<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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GENERAL BINDING CORPORATION
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
GENERAL BINDING CORPORATION
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(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 transactions applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
[ ] 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:
------------------------------------------------------------------------
1 Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE> 2
[Copywhite]
WILLIAM N. LANE, III
Chairman
April 12, 1994
To GBC stockholders:
You are cordially invited to attend the GBC annual meeting of stockholders,
which will be held on Tuesday, May 10, 1994 at 3:30 p.m. at the Holiday Inn
North Shore, 5300 W. Touhy Av., Skokie, Illinois.
At the meeting we shall report to you on the current business and
developments at GBC. The Board of Directors and many of our executives will also
be present to discuss the affairs of the Company with you. After the meeting,
Company products will be demonstrated and refreshments will be served.
Please sign and return the enclosed proxy card to assure that your shares
will be represented. If you plan to attend the meeting, please so indicate in
the appropriate space provided on the card. The proxy will not be used if you do
attend and wish to vote in person.
Sincerely yours,
WILLIAM N. LANE, III
Chairman
<PAGE> 3
GENERAL BINDING CORPORATION
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 10, 1994
Northbrook, Illinois
April 12, 1994
The annual meeting of the stockholders of General Binding Corporation (the
"Company") will be held on Tuesday, the 10th day of May, 1994 at 3:30 p.m. local
time, at the Holiday Inn North Shore, 5300 W. Touhy Avenue, Skokie, Illinois for
the following purposes:
1. To elect a board of nine directors for the ensuing year.
2. To act upon a proposal to ratify the selection of Arthur Andersen & Co.
as independent public accountants for the fiscal year 1994.
3. To transact such other business as may properly come before the meeting.
The transfer books will not be closed. Only stockholders of record, at the
close of business on March 21, 1994, are entitled to notice of and to vote at
this meeting or any adjournment thereof.
In order that your shares may be represented at the meeting, in the event
you are not personally present, please sign the proxy and return it in the
enclosed envelope.
By order of the Board of Directors
STEVEN RUBIN
Vice President, Secretary &
General Counsel
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. PLEASE SIGN,
DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN ORDER THAT YOUR SHARES WILL BE
VOTED. A RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES IS ENCLOSED FOR YOUR CONVENIENCE. IF YOU ATTEND THE MEETING YOU MAY
REVOKE THE PROXY AT ANY TIME BEFORE IT IS VOTED.
<PAGE> 4
GENERAL BINDING CORPORATION
ONE GBC PLAZA
NORTHBROOK, ILLINOIS 60062
------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 10, 1994
------------------
The enclosed proxy is solicited by the Board of Directors of the Company.
It may be revoked at any time before it is exercised, but if not revoked, the
shares represented by the proxy will be voted. If the proxy card is marked to
indicate a choice, the shares will be voted as directed. If no indication is
made, the proxy will be voted FOR the election of directors and FOR the
ratification of the selection of Arthur Andersen & Co. as independent auditors.
You may revoke your proxy by giving written notice of revocation to the
Secretary of the Company at any time before it is voted or by attending the
meeting and voting your shares in person. The expense incurred in the
solicitation of the proxies will be borne by the Company. In addition to this
solicitation by mail, proxies may be solicited by officers, directors, and
regular employees of the Company, without extra compensation, personally and by
mail, telephone or telegraph. Brokers, nominees, fiduciaries and other
custodians will be required to forward soliciting material to the beneficial
owners of shares and will be reimbursed for their expenses. This Proxy Statement
and the enclosed Proxy are being sent to the stockholders of the Company on or
about April 12, 1994.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
The voting securities entitled to vote at the meeting are 13,366,236 shares
of Common Stock entitled to one vote per share and 2,398,275 shares of Class B
Common Stock entitled to fifteen votes per share. The record date for
determination of stockholders entitled to vote at the meeting is March 21, 1994.
By virtue of Lane Industries, Inc. direct ownership of the Common Stock and
Class B Common Stock as described below, it controls 87.6% of the eligible votes
at the meeting.
Lane Industries, Inc. intends to vote its shares for the election as
directors of the nominees named herein and to ratify the selection of
independent public accountants.
1
<PAGE> 5
The following beneficial owners of the Company's equity securities are the
only persons known to management of the Company who beneficially owned more than
five per cent of any class of the Company's voting securities as of March 1,
1994:
<TABLE>
<CAPTION>
AMOUNT
AND
NATURE OF PERCENT
BENEFICIAL OF
CLASS OF STOCK NAME AND ADDRESS OWNERSHIP CLASS
- -------------------- ------------------------------ --------- ----
<S> <C> <C> <C>
Class B Common
Stock............. Lane Industries, Inc. 2,398,275(1)(3) 100
One Lane Center
Northbrook, IL 60062
Common Stock........ Lane Industries, Inc. 9,628,382(2)(3) 61(4)
One Lane Center
Northbrook, IL 60062
Common Stock........ Ariel Capital Management, Inc. 2,425,815(5) 15.4(4)
307 N. Michigan Ave.
Chicago, IL 60601
</TABLE>
- ---------------
(1) Class B Common Stock is convertible into Common Stock at the rate of one
share of Common Stock for each Class B share upon presentation of a Class B
share to the transfer agent.
(2) Includes the 2,398,275 Class B shares described in Note (1).
(3) Lane Industries, Inc. has the sole power to vote and to dispose of these
shares. The voting stock of Lane Industries, Inc. is owned by various
trusts under which certain members of the family of William N. Lane,
deceased, are beneficiaries. William N. Lane, III, Chairman and a Director
of the Company and other members of the Lane family are considered to have
control of Lane Industries, Inc. by virtue of their control of the voting
stock of Lane Industries, Inc. through a Voting Trust Agreement under which
they act as Voting Trustees.
(4) As a percent of the outstanding shares after giving effect to the possible
conversion of Class B Common Stock described in Note (1).
(5) As of December 31, 1993 based upon information provided in a Schedule 13-G
filed with the Securities and Exchange Commission and dated January 21,
1994. Ariel Capital has sole dispositive power over all of these shares,
has sole voting power over 1,646,305 of these shares, and shared voting
power over 295,540 of these shares.
ELECTION OF DIRECTORS
It is intended that the proxy will be voted for the election of the nine
nominees for director named below except in the event any of those named should
not continue to be available for election, discretionary authority may be
exercised to vote for a substitute. All of the nominees are current directors
and were elected by the stockholders. There are no family relationships among
any of the nominees.
2
<PAGE> 6
No circumstances are now known which would render any nominee named herein
unavailable. The nominees of Management for election to the Board of Directors,
each to hold office until the next annual meeting, or until his successor is
elected, are as follows:
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
FIRST YEAR OWNED PERCENT
ELECTED PRESENT POSITION MARCH 1, OF
NAME AND AGE DIRECTOR WITH COMPANY 1994 CLASS(A)
- --------------------------------- ---------- ------------------- ------------ --------
<S> <C> <C> <C> <C>
Harry J. Bruce, 62............... 1988 Director(b) 7,250 0
James M. Denny, 61............... 1983 Director(c) 1,012 0
Theodore Dimitriou, 67........... 1991 Director(d) 2,000 0
Rudolph Grua, 65................. 1984 President and Chief 80,314(f) .5
Executive
Officer, and
Director(e)
Thomas V. Kalebic, 50............ 1977 Director(g) 50,255(h) .3
William N. Lane, III, 50......... 1977 Chairman and 216,226(j) 1.4
Director(i)
Arthur C. Nielsen, Jr., 75....... 1966 Director(k) 25,500 .2
Warren R. Rothwell, 77........... 1961 Director(l) 68,819(m) .4
Robert J. Stucker, 49............ 1987 Director(n) 4,500 0
All Officers and Directors as a
group.......................... 948,760(o) 6.0
</TABLE>
- ---------------
(a) As a percent of outstanding shares after giving effect to the possible
issuance of shares pursuant to the Company's stock option plan described
below and the possible conversion of the Class B Common Stock (see note (1)
to Voting Securities and Principal Stockholders). Percentages less than .1%
are shown as 0%.
(b) Mr. Bruce is a private investor and was the President and Chief Executive
Officer of the Illinois Central Railroad from 1983 to March, 1989. He also
currently serves as a director of A.P. Green Industries and Duff and Phelps
Selected Utilities, Inc. and is a Professor of Management at Florida
Atlantic University.
(c) Mr. Denny is the Vice Chairman of Sears, Roebuck and Company, having been
named to the position in February, 1992. He first joined Sears as its Vice
President, Finance in September, 1986.
(d) Mr. Dimitriou is currently the Chairman, and has been for more than the
past prior five years, the Chairman, Chief Executive Officer and a director
of Wallace Computer Services, Inc., a leader in the business forms and
computer service and supply industry. Mr. Dimitriou also currently serves
as a director of the Walgreen Co.
(e) Mr. Grua became the Company's President and Chief Executive Officer and a
Director on May 1, 1984. He is also a director of the Varlen Corporation.
(f) Includes 9,250 shares exercisable under stock options by May 1, 1994. Also
includes 13,968 shares owned by Mr. Grua's wife, beneficial ownership of
which is disclaimed.
(g) Mr. Kalebic is currently Executive Vice President, Chief Operating Officer
and a Director of Lane Industries, Inc., a company with hotel, radio
broadcasting, farming and ranching operations in addition to other
investments. He has been an officer of Lane Industries, Inc. since 1975
(see (j) below). Mr. Kalebic is also a Voting Trustee under the Agreement
referenced in note (3) to Voting Securities and Principal Stockholders.
(h) Mr. Kalebic has outstanding options to acquire from Lane Industries, Inc.
up to 62,875 shares of the Company's Common Stock at prices ranging from
$8.69 to $19.75. Of those outstanding options 17,125 were exercisable on
March 1, 1994 but are not included in the figure included in the table.
3
<PAGE> 7
(i) Mr. Lane is the Chairman, President and a Director of Lane Industries,
Inc., and has served in such capacity since September, 1978. He was elected
Chairman of General Binding Corporation in May, 1983. He also currently
serves as a director of Wallace Computer Services, Inc.
(j) Does not include 9,628,382 shares owned by Lane Industries, Inc., an
associate of Mr. Lane, III (see notes (2) and (3) to Voting Securities and
Principal Stockholders). Also includes 17,312 shares exercisable under
stock options by May 1, 1994.
(k) Mr. Nielsen is the former Chairman and Chief Executive Officer of A. C.
Nielsen Co. and now acts as a consultant to that Company.
(l) Mr. Rothwell is Chairman of the Company's Executive Committee. He was the
Company's President on an interim basis from November, 1983 to May, 1984.
He had previously been the Company's Chairman since November, 1978 until
his retirement from that position in May, 1983.
(m) 1,000 of these shares are held in the estate of Mr. Rothwell's deceased
wife. 25,606 of these shares are held in a charitable remainder trust over
which Mr. Rothwell may indirectly have voting and dispositive powers. Mr.
Rothwell disclaims beneficial ownership over 26,606 of these shares.
(n) Mr. Stucker is a partner with the law firm of Vedder, Price, Kaufman &
Kammholz. He is also a director of Lane Industries, Inc. (see (j) above).
Vedder, Price, Kaufman & Kammholz has performed legal services for the
Company and Lane Industries, Inc. for many years and it is anticipated that
they will continue to do so in the future.
(o) Includes 352,983 shares owned by the Company's Employee's Profit Sharing
Plan. Messrs. Grua, Kalebic, Lane and Rothwell share the power to direct
the disposition of these shares as members of the Company's Executive
Committee of the Board. The members of the Executive Committee disclaim
beneficial ownership of these shares. Also includes 63,062 shares
exercisable under stock options or exercisable by May 1, 1994 under the
Company's stock option plans.
As required by the Securities and Exchange Commission rules under Sec. 16
of the Securities and Exchange Act of 1934, the Company is aware that one
director and one of its principal stockholders filed untimely reports for
transactions in the Company's Common Stock for the year ended December 31, 1993
as follows: Thomas V. Kalebic and Lane Industries, Inc. both filed reports four
days late concerning the same transaction in which Mr. Kalebic purchased shares
from Lane Industries, Inc. pursuant to an option purchase agreement he has with
it.
STOCK OWNERSHIP OF MANAGEMENT
Following is information with respect to the ownership of the Company's
Common Stock by those non-director executive officers named in the Senior
Executive Compensation Table found on page following.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
OWNED
PRESENT POSITION MARCH 1,
NAME WITH COMPANY 1994
---------------------------------- ------------------------------------ ------------
<S> <C> <C>
Elliott L. Smith.................. Executive Vice President 15,804(a)
Govi C. Reddy..................... Senior Vice President; 9,617(a)
President, Film Products Division
John G. Lindroth.................. Senior Vice President; 15,576(a)
North American Sales
</TABLE>
4
<PAGE> 8
- ---------------
(a) Includes the following number of shares that could be obtained by exercising
options under the Company's stock option plans by May 1, 1994 -- 8,657 for
Mr. Smith, 5,212 for Mr. Reddy and 1,437 for Mr. Lindroth.
BOARD OF DIRECTORS AND COMMITTEE DATA
The Board of Directors has appointed a standing Audit Committee. No
nominating committee has been appointed.
The current members of the Audit Committee are Messrs. Nielsen (Chairman),
Denny, Dimitriou, Kalebic and Lane, III. The Committee (a) recommends to the
entire Board the firm to be retained each year as independent public
accountants, (b) reviews the scope of the audit to be performed by the public
accountants, (c) reviews the reports of the public accountants and (d)
periodically meets with the Company's internal auditors and financial management
to review the internal audit and control methods and procedures of the Company,
reporting thereon to the entire Board. The Audit Committee met four times in
1993.
The Board has also appointed a standing Executive Committee, which consists
of Messrs. Rothwell (Chairman), Lane, Grua, and Kalebic. This Committee is
responsible for the review of the Company's operations and finances. Included
within these responsibilities is the control and implementation of compensation
policies and programs for the Company's senior executives. The Executive
Committee met 20 times in 1993.
There were five meetings of the Board of Directors during 1993. Each member
of the Board attended at least 75% of all board and committee meetings of which
the director was a member during the year.
DIRECTOR'S COMPENSATION
Directors who are not employees of the Company receive an annual director's
fee of $5,000 and are paid $1,000 for each Board meeting attended and $500 for
each Audit Committee meeting attended. Employee directors receive $1,000 per
meeting for attending regularly scheduled Board meetings. In addition to Board
meeting fees, Thomas V. Kalebic receives an annual fee of $10,000 to compensate
him for Board Committee participation and for the additional service he provides
the Company as a member of its Executive Committee. In addition to the annual
and board meeting fees, Warren R. Rothwell receives payments from the Company
pursuant to a consulting agreement entered into with the Company in May, 1983.
Under the terms of the Agreement, Mr. Rothwell acts as Chairman of the Board's
Executive Committee and performs other business consulting for the Company. In
1993, $55,000 was paid to Mr. Rothwell pursuant to this Agreement.
5
<PAGE> 9
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION IN COMPENSATION DECISIONS
During 1993 and currently, Mr. Kalebic, a member of the Company's Executive
Committee served as an officer and director of Lane Industries, Inc. of which
William N. Lane, III, the Company's Chairman is also the Chairman and Chief
Executive Officer (see notes (g) and (j) to Election of Directors and
Transactions with Management).
During 1993 and currently, Mr. Lane has acted as a member of the
Compensation Committee of the Board of Directors of Wallace Computer Services,
Inc. of which Mr. Theodore Dimitriou, a Director of the Company, is Chairman of
the Board.
During 1993, executive officer compensation matters were principally
decided by the Company's Executive Committee of the Board of Directors with the
Board in whole having oversight authority. The Executive Committee and the Board
also considered recommendations made by the Stock Option Plan Administrative
Committee, with respect to stock option matters. The Board's Executive Committee
consists of Messrs. Lane, Grua, Kalebic and Rothwell, who acts as Chairman. As
members of the Company's Board and its Executive Committee, Messrs. Lane and
Grua participated in deliberations concerning their own compensation and the
compensation of the other executive officers of the Company.
EXECUTIVE OFFICERS OF THE COMPANY (1)
<TABLE>
<CAPTION>
NAME AND AGE TITLE
------------ -----
<S> <C>
William N. Lane, III, 50............ Chairman
Rudolph Grua, 65.................... President and Chief Executive Officer
Elliott L. Smith, 59................ Executive Vice President
Steven R. Baumhardt, 45............. Senior Vice President, International Operations
Walter M. Hebb, 54.................. Senior Vice President, Corporate Development
John G. Lindroth, 56................ Senior Vice President, North American Sales
Govi C. Reddy, 49................... Senior Vice President; President, Film Products
Division
Eugene J. Angel, 53................. Vice President; President, U.S. Ring
Binder Corp.
Govind K. Arora, 45................. Vice President, Manufacturing
Thomas F. Gueth, 44................. Vice President, Research & Development
Joseph J. LaPorte, 62............... Vice President, Corporate Relations
Edward J. McNulty, 54............... Vice President and Chief Financial Officer
Steven Rubin, 46.................... Vice President, Secretary and General Counsel
Charles K. Shattuck, 45............. Vice President, Office Products Group
Paul E. Wiedlin, 48................. Vice President, Binder Operations
</TABLE>
- ---------------
(1) All of the above-named officers have been actively engaged in the business
of the Company for the past five years, in the capacity indicated above or
in a substantially similar capacity, except: Steven R. Baumhardt, who before
joining the Company in August, 1993, held various general management
positions with the Eastman Kodak Company for more than the past five years,
his most recent position being the General Manager of Central American and
Caribbean Operations for the entire universe of Kodak brand products; Eugene
J. Angel, who before joining the Company in July, 1991 had been the
President and CEO of McBee Binder Corp., a loose leaf binder manufacturer,
since 1988 and prior to holding that position had been, since 1984, Vice
President, Sales for Wilson Jones, U.S.A., a manufacturer of a wide variety
of office products; Thomas F. Gueth, who before joining the Company in
November, 1991 had been the Director of Development
6
<PAGE> 10
Engineering for the Pitney Bowes Corporation, a manufacturer of mailing and
other office equipment; and, Charles K. Shattuck, who before joining the
Company in October, 1991, had been the Vice President-Marketing for the
Office Products Division of Rubbermaid, Inc. Mr. Smith was named the
Company's Executive Vice President in February, 1990 after serving as the
Company's Senior Vice President, International since April, 1986. Mr. Arora
was named to this position in April, 1992 after serving in various
manufacturing positions with the Company since 1978, the most recent of
which was Vice President, Operations of the Company's Film Products
division. Before being named to this position in April, 1992 Mr. Wiedlin had
acted as the Company's Vice President, Manufacturing since January 1989 and
had held various senior line manufacturing management positions with the
Company for more than five years prior to that time.
There is no family relationship between any of the above named officers.
All officers are elected for a one-year term by the Board of Directors or
until reelected.
BOARD EXECUTIVE COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
In 1993, the Executive Committee of the Board of Directors approved the
compensation policies and programs of the Company as they pertained to the
Company's executive officers, with the Board having oversight responsibility on
these issues. This Committee will also bear this responsibility for the year
1994. The members of the Executive Committee were Messrs. Grua, Kalebic, Lane,
and Rothwell, who acts as Chairman. Mr. Lane and Mr. Grua are current officers
and employees of the Company.
The Company and the Committee have maintained the philosophy that executive
officer compensation should be directly and materially linked to operating
performance. Thus, executive officer compensation is heavily weighted towards
bonuses paid on the basis of both corporate and personal performance and the
growth in wealth that can be achieved through the exercise of options in the
Company's common stock. Therefore, in years when the Company has had excellent
earnings growth, its executive officers have been justly rewarded; and in less
profitable years, total executive compensation has been negatively affected,
such as in 1993, for which no bonuses were awarded.
The principal components of the compensation package for executive officers
of the Company are salary, bonus, and stock options. In addition, the Company's
Chief Executive Officer ("CEO") has a deferred compensation agreement with the
Company. The Committee believes that the compensation packages for the CEO and
other executive officers are typical of other companies of the same general size
and necessary to attract, properly motivate and retain a quality management team
which will best serve the interests of the stockholders.
Based on information provided in various compensation surveys subscribed to
and received by the Company, the salaries of the CEO individually and of all
other executive officers are approved by the Committee. The Committee believes,
based on this information, that the salaries paid in 1993 to the CEO and the
other executive officers, as well as their current salaries, are near the median
of the average base salaries for executive officers of other comparable sized
companies.
Senior executive compensation is most closely related to corporate
performance through awards made under the Management Incentive Compensation Plan
(the "MIC Plan") and grants of options under the Company's 1989 Non-qualified
Stock Option Plan. Under the MIC Plan participants can earn a bonus award,
subject to minor adjustments, of up to 80% of annual salary. The maximum award
under
7
<PAGE> 11
the MIC Plan was increased to this level in 1993 from up to 60% of annual salary
in prior years to make the MIC Plan more competitive with similar plans offered
by other comparable sized companies.
The amount of bonus awarded under the MIC Plan is based on a combination of
achieving certain annual corporate objectives as well as individual performance
objectives. In 1993 and again for 1994, the corporate performance objective is
based on attaining a certain earnings per share ("EPS") level. In 1993, the
Company did not achieve targeted EPS nor did it achieve the minimum EPS level
necessary to trigger any awards under the MIC Plan.
The Committee also strongly believes that the granting of stock options to
the CEO and the other senior executives should be an integral portion of
over-all executive compensation. The opportunity to provide wealth to the
executive group through the growth in value of the Company's common stock is an
integral means of aligning the interest of management with stockholders and
helps focus the attention of management on the long-term success of the Company.
Options are granted to the CEO and the other executive officers on a periodic
basis when the Stock Option Plan Administrative Committee, the Committee and the
Board of Directors in whole deems such action appropriate.
To further enhance the aligning of management interest with that of the
Stockholders, the Committee and the Board implemented an executive stock
ownership program effective January 1, 1994. Under the terms of this program,
the Company's senior officers, as well as certain other members of management,
are encouraged to acquire and maintain a certain level of ownership of the
Company's Common Stock. The level of ownership called for ranges from a number
of shares in value equal to or greater than one times annual salary for those
employees with a salary level of $149,999 and below to two and one-half times
salary for those employees with a salary level of $300,000 or above. Depending
on length of service, an employee will have from five to seven years to attain
their desired ownership levels, however, the Committee will monitor annually the
progress being made by the employee to reach such level. If the Committee is not
satisfied with the progress of share acquisition by any employee it could elect
to recommend a reduction in future stock option grants to the affected employees
by the Stock Option Plan Administration Committee.
Recently enacted Sec. 162(m) of the Internal Revenue Code generally limits
the corporate tax deduction for compensation paid to executive officers named in
the Senior Executive compensation Table that follows to $1 million, unless
certain requirements are met. The Committee has determined not to modify the MIC
Plan or any of the Company's other compensation programs at this time since
compensation paid to executive officers under the current company programs would
be less than the $1 million limit and since final rules have not been issued by
the Internal Revenue Service. In the future, the Committee will periodically
review the necessity of modifying the compensation programs for executive
officers so that the corporate tax deduction is maximized, however, it will
retain the flexibility to not make such modifications when it deems such action
to be in the best interests of the Company and its shareholders.
The Executive Committee
Warren R. Rothwell,
Chairman
Rudolph Grua
Thomas V. Kalebic
William N. Lane, III
8
<PAGE> 12
SENIOR EXECUTIVE COMPENSATION
The following table shows the compensation paid and accrued by the Company
during the last fiscal year to each of its five highest paid senior executives,
including the Chief Executive Officer.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------ TOTAL
ANNUAL COMPENSATION AWARDS COMPENSATION
--------------------------------------- ------------ ------------
OTHER ANNUAL OPTIONS/ ALL OTHER (TOTAL OF
NAME AND SALARY BONUS(1) COMPENSATION(2)(4) SARS COMPENSATION(3)(4) COLUMNS
PRINCIPAL POSITION YEAR ($)(A) ($)(B) ($)(C) (#) ($)(D) A-D)($)
- ------------------------ ---- ------- -------- ------------------ ------------ ------------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
William N. Lane, III.... 1993 190,000 0 34 10,000 15,352(5) 215,352
Chairman of the Board 1992 178,000 26,515 122 18,000 13,912(5) 218,549
1991 168,000 25,200 0 193,200
Rudolph Grua............ 1993 351,667 0 8,363 8,000 23,422(5) 383,452
President and Chief 1992 327,500 72,050 7,547 14,000 35,139(5) 442,236
Executive Officer 1991 310,000 46,500 0 356,500
Elliott L. Smith........ 1993 199,667 0 4,344 2,500 10,031(5) 214,042
Executive Vice 1992 189,167 23,645 4,267 4,000 9,545(5) 226,624
President 1991 178,750 22,345 0 201,095
Govi C. Reddy........... 1993 183,750 0 4,145 5,000 10,375(5) 198,270
Senior Vice President; 1992 169,500 52,545 4,462 4,600 9,172(5) 235,679
President, Film 1991 159,000 39,750 0 198,750
Products Division
John G. Lindroth........ 1993 153,333 0 5,877 2,000 7,841(5) 167,051
Senior Vice President, 1992 148,333 18,540 4,691 2,000 7,228(5) 178,792
North American Sales 1991 143,333 11,470 0 154,803
</TABLE>
- ---------------
(1) Annual bonus amounts are earned and accrued during the fiscal years
indicated, and paid subsequent to the end of such year.
(2) The above named individuals receive certain non-cash personal benefits, the
aggregate cost of which to the Company are below applicable reporting
thresholds. The amounts included in this column represent the amounts
reimbursed to the named individuals for income taxes attributable to such
personal benefits.
(3) Unless otherwise noted below, these amounts represent contributions by the
Company to the Company's Profit Sharing, Savings and Retirement Plan Trust
on behalf of the named individuals. This is a tax qualified deferred
contributory Profit Sharing Plan in which all regular employees of covered
domestic companies are eligible to participate after one year of service.
The employee must contribute at least 2%, and may contribute up to 12%, of
his compensation. The Company's contribution, subject to certain
limitations, is the greater of 2% of compensation of participants or an
amount determined by a formula based upon net income. The Company may make
contributions in excess of the required amount (not in excess of the amount
deductible for Federal income tax purposes) and has done so in every year
except one since establishment of the Plan in 1963. For each year since 1972
Company contributions were 4.3% of participant's compensation. Participants
become vested, except in certain situations, in the Company contributions
and the earnings, if any, thereon at various percentages after two years of
service becoming 100% vested after seven years of service. Of the
individuals named in the compensation table at December 31, 1993, Messrs.
Lane, Grua, Smith and Reddy were 100% vested and Mr. Lindroth was 80% vested
in the Company portions of their account. Participants may, with the
approval of the Plan's administration committee, withdraw their vested
portion of the Company account upon termination of employment, retirement or
death, or in certain hardship situations.
(4) This information is not required to be disclosed for fiscal years ended
prior to December 15, 1992 and thus is not included in the table for such
years.
9
<PAGE> 13
(5) Also includes the following amounts paid by the Company for term life
insurance premiums for the benefit of the named individuals in 1993 and 1992
respectively -- Mr. Lane $222 and $174, Mr. Grua $1,308 and $822, Mr. Smith
$450 each year, Mr. Reddy $174 each year, and Mr. Lindroth $450 and $356.
With respect to Mr. Grua, this amount also includes $6,973 for 1993 and
$19,473 for 1992 accrued by the Company as an expense to fund future
liabilities to Mr. Grua or his surviving spouse under a deferred
compensation agreement it has entered into with Mr. Grua. Under the terms of
this agreement, the Company will pay Mr. Grua, or his wife, the sum of
$23,000 per year for a term of ten years following his 65th birthday, or at
retirement should his employment with the Company continue past his 65th
birthday. With respect to Messrs. Grua and Lane, this amount also includes
$5,000 paid to each of them during 1993 as Board of Director's fees.
RETIREMENT PLAN
The Company's Guaranteed Retirement Income Plan covering all employees who
participate in the Company's Profit Sharing Plan provides in pertinent part for
annual retirement benefits at age 65 after 30 years of benefit service equal to
50% of the average of the five highest consecutive years of compensation out of
the last ten years worked. The retirement benefit is reduced by the annual
income which would be provided by the purchase or funding of an annuity with the
balance in the employee's retirement account under the Profit Sharing Plan and
by 50% of the primary social security benefit payable at age 65. The amount of
the retirement benefit and the social security offset are proportionately
reduced for benefit service of less than 30 years. No benefit is payable, except
in certain circumstances, to anyone with less than seven years participation in
the Profit Sharing Plan.
The table below shows the annual retirement benefit at age 65 which would
accrue for each year of participation at the respective salary rates before the
profit sharing retirement account and social security reductions.
<TABLE>
<Caption
AVERAGE
ANNUAL
COMPENSATION ANNUAL BENEFIT FOR YEARS OF PARTICIPATION INDICATED
FOR 5 ----------------------------------------------------------------------
HIGHEST 10 25
YRS. YEARS 15 YEARS 20 YEARS YEARS 30 YEARS
-------- ------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
$100,000 $16,667 $ 25,000 $ 33,333 $41,667 $ 50,000
200,000 33,334 50,000 66,666 83,334 100,000
300,000 50,000 75,000 100,000 * *
400,000 66,667 100,000 * * *
500,000 83,334 * * * *
</TABLE>
--------------------
* Maximum retirement benefit--Under the Internal Revenue Code of 1986 (the
"Code"), the maximum annual retirement benefit payable to or on behalf of
a participant under the Retirement Plan in 1993 was limited to the lesser
of (a) $115,641 or (b) 100% of the participant's average compensation for
his highest three years, except that the maximum benefit limit can never
be lower than the participant's accrued benefit under the Retirement Plan
as of December 31, 1982.
No contribution was made by the Company in 1993 for the Retirement Plan
because the Plan has been actuarially determined to be currently overfunded with
respect to any Plan liability to participants.
All of the individuals listed in the cash compensation table presently
participate in the Retirement Plan. For those individuals listed in the cash
compensation table, their respective years of benefit service
10
<PAGE> 14
as of December 31, 1993 and covered compensation (salary, bonus paid during the
year and commissions) for the year 1993 were as follows:
<TABLE>
<CAPTION>
YEARS OF
BENEFIT COVERED
INDIVIDUAL SERVICE COMPENSATION
---------- ------- ------------
<S> <C> <C>
William N. Lane, III...................... 27 $216,515
Rudolph Grua.............................. 9 423,717
Elliott L. Smith.......................... 7 222,812
Govi C. Reddy............................. 15 236,295
John G. Lindroth.......................... 6 171,873
</TABLE>
STOCK OPTION INFORMATION
The Company has two non-qualified stock option plans, one of which (the
"1980 Plan") terminated on February 28, 1990. Although the 1980 Plan has
terminated, options that have been granted thereunder may be exercised at
various times until January 31, 1998. The other stock option plan (the "1989
Plan") was approved by the shareholders in 1989. Except as noted below, the two
Plans are virtually identical in method of operation. Under the Plans options
may be granted during a ten year period to officers, including officers who are
directors, and other key employees of the Company to purchase the Common Stock
of the Company at a price of not less than 85% of fair market value on the date
of the grant. Options granted may be exercised in four equal parts over a period
not to exceed eight years from the date of grant, except that no part of an
option may be exercised until at least one year from the date of grant has
elapsed. 1,050,000 shares of the Company's Common Stock have been reserved for
issuance under the 1989 Plan which is administered by a Committee of three
directors who are ineligible to receive options thereunder. All options
terminate when an optionee ceases to be employed by the Company except in the
cases of retirement, death or disability.
The 1989 Plan provides that any option granted under the 1989 Plan may
include a grant of stock appreciation rights ("SARs") simultaneously with the
grant of the option or any time within six (6) months thereafter prior to the
exercise, termination or expiration of such option. SARs represent the right of
an optionee, without payment to the Company (except for applicable withholding
taxes), to receive in cash the excess of the fair market value per share on the
date on which SARs are exercised over the fair market value of the shares on the
grant date. SARs may only be exercised during a period beginning on the third
business day, and ending on the 12th business day, following the date on which
the Company has released for publication its regular quarterly or fiscal
year-end summary financial information. Exercise of SARs shall result in the
extinguishment of the pro rata portion of the options to which they relate and
the exercise of an option shall result in the extinguishment of the pro rata
portion of their related SARs. The 1980 Plan did not provide for or include any
Stock Appreciation Rights.
The following table sets forth the details of options granted to the
individuals listed in the Senior Executive Compensation Table during 1993. The
second table in this section sets forth certain information with respect to
options exercised by those individuals in 1993 as well as the value of their
unexercised options at the end of the year.
11
<PAGE> 15
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SAR'S
OPTIONS/ GRANTED TO
SAR'S EMPLOYEES EXERCISE OR GRANT DATE
GRANTED(1) IN FISCAL BASE PRICE EXPIRATION PRESENT VALUE(2)
NAME (#) YEAR ($/SHARE) DATE ($)
- --------------------------- ---------- ---------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
William N. Lane, III....... 10,000 14.2 17.00 3/28/01 66,800
Rudolph Grua............... 8,000 11.3 17.00 3/28/01 53,440
Elliott L. Smith........... 2,500 3.5 17.00 3/28/01 16,700
Govi C. Reddy.............. 5,000 7.0 17.00 3/28/01 33,400
John G. Lindroth........... 2,000 2.8 17.00 3/28/01 13,360
</TABLE>
- ---------------
(1) All options granted to the named individuals were granted under the
Company's 1989 Non-Qualified Stock Option Plan on March 29, 1993.
Twenty-five percent (25%) of each option first became exercisable one (1)
year after the respective grant date. Only twenty-five percent (25%) of an
initial option grant may be exercised during any one (1) year period
commencing with the anniversary date of an option grant. All of these
options were granted with an exercise price equal to the closing price of
the Company's Common Stock after trading on the grant date in the NASDAQ
national market over-the-counter quotation system. No SARs were granted in
connection with these option grants.
(2) Based on the Black-Scholes stock option pricing model. The following
assumptions were made for purposes of calculating the Grant Date Present
Value: the option term is assumed to be eight years; volatility at .3505; a
dividend yield of 2.4%; and, a risk free interest rate of 6.23%. The actual
value, if any, a named individual may realize will depend on the market
value of the underlying shares at the time the option is exercised, so there
is no assurance the value realized will be at or near the value estimated by
the Black-Scholes model. The Company's use of this model should not be
construed as an endorsement of its accuracy at valuing stock options.
12
<PAGE> 16
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR,
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/ OPTIONS/SARS
ACQUIRED SAR'S AT AT FY-END
ON VALUE FY-END EXERCISABLE/
EXERCISE REALIZED(1) EXERCISABLE/ UNEXERCISABLE
NAME (#) ($) UNEXERCISABLE ($)
---- -------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
William N. Lane, III................ 9,000 42,141 9,187/47,501 0/79,313
Rudolph Grua........................ -- -- 7,250/26,000 0/0
Elliott L. Smith.................... -- -- 8,156/14,313 59,468/40,792
Govi C. Reddy....................... -- -- 3,962/13,513 11,893/11,902
John G. Lindroth.................... -- -- 1,437/ 5,376 0/0
</TABLE>
- ---------------
(1) Value realized represents the difference between the option exercise price
and the fair market value of the Company's Common Stock on the date the
option was exercised.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Company's Common Stock for the last five fiscal years with the cumulative total
return on the NASDAQ Composite Index and the S&P Office Equipment and Supplies
Index over the same period (assuming the investment of $100 in the Company's
Stock, the NASDAQ Composite Index and the S&P Office Equipment and Supplies
Index on December 31, 1988, and the reinvestment of all dividends).
<TABLE>
<CAPTION>
S&P Office
Measurement Period General Binding NASDAQ Total Equipment &
(Fiscal Year Covered) Corporation Return Index Supplies
<S> <C> <C> <C>
12/88 100 100 100
12/89 137 121 109
12/90 86 103 85
12/91 102 165 135
12/92 107 192 158
12/93 90 219 180
</TABLE>
13
<PAGE> 17
TRANSACTIONS WITH MANAGEMENT
In 1978 the Company implemented a Recapitalization Plan which had been
previously approved by the stockholders. As part of the Plan the Company entered
into an agreement with Lane Industries, Inc., providing for the sharing of
Federal income tax savings, if any, between the Company and Lane Industries,
Inc., resulting from the filing of consolidated Federal income tax returns. In
1993 the Company made $6,983,530 in payments pursuant to this Agreement as the
Company's portion of its tax liability.
In 1985 the Company entered into an Agreement with Lane Industries, Inc.
under which the Company would receive twenty per cent (20%) of tax savings, if
any, realized by filing unitary state tax returns on a combined basis with Lane
Industries, Inc. In 1993 the Company made $207,600 in payments representing the
Company's portion of its state income tax liabilities under this Agreement.
Certain Lane Industries, Inc. personnel perform federal and state income
tax planning, risk management and finance services for GBC. Since January 1,
1993 the Company has paid $590,423 to Lane Industries, Inc. for these and
related support services and facilities costs. Management of the Company
believes that these costs are reasonable and fair and that the expense incurred
is less than the expense the Company would incur for employing its own personnel
with comparable levels of skill and experience to perform these services.
The Company makes reservations for business travel and accommodations
through a travel agency which is controlled by Lane Industries, Inc. The Company
pays the rates charged by the various carriers, hotels and car rental companies
which in turn pay commissions to this travel agency. The Company booked
approximately $1,494,823 of business travel and accommodations through such
travel agency in 1993 and the first two months of 1994.
On September 8, 1993 the Company purchased 4,387 shares of its Common Stock
from the estate of June P. Rothwell, the deceased spouse of Warren R. Rothwell,
a director of the Company. On February 7, 1994, the Company purchased an
additional 1,000 shares from Mrs. Rothwell's estate. All of the shares
purchased, which the Company will use for treasury purposes, were purchased at a
price of $15.125 each which was the mean between the Company's bid and ask
prices as quoted on the dates of the two transactions in the NASDAQ national
market over-the-counter quotation system.
14
<PAGE> 18
PROPOSAL TO RATIFY SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, on the recommendation of the Audit Committee, has
selected Arthur Andersen & Co. as independent public accountants to make an
audit of the accounts of the Company for the year 1994. If this selection is not
ratified, the Board of Directors will reconsider its selection.
The firm of Arthur Andersen & Co. has audited the books of the Company and
its predecessor annually since 1948, has offices in or convenient to most of the
locations in the United States and foreign countries where the Company operates,
and is considered to be well qualified. The Company has been advised by Arthur
Andersen & Co. that neither the firm nor any of its partners has any financial
interest, either direct or indirect in the Company or any of its subsidiaries.
Representatives of Arthur Andersen & Co. will be present at the annual meeting
and will have the opportunity to make a statement if they so desire and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS FAVORS A VOTE FOR THE PROPOSAL TO RATIFY THE
SELECTION OF ARTHUR ANDERSEN & CO. AS INDEPENDENT PUBLIC ACCOUNTANTS.
SHAREHOLDER PROPOSALS
Any proposal by a shareholder which is to be presented at the annual
meeting to be held in 1995 must be received at the Company's offices in
Northbrook, Illinois not later than December 12, 1994 in order to be included in
the proxy statement and form of proxy relating to that meeting.
OTHER BUSINESS
The Board of Directors knows of no other business to be presented for
consideration at the meeting. Should any other matter requiring stockholders'
action or approval be presented to the meeting, it is the intention of the proxy
holders named in the enclosed form of proxy to take such action as shall be in
accordance with their best judgment in the interest of the Company.
By order of the Board of Directors
STEVEN RUBIN
Vice President, Secretary
and General Counsel
Northbrook, Illinois
April 12, 1994
A COPY OF THE COMPANY'S ANNUAL REPORT FOR THE YEAR 1993 HAS BEEN
MAILED TO ALL STOCKHOLDERS. THE ANNUAL REPORT IS NOT TO BE REGARDED AS
PROXY SOLICITING MATERIAL.
15
<PAGE> 19
PRELIMINARY COPY--
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS. The
undersigned hereby appoints William
N. Lane, III, Robert J. Stucker and
Rudolph Grua, or any of them, with
full power of substitution, to
represent and to vote as designated
[Copy White] PROXY below, all the shares of
General Binding Corporation held of
record by the undersigned on
March 21, 1994, at the
annual meeting of stockholders to be
held on May 10, 1994, or at any
adjournment thereof.
ONE GBC PLAZA, NORTHBROOK ILLINOIS 60062
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS / / FOR all nominees listed below / / WITHOUT AUTHORITY
(except as marked to the contrary to vote for all nominees listed
below) below
</TABLE>
H. J. Bruce, J. M. Denny, T. Dimitriou, R. Grua, T. V. Kalebic,
W. N. Lane, III, R. J. Stucker, A. C. Nielsen, Jr. and W. R.
Rothwell
Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name on the following line:
-------------------------------------------------------------------
2. Ratification of the appointment of Arthur Andersen & Co. as
independent public accountants for the fiscal year 1993.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion upon such other matters as may properly come
before the meeting or any adjournment or adjournments thereof.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO SPECIFIC
DIRECTION IS GIVEN, THE PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS AND PROPOSAL 2.
The undersigned hereby revokes any proxy or proxies heretofore
given to vote upon or act with respect to said stock and hereby
ratifies and confirms all that said proxies and substitutes, or any
of them, may lawfully do by virtue hereof.
/ / I (we) shall attend the meeting.
/ / I (we) shall not attend the meeting.
Dated ________________, 1994
-----------------------------
Signature
-----------------------------
Signature if held jointly
Please sign exactly as name
appears hereon. When signing
as attorney, executor,
administrator, trustee or
guardian please give full
title. If stock is held in
PLEASE MARK, SIGN, DATE AND RETURN THE the name of more than
PROXY CARD PROMPTLY USING THE RETURN one person, all named holders
ENVELOPE. must sign the proxy.
(OVER)
- --------------------------------------------------------------------------------
