasonably request. The compensation payable to Mr.
Spungin during each year of the consulting period will be equal to two-thirds of
the highest compensation Mr. Spungin received during any one of the five fiscal
years preceding the commencement of the consulting term, but not to exceed
$550,000 per year. In the event of a change in control of the Company of the
type required to be reported under the Securities Exchange Act of 1934, as
amended, (1) Mr. Spungin may elect to have the Company establish a trust funded
with an amount sufficient to provide the payments due Mr. Spungin under the
agreement and (2) Mr. Spungin will be entitled to be paid an amount equal to the
amount of any excise tax which may be imposed on Mr. Spungin by Section 4999 of
the Internal Revenue Code of 1986 ("Code") together with any amount necessary to
satisfy any federal, state and local income tax arising therefrom. Upon Mr.
Spungin's death during the employment term, consulting period or thereafter, his
wife, if living, will receive one-half of the consulting payments to which Mr.
Spungin was entitled annually for ten years following his death, or until her
earlier death. A trust has been established by the Company, and a life insurance
policy has been purchased by the company to be held by the trust, to provide for
the Company's obligations to Mrs. Spungin under the agreement.
Employment and consulting agreements have been entered into with Messrs. Hewson,
Weissman, Kravis, Schwarz and four other current executive officers not
individually named in the Summary Compensation Table on page 12. The agreements
generally provide for annual compensation of not less than the officer's salary
at the time the employment agreement was made, plus participation in all bonus,
stock option and other benefit plans generally available to executive officers
of the Company. The term of employment is for two years, and is extended one day
for each day of
15
<PAGE>
employment since the date of the agreement, so that in effect there is
continuously two years remaining on the term of employment. Either party may
terminate the agreement for any reason by giving a two year Notice of
Termination. Otherwise, if the officer's employment should be terminated by the
Company, other than for cause, or if the officer should terminate for good
reason, or in the event of his disability, the officer will be entitled to be
paid an amount equal to twice the highest compensation he had received during
any one of the three calendar years preceding the termination, payable in 24
equal monthly installments. If not sooner terminated, the employment agreement
will end when the officer reaches age 65 at which time the officer may choose to
become a consultant to the Company for a period of four years at one-half of his
annual compensation. The agreement terminates in the event of death. The
agreement also contains provisions restricting the disclosure of proprietary
materials and confidential information and restricts the officer from being
employed by or consulting with any competing firm during the employment term and
for up to two years thereafter. In April 1991, at the time he became president
of the Company, Mr. Hewson's agreement was amended to provide that if his
employment is not terminated voluntarily without good reason or by the Company
for cause within six months after a change in control of the Company, the term
of employment will become three years rather than two years. Effective September
1, 1994, Mr. Weissman's contract terminated by mutual agreement and Mr. Weissman
took early retirement.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is made up entirely of
outside Directors. The Committee is responsible for recommending to the Board of
Directors annual competitive base compensation structures, and appropriate bonus
payouts for officers and senior management based on performance, and awards
under the Company's Stock Incentive Award Plan to align long-term executive
compensation with the interests of shareholders.
PHILOSOPHY
The Compensation Committee is guided by the following principles:
- Compensation programs are designed to provide competitive base
salaries, annual incentive, and long-term rewards when Company
objectives are met. The Company uses stock options and
restricted stock grants primarily to align management's
interests with those of the Company's shareholders.
- Compensation programs are designed simply, whenever possible,
for ease of understanding. Participants are fully informed
about what the possible rewards are, and what they must do to
earn them.
- Total compensation is aimed at being competitive with an
appropriate comparative group of companies. Hewitt Associates,
an outside compensation consultant, works closely with
management and reports to the Compensation Committee on how the
Company's compensation practices compare to the practices
within the comparative companies.
COMPONENTS OF OVERALL COMPENSATION
The Compensation Committee considers several factors when determining
compensation of executives, other officers, and senior managers.
- Company Performance - The Committee sets, in conjunction with
the Board of Directors, annual earnings, return to
shareholders' equity targets, which are used in determining the
level of incentive awards.
16
<PAGE>
- Individual Performance - The Committee considers in addition to
the business results achieved, the accomplishment of various
other managerial objectives and personal goals.
- Competitive Practice - The Committee regularly receives reports
from Hewitt Associates, a nationally recognized compensation
practice consulting firm, which summarizes and evaluates United
Stationers' compensation practices against a group of
approximately forty comparative companies, extracted from the
Hewitt Total Compensation Data Base and from recent proxy
statements. Comparative companies are for the most part, from
the office equipment and wholesale trade industries. The
comparative companies include: (1) companies included in the
Value Line Peer Group Index shown in the Comparative Five-Year
Total Returns graph shown on page 19 of this Proxy Statement;
(2) selected Chicago area and wholesale non-durable goods
companies, and, (3) companies with market capitalizations
comparable to the Company's. The companies in the sample are
chosen as representative of companies with which United
Stationers generally competes for management and executive
talent. The comparisons review base salary, annual bonus, and
long-term incentive awards for the CEO and other officer
positions. Hewitt and the Compensation Committee believe that
this sample of benchmark positions provides guidance to overall
pay practices.
TARGETED COMPENSATION
Total compensation for officers and management individuals is targeted at the
median compensation of comparable companies.
SALARY
A salary range for each position is developed based on average base pay for
similar positions at Hewitt's comparative companies. The salaries of executives,
officers, and senior managers are reviewed annually against these ranges with
adjustments in base compensation normally becoming effective on December 1st. As
part of the Company's cost control actions, the base compensation of all
officers was frozen, so that no adjustments became effective on December 1,
1994.
The Compensation Committee generally considers level of responsibility,
performance, internal equity, and competitive base compensation practices when
determining salary adjustments. During 1994, Mr. Spungin's base salary was
comparable to CEO positions in comparative companies. See the description of Mr.
Spungin's employment and consulting agreement on page 15 of this Proxy
Statement.
BONUS PLANS
A Management Incentive Plan provides annual incentive compensation opportunities
to officers and other upper management level participants based on Company
performance, region and/or division performance, and personal performance. Under
this Plan, annual targets are set by the Board of Directors and bonuses are
awarded under a formula based on percentage attainment of the targets. The
incentive awards for the CEO, COO and CFO are based solely on the earnings
performance of the Company. If the Company fails to produce minimum targeted
results, no incentives are paid to the CEO, COO or CFO. For Fiscal 1994, the
Company failed to meet the targets set by the Compensation Committee; therefore,
no bonuses were earned by the executive officers based on Company performance
although certain officers (other than the CEO, COO and CFO) did earn bonuses
based on personal performance targets.
17
<PAGE>
There is also an Executive Bonus Plan applying to senior officers. While the
Plan provides annual incentive opportunity, it also focuses on long-term
results. Annual targets are established by the Compensation Committee measured
by return on equity ("ROE"). Bonus awards are made annually, if earned, based on
the percentage achievement of targets set, with 50% of the awards deferred and
paid over a three-year period. Of the deferred amounts, approximately 30% is in
cash to be paid in three annual installments. The deferred cash portion may
increase based on the subsequent ROE performance. The other 70% of the deferred
award is converted to "Share Units" having a value equal to the market price of
one share of Company common stock. Thus the value of the Share Units rises and
falls in response to market fluctuations. The Share Units are converted into
Common Stock upon distribution in three annual increments. For fiscal 1994, no
bonuses were earned under the Executive Bonus Plan since the Company failed to
meet the ROE target set by the Committee.
Almost half of Mr. Spungin's total potential compensation is dependent upon
Company performance. When targeted objectives (that are in the judgment of the
Committee reasonably difficult to attain) are reached, annual incentives range
from 47% of total compensation for Mr. Spungin to 29% of total compensation for
certain other executive officers. If Company performance significantly exceeds
annual targeted objectives, maximum incentive awards ranging up to 58% of total
compensation for Mr. Spungin, and up to 38% of total compensation for certain
other executive officers may be earned.
LONG-TERM INCENTIVE COMPENSATION
The Committee believes that grants of stock options and restricted stock provide
performance incentives to senior executives and key employees who are
responsible for the management, growth and financial success of the Company.
Options are priced at 100 percent of the market value on the date of grant.
Since stock options have no economic value to recipients until the price of the
Company's stock exceeds the grant price, the participants are motivated to
manage the business in ways that over the long term will benefit stockholders
through an increase in stock price. As a general rule, the Compensation
Committee considers the level of job responsibility and the participant's
potential impact on the Company's performance in arriving at the number of
shares to be granted under the stock option plans. Option grants have been
approved in three of the past four years for most participants. Grants are given
under a vesting plan which is designed to tie the individual to the Company for
the long term and align management's interests with the shareholders. The
Company's long term incentives are generally considered as conservative,
according to Hewitt Associates, when ranked against comparative companies.
Respectfully submitted:
COMPENSATION COMMITTEE
E. David Coolidge III, Chairman
Douglas K. Chapman
David R. Smith
Jack Twyman
18
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph sets forth the annual percentage change in the cumulative
total shareholder return on the Company's Common Stock during the preceding five
fiscal years, compared with the cumulative total returns of the NASDAQ Stock
market (U.S. Companies) and a peer group comprised of companies included within
the Value Line's Office Equipment and Supplies Industry. The comparison assumes
$100 was invested on August 31, 1989 in the Company's Common Stock and in each
of the foregoing indices and assumes reinvestment of dividends.
Comparative Five-Year Total Returns
United Stationers (USTR), Nasdaq Stock Market, Peer Group
(Performance results through 08/31/94)
[STOCK PERFORMANCE GRAPH FILED UNDER COVER FORM SE]
1 Nasdaq Stock Market (US Companies)
2 Value Line Office Equipment and Supplies Industry
19
<PAGE>
PROFIT SHARING PLUSAVINGS PLAN
The Company has a qualified Profit Sharing Plan in which all salaried employees
and certain hourly paid employees of the Company and its subsidiaries are
eligible to participate following completion of six consecutive months of
employment. The Profit Sharing Plan provides for annual contributions by the
Company in an amount determined by the Board of Directors. The Plan consists of
a "Basic Contribution," "Excess Contribution" and "Matching Contributions." The
Basic Contribution is allocated based on the ratio of each participant's
earnings to the earnings of all participants for the year. Allocations under the
Excess Contribution are based upon participants' earnings in excess of 85% of
the Social Security Taxable Wage Base. The portion vested under the Basic
Contribution described above will be immediately fully vested in the
participant's account. The portion described under the Excess Contribution vests
10% each year for the first four years and 20% per year thereafter, until fully
vested after seven years. Upon retirement, death or disability, a participant or
his beneficiary is entitled to the entire amount of his account. A participant
whose employment terminates for any reason other than retirement, death or
disability is entitled to only the vested portion of his account. The plan also
permits employees to have contributions made as 401(k) salary deferrals on their
behalf and to make after-tax voluntary contributions.
There was no Company contribution to the Profit Sharing PluSavings Plan for the
year ended August 31, 1994 (except for the Matching Contributions described
below).
The Plan provides that the Company may match employee contributions made as
401(k) salary deferrals. The Company is contributing $.25 for each $1.00 of
pre-tax employee contributions, on contributions up to 4% of eligible wages. For
the year ended August 31, 1994, the Company paid $494,347 in matching
contributions.
PENSION PLANS
The Company and its subsidiary maintain noncontributory pension plans covering
substantially all employees. Employees are eligible to participate following the
conclusion of twelve consecutive months of employment and the attainment of age
21. The Pension Plan provides for annual retirement benefits at age 65 equal to
one percent of an employee's career-average annual compensation (as reported to
the Internal Revenue Service) multiplied by the number of years of credited
service up to a maximum of 40 years; however, an employee's annual compensation
for each year of service prior to September 1989, is deemed to be the
compensation earned by such employee during the twelve month period ending on
August 31, 1989. Employees' pension rights fully vest after five years of
service. These benefits are in addition to normal Social Security retirement
benefits. Alternative benefit options of early retirement, joint and survivor
annuity, and disability are also available. All such options are of actuarially
equivalent value to the basic pension. The normal retirement age under this plan
is 65. The Pension Plan contribution accrued for the fiscal year ended August
31, 1994 was $1,705,817.
United also maintains a number of retirement benefit plans for its employees who
are covered under collective bargaining agreements.
20
<PAGE>
The following table sets forth the estimated annual benefits upon retirement at
age 65 under the pension plan to the five executive officers individually named
in the Summary Compensation Table on page 12 (calculated on the basis of
estimated years of service at retirement age and levels of compensation paid in
calendar year 1994, assuming 5.5% compounded annual increases):
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION
NAME OF PARTICIPANT AT RETIREMENT
- ------------------------------------------------------------------ --------------------------
<S> <C>
Joel D. Spungin $ 150,493
Jeffrey K. Hewson $ 37,607
Ronald W. Weissman $ 65,071
Allen B. Kravis $ 43,818
Steven R. Schwarz $ 85,042
</TABLE>
As of August 31, 1994, the credited years of service under the Pension Plan for
the five individuals named were as follows: Mr. Spungin, 36 years; Mr. Hewson, 4
years; Mr. Weissman, 26 years; Mr. Kravis, 19 years and Mr. Schwarz, 17 years.
The Company's contributions to the Pension Plan are not allocated to the
accounts of the individual participants.
SUPPLEMENTAL BENEFITS PLAN
The Board of Directors has adopted a nonqualified unfunded program
("Supplemental Benefits Plan") to provide for the payment to individuals of
benefits which would otherwise be payable under the Company's Pension Plan and
Profit Sharing PluSavings Plan but which may not be paid under such plans due to
limits imposed by Sections 401(a)(17) and 415 of the Internal Revenue Code. In
addition, the plan also provides that a participant in the plan who has reached
40 years of service and age 65, but continues as an employee (for example, under
a consulting agreement) would be able to elect to receive, upon retirement, the
lump sum amount to which he or she would have been entitled had retirement begun
at age 65. As of September 1, 1994, Messrs. Spungin, Hewson, Weissman, Kravis,
and Schwarz would be entitled to receive potential annual pension payments,
pursuant to the Supplemental Benefits Plan, of approximately $93,089, $109,434,
$4,303, $17,625 and $79,031 respectively, commencing at normal retirement age.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Melvin L. Hecktman, who resigned as vice chairman of the Company effective
September 1, 1993, has a consulting agreement with the Company by which Mr.
Hecktman, until February 28, 1995, will receive annual compensation of $275,000,
plus participation in all bonus and other benefit plans generally available to
executive officers of the Company. The amount of his consulting compensation is
subject to reduction by the amount of compensation he may receive from new
employment. Under the terms of the consulting agreement, Mr. Hecktman will
render such advisory and consulting services as requested by the Company. If Mr.
Hecktman dies during the consulting term, his wife shall receive of one-half of
the consulting payments to which Mr. Hecktman is entitled, such payments to his
wife to continue for the balance of Mr. Hecktman's consulting term or until her
earlier death. Mr. Hecktman is restricted from disclosing proprietary materials
and confidential information. In addition, Mr. Hecktman is restricted from being
employed by or consulting with any competing firm during the consulting period.
Mr. Coolidge, a director of the Company, is a partner of William Blair &
Company, which from time to time has rendered investment banking and related
services to the Company, for which the Company has paid customary fees.
21
<PAGE>
FILINGS UNDER SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities and Exchange Act of 1934 requires the Company's
directors and officers to file reports of holdings and transactions in the
Company's Common Stock with the Securities and Exchange Commission. Based on
Company records and other information, the Company believes that with respect to
the fiscal year ended August 31, 1994 all Section 16(a) filing requirements
applicable to its directors and officers were in compliance.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Arthur Andersen LLP as
independent public accountants for the Company for the fiscal year ending August
31, 1995. Arthur Andersen has served as the Company's independent public
accountants since the Company's organization in 1981.
Representatives of Arthur Andersen are expected to be present at the Annual
Meeting and are expected to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Annual Meeting of
stockholders to be held in January 1996 must be received by the Company no later
than August 10, 1995 in order to be considered for inclusion in the Company's
Proxy Statement and form of proxy relating to such meeting.
OTHER MATTERS
Management does not know of any other matter to be presented for action by the
stockholders at the Annual Meeting. The persons named in the accompanying proxy
will vote such proxy as determined by a majority of the Board of Directors with
respect to any other matter not now known which is properly brought before the
meeting.
By Order of the Board of Directors
PASTEUP SIG
OTIS H. HALLEEN
SECRETARY
Des Plaines, Illinois
22
<PAGE>
APPENDIX A
AMENDMENT TO
UNITED STATIONERS INC.
1981 STOCK INCENTIVE AWARD PLAN
Amendment Adopted October 11, 1994
1. The United Stationers Inc. 1981 Stock Incentive Award Plan (the "Plan") is
amended as follows:
a. Section 4 of the Plan is amended by deleting the number "1,620,000" in
the first sentence and substituting therefor "1,782,000"
b. Section 5(g) of the Plan is amended by adding at the end thereof, after
the word "grant," the following: "including, without limitation, by
delivery of a note of the individual exercising the option."
2. This Amendment shall be subject to approval by the stockholders of the
Company.
<PAGE>
APPENDIX B
AMENDMENT TO
UNITED STATIONERS INC.
MANAGEMENT INCENTIVE PLAN
Dated: October 11, 1994
1. Section 5 of the United Stationers Inc. Management Incentive Plan (as
amended and restated as of September 1, 1988) is hereby amended by adding
thereto, as paragraphs 5.2 through 5.5 thereof, the following:
5.2 ALTERNATIVE FORM OF PAYMENT. Alternatively, Participants may elect to
receive up to one-half of their Final Awards in common stock of the
Company. Any Participant who so elects may receive shares of common stock
of the Company having a value, as of the end of the Plan Year, equal to
120% of the cash value of the selected portion of the Award.
5.3 TIME FOR ELECTION. Participants must make their election, if any, to
receive common stock prior to the end of the Plan Year, except that
Executive Officers of the Company must make their election, if any, on or
before February 28 in each Plan Year. No such election will be valid for
the Plan Year in which the Participant's employment terminates.
5.4 LIMITATIONS ON TRANSFER OF SHARES. Shares acquired by Participants
pursuant to this Plan may not be sold, assigned, transferred, pledged or
otherwise encumbered prior to the earliest to occur of a Change in
Control of the Company or two years after the date of issuance of such
shares. Certificates representing such shares to be issued under this
Plan shall bear an appropriate restrictive legend reflecting this
limitation on transfer.
5.5 NUMBER OF AUTHORIZED SHARES. The total number of shares of common stock
which may be issued pursuant to this Plan shall be 300,000.
2. This Amendment is subject to approval by the stockholders of the Company at
the next annual meeting of stockholders, and shall become effective upon
such approval.
<PAGE>
PROXY
UNITED STATIONERS INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - JANUARY 11, 1995
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints JOEL D. SPUNGIN, MELVIN L. HECKTMAN AND
JEROLD A. HECKTMAN, or any of them, proxies, with full power of substitution, to
vote all the shares of common stock of UNITED STATIONERS INC. which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
at The Northern Trust Company, Assembly Room, Sixth Floor, 50 South LaSalle
Street, Chicago, Illinois on Wednesday, January 11, 1995 at 1:30 p.m., local
time, and at any adjournment thereof, with all powers the undersigned would
possess if present.
THIS PROXY IS TO BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE DIRECTOR NOMINEES LISTED ON THE REVERSE
SIDE, AND IN THEIR DISCRETION THE PROXIES MAY VOTE UPON ANY OTHER BUSINESS THAT
PROPERLY COMES BEFORE THE MEETING.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
<PAGE>
/X/ Please mark
votes as in
this example.
1. Election of three directors to serve for a three-year term expiring in
1998.
Nominees: E. David Coolidge III, Jerold A. Hecktman, Jack Twyman
FOR WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
/ / / /
FOR ALL EXCEPT THE FOLLOWING NOMINEE(S)
______________________________________________________________
Instructions: To withhold authority to vote for any individual
nominee, write that nominee's name on the line provided above.
2. To approve an amendment to the 1981 Stock Incentive Award Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. To approve an amendment to the Management Incentive Plan.
FOR AGAINST ABSTAIN
/ / / / / /
MARK HERE MARK HERE
FOR ADDRESS / / IF YOU PLAN / /
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
NOTE: Please date and sign as your name appears hereon. Joint owners should all
sign. When signing as attorney, executor, administrator, trustee, guardian or
corporate officer, please give full title as such.
Signature: ______________________________________________ Date ________________
Signature: ______________________________________________ Date ________________
