<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:
- --------------------------------------------------------------------------------
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(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 5, 2000
To GBC stockholders:
You are cordially invited to attend the GBC annual meeting of stockholders,
which will be held on Tuesday, May 9, 2000 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 9, 2000
Northbrook, Illinois
April 5, 2000
The annual meeting of the stockholders of General Binding Corporation (the
"Company") will be held on Tuesday, the 9th day of May, 2000 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 ratify the selection of Arthur Andersen & Co.
as independent public accountants for the fiscal year 2000.
3. To transact such other business as may properly come before the meeting.
The transfer books will not be closed. Only stockholders of record, at the
close of business on March 20, 2000, 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 9, 2000
------------------
The enclosed proxy is solicited by the Board of Directors of the Company.
It may be revoked at any time before it is exercised, but if not revoked, the
shares represented by the proxy will be voted. If the proxy card is marked to
indicate a choice, the shares will be voted as directed. If no indication is
made, the proxy will be voted FOR the election of directors and FOR the
ratification of the selection of Arthur Andersen & Co. as independent auditors.
You may revoke your proxy by giving written notice of revocation to the
Secretary of the Company at any time before it is voted or by attending the
meeting and voting your shares in person. The expense incurred in the
solicitation of the proxies will be borne by the Company. In addition to this
solicitation by mail, proxies may be solicited by officers, directors, and
regular employees of the Company, without extra compensation, personally and by
mail, telephone or telegraph. Brokers, nominees, fiduciaries and other
custodians will be required to forward soliciting material to the beneficial
owners of shares and will be reimbursed for their expenses. This Proxy Statement
and the enclosed Proxy are being sent to the stockholders of the Company on or
about April 5, 2000.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
The voting securities entitled to vote at the meeting are 13,326,924 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 20, 2000.
By virtue of Lane Industries, Inc. direct ownership of the Common Stock and
Class B Common Stock as described below, it controls 88.2% 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 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 February 29,
2000:
<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. 9,883,237(2)(3) 62.8(4)
One Lane Center
Northbrook, IL 60062
Common Stock............. Ariel Capital Management, Inc. 2,787,781(5) 17.8(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, 1999 based upon information provided in a Schedule 13-G
filed with the Securities and Exchange Commission and dated February 8,
2000. Ariel Capital has sole dispositive and voting power over all 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
FIRST YEAR BENEFICIALLY PERCENT
ELECTED PRESENT POSITION OWNED OF
NAME AND AGE DIRECTOR WITH COMPANY FEBRUARY 29, 2000 CLASS(A)
------------ ---------- ---------------- ----------------- --------
<S> <C> <C> <C> <C>
George V. Bayly, 57.................... 1998 Director(b) 0 0
Richard U. De Schutter, 59............. 1997 Director(c) 1,000 0
Theodore Dimitriou, 73................. 1991 Director(d) 2,000 0
Thomas V. Kalebic, 56.................. 1977 Director(e) 96,505(f) .6
William N. Lane, III, 56............... 1977 Chairman and 288,727(h) 1.8
Director(g)
James A. Miller, 57.................... 1997 Director(i) 0 0
Arthur C. Nielsen, Jr., 81............. 1966 Director(j) 34,860 .2
Govi C. Reddy, 55...................... 1994 President and Chief 69,205(l) .4
Executive
Officer, and
Director(k)
Warren R. Rothwell, 83................. 1961 Director(m) 15,100 0
Robert J. Stucker, 55.................. 1987 Director(n) 4,500 0
All Officers and Directors as a
group................................ 903,804(o) 5.7
</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. Bayly is Chairman, President and CEO of Ivex Packaging Corporation, a
specialty packaging company engaged in the manufacturing and marketing of a
broad range of plastic and paper packaging products. He has held this
position for more than the past five years.
(c) Mr. De Schutter is currently Vice Chairman, Chief Administration Officer,
and a Director of the Monsanto Company, a leading life sciences company.
Prior to assuming these responsibilities in 1999, he had been the Chairman
and Chief Executive Officer of G.D. Searle & Co., a wholly owned subsidiary
of Monsanto engaged in the research, development and marketing of
pharmaceutical products since April, 1995. He is also a director of
ReliaStar Financial Corp.
(d) Mr. Dimitriou is currently a private investor. Prior to his retirement in
1998, he had 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. 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 (h) below).
Mr. Kalebic is also a Voting Trustee under the Agreement referenced in note
(3) to Voting Securities and Principal Stockholders.
(f) At March 1, 2000 Mr. Kalebic had outstanding options to acquire from Lane
Industries, Inc. up to 214,500 shares of the Company's Common Stock at
prices ranging from $7.00 to $30.00 each. Of those outstanding options
45,750 were exercisable prior to May 1, 2000 but are not included in the
figure included in the table.
3
<PAGE> 7
(g) 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.
(h) Does not include 9,883,237 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 40,125 shares exercisable under
stock options by May 1, 2000.
(i) Mr. Miller is currently a private investor. Until 1998 he had been the
President, CEO and a director of Alliant FoodService, Inc. a broadline
food-service distributor. Prior to his appointment to that position in
1995, he had been serving, since 1991, as President of Kraft Food Service,
the predecessor to Alliant.
(j) Mr. Nielsen is Chairman Emeritus of the A. C. Nielsen Co. and now acts as a
consultant to that Company.
(k) 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.
(l) Includes 32,350 shares exercisable under stock options by May 1, 2000.
(m) 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.
(n) Mr. Stucker is a partner with the law firm of Vedder, Price, Kaufman &
Kammholz. He is also a director of Lane Industries, Inc. (see (h) above).
Vedder, Price, Kaufman & Kammholz has performed legal services for the
Company and Lane Industries, Inc. for many years and it is anticipated that
they will continue to do so in the future.
(o) Includes 352,983 shares owned by the Company's Employee's 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 90,037 shares
exercisable under stock options or exercisable by May 1, 2000 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 1998 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, 1999
through December 31, 1999, except that Mr. Warren R. Rothwell, a Director,
reported a July, 1999 sale of 4,000 shares of common stock one month late. The
transaction set forth in this one late report did not result in any short-swing
profits (under Section 16(b) of the Exchange Act) for Mr. Rothwell.
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 11 hereinafter.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
PRESENT POSITION OWNED
NAME WITH COMPANY FEBRUARY 29, 2000
---- ---------------- -----------------
<S> <C> <C>
Timothy J. Webb.................... Group President, 2,100
Document Finishing
Terry G. Westbrook................. Senior Vice President & 0
Chief Financial Officer
</TABLE>
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
1999.
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 twenty
three times in 1999.
There were five meetings of the Board of Directors during 1999. 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 $20,000 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.
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.
5
<PAGE> 9
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, 1999, the PSUS account balances for the following named
Directors were:
<TABLE>
<CAPTION>
PHANTOM STOCK UNIT
ACCOUNT BALANCE
DECEMBER 31, 1999
PHANTOM STOCK UNITS ---------------------------------
DIRECTOR EARNED IN 1999 (IN TOTAL UNITS) ($ VALUE (1))
-------- ------------------- ---------------- -------------
<S> <C> <C> <C>
William N. Lane, III........................ 344.182 1,143.933 13,441
George V. Bayly............................. 1,391.765 1,867.354 21,941
Richard U. DeSchutter....................... 1,499.342 3,168.039 37,224
Theodore Dimitriou.......................... 1,595.342 4,669.312 54,864
Thomas V. Kalebic........................... 1,458.765 4,542.205 53,371
James A. Miller............................. 1,407.765 2,457.243 28,873
Arthur C. Nielsen, Jr....................... 1,585.342 4,080.367 47,944
Govi C. Reddy............................... 348.182 1,240.436 14,575
Robert J. Stucker........................... 1,456.765 4,447.769 52,261
</TABLE>
- ---------------
(1) Based on $11.75 Value.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION IN COMPENSATION DECISIONS
During 1999 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 (f) and (i) to Election of Directors and
Transactions with Management).
6
<PAGE> 10
During 1999, 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 are currently Mr. Dimitriou, Mr. Rothwell and Mr.
Miller, 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, 56.................. Chairman
Govi C. Reddy, 55......................... President and Chief Executive Officer
Timothy J. Webb, 50....................... Group President, Document Finishing
John Turner, 51........................... Group President, Films
Govind K. Arora, 51....................... Senior Vice President, Worldwide Manufacturing and
Logistics
Terry G. Westbrook, 53.................... Senior Vice President and Chief Financial Officer
William R. Chambers, Jr., 45.............. Chief Operating Officer, Office Products Group
Robert F. Neuschel, 44.................... Vice President, E-Commerce
Steven Rubin, 52.......................... Vice President, Secretary and General Counsel
Paul C. Zarazinski, 44.................... Vice President and Chief Information Officer
Perry S. Zukowski, 41..................... Vice President, Human Resources
</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: Timothy J.
Webb, who before joining the Company in August, 1999 had been the Senior
Vice President and General Manager of the Impressions Division of the
Standard Register Company, a business printing firm, since the end of 1997
and had been, prior to that time, the President and Chief Executive Officer
of UARCO, Inc., a business printing firm, since 1994; Terry G. Westbrook,
who before joining the Company in September, 1999 had been a financial
consultant since 1997 and had been the Senior Vice President and Chief
Financial Officer at Utilicorp United, a global energy and utility company
since 1996 and, for the five years prior to that had been the Senior Vice
President-Finance and Chief Financial Officer of the Quaker Oats Company, a
food concern; John Turner, who before taking this position in March, 2000
had been the Company's Vice President and General Manager of the Films
Division since 1997 and European Films Division Vice President and General
Manager from 1994 to 1997; William R. Chambers, who before being named to
this position in August, 1999 had been the Company's Vice President and
Chief Financial Officer since August, 1997 and prior to that had been
Director of Manufacturing Development since November, 1995; Govind K. Arora,
who before being elected to his position in March, 2000 had held various
manufacturing management positions with the Company for more than the past
five years; Robert F. Neuschel, who before being named to this position in
March, 2000 had been the Vice President and General Manager of the Company's
European Films Division since September, 1997 and had held various marketing
positions with the Company prior to that time since 1979; Paul C.
Zarazinski, who before joining the Company in August, 1999 had been the Vice
President, Information Services for Kerry, Inc., a food products
7
<PAGE> 11
manufacturer since October, 1997 and, prior to that time, held a similar
position with Malinckrodt Veterinary, Inc., a manufacturer of biological and
pharmaceutical products for animals since 1994; and Perry S. Zukowski, who
before being named to this position in March, 1998 had been the Company's
Asst. Vice President, Human Resources since March, 1997 and for the four
years prior to that had been Asst. Treasurer & Risk Management Director for
Lane Industries, Inc.
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 1999, 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
2000. 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 1997, its executive officers have been justly
rewarded. In years when the Company has not had excellent earnings growth, such
as in 1998 and 1999, executive officer compensation has suffered.
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 1999 to Mr. Reddy 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 1999, the corporate performance objective was based on attaining
a certain earnings per share ("EPS") level. In 1999, the Company did not achieve
EPS that was within a range that had been targeted by the Committee and the
Board of Directors. Thus, Mr. Reddy and the other executive officers did not
receive a MIC Plan bonus for the year 1999. For the year 2000, the corporate
performance objective for the MIC plan is based on
8
<PAGE> 12
meeting certain EBITDA ("earnings before interest, taxes, depreciation and
amortization charges") targets and achieving certain shareholder value criteria.
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
1999 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.
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 $1 million limit. In the future, the Committee will periodically review the
necessity of modifying the compensation programs for executive officers so that
the corporate tax deduction is maximized, however, it will retain the
flexibility to not make such modifications when it deems such action to be in
the best interests of the Company and its shareholders.
<TABLE>
<S> <C>
The Executive Committee The Stock Option Plan
Thomas V. Kalebic Administrative Committee
William N. Lane, III Theodore Dimitriou
Govi C. Reddy Warren R. Rothwell
James A. Miller
</TABLE>
9
<PAGE> 13
SENIOR EXECUTIVE COMPENSATION
The following table shows the compensation paid and accrued by the Company
during 1999 to each of its five highest paid senior executives including the
Chief Executive Officer.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION TOTAL
ANNUAL COMPENSATION AWARDS COMPENSATION
------------------------------------ ------ ------------
OTHER ANNUAL OPTIONS/ ALL OTHER (TOTAL OF
NAME AND SALARY BONUS(1) COMPENSATION(2) SARS COMPENSATION(3) COLUMNS
PRINCIPAL POSITION YEAR ($)(A) ($)(B) ($)(C) (#) ($)(D) A-D)($)
------------------ ---- ------ -------- --------------- -------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
William N. Lane, III.......... 1999 257,000 -- -- -- 11,365 268,365
Chairman of the Board 1998 252,115 -- -- 55,000 16,520 268,635
1997 230,000 115,000 -- 15,000 11,700 356,700
Govi C. Reddy................. 1999 580,000 -- 27,898 900 26,152 634,050
President and Chief 1998 571,158 -- 10,922 47,000 35,827 617,907
1997 450,609 225,004 14,264 12,000 11,700 701,577
Timothy J. Webb(4)............ 1999 158,653 162,500 -- 7,500 -- 321,153
Group President,
Document Finishing
Robert O'Connor(5)............ 1999 230,000 -- -- -- 2,187 232,187
Group President, Films 1998 192,308 51,923 589 6,000 9,608 254,428
Terry G. Westbrook(6)......... 1999 94,234 -- -- 7,500 -- 94,234
Senior Vice President &
Chief Financial Officer
</TABLE>
- ---------------
(1) Annual bonus amounts are earned and accrued during the fiscal years
indicated, and paid subsequent to the end of such year.
(2) The above named individuals receive certain non-cash personal benefits, the
aggregate cost of which to the Company are below applicable reporting
thresholds. The amounts included in this column represent the amounts
reimbursed to the named individuals for income taxes attributable to such
personal benefits.
(3) Unless otherwise noted below, these amounts represent contributions by the
Company to the Company's 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) Mr. Webb joined the Company in August, 1999. As part of his hiring
agreement, he was guaranteed bonuses of $162,500 for the year 1999 and
$62,500 for the year 2000. His annual current salary rate is $375,000.
(5) Mr. O'Connor retired from his employment with the Company on December 31,
1999.
(6) Mr. Westbrook joined the Company in September, 1999. His current annual
salary rate is $350,000.
STOCK OPTION INFORMATION
The following table sets forth the details of options granted to the
individuals listed in the Senior Executive Compensation Table during 1999. The
second table in this section sets forth certain information with respect to
options exercised by those individuals in 1999 as well as the value of their
unexercised options at the end of the year.
10
<PAGE> 14
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SAR'S
OPTIONS/ GRANTED TO
SAR'S EMPLOYEES EXERCISE OR GRANT DATE
GRANTED IN FISCAL BASE PRICE EXPIRATION PRESENT VALUE(2)
NAME (#) YEAR ($/SHARE) DATE ($)
---- ---------- ---------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Govi C. Reddy............. 900 1.9 23.00 3/16/07 8,703
Timothy J. Webb........... 7,500 15.8 18.00 8/1/07 55,575
Terry G. Westbrook........ 7,500 15.8 8.66 11/4/07 28,500
</TABLE>
- ---------------
(1) All options granted to the named individuals were granted under the
Company's 1989 Stock Option Plan. Twenty-five percent (25%) of each option
first became exercisable one (1) year after the respective grant date. Only
twenty-five percent (25%) of an initial option grant may be exercised during
any one (1) year period commencing with the anniversary date of an option
grant. All of these options were granted with an exercise price equal to the
closing price of the Company's Common Stock after trading on the grant date
in the NASDAQ stock market. No SARs were granted in connection with these
option grants.
(2) Based on the Black-Scholes stock option pricing model. The following
assumptions were made for purposes of calculating the Grant Date Present
Value: the option term is assumed to be eight years; volatility at 39.16%; a
dividend yield of 2.09%; and, a risk free interest rate of 5.4%. The actual
value, if any, a named individual may realize will depend on the market
value of the underlying shares at the time the option is exercised, so there
is no assurance the value realized will be at or near the value estimated by
the Black-Scholes model. The Company's use of this model should not be
construed as an endorsement of its accuracy at valuing stock options.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR,
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/ OPTIONS/SARS
ACQUIRED SAR'S AT AT FY-END(2)
ON VALUE FY-END EXERCISABLE/
EXERCISE REALIZED(1) EXERCISABLE/ UNEXERCISABLE
NAME (#) ($) UNEXERCISABLE ($)
---- -------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
William N. Lane, III........ 7,000 129,125 44,625/112,375 0/0
Govi C. Reddy............... 6,000 60,750 33,500/88,300 0/0
Timothy J. Webb............. -- -- 0/7,500 0/0
Terry J. Westbrook.......... -- -- 0/7,500 0/0
</TABLE>
- ---------------
(1) Value realized represents the difference between the option exercise price
and the fair market value of the Company's Common Stock on the date the
option was exercised.
(2) Based on fair market value of $11.75 per Common Share on December 31, 1999.
11
<PAGE> 15
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.
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
GENERAL BINDING NASDAQ TOTAL RETURN
CORPORATION PEER GROUP INDEX
--------------- ---------- -------------------
<S> <C> <C> <C>
12/94 100.00 100.00 100.00
12/95 103.00 150.00 141.00
12/96 158.00 174.00 174.00
12/97 162.00 222.00 213.00
12/98 203.00 205.00 151.00
12/99 66.00 151.00 542.00
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
12/94 12/95 12/96 12/97 12/98 12/99
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
General Binding Corporation 100 103 158 162 203 66
-----------------------------------------------------------------------------------
Peer Group 100 150 174 222 205 151
-----------------------------------------------------------------------------------
NASDAQ Total Return Index 100 141 174 213 300 542
-----------------------------------------------------------------------------------
</TABLE>
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, United
Stationers Inc., Gradco Systems, Inc., and Day Runner, 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
1999 the Company received $4,000,000 from Lane Industries, Inc. representing its
share of savings under this Agreement, which amount is treated by the Company as
a contribution to capital.
In 1985 the Company entered into an Agreement with Lane Industries, Inc.
providing for the sharing of state income tax savings, if any, realized by
filing state income tax returns on a combined or consolidated basis with Lane
Industries, Inc. In 1999 the Company paid Lane Industries, Inc. $79,550 which
represented the Company's share of such savings for that year.
Certain Lane Industries, Inc. personnel perform federal and state income
tax planning, legal, risk management, acquisition due diligence and finance
services for the Company. In 1999 and the first two
12
<PAGE> 16
months of 2000, the Company has paid $605,139 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 $1,088,000 of business travel and accommodations through such
travel agency in 1999 and the first two months of 2000.
At certain times in 1999 and the first two months of 2000 the Company used
hotel services and accommodations owned by a subsidiary of Lane Industries, Inc.
When using these services and accommodations the Company pays rates which are
comparable to rates charged by other hotel operators. During the relevant period
the Company paid the Lane Industries, Inc. subsidiary $125,000 for these
services and accommodations.
13
<PAGE> 17
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 2000. 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 2001 must be received at the Company's offices in
Northbrook, Illinois not later than December 15, 2000 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 5, 2000
A COPY OF THE COMPANY'S ANNUAL REPORT FOR THE YEAR 1999 HAS BEEN
MAILED TO ALL STOCKHOLDERS. THE ANNUAL REPORT IS NOT TO BE REGARDED AS
PROXY SOLICITING MATERIAL.
14
<PAGE> 18
PROXY GENERAL BINDING CORPORATION PROXY
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
Govi C. Reddy, or any of them, with full power of substitution, to represent and
to vote as designated on the reverse side, all the shares of General Binding
Corporation held of record by the undersigned on March 20, 2000, at the annual
meeting of stockholders to be held on May 9, 2000, 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.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE RETURN
ENVELOPE.
(Continued and to be signed on reverse side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
- --------------------------------------------------------------------------------
<PAGE> 19
<TABLE>
<S><C>
- ------------------------------------------------------------------------------------------------------------------------------------
GENERAL BINDING CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
[ ]
For All
1. ELECTION OF DIRECTORS For Withheld Except Nominees written below 2. Ratification of the appointment For Against Abstain
G.V. Baly, / / / / / / of Arthur Andersen & Co. as / / / / / /
R. U. DeSchutter, ------------------- independent public accountants
T. Dimitriou, Nominee Exception for the fiscal year 2000.
T. V. Kalebic,
J. A. Miller, 3. In their discretion upon such other matters as may
W. N. Lane, III, properly come before the meeting or any adjournment
R. J. Stucker or adjournments thereof.
A. C. Nielsen, Jr.,
G. C. Reddy and The undersigned hereby revokes any proxy or proxies
W. R. Rothwell 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
do by virtue thereof.
[ ] I (we) shall attend the meeting.
[ ] I (we) shall not attend the meeting.
Signature ________________________________________ Signature if held jointly _______________________________ Dated: _________, 2000
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.
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD ANDD DETACH HERE
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
