<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)
- - -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
[ ] 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
[GENERAL BINDING CORPORATION LOGO]
WILLIAM N. LANE, III
Chairman
April 3, 1997
To GBC stockholders:
You are cordially invited to attend the GBC annual meeting of stockholders,
which will be held on Tuesday, May 6, 1997 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
WILLIAM N. LANE, III
Chairman
<PAGE> 3
GENERAL BINDING CORPORATION
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 6, 1997
Northbrook, Illinois
April 3, 1997
The annual meeting of the stockholders of General Binding Corporation (the
"Company") will be held on Tuesday, the 6th day of May, 1997 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 amend Article FOURTH of the Company's Restated
Certificate of Incorporation.
3. To act upon a proposal to ratify the selection of Arthur Andersen & Co.
as independent public accountants for the fiscal year 1997.
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 17, 1997, 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
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 6, 1997
------------------
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
amend Article FOURTH of the Company's Restated Certificate of Incorporation 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 6, 1997.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
The voting securities entitled to vote at the meeting are 13,365,325 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 17, 1997.
By virtue of Lane Industries, Inc. direct ownership of the Common Stock and
Class B Common Stock as described below, it controls 87.8% 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 amend Article FOURTH
of the Company's Restated Certificate of Incorporation 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,
1997:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
CLASS OF STOCK NAME AND ADDRESS BENEFICIAL OWNERSHIP OF 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. 9,733,259(2)(3) 61.7(4)
One Lane Center
Northbrook, IL 60062
Common Stock............. Ariel Capital Management, Inc. 1,376,116(5) 8.7(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, 1996 based upon information provided in a Schedule 13-G
filed with the Securities and Exchange Commission and dated February 10,
1997. Ariel Capital has sole dispositive power over all of these shares, has
sole voting power over 1,281,441 of these shares, and shared voting power
over 22,675 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 except for Mr. De Schutter who was elected
to the Board by the other directors on March 19, 1997. 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
FIRST YEAR BENEFICIALLY PERCENT
ELECTED PRESENT POSITION OWNED OF
NAME AND AGE DIRECTOR WITH COMPANY MARCH 1, 1997 CLASS(A)
------------ ---------- ---------------- ------------- --------
<S> <C> <C> <C> <C>
Harry J. Bruce, 65..................... 1988 Director(b) 5,000 0
Richard U. De Schutter, 56............. 1997 Director(c) 1,000 0
Theodore Dimitriou, 70................. 1991 Director(d) 2,000 0
Rudolph Grua, 68....................... 1984 Vice Chairman and 56,464(f) .3
Director(e)
Thomas V. Kalebic, 53.................. 1977 Director(g) 66,005(h) .4
William N. Lane, III, 53............... 1977 Chairman and 250,452(j) 1.6
Director(i)
Arthur C. Nielsen, Jr., 78............. 1966 Director(k) 25,500 .2
Govi C. Reddy, 52...................... 1994 President and Chief 30,455(m) .2
Executive
Officer, and
Director(l)
Warren R. Rothwell, 80................. 1961 Director(n) 62,819(o) .4
Robert J. Stucker, 52.................. 1987 Director(p) 4,500 0
All Officers and Directors as a
group................................ 992,621(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. De Schutter is currently the Chairman of the Board and Chief Executive
Officer of G.D. Searle & Co., a specialty pharmaceutical and foods company,
and has been in that position since April, 1995. Prior to assuming those
responsibilities he had been President of Searle since December, 1991.
(d) Mr. Dimitriou is currently the Chairman, and has been for more than the
past five years, the Chairman and a director of Wallace Computer Services,
Inc., a business forms and computer service and supply company.
(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, home
security, 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, 1997 Mr. Kalebic had outstanding options to acquire from Lane
Industries, Inc. up to 136,500 shares of the Company's Common Stock at
prices ranging from $14.50 to $29.75 each. Of those outstanding options
20,250 were exercisable on March 1, 1997 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 9,733,259 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 15,750 shares exercisable under
stock options by May 1, 1997.
(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 12,400 shares exercisable under stock options by May 1, 1997.
(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 20,606 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 21,819 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 401-K Savings and
Retirement Plan. Messrs. 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 46,800 shares
exercisable under stock options or exercisable by May 1, 1997 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 1996 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, 1996
through December 31, 1996.
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
PRESENT POSITION OWNED
NAME WITH COMPANY MARCH 1, 1997
---- ---------------- -------------
<S> <C> <C>
Howard B. Green................... Group President, Office Products 6,000
Elliott L. Smith.................. Senior Vice President, 18,250(a)
the Americas
Walter M. Hebb.................... Senior Vice President, 11,072(a)
Asia/Pacific
Edward J. McNulty................. Vice President & 41,590(a)
Chief Financial Officer
</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, 1997 -- 4,250 for
Mr. Smith, 3,900 for Mr. Hebb and 3,375 for Mr. McNulty.
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),
DeSchutter, 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
1996.
The Board has also appointed a standing Executive Committee, which consists
of Messrs. Lane, 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 24
times in 1996.
There were six meetings of the Board of Directors during 1996. 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 $15,000 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
5
<PAGE> 9
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
1996. In addition to Board meeting fees, Rudolph Grua, in 1996, was paid a
consulting fee of $100,000 and was paid $23,000 pursuant to a deferred
compensation agreement he entered into with the Company when he was its
President and Chief Executive Officer.
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
director's or board meeting fees as he so chooses. PSUS received in lieu of the
annual 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, 1996, the PSUS account balances for the following named
Directors were:
<TABLE>
<CAPTION>
PHANTOM STOCK UNIT
ACCOUNT BALANCE
PHANTOM STOCK UNITS DECEMBER 31, 1996
DIRECTOR EARNED IN 1996 (IN TOTAL UNITS) ($ VALUE (1))
-------- ------------------- ---------------- -------------
<S> <C> <C> <C>
William N. Lane, III........................ 181.734 401.545 12,071
Harry J. Bruce.............................. 474.361 1,030.306 30,974
Theodore Dimitriou.......................... 832.084 1,388.029 41,728
Thomas V. Kalebic........................... 745.598 1,522.354 45,766
Govi C. Reddy............................... 271.237 491.048 14,762
Robert J. Stucker........................... 744.598 1,463.414 43,994
</TABLE>
- - ---------------
(1) Based on $30.0625 Value.
6
<PAGE> 10
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION IN COMPENSATION DECISIONS
During 1996 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 1996 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 1996, 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 and Reddy 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, 53.................. Chairman
Govi C. Reddy, 52......................... President and Chief Executive Officer
Howard B. Green, 41....................... Group President, Office Products
Walter M. Hebb, 57........................ Senior Vice President, Asia/Pacific
Elliott L. Smith, 62...................... Senior Vice President, the Americas
Stephen Firth, 46......................... Vice President, Europe
William P. Heffernan, 40.................. Vice President, Acquisitions
Joseph J. LaPorte, 65..................... Vice President, Corporate Relations
Edward J. McNulty, 57..................... Vice President and Chief Financial Officer
Steven Rubin, 49.......................... Vice President, Secretary and General Counsel
Wally G. Schnell, Jr., 51................. Vice President, Business Technology
Charles K. Shattuck, 48................... Vice President, Business Development
</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; Howard B. Green, who was hired by the Company in January,
1997 upon the Company's acquisition of the assets and business of the
Quartet Manufacturing Company, a manufacturer of visual presentation
products, where he had been Quartet's Chief Executive Officer for more than
the past five years; 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
7
<PAGE> 11
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;
William P. Heffernan, who before being named to this position in February,
1997, had been the Company's Vice President, Business Technology since
January, 1995 and had been prior to that time 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; Wally G. Schnell, Jr., who
before joining the Company in February, 1997 had been the Managing Director
of SHL Systemhouse, a systems integration and outsourcing firm since April,
1995, and prior to that time had been the Director of Information Services
for Wallace Computer Services, a business forms and computer service and
supply business for more than five years; and, Charles K. Shattuck, who
before assuming these responsibilities in March, 1997 had been the Company's
Vice President, Office Products Group for more than the past five years.
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 AND STOCK OPTION PLAN ADMINISTRATIVE
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
In 1996, 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
1997. The members of the Executive Committee were Messrs. 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 1996, 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 1996 to Mr. Reddy, who was
the Company's CEO in 1996, 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.
8
<PAGE> 12
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 1996 and again for 1997, the corporate performance objective is
based on attaining a certain earnings per share ("EPS") level. In 1996, the
Company achieved a greater EPS than had been targeted by the Committee and the
Board of Directors. Based on the Company's 1996 EPS of $1.60 and Mr. Reddy's
level of achievement of personal objectives, he was awarded, as CEO, a 1996 MIC
Plan bonus of $262,500. 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 other executive officers on a periodic
basis by the Stock Option Plan Administrative Committee. Options awarded during
1996 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 1996, following review of input received from management
and its compensation consultant, the Board of Directors adopted and the
Shareholders approved an amendment and restatement of the 1989 Stock Option Plan
to enable the Stock Option Plan Administrative Committee to grant longer term,
performance-related options related to the achievement of the Company's
multi-year performance targets. These longer-term, performance-related options
are more fully described in footnote (2) to OPTION/SAR GRANTS IN LAST FISCAL
YEAR on p. 12 herein.
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 required ownership call 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 $1 million limit. In the future, the Committee will periodically review the
necessity of modifying the compensation programs for
9
<PAGE> 13
executive officers so that the corporate tax deduction is maximized, however, it
will retain the flexibility to not make such modifications when it deems such
action to be in the best interests of the Company and its shareholders.
The Executive Committee The Stock Option Plan
Thomas V. Kalebic Administrative Committee
William N. Lane, III Harry J. Bruce
Govi C. Reddy Warren R. Rothwell
Robert J. Stucker
10
<PAGE> 14
SENIOR EXECUTIVE COMPENSATION
The following table shows the compensation paid and accrued by the Company
during the last fiscal year to each of its five highest paid senior executives,
including the Chief Executive Officer.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------ TOTAL
ANNUAL COMPENSATION AWARDS COMPENSATION
------------------------------------ ------ ------------
OTHER ANNUAL OPTIONS/ ALL OTHER (TOTAL OF
NAME AND SALARY BONUS(1) COMPENSATION(2) SARS COMPENSATION(3) COLUMNS
PRINCIPAL POSITION YEAR ($)(A) ($)(B) ($)(C) (#) ($)(D) A-D)($)
- - ------------------ ---- ------ -------- --------------- -------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
William N. Lane, III......... 1996 229,991 161,000 -- 60,000 11,250 402,241
Chairman of the Board 1995 210,865 150,500 45 10,000 11,535 372,945
1994 200,000 50,000 87 10,000 13,179(4) 263,266
Govi C. Reddy................ 1996 350,012 262,500 13,060 48,000 11,250 636,822
President and Chief 1995 294,234 225,000 9,327 25,000 11,535 540,096
Executive Officer 1994 208,750 78,263 5,962 3,000 11,349(4) 304,324
Elliott L. Smith............. 1996 228,385 119,902 9,371 17,000 11,250 368,908
Senior Vice President/ 1995 217,795 108,265 6,513 2,500 11,941 344,514
the Americas 1994 211,000 31,650 5,138 3,000 11,279(4) 259,067
Walter M. Hebb............... 1996 173,731 84,693 6,643 13,000 11,250 276,317
Senior Vice President, 1995 160,180 85,750 5,434 3,000 8,389 259,753
Asia/Pacific 1994 155,250 34,920 4,219 2,000 6,450 200,839
Edward J. McNulty............ 1996 170,000 69,063 6,304 10,200 12,068(4) 257,435
Vice President and 1995 159,981 66,180 5,618 2,500 8,112 239,891
Chief Financial Officer 1994 155,000 28,675 3,330 2,000 6,665 193,670
Howard B. Green.............. 1996 -- -- -- -- -- --
Group President,
Office Products(5)
</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 for the years 1994 and 1995
represent contributions by the Company to the Company's tax qualified Profit
Sharing, Savings and Retirement Plan Trust and for 1996 to the Company's
401-K Savings and Retirement Plan 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 amounts paid by the Company for term life insurance premiums
for the benefit of the named individuals. 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 and Mr. Reddy $1,000.
(5) Mr. Green was hired by the Company in January, 1997. He is currently being
compensated at a salary rate of $300,000 per annum. He is also receiving
compensation from the Company at the rate of $17,000 per month pursuant to a
non-competition agreement he entered into with the Company upon the
Company's acquisition of the business and assets of the Quartet
Manufacturing Company in January, 1997.
11
<PAGE> 15
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 1996 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 other than Mr. Green. For those individuals listed in the
cash compensation table, their respective years of benefit service as of
December 31, 1996 were as follows:
<TABLE>
<CAPTION>
YEARS OF
INDIVIDUAL BENEFIT SERVICE
---------- ---------------
<S> <C>
William N. Lane, III................................... 29
Govi C. Reddy.......................................... 17
Elliott L. Smith....................................... 9
Walter M. Hebb......................................... 9
Edward J. McNulty...................................... 12
</TABLE>
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 $556 per month.
12
<PAGE> 16
STOCK OPTION INFORMATION
The following table sets forth the details of options granted to the
individuals listed in the Senior Executive Compensation Table during 1996. The
second table in this section sets forth certain information with respect to
options exercised by those individuals in 1996 as well as the value of their
unexercised options at the end of the year.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SAR'S
OPTIONS/ GRANTED TO
SAR'S EMPLOYEES EXERCISE OR GRANT DATE
GRANTED IN FISCAL BASE PRICE EXPIRATION PRESENT VALUE(3)
NAME (#) YEAR ($/SHARE) DATE ($)
---- ---------- ---------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
William N. Lane, III...... 15,000(1) 20.8 22.625 2/27/04 149,100
45,000(2) 27.6 23.00 3/12/06 466,200
Govi C. Reddy............. 12,000(1) 16.7 22.625 2/27/04 119,280
36,000(2) 22.1 23.00 3/12/06 372,960
Elliott L. Smith.......... 5,000(1) 6.9 22.625 2/27/04 49,700
12,000(2) 7.4 23.00 3/12/06 124,320
Walter M. Hebb............ 4,000(1) 5.6 22.625 2/27/04 39,760
9,000(2) 5.5 23.00 3/12/06 93,240
Edward J. McNulty......... 3,000(1) 4.2 22.625 2/27/04 29,820
7,200(2) 4.4 23.00 3/12/06 74,592
</TABLE>
- - ---------------
(1) All options granted to the named individuals were granted under the
Company's 1989 Stock Option Plan on February 28, 1996. 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) All of these options were granted under the Company's 1989 Stock Option Plan
on March 13, 1996. The options vest in full on September 13, 2005 and expire
on March 13, 2006, subject to earlier vesting at the discretion of the Stock
Option Plan Administrative Committee in the event certain levels of revenue
growth, return on equity and growth in earnings per share of Common Stock
are attained by the Company over a three-year period ending December 31,
1998. To the extent options become exercisable as a result of such
performance, 50% of those options will be exercisable on March 13, 1999 and
50% on March 13, 2000, in each case to be exercised within four years of
such date. The options will expire in the event the optionee's employment
terminates, except in certain circumstances in the event of retirement,
disability, death or involuntary termination without cause. If retirement,
disability or death occurs during the three-year performance period, a pro
rata portion
13
<PAGE> 17
of the option will remain outstanding until the end of the performance
period at which time it will vest to the extent performance measures are
attained and will be exercisable through March 13, 2000. If termination of
employment occurs after the option has become exercisable, then the option
may be exercised for a period of one year following such termination of
employment due to death, disability or retirement, or three months in the
event of involuntary termination without cause. No SARs were granted in
connection with these option grants.
(3) 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 38.3; a
dividend yield of 1.9% for the $22.625 options and 1.8% for the $23 options;
and, a risk free interest rate of 6.14% for the $22.625 options and 6.41%
for the $23 options. The actual value, if any, a named individual may
realize will depend on the market value of the underlying shares at the time
the option is exercised, so there is no assurance the value realized will be
at or near the value estimated by the Black-Scholes model. The Company's use
of this model should not be construed as an endorsement of its accuracy at
valuing stock options.
14
<PAGE> 18
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR,
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/ OPTIONS/SARS
ACQUIRED SAR'S AT AT FY-END(2)
ON VALUE FY-END EXERCISABLE/
EXERCISE REALIZED(1) EXERCISABLE/ UNEXERCISABLE
NAME (#) ($) UNEXERCISABLE ($)
---- -------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
William N. Lane, III........... -- -- 16,688/93,500 215,554/830,000
Govi C. Reddy.................. 2,875 20,475 7,650/74,200 105,063/694,875
Elliott L. Smith............... 6,938 78,228 -- /26,000 -- /232,969
Walter M. Hebb................. -- -- 4,025/21,200 52,506/193,750
Edward J. McNulty.............. -- -- 3,375/16,950 43,775/155,444
</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 $29.75 per Common Share on December 31, 1996.
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 NASDAQ
Measurement Period Binding Cor- Total Return
(Fiscal Year Covered) poration Peer Group Index
<S> <C> <C> <C>
12/91 100 100 100
12/92 105 113 115
12/93 88 112 132
12/94 111 102 128
12/95 115 154 179
12/96 175 178 220
</TABLE>
15
<PAGE> 19
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
1996 the Company made $5,614,000 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 1996 the Company made $262,818 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. In
1996 and the first two months of 1997, the Company has paid $1,425,546 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 $1,032,000 of business travel and accommodations through such
travel agency in 1996 and the first two months of 1997.
The Company makes arrangements for incentive travel programs through a
company that is owned by the sister of Edward J. McNulty, the Company's Vice
President and Chief Financial Officer. In 1996 and the first two months of 1997,
the Company paid this incentive travel business $1,530,000 in fees and advances
for incentive travel arrangements. Mr. McNulty has represented to the Company
that he has no legal or beneficial ownership interest in this incentive travel
company.
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. In March, 1997, the
Company purchased for treasury purposes 3,000 shares of its common stock from
Mr. Grua's wife at a price of $32.875 each. The price paid for these shares was
equal to the average price of the Company's common stock for trades reported on
the NASDAQ stock market on the date the transaction took place.
16
<PAGE> 20
PROPOSAL TO AMEND THE RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED SHARES OF COMMON STOCK
AND CLASS B COMMON STOCK
The Board of Directors has unanimously approved and recommends to the
stockholders that they consider and approve a proposal to amend the Company's
Restated Certificate of Incorporation to increase the number of authorized
shares of Common Stock, par value $.125 per share to 40,000,000 shares from
20,000,000 shares and to increase the number of authorized shares of Class B
Common Stock, par value $.125 per share, to 4,796,550 shares from 2,398,275
shares. If the proposed amendment is approved, the first paragraph of Article
FOURTH of the Company's Restated Certificate of Incorporation would be amended
to read as follows:
"FOURTH. The total number of shares of stock which the Corporation shall
have authority to issue is 44,796,550 consisting of 40,000,000 shares of
Common Stock, twelve and one-half cents per share par value, and 4,796,550
shares of Class B Common Stock, twelve and one-half cents per share par
value."
As of March 17, 1997, 15,693,747 shares of Common Stock had been issued, of
which 13,372,013 shares were outstanding and 2,321,734 were held in the treasury
of the Company. In addition, the Company has reserved 477,313 shares of Common
Stock for issuance upon the exercise of outstanding employee stock options, has
reserved an additional 776,675 shares of Common Stock for the granting of
employee stock options in the future and has reserved 2,398,275 shares of Common
Stock for the potential conversion of the outstanding Class B Common Stock (see
note (1) to Voting Securities and Principal Stockholders). Also, as of March 17,
1997, all of the 2,398,275 shares of Class B Common Stock has been issued and is
outstanding.
No other changes to Article FOURTH of the Restated Certificate of
Incorporation are being proposed. The remaining provisions of Article FOURTH
provide, in part, that: (i) each share of Common Stock and Class B Common Stock
entitle the holder thereof to one vote and fifteen votes, respectively, per
share on all matters submitted to a vote of stockholders; (ii) Class B Common
Stock will be converted automatically into Common Stock at the rate of one
Common Share for each Class B share upon the presentation of a Class B share to
the transfer agent for transfer, unless the transfer is solely in connection
with a statutory merger or consolidation involving the record owner in which
case the Class B shares would not be so converted; (iii) the holders of all
Common and Class B shares are entitled to (a) participate on a share for share
basis in such dividends (payable in cash, stock or otherwise) as may be lawfully
declared by the Company, and (b) share ratably in the assets of the Company in
the event of any liquidation, dissolution or winding up of the affairs of the
Company; (iv) no stockholder of the Company shall by reason of his holding
shares of any class have any pre-emptive rights; (v) shares of stock of the
Company regardless of class may be issued for such consideration and for such
corporate purposes as the Board of Directors may from time to time determine;
and (vi) the Board of Directors may issue shares of the Company to the
stockholders pro rata in the form of stock dividends and/or stock splitups which
may or may not affect the capital account of the Company in the discretion of
the Board of Directors.
The Company has no present plans, understandings or agreements for the
issuance or use of the proposed additional shares of Common and Class B Common
Stock. However, the Board of Directors believes that it is desirable to have the
additional authorized shares available for possible future financing and/or
acquisition transactions, stock dividends or splitups, the Company's stock
option plan and other
17
<PAGE> 21
general corporate purposes. Having such additional authorized shares available
for issuance in the future will give the Company greater flexibility and will
allow such shares to be issued without the expense and delay of a special
shareholder's meeting. The additional shares of Common and Class B Common Stock
will be available without further action by the stockholders, unless such action
is required by law or the rules of the National Association of Securities
Dealers or any stock exchange on which the Company's securities may then be
listed.
Stockholders should recognize that although the Board of Directors will
issue Common or Class B Common Stock only when it considers such issuance to be
in the best interest of the Company, the issuance of additional shares may,
among other things, have a dilutive effect on earnings per share of currently
outstanding shares and on the equity and voting rights of current stockholders.
However, the Board believes that the benefits of providing the Company with the
flexibility to issue shares without delay for any business purpose outweigh the
possible disadvantages of dilution and that it is prudent and in the best
interest of stockholders to provide the advantage of greater flexibility which
will result from the adoption of the Authorized Shares Amendment.
An affirmative vote by the holders of a majority of the outstanding shares
entitled to vote at the meeting is required for the adoption of this proposal to
amend the Restated Certificate of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
18
<PAGE> 22
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 1997. 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 1998 must be received at the Company's offices in
Northbrook, Illinois not later than December 10, 1997 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
STEVEN RUBIN
Vice President, Secretary
and General Counsel
Northbrook, Illinois
April 3, 1997
A COPY OF THE COMPANY'S ANNUAL REPORT FOR THE YEAR 1996 HAS BEEN
MAILED TO ALL STOCKHOLDERS. THE ANNUAL REPORT IS NOT TO BE REGARDED AS
PROXY SOLICITING MATERIAL.
19
<PAGE> 23
PROXY PROXY
GENERAL BINDING CORPORATION
ONE GBC PLAZA, NORTHBROOK, ILLINOIS 60062
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 below, all the shares of General Binding Corporation
held of record by the undersigned on March 17, 1997, at the annual meeting of
stockholders to be held on May 6, 1997, or at any adjournment 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 AND PROPOSAL 3.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE RETURN
ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE> 24
GENERAL BINDING CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ]
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS For Withhold For All
H.J. Bruce, R. U. De All All Except Nominees written below.
Schutter, T. Dimitriou, [ ] [ ] [ ]
R. Grua, T. V. Kalebic, ------------------------------
W. N. Lane, III, R. J. Nominee Exception
Stucker, A. C. Nielsen,
Jr., G. C. Reddy and W.
R. Rothwell
For Against Abstain
2. Approval of the proposed [ ] [ ] [ ]
amendment to Article
Fourth of the Company's
Restated Certificate of
Incorporation to increase
authorized shares of
Common Stock and Class B
Common Stock.
For Against Abstain
3. Ratification of the [ ] [ ] [ ]
appointment of Arthur
Andersen & Co. as
independent public
accountants for the
fiscal year 1997.
4. In their discretion upon such other matters as
may properly come before the meeting or any
adjournment or adjournments thereof.
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.
</TABLE>
<TABLE>
<S><C>
Signature Signature (if held jointly) Dated: 1997
-------------------------- --------------------------- -------------------------,
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 the name of more than one person, all named holders must sign the proxy.
</TABLE>
