<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
GENERAL BINDING CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
GENERAL BINDING CORPORATION
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
(5) Total fee paid:
- - --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- - --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- - --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- - --------------------------------------------------------------------------------
(3) Filing party:
- - --------------------------------------------------------------------------------
(4) Date filed:
- - --------------------------------------------------------------------------------
<PAGE> 2
LOGO
WILLIAM N. LANE, III
Chairman
April 8, 1996
To GBC stockholders:
You are cordially invited to attend the GBC annual meeting of stockholders,
which will be held on Tuesday, May 14, 1996 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 14, 1996
Northbrook, Illinois
April 8, 1996
The annual meeting of the stockholders of General Binding Corporation (the
"Company") will be held on Tuesday, the 14th day of May, 1996 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 ten directors for the ensuing year.
2. To act upon a proposal to approve the 1989 Stock Option Plan as amended
and restated.
3. To act upon a proposal to ratify the selection of Arthur Andersen & Co.
as independent public accountants for the fiscal year 1996.
4. 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 18, 1996, 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 14, 1996
------------------
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, FOR the proposal to
approve the 1989 Stock Option Plan as amended and restated 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 8, 1996.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
The voting securities entitled to vote at the meeting are 13,343,943 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 18, 1996.
By virtue of Lane Industries, Inc. direct ownership of the Common Stock and
Class B Common Stock as described below, it controls 87.7% of the eligible votes
at the meeting.
Abstentions and broker non-votes will be counted for purposes of
determining the presence of a quorum. Broker non-votes will not be counted as
shares present and entitled to vote nor as a vote cast on any matter presented
at the meeting. Directors are elected by a plurality of the votes of the shares
present and entitled to vote. Accordingly, abstentions and broker non-votes will
not have any effect on the election of directors. Action on any other matter is
approved by a majority vote of the shares present and entitled to vote at the
meeting. Accordingly, abstentions will have the effect of a negative vote on
such matters.
Lane Industries, Inc. intends to vote its shares for the election as
directors of the nominees named herein, for the proposal to approve the 1989
Stock Option Plan as amended and restated 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,
1996:
<TABLE>
<CAPTION>
AMOUNT
AND
NATURE OF
BENEFICIAL PERCENT
CLASS OF STOCK NAME AND ADDRESS OWNERSHIP OF CLASS
- - ----------------- ------------------------------ --------- --------
<S> <C> <C> <C>
Class B Common 2,398,275(1)(3) 100
Stock.......... Lane Industries, Inc.
One Lane Center
Northbrook, IL 60062
Common Stock..... Lane Industries, Inc. 9,687,257(2)(3) 61.5(4)
One Lane Center
Northbrook, IL 60062
Common Stock..... Ariel Capital Management, Inc. 1,698,090(5) 10.8(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, 1995 based upon information provided in a Schedule 13-G
filed with the Securities and Exchange Commission and dated February 8,
1996. Ariel Capital has sole dispositive power over all of these shares,
has sole voting power over 1,622,615 of these shares, and shared voting
power over 19,375 of these shares.
ELECTION OF DIRECTORS
It is intended that the proxy will be voted for the election of the ten
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 1996 CLASS(A)
- - --------------------------------- ---------- ------------------- ------------ --------
<S> <C> <C> <C> <C>
Harry J. Bruce, 64............... 1988 Director(b) 10,000 0
James M. Denny, 63............... 1983 Director(c) 1,012 0
Theodore Dimitriou, 69........... 1991 Director(d) 2,000 0
Rudolph Grua, 67................. 1984 Vice Chairman and 70,464(f) .5
Director(e)
Thomas V. Kalebic, 52............ 1977 Director(g) 55,880(h) .4
William N. Lane, III, 52......... 1977 Chairman and 242,102(j) 1.5
Director(i)
Arthur C. Nielsen, Jr., 77....... 1966 Director(k) 25,500 .2
Govi C. Reddy, 51................ 1994 President and Chief 24,555(m) .2
Executive
Officer, and
Director(l)
Warren R. Rothwell, 79........... 1961 Director(n) 67,819(o) .4
Robert J. Stucker, 51............ 1987 Director(p) 4,500 0
All Officers and Directors as a
group.......................... 990,491(q) 6.3
</TABLE>
- - ---------------
(a) As a percent of outstanding shares after giving effect to the possible
issuance of shares pursuant to the Company's stock option plans 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 has been the Chairman of Roman Adhesives, Inc., a specialty
chemical manufacturer since 1990. He also currently serves as a director of
Duff and Phelps Selected Utilities, Inc. and was formerly a Professor of
Management at Florida Atlantic University.
(c) Mr. Denny was elected Managing Director, William Blair Capital Partners,
LLC in September, 1995. He had previously served as Vice Chairman of Sears,
Roebuck and Co., a merchandising and financial services company, from
February, 1992 until August, 1995 and as Senior Vice President and Chief
Financial Officer of Sears from February, 1988 through January, 1992. Mr.
Denny also currently serves as a Director of the Allstate Corporation,
Gilead Sciences, Inc. and GATX Corporation.
(d) Mr. Dimitriou is currently the Chairman, and has been for more than the
past prior five years, the Chairman and a director of Wallace Computer
Services, Inc., a business forms and computer service and supply company.
Mr. Dimitriou also currently serves as a director of the Walgreen Co.
(e) Mr. Grua became the Company's Vice Chairman on January 1, 1995. Prior to
that time he had been the Company's President and Chief Executive Officer
since May 1, 1984. He is also a director of the Varlen Corporation.
(f) Includes 14,143 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.
3
<PAGE> 7
(h) At March 1, 1996 Mr. Kalebic had outstanding options to acquire from Lane
Industries, Inc. up to 71,625 shares of the Company's Common Stock at
prices ranging from $8.69 to $19.75. Of those outstanding options 22,125
were exercisable on March 1, 1996 but are not included in the figure
included in the table.
(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 9,687,257 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 16,688 shares exercisable under
stock options by May 1, 1996.
(k) Mr. Nielsen is Chairman Emeritus of the A. C. Nielsen Co. and now acts as a
consultant to that Company.
(l) Mr. Reddy became a director in June, 1994 and was named the Company's
President and Chief Executive Officer effective January 1, 1995. He has
been employed by the Company since July, 1978 in various management
positions, the most recent of which was Senior Vice-President of Subsidiary
Operations and President of the Company's laminating film division.
(m) Includes 10,525 shares exercisable under stock options by May 1, 1996.
(n) Mr. Rothwell is a private investor. 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.
(o) 1,213 of these shares are owned by Mr. Rothwell's wife and 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 26,819 of these shares.
(p) 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.
(q) Includes 352,983 shares owned by the Company's Employee's Profit Sharing
Plan. Messrs. Grua, Kalebic, Lane and Reddy 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 54,838 shares exercisable under
stock options or exercisable by May 1, 1996 under the Company's stock
option plans.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors and persons who own more than 10% of the Common
Stock to file reports of ownership and changes in ownership with the Securities
and Exchange Commission and with the exchange on which the shares of Common
Stock are traded. Such persons are also required to furnish the Company with
copies of all Section 16(a) forms they file. Based solely upon the Company's
review of such forms and, if appropriate, representations made to the Company by
any such reporting person concerning whether a Form 5 was required to be filed
for the 1995 fiscal year, the Company is not aware that any of its directors and
executive officers or 10% stockholders failed to comply with the filing
requirements of Section 16(a) during the period commencing January 1, 1995
through December 31, 1995 except for Steven R. Baumhardt, a former executive
officer of the Company who reported a December, 1995 sale of 575 shares of the
Company's Common Stock approximately one month late.
4
<PAGE> 8
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 10 hereinafter.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
OWNED
PRESENT POSITION MARCH 1,
NAME WITH COMPANY 1996
---------------------------------- ------------------------------------ ------------
<S> <C> <C>
Elliott L. Smith.................. Senior Vice President, 15,762(a)
the Americas
Walter M. Hebb.................... Senior Vice President, 10,391(a)
Asia/Pacific
</TABLE>
- - ---------------
(a) Includes the following number of shares that could be obtained by exercising
options under the Company's stock option plans by May 1, 1996 -- 4,125 for
Mr. Smith and 4,025 for Mr. Hebb.
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
1995.
The Board has also appointed a standing Executive Committee, which consists
of Messrs. Lane, Grua, Reddy, 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 22
times in 1995.
There were five meetings of the Board of Directors during 1995. 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 $10,000 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, Thomas V.
Kalebic receives an annual fee of $5,000 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 is paid a consulting fee by the Company which totalled
$55,000 for the year 1995.
5
<PAGE> 9
Directors may elect to defer their annual and/or board meeting fees
pursuant to a Phantom Stock Plan which was established by the Company in 1995.
This Plan gives the Directors the ability to receive incentive compensation
based on any appreciation of the common stock of the Company and on the
dividends declared on such stock while the Directors remain in office.
Management believes this Plan promotes a closer identity of interests between
the Directors and the Company's shareholders.
Any Director who elects to participate in the Plan receives Phantom Stock
Units ("PSUS") in lieu of cash compensation for either or both of his annual or
board meeting fees as he so chooses. PSUS received in lieu of the annual board
fee are credited as of the date of the Company's annual meeting of stockholders
during the fiscal year in question. The number of PSUS credited is determined by
dividing the amount of the annual fee by the average of the high and low prices
at which the Company's common stock trades on the NASDAQ stock market on that
date ("Value"). PSUS received in lieu of board meeting fees are credited to a
Director's account at the Value on the day of the board meeting attended by the
Director.
Directors who maintain a PSUS account also receive Dividend Equivalents in
a dollar amount equal to the cash dividend which the Director would have been
entitled to receive if he had been the owner, on the record date for a dividend
paid on the Company's common stock, of a number of shares of common stock equal
to the total PSUS then credited to the Director's account. Dividend Equivalents
are converted into PSUS and credited to the Director's PSUS account at the Value
existing on the last day of each fiscal year.
A participating Director may only redeem his PSUS account through a lump
sum cash payment within thirty (30) days after he ceases to be a member of the
Board, and his rights under the Plan may not be assigned, encumbered or
otherwise transferred except to a designated beneficiary in the event of the
death of a participant. PSUS have no voting or other shareholder rights attached
to them and the Company's obligation to redeem any PSUS is unsecured.
At December 31, 1995, the PSUS account balances for the following named
Directors were:
<TABLE>
<CAPTION>
PHANTOM STOCK UNIT
ACCOUNT BALANCE
PHANTOM STOCK UNITS DECEMBER 31, 1995
DIRECTOR EARNED IN 1995 (IN TOTAL UNITS) ($ VALUE (1))
- - -------------------------------------------- ------------------- ---------------- -------------
<S> <C> <C> <C>
William N. Lane, III........................ 219.811 219.811 4,369
Harry J. Bruce.............................. 555.945 555.945 11,049
James M. Denny.............................. 859.263 859.263 17,078
Theodore Dimitriou.......................... 555.945 555.945 11,049
Thomas V. Kalebic........................... 776.756 776.756 15,438
Govi C. Reddy............................... 219.811 219.811 4,369
Robert J. Stucker........................... 718.816 718.816 14,286
</TABLE>
- - ---------------
(1) Based on $19.875 Value.
6
<PAGE> 10
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION IN COMPENSATION DECISIONS
During 1995 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 1995 and currently, Mr. Lane has acted as Chairman 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 1995, 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, whose members were Mr. Bruce, Mr. Rothwell and Mr. Stucker, with
respect to stock option matters. As members of the Company's Board and its
Executive Committee, Messrs. Lane, Reddy 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, 52............ Chairman
Govi C. Reddy, 51................... President and Chief Executive Officer
Walter M. Hebb, 56.................. Senior Vice President, Asia/Pacific
Elliott L. Smith, 61................ Senior Vice President, the Americas
Stephen Firth, 45................... Vice President, Europe
William P. Heffernan, 39............ Vice President, Business Technology
Joseph J. LaPorte, 64............... Vice President, Corporate Relations
Edward J. McNulty, 56............... Vice President and Chief Financial Officer
Steven Rubin, 48.................... Vice President, Secretary and General Counsel
</TABLE>
- - ---------------
(1) All of the above-named officers have been actively engaged in the business
of the Company as Company employees for the past five years, in the capacity
indicated above or in a substantially similar capacity, except: Govi C.
Reddy, who before being named President and Chief Executive Officer on
January 1, 1995 had been employed by the Company in various management
positions since July, 1978 the most recent of which was Senior Vice
President, Subsidiary Operations and President of the Company's Film
Products division; Walter M. Hebb, who had served as the Company's Senior
Vice President, Corporate Development for more than five years prior to his
appointment to this position in July, 1995; Elliott L. Smith, who before
being named to this position on January 1, 1995 had been the Company's
Executive Vice President for more than the past five years; Stephen Firth,
who before being appointed to this position in December, 1995 had been the
general manager of the Company's United Kingdom subsidiary for more than the
past five years; and William P. Heffernan, who before being named to this
position on January 1, 1995, had been the Treasurer of Lane Industries, Inc.
since April, 1994 and for the five years prior to that time had been the
Company's Corporate Controller.
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.
7
<PAGE> 11
BOARD EXECUTIVE COMMITTEE AND STOCK OPTION PLAN ADMINISTRATIVE
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
In 1995, 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
1996. The members of the Executive Committee were Messrs. Grua, Kalebic, Lane
and Reddy. Mr. Lane and Mr. Reddy 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, such as in 1995, 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. 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 1995 to Mr. Reddy, who was
the Company's CEO in 1995, 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 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 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 1995 and again for 1996, the corporate performance objective is
based on attaining a certain earnings per share ("EPS") level. In 1995, the
Company achieved a greater EPS than had been targeted by the Committee and the
Board of Directors. Based on the Company's 1995 EPS of $1.37 and Mr. Reddy's
level of achievement of personal objectives, he was awarded, as CEO, a 1995 MIC
Plan bonus of $225,000. The Chairman and the Committee determined that the CEO
had met all of his personal objectives for the year.
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
8
<PAGE> 12
other executive officers on a periodic basis by the Stock Option Plan
Administrative Committee. Options awarded during 1995 reflect continuation of
this policy through intermittent grants to the CEO and other executive officers
based on their relative levels of compensation and responsibilities. In March
1996, following review of input received from management and its compensation
consultant, the Board of Directors adopted an amendment and restatement of the
1989 Stock Option Plan, subject to the approval of the stockholders at the 1996
Annual Meeting, to enable the Stock Option Plan Administrative Committee to
grant longer term, performance-related options related to the execution of the
Company's multi-year performance targets. A description of the amended and
restated 1989 Stock Option Plan appears elsewhere in this Proxy Statement. The
Plan is set forth in Appendix A to this Proxy Statement.
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 Administrative Committee.
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 $1 million limit. In the future, the Committee will periodically review the
necessity of modifying the compensation programs for executive officers so that
the corporate tax deduction is maximized, however, it will retain the
flexibility to not make such modifications when it deems such action to be in
the best interests of the Company and its shareholders.
<TABLE>
<S> <C>
The Executive Committee The Stock Option Plan
Rudolph Grua Administrative Committee
Thomas V. Kalebic Harry J. Bruce
William N. Lane, III Warren R. Rothwell
Govi C. Reddy Robert J. Stucker
</TABLE>
9
<PAGE> 13
SENIOR EXECUTIVE COMPENSATION
The following table shows the compensation paid and accrued by the Company
during the last fiscal year to each of its five highest paid senior executives,
including the Chief Executive Officer.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
TOTAL
ANNUAL COMPENSATION AWARDS COMPENSATION
------------------------------------ ------------ ------------
OTHER ANNUAL OPTIONS/ ALL OTHER (TOTAL OF
NAME AND SALARY BONUS(1) COMPENSATION(2) SARS COMPENSATION(3) COLUMNS
PRINCIPAL POSITION YEAR ($)(A) ($)(B) ($)(C) (#) ($)(D) A-D)($)
- - ----------------------------- ---- ------- -------- --------------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
William N. Lane, III......... 1995 210,865 150,500 45 10,000 11,535 372,945
Chairman of the Board 1994 200,000 50,000 87 10,000 13,179(4) 263,266
1993 190,000 0 34 10,000 15,352(4) 215,352
Govi C. Reddy................ 1995 294,234 225,000 9,327 25,000 11,535 540,096
President and Chief 1994 208,750 78,263 5,962 3,000 11,349(4) 304,324
Executive Officer 1993 183,750 0 4,145 5,000 10,375(4) 198,270
Rudolph Grua................. 1995 200,000 105,000 6,865 8,000 36,732 348,597
Vice Chairman(5) 1994 386,667 96,650 65,839 8,000 37,646(4) 586,802
1993 351,667 0 8,363 8,000 23,422(4) 383,452
Elliott L. Smith............. 1995 217,795 108,265 6,513 2,500 11,941 344,514
Senior Vice President/ 1994 211,000 31,650 5,138 3,000 11,279(4) 259,067
the Americas 1993 199,667 0 4,344 2,500 10,031(4) 214,042
Walter M. Hebb............... 1995 160,180 85,750 5,434 3,000 8,389 259,753
Senior Vice President, 1994 155,250 34,920 4,219 2,000 6,450 200,839
Asia/Pacific 1993 146,333 0 5,345 3,000 7,393 159,071
</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, except for certain benefits provided to Mr. Grua in 1994. In
1994 Mr. Grua received a personal benefit valued at $42,912 in connection
with the transfer to him of ownership of a Company automobile. The remaining
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 for the years 1994 and 1995
represent contributions by the Company to the Company's tax qualified Profit
Sharing, Savings and Retirement Plan Trust on behalf of the named
individuals and to their respective accounts established pursuant to the
Company's non-tax qualified Supplemental Deferred Compensation Plan.
(4) Also includes the following amounts paid by the Company for term life
insurance premiums for the benefit of the named individuals in 1995 -- Mr.
Grua $1,724 and Mr. Smith $1,584. This amount also includes Board of
Director's fees paid in 1995 to the following named individuals in amounts
as follows -- Mr. Lane $1,000, Mr. Reddy $1,000 and Mr. Grua $5,000. With
respect to Mr. Grua this amount also includes $19,473 expensed by the
Company in 1995 as an accrual to fund future liabilities to Mr. Grua or his
surviving spouse under a deferred compensation agreement.
(5) Mr. Grua resigned from this position effective at the close of business on
December 29, 1995.
10
<PAGE> 14
RETIREMENT PLAN
The Company maintains a Guaranteed Retirement Income Plan ("GRIP") covering
all employees who participated in the Company's Profit Sharing Plan through
December 31, 1995. GRIP 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. All benefits accruing and earned under GRIP for plan participants
were frozen at the end of 1995 in connection with the Company's conversion of
its Profit Sharing Plan to a 401-K Savings Plan. As a result, no GRIP
participant can accrue any additional plan benefits while GRIP remains frozen.
No contribution was made by the Company in 1995 for GRIP 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 GRIP. For those individuals listed in the cash compensation
table, their respective years of benefit service as of December 31, 1995 were as
follows:
<TABLE>
<CAPTION>
YEARS OF
INDIVIDUAL BENEFIT SERVICE
---------- ----------------
<S> <C>
William N. Lane, III............................................ 29
Govi C. Reddy................................................... 17
Rudolph Grua.................................................... 11
Elliott L. Smith................................................ 9
Walter M. Hebb.................................................. 9
</TABLE>
Compensation covered by GRIP (salary, bonus paid during the year and
commissions) is limited to $150,000 per Internal Revenue Service regulations.
Upon reaching age 65 the only individual named in the cash compensation
table entitled to receive a GRIP benefit would be Mr. Smith and that benefit
would be $150 per month.
11
<PAGE> 15
STOCK OPTION INFORMATION
The following table sets forth the details of options granted to the
individuals listed in the Senior Executive Compensation Table during 1995. The
second table in this section sets forth certain information with respect to
options exercised by those individuals in 1995 as well as the value of their
unexercised options at the end of the year.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SAR'S
OPTIONS/ GRANTED TO
SAR'S EMPLOYEES EXERCISE OR GRANT DATE
GRANTED(1) IN FISCAL BASE PRICE EXPIRATION PRESENT VALUE(2)
NAME (#) YEAR ($/SHARE) DATE ($)
- - --------------------------- ---------- ---------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
William N. Lane, III....... 10,000 12.8 15.00 2/27/03 62,800
Govi C. Reddy.............. 25,000 32.0 15.00 2/27/03 157,000
Rudolph Grua............... 8,000 10.2 15.00 2/27/03 50,240
Elliott L. Smith........... 2,500 3.2 15.00 2/27/03 15,700
Walter M. Hebb............. 3,000 3.8 15.00 2/27/03 18,840
</TABLE>
- - ---------------
(1) All options granted to the named individuals were granted under the
Company's 1989 Stock Option Plan on February 28, 1995. 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 39.08; a
dividend yield of 2.8%; and, a risk free interest rate of 7.28%. 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(2)
ON VALUE FY-END EXERCISABLE/
EXERCISE REALIZED(1) EXERCISABLE/ UNEXERCISABLE
NAME (#) ($) UNEXERCISABLE ($)
- - ------------------------------------ -------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
William N. Lane, III................ 16,183 75,846 11,688/38,500 7,658/109,375
Govi C. Reddy....................... 3,563 21,666 2,400/35,575 3,625/145,318
Rudolph Grua........................ -- -- 10,250/35,300 29,438/100,438
Elliott L. Smith.................... 4,500 32,772 5,188/10,750 28,346/23,824
Walter M. Hebb...................... 3,875 27,335 1,650/10,575 2,188/32,569
</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.
(2) Based on fair market value of $19.75 per Common Share on December 31, 1995.
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 a peer group consisting of other
companies that manufacture and sell office products.
<TABLE>
<CAPTION>
General
Measurement Period Binding Cor- NASDAQ Total
(Fiscal Year Covered) poration Peer Group Return Index
<S> <C> <C> <C>
12/90 100 100 100
12/91 119 125 157
12/92 125 133 181
12/93 105 132 208
12/94 132 120 201
12/95 137 181 281
</TABLE>
13
<PAGE> 17
The peer group used in the preceding graph consists of the Company, The
Standard Register Company, Tab Products Co., Ennis Business Forms, Inc., Hunt
Manufacturing Co., A.T. Cross Company, Dixon Ticonderoga Company, Smith Corona
Corporation, Gradco Systems, Inc., Day Runner, Inc., Varitronic Systems, Inc.,
United Stationers Inc., and Duplex Products Inc.
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
1995 the Company made $10,267,000 in payments pursuant to this Agreement which
represented the Company's portion of its tax liability under this Agreement.
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 1995 the Company made $206,255 in payments pursuant to this
Agreement which represented 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, legal, risk management and finance services for the Company. Since
January 1, 1995 the Company has paid $889,063 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 $987,900 of business travel and accommodations through such travel
agency in 1995 and the first two months of 1996.
At certain times in 1995 the Company used jet aircraft, the ownership of
which was controlled by Lane Industries, Inc. When using this aircraft the
Company pays a mileage and usage rate which is comparable to rates charged by
other private business aircraft operators. In 1995 the Company paid $65,115 for
the use of this jet aircraft.
In February, 1996 the Company purchased for treasury purposes 41,750 shares
of its common stock from Rudolph Grua, the Company's Vice-Chairman of the Board.
31,750 of these shares were purchased at a price of $23 each and the remaining
8,000 shares were purchased at a price of $22.625 each. The prices paid were
equal to the closing price of the Company's common stock on the NASDAQ stock
market on the date the respective transactions took place. All of the shares
purchased had been acquired by Mr. Grua upon his exercise of stock options in
February, 1996 pursuant to the Company's stock option plans.
14
<PAGE> 18
PROPOSAL TO AMEND AND RESTATE THE
1989 STOCK OPTION PLAN
In 1989, the Company's stockholders approved the General Binding
Corporation 1989 Stock Option Plan for the purpose of providing the Company and
its stockholders the benefits of the incentive inherent in stock ownership by
the Company's officers and other key employees and to provide additional
compensation to those individuals based on appreciation in the Company's Common
Stock. On March 13, 1996, the Board of Directors approved the amendment and
restatement of the 1989 Stock Option Plan to provide flexibility to grant
options with various terms and conditions, to increase the number of shares
available for options, and to make technical and other changes. The Board of
Directors continues to believe that stock ownership of the Company by its
management employees will provide them with meaningful incentives to achieve the
long-term growth and financial objectives of the Company and that the proposed
amendment and restatement of the 1989 Plan will better enable the Company to
provide such incentives.
A summary of the key provisions of the 1989 Stock Option Plan, as proposed
to be amended and restated ("1989 Plan") follows. The complete text of the 1989
Plan is attached to this Proxy Statement as Appendix A.
SUMMARY OF AMENDED AND RESTATED 1989 STOCK OPTION PLAN
A maximum of 1,050,000 shares of Company Common Stock par value $.125 (the
"Shares") was initially reserved for grants of options under the 1989 Plan.
Through March 13, 1996, the date the Board of Directors approved the amendment
and restatement of the Plan, 702,725 shares remained available for grants under
the 1989 Plan. In order to continue the current program of intermittent awards
and have sufficient shares to grant performance-related and other options
necessary to achieve the desired incentive results, it is proposed that the
number of shares available under the 1989 Plan be increased to 1,347,275, which,
after taking into account the options outstanding and previously exercised
leaves 1,000,000 shares available for issuance under existing options and future
awards. In order to comply with the provisions of Section 162(m) of the Internal
Revenue Code ("Section 162(m)") relating to "performance-based" compensation,
the 1989 Plan includes a newly-established limit of 250,000 shares of Common
Stock on the maximum number of shares of Common Stock which may be made subject
to awards granted to any one individual in a single calendar year. The source of
shares available for option grants may be either from authorized or unissued
shares or previously issued shares which have been reacquired by the Company, or
a combination thereof. In the event of any future stock dividends, stock splits
or other forms of change in capital structure, appropriate adjustments will be
made to the number of shares remaining available for option grants, the maximum
annual number of shares which may be subject to awards to any one individual,
the option price of unexercised options previously granted and the number of
shares subject to each then outstanding option. To the extent that the full
number of shares subject to an option are not issued because the unexercised
option expires or terminates, or with respect to future option exercises because
of the use of shares to satisfy the exercise price or applicable withholding
taxes, the shares not issued shall become available for subsequent option
grants.
The 1989 Plan is administered by the Stock Option Plan Administrative
Committee of the Board which in the past has been comprised of three members
ineligible to participate in the 1989 Plan. The initial Committee consisted of
Messrs. Bruce, Rothwell and Stucker, however, in connection with the amendment
and restatement of the 1989 Plan, membership on the Committee will be limited to
those directors who qualify as "outside directors" under Section 162(m) and the
size of the Committee
15
<PAGE> 19
reduced to not less than two directors. Because Messrs. Rothwell and Stucker do
not qualify as "outside directors" under Section 162(m), the Board of Directors
has appointed Messrs. Denny and Dimitriou to serve on the Committee. The
Committee will designate the officers and key employees to be granted options,
determine the number of shares subject to an individual option and will adopt
any necessary rules and regulations to carry out the purposes and provisions of
the 1989 Plan. Options granted under the 1989 Plan are not incentive stock
options under the Code.
As originally approved, the 1989 Plan requires each option to be divided
into four equal annual allotments, exercisable on the first, second, third and
fourth anniversary of the date of grant. Not more than one 25% annual allotment
may be exercised in the one year period commencing on the anniversary of the
grant date, and all allotments must be exercised within eight years from the
grant date. While it is currently anticipated that the intermittent allotment
form of option will continue to be used, the proposed 1989 Plan permits the
Committee to grant options with such terms and conditions as the Committee shall
determine, provided that no option may be exercisable more than 10 years from
the date of grant. The Board of Directors believes that it is appropriate for
the Committee to have the discretion to structure awards, such as those
described below, that are more closely aligned to specific performance goals or
periods than could be accomplished with the intermittent allotment options.
The 1989 Plan provides that the option price per share shall be determined
by the Committee but in no event may the option price be less than 85% of fair
market value (determined by reference to the trading price of the Common Stock
as reported by the Nasdaq Stock Market) of a share on the date the option is
granted. To date, no options have been granted pursuant to the 1989 Plan at less
than 100% of fair market value. Options may be exercised either by the payment
of cash in the amount of the aggregate option price or by an exchange of shares
owned by the optionee prior to the date the option is exercised, or a
combination of both, having a value equal to the aggregate option price of the
shares subject to the option being exercised.
Generally, no option may be exercised unless the optionee is an employee of
the Company, its subsidiaries or affiliates. Exceptions apply in circumstances
of death, disability or retirement, in which case the options may become
exercisable in full and the period to exercise the option may be extended
following termination of employment for 12 months or such other period
determined by the Committee. In the event of an involuntary termination without
cause, any unexercised option will be exercisable for a period of three months
after termination of employment, but only to the extent the option was
exercisable at the time of termination of employment. Options granted under the
1989 Plan are not transferable except by will or the laws of descent and
distribution.
At the discretion of the Committee, 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 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. 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. To
date, no SARs have been granted under the 1989 Plan.
The Board of Directors may amend, suspend or terminate the 1989 Plan
without approval of the stockholders. However, the Board is not authorized to
amend the 1989 Plan by increasing the number of
16
