Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant (x) Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
(x) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material pursuant to Section 240.14a-11(c) or Section
240.14a-12
Bontex, Inc.
(Name of Registrant as Specified in its Charter)
David A. Dugan, Assistant Corporate Secretary
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
N/A
Payment of Filing Fee (Check the appropriate box):
(x) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee Paid:
( ) Fee paid previously with preliminary materials
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[Bontex logo] BONTEX [R]
2000
Notice of Annual Stockholders Meeting
and
Proxy Statement
Thursday, November 2, 2000
at 10:30 a.m. local time
Lexington, Virginia
<PAGE>
September 28, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Stockholders Meeting to be held
at 10:30 a.m., Eastern Daylight-Saving Time, on Thursday, November 2, 2000, the
Best Western Inn at Hunt Ridge, Lexington, Virginia. The accompanying Notice of
Annual Meeting and Proxy Statement contains detailed information as to the
formal business to be transacted at the meeting.
The Board urges you to vote "FOR" all proposals on the enclosed proxy card.
Regardless of whether you plan to attend the meeting, it is important that your
shares be voted. Accordingly, please complete, sign, and date the proxy card
attached and return it in the enclosed postage-paid envelope. Please note,
however, that if your shares are held of record by a broker, bank, or other
nominees and you wish to vote at the meeting, you must obtain from the record
holder a proxy issued in your name.
Thank you for your interest.
Sincerely,
James C. Kostelni
Chairman of the Board and
Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL STOCKHOLDERS MEETING
September 28, 2000
BONTEX, INC.
Notice is hereby given that the Annual Meeting of Stockholders of Bontex,
Inc. will be held at the Best Western Inn at Hunt Ridge, Willow Springs Drive,
Lexington, Virginia, on November 2, 2000 at 10:30 a.m., Eastern Daylight-Saving
Time, for the following purposes:
1. To elect three Class A directors to serve until the annual meeting of
stockholders in 2003,
2. The transaction of such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record at the close of business on September 8, 2000,
are entitled to vote at this meeting.
You are urged to fill in, date and sign the accompanying proxy and to mail
the same as promptly as possible. If you sign and return your proxy without
specifying your choices, it will be understood that you wish to have your shares
voted in accordance with the directors' recommendations. Should you decide to
attend the meeting and vote in person, you may withdraw your proxy.
Your attention is directed to the Proxy Statement accompanying this Notice
for a more complete statement regarding the matters proposed to be acted upon at
the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Charles W. J. Kostelni
Corporate Secretary
<PAGE>
BONTEX, INC.
A VIRGINIA CORPORATION
PROXY STATEMENT
2000 ANNUAL MEETING OF STOCKHOLDERS
GENERAL
This Proxy Statement is furnished in connection with the solicitation by
and on behalf of the Board of Directors of Bontex, Inc. (the "Company") of
proxies in the accompanying form to be used at the Annual Meeting of the
Stockholders of the Company to be held on November 2, 2000, at 10:30 a.m.,
Eastern Daylight-Saving Time, at the Best Western Inn at Hunt Ridge, Willow
Springs Drive, Lexington, Virginia 24450, and at any adjournments thereof. The
approximate date on which this Proxy Statement and the accompanying form of
proxy are first being sent or given to stockholders is October 9, 2000.
A copy of the Company's Annual Report to Stockholders, including
consolidated financial statements for the fiscal year ended June 30, 2000,
reported upon by KPMG LLP, is being mailed concurrently with this Proxy
Statement, but should not be considered proxy solicitation material.
Any person signing and mailing the enclosed form of proxy may revoke the
proxy at any time prior to the actual voting thereof by attending the Annual
Meeting and voting in person, by submitting a signed proxy bearing a later date,
or by giving prior written notice of revocation of the proxy to the Corporate
Secretary of the Company, One Bontex Drive, Buena Vista, Virginia 24416-1500.
All properly executed proxies delivered pursuant to this solicitation will be
voted at the Annual Meeting in the manner specified therein. If no specification
is made, the proxy will be voted FOR the election of all of the Class A
directors.
VOTING SECURITIES
The close of business on September 8, 2000, has been fixed as the record
date for the determination of stockholders of the Company entitled to notice of
and to vote at the Annual Meeting of Stockholders. There were 1,572,824 shares
of Company common stock outstanding as of the foregoing record date, and each
such share is entitled to one vote.
The holders of shares entitled to cast a majority of the votes at the
Annual Meeting constitute a quorum. If a share is represented for any purpose at
the Annual Meeting, it is deemed to be present for purposes of establishing a
quorum. Abstentions and broker non-votes (i.e., shares registered in the names
of brokers or other "street name" nominees for which proxies are voted for some
but not all matters) will be included in determining the number of shares
represented at the Annual Meeting. Directors will be elected by a plurality of
the votes cast in person or by proxy at the Annual Meeting. For purpose of
determining the votes cast with respect to any other matter presented for
consideration at the Annual Meeting, only those votes cast "for" or "against"
are included. Votes that are withheld and broker non-votes will not be included
in determining the votes cast.
The Company will appoint one or more inspectors of election to act at the
Annual Meeting and to make a written report thereof. Prior to the meeting, the
inspectors will sign an oath to perform their duties in an impartial manner and
according to the best of their abilities. The inspectors will ascertain the
number of shares outstanding and the voting power of each, determine the shares
represented at the meeting and the validity of proxies and ballots, count all
votes and ballots, and perform certain other duties as required by law.
1
<PAGE>
As a matter of policy, proxies, ballots and voting tabulations that
identify individual stockholders are kept private by the Company. Such documents
are available for examination only by the inspectors of election and certain
personnel associated with processing proxy cards and tabulating votes. The vote
of any stockholder is not disclosed except as may be necessary to meet legal
requirements.
STOCK HOLDINGS OF CERTAIN OWNERS AND MANAGEMENT
The following table sets forth as of August 25, 2000, certain information
regarding the only known beneficial holders of more than five percent of the
outstanding common stock of the Company and the beneficial ownership of the
common stock of the Company by each director and nominee, by each named
executive officer and by all directors and executive officers as a group. Unless
otherwise noted in the footnotes to the table, the named persons have sole
voting and investment power with respect to all outstanding shares of common
stock shown as beneficially owned by them.
<TABLE>
<CAPTION>
Shares Beneficially
Owned Percent of Class
<S> <C> <C> <C>
First Union National Bank 843,082 (1) 50.04
303 Broad Street
Red Bank, New Jersey 07701
Mrs. Dolores Kostelni 696,207 (2) 41.32
Route 4, Box 251
Turtle Brooke Lane
Lexington, Virginia 24450
Mrs. Patricia S. Tischio 675,607 (3)(9) 40.10
901 Foxboro Drive
Norwalk, Connecticut 06851
Estate of Marie G. Surmonte 675,507 (4) 40.09
c/o First Union National Bank
303 Broad Street
Red Bank, New Jersey 07701
Hugo N. Surmonte Residuary Trust 95,400 (5) 5.66
c/o First Union National Bank
303 Broad Street
Red Bank, New Jersey 07701
William J. Binnie 3,744 (6) *
Bontex, Inc.
One Bontex Drive
Buena Vista, Virginia 24416-1500
Michael J. Breton 1,900 *
Bontex S.A.
rue Slar
4801 Stembert, Belgium
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially
Owned Percent of Class
<S> <C>
William B. D'Surney 850 *
Bontex, Inc.
One Bontex Drive
Buena Vista, Virginia 24416-1500
David A. Dugan 5,837 *
Bontex, Inc.
One Bontex Drive
Buena Vista, Virginia 24416-1500
Charles W. J. Kostelni 33,149 (10) 1.97
Bontex, Inc.
One Bontex Drive
Buena Vista, Virginia 24416-1500
James C. Kostelni 140,160 (7)(9) 8.32
Bontex, Inc.
One Bontex Drive
Buena Vista, Virginia 24416-1500
Jeffrey C. Kostelni 43,841 (8) 2.60
Bontex, Inc.
One Bontex Drive
Buena Vista, Virginia 24416-1500
Frank B. Mayorshi 600 *
Bontex, Inc.
One Bontex Drive
Buena Vista, Virginia 24416-1500
Larry E. Morris 9,070 (12) *
Bontex, Inc.
One Bontex Drive
Buena Vista, Virginia 24416-1500
Joseph F. Raffetto 5,582 *
Bontex, Inc.
One Bontex Drive
Buena Vista, Virginia 24416-1500
Robert J. Weeks 10,121 *
Bontex, Inc.
One Bontex Drive
Buena Vista, Virginia 24416-1500
All Directors and 930,461 55.23
Executive Officers
as a Group (12 persons)
</TABLE>
3
<PAGE>
(1) Includes 95,400 shares held as co-trustee for the Hugo N. Surmonte
Residuary Trust, 72,175 shares held as trustee of the Hugo N. Surmonte
Marital Trust, and 675,507 shares held as a co-executor of the Estate
of Marie G. Surmonte. The Bank has shared voting and dispositive power
with respect to these shares.
(2) Includes 20,700 shares owned by Mrs. Kostelni with sole voting and
dispositive power and an aggregate of 675,507 shares of which Mrs.
Kostelni has shared voting and dispositive power as a co-executor of
the Estate of Marie G. Surmonte. Excludes 57,590 shares owned by Mrs.
Kostelni's spouse, Mr. James C. Kostelni, and 2,653 shares owned by
Mrs. Kostelni's adult son, James H. Kostelni.
(3) Includes 100 shares owned by Mrs. Tischio with sole voting and
dispositive power, an aggregate of 675,507 shares of which Mrs. Tischio
has shared voting and dispositive power as a co-executor of theEstate
of Marie G. Surmonte, and excludes 2,750 shares owned by Mrs. Tischio's
adult daughter, as to which Mrs. Tischio disclaims beneficial
ownership.
(4) Dolores Kostelni, Patricia S. Tischio and First Union National Bank are
co-executors of the Estate and have shared voting and dispositive power
with respect to these shares.
(5) Dolores Kostelni and Patricia S. Tischio are beneficiaries of the
Trust. Mrs. Kostelni and Mrs. Tischio and the Bank have shared voting
and dispositive power with respect to these shares.
(6) Includes 726 shares held by Mr. Binnie's spouse as Trustee for their
sons.
(7) Includes 20,700 shares owned by Mr. James C. Kostelni's spouse, Dolores
Kostelni. Does not include 2,653 owned by Mr. James C. Kostelni's adult
son, James H. Kostelni, as to which Mr. James C. Kostelni disclaims
beneficial ownership, and 675,507 shares held in the Estate of Marie G.
Surmonte, of which Mr. James C. Kostelni's spouse, Dolores Kostelni, is
a co-executor with shared voting and dispositive power. Includes 57,220
shares that are unissued, but are subject to stock options.
(8) Includes 1,000 shares owned by Mr. Jeffrey C. Kostelni's spouse.
Includes 22,015 shares that are unissued, but are subject to stock
options.
(9) Mr. James C. Kostelni's spouse, Dolores Kostelni, and Mrs. Patricia S.
Tischio are co-executors and share voting and dispositive power with
First Union National Bank of 675,507 shares held by the Estate of Mrs.
Marie G. Surmonte.
(10) Includes 22,015 shares that are unissued, but are subject to stock
options.
(11) Includes 5,677 shares that are unissued, but are subject to stock
options.
(12) Includes 5,070 shares that are unissued, but are subject to stock
options.
*Represents less than 1% of the outstanding shares of Company common stock.
ELECTION OF DIRECTORS
PROPOSAL NO. 1
The Company's Board of Directors is divided into three classes (A, B and C)
with staggered three-year terms. The current term of office of the Class A
directors expires at the 2000 Annual Meeting of Stockholders. The terms of the
Class B and Class C directors will expire in 2001 and 2002, respectively.
There are four Class A directors, James C. Kostelni, Robert J. Weeks,
Hadelin H. Mothet and William B. D'Surney, each of whom has been nominated for
election or re-election by the Board of Directors. Messrs. Kostelni, Weeks and
D'Surney currently serve on the Board and are standing for re-election.
It is the intention of the persons named as proxies, unless instructed
otherwise, to vote for the election of each of the four nominees set forth
below. Each nominee has agreed to serve if elected. If any nominee shall
unexpectedly be unable to serve, the shares represented by all valid proxies
will be voted for the remaining nominees and such other person or persons as may
be designated by the Board. At this time, the Board knows of no reason why any
nominee might be unable to serve. Class A nominees will serve for a three-year
term until the 2003 Annual Meeting and until their successors are elected and
qualified.
4
<PAGE>
The present principal occupation or employment and employment during the
past five years and all positions or offices, if any, held with the Company are
set forth opposite the name of each director and nominee. Three of the nominees,
James C. Kostelini, Robert J. Weeks, and William B. D'Surney, are members of the
present Board of Directors. The fourth nominee, Mr. Hadelin Mothet, is not a
member of the present Board of Directors.
Your Board of Directors recommends a vote FOR each of the nominees for
Class A Director.
<TABLE>
<CAPTION>
NOMINEES
CLASS A DIRECTORS
(Serving Until 2003 Annual Meeting)
Year in Which First
Name and Age Elected as Director Principal Occupation
------------ ------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
James C. Kostelni 1965 Chairman of the Board, President, and Chief
Age 65 Executive Officer of the Company (since 1994),
President and Chief Operating Officer (since 1971).
Mr. Kostelni has a Bachelor of Science Degree in
Business Administration.
Robert J. Weeks 1983 Private investor since 1993; prior thereto,
Age 66 Vice-President, Dun & Bradstreet Corp. Bethlehem,
Pennsylvania. Mr. Weeks has a Bachelor of Science
Degree in Business Administration.
Hadelin H. Mothet Financial Director and Assistant General Manager
Age 56 (since 1985) of Bontex S.A.. Mr. Mothet has a
Bachelor of Science Degree in Accountancy.
William B. D'Surney 1995 Private investor since 1994; prior thereto,
Age 71 Senior Vice-President, Alexander & Alexander,
Richmond, Virginia. Mr. D'Surney has a Bachelor
of Science Degree in Business Administration.
DIRECTORS CONTINUING IN OFFICE
CLASS B DIRECTORS
(Serving Until 2001 Annual Meeting)
Year in Which First
Name and Age Elected as Director Principal Occupation
------------ ------------------- --------------------
Patricia S. Tischio 1995 Assistant Corporate Secretary (1994-1997),
Age 61 Corporate Office Manager (1989-2000) and Sales
and Administrative Services (since 2000) of the
Company. Mrs. Tischio has a Bachelor of Arts
Degree in English.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Jeffrey C. Kostelni 1995 Senior Vice President (since 1999), Chief
Age 34 Financial Officer and Treasurer (since 1994) of the
Company and General Sales Manager of Bontex
S.A., a subsidiary of the Company in Belgium
(1995-1999). Mr. Kostelni has a Bachelor of Science
Degree in Accountancy and is a Certified Public
Accountant.
Joseph F. Raffetto 1984 Private investor since 1994; prior thereto, physician.
Age 91
CLASS C DIRECTORS
(Serving Until 2002 Annual Meeting)
Year in Which First
Name and Age Elected as Director Principal Occupation
------------ ------------------- --------------------
William J. Binnie 1977 Retired engineering consultant since 1996;
Age 75 prior thereto, President, W.J. Binnie & Associates, a
manufacturer's representative company, Whispering
Pines, North Carolina. Mr. Binnie has a Bachelor of
Science Degree in Civil Engineering.
Charles W. J. Kostelni 1998 Senior Vice President (since 1999), General
Age 36 Manager (U.S. Operations only) (since 1998),
Corporate Secretary (since 1997), Corporate
Controller (since 1996) of the Company and
General Sales Manager of Bontex S.A., a subsidiary
of the Company in Belgium (since 1999). Prior
thereto, Assistant Controller (1994-1996) of the
Company. Mr. Kostelni has a Bachelor of Science
Degree in Accountancy and is a Certified Public
Accountant.
Frank B. Mayorshi 1993 Private investor since 1991; prior thereto,
Age 64 Partner, KPMG LLP, Roanoke, Virginia. Mr.
Mayorshi has a Bachelor of Science Degree in
Business Administration
</TABLE>
No director or nominee is a director of any other company with a class of
securities registered pursuant to Section 12 of the Securities Exchange Act of
1934. Mr. Charles W. J. Kostelni and Mr. Jeffrey C. Kostelni are the sons of Mr.
James C. Kostelni. Mrs. Patricia S. Tischio is the sister-in-law of Mr. James C.
Kostelni and the aunt of Mr. Charles W. J. Kostelni and Mr. Jeffrey C. Kostelni.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held five meetings during fiscal 2000. All
directors, with the exception of Patricia S. Tischio, attended at least 75% of
the total number of meetings of the Board and the committees of the Board on
which they served.
6
<PAGE>
A director's fee of $1,500 per meeting attended is paid to all non-employee
directors. In addition, non-employee directors who are members of the Executive,
Audit, Compliance and/or Compensation Committees receive a fee of $500 per
committee meeting attended. All directors are reimbursed for their actual travel
expenses for attending Board and committee meetings.
The Board of Directors annually elects five standing committees: the
Executive Committee, the Audit Committee, the Compensation Committee, the
Compliance Committee and the Nominating Committee.
The Executive Committee of the Board of Directors, which is composed of
Messrs. James C. Kostelni (Chairman), Weeks, Mayorshi and Binnie, is empowered
to exercise all authority of the Board of Directors, except with respect to
matters reserved for the Board by Virginia law. This committee met four times
during fiscal 2000.
The Audit Committee of the Board of Directors, which consists of Messrs.
Mayorshi (Chairman), Binnie and Weeks, oversees the financial reporting process
and the Company's internal controls. This committee met four times during fiscal
2000.
The Compensation Committee of the Board of Directors, which consists of
Messrs. Weeks (Chairman), Binnie and Mayorshi, meets as necessary to consider
and make recommendations to the Board of Directors concerning compensation of
executive officers and employees of the Company. This committee met four times
during fiscal 2000.
The Compliance Committee of the Board of Directors, which consists of
Messrs. D'Surney (Chairman), Raffetto and Binnie, oversees the Company's
compliance with environmental and safety regulations. This Committee met four
times during fiscal 2000.
The Nominating Committee of the Board of Directors, which consists of
Messrs. James C. Kostelni (Chairman), Mayorshi and Weeks, considers and
recommends to the Board, candidates for election as directors of the Company.
The Nominating Committee will not consider nominees recommended by stockholders.
This committee met one time during fiscal 2000.
7
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information regarding the individual
compensation earned by the Chief Executive Officer and four other executives for
services in all capacities to the Company and its subsidiaries for the fiscal
years ended June 30, 2000, 1999 and 1998.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
Awards
Other Annual Securities All Other
Name and Principal Compensation Underlying Compensation
Position Year Salary($) Bonus ($) ($) (2) Options (#) (#) (3)
-------- ---- --------- --------- ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
James C. Kostelni 2000 250,000 - 5,332 24,250 7,962
Chairman of the Board of 1999 250,000 - 6,858 72,000 6,810
Directors, President and 1998 242,795 44,664 (1) 59,188 - 65,891
Chief Executive Officer
Michael J. Breton 2000 125,518 - 14,910 - 33,559
Director of International 1999 144,350 - 15,606 - 42,527
Operations, Bontex, S.A. 1998 148,417 10,781 (1) 18,135 - 7,829
Larry E. Morris 2000 85,000 - - 5,070 2,941
Technical Sales Director 1999 96,840 - - - 3,631
1998 105,280 13,576 (1) 3,351 - 3,485
Tarcisio Pasquali 2000 140,299 - 15,497 - -
General Manager, 1999 163,441 - 17,297 - -
Bontex S.r.l. 1998 179,925 20,200 (1) 17,100 - -
Hadelin H. Mothet 2000 76,000 - 9,402 - 21,887
Financial Director and 1999 83,263 - 9,356 - 10,886
Assistant General Manager, 1998 82,123 15,072 (1) 9,347 - 9,264
Bontex S.A.
</TABLE>
(1) Performance-based bonuses awarded by the Compensation Committee and
paid in 1998 for 1997 performance.
(2) Except as otherwise indicated in the table, the named executives did
not receive perquisites or other personal benefits in excess of the
lesser of $50,000 or 10% of the total of his salary and bonus reported
in the table. All amounts represent automobile allowances or long-term
disability insurance premium payments.
(3) Amounts disclosed in this column for 2000 include: (i) payment by the
Company of premiums for whole life insurance on behalf of Mr. James
Kostelni in the amount of $7,962; (ii) Company contributions on behalf
of the named executive officers under the Bontex Inc. Retirement Plan
as follows: Mr. James Kostelni $0, Mr. Breton $0, Mr. Morris $1,888,
Mr. Pasquali $0 and Mr. Mothet $0; (iii) Bontex S.A.'s contribution
under the Bontex, S.A. Pension Plan on behalf of Mr. Breton, $33,559 in
2000 and $42,527 in 1999 and Mr. Mothet $21,887 in 2000. (The increase
in Mr. Breton's pension costs over prior years is due to a change in
the pension plan policy based on Mr. Breton's age. The change is a one
time adjustment and is being offset by a permanent salary reduction
implemented in the fourth quarter of fiscal year 1999, of which the
8
<PAGE>
full effect will be seen in subsequent years); and (iv) Company
contributions on behalf of the named executive officers under the
Bontex Inc. Executive Benefit Deferred Compensation Agreement as
follows: Mr. James Kostelni $0, Mr. Breton $0, Mr. Pasquali $0 and Mr.
Mothet $0, and Mr. Morris $1,053.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
-------------- ------------- -------------- ---------------- -------------- ----------------------
% of Total Potential Realized
Number of Options Market Value at Assumed
Securities Granted to Exercise Price on Annual Rates of
Underlying Employees or Base Date of Stock Price
Options in Fiscal Price Grant Expiration Appreciation for
Granted (#) Year ($/Share) ($/Share) Date Option Term(1)
-------------- ------------- -------------- ---------------- -------------- ----------------------
5%($) 10%($)
---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
James C. Kostelni 24,250 40.4 2.00 1.813 Jan. 2010 71,615 114,035
Larry E. Morris 5,070 8.5 2.00 1.813 Jan. 2010 14,973 23,841
</TABLE>
(1) The hypothetical potential appreciation shown in these columns reflects
the required calculations at annual rates of 5% and 10% set by the
Securities Exchange Commission, and is not intended to represent either
historical appreciation or anticipated future appreciation of the
Company's Common Stock price.
Retirement Plans
Bontex, Inc. Retirement Income Plan
The Company has in effect a contributory defined benefit retirement plan
("Plan"). Estimated annual benefits payable at normal retirement age 65 under
the Plan to persons in specified remuneration and years of service
classifications are set forth below. The following table contains no benefits
attributable to supplemental benefit plans, as there are no such plans.
<TABLE>
<CAPTION>
Years of Service
Final Average -----------------------------------------------------------------------------------------
Earnings 15 20 25 30 35
----------------- ------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$ 125,000 $ 32,730 $ 43,640 $ 54,550 $ 65,460 $ 65,460
150,000 40,230 53,640 67,050 80,460 80,460
175,000 46,230 61,640 77,050 92,460 92,460
200,000 46,230 61,640 77,050 92,460 92,460
225,000 46,230 61,640 77,050 92,460 92,460
250,000 46,230 61,640 77,050 92,460 92,460
300,000 46,230 61,640 77,050 92,460 92,460
400,000 46,230 61,640 77,050 92,460 92,460
450,000 46,230 61,640 77,050 92,460 92,460
500,000 46,230 61,640 77,050 92,460 92,460
</TABLE>
9
<PAGE>
The benefits in the Table are computed as a straight-life annuity payable
annually and are derived from both employer and employee contributions. The
benefits are not subject to any deduction for Social Security or other offset
amounts.
The compensation covered by the Plan includes all amounts received for
personal services rendered in the course of employment for the Company to the
extent those amounts are includable in gross income, except for distributions
from deferred compensation plans or other amounts that receive special tax
treatment. Compensation for purposes of the Plan may not exceed statutory
limits. The limit for the 2000 and 1999 plan years was $170,000 and $160,000,
respectively, which may be increased by the Internal Revenue Service in the
future to reflect cost of living increases. The benefit formula equals the sum
of (A) 1.5% of Final Average Earnings up to Social Security Covered
Compensation, and (B) 2.0% of Final Average Earnings in excess of Social
Security Covered Compensation, multiplied by credited years of service up to a
maximum of 30 years.
Social Security Covered Compensation means the average of the taxable wage
bases for the 35 calendar years ending with the last day of the calendar year in
which a participant attains his Social Security retirement age. Final Average
Earnings is generally the average earnings for the five highest consecutive
years of compensation during the ten years immediately preceding retirement.
It is estimated that at age 65, for Plan purposes, Jeffrey C. Kostelni,
Charles W. J. Kostelni and Larry E. Morris will have 38, 34 and 28 years of
credited service, respectively. Mr. Michael J. Breton does not participate in
the Plan. Mr. James C. Kostelni has reached age 65 and currently has 41 years of
credited service.
Bontex, S.A. Pension Plan
The Company's subsidiary, Bontex, S.A., maintains a pension plan
("Pension Plan") for certain of its employees. Mr. Breton is the only Pension
Plan participant included in the Compensation Table. The Pension Plan generally
provides a monthly retirement benefit beginning at normal retirement age 65
until the participant's death based on years of service and the average of the
last five years' annual salary. Provisions are also made for monthly payments to
a surviving spouse and children. Estimated annual benefits payable upon
retirement under the Pension Plan to persons in specified remuneration and years
of service classifications are set forth below. No benefits from a supplemental
benefit plan are included as no such plan exists.
<TABLE>
<CAPTION>
Years of Service
Final Average -----------------------------------------------------------------------------------------
Earnings 15 20 25 30 35
----------------- ------------- -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
$ 125,000 $ 15,591 $ 20,789 $ 25,987 $ 31,184 $ 36,381
150,000 19,822 26,429 33,036 39,643 46,251
175,000 24,052 32,068 40,086 48,103 56,120
200,000 28,281 37,708 47,135 56,163 65,990
225,000 32,511 43,347 54,186 65,023 75,860
250,000 36,741 48,988 61,235 73,482 85,729
300,000 45,201 52,431 75,335 90,401 105,469
400,000 62,119 82,827 103,533 124,241 144,947
450,000 70,580 94,107 117,634 141,159 164,687
500,000 79,040 105,386 131,733 158,079 184,426
</TABLE>
It is estimated that at age 65, Mr. Breton will have 18 and Mr. Mothet 37
years of credited service, respectively. Although compensation for Pension Plan
purposes is the average of the most recent five years' annual salary, only
$85,618 of the amount shown for Mr. Breton in the Compensation Table qualifies
as
10
<PAGE>
compensation under the Pension Plan for 2000. The Pension Plan defines the
benefit in terms of Belgian francs, and the above amounts were calculated using
the exchange rate in effect on June 30, 2000. The benefits listed in the Pension
Plan table are computed as a straight-life annuity payable annually and are not
subject to any deduction for Social Security or other offset amounts.
Bontex, Inc. Executive Benefit Deferred Compensation Agreement
The Company adopted a tax deferred compensation benefit plan for certain
executives during fiscal year 1997. The plan allows the employee to defer up to
four percent of his compensation with a Company match of up to one percent of
compensation. The Company's contribution funds life insurance policies on each
executive, with the Company as owner and beneficiary.
Retirement Compensation Agreements
Supplemental Executive Compensation Agreement
On May 26, 1994, the Company and Mr. James C. Kostelni (hereafter in this
section, Mr. Kostelni) entered into a Supplemental Executive Compensation
Agreement which is intended to supplement Mr. Kostelni's retirement benefits to
make up for any loss of benefits under the Bontex, Inc. Retirement Income Plan
resulting from the application of certain limitations imposed by amendments to
Section 401(a)(17) of the Internal Revenue Code of 1986, as amended, under the
Revenue Reconciliation Act of 1993. Under the Supplemental Executive
Compensation Agreement, the Company has agreed, during Mr. Kostelni's life, to
purchase for Mr. Kostelni, upon execution of the Agreement and thereafter on May
1 of each year through May 1, 2000 an annuity contract which provides for the
payment of at least $458.33 per month to Mr. Kostelni, such payments to begin
upon Mr. Kostelni's reaching age sixty-five and to end upon Mr. Kostelni's death
or the ten-year anniversary date of the first annuity payment, whichever is
later. In order to replace the survivorship benefits which Mr. Kostelni's
spouse, but for the tax changes, would receive upon his death, the Company also
has agreed to pay to Mr. Kostelni, upon execution of the Agreement and
thereafter on May 1 of each year through May 1, 1997, a cash payment in the
amount of $26,000. It is intended that such cash payment will be used by Mr.
Kostelni to purchase life insurance which will then provide the survivor
benefit. Additionally, the Supplemental Executive Compensation Agreement also
provides that the Company shall, upon execution of the Agreement and thereafter
on May 1 of each year through May 1, 2000, make a cash "gross-up" payment equal
to the amount of any federal, state and local income taxes paid by Mr. Kostelni
on the benefits received under the Agreement. With Mr. Kostelni's consent, the
Company did not purchase the annuity contract as provided in the Agreement
during fiscal years 1999 or 2000.
Under the Supplemental Executive Compensation Agreement, the Company shall,
upon a change in control, (i) purchase and transfer to Mr. Kostelni all
remaining annuities to be purchased pursuant to the Agreement; (ii) pay to Mr.
Kostelni all bonus amounts still owing pursuant to the Agreement; and (iii) pay
to Mr. Kostelni the applicable "gross-up" payment computed in accordance with
the Agreement. If Mr. Kostelni dies during the term of the Supplemental
Executive Compensation Agreement, or if Mr. Kostelni's employment with the
Company is terminated, either voluntarily or pursuant to the terms of the
Executive Compensation Agreement (discussed below), the Agreement shall
terminate, and Mr. Kostelni shall be entitled to no further payments or benefits
under the Agreement, except those which have accrued as of the date of his death
or termination.
A change in control under the Supplemental Executive Compensation Agreement
shall be deemed to have occurred in the event that (i) any person or group
becomes a beneficial owner of 20% or more of the combined voting power of the
Company's voting securities; (ii) the members of the Company's Board of
Directors on the date of the Agreement cease for any reason to constitute at
least a majority of the Board; (iii) all or substantially all of the assets of
the Company are sold, transferred or conveyed by any means, including, but not
limited to, direct
11
<PAGE>
purchase or merger, if the transferee is not controlled by the Company; or (iv)
the Company is merged or consolidated with another entity and as a result of
such merger or consolidation less than 75% of the outstanding voting securities
of the surviving or resulting entity shall be owned in the aggregate by the
former stockholders of the Company. No change of control shall be deemed to have
occurred for purposes of the Agreement by virtue of the acquisition, directly or
indirectly, of 20% or more of the combined voting power of the Company's voting
securities by Mr. Kostelni or a group including Mr. Kostelni, by a subsidiary or
certain other affiliates of the Company, or by the heirs, successors or assigns
of Hugo N. Surmonte.
Employment Agreement
On January 22, 1997, the Company and Mr. James C. Kostelni (hereafter in
this section, Mr. Kostelni) entered into an Executive Compensation Agreement
providing for the employment of Mr. Kostelni as President and Chief Executive
Officer of the Company until May 15, 2005. This Agreement supersedes in its
entirety the Executive Compensation Agreement dated June 29,1989, by and between
the Company (as successor to Georgia Bonded Fibers, Inc.) and Mr. Kostelni.
Under the Agreement, Mr. Kostelni is to receive a minimum annual salary of
$222,000, which shall be adjusted annually by the Compensation Committee of the
Board of Directors, along with certain benefits, including such bonuses as are
approved by the Board of Directors, an automobile allowance and all fringe
benefits offered to Company employees.
The Agreement may be terminated by the Company only for cause, provided,
however, that the Company may not terminate the Agreement on (i) the sale by the
Company of substantially all of its assets to a single purchaser or to a group
of associated purchasers; (ii) the sale, exchange or other disposition, in one
transaction, of more than 50% of the outstanding shares of Company common stock;
(iii) a decision by the Company to terminate its business and liquidate its
assets; or (iv) the merger or consolidation of the Company in a transaction in
which the stockholders of the Company receive less than 50% of the outstanding
voting shares of the new or continuing corporation. Under the Agreement, "cause"
is deemed to include only Mr. Kostelni's (i) conviction of a felony; (ii)
material breach of the Agreement which remains uncured sixty days after notice
by the Company of such breach; or (iii) dishonesty directly related to the
performance of his duties.
The Agreement also may be terminated by the Company if Mr. Kostelni becomes
disabled for a period of more than twelve consecutive months, and shall be
terminated if Mr. Kostelni dies during the term of the Agreement. In the event
of termination of the Agreement as a result of Mr. Kostelni's death or
disability, the Company shall, within forty-five days after such termination,
pay to Mr. Kostelni or his estate, as the case may be, an amount equal to
six-months compensation or the balance due under the Agreement, whichever is
less. Additionally, in the event of Mr. Kostelni's death during the term of the
Agreement, the Company shall, within sixty days after the date of death, pay a
survivor's benefit of $5,000 to his widow or other survivor.
The Agreement also granted Mr. Kostelni a stock option to purchase 80,000
shares of the Company's common stock, at an exercise price of $4.50 per share,
which was the fair market value of the stock on the date of grant (January 22,
1997). The option was exercisable from the date of grant and had a minimum term
of ten years. On July 1, 1998, Mr. Kostelni voluntarily agreed to cancel the
unexercised option in order to expedite the Company's application to transfer
its common stock listing to The Nasdaq SmallCap Market. At the Annual Meeting
held on October 22, 1998 and adjourned to January 28, 1999, the stockholders
approved the issuance of a new option to Mr. Kostelni, exercisable effective
January 28, 1999, to purchase 72,000 shares of the Company's common stock, at an
exercise price of $4.50 per share. At the Annual Meeting of stockholders held on
October 28, 1999, the Company's stockholders approved the Bontex Inc. Key
Employee Stock Option Plan. As a condition to any grant of options under such
plan, Mr. Kostelni agreed on January 27, 2000, to cancel 39,030 previously
granted stock options to purchase shares of the Company's common stock at an
exercise price of $4.50 per share. On that same date, the Company granted to Mr.
Kostelni 24,250 options to purchase shares of the Company's common stock at a
price of $2.00 per share. The options are exercisable beginning six months after
the grant date and expire on January 27, 2010.
12
<PAGE>
Related Party Transactions
On February 16, 1999, the Company entered into a five-year contract with
Maxcomm, Inc. ("Maxcomm"), a Virginia corporation, wholly owned by Mr. J. H.
Kostelni, the son of Mr. James C. Kostelni. Pursuant to the contract, Maxcomm
will continue to develop a marketing relationship with certain identified target
companies for the purpose of developing and refining products for global
distribution by Bontex in the footwear, luggage and allied industries. In
consideration, Bontex will pay Maxcomm a monthly commission calculated based on
6% of all collected net sales made by Bontex with respect to the distribution of
products to the identified target companies. Bontex additionally agreed to
reimburse Maxcomm $75,000 for the costs and expenses it incurred in its ongoing
marketing efforts on Bontex's behalf.
On April 30, 2000, the Company entered into an employment agreement (the
"Agreement") with Patricia Surmonte Tischio. Pursuant to the Agreement, the
Company will pay Ms. Tischio as a part-time employee $2,750 per month during the
period February 1, 2000 through August 31, 2000 and $1,750 per month during the
period September 1, 2000 through October 31, 2004. The Agreement states that Ms.
Tischio will work no more than 15 hours per week. Under the Agreement, the
Company also delivered title to a 1992 Ford Taurus to Ms. Tischio and provides
her with term life insurance coverage in a decreasing amount equal to her
remaining employment payments due under the Agreement. The Agreement is also
a complete settlement and release of all claims by Ms. Tischio against Bontex
through the date of the Agreement. The Agreement provides that until November 1,
2004, Ms. Tischio may not work for a competitor of Bontex.
COMPENSATION COMMITTEE REPORT ON REPRICING OF OPTIONS
The following table sets forth information on options to purchase
shares of Company common stock that were canceled for James C. Kostelni on
January 27, 2000, and on options that were granted to him on the same date upon
different terms under the Bontex, Inc. Key Employee Stock Option Plan. The
options thereby granted under such plan shall expire on January 27, 2010. Such
plan provides that options granted thereunder will have an exercise price at the
greater of market value or $2.00 per share. As a condition to the grant of
options to him under such plan, he agreed to cancel certain stock options
previously granted to him. The basis for such cancellations and grants
under such plan was the Company's desire to attract, retain and motivate
executive officers of the Company upon whose judgment, initiative, and efforts
the Company depends by providing such persons with the opportunity to benefit
through the appreciation in the value of Company common stock though the grant
of an opportunity to acquire equity interests in the Company.
<TABLE>
<CAPTION>
Ten-Year Option/SAR Repricings
Length of
Securities original
underlying option term
number of Market price of Exercise price remaining
options/SARs stock at time of at time of New at date of
repriced or repricing or repricing or exercise repricing or
Name Date amended (#) (1) amendment ($) amendment ($) price ($) amendment
--------------------------- ------------ ------------------ ----------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
James C. Kostelni
Chairman of the Board of
Directors, President and
Chief Executive Officer 01/27/00 24,250 1.813 4.50 2.00 6.0 years
</TABLE>
13
<PAGE>
(1) On January 27, 2000, stock options to Mr. James C. Kostelni for 39,033
shares were canceled.
Report Submitted by the Compensation Committee of
the Board of Directors of the Company.
Robert J. Weeks, Chairman
Frank B. Mayorshi
William J. Binnie
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of Bontex, Inc. is responsible for recommending
to the Board of Directors the compensation policies applicable to all employees,
including the Company's executive officers. The Company's compensation policies
are based on the fundamental premise that the achievements of the Company result
from the coordinated efforts of all employees working toward common objectives.
The Compensation Committee consists of Robert J. Weeks, Chairman, Frank B.
Mayorshi and William J. Binnie, who are each independent directors of the
Company.
Compensation Philosophy and Objectives
The Company seeks to attract, motivate and retain the best possible
executive and other employee talent by providing competitive, performance-based
compensation programs that tie compensation to the Company's business objectives
and performance. The overall objective of this strategy is to align the
financial interests of the executive and other employees with those of the
stockholders by linking a substantial component of its executives' compensation
directly to Company performance.
The Committee recommends to the Board of Directors the compensation
policies that govern both the compensation opportunities available, as well as
the actual amounts paid, to Company officers. These policies are designed to
provide competitive levels of compensation that link incentive awards to the
Company's annual operating plan.
The Company's incentive bonus plans for executives and other employees are
designed to recognize individual and group performance. Target compensation
levels are intended to be competitive with those at other progressive companies.
Elements of the Fiscal 2000 Executive Compensation Program.
The Committee believes the interests of the stockholders will be best
served if the executive compensation program links a substantial component of
the cash compensation earned by executives to increases in stockholder value.
The current program therefore includes the following two principal components:
base salary and annual cash bonuses. There were no cash bonuses for fiscal 2000.
Base Salary
Base salaries for all executive officers, including the Chief Executive
Officer, are established by reference to defined salary ranges which have been
assigned to each position based upon salary opportunities provided by the
Company's competitors. Increases to individual base salaries are awarded based
on the officer's responsibilities, an evaluation of past and current
performance, seniority and experience, the Company's overall operating results,
position in range, the overall level of salary adjustments among the Company's
peers and current and projected economic conditions. Base salary is also a
reflection of the value of the job in the Company's operations.
14
<PAGE>
Chief Executive Officer (CEO) Compensation
The 2000 compensation paid to Mr. James C. Kostelni, the Company's Chief
Executive Officer, was recommended by the Compensation Committee based on its
review of independently produced CEO compensation surveys and consideration of
compensation paid by companies of similar size with global responsibilities in
comparable industries. The Compensation Committee recommended the CEO's
compensation to the Board of Directors after considering that Mr. James C.
Kostelni's on-going efforts to develop the Company's specifications sales
business, his progress in restructuring the Company and reducing costs, his
overall past and present performance and contributions to the Company, and the
relationship of the CEO's compensation to that of other key executives.
Report Submitted by the Compensation Committee
of the Board of Directors of the Company.
Robert J. Weeks, Chairman
Frank B. Mayorshi
William J. Binnie
STOCK PERFORMANCE
The following graph compares the yearly percentage change and the
cumulative total stockholder returns on the Company's common stock with the
cumulative return on the NASDAQ Market Index and the MG Paper Products Peer
Group Index for the five-year period commencing on June 30, 1995 and ending on
June 30, 2000. These comparisons assume the investment of $100 of the Company's
common stock and in each of the indices on June 30, 1995 and the reinvestment of
dividends.
[PERFORMANCE GRAPH APPEARS HERE.]
15
<PAGE>
Comparison of 5 Year Cumulative Total Return of Company,
Industry Index and Broad Market
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999 2000
--------- --------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
BONTEX, INC. $ 100.00 $ 111.54 $ 150.00 $ 88.46 $ 53.85 $ 57.69
MG PAPER PRODUCTS INDEX 100.00 105.74 134.28 129.68 148.09 124.99
NASDAQ MARKET INDEX 100.00 125.88 151.64 201.01 281.69 423.84
</TABLE>
The peer group comprises the largest companies domestically traded on the
NASDAQ market which operate in the Company's industry, paper products. None of
these companies compete directly with Bontex, Inc. The returns of each company
have been weighted according to their respective stock market capitalization for
purposes of arriving at a peer group average.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and any persons who own more than ten percent
of the Company's common stock, to file reports of ownership and changes in
ownership of Company common stock with the Securities and Exchange Commission.
Based on its review of the copies of such Forms furnished to it with respect to
fiscal 2000 and written representations from certain reporting persons that no
other reports are required, the Company believes that during fiscal 2000 one
report relating to one transaction inadvertently was filed late by each of Mr.
James C. Kostelni, Mr. Jeffrey C. Kostelni and Mr. Charles W. J. Kostelni.
INDEPENDENT AUDITORS
The firm of KPMG LLP audited the Company's consolidated financial
statements as of and for the year ended June 30, 2000 and has been reappointed
by the Board of Directors as independent auditors for the year ended June 30,
2001. A representative of KPMG LLP is expected to attend the meeting with the
opportunity to make a statement and/or respond to appropriate questions from
stockholders at the meeting.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the Company's proxy statement
for the 2000 Annual Meeting, stockholder proposals must be received by the
Corporate Secretary of Bontex, Inc., One Bontex Drive, Buena Vista, Virginia
24416-1500, no later than May 23, 2001. Stockholder proposals intended to be
presented at the 2001 Annual Meeting by means other than inclusion in the
Company's proxy statement must be received by the Corporate Secretary no later
than August 13, 2001.
OTHER MATTERS
The Board knows of no matters which may properly come before the Annual
Meeting other than the matters referred to in this Proxy Statement. If, however,
any matters properly come before the meeting, it is the intention of the persons
named in the accompanying proxy to vote such proxy in accordance with their best
judgment thereon.
BY THE ORDER OF THE BOARD OF DIRECTORS
Charles W. J. Kostelni
Corporate Secretary
September 28, 2000
The Company's Annual Report on Form 10-K, excluding exhibits, is available
without charge to any stockholder of record requesting the same. Written
requests should be addressed to the attention of the Corporate Controller,
Bontex, Inc., One Bontex Drive, Buena Vista, Virginia 24416-1500.
16
<PAGE>
[PROXY CARD APPEARS HERE.]
BONTEX, INC.
REVOCABLE PROXY
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
Proxy Solicited on Behalf of the Board of Directors of the Company for
Annual Meeting November 2, 2000
The undersigned hereby constitutes and appoints David A. Dugan and William
B. D'Surney, or either of them, his true and lawful agents and proxies, with
full power of substitution in each, to represent the undersigned and to vote as
designated below, all the shares of Common Stock held of record by the
undersigned on September 8, 2000, at the Annual Meeting of Stockholders of
Bontex, Inc. to be held at the Best Western Inn at Hunt Ridge, Willow Springs
Drive, Lexington, Virginia, on Thursday, November 2, 2000 at 10:30 A.M., Eastern
Daylight Saving Time, and at any adjournments thereof.
The undersigned acknowledges receipt of the Proxy Statement dated September 28,
2000.
This proxy must be signed Date
exactly as name appears hereon. --------------------------
-------------------------------------------------------------------------------
Stockholder sign above Co-holder (if any) sign above
With- For All
For hold Except
1. ELECTION OF DIRECTORS [ ] [ ] [ ]
Nominees: Four Class A directors for a three year term, James C.
Kostelni, Robert J. Weeks, Hadelin H. Mothet and William B. D'Surney.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
-------------------------------------------------------------------------------
2. In their discretion, upon other matters as may properly come before the
meeting.
Please check box if you plan to attend the November 2, 2000 annual
stockholders meeting. [ ]
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR Proposal 1. This proxy is revocable at any time prior to the
exercise hereof.
-------------------------------------------------------------------------------
Detach above card, sign, date and mail in postage paid envelope provided.
BONTEX, INC.
When shares are held by joint tenants, both should sign. Executors,
administrators, trustees, etc. should give full title as such. If executed on
behalf of a corporation, please sign full corporate name by duly authorized
officer.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
