<PAGE>
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 (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)
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:
-------------------------------------------------------------------------
(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:
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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 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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<PAGE>
AMERICAN BILTRITE INC.
57 River Street
Wellesley Hills, Massachusetts 02481
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
MAY 9, 2000
----------------
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 the Long Lane Room , 2nd Floor, Fleet
Bank, 100 Federal Street, Boston, Massachusetts, on Tuesday, May 9, 2000 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 2003 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 24, 2000 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 5, 2000
<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 9, 2000 in the Long Lane Room,
2nd Floor, Fleet Bank, 100 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
02481. 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 5, 2000.
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 24, 2000, there were issued and outstanding 3,517,386 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, 1999 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 I directors at the Meeting. The accompanying proxy will be
voted for the election of the nominees named in Class I below unless otherwise
instructed. The term of those Class I directors elected at the Meeting will
expire at the Annual Meeting of Stockholders held in 2003 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 I
Gilbert K. Gailius (68). Vice President--Strategic Planning of the 2003
Company. Director of the Company since 1983.
Richard G. Marcus (52).. President and Chief Operating Officer of the 2003
Company. Director of the Company since 1982.
Vice Chairman of the Board of Directors of
Congoleum Corporation.
Frederick H. Joseph Managing Director, ING Barings LLC, Investment 2003
(63)................... Bankers. From 1994 to 1998 was Chairman of
Clovebrook Capital Corp. Director of the Company
since 1997.
Incumbent Directors
- -------------------
CLASS II
John C. Garrel, 3rd Former Director, Global Banking, The First 2001
(60)................... National Bank of Boston, a national banking
association. Director of the Company since 1977.
James S. Marcus (70).... Former Limited Partner, Goldman, Sachs & Co., 2001
investment bankers. Director of the Company
since 1971. Director of Kellwood Company and
Insight Communications.
Roger S. Marcus (54).... Chairman of the Board and Chief Executive 2001
Officer of the Company. Director of the Company
since 1981. Chairman of the Board of Directors
and Chief Executive Officer of Congoleum
Corporation.
CLASS III
Mark N. Kaplan, Esq. Of Counsel, Skadden, Arps, Slate, Meagher & Flom 2002
(70)................... LLP, attorneys. Director of the Company since
1982. Director of: Grey Advertising Inc.; DRS
Technologies Inc.; Autobytel.com Inc.; REFAC
Technology Development Corporation; Volt
Information Sciences, 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 (83).. Investor. Director of the Company since 1992. 2002
William M. Marcus (62).. Executive Vice President and Treasurer of the 2002
Company. Director of the Company since 1966.
Director of Congoleum Corporation.
Kenneth I. Watchmaker Executive Vice President and Chief Financial 2002
(57)................... Officer of Reebok International Ltd., a
worldwide designer, marketer and distributor of
sports, fitness and casual footwear, apparel and
equipment. 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 I 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 (54).... Chief Executive Officer 1981
Richard G. Marcus (52).. President and Chief Operating Officer 1982
William M. Marcus (62).. Executive Vice President and Treasurer 1966
Gilbert K. Gailius (68). Vice President-Strategic Planning 1979
Howard N. Feist (43).... Vice President-Finance and Chief Financial 2000
Officer of the Company and Chief Financial
Officer and Secretary of Congoleum
Corporation
J. Dennis Burns (60).... Vice President and General Manager, Tape 1985
Products Division
Jean Richard (55)....... Vice President and General Manager American 2000
Biltrite (Canada) Ltd.
Henry W. Winkleman (55). Vice President, Corporate Counsel and 1989
Secretary
Edward J. Lapointe (57). Controller 1983
</TABLE>
3
<PAGE>
CERTAIN BENEFICIAL OWNERS OF COMMON STOCK
The following table, together with the accompanying text and footnotes, sets
forth, as of March 24, 2000, (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........................... 987,250(3)(4) 28.1%
c/o American Biltrite Inc.
57 River Street
Wellesley Hills, MA 02481
Richard G. Marcus........................ 562,627(3)(5) 15.5
c/o American Biltrite Inc.
57 River Street
Wellesley Hills, MA 02481
Roger S. Marcus.......................... 559,987(3)(6) 15.4
c/o American Biltrite Inc.
57 River Street
Wellesley Hills, MA 02481
William M. Marcus........................ 393,884(3)(7) 10.9
c/o American Biltrite Inc.
57 River Street
Wellesley Hills, MA 02481
Gilbert K. Gailius....................... 54,000(8) 1.5
J. Dennis Burns.......................... 20,600(9) --
Mark N. Kaplan........................... 2,000 --
John C. Garrels, 3rd..................... 800 --
James S. Marcus.......................... 200 --
All directors and executive officers as a
group (14 persons)...................... 2,333,142 59.3
5% Beneficial Owners
Dimensional Fund Advisors, Inc........... 291,750(10) 8.4
1299 Ocean Avenue, Suite 650
Santa Monica, CA 90491
Wilen Management Company, Inc............ 237,310(11) 6.7
2360 West Joppe Road, Suite 226
Lutherville, MD 21093
Marvin C. Schwartz....................... 186,500(12) 5.3
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 2,225,142 shares, or
58.1%, 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 02481).
(4) Natalie S. Marcus has sole voting and investment power over 839,250
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 306,627
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
112,000 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 3,190 shares.
(6) Roger S. Marcus has sole voting and investment power over 303,981
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 112,000 shares which are issuable upon exercise of options
exercisable within 60 days of the date of this proxy statement. Roger S.
Marcus's daughter, Elissa G. Marcus, owns 6,090 shares.
(7) William M. Marcus has sole voting and investment power over 302,284
shares. Mr. Marcus also has the right to acquire 91,600 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 42,000 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 17,600 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 1,
2000.
(11) Based on information contained in a Schedule 13G filed with the
Commission on February 8, 2000.
(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.
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. The Company believes that during the year
ended December 31, 1998, its officers, directors and holders of more than 10%
of the company's Common Stock complied with all Section 16(a) filing
requirements.
6
<PAGE>
DIRECTOR COMPENSATION AND COMMITTEES
During 1999, 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
$15,000 per year and $2,000 for each Board meeting and each Audit and
Executive Committee meeting attended during 1999.
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 Fleet Boston Financial 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 1999, the Executive Committee held one meeting. 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 1999, 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 three times during 1999. The members of the Compensation
Committee are Messrs. John C. Garrels, 3rd, Mark N. Kaplan and Kenneth I.
Watchmaker. 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 held one meeting in
1999.
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 ("Section 162(m)"), 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 1999, 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
$492,500 for 1999 represents an increase of 6.5% over his $462,500 base salary
for 1998. The Compensation Committee approved a base salary of $517,500 for
Mr. Marcus for 2000, an increase of 5.1% over his 1999 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 1999, Roger S. Marcus was awarded an aggregate bonus of $575,000. For
1998, he was awarded a bonus of $550,000. A portion of Mr. Marcus's 1999 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 1999 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 1999 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 have been
entitled to at age 65 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. Mr. Gailius's rights
with respect to these benefits are those of an unsecured creditor of the
Company.
Company Agreements
Mr. Gailius's base salary, annual bonus and supplemental benefits in his new
position as the Company's Vice President of Strategic Planning are provided
for in employment arrangements recently approved by the Board. These
arrangements are described below under the heading "Executive Compensation-
Employment Arrangements." No other executive officer of the Company has an
employment agreement with 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 1999, 50.3% of the Company's executive compensation consisted
of performance-based variable elements. In the case of Roger S. Marcus,
approximately 53.9% of his 1999 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, was a partner in and is now of
counsel at Skadden, Arps, Slate, Meagher & Flom LLP, a law firm retained by
the Company in 1999 and proposed to be retained during 2000. In fiscal year
1999, the Company paid fees and disbursements for professional services to
such firm in the amount of $68,273.
Frederick H. Joseph, a director of the Company, is a managing director in
ING Barings LLC, an investment banking firm. In fiscal year 1999, ING Barings
LLC received a fee of $50,000 for investment banking service.
11
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
earned by or paid to the Company's Chairman of the Board and Chief Executive
Officer and the Company's four other most highly compensated officers for
services rendered to the Company and its subsidiaries in all capacities during
each of the last three years. The table also identifies the principal capacity
in which each of the named executives served the Company at the end of 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
--------------------
Name and Principal All Other
Position Year Salary($) Bonus($) Compensation($)(1)
- ------------------ ---- ---------- --------- ------------------
<S> <C> <C> <C> <C>
Roger S. Marcus................. 1999 492,500 575,000 196,400
Chairman of the Board and 1998 462,500 550,000 196,400
Chief Executive Officer 1997 437,500 500,000 196,400
Richard G. Marcus............... 1999 492,500 575,000 156,400
President and Chief Operating 1998 462,500 550,000 156,400
Officer 1997 437,500 500,000 156,400
William M. Marcus............... 1999 394,000 400,000 226,400
Executive Vice President and
Treasurer 1998 370,500 300,000 226,400
1997 351,000 280,000 226,000
Gilbert K. Gailius.............. 1999 292,500 250,000 16,400
Vice President-Finance 1998 275,000 187,500 16,400
and Chief Financial Officer 1997 260,000 175,000 16,000
J. Dennis Burns................. 1999 195,000 85,000 18,400
Vice President and 1998 186,250 50,000 18,400
General Manager, 1997 178,750 60,000 18,400
Tape Products Division
</TABLE>
- --------
(1) The amounts disclosed in this column include:
(a) Company contributions of $6,400, in each of 1999, 1998 and 1997,
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 1999, 1998 and 1997 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 1999, 1998 and 1997 under split-
dollar insurance arrangements on behalf of Roger S. Marcus, Richard G.
Marcus, William M. Marcus and J. Dennis Burns, totaling $180,000, $140,000,
$210,000 and $12,000, respectively for each year.
Employment Arrangements
The Board recently approved employment arrangements for Gilbert K. Gailius,
formerly the Company's Chief Financial officer. These arrangements are
effective as of January 1, 2000. Under these arrangements, the Company has
agreed to employ Mr. Gailius for a period of two years as its Vice President
of Strategic Planning
12
<PAGE>
at a salary of $150,000 per year. In his new position, Mr. Gailius continues
to participate in the Company's annual bonus program at a level 50% lower than
the level at which he participated in that program for the Company's 1999
fiscal year. Mr. Gailius also continues to be eligible for pension benefits
equal to $100,000 per year, consisting of (a) the dollar amount of retirement
benefits actually payable to Mr. Gailius under the Pension Plan; (b) an amount
equal to the unfunded supplemental retirement benefits described above under
the heading "Compensation Committee Report-Supplemental Benefits," and (c) an
additional cash payment from the Company. The payment referenced in clause (c)
of the immediately preceding sentence is guaranteed for at least five years
after Mr. Gailius's two-year term expires on January 1, 2002. The employment
arrangements further provide that Mr. Gailius's duties and responsibilities as
Vice President of Strategic Planning will be as determined from time to time
by the Company's President.
13
<PAGE>
STOCK OPTIONS
The table below sets forth information relating to stock option exercises in
1999 by the named executive officers of the Company and the number and value
of each such officer's unexercised in-the-money options/SARs on December 31,
1999 based upon the difference between exercise price and closing price per
share at fiscal year-end.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-the-Money
Options/SARs at FY-End Options/SARs at FY-End
--------------------------------- ---------------------------------
Shares Acquired Value
Name on Exercise (#) Realized($) Exercisable (#) Unexercisable (#) Exercisable ($) Unexercisable ($)
---- --------------- ----------- --------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Roger S. Marcus......... -- -- 102,000 30,000 72,500 0
Richard G. Marcus....... -- -- 102,000 30,000 72,500 0
William M. Marcus....... -- -- 83,600 24,000 72,500 0
Gilbert K. Gailius...... -- -- 38,000 12,000 43,500 0
J. Dennis Burns......... -- -- 16,400 3,600 29,000 0
</TABLE>
14
<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 1999, 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 40
- ------------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$150,000....................... $18,400 $24,500 $30,600 $36,800 $42,900 $49,000
$175,000....................... 19,700 26,300 32,900 39,500 46,000 52,600
$200,000....................... 19,700 26,300 32,900 39,500 46,000 52,600
$300,000....................... 19,700 26,300 32,900 39,500 46,000 52,600
$400,000....................... 19,700 26,300 32,900 39,500 46,000 52,600
$500,000....................... 19,700 26,300 32,900 39,500 46,000 52,600
</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>
1999 Remuneration Credited Years
Name Covered by Plan of Service
---- ----------------- --------------
<S> <C> <C>
Roger S. Marcus........................... $160,000 32
Richard G. Marcus......................... 160,000 29
William M. Marcus......................... 160,000 39
Gilbert K. Gailius........................ 160,000(1) 21
J. Dennis Burns........................... 160,000 15
</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 as outlined in the notes to the Summary Compensation Table.
15
<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]
<TABLE>
<CAPTION>
----------------------- FISCAL YEAR ENDING -------------
- -----
COMPANY/INDEX/MARKET 12/30/1994 12/29/1995 12/31/1996 12/31/1997 12/31/1998 12/31/1999
<S> <C> <C> <C> <C> <C> <C>
American Biltrite 100.00 79.46 82.93 91.05 79.14 56.50
Plastics Products, NEC 100.00 121.22 156.12 191.49 190.43 183.87
AMEX Market Index 100.00 128.90 136.01 163.66 161.44 201.27
</TABLE>
16
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board has selected Ernst & Young LLP as the Company's independent public
accountants for 2000. 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
Stockholder proposals intended to be presented at the year 2000 Annual
Meeting of Stockholders pursuant to Rule 14a-8 under the Exchange Act must be
received by the Company at the Company's principal executive offices by
December 2, 2000. In order for stockholder proposals made outside of Rule 14a-
8 under the Exchange Act to be considered "timely" within the meaning of Rule
14a-4(c) under the Exchange Act, such proposals must be received by the
Company at the Company's principal executive offices by February 4, 2001.
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 5, 2000
17
<PAGE>
REVOCABLE PROXY
AMERICAN BILTRITE INC.
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS MAY 9, 2000
This proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Roger S. Marcus, Richard G. Marcus and
William M. Marcus and each of them, as attorneys and proxies, with full power of
substitution, to represent and to vote, as designated below, at the Annual
Meeting of Stockholders of American Biltrite Inc. (the "Company") to be held in
the Long Lane Room, 2nd Floor, at Fleet Bank, 100 Federal Street, Boston,
Massachusetts on Tuesday, May 9, 2000, at 9:00 A.M., Boston time, and at any
adjournment thereof, all shares of Common Stock of the Company which the
undersigned could vote. If present in such manner as such proxies may determine
on any matters which may properly come before the meeting and to vote on the
following as specified hereon.
-------------------------------------
Please be sure to sign and date Date
this Proxy in the box below.
- ------------------------------------------------------------------------
- -------Stockholders sign above-------Co-holder (if any) sign above------
With- For All
1. ELECTION OF CLASS I DIRECTORS For hold Except
(except as mentioned to the contrary [_] [_] [_]
below):
Nominees: /s/ Gilbert K. Gailius Richard G. Marcus
Frederick H. Joseph
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For an Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH NOMINEE.
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" THE PROPOSAL IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THIS MEETING.
Note: Signature(s) should agree with name(s) as printed hereon. All joint
owners and fiduciaries should sign. When signing as attorney, executor,
administrator, trustee, guardian or custodian for a minor, please give full
title as such. If a corporation, please sign full corporate name and indicate
the signer's office of authority. If a partner, sign in partnership name by
authorized person.
Detach above card, sign date and mail in postage-paid envelope provided.
AMERICAN BILTRITE INC.
- -------------------------------------------------------------------------------
PLEASE FILL IN DATE, SIGN AND MAIL THIS PROXY IN
THE ENCLOSED POST-PAID RETURN ENVELOPE
- -------------------------------------------------------------------------------
