<PAGE>
SCHEDULE 14A INFORMATION
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:
[_CONFIDENTIAL,]FOR USE OF THE
[_]Preliminary Proxy Statement COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
AMERICAN BILTRITE INC.
-----------------------------------------------------
(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)(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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
AMERICAN BILTRITE INC.
57 RIVER STREET
WELLESLEY HILLS, MASSACHUSETTS 02181
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
MAY 14, 1998
----------------
To the Stockholders of
American Biltrite Inc.:
Notice is hereby given that the Annual Meeting of the Stockholders of
American Biltrite Inc. will be held in Conference Room 6, 8th Floor, Fleet
Bank, 1 Federal Street, Boston, Massachusetts, on Thursday, May 14, 1998 at
9:00 A.M. Boston time, for the following purposes:
1. To elect three directors who will hold office until the Annual Meeting
of Stockholders in 2001 and until their successors are duly elected and
qualified.
2. To transact any other business that may properly come before the meeting
or any adjournment thereof.
The close of business on March 26, 1998 has been fixed as the record date
for determining the stockholders entitled to notice of, and to vote at, the
Annual Meeting and any adjournment thereof.
It is desirable that the stock of the Company should be represented as fully
as possible at the Annual Meeting. Please sign, date and return the
accompanying proxy in the enclosed envelope, which requires no postage if
mailed in the United States. If you should attend the Annual Meeting, you may
vote in person, if you wish, whether or not you have sent in your proxy.
By Order of The Board of Directors
Henry W. Winkleman
Secretary
Wellesley Hills, Massachusetts
April 10, 1998
<PAGE>
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation, by
and on behalf of the Board of Directors (the "Board") of American Biltrite
Inc. (the "Company"), of proxies to be used in voting at the Annual Meeting of
Stockholders (the "Meeting") to be held on May 14, 1998 in Conference Room 6,
8th Floor, Fleet Bank, 1 Federal Street, Boston, Massachusetts at 9:00 A.M.
Boston time, and at any adjournments thereof. The principal executive offices
of the Company are located at 57 River Street, Wellesley Hills, Massachusetts
02181. The cost of preparing and mailing the notice, proxy statement and proxy
will be paid by the Company. It is expected that the solicitation of proxies
will be by the Company by mail only, but may also be made by overnight
delivery service, facsimile, personal interview, mail, telephone or telegraph
by directors, officers or employees of the Company. The Company will request
banks and brokers holding stock in their names or custody, or in the names of
nominees for others, to forward copies of the proxy material to those persons
for whom they hold such stock and to request authority for the execution of
proxies and, upon request, will reimburse such banks and brokers for their
out-of-pocket expenses incurred in connection therewith. This proxy statement
and the accompanying proxy card were first mailed to stockholders on or about
April 10, 1998.
Proxies in the accompanying form, properly executed, duly returned to the
Company and not revoked, will be voted at the Meeting (including
adjournments), and where a specification is made by means of the ballot
provided in the proxies regarding any matter presented to the meeting, such
proxies will be voted in accordance with such specification.
Any stockholder giving a proxy in the accompanying form retains the power to
revoke it at any time prior to the exercise of the powers conferred thereby by
filing a later dated proxy or by notice of revocation filed in writing with
the Secretary of the Company. Attendance at the Meeting in person will not be
deemed to revoke the proxy unless the stockholder affirmatively indicates at
the Meeting an intention to vote the shares in person.
On March 26, 1998, there were issued and outstanding 3,637,308 shares of the
Company's Common Stock, par value $.01 per share (the "Common Stock"). Only
stockholders of record at the close of business on that date are entitled to
notice of and to vote at the Meeting or any adjournment thereof, and those
entitled to vote will have one vote for each share held.
A quorum for the consideration of any question at the Meeting will consist
of a majority in interest of all stock issued and outstanding and entitled to
vote upon that question. A plurality of the shares represented and voting at
the Meeting is required to elect directors. On all other matters, a majority
of the shares represented and voting at the meeting is required to decide the
question. Under applicable Delaware law, abstentions and broker non-votes will
be disregarded and have no effect on the outcome of the election.
A copy of the Annual Report of the Company for the fiscal year ended
December 31, 1997 is enclosed with this proxy statement.
<PAGE>
ELECTION OF DIRECTORS
The Board is divided into three classes, the terms of which expire at
successive Annual Meetings of Stockholders. Stockholders are being asked to
elect three Class II directors at the Meeting. The accompanying proxy will be
voted for the election of the nominees named in Class II below unless
otherwise instructed. The term of those Class II directors elected at the
Meeting will expire at the Annual Meeting of Stockholders held in 2001 upon
the election and qualification of their successors. Should any person named
below be unable or unwilling to serve as a director, persons named as proxies
intend to vote for such other person as management may recommend. Each nominee
is currently a director of the Company.
The following table sets forth the name, age and principal occupation of
each of the nominees for election as director and each current director in the
classes continuing in office, together with a statement as to the period
during which he or she has served as a director of the Company.
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE AND EXPIRATION OF
NAME (AGE) OTHER DIRECTORSHIPS PRESENT TERM
---------- ----------------------- -------------
<S> <C> <C>
NOMINEES
- --------
CLASS II
John C. Garrels, 3rd Former Director, Global Banking, The First 1998
(58)................... National Bank of Boston, a national banking
association. Director of the Company since 1977.
James S. Marcus (68).... Limited Partner, Goldman, Sachs & Co., 1998
investment bankers. Director of the Company
since 1971. Director of Kellwood Company.
Roger S. Marcus (52).... Chairman of the Board and Chief Executive 1998
Officer of the Company. Director of the Company
since 1981. Chairman of the Board of Directors
and Chief Executive Officer of Congoleum
Corporation.
INCUMBENT DIRECTORS
- -------------------
CLASS I
Gilbert K. Gailius (66). Vice President and Chief Financial Officer of 2000
the Company. Director of the Company since 1983.
Richard G. Marcus (50).. President and Chief Operating Officer of the 2000
Company. Director of the Company since 1982.
Vice Chairman of the Board of Directors of
Congoleum Corporation.
Frederick H. Joseph Chairman of Clovebrook Capital Corp. since 1994. 2000
(61)................... Prior to 1994 served as a private financial
consultant. Director of the Company since 1997.
CLASS III
Mark N. Kaplan, Esq. Partner, Skadden, Arps, Slate, Meagher & Flom 1999
(68)................... LLP, attorneys. Director of the Company since
1982. Director of: Grey Advertising Inc.; DRS
Technologies Inc.; REFAC Technology Development
Corporation; Volt Information Sciences, Inc.;
Movie Fone, Inc.; and Congoleum Corporation.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE AND EXPIRATION OF
NAME (AGE) OTHER DIRECTORSHIPS PRESENT TERM
---------- ----------------------- -------------
<S> <C> <C>
Natalie S. Marcus (81).. Investor. Director of the Company since 1992. 1999
William M. Marcus (60).. Executive Vice President and Treasurer of the 1999
Company. Director of the Company since 1966.
Director of: Reebok International Ltd.; and
Congoleum Corporation.
Kenneth I. Watchmaker Executive Vice President and Chief Financial 1999
(55)................... Officer of Reebok International Ltd., footwear
manufacturer and marketer. Prior to 1992, Mr.
Watchmaker was a Partner at Ernst and Young LLP,
accountants. Director of the Company since 1995.
</TABLE>
Note: Natalie S. Marcus is the mother of Roger S. Marcus and Richard G. Marcus
and the aunt of William M. Marcus. James S. Marcus is not related to
Natalie, Roger, Richard or William Marcus.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR ELECTION OF EACH
OF THE NOMINEES FOR CLASS II DIRECTOR.
EXECUTIVE OFFICERS
The following table sets forth certain information relating to the executive
officers of the Company.
<TABLE>
<CAPTION>
EXECUTIVE OFFICER
EXECUTIVE OFFICER (AGE) POSITION SINCE
- ----------------------- -------- -----------------
<S> <C> <C>
Roger S. Marcus (52).... Chief Executive Officer 1981
Richard G. Marcus (50).. President and Chief Operating Officer 1982
William M. Marcus (60).. Executive Vice President and 1966
Treasurer
Gilbert K. Gailius (66). Vice President-Finance and Chief Financial 1979
Officer
Richard R. Miquelon Vice President and General Manager, 1977
(65)................... American Biltrite (Canada) Ltd.
J. Dennis Burns (58).... Vice President and General Manager, Tape 1985
Products Division
Edward J. Lapointe (55). Controller 1983
Henry W. Winkleman (53). Secretary 1989
</TABLE>
3
<PAGE>
CERTAIN BENEFICIAL OWNERS OF COMMON STOCK
The following table, together with the accompanying text and footnotes, sets
forth, as of March 26, 1998, (a) the holdings of the Common Stock of each
director of the Company and of each person nominated to become a director of
the Company, (b) the holdings of the Common Stock of all officers and
directors as a group and (c) the names, addresses and holdings of the
Company's Common Stock of each person who owns 5% or more of its Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP(2) COMMON STOCK
---------------------- ----------------------- ------------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS
Natalie Marcus........................... 1,009,910(3)(4) 25.7%
c/o American Biltrite Inc.
57 River Street
Wellesley Hills, MA 02181
Richard G. Marcus........................ 527,247(3)(5) 13.4
c/o American Biltrite Inc.
57 River Street
Wellesley Hills, MA 02181
Roger S. Marcus.......................... 524,601(3)(6) 13.4
c/o American Biltrite Inc.
57 River Street
Wellesley Hills, MA 02181
William M. Marcus........................ 366,364(3)(7) 9.3
c/o American Biltrite Inc.
57 River Street
Wellesley Hills, MA 02181
Gilbert K. Gailius....................... 41,200(8) 1.1
J. Dennis Burns.......................... 16,200(9) --
Mark N. Kaplan........................... 2,000 --
John C. Garrels, 3rd..................... 800 --
James S. Marcus.......................... 200 --
All directors and executive officers as a 2,229,522 56.8
group (14 persons)......................
</TABLE>
<TABLE>
<S> <C> <C>
5% BENEFICIAL OWNERS
Dimensional Fund Advisors, Inc.................................. 284,450(10) 7.2
1299 Ocean Avenue, Suite 650
Santa Monica, CA 90491
Wilen Management Corporation.................................... 261,710(11) 6.7
2360 West Joppe Road, Suite 226
Lutherville, MD 21093
Marvin C. Schwartz.............................................. 198,800(12) 5.1
c/o Neuberger & Berman, LLC
605 Third Avenue
New York, NY 10158
</TABLE>
4
<PAGE>
- --------
(1) Addresses are given only for beneficial owners of more than 5% of the
Common Stock.
(2) Unless otherwise noted, the nature of beneficial ownership is sole voting
and/or investment power.
(3) As of the date shown, these shares were among the 2,149,522 shares, or
54.7%, of the outstanding Common Stock beneficially owned by the
following persons, who have identified themselves as persons who have
taken, and reasonably anticipate continuing to take, actions which direct
or may cause the direction of the management and policies of the Company
and the voting of their shares of Common Stock in a manner consistent
each with the other, and who therefore may be deemed to constitute a
"group" within the meaning of Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"); Natalie S. Marcus, Richard
G. Marcus, Roger S. Marcus, William M. Marcus and Cynthia S. Marcus (c/o
American Biltrite Inc., 57 River Street, Wellesley Hills, MA 02181).
(4) Natalie S. Marcus has sole voting and investment power over 865,910
shares. Mrs. Marcus is also a co-trustee with Richard G. Marcus and Roger
S. Marcus over 144,000 shares and trustee of a charitable trust which
holds 4,000 shares.
(5) Richard G. Marcus has sole voting and investment power over 305,647
shares. Mr. Marcus is also a co-trustee with Natalie S. Marcus and Roger
S. Marcus over 144,000 shares. Mr. Marcus also has the right to acquire
77,600 shares which are issuable upon exercise of options exercisable
within 60 days of the date of this proxy statement. Richard G. Marcus's
wife, Beth A. Marcus, owns 2,210 shares; his son, Todd Marcus, owns 5,110
shares.
(6) Roger S. Marcus has sole voting and investment power over 303,001 shares.
Mr. Marcus is also a co-trustee with Natalie S. Marcus and Richard G.
Marcus over 144,000 shares. Mr. Marcus also has the right to acquire
77,600 shares which are issuable upon exercise of options exercisable
within 60 days of the date of this proxy statement.
(7) William M. Marcus has sole voting and investment power over 302,284
shares. Mr. Marcus also has the right to acquire 64,080 shares which are
issuable upon exercise of options exercisable within 60 days of the date
of this proxy statement. William M. Marcus's wife, Cynthia S. Marcus,
owns 9,400 shares.
(8) Gilbert K. Gailius has sole voting and investment power over 12,000
shares. Mr. Gailius has the right to acquire 29,200 shares which are
issuable upon exercise of options exercisable within 60 days of the date
of this proxy statement.
(9) J. Dennis Burns has sole voting and investment power over 3,000 shares.
Mr. Burns has the right to acquire 13,200 shares which are issuable upon
exercise of options exercisable within 60 days of the date of this proxy
statement.
(10) Based on information contained in a Schedule 13G filed with the
Securities and Exchange Commission (the "Commission") on February 9,
1998.
(11) Based on information contained in a Schedule 13G filed with the
Commission on February 13, 1998.
(12) Based on information contained in a Schedule 13D filed with the
Commission on December 9, 1996.
5
<PAGE>
In February 1996, Richard G. Marcus entered into a settlement agreement in
the form of a consent decree with the Commission in connection with the
Commission's investigation covering trading in the Common Stock by an
acquaintance of Mr. Marcus. Mr. Marcus, without admitting or denying the
Commission's allegations of securities laws violations, agreed, among other
things, to the entry of a permanent injunction against future violations of
Section 10(b) of, and Rule 10b-5 under, the Exchange Act.
In May 1993, Frederick H. Joseph, a director of the Company, entered into a
settlement agreement in the form of a consent decree with the Commission in
connection with an administrative proceeding brought by the Commission with
respect to alleged supervisory deficiencies in connection with Mr. Joseph's
former role as Chief Executive Officer of Drexel Burnham Lambert Incorporated.
Mr. Joseph, without admitting or denying the Commission's allegations of
securities law violations, agreed, among other things, to be barred from
association in a supervisory capacity with any broker, dealer, municipal
securities dealer, investment advisor or investment company (each, a
"securities firm") for a minimum period of three years. In accordance with the
terms of the Commission's order, Mr. Joseph is currently in the process of
making application to become associated with such a securities firm in a
supervisory capacity other than that of chairperson, chief executive officer
or president.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, requires the Company's directors,
executive officers and holders of more than 10% of the Common Stock and other
equity securities of the Company to file with the Commission initial reports
of ownership and reports of changes in ownership of the Common Stock and other
equity securities of the Company. Based solely on a review of the copies of
such reports furnished to the Company during fiscal year ended December 31,
1997, the Company believes all Section 16(a) filing requirements were
satisfied.
6
<PAGE>
DIRECTOR COMPENSATION AND COMMITTEES
During 1997, the Board held four meetings. Each director who is not an
officer and employee of the Company is entitled to receive a director's fee of
$10,000 per year and $1,250 for each Board meeting and each Audit and
Executive Committee meeting attended.
Directors may elect to defer the receipt of all or a part of their fees.
Amounts so deferred earn interest, compounded quarterly, at a rate equal to
the base rate quoted by The First National Bank of Boston at the end of each
quarter.
There are four standing committees of the Board. The Company's Executive
Committee consists of five members. The functions of the committee are to
advise and aid the officers of the Company in all matters concerning its
interests and the management of its business and, when the Board is not in
session, to exercise all the powers of the Board with reference to the conduct
of the business of the Company which may be lawfully delegated by the Board.
During 1997, the Executive Committee held no meetings. The members of the
Executive Committee are Messrs. William M. Marcus, Chairman, Roger S. Marcus,
Richard G. Marcus, Mark N. Kaplan and John C. Garrels, 3rd.
The Company also has an Audit Committee consisting of three members, all of
whom are non-employee directors. The Audit Committee recommends engagement of
the independent auditors, considers the fee arrangement and scope of the
audit, reviews the financial statements and the independent auditors' report,
reviews the activities and recommendations of the Company's internal auditors,
considers comments made by the independent auditors with respect to the
Company's internal control structure and reviews internal accounting
procedures and controls with the Company's financial and accounting staff.
During 1997, the Audit Committee held two meetings. The members of the Audit
Committee are Messrs. Kenneth I. Watchmaker, James S. Marcus and John C.
Garrels, 3rd.
The Company's Compensation Committee consists of three members. The
committee met twice during 1997. The members of the Compensation Committee are
Messrs. John C. Garrels, 3rd, Mark N. Kaplan and Kenneth I. Watchmaker. Mr.
Watchmaker joined the Compensation Committee after the 1997 meetings were
held. The Company does not have a nominating committee of the Board.
The Company's Stock Award Committee consists of three members. The function
of the committee is to grant stock options and other employee incentives to
executive officers of the Company (including without limitation the Company's
Chief Executive Officer and the Company's four other most highly compensated
officers). The members of the Stock Award Committee are John C. Garrels, 3rd,
James S. Marcus and Kenneth I. Watchmaker. The committee met once in 1997.
7
<PAGE>
COMPENSATION COMMITTEE REPORT
OVERALL POLICY
The Company's executive compensation program is designed to reflect both
corporate performance and individual responsibilities and performance. The
Compensation Committee administers the Company's overall compensation strategy
in an attempt to relate executive compensation appropriately to the Company's
overall growth and success and to the executive's duties, demonstrated
abilities and, where appropriate, the performance of the operating division or
subsidiary for which the executive is responsible. The objectives of this
strategy are to attract and retain the best possible executives, to motivate
these executives to achieve the Company's business goals and to provide a
compensation package that recognizes individual contributions as well as
overall business results.
Each year, the Compensation Committee conducts a review of the Company's
executive compensation. This review includes consideration of: the
relationship between an executive's current compensation and his current
duties and responsibilities; the compensation of executive officers with
similar duties and responsibilities; and inflationary trends. The annual
compensation review permits an ongoing evaluation of the relationships among
the size and scope of the Company's operations, the Company's performance and
its executive compensation. The Compensation Committee also considers the
legal and tax effects (including without limitation the effects of Section
162(m) of the Internal Revenue Code of 1986, as amended, of the Company's
executive compensation program in order to provide the most favorable legal
and tax consequences for the Company.
The Compensation Committee determines the compensation of the individuals
whose compensation is detailed in this proxy statement (including in the
Summary Compensation Table) and sets policies for and reviews the compensation
awarded to the Company's most highly compensated corporate executives. This
process is designed to provide consistency throughout the executive
compensation program. In reviewing the individual performance of the
executives whose compensation is described in this proxy statement (other than
Roger S. Marcus, the Company's Chief Executive Officer), the Compensation
Committee takes into account the views of Roger S. Marcus.
The key elements of the Company's executive compensation consist of base
salary, annual bonus and stock options. In 1996, the Compensation Committee
established certain additional elements to the Company's executive
compensation program, including principally split-dollar insurance
arrangements. The Compensation Committee's policies with respect to each of
these elements, including the bases for the compensation awarded to Roger S.
Marcus, are discussed below. In addition, although the elements of
compensation described below are considered separately, the Compensation
Committee takes into account the full compensation package afforded by the
Company to the individual, including pension benefits, insurance and other
benefits, as well as the specific elements of the program described below.
BASE SALARIES
Base salaries for executive officers are determined by considering
historical salaries paid by the Company to officers having certain duties and
responsibilities and then evaluating the current responsibilities of the
position, the scope of the operations under management and the experience of
the individual. Annual salary adjustments are determined by evaluating on an
individual basis (i) new responsibilities of the executive's position, (ii)
changes in the scope of the operations managed, (iii) the performance both of
such operations and of the executive in the position and (iv) annual increases
in the cost of living.
8
<PAGE>
With respect to the base salary of Roger S. Marcus in 1997, the Compensation
Committee took into account the Company's performance (and, specifically, the
performance of Congoleum Corporation, a subsidiary of the Company), the asset
values created for the Company by Congoleum Corporation under Mr. Marcus's
leadership and the assessment by the Compensation Committee of Mr. Marcus's
individual performance as Chief Executive Officer of both the Company and
Congoleum Corporation. The Compensation Committee also took into account the
length of Mr. Marcus's service to the Company and his increasing
responsibilities in the course of such service. Mr. Marcus's base salary of
$437,500 for 1997 represents an increase of 3.6% over his $422,500 base salary
for 1996. The Compensation Committee approved a base salary of $462,500 for
Mr. Marcus for 1998, an increase of 5.7% over his 1997 base salary.
ANNUAL BONUS
The Company's executive officers are eligible for an annual cash bonus.
Annual bonuses are determined on the basis of individual and corporate
performance. The most significant corporate performance measure for bonus
payments is earnings of the Company as a whole and then the relevant divisions
or subsidiaries, where appropriate. The Compensation Committee has adopted a
policy of paying bonuses to Roger S. Marcus and Richard G. Marcus of
approximately 3-4% of the Company's after-tax earnings, taking into account
significant non-operational occurrences and the actual level of profitability
for the relevant year. In determining annual bonuses, the Committee also
considers the views of Roger S. Marcus as Chief Executive Officer and
discusses with him the appropriate bonuses for all executives, including
himself.
For 1997, Roger S. Marcus was awarded an aggregate bonus of $500,000. For
1996, he was awarded a bonus of $525,000. A portion of Mr. Marcus's 1997 bonus
was based on earnings for the Company as a whole in accordance with the
Compensation Committee policy set forth above. A substantial portion of Mr.
Marcus's 1997 bonus, however, was awarded to Mr. Marcus for his exceptional
performance as Chief Executive Officer of the Company and as Chief Executive
Officer of Congoleum Corporation, taking into account certain payments by
Congoleum Corporation to the Company relating to, among other things, Mr.
Marcus's service as Chief Executive Officer of Congoleum Corporation. In
awarding Mr. Marcus's aggregate bonus, the Compensation Committee also
considered the performance of the Common Stock and Mr. Marcus's role in
promoting the long-term strategic growth of the Company.
STOCK OPTIONS
Under the Company's 1993 Stock Award and Incentive Plan, stock options are
granted to the Company's executive officers. Stock options are granted to the
Company's executive officers by the Compensation Committee or the Stock Award
Committee, as appropriate. Currently, these Committees set guidelines for the
size of stock option awards based on factors similar to those used to
determine base salaries and annual bonus. Stock options are designed to align
the interests of executives with those of the stockholders.
Under the 1993 Stock Award and Incentive Plan, stock options are typically
granted with an exercise price equal to the market price of the Common Stock
on the date of grant and vest over time. This approach is designed to
encourage the creation of stockholder value over the long term since the full
benefit of options granted under the plan cannot be realized unless stock
price appreciation occurs over time.
SUPPLEMENTAL BENEFITS
In 1996, the Compensation Committee established supplemental benefits for
certain executive officers of the Company. These supplemental benefits were
proposed and approved as a means of addressing the substantial inequity to the
five most highly compensated executive officers of the Company created by the
cap on credited
9
<PAGE>
compensation under the Company's qualified pension plan described below under
the caption "Defined Benefit Pension Plan." Effective as of December 20, 1996,
the Company entered into split-dollar life insurance agreements for the
benefit of each of William M. Marcus, Richard G. Marcus and Roger S. Marcus.
Effective as of January 9, 1997, the Company entered into a similar agreement
for the benefit of J. Dennis Burns. Under these contracts, the Company agreed
to pay a portion of premiums due over a specified time period on certain
variable life insurance policies providing life insurance protection for the
family of each executive officer, subject to various terms and conditions. In
1996, the Company paid the full initial premiums under each of the policies.
In 1997 and future policy years covered by the split-dollar agreements,
although the Company is only obligated under the agreements to pay a portion
of the executives' policy premiums, the Company has paid and may continue to
pay the full premium under any of the policies or reimburse the executives for
some or all of their portion of the premiums under one or more of their
respective policies covered by the agreements. Premiums paid in 1997 under the
split-dollar agreements are reflected in the Summary Compensation Table set
forth below under the column entitled "All Other Compensation." Under each of
the split-dollar agreements, the Company is entitled to all of the net
premiums paid by it upon termination of the agreement in accordance with its
terms. Each life insurance policy subject to a split-dollar agreement has been
assigned to the Company as collateral to secure recovery by the Company of the
premiums paid by it on that policy.
In 1996, the Compensation Committee also approved unfunded supplemental
retirement benefits for Gilbert K. Gailius, the Company's Chief Financial
Officer, which entitle Mr. Gailius to post-retirement cash payments from the
Company, payable on the same basis as benefits payable under The Retirement
Plan for Salaried Employees of American Biltrite Inc. (the "Pension Plan").
The supplemental retirement benefits will equal the difference between (a) the
dollar amount of retirement benefits to which Mr. Gailius would be entitled
under the Pension Plan absent any limit on credited compensation imposed by
the Internal Revenue Code of 1986, as amended ("Required Maximum"), and (b)
the dollar amount of retirement benefits actually payable to Mr. Gailius under
the Pension Plan. The present value of Mr. Gailius's supplemental retirement
benefits is approximately $140,000. Mr. Gailius's rights with respect to these
benefits are those of an unsecured creditor of the Company.
CONCLUSION
Through the programs described above, a significant portion of the Company's
executive compensation is linked directly to individual and corporate
performance. In 1997, 47.6% of the Company's executive compensation consisted
of performance-based variable elements. In the case of Roger S. Marcus,
approximately 53.3% of his 1997 compensation consisted of performance-based
variable elements. The Compensation Committee intends to continue the policy
of linking executive compensation to corporate and individual performance,
recognizing that the ups and downs of the business cycle from time to time may
result in an imbalance for a particular period.
COMPENSATION COMMITTEE
Mark N. Kaplan, Chairman
John C. Garrels, 3rd
Kenneth I. Watchmaker
10
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mark N. Kaplan, a director of the Company, is a partner in Skadden, Arps,
Slate, Meagher & Flom LLP, a law firm retained by the Company in 1997 and
proposed to be retained during 1998. In fiscal year 1997, the Company paid
fees and disbursements for professional services to such firm in the amount of
$103,490.
Frederick H. Joseph, a director of the Company, is a stockholder of
Loewenbaum & Co. Inc. ("Loewenbaum"), a registered broker-dealer retained by
the Company in fiscal 1997 (under a predecessor corporate name) to render
strategic advice to the Company. In fiscal 1997, the Company paid aggregate
fees for professional services to this entity in the amount of $125,000. The
services rendered to the Company by Loewenbaum in fiscal 1997 were principally
provided by Mr. Joseph, and under a contractual arrangement with Loewenbaum,
Mr. Joseph received from Loewenbaum $106,250 of the aggregate fees paid to
Loewenbaum by the Company for those services.
11
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
earned by or paid to the Company's Chairman of the Board and Chief Executive
Officer and the Company's four other most highly compensated officers for
services rendered to the Company and its subsidiaries in all capacities during
each of the last three years. The table also identifies the principal capacity
in which each of the named executives served the Company at the end of 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
------------------
NAME AND PRINCIPAL ALL OTHER
POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1)
- ------------------ ---- --------- -------- ------------------
<S> <C> <C> <C> <C>
Roger S. Marcus..................... 1997 437,500 500,000 196,400
Chairman of the Board and 1996 422,500 525,000 196,000
Chief Executive Officer 1995 395,000 550,000 16,000
Richard G. Marcus................... 1997 437,500 500,000 156,400
President and Chief 1996 422,500 525,000 156,000
Operating Officer 1995 395,000 550,000 16,000
William M. Marcus................... 1997 351,000 280,000 226,400
Executive Vice President 1996 338,500 160,000 226,000
and Treasurer 1995 316,000 160,000 16,000
Gilbert K. Gailius.................. 1997 260,000 175,000 16,400
Vice President-Finance 1996 250,000 100,000 16,000
and Chief Financial Officer 1995 237,500 100,000 16,000
J. Dennis Burns..................... 1997 178,750 60,000 18,400
Vice President and 1996 171,250 60,000 7,000
General Manager, 1995 163,750 70,000 6,000
Tape Products Division
</TABLE>
- --------
(1) The amounts disclosed in this column include:
(a) Company contributions of $6,400, $6,000 and $6,000 in 1997, 1996 and
1995, respectively, under the Section 401(k) Savings Investment Plan on
behalf of each individual listed;
(b) payment by the Company of $10,000 in each of 1997, 1996 and 1995 to
individual life insurance trusts for Roger S. Marcus, Richard G. Marcus,
William M. Marcus and Gilbert K. Gailius; and
(c) premiums paid by the Company in 1997 under split-dollar insurance
arrangements on behalf of Roger S. Marcus, Richard G. Marcus, William M.
Marcus and J. Dennis Burns, totalling $180,000, $140,000, $210,000 and
$12,000, respectively.
12
<PAGE>
STOCK OPTIONS
The table below sets forth information relating to stock option grants in
1997 to the named executive officers of the Company.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
PERCENT OF RATES OF STOCK
NUMBER OF TOTAL PRICE
SECURITIES OPTIONS/SARS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM
OPTION/SARS EMPLOYEES IN PRICE EXPIRATION -----------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ----------- ------------ -------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Roger S. Marcus......... 50,000 21.0% 23.625 4/14/07 744,190 1,878,190
Richard G. Marcus....... 50,000 21.0% 23.625 4/14/07 744,190 1,878,190
William M. Marcus....... 40,000 16.8% 23.625 4/14/07 595,352 1,502,552
Gilbert K. Gailius...... 20,000 8.4% 23.625 4/14/07 297,676 751,276
J. Dennis Burns......... 6,000 2.5% 23.625 4/14/07 89,302 225,383
</TABLE>
The table below sets forth information relating to stock option exercises in
1997 by the named executive officers of the Company and the number and value
of each such officer's unexercised in-the-money options/SARs on December 31,
1997 based upon the difference between exercise price and closing price per
share at fiscal year-end.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
SHARES OPTIONS/SARS AT FY-END AT FY-END
ACQUIRED ON VALUE --------------------------------- ---------------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE (#) UNEXERCISABLE (#) EXERCISABLE (#) UNEXERCISABLE (#)
---- ------------ ------------ --------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Roger S. Marcus......... -- -- 67,600 64,400 580,400 121,350
Richard G. Marcus....... -- -- 67,600 64,400 580,400 121,350
William M. Marcus....... -- -- 56,080 51,520 498,320 97,080
Gilbert K. Gailius...... -- -- 25,200 24,800 238,800 41,700
J. Dennis Burns......... -- -- 12,000 8,000 125,000 16,500
</TABLE>
13
<PAGE>
DEFINED BENEFIT PENSION PLAN
In addition to the remuneration set forth above, the Company contributes
annually to the Pension Plan, a defined benefit pension plan. The annual
actuarial valuation of the Pension Plan is performed using the Projected Unit
Credit Cost Method as the actuarial cost method under which the Company's
contributions are determined for all participants as a group. Allocations of
the Company's contribution to individual participants are not readily
available. Remuneration under the Pension Plan is calculated on the basis of
the employee's highest average compensation over a period of five consecutive
years during the last ten years of service ("final average compensation")
subject to any applicable Required Maximum. Benefits payable under the Pension
Plan are not subject to deduction for Social Security or other offset amounts.
The table below sets forth the approximate maximum retirement benefits for
employees retiring during 1997, subject to limitations, if any, imposed by
law, payable under the Pension Plan to persons whose final average
compensation is in the classification indicated.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$125,000............................... $15,100 $20,200 $25,200 $30,200 $35,300
$150,000............................... 18,500 24,700 30,800 37,000 43,100
$175,000............................... 19,000 25,000 31,000 38,000 44,000
$200,000............................... 19,000 25,000 31,000 38,000 44,000
$300,000............................... 19,000 25,000 31,000 38,000 44,000
$400,000............................... 19,000 25,000 31,000 38,000 44,000
$500,000............................... 19,000 25,000 31,000 38,000 44,000
</TABLE>
The table below sets forth certain information relating to the Pension Plan
with respect to the five most highly compensated executive officers of the
Company. Remuneration covered by the Pension Plan for each of these executives
currently is limited to the Required Maximum.
<TABLE>
<CAPTION>
1997 REMUNERATION CREDITED YEARS
NAME COVERED BY PLAN OF SERVICE
---- ----------------- --------------
<S> <C> <C>
Roger S. Marcus........................... $160,000 30
Richard G. Marcus......................... 160,000 27
William M. Marcus......................... 160,000 37
Gilbert K. Gailius........................ 160,000(1) 19
J. Dennis Burns........................... 160,000 13
</TABLE>
- --------
(1) Mr. Gailius also has certain supplemental retirement benefits described
above in the Compensation Committee Report that negate the effect of the
Required Maximum as to Mr. Gailius and entitle Mr. Gailius to aggregate
benefits (under the Pension Plan and the supplemental retirement benefits)
based on his full final average compensation.
14
<PAGE>
CUMULATIVE TOTAL STOCKHOLDER RETURN
The graph that follows compares the monthly cumulative total stockholder
return of the Common Stock to the monthly cumulative returns of the American
Stock Exchange Market Value Index and a Peer Group Index which includes
companies in Standard Industrial Classification (SIC) code number 3089--Plastic
Products, N.E.C.
[GRAPH APPEARS HERE]
COMPARISION OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
<TABLE>
<CAPTION>
- -----------------------------FISCAL YEAR ENDING---------------------------------
COMPANY 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
AMERICAN BILTRITE INC. 100 239.08 293.27 233.04 243.21 267.01
INDUSTRY INDEX 100 127.21 233.04 151.54 195.17 239.39
BROAD MARKET 100 118.81 104.95 135/28 142.74 171.76
</TABLE>
15
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board has selected Ernst & Young LLP as the Company's independent public
accountants for 1998. Representatives of Ernst & Young LLP are expected to be
present at the Meeting, will be given an opportunity to make a statement if
they desire to do so and are expected to be available to respond to
appropriate questions.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented in the proxy statement
for the 1999 Annual Meeting of Stockholders of the Company must be received by
the Company at its principal executive offices no later than December 15,
1998.
OTHER MATTERS
Management of the Company has no knowledge of any other matters which may
come before the Meeting and does not itself intend to present any such other
matters. However, if any such other matters shall properly come before the
Meeting or any adjournment thereof, the persons named as proxies will have
discretionary authority to vote the shares represented by the accompanying
proxy in accordance with their best judgment.
By Order of the Board of Directors
Henry W. Winkleman
Secretary
Wellesley Hills, Massachusetts
April 10, 1998
16
