<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
GIANT GROUP, LTD.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[GIANT GROUP, LTD. LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 1998
To the Stockholders of
GIANT GROUP, LTD.:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of GIANT GROUP, LTD. (the "Company") will be held at Fess Parker's
Double Tree Resort, 633 E. Cabrillo Blvd., Santa Barbara, California, on June
10, 1998 at 5:00 p.m. (local time), for the following purposes:
(1) To elect a Board of five directors;
(2) To ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors for fiscal 1998; and
(3) To transact such other business as may properly come before the Meeting
and any adjournment(s) or postponement(s) thereof.
A Proxy Statement describing matters to be considered at the Meeting is
attached to this Notice. Only stockholders of record at the close of business on
April 30, 1998 will be entitled to notice of and to vote at the Meeting.
By Order of the Board of Directors
/s/ WILLIAM H. PENNINGTON
WILLIAM H. PENNINGTON, Secretary
Los Angeles, California
April 30, 1998
IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE MARK, DATE
AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE SELF-ADDRESSED, POSTAGE PREPAID
ENVELOPE WHICH HAS BEEN PROVIDED FOR YOUR CONVENIENCE. IN THE EVENT YOU ATTEND
THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE> 3
GIANT GROUP, LTD.
9000 SUNSET BOULEVARD
16TH FLOOR
LOS ANGELES, CALIFORNIA 90069
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 1998
GENERAL
This Proxy Statement and the accompanying proxy card are furnished in
connection with the solicitation of proxies by the Board of Directors of GIANT
GROUP, LTD., a Delaware corporation (the "Company"), for use at its Annual
Meeting of Stockholders (the "Meeting") and any adjournment(s) or
postponement(s) thereof. The Meeting is to be held on June 10, 1998 at 5:00 p.m.
at Fess Parker's Double Tree Resort, 633 E. Cabrillo Blvd., Santa Barbara,
California. The approximate date of the mailing of this Proxy Statement and
accompanying proxy card to the Company's stockholders is May 4, 1998.
In an effort to have as large a representation at the Meeting as possible,
proxy solicitation may be made personally or by telephone or telegram by
officers or employees of the Company, without added compensation. The Company
will reimburse brokers, banks and other custodians, nominees and fiduciaries for
their expenses in sending proxy materials to beneficial owners.
RECORD DATE AND VOTING SECURITIES
The close of business on April 30, 1998 (the "Record Date") has been fixed
as the Record Date for the determination of the stockholders of the Company
entitled to notice of and to vote at the Meeting. As of the Record Date, the
Company had outstanding 3,180,655 shares of Common Stock, par value $.01 per
share (the "Common Stock"). Each share of Common Stock entitles the record
holder thereof to one vote on all matters properly coming before the Meeting.
PRINCIPAL HOLDERS
The following lists the only stockholders who, to the knowledge of
management of the Company, based upon filings with the Securities and Exchange
Commission (the "SEC"), are the beneficial owners of more than 5% of the Common
Stock:
<TABLE>
<CAPTION>
NAME & ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS(2)
----------------- ----------------------- ----------
<S> <C> <C>
Burt Sugarman............................................... 2,988,672 shares(3) 60.0%
9000 Sunset Boulevard,
16th Floor
Los Angeles, CA 90069
Dimensional Fund Advisors, Inc.............................. 298,000 shares(4) 9.4%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
David Gotterer.............................................. 215,875 shares(5) 6.6%
c/o Mason & Company, LLP
400 Park Avenue
New York, New York 10022
Kennedy Capital Management, Inc............................. 172,800 shares(6) 5.4%
10829 Olive Blvd.
St. Louis, MO 63141
</TABLE>
<PAGE> 4
- ---------------
(1) Under the rules of the SEC a person is deemed to be the beneficial owner of
a security if such person has or shares the power to vote or to direct the
voting of such security, or the power to dispose or to direct the
disposition of such security. A person is also deemed to be the beneficial
owner of any securities which that person has the right to acquire
beneficial ownership within 60 days as well as any securities owned by such
person's spouse, children or other relatives living in the same house.
Unless otherwise indicated, the named person has sole voting and investment
power with respect to the shares held by them.
(2) Computed on the basis of 3,180,655 shares of Common Stock issued and
outstanding as of the Record Date plus stock options of each reporting
person currently exercisable or exercisable within 60 days of the Record
Date.
(3) Includes 1,799,202 shares underlying presently exercisable stock options.
Does not include 109,050 shares owned by Mr. Sugarman's spouse as to which
he disclaims beneficial ownership.
(4) As reported in a Schedule 13G dated February 6, 1998, Dimensional Fund
Advisors, Inc. ("Dimensional"), a registered investment advisor, is deemed
to have beneficial ownership of 298,000 shares of Common Stock as of
December 31, 1997, all of which shares are held in portfolios of DFA
Investment Dimensions Group, Inc., a registered open-end investment company,
or in series of the DFA Investment Trust Company, a Delaware business trust,
or the DFA Group Trust and DFA Participation Group Trust, investment
vehicles for qualified employee benefit plans, all of which Dimensional
serves as investment manager. Dimensional disclaims beneficial ownership of
all such shares.
(5) Includes 103,375 shares that Mr. Gotterer may purchase under presently
exercisable stock options, but excludes 63,375 shares underlying options
held by Mr. Gotterer, as to which he disclaims beneficial ownership since a
business partner is entitled to the beneficial ownership of such shares upon
any exercise of such options.
(6) As reported in a Schedule 13G dated February 10, 1998, Kennedy Capital
Management, Inc., a registered investment advisor, is deemed to have
beneficial ownership of 172,800 shares of Common Stock as of December 31,
1997.
2
<PAGE> 5
ELECTION OF DIRECTORS
[PROPOSAL NO. 1]
NOMINEES
At the Meeting, five directors are to be elected to serve until the Annual
Meeting of Stockholders in 1999 and until their successors are elected and
qualified. The Board of Directors has nominated Burt Sugarman, David Gotterer,
Terry Christensen, David Malcolm and Jeffrey Rosenthal.
The Board of Directors has no reason to expect that any of the nominees
will be unable to stand for election. In the event that a vacancy among the
original nominees occurs prior to the Meeting, the proxies will be voted for a
substitute nominee or nominees named by the Board of Directors and for the
remaining nominees.
The following table sets forth information as of the Record Date about each
nominee for director and the ownership of equity securities by all directors and
executive officers of the Company as a group:
<TABLE>
<CAPTION>
SHARES AND
PERCENT OF
DIRECTOR COMMON STOCK
AGE SINCE OWNED(1)
--- -------- -----------------
<S> <C> <C> <C>
BURT SUGARMAN............................................... 59 1982 2,988,672 shs.(2)
Mr. Sugarman has been Chairman of the Board of the Company 60.0%
since 1983, and President and Chief Executive Officer
since May 1985. Mr. Sugarman was Chairman of the Board of
Rally's Hamburgers, Inc. (NASDAQ) ("Rally's"), an operator
and franchisor of double drive-through hamburger
restaurants in which the Company has an equity investment,
from November 1994 through October 1997, having served as
its Chairman of the Board and Chief Executive Officer from
1990 through February 1994. He remains a director of
Rally's and is also a Director of Checkers Drive-In
Restaurants, Inc. (NASDAQ) ("Checkers").
DAVID GOTTERER.............................................. 69 1984 215,875 shs.(3)
Mr. Gotterer has been Vice Chairman of the Company since May 6.6%
1986. He has been a senior partner in the accounting firm
of Mason & Company, LLP, New York, New York, for more than
the past five years. He is a Director of Rally's.
TERRY CHRISTENSEN........................................... 57 1994 65,000 shs.(4)
Mr. Christensen has been a partner in the law firm 2.0%
Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro,
LLP, Los Angeles, California, for more than the last five
years. He is a Director of MGM Grand, Inc. (New York Stock
Exchange), Rally's and Checkers.
DAVID MALCOLM............................................... 45 1996 25,000 shs.(5)
Mr. Malcolm has been Chairman of the Board of Suncoast *
Financial Mortgage Corporation, a mortgage banking and
real estate development company, since 1978, President of
West Coast Restaurant Enterprises, an owner operator of 15
Rally's restaurants, since February 1995, and Vice
President of Artemis Capital Group, an investment banking
firm, since November 1996. Mr. Malcolm also served as
Executive Vice President of Grigsby Brandford & Co., Inc.,
an investment banking firm, from February 1994 to October,
1996. Mr. Malcolm is also a Commissioner on the San Diego
Unified Port District and a Commissioner on the California
Commission on Judicial Performance.
JEFFREY ROSENTHAL........................................... 40 1997 20,000 shs.(6)
Mr. Rosenthal has served as Chairman and Chief Executive *
Officer of TV Fanfare Publications, Inc., an international
advertising company with offices in 40 cities and four
countries, since 1984.
All Directors and Executive Officers as a group (6 3,319,547 shs.(7)
persons)..................................................
64.0%
</TABLE>
3
<PAGE> 6
- ---------------
* indicates less than 1%
(1) Unless otherwise indicated, the beneficial owner has both sole voting and
sole investment power with respect to his shares. Computed on the basis of
3,180,655 shares of Common Stock outstanding as of the Record Date plus
stock options of each reporting person currently exercisable or exercisable
within 60 days of the Record Date.
(2) Includes 1,799,202 shares underlying presently exercisable stock options.
Does not include 109,050 shares of Common Stock owned by Mr. Sugarman's
spouse, as to which shares he disclaims beneficial ownership.
(3) Includes 103,375 shares that Mr. Gotterer may purchase under presently
exercisable stock options, but excludes 63,375 shares underlying options
held by Mr. Gotterer, as to which shares he disclaims beneficial ownership
since a business partner is entitled to the beneficial ownership of such
shares upon any exercise of such options.
(4) Includes 60,000 shares underlying presently exercisable stock options.
(5) Includes 20,000 shares underlying presently exercisable stock options.
(6) Includes 15,000 shares underlying presently exercisable stock options.
(7) This total includes 2,002,577 shares which such executive officers and
directors may acquire upon the exercise of presently exercisable stock
options.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the 1997 fiscal year the Board of Directors of the Company met on
five occasions. Each of the directors who served as a director in 1997 attended
all meetings of the Board of Directors and the meetings held by all committees
of the Board on which such director served, except that David Malcolm missed the
Audit Committee meeting.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an Executive Committee, a Compensation Committee, an Option
Committee, an Audit Committee and an Incentive Compensation Committee. The
members of each Committee are appointed by the Board of Directors for a term
beginning after the first regular meeting of the Board of Directors following
the Annual Meeting of Stockholders and serve until their respective successors
are elected and qualified.
The Executive Committee, consisting of Messrs. Gotterer and Christensen,
did not meet formally during 1997, but its members consulted regularly on an
informal basis in connection with the functions of this Committee. This
Committee was established to act in the place of the Board between Board
meetings.
The Compensation Committee presently consists of Messrs. Gotterer and
Christensen. The Compensation Committee did not meet formally during 1997.
The Option Committee presently consists of Messrs. Gotterer and
Christensen. The Option Committee did not meet formally during 1997. The Option
Committee administers the Company's stock option plans.
The Audit Committee is responsible for exercising such supervisory control
over the internal auditing and accounting procedures, practices and personnel of
the Company as the Audit Committee deems necessary or advisable and makes
recommendations annually to the Board of Directors concerning the appointment of
the Company's independent auditors for the ensuing fiscal year. The members of
the Audit Committee are Messrs. Christensen and Malcolm. The Audit Committee met
on one occasion during 1997, and its members consulted regularly on an informal
basis in connection with functions of this Committee.
The Incentive Compensation Committee presently consists of Messrs. Malcolm
and Rosenthal. The Incentive Compensation Committee met on one occasion in 1997.
There is no standing nominating committee or other committee performing
similar functions.
4
<PAGE> 7
COMPENSATION OF DIRECTORS
Non-employee directors of the Company are compensated at a rate of $10,000
per annum, plus $500 for each meeting of the Board of Directors attended.
Non-employee directors also participate in the Company's 1996 Stock Option Plan
for Non-Employee Directors (the "Director Plan"). Pursuant to the Director Plan
each non-employee director receives 5,000 options on each May 20 or, if a
director was not a director on May 20, 1996 (the adoption date of the Director
Plan), on each anniversary of their election to the Board of Directors. In
addition, each director who is appointed to the Executive Committee will receive
5,000 options upon their appointment and 5,000 options on each anniversary
thereof. Each option has a five year term and is immediately exercisable. Prior
to 1998 each non-employee director received annual grants of 10,000 options and
an additional 10,000 options if such non-employee director was a member of the
Executive Committee. The exercise price of each option is the fair market price
of the options on the date of grant. Members of the Audit Committee are
compensated for their services thereon at the rate of $250 per meeting attended.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company for the
three years ended December 31, 1997, 1996, and 1995 of those persons who were
(i) the Chief Executive Officer and (ii) executive officers of the Company
during 1997 and whose cash compensation exceeded $100,000 for services performed
by such persons for the Company during 1997 (collectively, the "Named
Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION AWARDS
----------------------------------------- ----------------------------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION STOCK OPTION/SARS COMPENSATION
NAME & PRINCIPAL POSITION YEAR $ $ $ AWARD(S) # $
- ------------------------- ---- --------- ----- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Burt Sugarman........... 1997 1,000,000 -0- 54,747(1) -0- -0- 28,889(3)
Chairman of the Board 1996 1,000,000 -0- 51,548(1) -0- 200,000 25,000(3)
President and Chief 1995 1,000,000 -0- 26,774(1) -0- 1,899,202(2) 25,000(3)
Executive Officer
Cathy L. Wood........... 1997(4) 132,980 -0- -0- -0- -0- -0-
Vice President, Secretary 1996 199,194 -0- -0- -0- -0- -0-
and Chief Financial
Officer 1995(5) 166,123 -0- -0- -0- 55,000(6) -0-
</TABLE>
- ---------------
(1) Amounts represent the value of use of the Company's airplane and automobile.
(2) 1,899,202 options held by Mr. Sugarman exercisable at $6.33 per share and
expiring in 1996 were canceled and an identical number of new options were
issued to him with an exercise price of $6.75, which was the current market
price of the Common Stock at the time such options were granted.
(3) Represents amounts paid to Mr. Sugarman by Rally's for services as Chairman
and Chief Executive Officer of Rally's. Mr. Sugarman served as Chairman of
Rally's until October 1997.
(4) Ms. Wood left the Company in July 1997.
(5) Ms. Wood joined the Company in January 1995.
(6) Ms. Wood was granted 45,000 options in March 1995 and 10,000 options in July
1995, which expired in July 1997.
EMPLOYMENT CONTRACTS
Mr. Sugarman is employed as Chairman of the Board, President and Chief
Executive Officer of the Company pursuant to an employment agreement expiring on
December 31, 2000. The term of the agreement will be automatically extended for
successive two-year periods commencing January 1, 2001, unless the Company or
Mr. Sugarman notifies the other of its election not to extend the term of the
agreement one year
5
<PAGE> 8
prior to the expiration of the term. The agreement provides that Mr. Sugarman is
to receive an annual base salary of $1,000,000, an annual bonus in an amount
determined from year to year by the Compensation Committee of the Board of
Directors, at its discretion, and certain additional benefits. The employment
agreement is terminable prior to the expiration of the term of the Agreement (1)
by the Company for cause (as defined therein) and (2) by Mr. Sugarman (a) for
cause (as defined therein), (b) at any time for any reason, after January 1,
1999 or (c) if Mr. Sugarman ceases to own or control at least 10% of the Common
Stock of the Company. Should the employment agreement be terminated by the
Company without cause or by Mr. Sugarman for cause, Mr. Sugarman would be
entitled to (1) continuation of all health insurance benefits through the
expiration of the term of the agreement, or for 24 months from termination,
whichever period is longer and (2) a lump sum payment in an amount equal to the
greater of (a) two times the annual base salary, and (b) the amount which would
have been payable throughout the remainder of the term of the agreement,
provided that if Mr. Sugarman is terminated within one year following a change
in ownership of the Company (as defined therein), Mr. Sugarman will receive a
lump sum payment equal to 2.99 times the average annual compensation paid to Mr.
Sugarman by the Company during the five years prior to such change in ownership.
In the event of Mr. Sugarman's death or disability he, (or his estate) would be
entitled to receive a lump sum payment equal to the greater of (a) two times the
annual base salary and (b) the amount which would have been payable throughout
the remainder of the term of the agreement. In the event of Mr. Sugarman's
death, the Company would also be obligated to continue all health insurance
benefits for Mr. Sugarman's immediate family for two years. Upon the expiration
of the agreement, the Company is obligated to pay to Mr. Sugarman a lump sum
equal to two times the annual base salary. Pursuant to the employment agreement,
Mr. Sugarman has agreed during the term of the agreement, not to render services
to, or plan for or organize, a business which is materially competitive with or
similar to the business of the Company or any of its subsidiaries.
OPTION PLANS
The Company has a 1985 Non-Qualified Stock Option Plan (the "1985 Stock
Option Plan"). The 1985 Stock Option Plan provides for the grant of options to
purchase 3,000,000 shares of Common Stock; provided that, pursuant to the terms
of the 1985 Stock Option Plan, no further grants may be made under the plan. As
of December 31, 1997, options to purchase 1,750,952 shares were outstanding, and
options for 307,500 shares had been exercised.
The Company has a 1996 Employee Stock Option Plan (the "1996 Stock Option
Plan") and the Director Plan. The 1996 Stock Option Plan presently provides for
the grant of options to purchase 500,000 shares of Common Stock to officers and
key management personnel of the Company. As of December 31, 1997, options to
purchase 215,000 shares were outstanding and no options had been exercised. The
Director Plan presently provides for the grant of 400,000 shares of Common
Stock. As of December 31, 1997, options to purchase 110,000 shares were
outstanding and no options had been exercised.
FISCAL YEAR END OPTION VALUE
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED IN
NUMBER OF UNEXERCISED THE MONEY OPTIONS AT
SHARES OPTIONS AT DECEMBER 31,
ACQUIRED DECEMBER 31, 1997 1997(1)
ON VALUE --------------------------- --------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE
---- -------- -------- ----------- ------------- --------------------
<S> <C> <C> <C> <C> <C>
Burt Sugarman........................ -0- -0- 1,799,202 -0- $399,801
</TABLE>
- ---------------
(1) Based upon the closing price of the Common Stock on December 31, 1997 of
$7.00 minus the option exercise price of $6.75 per share for 1,599,202
shares.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997 the Compensation Committee and Option Committee of the Board of
Directors consisted of David Gotterer and Terry Christensen. David Gotterer is
Vice Chairman of the Company and a Senior
6
<PAGE> 9
Partner in the accounting firm of Mason & Company, LLP, which received $81,741
from the Company for rendering consulting, financial and accounting services to
the Company during 1997. Terry Christensen is a partner in the law firm of
Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP, which represents
the Company and Rally's in certain corporate and litigation matters. Both Mr.
Gotterer and Mr. Christensen are directors of Rally's.
COMPENSATION COMMITTEE REPORT
In 1997 the Compensation Committee and Option Committee of the Board of
Directors consisted of Terry Christensen and David Gotterer. The Compensation
Committee is responsible for developing and making recommendations to the
Company with respect to executive officer compensation policies, addressing such
matters as salaries, bonuses, incentive plans, benefits and overall
compensation. The Compensation Committee also determines the compensation to be
paid to the Chief Executive Officer and each of the other executive officers of
the Company. The Compensation Committee, however, does not administer the
Company's 1997 Incentive Compensation Plan for Executive Officers (the
"Incentive Plan"). The Incentive Plan is administered by the Incentive
Compensation Committee. No amounts were earned under the Incentive Plan in 1997.
The objectives of the Compensation Committee in determining the type and
amount of executive officer compensation are to provide a level of compensation
which allows the Company to attract and retain competent executives. The
Compensation Committee further believes that the Company's compensation programs
should provide personnel with a financial interest in the Company similar to the
interests of the Company's stockholders and that there should be a correlation
between the performance of the Company and individual performance and
compensation. During 1997 the Compensation Committee did not award any bonuses
to either of the Named Executives.
Mr. Sugarman, the Chief Executive Officer of the Company is eligible to
participate in the same compensation plans available to the Company's other
executives. In 1997, Mr. Sugarman received base compensation of $1,000,000
pursuant to the terms of his employment agreement. The Compensation Committee
did not award Mr. Sugarman a discretionary bonus for 1997. In February 1997, the
Company amended Mr. Sugarman's employment agreement to, among other things,
extend the term of the agreement, provide for certain payments to Mr. Sugarman
upon a change in control of the Company and, as approved by the stockholders,
permit Mr. Sugarman (or his estate) to exercise options granted to him pursuant
to the 1985 Stock Option Plan and the 1996 Stock Option Plan for up to 18 months
following his death or disability. The members of the Compensation Committee
approved the amendment in order to ensure that Mr. Sugarman's services would be
available to the Company as the Company continues to pursue equity investment
opportunities.
DAVID GOTTERER
TERRY CHRISTENSEN
7
<PAGE> 10
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the Company's
cumulative total stockholder return on the Common Stock for the five years ended
December 31, 1997, based upon the market price of the Common Stock as reported
on the New York Stock Exchange with the cumulative total return (and assuming
reinvestment of dividends), with (i) the NYSE Stock Index and (ii) an index of a
group of companies in the fast food industry selected by the Company, consisting
of CKE Restaurants, Inc., Flagstar Companies, Inc. (1992 - 1996), Krystal
Company (1992 - 1996), Checkers, Foodmaker, Inc., and Sonic Corporation.
Flagstar Companies, Inc. is excluded from 1997 because it is no longer listed on
any stock exchange and Krystal Company is excluded from 1997 because it was
acquired by Port Royal Holdings in 1997 which is not listed on any stock
exchange. The Company, through its equity investment in Rally's, is involved in
the fast food industry.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN AMONG GIANT GROUP, LTD.
NYSE STOCK MARKET AND PEER GROUP INDEX
TOTAL RETURN TO SHAREHOLDERS
<TABLE>
<CAPTION>
MEASUREMENT PERIOD GIANT GROUP
(FISCAL YEAR COVERED) LTD. PEER GROUP BROAD MARKET
<S> <C> <C> <C>
1992 100 100 100
1993 94.51 83.83 113.54
1994 59.34 35.72 111.33
1995 80.22 51.66 144.36
1996 73.63 90.12 173.9
1997 61.54 137.94 228.78
</TABLE>
- ---------------
(1) For 1997, excludes Flagstar Companies, Inc. which is no longer listed on any
stock exchange and Krystal Company which was acquired in 1997 by Port Royal
Holding, a company which is not listed on any stock exchange.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
David Gotterer, Vice Chairman and a Director of the Company and of Rally's,
is a Senior Partner in the accounting firm of Mason & Company, LLP, which
received $81,741 from the Company for rendering consulting, financial and
accounting services to the Company during 1997.
8
<PAGE> 11
RATIFICATION OF AUDITORS
[PROPOSAL NO. 2]
Arthur Andersen LLP has been selected by the Board of Directors to serve as
the independent auditors for the Company for the year ending December 31, 1998.
The firm has served as the Company's accountants since 1996. A representative of
Arthur Andersen LLP is expected to be available by telephone and will be given
the opportunity to make a statement if he or she so desires and to respond to
appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR FISCAL 1998.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC and provide the Company with
copies of such reports. Based solely on its review of the copies of such forms
received by it, or written representations from certain reporting persons that
no Forms 5 were required for those persons, the Company believes that, during
the past fiscal year all filing requirements applicable to its executive
officers, directors, and greater than ten-percent stockholders were complied
with, with the exception that Jeffrey Rosenthal, a director of the Company,
inadvertently failed to report the purchase of 2,000 shares in June 1997 and did
not file a Form 5 with respect to options granted in 1997. Both transactions
were subsequently reported. Also, William H. Pennington, an executive officer of
the Company, inadvertently did not file a Form 3 within 10 days of his becoming
an executive officer of the Company. This form was subsequently filed.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1999 Annual Meeting
must be received by the Company for inclusion in its proxy statement and form of
proxy by January 4, 1999. To assure that a stockholder's proposal is included in
the proxy statement and form of proxy, it will be necessary for the stockholder
to comply with the regulations of the SEC governing inclusion of such proposals
in such documents. In addition, stockholders may directly nominate persons for
director only by complying with the following procedure set forth in the
Company's By-Laws; the stockholder must submit the names of such persons in
writing to the Secretary of the Company not less than 70 days nor more than 90
days prior to the date of the preceding year's annual meeting. The nominations
must be accompanied by all information relating to such person that is required
to be disclosed in solicitations of proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended, and the name, record address, and class and
number of shares of the Company owned by the stockholder making the nomination.
A stockholder may properly bring business before the Annual Meeting of
Stockholders only by complying with the following procedure set forth in the
Company's By-Laws; the stockholder must submit to the Secretary of the Company,
not less than 70 days nor more than 90 days prior to the date of the preceding
year's annual meeting, a written statement describing the business at the Annual
Meeting, the name, record address, and class and number of shares of the Company
owned by the stockholder making the submission, and a description of any
material interest of the stockholder in such business.
Any such proposal should be communicated in writing to the Secretary of the
Company at 9000 Sunset Boulevard, 16th Floor, Los Angeles, California, 90069.
VOTING PROCEDURES
At the Meeting, stockholders will be requested to act upon the matters set
forth in this Proxy Statement. If you are not present at the Meeting, your
shares can be voted only when represented by proxy. The shares represented by
your proxy will be voted in accordance with your directions if the proxy is
properly signed and
9
<PAGE> 12
returned to the Company at or before the Meeting. If no instructions are
specified in the proxy with respect to any proposal, the shares represented
thereby will be voted for the nominees for the Board of Directors listed in this
Proxy Statement and for the ratification of Arthur Andersen, LLP as independent
auditors for the Company. If any other matters shall properly come before the
Meeting, the enclosed proxy will be voted in accordance with the best judgment
of the persons voting such proxy.
A proxy may be revoked at any time prior to it being voted at the Meeting
by delivering to the Secretary of the Company a signed writing revoking the
proxy or a duly executed proxy bearing a later date, or by appearing and voting
in person at the Meeting. The mere presence at the Meeting of a person
appointing a proxy does not revoke the appointment. Please note that it is
important to date your proxy because the last dated proxy will revoke any
earlier dated proxies and will be the one that is voted at the Meeting.
A majority of the outstanding shares of Common Stock represented at the
Meeting, in person or by proxy, will constitute a quorum. The votes of
stockholders present in person or represented by proxy at the Meeting will be
tabulated by an inspector of election appointed by the Company. The five
nominees for director of the Company who receive the greatest number of votes
cast by stockholders present in person or represented by proxy at the Meeting
and entitled to vote thereon will be elected directors of the Company. The
affirmative vote of the holders of a majority of the shares of Common Stock
represented at the Meeting is required to approve proposal two. Abstentions will
have no effect on the outcome of the vote for the election of directors, but
will have the effect of being cast against proposal two. Broker "non-votes" will
have no effect on proposal two.
OTHER BUSINESS
The Board of Directors does not know of any matters to be presented for
action at the Meeting other than as set forth in this Proxy Statement. If any
other business should properly come before the Meeting, the persons named in the
proxy intend to vote thereon with their best judgment.
The Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1997 (which contains a copy of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1997) accompanies this Proxy
Statement.
THE COMPANY'S 1997 ANNUAL REPORT ON FORM 10-K (INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULE THERETO) WILL BE PROVIDED WITHOUT CHARGE TO EACH
STOCKHOLDER UPON WRITTEN REQUEST. EACH REQUEST MUST SET FORTH A GOOD FAITH
REPRESENTATION THAT, AS OF APRIL 30, 1998, THE RECORD DATE FOR THE MEETING, THE
PERSON MAKING THE REQUEST WAS THE BENEFICIAL OWNER OF SHARES OF COMMON STOCK OF
THE COMPANY. THE REQUEST SHOULD BE DIRECTED TO: WILLIAM H. PENNINGTON,
SECRETARY, GIANT GROUP, LTD., 9000 SUNSET BOULEVARD, 16TH FLOOR, LOS ANGELES,
CALIFORNIA 90069, TELEPHONE (310) 273-5678.
By Order of the Board of Directors
/s/ WILLIAM H. PENNINGTON
WILLIAM H. PENNINGTON, Secretary
10
<PAGE> 13
GIANT GROUP, LTD.
P
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R ANNUAL MEETING OF STOCKHOLDERS -- JUNE 10, 1998
O The undersigned hereby appoints Burt Sugarman and David Gotterer, and each
of them, proxies with power of substitution each, for and in the name of the
X undersigned to vote all shares of Common Stock of GIANT GROUP, LTD., a
Delaware corporation (the "Company"), that the undersigned would be entitled
Y to vote at the Company's 1998 Annual Meeting of Stockholders (the
"Meeting"), and at any adjournments thereof, upon the matters set forth in
the Notice of the Meeting as stated hereon, hereby revoking any proxy
heretofore given. In their discretion, the proxies are further authorized to
vote upon such other business as may properly come before the Meeting.
The undersigned acknowledges receipt of the Notice of the Meeting and the
accompanying Proxy Statement and Annual Report.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 14
- -------------------------------------------------------------------------------
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2. Please mark
your vote as [X]
indicated in
this example
FOR WITHHELD
1. Election of Directors Below. [ ] [ ]
Nominees: Terry Christensen, David Getterer, David Malcolm,
Jeff Rosenthal, Burt Sugarman
For, except vote withheld from the following nominees(s):
- ---------------------------------------------------------
FOR WITHHELD ABSTAIN
2. Ratification of the appointment of Arthur [ ] [ ] [ ]
Andersen LLP as independent auditors.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTORS LISTED ABOVE, FOR
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS
AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE
MEETING.
Signature: Signature: Date:
-------------------- -------------------- --------------
Note: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
