<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
AMERICAN BUSINESS PRODUCTS, 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.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
(LOGO)
AMERICAN BUSINESS PRODUCTS, INC.
POST OFFICE BOX 105684 ATLANTA, GEORGIA 30348
(770) 953-8300
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 8, 1998
NOTICE HEREBY IS GIVEN that the 1998 Annual Meeting of Shareholders of
American Business Products, Inc. (the "Company") will be held at The Cobb
Galleria Centre, Two Galleria Parkway, Atlanta, Georgia, on Friday, May 8, 1998
at 11:00 a.m., Atlanta time, for the purpose of considering and voting upon:
1. A proposal to elect four directors of the Company.
2. A proposal to amend the American Business Products, Inc. 1993
Directors Stock Incentive Plan to increase the aggregate number of shares
authorized for issuance under the Plan from 225,000 to 425,000 shares and
to make other operative changes.
3. A proposal to ratify the appointment of Deloitte & Touche LLP as
independent auditors of the Company for the fiscal year ending December 31,
1998.
4. Such other business as properly may come before the Annual Meeting
or any adjournments thereof. The Board of Directors is not aware of any
other business to be presented to a vote of the shareholders at the Annual
Meeting.
Information relating to the above matters is set forth in the attached
Proxy Statement. Shareholders of record at the close of business on March 2,
1998 are entitled to receive notice of and to vote at the Annual Meeting and any
adjournments thereof.
By Order of the Board of Directors
/s/ Dawn M. Gray
DAWN M. GRAY
Secretary
Atlanta, Georgia
March 20, 1998
PLEASE READ THE ATTACHED PROXY STATEMENT AND THEN PROMPTLY COMPLETE,
EXECUTE AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID
ENVELOPE. THE PROMPT RETURN OF PROXY CARDS WILL SAVE YOUR COMPANY THE EXPENSE OF
FURTHER PROXY SOLICITATION.
<PAGE> 3
AMERICAN BUSINESS PRODUCTS, INC.
2100 RIVEREDGE PARKWAY
SUITE 1200
ATLANTA, GEORGIA 30328
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 8, 1998
This Proxy Statement is furnished to the shareholders of American Business
Products, Inc. (the "Company") in connection with the solicitation of proxies by
the Board of Directors of the Company to be voted at the 1998 Annual Meeting of
Shareholders (the "Annual Meeting") and at any adjournments thereof. The Annual
Meeting will be held on Friday, May 8, 1998 at The Cobb Galleria Centre, Two
Galleria Parkway, Atlanta, Georgia, at 11:00 a.m., Atlanta time.
The approximate date on which this Proxy Statement and the enclosed form(s)
of proxy card are first being sent or given to shareholders is March 20, 1998.
VOTING
GENERAL
The securities that can be voted at the Annual Meeting consist of the
Common Stock of the Company, $2.00 par value per share, with each share
entitling its owner to one vote on each matter submitted to the shareholders.
The record date for determining the holders of Common Stock who are entitled to
notice of and to vote at the Annual Meeting is March 2, 1998. On the record
date, 16,162,521 shares of Common Stock were outstanding and eligible to be
voted at the Annual Meeting.
QUORUM AND VOTE REQUIRED
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock of the Company is necessary to constitute a quorum at the
Annual Meeting. In counting the votes to determine whether a quorum exists at
the Annual Meeting, the proposal receiving the greatest number of votes "for" or
"against" and abstentions (including instructions to withhold authority to vote)
will be used.
In voting with regard to the proposal to elect directors (Proposal 1),
shareholders may vote in favor of all nominees, withhold their votes as to all
nominees or withhold their votes as to specific nominees. The vote required to
approve Proposal 1 is governed by Georgia law and is a plurality of the votes
cast by the holders of shares entitled to vote, provided a quorum is present. As
a result, in accordance with Georgia law, votes that are withheld will not be
counted and will have no effect.
In voting with regard to the proposal to amend the American Business
Products, Inc. 1993 Directors Stock Incentive Plan (Proposal 2), shareholders
may vote in favor of the proposal or against the proposal or may abstain from
voting. The vote required to approve Proposal 2 is governed by Georgia law and
the rules of the New York Stock Exchange (the "Exchange"). A majority of the
shares of Common Stock outstanding on the record date and eligible to be voted
at the Annual Meeting must be voted on Proposal 2. Abstentions will count as
votes cast. Votes cast favoring Proposal 2 must exceed the sum of the votes cast
opposing Proposal 2 and abstentions. As a result, in accordance with the rules
of the Exchange, abstentions will have an effect on approval of the proposal.
<PAGE> 4
In voting with regard to the proposal to ratify the appointment of
independent auditors (Proposal 3), shareholders may vote in favor of the
proposal or against the proposal or may abstain from voting. The vote required
to approve Proposal 3 is governed by Georgia law, and the votes cast favoring
Proposal 3 must exceed the votes cast opposing Proposal 3, provided a quorum is
present. As a result, in accordance with Georgia law, abstentions will not be
counted and will have no effect.
Under the rules of the Exchange that govern most domestic stock brokerage
firms, member brokerage firms that hold shares in street name for beneficial
owners may, to the extent that such beneficial owners do not furnish voting
instructions with respect to any or all proposals submitted for shareholder
action, vote in their discretion upon proposals which are considered
"discretionary" proposals under the rules of the Exchange. Member brokerage
firms that have received no instructions from their clients as to "non-
discretionary" proposals do not have discretion to vote on these proposals. Such
"broker non-votes" will not be considered in determining whether a quorum exists
at the Annual Meeting and will not be considered as votes cast in determining
the outcome of any proposal.
PROXIES FOR HOLDERS OF COMMON STOCK
Proxy cards are being transmitted with this Proxy Statement to all holders
of Common Stock of the Company. If the proxy is completed properly and returned
by the shareholder and is not revoked, it will be voted at the Annual Meeting in
the manner specified thereon. IF THE PROXY IS PROPERLY EXECUTED AND RETURNED BUT
WITHOUT INSTRUCTIONS FOR VOTING, THE SHARES REPRESENTED BY THE PROXY WILL BE
VOTED "FOR" EACH OF THE PROPOSALS LISTED ON THE PROXY CARD AND DESCRIBED HEREIN.
Any shareholder who executes and delivers a proxy card may revoke it at any time
prior to its use by giving written notice to the Secretary of the Company, or by
executing and delivering to the Secretary a duly executed proxy card bearing a
later date, or by appearing at the meeting and voting in person; provided,
however, that under the rules of the Exchange, any beneficial owner of the
Company's Common Stock whose shares are held in street name by a member
brokerage firm may revoke his proxy and vote his shares in person at the Annual
Meeting only in accordance with the applicable rules and procedures of the
Exchange. The Board of Directors of the Company does not know of any other
business to be brought before the Annual Meeting other than that described
herein, but it is intended that, as to any such other business, a vote will be
cast pursuant to the proxy in accordance with the judgment of the persons named
as proxies.
PROXIES FOR PARTICIPANTS IN EMPLOYEE BENEFIT PLANS
Separate proxy cards are being transmitted to all persons who have shares
of Common Stock attributable to their accounts as participants or beneficiaries
under the American Business Products, Inc. Profit Sharing Retirement Plan (the
"Profit Sharing Plan") and the American Business Products, Inc. Employee Savings
Plan (the "Employee Savings Plan"). These proxy cards appoint the respective
Trustees for the Profit Sharing Plan and the Employee Savings Plan to vote the
shares held for the accounts of the participants or their beneficiaries in the
Profit Sharing Plan and the Employee Savings Plan in accordance with the
instructions noted thereon. IN THE EVENT NO PROXY CARD IS RECEIVED FROM A
PARTICIPANT OR BENEFICIARY IN THE PROFIT SHARING PLAN OR A PROXY CARD IS
RECEIVED WITHOUT INSTRUCTIONS FOR VOTING, THE TRUSTEES OF THE PROFIT SHARING
PLAN WILL VOTE THE SHARES OF STOCK OF THE PARTICIPANT OR BENEFICIARY WITH REGARD
TO EACH OF THE PROPOSALS LISTED ON THE PROXY CARD AND DESCRIBED HEREIN AS THE
TRUSTEES DEEM PROPER IN THEIR BEST JUDGMENT. IN THE EVENT NO PROXY CARD IS
RECEIVED FROM A PARTICIPANT OR BENEFICIARY IN THE EMPLOYEE SAVINGS PLAN OR A
PROXY CARD IS RECEIVED WITHOUT INSTRUCTIONS FOR VOTING, THE TRUSTEES OF THE
EMPLOYEE SAVINGS PLAN WILL VOTE THE SHARES OF STOCK OF THE PARTICIPANT OR
BENEFICIARY WITH REGARD TO EACH OF THE PROPOSALS LISTED ON THE PROXY CARD AND
DESCRIBED
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<PAGE> 5
HEREIN IN PROPORTION WITH THE VOTES CAST BY THE PARTICIPANTS OR BENEFICIARIES IN
THE EMPLOYEE SAVINGS PLAN WHO PROPERLY EXECUTED AND DELIVERED PROXY CARDS TO THE
TRUSTEES.
Any Profit Sharing Plan or Employee Savings Plan participant or beneficiary
who executes and delivers a proxy card to the Trustees may revoke it at any time
prior to its use by giving written notice to the respective Trustees or by
executing and delivering to the Trustees a duly executed proxy card bearing a
later date. Under the terms of the Profit Sharing Plan and the Employee Savings
Plan, only the Trustees of the plans can vote the shares allocated to the
accounts of participants, even if such participants or their beneficiaries
attend the Annual Meeting in person.
In addition to soliciting proxies through the mail, the Company may solicit
proxies through its directors, officers and employees in person and by
telephone, facsimile or telegraph. All expenses incurred in connection with the
solicitation of proxies will be borne by the Company, including the charges and
expenses of brokerage firms, nominees, custodians, fiduciaries and others for
forwarding solicitation materials to beneficial owners of Common Stock.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of December 31, 1997
regarding the ownership of the Company's Common Stock by each person known to
the Company to be the beneficial owner of more than 5% of the Company's Common
Stock, by each executive officer named in the Summary Compensation Table herein
and by all directors (including Mr. W.J. Biggers, who will be retiring as a
director immediately after the Annual Meeting), nominees, and executive officers
of the Company as a group, based on data furnished to the Company by such
persons.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME BENEFICIALLY OWNED(1) CLASS
- ---- --------------------- ----------
<S> <C> <C>
Curtis Investment Company, LP.............................. 1,527,902(2) 9.3%
Lonnie C. Baxter........................................... 240,071(3) 1.5
American Business Products, Inc.
Profit Sharing Retirement Plan........................... 1,018,861(4) 6.2
R.W. Gundeck............................................... 105,622(5) *
T. R. Carmody.............................................. 91,686(5) *
Richard G. Smith........................................... 1,250(5) *
John H. Karr............................................... 27 *
All directors, nominees, and executive officers of the
Company as a group (17 persons).......................... 460,940(6)(7) 2.8
</TABLE>
- ---------------
* Represents less than one percent of the outstanding shares of Common Stock
of the Company.
(1) The stock ownership information shown above and in "Proposal 1 -- Election
of Directors -- Information Regarding Nominees and Directors" is based upon
information furnished to the Company by the named persons. Beneficial
ownership as reported in this Proxy Statement has been determined in
accordance with regulations of the Securities and Exchange Commission (the
"Commission") and includes shares of Common Stock of the Company which may
be acquired within 60 days upon the exercise of outstanding stock options.
The named persons have sole voting and investment power with regard to the
shares shown as beneficially owned by such persons except as otherwise
indicated.
(2) Curtis Investment Company, LP ("CIC") is a limited partnership of which Ms.
Lonnie C. Baxter was the managing general partner on December 31, 1997. As
managing general partner, Ms. Baxter had sole
3
<PAGE> 6
voting and investment power for all of the shares owned by CIC, although Ms.
Baxter's proportionate interest in CIC is 22.2%. Therefore, Ms. Baxter was
deemed to be the indirect beneficial owner of the 1,527,902 shares owned by
CIC on December 31, 1997. On January 1, 1998, Mr. Henry J. Bird became the
managing general partner of CIC. Therefore, Mr. Bird is currently deemed to
be the beneficial owner of the 1,527,902 shares owned by CIC. The address of
CIC is 2100 RiverEdge Parkway, Suite 1200, Atlanta, GA 30328.
(3) The shares shown include 132,990 shares owned by Lonnie C. Baxter; 161
shares allocated to the account of Ms. Baxter under the Profit Sharing Plan;
21 shares allocated to the account of Ms. Baxter under the Employee Savings
Plan; 83,556 shares that Ms. Baxter votes as trustee of certain family
trusts or as custodian for certain family members and as to which she
disclaims any beneficial ownership; 2,250 shares which, as of December 31,
1997, Ms. Baxter voted as Chairperson of the Arcadia Wildlife Preserve and
as to which she disclaimed any beneficial ownership; and 21,093 shares owned
by the Henry Curtis Family Trust of 1990 for which Ms. Baxter shares voting
and investment power. The shares shown do not include 1,527,902 shares owned
by CIC of which Ms. Baxter was deemed to be the indirect beneficial owner on
December 31, 1997, as described in footnote (2). Ms. Baxter is the sister of
Henry Curtis VII, a current director and the Vice President of the Company.
Ms. Baxter's address is 2100 RiverEdge Parkway, Suite 1200, Atlanta, Georgia
30328.
(4) The Profit Sharing Plan directs that the Stock Bonus Accounts, and all
undistributed income accruing thereon, held in the Trust Fund established
under the Plan be invested by the Trustees primarily in shares of the
Company's Common Stock. The participants have no power to direct the
investment of the Stock Bonus Accounts. Therefore, the Trustees of the Plan
are deemed to have investment power with respect to the shares held by the
Plan. As a result, the Plan is deemed to be the beneficial owner of the
shares held by it and each of the Trustees is deemed to be the indirect
beneficial owner of the shares held by the Plan. The Trustees of the Plan
are T.R. Carmody, Henry Curtis VII, John H. Karr and Robert J. Dahl. The
address of the Plan is 2100 RiverEdge Parkway, Suite 1200, Atlanta, Georgia
30328.
(5) With regard to the beneficial ownership of shares of Common Stock by Mr.
Gundeck, the shares shown include 1,800 shares owned jointly with his wife,
103,200 shares which Mr. Gundeck may acquire upon the exercise of stock
options, 523 shares allocated to his account under the Profit Sharing Plan,
and 99 shares allocated to his account under the Employee Savings Plan; with
regard to Mr. Carmody, the shares shown include 51,547 shares owned jointly
with his wife and 33,000 shares which Mr. Carmody may acquire upon the
exercise of stock options and do not include 1,018,861 shares for which he
shares investment power as co-trustee of the Profit Sharing Plan and for
which he disclaims any beneficial ownership; and with regard to Mr. Smith,
all the shares shown are shares which Mr. Smith may acquire upon the
exercise of stock options.
(6) The shares shown include 75,745 shares beneficially owned by Mr. Biggers,
who, in accordance with Company policy, will be retiring as a director
immediately after the Annual Meeting. These shares include 4,500 shares
which Mr. Biggers may acquire upon the exercise of stock options and 1,180
shares owned by Mr. Biggers' wife as to which he disclaims any beneficial
ownership.
(7) The shares shown include 65,729 shares which may be acquired by certain
directors and executive officers pursuant to the exercise of stock options;
2,360 shares owned by the spouses of certain directors and executive
officers for which the respective persons disclaim beneficial ownership;
51,547 shares owned jointly by a director with his spouse; 79,507 shares
voted by a director as trustee and as to which he disclaims any beneficial
ownership; 21,093 shares owned by the Henry Curtis Family Trust of 1990 for
which a director shares voting and investment power and for which he
disclaims any beneficial ownership;
4
<PAGE> 7
and 3,413 shares allocated to the accounts of the directors and executive
officers under the Profit Sharing Plan and 103 shares allocated to executive
officers under the Employee Savings Plan. The shares shown do not include
1,017,446 shares for which Messrs. Carmody, Curtis and Karr share investment
power as three of the four co-trustees of the Profit Sharing Plan and for
which they disclaim beneficial ownership.
PROPOSAL 1 -- ELECTION OF DIRECTORS
NOMINEES
The Bylaws of the Company provide that the Board of Directors of the
Company shall consist of not less than three nor more than fifteen persons and
that the number of directors shall be determined from time to time by the Board
of Directors. The Articles of Incorporation of the Company further provide that
the Board of Directors of the Company shall be divided into three classes as
nearly equal in number as possible. The term of office of one of the classes of
directors expires each year, and a new class of directors is elected each year
by the shareholders for a term of three years or until their successors are
elected and qualified. The Board currently consists of 12 members.
Mr. Robert Gundeck resigned from the Board of Directors on November 7,
1997. On December 11, 1997, Mr. James F. McDonald was appointed by the Board of
Directors to succeed Mr. Gundeck as a director in the class whose term expires
at the 1998 Annual Meeting and Mr. William B. Stokely, III, was appointed by the
Board of Directors to fill a newly created directorship in the class whose term
will expire at the 2000 Annual Meeting.
Mr. Carmody, whose term expires at the Annual Meeting, will retire from the
Board at the expiration of his term and will not stand for re-election. Mr.
Biggers, a director in the class whose term is scheduled to expire at the 1999
Annual Meeting, will also retire from the Board as of the Annual Meeting. As a
result of Mr. Biggers' retirement, at its February 11, 1998 meeting, the Board
reduced the class of directors to serve until the 1999 Annual Meeting to three
and the number of directors to 11, effective May 8, 1998.
The Board of Directors has nominated Larry L. Gellerstedt, III, Hollis L.
Harris, W. Stell Huie and James F. McDonald to stand for election as directors
at the Annual Meeting. Each of Messrs. Harris, Huie and McDonald is presently a
member of the Board of Directors whose term is scheduled to expire at the Annual
Meeting. On February 24, 1998, Mr. Gellerstedt was elected President and Chief
Executive Officer of the Company, effective March 30, 1998. Each nominee has
consented to serve as a director if elected. If elected by the shareholders,
Messrs. Gellerstedt, Harris, Huie and McDonald will serve a three-year term
which will expire at the time of the 2001 Annual Meeting of Shareholders or at
the time their successors are elected and qualified.
If any of the nominees should become unavailable to serve for any reason
(which is not anticipated), the Board of Directors, in its discretion, may
designate a substitute nominee or nominees (in which case the persons named as
proxies on the enclosed proxy card will vote all valid proxy cards for the
election of such substitute nominee or nominees), allow the vacancy or vacancies
to remain open until the Board locates a suitable candidate or candidates, or by
resolution reduce the authorized number of directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE PROPOSAL TO ELECT MESSRS. GELLERSTEDT, HARRIS, HUIE AND MCDONALD AS
DIRECTORS OF THE COMPANY TO HOLD OFFICE UNTIL THE 2001 ANNUAL MEETING OF
SHAREHOLDERS OR UNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFIED.
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<PAGE> 8
INFORMATION REGARDING NOMINEES AND DIRECTORS
Set forth below is certain information regarding the four nominees for
director and all current directors whose terms of office will continue after the
Annual Meeting. Information regarding their beneficial ownership of Common Stock
of the Company is as of December 31, 1997.
PERSONS NOMINATED TO SERVE UNTIL THE 2001 ANNUAL MEETING
LARRY L. GELLERSTEDT, III will become President and Chief Executive Officer
of the Company on March 30, 1998. He was previously employed at Beers
Construction Company ("Beers") in Atlanta, Georgia from 1978 through 1997. He is
currently the nonemployee Chairman of the Board of Beers. From November 1990
through December 1997, Mr. Gellerstedt served as Chairman, Chief Executive
Officer and President of Beers. Mr. Gellerstedt is a director of AGL Resources
Inc., ALLTEL Corporation, Beers Construction Company, Rock-Tenn Company and
SunTrust Bank, Atlanta. Mr. Gellerstedt is also board chairman of the
Metropolitan Atlanta YMCA and ESR Children's Health Care System, Inc., and
serves on the boards of the Jesse Parker Williams Foundation, the Metro Atlanta
Chamber of Commerce, Central Atlanta Progress and The Commerce Club. Mr.
Gellerstedt is 41. He beneficially owns no shares of the Common Stock of the
Company.
HOLLIS L. HARRIS served as Chairman, President and Chief Executive Officer
of Air Canada from January 1993 until his retirement on August 1, 1996. He
previously served as Vice Chairman, President and Chief Executive Officer of Air
Canada from February 1992 until December 1992. He was Chairman of the Board,
President and Chief Executive Officer of Continental Airlines, Inc. and
President and Chief Executive Officer of Continental Airlines Holdings, Inc.
from 1990 until 1991. Mr. Harris served as President and Chief Operating Officer
of Delta Air Lines, Inc. from 1987 to 1990. Mr. Harris has been a director of
the Company since 1988. Mr. Harris is 66. He beneficially owns 830 shares of the
Common Stock of the Company.*
W. STELL HUIE has been Senior Counsel to the law firm of Long Aldridge &
Norman LLP, general counsel to the Company, since January 1995. He previously
was a Senior Partner in Long Aldridge & Norman LLP from 1984 until January 1995.
He has been a practicing attorney since 1953. Mr. Huie has been a director of
the Company since 1968. Mr. Huie is 67. He beneficially owns 26,845 shares of
the Common Stock of the Company.*(1)(2)
JAMES F. McDONALD has been President and Chief Executive Officer of
Scientific-Atlanta, Inc., a communications company, since July 1993. From July
1991 until July 1993, Mr. McDonald was a general partner in the venture capital
firm of J.H. Whitney & Co. Mr. McDonald is a director of Burlington Resources,
Inc. and Scientific Atlanta, Inc. He has been a director of the Company since
December 11, 1997. Mr. McDonald is 58. He beneficially owns 200 shares of the
Company's Common Stock.*
DIRECTORS TO SERVE UNTIL THE 1999 ANNUAL MEETING
HENRY CURTIS VII has been Vice President of the Company since April 1995.
He served as Vice President and Sales Support of Curtis 1000 Inc. from 1992 to
March 1995. He previously served as Director of Administration and Sales Support
of Curtis 1000 Inc. from 1990 to 1992. Mr. Curtis served as Director of Employee
Benefits of the Company from 1983 to 1990 and has held various positions with
the Company and its wholly-owned subsidiaries, Curtis 1000 Inc. and Vanier
Graphics Corporation, since 1971. He has been a director of the Company since
1989. Mr. Curtis is 49. He beneficially owns 234,513 shares (1.43%) of the
Common Stock of the Company.(1)
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<PAGE> 9
C. DOUGLAS MILLER has been Chief Executive Officer and President of Norrell
Corporation since October 15, 1993. He joined Norrell Services, Inc., a
subsidiary of Norrell Corporation, in 1979, and served as President and Chief
Operating Officer of Norrell Corporation from 1990 to his election as President
and Chief Executive Officer. Mr. Miller is also Chairman of the Board of
Directors of Norrell Corporation. Mr. Miller has been a director of the Company
since April 24, 1996. Mr. Miller is 56. He beneficially owns 307 shares of the
Common Stock of the Company.*
G. HAROLD NORTHROP has been Vice Chairman of the Board of Trustees of the
Ida Cason Callaway Foundation, a nonprofit foundation (the "Foundation"), since
1992 and Chairman of the Executive Committee of the Board of Trustees of the
Foundation since 1991. He also has served as a Trustee of the Foundation and a
director of Callaway Gardens Resort, Inc., which operates Callaway Gardens, a
resort and convention center, since 1972. Mr. Northrop was President and Chief
Executive Officer of the Foundation from 1972 until 1991 and was President and
Chief Executive Officer of Callaway Gardens Resort, Inc. from 1972 until 1990.
Mr. Northrop has been a director of the Company since 1986. He also is a
director of SunTrust Bank of Columbus, Georgia and John H. Harland Company. Mr.
Northrop is 62. He beneficially owns 8,251 shares of the Common Stock of the
Company.*(2)
DIRECTORS TO SERVE UNTIL THE 2000 ANNUAL MEETING
F. DUANE ACKERMAN was elected Chairman, President and Chief Executive
Officer of BellSouth Corporation effective January 1, 1998. He previously served
as President and Chief Executive Officer of BellSouth from January 1997 until
December 1997, and was Vice Chairman and Chief Operating Officer of BellSouth
Corporation from January 1995 until December 1996. He served as President and
Chief Executive Officer of BellSouth Telecommunications, Inc. from 1992 until
1994. From 1991 until 1992 he served as President and Chief Executive Operating
Officer of BellSouth Telecommunications, Inc. and from March 1991 until November
1991 he served as its Vice Chairman and Group President. Mr. Ackerman previously
served as Vice Chairman -- Finance & Administration of BellSouth Corporation
from 1989 until 1991. Mr. Ackerman has been a director of the Company since
1993. In addition to being a director of BellSouth Corporation, Mr. Ackerman is
also a director of American Heritage Life Insurance Corporation. Mr. Ackerman is
55. He beneficially owns 5,639 shares of the Common Stock of the Company.*(2)
THOMAS F. KELLER, Ph.D. has been R.J. Reynolds Professor of Business
Administration at Duke University since 1974 and served as Dean of the Fuqua
School of Business at Duke University from 1974 until his retirement on June 30,
1996. Dr. Keller has been a director of the Company since 1992. Dr. Keller is
also a director of Ladd Furniture, Inc., Nations Funds, Inc., Nations Fund
Portfolios, Inc., Nations Government Income Term Trust 2003, Inc., Nations
Government Income Term Trust 2004, Inc., Nations Balanced Target Maturity Fund,
Inc., Nations LifeGoal Funds, Inc., Hatteras Income Securities, Inc., The Mentor
Fund Cash Reserve Trust, Mentor Institutional Trust, Dimon, Incorporated,
Wendy's International, Inc., Biogen, Inc., Triangle Community Foundation, and
North Carolina Zoological Society and a trustee of Nations Institutional
Reserves, Nations Fund Trust and Spillman College. Dr. Keller is 66. He
beneficially owns 5,789 shares of the Common Stock of the Company.*(2)
DANIEL W. McGLAUGHLIN was President and Chief Executive Officer of Equifax,
Inc. from January 1, 1996 until January 1, 1998 and has served as a director of
Equifax since 1990. He joined Equifax in August 1989 as Senior Vice President,
Information Technology and served as Executive Vice President from January 1991
to December 1992, and as President and Chief Operating Officer from January 1993
to December 1995. Mr. McGlaughlin is Chairman of The Georgia Industrial
Fellowships for Teachers and
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<PAGE> 10
Chairman of the Board of Trustees of the Atlanta Botanical Gardens. Mr.
McGlaughlin has been a director of the Company since July 1996. Mr. McGlaughlin
is also a director of Equifax Inc., ChoicePoint, FORE Systems, Inc., Nichols
Research Corporation, Wachovia Corporation of Georgia and its subsidiary
Wachovia Bank of Georgia, N.A., and the Atlanta United Way. Mr. McGlaughlin is
61. He beneficially owns 1,300 shares of the Common Stock of the Company.*
WILLIAM B. STOKELY, III has been Chairman and President of The Stokely
Company, a personal investment holding company, and Stokely Hospitality
Properties Inc., which owns and operates restaurants, since 1984 and has been
Managing/Operating Partner of Stokely Hospitality Enterprises since 1984. Mr.
Stokely served as Chairman of the Board and Chief Executive Officer of Stokely
Van Camp, Inc., a food processing and distribution company, from 1981 until
1983, and worked for the company for 20 years. Mr. Stokely is also Chairman and
President of the William B. Stokely Foundation. Mr. Stokely serves as Chairman
of the Board of the Greater Knoxville Sports Corporation. He has been a director
of the Company since December 11, 1997. Mr. Stokely is 57. He beneficially owns
200 shares of the Company's Common Stock.*
- ---------------
* Less than one percent of the outstanding shares of Common Stock of the
Company.
(1) With regard to Mr. Curtis, the shares shown include 2,925 shares which Mr.
Curtis may acquire upon the exercise of stock options, 1,415 shares
allocated to Mr. Curtis' account under the Profit Sharing Plan, 54 shares
allocated to Mr. Curtis' account under the Employee Savings Plan, 79,507
shares voted by him as trustee of certain family trusts and for which he
disclaims any beneficial ownership and 21,093 shares for which he shares
voting and investment power as co-trustee of a family trust and for which he
disclaims any beneficial ownership and do not include 1,017,446 shares for
which he shares investment power as co-trustee of the Profit Sharing Plan
and for which he disclaims any beneficial ownership; and with regard to Mr.
Huie, the shares shown include 1,180 shares owned by Mr. Huie's wife for
which Mr. Huie disclaims any beneficial ownership.
(2) With regard to each of Messrs. Ackerman, Huie, Keller and Northrop, the
shares shown include 4,939 shares which he may acquire upon the exercise of
stock options.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors conducts its business through meetings of the full
Board and through committees of the Board, consisting of an Executive Committee,
a Compensation and Nominating Committee (the "Compensation Committee"), an Audit
Committee, and a Finance and Strategic Planning Committee (formerly the
Strategic Planning Committee). During the fiscal year ended December 31, 1997,
the Board of Directors also had a Directors Affairs Committee and two special
committees, an Ad Hoc Committee and a Search Committee. During fiscal 1997, the
Board of Directors held seven meetings, the Executive Committee held no
meetings, the Compensation Committee held seven meetings, the Audit Committee
held two meetings, the Strategic Planning Committee held three meetings, the
Directors Affairs Committee held one meeting, the Ad Hoc Committee held nine
meetings and the Search Committee held two meetings. Attendance at meetings of
the Board of Directors and its committees as a whole averaged 98%. Each director
attended 87% or more of the aggregate of all meetings of the Board of Directors
and all committees of the Board of Directors of which he was a member held
during the period in the Company's 1997 fiscal year during which he served.
The Executive Committee is composed of Messrs. Northrop (Chairman),
Biggers, Carmody, Huie and McGlaughlin. This committee, during intervals between
meetings of the Board, may exercise the powers of
8
<PAGE> 11
the Board of Directors except with regard to a limited number of matters which
include amending the Articles of Incorporation or bylaws of the Company,
forming, appointing initial members of or delegating responsibility to
committees of the Board, filling vacancies on the Board of Directors or any of
its committees, approving or proposing to the shareholders action that is
required to be approved by the shareholders, or approving a plan of merger that
does not require shareholder approval. The Executive Committee is also
responsible for reviewing and advising the full Board on management succession
issues, including making recommendations to the full Board with respect to
selection of a new Chief Executive Officer. The outside director members of the
Executive Committee (without the Chief Executive Officer present) are
responsible for reviewing, at least annually, the Board's corporate governance
principles and practices.
The Executive Committee is responsible for conducting periodic reviews on
at least an annual basis of the Board's performance in order to increase the
effectiveness of the Board. The Executive Committee evaluates the Board's
performance as a body, including the independence of the Board and the range of
experience, expertise and availability of individual Directors. The Executive
Committee reviews the Board's relationship with management to ensure that the
Board is receiving adequate information and that the Board's involvement with
management is effective. The Executive Committee reports its findings to the
Board and makes recommendations to improve the Board's performance including any
proposals regarding changes in the membership of the Board. All actions of the
Executive Committee are submitted for review and ratification by the full Board
of Directors.
The Compensation Committee is composed of Messrs. Huie (Chairman),
Ackerman, Harris and Stokely. This committee is responsible for evaluating the
performance of the Company's Chief Executive Officer in the course of
recommending his salary, bonus and long-term incentives. The committee is
responsible for setting annual and long-term performance goals for the Chief
Executive Officer and for evaluating his performance against such goals. The
committee reviews the performance of all of the other executive officers of the
Company, recommends to the Board the amount and form of all compensation of
executive officers of the Company and recommends to the Board nominees for
election to the Board of Directors. The Compensation Committee will consider
nominees for director recommended by shareholders if submitted to the Company in
accordance with the procedures set forth in Article III, Section 2 of the bylaws
of the Company. See "Shareholder Proposals For 1999 Annual Meeting."
The Audit Committee is composed of Messrs. Keller (Chairman), Harris,
Miller and McDonald. This committee is responsible for the review and evaluation
of the Company's internal controls and accounting procedures and for the review
of audit reports with the Company's independent auditors. In addition, this
committee makes recommendations to the Board of Directors concerning the
appointment of independent auditors.
The Finance and Strategic Planning Committee is composed of Messrs.
McGlaughlin (Chairman), McDonald, Miller and Northrop. The committee is
responsible for reviewing, approving or recommending to the full Board of
Directors, as required, the long-term business goals and strategies of the
Company, which include strategic considerations in the allocation of corporate
resources, and for overseeing the financial objectives, policies, procedures and
activities of the Company. The committee reviews, approves for presentation and
makes recommendations to the full Board with respect to the Company's financial
plans and policy, corporate finance, and charitable activities. The committee
provides oversight of, reviews and keeps informed on a timely basis with respect
to the Company's policies, practices and proposals with respect to financial
management and treasury operations; financial results and status and events
having significant financial impact, and makes recommendations to the full Board
as the committee deems appropriate with respect to the fiscal affairs of the
Company; and significant business development activities and the financial
9
<PAGE> 12
results of such activities, exchange listing requirements, shareholder
relations, and appointment of corporate agents, including the Company's transfer
agent and registrar.
The Finance and Strategic Planning Committee also reviews and recommends to
the Board for approval long-term business objectives and strategic plans
developed by management; reviews the business development activities and
allocations of corporate resources recommended by management; reviews, approves
or recommends to the full Board, as appropriate, strategic decisions regarding
expansion, contraction or exit from existing lines of business and entry into
lines of business that involve new strategic directions for the Company; works
in conjunction with management to keep the full Board informed of the long-term
business objectives and strategic plans of the Company and critical issues
associated with those objectives and plans; and provides guidance to management
in the development of strategic plans.
The Director Affairs Committee was composed of Messrs. Northrop (Chairman),
Ackerman, Harris and Miller. This committee was responsible for reviewing, at
least annually, the effectiveness of the Board of Directors as a whole,
including its corporate governance policies and practices, as well as the
performance of each incumbent director, and reporting to the Board the results
of its analysis and any recommendations. The Director Affairs Committee was also
responsible for reviewing with the Board on an annual basis the appropriate
skills and characteristics, including age and diversity, required of Board
members in the context of the current make-up of the Board. The committee also
conducted an annual assessment of Board performance and discussed its findings
with the full Board. The responsibilities of the Directors Affairs Committee
were assumed by the Executive Committee on December 10, 1997.
The Ad Hoc Committee was composed of Messrs. Northrop (Chairman), Huie and
Keller. The committee worked with management on a regular basis for the purpose
of developing management and management succession plans. The responsibilities
of the Ad Hoc Committee were assumed by the Search Committee on October 22,
1997.
The Search Committee was composed of Messrs. Northrop (Chairman), Huie and
Keller. The committee was responsible for negotiating a severance arrangement
with the Company's former President and Chief Executive Officer, negotiating the
compensation arrangement with the Company's Interim President and Chief
Executive Officer and taking all steps necessary to hire a new President and
Chief Executive Officer.
DIRECTOR COMPENSATION
CASH COMPENSATION
Nonemployee directors receive a quarterly retainer fee of $3,750 plus
$1,100 for each meeting of the Board of Directors attended, and a nonemployee
Chairman of the Board receives an additional fee of $500 for each meeting of the
Board of Directors attended. Nonemployee directors who are members of the
Executive Committee, the Compensation Committee, the Audit Committee or the
Finance and Strategic Planning Committee, or who were members of the Directors
Affairs Committee, receive $750 for each committee meeting attended, and
nonemployee Chairmen of these committees receive an additional fee of $500 for
each committee meeting attended. Nonemployee directors who were members of the
Ad Hoc Committee or the Search Committee received $1,100 for each committee
meeting attended, and nonemployee Chairmen of these committees received an
additional $500 for each committee meeting attended. Directors who are salaried
employees of the Company or any of its subsidiaries generally do not receive
fees for their services as directors. However, Mr. Carmody has continued to
receive nonemployee directors' fees for the period
10
<PAGE> 13
November 7 to December 31, 1997 during which he served as Interim President and
Chief Executive Officer of the Company. See "Table 1: Summary Compensation
Table."
The Board asked Mr. Northrop to provide additional services in assisting
the Company's management personnel and in transitioning management after the
resignation of Mr. Gundeck. For these additional services, Mr. Northrop receives
a monthly retainer of $10,000 which commenced as of June 15, 1997 and will
terminate as of the 1998 Annual Meeting.
NONCASH COMPENSATION
1993 DIRECTORS STOCK INCENTIVE PLAN. The American Business Products, Inc.
1993 Directors Stock Incentive Plan, effective as of October 1, 1993, and as
amended December 11, 1996 (the "1993 Plan"), currently provides for the granting
of nonqualified stock options ("Options") to directors who are not otherwise
compensated employees of the Company or its subsidiaries who elect to receive
Options in lieu of all or a portion of their directors' fees. The 1993 Plan also
provides that as of the date of the annual shareholders meeting at the beginning
of each year for which a nonemployee director is reelected or continues to serve
as a director, he will receive a grant of 100 shares of Common Stock, subject to
certain restrictions ("Restricted Stock"). (Options and Restricted Stock are
referred to collectively as "Stock Rights.")
A proposal to amend the 1993 Plan will be submitted to the shareholders for
approval at the Annual Meeting. See "Proposal 2 -- Approval of Amendment to the
1993 Directors Stock Incentive Plan" for descriptions of the proposed amendment
to the 1993 Plan and other material provisions of the 1993 Plan that would not
be affected by the amendment. As the 1993 Plan is proposed to be amended, the
directors' deferral of fees would be eliminated and the committee administering
the Plan (the "Administering Committee") would be authorized to grant, at its
discretion, to nonemployee directors Options, which would generally have a term
of ten years and an exercise price equal to the fair market value of the Common
Stock on the date of grant. The Options would vest over a three-year period. The
Compensation Committee currently anticipates that, if the proposed amendment to
the 1993 Plan is approved by the shareholders, as of the date of the annual
shareholders meeting at the beginning of each year for which a nonemployee
director is reelected or continues to serve as a director, the nonemployee
director will receive 4,000 Options. See "Proposal 2 -- Approval of Amendment to
the 1993 Directors Stock Incentive Plan."
Eleven directors currently are eligible to participate in the 1993 Plan.
During the fiscal year ended December 31, 1997, the Administering Committee
granted Options to purchase 1,277 shares of Common Stock at an option price of
$11.50 per share to each of the following directors of the Company: Messrs.
Ackerman, Keller, McGlaughlin, Miller and Northrop. During the fiscal year ended
December 31, 1997, the Administering Committee awarded 100 shares of Restricted
Stock to each of Messrs. Ackerman, Biggers, Harris, Huie, Keller, McGlaughlin,
Miller and Northrop, and 200 shares of Restricted Stock to Messrs. Carmody,
McDonald and Stokely.
The Company also maintains two additional plans for directors: a deferred
compensation plan, known as the "Deferred Compensation Plan for Directors," and
another plan, in the nature of a retirement plan, known as the "Deferred
Compensation Investment Plan (Directors)."
DEFERRED COMPENSATION PLAN FOR DIRECTORS. The Company maintains the
Deferred Compensation Plan for Directors in which all directors of the Company
are eligible to participate. If a director elects to participate, the director
may elect to defer retainer fees, meeting fees or all fees otherwise payable to
him for service on the Board of Directors. At the election of each participant,
amounts deferred under the plan prior to April 1, 1994,
11
<PAGE> 14
are treated as if invested under either a "cash deferral program" or a "phantom
stock program." Under the cash deferral program, the deferred fees are credited
with deemed interest at a rate determined from time to time by a committee
appointed by the Board of Directors of the Company. Under the phantom stock
program, the deferred fees are treated as if applied to purchase shares of
Common Stock of the Company. A bookkeeping account is set up for the participant
which is credited with a number of "stock units" equal to the number of shares
of Common Stock that could have been purchased with the fees at the time of
deferral. The number of stock units credited to the participant is adjusted
periodically to account for dividends, stock splits and other events affecting
the number of outstanding shares, as if the stock units were actual shares of
Common Stock. All amounts deferred under the plan on or after April 1, 1994 are
invested under the cash deferral program.
Generally, a participant will receive payment of his benefit under the plan
in quarterly installments over five years, in cash, beginning after he attains
age 70 or, if later, after he retires or otherwise leaves the Board of Directors
of the Company. The amount of each cash payment is determined, in the case of
the cash deferral program, by the amount of fees deferred plus the interest
accrued thereon or, in the case of the phantom stock program, by the number of
stock units credited to the participant's account and the market value per share
of the Company's Common Stock. If a participant dies before receiving full
payment of his benefit under the plan, the remaining amount will be paid in a
lump sum, in cash, to his beneficiary.
Other than Mr. Carmody, the Interim President and Chief Executive Officer
of the Company, none of the current executive officers of the Company named in
the Summary Compensation Table who also are directors of the Company receive
fees for services as a director, and therefore no amounts have been deferred for
these individuals under the plan. Mr. Carmody received no fees for his service
as a director prior to his retirement from employment with the Company on June
30, 1996; thereafter, he has received fees for his services as a nonemployee
director and Chairman of the Board. No amounts have been deferred by Mr. Carmody
under the plan. For the 1997 fiscal year, $81,716 representing deemed interest
at the rate of 10.79% was credited pursuant to the cash deferral program under
the plan and 210.87 stock units representing dividends on phantom stock units,
were credited pursuant to the phantom stock program under the plan for the
benefit of all current nonemployee directors participating in the plan as a
group.
DEFERRED COMPENSATION INVESTMENT PLAN (DIRECTORS). The Deferred
Compensation Investment Plan (Directors) covers certain directors of the Company
designated by the Board of Directors of the Company. Under the plan, each
participant elected to defer some or all of his 1985 annual compensation for
services as a director to be invested in the plan. The Company has invested the
deferred funds in life insurance contracts. Under the plan, the Company may
change its investment at any time. The maximum annual amount of benefit payable
to a fully vested participant is specified in the participant's joiner agreement
with the Company but may be reduced due to certain adverse changes in federal
income tax provisions. A participant's vested benefit will never fall below the
amount of the deferral, plus interest compounded at an annual rate of 12%.
A participant is fully vested in the amount of his benefit (i) if he
remains on the Board to age 60, (ii) if prior to retirement he suffers total and
permanent disability or dies, or (iii) upon a change in control of the Company.
Upon retirement or other termination of service as a director after attaining
age 60, a participant (or his beneficiary if he dies) generally will receive
equal monthly payments, beginning at the later of age 70 or retirement, for a
period of ten years. If a participant dies before retirement, the participant's
beneficiary will receive equal monthly installments of the participant's benefit
over a ten-year period. If a participant dies after payments commence, his
benefit will be payable to his beneficiary for the remainder of the ten-year
payment period. If a participant terminates his service on the Board prior to
attaining age 60 for reasons other than death or disability or commits suicide
within two years after becoming a participant, he or his beneficiary will
12
<PAGE> 15
receive a lump-sum payment of the amount of compensation he has deferred, plus
interest compounded at an annual rate of 12%.
In fiscal 1997, no amounts were paid under the plan to any current
director, no amounts were deferred by any current director, and the Company
incurred expense of $85,576 for all current and retired directors who
participate in this plan.
EXECUTIVE COMPENSATION
Table 1 summarizes by various categories, for the fiscal years ended
December 31, 1997, 1996 and 1995, the total compensation earned by (i) the
Interim Chief Executive Officer of the Company, (ii) each of the two most highly
compensated executive officers of the Company who were serving as executive
officers at December 31, 1997 and whose salary and bonus for the fiscal year
ended December 31, 1997 exceeded $100,000, and (iii) the former Chief Executive
Officer of the Company (collectively referred to as the "named executive
officers"). For information regarding the various factors considered by the
Compensation Committee in recommending the compensation of the Chief Executive
Officer of the Company and, generally, the other executive officers of the
Company, see "Compensation and Nominating Committee Report" below.
TABLE 1: SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING ALL OTHER
--------------------------- OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) (#) (3)
- --------------------------- ---- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
T.R. Carmody(4)............................ 1997 $ 45,000 $ 0 0 $ 39,047
Chairman, Interim President 1996 237,500 0 0 878,026
and Chief Executive Officer 1995 435,000 478,500 15,000 198,129
R.W. Gundeck(4)(5)......................... 1997 384,375 0 0 7,024
Former President and 1996 400,000 200,000 58,000 42,852
Chief Executive Officer 1995 295,000 295,000 32,600 32,207
R.G. Smith(6).............................. 1997 220,000 0 84,000 11,801
Vice President Finance 1996 200,000 75,000 5,000 0
and Chief Financial Officer 1995 58,333 20,000 0 0
J. H. Karr(7).............................. 1997 62,500 15,625 7,000 25,000
Treasurer
</TABLE>
- ---------------
(1) Includes before-tax contributions made to the Employee Savings Plan during
fiscal 1997 by Messrs. Gundeck and Smith.
(2) Reflects cash bonus awards earned during the respective fiscal years for the
achievement of performance criteria pursuant to the Annual Management
Incentive Bonus Plan. (See "Compensation and Nominating Committee Report on
Executive Compensation -- Executive Officer Compensation.")
(3) All Other Compensation earned during fiscal 1997 includes the following: (i)
Company contributions to the Profit Sharing Plan: Mr. Gundeck -- $5,424 and
Mr. Smith -- $5,424; (ii) Company contributions to the Employee Savings
Plan: Mr. Gundeck -- $1,600 and Mr. Smith -- $1,600; (iii) a special bonus
paid
13
<PAGE> 16
in lieu of certain contributions to the Profit Sharing Plan due to
limitations imposed by the Internal Revenue Service: Mr. Smith -- $4,777;
(iv) the following payments to Mr. Carmody attributable to the period
November 7 through December 31, 1997 during which he served as Interim
President and Chief Executive Officer: nonemployee directors' quarterly
retainer fee -- $2,188, nonemployee directors' meeting fees -- $3,200,
Supplemental Retirement Income Plan -- $25,521, and Deferred Compensation
Investment Plan (Executives) -- $8,138; and (v) with respect to Mr.
Karr -- $25,000 representing a moving allowance.
All Other Compensation earned during fiscal 1996 includes the following:
(i) Company contributions to the Profit Sharing Plan: Mr. Gundeck -- $7,950
and Mr. Carmody -- $7,950; (ii) Company contributions to the Employee
Savings Plan: Mr. Gundeck -- $1,500; (iii) premiums paid by the Company for
life insurance policies, any proceeds of which are payable to the
respective beneficiaries designated by the named executive officers: Mr.
Carmody -- $1,310; (iv) Company contributions to the American Business
Products, Inc. Executive Retirement Plan: Mr. Gundeck -- $3,330; (v) a
special bonus paid in lieu of certain contributions to the Profit Sharing
Plan due to limitations imposed by the Internal Revenue Service: Mr.
Gundeck -- $30,072 and Mr. Carmody -- $32,166; (vi) the cash surrender
value of a life insurance policy transferred to Mr. Carmody on September 9,
1996 -- $675,600; (vii) expense incurred by the Company under the Deferred
Compensation Investment Plan (Executives): Mr. Carmody -- $39,000; and
(viii) expense incurred by the Company under the Supplemental Retirement
Income Plan: Mr. Carmody -- $122,000.
All Other Compensation earned during fiscal 1995 includes the following:
(i) Company contributions to the Profit Sharing Plan: Mr.
Gundeck -- $10,125 and Mr. Carmody -- $10,125; (ii) Company contributions
to the Employee Savings Plan: Mr. Gundeck -- $750; (iii) premiums paid by
the Company for life insurance policies, any proceeds of which are payable
to the respective beneficiaries designated by the named executive officers:
Mr. Carmody -- $3,492; (iv) Company contributions to the American Business
Products, Inc. Executive Retirement Plan: Mr. Gundeck -- $3,330; (v) a
special bonus paid in lieu of certain contributions to the Profit Sharing
Plan due to limitations imposed by the Internal Revenue Service: Mr.
Gundeck -- $18,002 and Mr. Carmody -- $35,512; (vi) expense incurred by the
Company under the Deferred Compensation Investment Plan (Executives): Mr.
Carmody -- $36,000; and (vii) expense incurred by the Company under the
Supplemental Retirement Income Plan: Mr. Carmody -- $113,000.
(4) Mr. Gundeck resigned as President and Chief Executive Officer, effective
November 7, 1997; his 1997 salary is attributable to the period January 1,
1997 through November 7, 1997. Mr. Carmody retired from his employment with
the Company on June 30, 1996; his 1996 salary is attributable to the period
January 1, 1996 to June 30, 1996. Effective November 7, 1997, Mr. Carmody
assumed the positions of Interim President and Chief Executive Officer; his
1997 salary is attributable to the period November 7, 1997 through December
31, 1997. See "Employment and Other Agreements" for descriptions of the
agreement pursuant to which Mr. Carmody is serving and Mr. Gundeck's
separation package. In addition, Mr. Carmody continues to serve as Chairman
of the Board of the Company.
(5) Salary includes before-tax contributions by Mr. Gundeck to the American
Business Products, Inc. Special Nonqualified Deferred Compensation Plan.
(6) Mr. Smith began employment with the Company on September 11, 1995, as Vice
President of Corporate Development. He became Vice President Finance and
Chief Financial Officer of the Company on January 1, 1996.
14
<PAGE> 17
(7) Mr. Karr began employment with the Company on June 30, 1997, and became
Treasurer on July 23, 1997.
OPTION GRANTS
Table 2 sets forth information regarding the number and terms of stock
options granted to the named executive officers during the fiscal year ended
December 31, 1997. Included in such information, in accordance with the rules
and regulations of the Commission, is the potential realizable value of each
option granted, calculated using the 5% and 10% option pricing model.
TABLE 2: OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZATION
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------------
NAME GRANTED(1) FISCAL YEAR (PER/SH)(2) DATE(3) 5% 10%
- ---- ----------- ------------- ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R.W. Gundeck........... 0 -- -- -- -- --
T.R. Carmody........... 0 -- -- -- -- --
R.G. Smith............. 14,000 4.4164% $23.6250 07/23/07 $208,006.90 $ 527,130.32
16,261 5.1297 19.8125 12/10/07 202,611.65 513,457.70
53,739 16.9525 19.8125 12/10/07 669,586.59 1,696,863.87
J. H. Karr............. 7,000 2.2082 19.8125 12/10/07 87,219.82 221,032.16
</TABLE>
- ---------------
(1) 14,000 options were granted to Mr. Smith on July 23, 1997 and an aggregate
of 77,000 options were granted to the named executive officers on December
10, 1997 pursuant to the American Business Products, Inc. 1991 Stock
Incentive Plan (the "1991 Stock Incentive Plan"). The options vest in
increments, with 25% of the shares covered thereby becoming exercisable on
the first anniversary of the date of grant, an additional 25% of the option
shares becoming exercisable on each successive anniversary date, and full
vesting occurring on the fourth anniversary date.
(2) The exercise price of an option may be paid in cash, by delivery of already
owned shares of Common Stock of the Company or by a combination thereof,
subject to certain conditions. To the extent that the exercise price of an
option is paid with shares of Common Stock of the Company, a reload option
may be granted to the optionee. A reload option is an option granted for the
same number of shares as is exchanged in payment of the exercise price and
is subject to all of the same terms and conditions as the original option
except for the exercise price which is determined on the basis of the fair
market value of the Common Stock of the Company on the date the reload
option is granted. One or more successive reload options may be granted to
an optionee who pays for the exercise of a reload option with shares of
Common Stock of the Company. Pursuant to the terms of the 1991 Stock
Incentive Plan, the administrative committee of the plan retains discretion,
subject to plan limits, to modify the terms of outstanding options and to
reprice options.
(3) The options were granted for a term of 10 years, subject to earlier
termination upon occurrence of certain events related to termination of
employment or change of control of the Company.
15
<PAGE> 18
OPTION EXERCISES
Table 3 sets forth the number of shares of Common Stock acquired upon the
exercise of options by the named executive officers during the fiscal year ended
December 31, 1997, including the aggregate value of gains on the date of
exercise. The table also sets forth (i) the number of shares covered by
unexercised options (both exercisable and unexercisable) as of December 31, 1997
and (ii) the respective values of "in-the-money" options, which represents the
positive spread between the exercise price of existing options and the fair
market value of the Company's Common Stock at December 31, 1997, which was
$21.625.
TABLE 3: AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END VALUES
<TABLE>
<CAPTION>
FISCAL YEAR-END
---------------------------------------------------------
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
EXERCISE DURING YEAR OPTIONS IN-THE-MONEY OPTIONS
-------------------------- AT FISCAL YEAR-END AT FISCAL YEAR-END
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R.W. Gundeck................. 0 $0 103,200 0 $199,500 $ 0
T.R. Carmody................. 0 0 32,999 0 154,625 0
R.G. Smith................... 0 0 1,250 87,750 1,094 130,156
J.H. Karr.................... 0 0 0 7,000 0 12,688
</TABLE>
COMPENSATORY PLANS AND ARRANGEMENTS
Set forth below is information regarding the Company's compensatory plans
and arrangements under which the named executive officers have vested rights to
receive future payments in an amount exceeding $100,000. With respect to the
Supplemental Retirement Income Plan and the Executive Retirement Plan, Messrs.
Gundeck, Smith, and Karr received no payments in fiscal 1997. Mr. Carmody, who
retired from employment with the Company on June 30, 1996, received payments of
$175,000 under the Supplemental Retirement Income Plan in fiscal 1997. He
received no payments under the Executive Retirement Plan. Because Mr. Carmody
has been acting as Interim President and Chief Executive Officer of the Company
since November 7, 1997, $25,521 attributable to payments under the Supplemental
Retirement Income Plan is included in the Summary Compensation Table.
EXECUTIVE RETIREMENT PLAN. In 1992, the Company adopted the American
Business Products Inc. Executive Retirement Plan for the benefit of a specified
group of employees of the Company and its subsidiaries. The Executive Retirement
Plan is a nonqualified defined contribution plan that permits eligible employees
to defer compensation on an after-tax basis. The minimum annual deferral amount
is $2,500. For each period for which an employee makes a contribution, the
Company will contribute an amount equal to 45% of the employee's contribution
amount which does not exceed 2.25% of his compensation for the period. Benefits
under the Executive Retirement Plan are provided exclusively through insurance
policies.
Eligible employees include those employees of the Company or its
subsidiaries who are actively employed at an open enrollment period and who have
either (i) completed one year of employment and have compensation equal to or
greater than $50,000, or (ii) completed five years of employment and have
16
<PAGE> 19
compensation equal to or greater than $40,000. For purposes of the Executive
Retirement Plan, "compensation" generally includes taxable wages plus deferrals
into Internal Revenue Code Section 401(k) or 125 plans. Open enrollment periods
are established periodically by the administrative committee of the Executive
Retirement Plan.
Each employee's contributions (and the Company's contributions on behalf of
such employee) are invested in split-dollar insurance policies issued by The
Confederation Life Insurance Company ("Confederation"). The Company retains
ownership of the cash surrender value of each policy in an amount equal to the
total of the Company's contributions toward the policy. In addition, the Company
retains ownership of a portion of the death benefits of the policy equal to the
lesser of the Company's contributions plus 6% interest or the total death
benefit. If an employee terminates employment, the Company may cause the
insurance company to surrender to the Company the amount of cash surrender value
retained by the Company and then release the policy to the employee. Upon the
employee's reaching age 65 or an earlier retirement date consented to by the
administrative committee, the employee may borrow against or withdraw from the
cash surrender value of the policy. Once the employee has withdrawn or borrowed
the amount of his or her interest, the Company retains ownership of the policy.
Distributions of cash surrender value to the employee will generally be made in
monthly installments over a 15-year period. The calculation of amounts payable
will be based on the insurance company's internal crediting rate applicable to
the policy. The Executive Retirement Plan contains other specific provisions
related to hardship withdrawals, loans and distributions from the policies.
Confederation was placed in rehabilitation in August 1994, and on October
23, 1996, a plan of rehabilitation was confirmed. The plan of rehabilitation
provides for life insurance policies, such as the ones held by the Company, to
be assumed by Pacific Mutual Life Insurance Company. In 1997, after the
completion of the rehabilitation of Confederation and the assumption of the
policies by Pacific Mutual Life Insurance Company, the Company offered each
participant an opportunity to receive a cash refund of his contributions to the
Executive Retirement Plan or to receive a transfer of the full ownership of the
split-dollar policy on his life. Those participants who elected a cash refund
relinquished their interest in their policies to the Company. Elections were
made by each of the participants, and the Company has completed the process to
make the refunds or to transfer the policies to most of the Executive Retirement
Plan participants. The Company intends that the Executive Retirement Plan will
be terminated in the next few months.
Mr. Gundeck is the only named executive officer who participated in the
Executive Retirement Plan. Mr. Gundeck elected to receive a cash refund of his
contributions to the Executive Retirement Plan, and he received a final
distribution of $46,905.
SUPPLEMENTAL RETIREMENT INCOME PLAN. The Supplemental Retirement Income
Plan covers certain executives of the Company and its subsidiaries who are
designated by the Board of Directors of the Company. Upon retirement, a vested
participant generally will receive fixed monthly cash payments for life, with
guaranteed payments to the participant or his beneficiary for a minimum of 15
years. Annual payments generally are equal to 50% of the highest annual
compensation (base salary plus bonus) paid to the participant during the last
three years in which the participant received his annual salary prior to
reaching age 62, but amounts payable under the plan are subject to dollar limits
set by the Board for each participant. Similar death benefits and disability
benefits (with specified reductions) are payable beginning on the date of death
or disability, respectively, if the participant dies prior to age 62 or becomes
disabled. A participant is fully vested (i) when he attains age 62; (ii) when
the sum of his age and years of service equals or exceeds 75 years and he has
attained at least age 60 while employed by the Company or any of its
subsidiaries; (iii) if prior to retirement he dies or suffers total and
permanent disability; (iv) if his employment is involuntarily terminated
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<PAGE> 20
for a reason other than cause; or (v) upon a change in control of the Company. A
participant whose employment is voluntarily terminated between the ages of 55
and 60 is partially vested if the sum of his age and years of service exceeds
75. A participant terminated involuntarily for a reason other than for cause is
treated as if he remains employed until his retirement (age 60 or 62, at the
participant's election).
Effective as of July 27, 1997, the plan was amended to grant unreduced
benefits to certain participants for the greater of the participant's life or 15
years. In the event of the participant's death prior to the expiration of the
15-year payment period, the remaining payments will be made to his beneficiary.
Generally, his surviving spouse will receive a monthly survivor benefit for her
lifetime in an amount equal to a percentage of the participant's monthly benefit
calculated on applicable actuarial assumptions.
Mr. Carmody, who retired on June 30, 1996, is entitled to and is receiving
benefits of $175,000 per year under the plan. Benefits attributable to the
period November 7 to December 31, 1997, during which Mr. Carmody served as
Interim President and Chief Executive Officer of the Company are included in
"Table 1: Summary Compensation Table." Upon his resignation, Mr. Gundeck became
fully vested in his benefits of $125,000 per year under the plan, but no
payments were made to him during 1997. Expenses incurred by the Company in
fiscal 1997 for the benefit of Mr. Carmody were $128,193 and for the benefit of
Mr. Gundeck were $500,520.
DEFERRED COMPENSATION INVESTMENT PLAN (EXECUTIVES). The Deferred
Compensation Investment Plan (Executives) covers certain key executives of the
Company and its subsidiaries as designated by the Board of Directors of the
Company. Under the plan, each participant elected to defer a specified amount of
his 1985 annual compensation to be invested in the plan. The Company has
invested the deferred funds in life insurance contracts. Under the plan, the
Company may change its investments at any time. The maximum annual amount of
benefit payable to a fully vested participant is specified in the participant's
joiner agreement with the Company but may be reduced due to certain adverse
changes in federal income tax provisions. A participant's vested benefit will
never fall below the amount of the deferral, plus interest compounded at an
annual rate of 12%.
A participant is fully vested in the amount of his benefit (i) when he
attains age 60 while actively employed by the Company or any of its
subsidiaries; (ii) if prior to retirement, when he suffers total and permanent
disability or dies; or (iii) upon a change in control of the Company. A
participant's benefit is payable for life after retirement; however, if a
participant dies before actual retirement, the participant's beneficiary will
receive equal monthly installments of the participant's benefit over a 15-year
period, and if a participant dies after payments commence, his benefit will be
payable to his beneficiary for the remainder of the 15-year payment period. The
plan was amended effective July 27, 1997 to grant unreduced benefits to certain
participants for the greater of the participant's life or 15 years. In the event
of the participant's death prior to the expiration of the 15-year payment
period, the remaining payments will be made to his beneficiary. Generally, the
participant's surviving spouse will receive a monthly survivor benefit for her
lifetime in an amount equal to a percentage of the participant's monthly benefit
calculated on applicable actuarial assumptions. A participant may elect to begin
receiving his vested benefit as early as age 60, but such benefit will be
actuarially reduced for each month that payment begins before age 62. If a
participant voluntarily terminates his employment between ages 55 and 60 for
reasons other than death or disability, he will receive a lump-sum distribution
equal to the amount of compensation he has deferred, plus interest accrued at
the annual compound rate of 15%. If a participant commits suicide within two
years after becoming a participant, goes into competition with the Company, or
voluntarily terminates his employment before attaining age 55, he or his
beneficiary will receive a lump-sum distribution equal to the amount of his
deferral, plus interest accrued at the annual compound rate of 12%. A
participant whose employment is involuntarily terminated for
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<PAGE> 21
a reason other than cause will be 100% vested in his benefit, which will be
payable at age 60 or 62 as if he retired or, at his election, in a single
lump-sum payment with interest accrued at the annual compound rate of 15%.
Mr. Carmody, who retired on June 30, 1996, is entitled to and is receiving
his maximum benefit of $55,800 per year under the plan. Benefits attributable to
the period November 7 to December 31, 1997, during which Mr. Carmody served as
Interim President and Chief Executive Officer of the Company are included in
"Table 1: Summary Compensation Table." Expenses incurred by the Company for the
benefit of Mr. Carmody in fiscal 1997 were $40,875.
SPECIAL NON-QUALIFIED DEFERRED COMPENSATION PLAN. The Special
Non-Qualified Deferred Compensation Plan covers certain key executives and
highly compensated employees of the Company. Under the plan, a participant may
elect to defer receipt of up to 90% of the cash compensation (including
commission and bonuses) payable to him in a given year. The plan is unfunded.
All deferrals are held on a participant's behalf by a grantor trust established
for the plan and will be subject to the claims of the Company's general
creditors in the event of insolvency of the Company prior to payment to plan
participants or their beneficiaries. A participant is immediately vested in all
deferrals and all income and gain thereon is credited to his individual account.
Each participant directs the investment of deferred funds held on his behalf.
At the time of his deferral election, a participant elects the date on
which and the form in which the deferrals will commence to be paid. Payments
will be made in either a single lump sum or annual installments over a period
elected by the participant up to 10 years. In the event of certain unforeseen
emergencies, the plan administrator may, in its sole discretion, pay a
participant a portion of his account. Upon termination of a participant's
employment for any reason other than death and prior to age 59 1/2, the
participant's account will be paid to the participant in a single lump sum as
soon as practicable following the date of termination. If a participant dies
prior to the complete distribution of his account, the balance of the account
will be paid as soon as practicable to the participant's designated beneficiary
or beneficiaries in either a lump sum payment or annual installments, as elected
by the participant. As soon as possible following a change of control of the
Company as defined in the plan, each participant will be paid his account
balance in a single lump sum. Amounts deferred by Mr. Gundeck pursuant to the
plan are included in the Summary Compensation Table.
EMPLOYMENT AND OTHER AGREEMENTS
THOMAS R. CARMODY. Effective November 7, 1997, the Company entered into an
agreement with Thomas R. Carmody pursuant to which Mr. Carmody is serving as the
Company's Interim President and Chief Executive Officer until March 30, 1998,
the effective date of Mr. Gellerstedt's appointment as the new President and
Chief Executive Officer of the Company. In exchange for his service, Mr. Carmody
received a salary of $45,000 for the remainder of the 1997 fiscal year.
Effective January 1, 1998, Mr. Carmody's salary is $25,000 per month, to be
prorated in the final month of the appointment based on the number of days Mr.
Carmody fills the position of Interim President and Chief Executive Officer,
divided by thirty (30) days. Mr. Carmody was also paid regular nonemployee
director fees for the balance of 1997. See "Table 1: Summary Compensation
Table."
JOHN H. KARR. The Company entered into an agreement with John H. Karr
dated June 26, 1997, pursuant to which Mr. Karr serves as Treasurer of the
Company. Under that agreement, Mr. Karr is entitled to participate in the
Company's management bonus plan, and received a bonus for 1997 of twenty-five
percent of the salary paid to him in 1997. Mr. Karr is also entitled to
participate in the Company's stock option plan, and was provided a special bonus
of $25,000 to defray the expense of relocation. That bonus must be repaid on
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<PAGE> 22
a prorated basis if Mr. Karr's employment with the Company is terminated within
twenty-five months of July 15, 1997. If the Company terminates Mr. Karr's
employment without cause, the Company must provide Mr. Karr with nine months of
salary, outplacement services at a cost of not more than $15,000, and, at the
Company's election, either fully vest any Company contributions on Mr. Karr's
behalf in the Company's Profit Sharing Plan and Employee Savings Plan or provide
an additional severance amount equal to the amount of any unvested
contributions.
RICHARD G. SMITH. The Company entered into an agreement with Richard G.
Smith, dated July 25, 1995, pursuant to which Mr. Smith serves as Vice President
and Chief Financial Officer of the Company, specifying the terms of his
employment. The Company also entered into a separation agreement with Mr. Smith
dated February 14, 1998, which superseded and revoked the separation provisions
in the July 25, 1995 agreement. The separation agreement provides that, upon the
involuntary termination of Mr. Smith's employment by the Company without cause
(as defined in the separation agreement) within five years following the date of
the separation agreement, the Company will pay Mr. Smith severance pay equal to
$18,333.33 a month for a period of eighteen months. In addition, the separation
agreement provides that upon a termination without cause, the committee
administering the 1991 Stock Incentive Plan (or a successor plan) will
immediately accelerate the vesting of any outstanding stock options held by Mr.
Smith on the date of his termination and will extend the term of exercisability
of those options until twelve months following the date of his termination.
RAYMOND J. WILSON. The Company entered into an agreement with Raymond J.
Wilson dated May 8, 1997, pursuant to which Mr. Wilson serves as Corporate
Controller of the Company. Under that agreement, Mr. Wilson is entitled to
participate in the Company's management bonus plan and receive a bonus for 1997
of no less than twenty-five percent of the salary paid to him in 1997. Mr.
Wilson is also entitled to participate in the Company's stock option plan. If
the Company terminates Mr. Wilson's employment without cause, the Company must
provide Mr. Wilson with nine months of salary.
ROBERT W. GUNDECK. Effective November 7, 1997, Robert W. Gundeck resigned
as President and Chief Executive Officer of the Company and as director and/or
officer of the Company and its subsidiaries. Pursuant to an agreement between
the Company and Mr. Gundeck, dated November 30, 1997 (the "Gundeck Separation
Agreement"), Mr. Gundeck agreed to make himself available for consulting
services through the last day of the calendar month which is twelve months after
November 7, 1997 (the "Severance Period"). Mr. Gundeck agreed to certain
restrictions during the Severance Period and for one year thereafter on his
ability to solicit any person or entity who transacted business with the Company
during the one-year period prior to Mr. Gundeck's resignation, as well as his
ability to solicit for employment any person who was an employee of the Company
during that same period. Mr. Gundeck also agreed to certain restrictions on his
ability to disclose certain confidential and proprietary information with regard
to the Company. In addition, Mr. Gundeck and the Company agreed under the
Separation Agreement to release each other from certain claims relating to Mr.
Gundeck's employment with or resignation from the Company.
Subject to Mr. Gundeck's compliance with the above provisions of the
Separation Agreement, the Company has agreed to continue Mr. Gundeck's salary at
a monthly base rate of $37,500 during the Severance Period. In addition, the
options or awards held by Mr. Gundeck under the Company's 1991 Stock Incentive
Plan became immediately exercisable, and the period of exercise for those
outstanding options was extended to November 7, 1998. Upon his resignation, Mr.
Gundeck became fully vested in his benefits of $125,000 per year under the
Supplemental Retirement Income Plan, and the Company agreed to make payments to
him pursuant to the terms of the plan. The Company agreed to transfer or assign
to Mr. Gundeck the lease for the Company-leased automobile previously provided
for his use. Under the Separation
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<PAGE> 23
Agreement, Mr. Gundeck is also entitled to a lump sum amount of $80,000 as
severance pay. At Mr. Gundeck's request, as much as $20,000 of the severance pay
may be paid directly to an outplacement company of his choice. Unless otherwise
requested by Mr. Gundeck, the severance pay will be paid to him on or about June
1, 1998. Mr. Gundeck's participation in each of the Company's employee benefit
plans or programs terminated as of November 7, 1997, unless his participation
was otherwise continued under the terms of those plans.
COMPENSATION AND NOMINATING COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1997, the members of the
Compensation Committee were Messrs. Northrop (Chairman) (until December 10,
1997), Huie (Chairman) (beginning December 10, 1997), Ackerman, Harris, Miller
(until December 10, 1997), and Stokely (beginning December 10, 1997). None of
them is or has ever been an officer or employee of the Company. There were no
interlocking relationships between any executive officers of the Company and any
entity whose directors or executive officers served on the Company's
Compensation Committee. The arrangement pursuant to which a retainer is being
paid to Mr. Northrop for certain services rendered by him is described above in
"Director Compensation." None of the other members of the Compensation Committee
engaged in transactions or had relationships requiring disclosure under Item 404
of Regulation S-K in the fiscal year ended December 31, 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The arrangement pursuant to which a retainer is being paid to Mr. Northrop
for certain services rendered by him is described above in "Director
Compensation." There were no other transactions or relationships requiring
disclosure under Item 404 of Regulation S-K for the fiscal year ended December
31, 1997.
COMPENSATION AND NOMINATING COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
This report by the Compensation and Nominating Committee of the Board of
Directors discusses the Compensation Committee's objectives and policies
applicable to the compensation of the Company's executive officers. The report
specifically reviews the Compensation Committee's guidelines in establishing the
compensation of the Company's Chief Executive Officer and generally with respect
to all executive officers. The Compensation Committee is composed entirely of
independent, nonemployee directors, whose main focus is always the enhancement
of shareholder value. In designing its compensation guidelines, the Compensation
Committee desires to attract, retain and appropriately reward executives of
exceptional talent and seeks to align the interests of those executives with the
Company's shareholders and customers. Both individual and corporate performance
are considered. Generally, an executive's compensation package contains three
components: base salary, annual incentive compensation and long-term incentive
compensation.
EXECUTIVE OFFICER COMPENSATION
BASE SALARIES. In setting base salaries for the executive officers, the
Compensation Committee considers survey-derived data concerning compensation
paid by other bonus-paying companies that are similar in size to the Company and
that manufacture nondurable goods. While some of the companies identified in the
stock performance graph peer group index are included in these surveys, the
Compensation Committee believes its competitors for executive talent are also
found outside of that group. As a matter of policy, base salaries are
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<PAGE> 24
targeted at the 50th percentile of comparable companies. These targeted base
salary levels provide the Compensation Committee a reference of competitive pay
while allowing the Compensation Committee to approve base salaries slightly
above or below the survey-derived pay on the basis of individual experience,
performance and responsibilities. Generally, the performance of the executive
officers is determined by the Chief Executive Officer's evaluation of how well
each executive officer has fulfilled his responsibilities, taking into account
actual performance as compared to the financial goals established for the
Company and other goals established for his area of responsibility. The
Compensation Committee annually reviews the survey methodology and, after
considering the recommendations of the Chief Executive Officer, determines the
base salaries for the executive officers.
SHORT-TERM INCENTIVE COMPENSATION. Under the Company's Annual Management
Incentive Bonus Plan (the "Bonus Plan"), the Company's executive officers and
other key employees have the opportunity to earn annual performance bonuses.
The performance goals for 1997 bonuses were based on achievement in the
following areas: sales revenues, net income, margin, and earnings per share. The
annual performance goals for the Company are recommended at the beginning of the
fiscal year by the Chief Executive Officer and are approved by the Compensation
Committee. In the Bonus Plan for 1997, the Compensation Committee established
performance standards for each of the corporate financial goals at "acceptable,"
"target" and "maximum" levels. For 1997, a threshold return of 9% on
shareholders' equity had to be achieved before any bonuses were earned
regardless of other corporate, business unit or individual performance results.
The Compensation Committee determined that for the 1997 year, for the
Company's President and Chief Executive Officer, performance would be based
solely on the Company's corporate financial results. The performance of others
eligible for the Bonus Plan would be based on both corporate results as well as
attainment of personal goals. Corporate financial performance accounted for
approximately 75% of an executive's bonus opportunity, and the achievement of
individual goals accounted for the remainder. The Compensation Committee also
determined that for the 1997 Bonus Plan, any "windfall" income or unusual
significant items of expense and any unplanned business unit consolidation would
be excluded from the determination of profits and bonuses. If performance goals
were met or exceeded, the Chief Executive Officer could earn from 5% to 90% of
base salary as bonus. Other executives participating in the Bonus Plan could
earn from 5% to 60% of base salary as bonus. No named executive officers
received bonuses under the Bonus Plan for 1997.
Certain executives who were hired during 1997 received bonuses as promised
upon hire. For named executive officers, these amounts totaled $15,625, as
reflected in "Executive Compensation -- Table 1: Summary Compensation Table."
In addition, certain executives received special bonuses in lieu of the
contributions to the Profit Sharing Plan which would have been made but for
limitations imposed by the Internal Revenue Service on the amount of
compensation that may be considered for contributions. Only one named executive
officer received a special bonus for 1997, which totaled $4,777, as reflected in
"Executive Compensation -- Table 1: Summary Compensation Table."
LONG-TERM INCENTIVE COMPENSATION. The Company's long-term incentive
compensation program is based on the 1991 Stock Incentive Plan. This program
promotes ownership of the Company's Common Stock which, in turn, provides a
common interest between the shareholders and executive officers of the Company.
In establishing a long-term incentive compensation program, the Compensation
Committee concluded that target long-term incentive compensation opportunities
(primarily in the form of stock option grants) should be
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<PAGE> 25
established and that compensation paid under the program should be directly
linked to the performance of the Company (as reflected by increases in the price
of its Common Stock) and the contribution of the individual thereto.
Options usually are granted annually, have an exercise price equal to the
fair market value of the Company's Common Stock on the date of grant and, to
encourage a long-term perspective, have an exercise period of ten years. The
number of options granted to executive officers is based on a review of grant
levels at comparable companies by the Compensation Committee, which is charged
with administering the program. Stock options granted to the named executive
officers during the fiscal year ended December 31, 1997 and year-end option
values are reflected in "Executive Compensation -- Table 2: Option Grants in
Last Fiscal Year" and "Executive Compensation -- Table 3: Aggregated Option
Exercises in Last Fiscal Year and Fiscal Year-End Values."
Additionally, the 1991 Stock Incentive Plan provides for the grant of
restricted stock awards to key employees at the discretion of the Compensation
Committee, either in recognition of extraordinary performance or as a result of
the achievement of preestablished performance goals for periods of at least
three years. No grants of restricted stock to executive officers were approved
during 1997.
CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation of the Company's Chief Executive Officer is consistent
with the compensation philosophy of the Company and is targeted at or slightly
below the 50th percentile of comparable companies. In determining the size of
the base salary component of the Chief Executive Officer's compensation, the
Compensation Committee generally considers competitive industry pay practices,
the Company's performance and the Chief Executive Officer's contribution to that
performance. Upon Mr. Gundeck's resignation, the Compensation Committee agreed
to the compensation for Mr. Carmody indicated in the Summary Compensation Table
for his interim period of service in this position.
On February 24, 1998, Larry L. Gellerstedt, III accepted an offer of
employment as President and Chief Executive Officer of the Company, to be
effective as of March 30, 1998. The Search Committee (in conjunction with the
Compensation Committee) agreed to provide certain signing incentives to Mr.
Gellerstedt, including an award of Restricted Stock to be made on March 30, 1998
in an amount equivalent to $250,000. This Restricted Stock will become vested
and transferable on December 31, 1998, provided that Mr. Gellerstedt is still
employed on that date. In addition, Mr. Gellerstedt will receive a stock option
on March 30, 1998, for 50,000 shares of the Company's Common Stock. This option
will be priced at the fair market value of the Common Stock on the date of
grant, will be immediately vested and will have a term of ten years. Also, as a
signing incentive, Mr. Gellerstedt will be guaranteed a minimum bonus of
$100,000 for the 1998 fiscal year.
Mr. Gellerstedt will receive a base salary of $400,000, which will increase
to $450,000 upon his election as Chairman of the Board of Directors. He will be
eligible to receive annual incentive compensation under the Company's Bonus Plan
and long-term incentive compensation under the 1991 Stock Incentive Plan. The
Company's offer to Mr. Gellerstedt contemplates that he will provide the Board
with a strategic plan for the Company. Upon approval of his strategic plan, the
Board will develop a long-term incentive arrangement for Mr. Gellerstedt to
increase his ownership in the Company's Common Stock over the period of
implementation of his plan.
If the Company terminates Mr. Gellerstedt's employment without cause (as
defined in the offer letter) during the first two years of his employment, or if
Mr. Gellerstedt voluntarily terminates during that period for
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good reason (as defined in the offer letter), the Company will continue his base
salary and group health insurance coverage for 12 months. In such a situation,
before any payment is made by the Company, Mr. Gellerstedt agrees to sign an
agreement containing noncompete, nondisclosure and nonsolicitation provisions to
protect the Company for a period of one year. Prior to the end of the second
year of Mr. Gellerstedt's employment, the Compensation Committee will negotiate
with him as to whether this or any other severance arrangement will apply beyond
the second year of his employment.
If a change in control of the Company occurs and Mr. Gellerstedt is
terminated by the Company or quits for good reason within two years thereafter,
the Company will pay Mr. Gellerstedt three times the sum of his base salary then
in effect plus his most recent bonus under the Bonus Plan and will continue his
group health insurance coverage for a period of three years. Payments made to
Mr. Gellerstedt under the change in control provisions will be limited or
reduced to an amount which will avoid the imposition of golden parachute excise
taxes. In the event payments become due under the change in control provisions
of the offer letter, Mr. Gellerstedt agrees to sign an agreement containing
noncompete, nondisclosure and nonsolicitation provisions to protect the Company
for a period of one year.
The Compensation Committee believes the signing incentives awarded to Mr.
Gellerstedt are competitive with those being offered to new chief executive
officers hired in comparable situations. Further, the Compensation Committee
believes the total compensation arrangement for Mr. Gellerstedt is competitive
with that provided by comparable companies and is commensurate with the
responsibilities of his office as Chief Executive Officer of the Company.
OMNIBUS BUDGET RECONCILIATION ACT OF 1993 IMPLICATIONS FOR EXECUTIVE
COMPENSATION
It is the responsibility of the Compensation Committee to address the
issues raised by the change in the tax laws which made certain
non-performance-based compensation in excess of $1,000,000 to executives of
public companies nondeductible to these companies beginning in 1995. In this
regard, the Compensation Committee must determine whether any actions with
respect to this limit should be taken by the Company. Given the Company's
current level of executive compensation, the Compensation Committee will monitor
this situation and will take appropriate action if it is warranted.
Compensation and Nominating Committee: W. Stell Huie (Chairman), F. Duane
Ackerman, Hollis L. Harris and William B. Stokely III.
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STOCK PERFORMANCE GRAPH
The following line graph compares the cumulative total shareholder return
on the Common Stock of the Company with the cumulative total return of companies
in the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index")
and in a peer group index.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, THE S&P 500 INDEX AND A PEER GROUP INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD AMERICAN BUSINESS
(FISCAL YEAR COVERED) PRODUCTS, INC. S&P 500 INDEX PEER GROUP
<S> <C> <C> <C>
12/31/92 100 100 100
12/31/93 92.84 110.08 126.71
12/31/94 85.75 111.53 126.65
12/31/95 169.78 153.45 166.55
12/31/96 153.68 188.68 211.62
12/31/97 135.89 251.63 193.76
</TABLE>
Assumes $100 invested on December 31, 1992 in the Company's Common Stock,
the S&P 500 Index, and the peer group index and also assumes dividend
reinvestment. The peer group index is composed of the following companies: Ennis
Business Forms, Inc., Moore Corporation Limited, New England Business Service,
Inc., The Reynolds and Reynolds Company ("Reynolds"), The Standard Register
Company and Wallace Computer Services, Inc.
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PROPOSAL 2 -- APPROVAL OF AMENDMENT TO THE
1993 DIRECTORS STOCK INCENTIVE PLAN
BACKGROUND
In 1993, the shareholders of the Company approved the 1993 Directors Stock
Incentive Plan. The shareholders are being asked to consider and approve the
amendment to the 1993 Plan described below. The Board of Directors believes that
the 1993 Plan is a key element of the Company's director compensation program
because stock-based compensation promotes the identity of long-term interests
between the Company's nonemployee directors and its shareholders. In addition,
stock-based compensation aids the Company in attracting and retaining directors,
and in stimulating the efforts of directors for the success of the Company and
its subsidiaries.
On February 11, 1998, the Board of Directors approved an amendment to the
1993 Plan, which, if approved by the shareholders of the Company, would, among
other changes, change the committee responsible for administering the 1993 Plan,
eliminate the ability of directors to receive options in lieu of cash fees,
permit the Administering Committee to make discretionary grants of Options to
nonemployee directors, increase the vesting period of the Options granted after
January 1, 1998, from one year to three years, increase the methods of payment
for the exercise of Options, increase the number of shares available for
issuance under the 1993 Plan, and eliminate the requirement for shareholder
approval of all amendments to the Plan.
Descriptions of the terms of the existing 1993 Plan that would be affected
by the proposed amendment and other material provisions of the Plan that would
not be affected by the proposed amendment are set forth below. The descriptions
do not purport to be complete and are subject to, and qualified in their
entirety by reference to, the text of the 1993 Plan and the proposed amendment
thereto. A copy of the full text of the 1993 Directors Stock Incentive Plan, as
well as the text of the proposed amendment, will be furnished to any shareholder
upon written request made to the Secretary of the Company.
PROPOSED AMENDMENT
ADMINISTERING COMMITTEE
The 1993 Plan currently provides that the members of the Company's
Executive Committee who are not eligible to participate in the 1993 Plan are to
administer and interpret the Plan. The proposed amendment provides that the 1993
Plan will be administered by the Compensation Committee.
INCREASE IN AUTHORIZED SHARES
As originally adopted, the 1993 Plan authorized and reserved 150,000 shares
of the Common Stock for issuance under the 1993 Plan. Due to stock splits, that
number has been adjusted automatically to 225,000 shares. The proposed amendment
would increase the number of shares of Common Stock reserved for issuance under
the 1993 Plan to 425,000 shares. As of March 16, 1998, the fair market value of
the Common Stock was $23.375 per share.
As of December 31, 1997, 185,029 shares of Common Stock were available for
the grant of Stock Rights under the 1993 Plan. The Board of Directors believes
that the proposed increase in the number of shares of Common Stock authorized
for issuance under the 1993 Plan would enable the Company to continue to attract
and retain key directors of the Company and would provide sufficient shares for
grants under the 1993 Plan in the foreseeable future.
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GRANT OF OPTIONS
The 1993 Plan currently provides that a director may elect to forego all or
a portion of his director's fees and receive in lieu of those fees the number of
Options determined by dividing the amount of fees foregone by one-half of the
fair market value of the Company's Common Stock on the date of grant. The
proposed amendment would eliminate this election and authorize the Administering
Committee, at its discretion, to grant Options to the eligible directors from
time to time. Nonemployee directors would continue to receive the applicable
cash fees for their services as directors.
OPTION PRICE
The 1993 Plan currently provides that the purchase price of each share of
Common Stock subject to an Option is one-half of the fair market value of the
Common Stock on the date the Option is granted (the "Option Price"). The
proposed amendment provides that for Options granted on or after January 1,
1998, the Option Price will be equal to the fair market value of the Common
Stock on the date the Option is granted.
VESTING
The 1993 Plan currently provides that Options first become exercisable
(vest) on the one-year anniversary of the date of grant. Pursuant to the
proposed amendment, Options issued on or after January 1, 1998 would vest on a
graduated basis over three years, with one-third of the Options vesting each
year.
PAYMENT OF EXERCISE PRICE
The 1993 Plan currently provides that payment of the Option Price must be
made in full in cash or by tendering shares of Common Stock already owned by the
director or in a combination of cash and shares. The proposed amendment would
add broker-assisted cashless exercises as an additional method of payment of the
Option Price for all Options.
AMENDMENT OF THE 1993 PLAN
The 1993 Plan currently requires that all amendments to the 1993 Plan be
approved by the shareholders and that the Plan may not be amended more than once
every six months, unless necessary to comply with changes to the Code, the
Employee Retirement Income Security Act or any rules or regulations issued
thereunder. The proposed amendment would authorize the Board to amend the 1993
Plan at any time. Shareholder approval would be sought when required by law.
MATERIAL PROVISIONS OF 1993 PLAN NOT AFFECTED BY PROPOSED AMENDMENT
ADMINISTRATION
Subject to the express provisions of the 1993 Plan, the Administering
Committee has full authority to, among other things, determine the terms and
provisions of the instruments by which grants of Stock Rights are evidenced.
SHARES AVAILABLE
Shares underlying any Options granted under the 1993 Plan that expire or
terminate without having been fully exercised or vested will be added to the
Common Stock otherwise available for grants of Stock Rights
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under the 1993 Plan. The number of shares available for issuance under the 1993
Plan is subject to readjustment in accordance with the antidilution provisions
of the Plan.
ELIGIBILITY
Directors who are not otherwise compensated employees of the Company or its
subsidiaries are eligible to receive Stock Rights under the 1993 Plan. Eleven
directors currently are eligible to participate in the 1993 Plan.
OPTIONS
TERM, VESTING AND EXERCISE OF OPTION. Subject to earlier termination upon
an optionee's ceasing to be a director, the term of any Option granted under the
1993 Plan commences on the date the Option is granted and expires three months
following the tenth anniversary of the date the Option is granted.
Generally, no Option will be exercisable unless the optionee has been a
director of the Company since the date of grant and is a director on the date of
exercise. Upon a change of control of the Company, however, all Options become
immediately exercisable for the full number of shares subject to the Option. The
vesting period will also be waived and the participant will be fully vested in
the Options in the event of the disability, retirement, death of the
participant, or his ceasing to serve as director.
An Option may be exercised for less than the full number of shares of
Common Stock subject to the Option, but an Option may not be exercised for less
than the lesser of (i) 100 shares, or (ii) the total remaining shares of Common
Stock subject to the Option. Upon exercise of an Option, payment must be made in
full. Payment must equal the Option Price of the shares subject to the Option
being exercised multiplied by the number of shares being purchased.
TRANSFERS. Options granted under the 1993 Plan are nontransferable and
nonassignable except at death. During the lifetime of an optionee, Options are
exercisable only by the director.
DEATH OF OPTIONEE. In the event of the death of an optionee, any Option or
unexercised portion thereof which is otherwise exercisable may be exercised by
the executor or administrator of his estate at any time prior to the expiration
of one year from the date of death of the director.
RESTRICTED STOCK
AWARDS. Eligible directors under the 1993 Plan will receive an award or
awards of Restricted Stock which will provide the recipient with immediate
rights of ownership in the shares of Common Stock underlying the award. Awards
are subject to conditions and restrictions as specified by the Administering
Committee. Each eligible director will receive Restricted Stock as follows: (i)
upon an eligible director's initial election to the Board, an individual
receives 200 shares of Restricted Stock; (ii) as of the date of the annual
shareholders meeting which follows an employee director's retirement as an
employee of the Company and continuance in his role as a director, an individual
receives 200 shares of Restricted Stock; and (iii) at the beginning of each year
for which an eligible director is reelected or continues to serve as a director
of the Company, an individual receives 100 shares of Restricted Stock. No
director will receive more than 2,000 shares of Restricted Stock.
RESTRICTIONS. Generally, a recipient of Restricted Stock granted prior to
January 1, 1997, will become vested and will obtain a nonforfeitable interest in
the Restricted Stock three years after the date of grant. A recipient's interest
in Restricted Stock granted after January 1, 1997, generally will become vested
and
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<PAGE> 31
nonforfeitable one year after the date of grant. The three-year or one-year
period, as the case may be, will be waived and the recipient will be fully
vested in the Restricted Stock in the event of the disability, retirement, or
death of the recipient or his ceasing to serve as director for any reason.
RIGHTS AS A SHAREHOLDER. Recipients of awards of Restricted Stock have the
right to vote the shares of Restricted Stock and to receive all dividends or
other distributions paid or made with respect to the Restricted Stock; however,
recipients do not have the right to transfer, sell or assign the Restricted
Stock until the lapse of the restrictions.
ADJUSTMENTS
In the event of changes in the number of outstanding shares of Common Stock
or in the event the Common Stock is changed into or exchanged for a different
kind of securities of the Company by reason of stock dividends, splits,
combinations, reclassifications or recapitalizations, an appropriate adjustment
will be made by the Committee to the number and kind of shares subject to
outstanding Stock Rights and remaining available for issuance pursuant to Stock
Rights to be granted under the 1993 Plan.
TERMINATION OF PLAN
The Plan will terminate upon the later of (i) the complete exercise or
lapse of the last outstanding Option or (ii) April 27, 2004, the last date upon
which Stock Rights may be granted under the 1993 Plan. In addition, the Board of
Directors may terminate the 1993 Plan in whole or in part in the event the Board
determines that the 1993 Plan is not in the best interest of the Company or its
shareholders for any reason. However, no such termination will affect the rights
of any optionee who has outstanding Stock Rights without the consent of the
optionee.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the consequences under the Internal
Revenue Code in effect on the date hereof of the receipt or exercise of Options
and awards of Restricted Stock under the 1993 Plan. This summary is not intended
to be exhaustive.
NONQUALIFIED STOCK OPTIONS
Neither the Company nor the optionee has income tax consequences from the
issuance of nonqualified stock options (NSOs). Generally, in the tax year when
an optionee exercises a NSO, the optionee recognizes ordinary income in the
amount by which the fair market value of the shares at the time of exercise
exceeds the option exercise price for such shares. The Company generally will
have a deduction in the same amount as the ordinary income recognized by the
optionee in the Company's tax year in which the optionee's tax year (of
exercise) ends.
If an optionee exercises a NSO by paying the Option exercise price with
previously acquired Company stock, the optionee will recognize income (relative
to the new shares he is receiving) in two steps. In the first step, a number of
new shares equivalent to the number of shares tendered (in payment of the NSO
exercised) is considered to have been exchanged in accordance with Internal
Revenue Code Section 1036 and the rulings thereunder and no gain or loss is
recognized. In the second step, with respect to the number of new shares
acquired in excess of the number of shares tendered, the optionee will recognize
income on those new shares equal to their fair market value less any nonstock
consideration tendered. The new shares equal to the number
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<PAGE> 32
of shares tendered will receive the same basis the optionee had in the tendered
shares, and the holding period with respect to the tendered shares will apply to
those new shares. The new shares received in excess of the number of tendered
shares will have a basis equal to the amount of income recognized by the
optionee upon exercise, increased by any nonstock consideration tendered.
RESTRICTED STOCK
A recipient of Restricted Stock will recognize income upon its receipt, but
generally to the extent that it is not subject to a substantial risk of
forfeiture. If the Restricted Stock is subject to restrictions that lapse in
increments over a period of time, so that the recipient becomes vested in a
portion of the shares as the restrictions lapse, the recipient will recognize
income in any tax year only with respect to the portion of the Restricted Stock
that becomes nonforfeitable during that year. The income recognized will be
equal to the fair market value of those shares, determined as of the time that
the restrictions on those shares lapse. That income generally will be taxable at
ordinary income tax rates. The Company generally will be entitled to a deduction
in an amount equal to the amount of ordinary income recognized by the recipient
of the Restricted Stock.
A recipient of Restricted Stock may elect instead to recognize ordinary
income for the taxable year in which he receives an award of Restricted Stock in
an amount equal to the fair market value of all shares of Restricted Stock
awarded to him (even if the shares are subject to forfeiture). That income will
be taxable at ordinary income tax rates. At the time of disposition of the
shares, a recipient who has made such an election will recognize gain in an
amount equal to the difference between the sales price and the fair market value
shares at the time of the award. Such gain will be taxable at the applicable
capital gains rate. Any election must be made within 30 days after the transfer
of the Restricted Stock to the recipient. The Company will be entitled to a
deduction in an amount equal to the amount of ordinary income recognized by the
recipient at the time of his election.
STOCK RIGHTS GRANTED UNDER THE 1993 DIRECTORS STOCK INCENTIVE PLAN
Options were first granted under the 1993 Plan on April 27, 1994. As of
December 31, 1997, Options had been granted to the Company's current nonemployee
directors as follows: Mr. Carmody -- 0 shares; Mr. Harris -- 0 shares; Mr. Huie
- -- 4,939 shares; Mr. Miller -- 1,277 shares; Mr. McDonald -- 0 shares; Mr.
Biggers -- 0 shares; Mr. Northrop -- 6,216 shares; Mr. Ackerman -- 6,216 shares;
Mr. Keller -- 6,216 shares; Mr. McGlaughlin -- 1,277 shares and Mr. Stokely -- 0
shares. All of such Options were granted at one-half of the fair market value of
the Company's Common Stock on the date of grant and the Company received
consideration equal to one-half of such fair market value for each Option
granted.
Restricted Stock was first granted under the 1993 Plan on April 27, 1994.
As of December 31, 1997, Restricted Stock had been granted to current
nonemployee directors as follows: Mr. Carmody -- 200 shares; Mr. Harris -- 400
shares; Mr. Huie -- 400 shares; Mr. Miller -- 300 shares; Mr. McDonald -- 200
shares; Mr. Biggers -- 400 shares; Mr. Northrop -- 400 shares; Mr.
Ackerman -- 300 shares; Mr. Keller -- 300 shares; Mr. McGlaughlin -- 300 shares;
and Mr. Stokely -- 200 shares. All the Restricted Stock was awarded at no cost
to the directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE PROPOSAL TO AMEND THE 1993 DIRECTORS STOCK INCENTIVE PLAN.
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<PAGE> 33
PROPOSAL 3 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Deloitte & Touche LLP to
continue as independent auditors of the Company for the fiscal year ending
December 31, 1998 and has directed that such appointment be submitted to the
shareholders of the company for ratification at the Annual Meeting. Deloitte &
Touche LLP (or its predecessor) has served as independent auditors of the
company since 1969 and is considered by management of the company to be well
qualified. If the shareholders do not ratify the appointment of Deloitte &
Touche LLP, the Board of Directors will reconsider the appointment.
Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting. They will have an opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions from shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998.
SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
BENEFICIAL OWNERSHIP REPORTING
Section 16(a) of the Securities Exchange Act of 1934, as amended, and
regulations of the Commission thereunder require the Company's executive
officers and directors and persons who own more than ten percent of the
Company's Common Stock, as well as certain affiliates of such persons, to file
initial reports of ownership and changes in ownership with the Commission and
the Exchange. Executive officers, directors and persons owning more than ten
percent of the Company's Common Stock are required by Commission regulation to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on its review of the copies of such reports received by it and written
representations from the reporting persons that no other reports were required
for those persons, to the Company's knowledge, during and with respect to the
fiscal year ended December 31, 1997, all filing requirements applicable to its
executive officers, directors, and beneficial owners of more than ten percent of
the Company's Common Stock were complied within a timely manner.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Shareholder proposals and director nominations intended to be presented at
the 1999 Annual Meeting of Shareholders of the Company must be submitted to the
Company in accordance with the procedures set forth in Article II, Section 1 and
Article III, Section 2, respectively, of the Bylaws of the Company. The effect
of these provisions is that shareholders must submit such proposals and
nominations in writing to the Company on or before November 20, 1998 in order
for such matters to be included in the Company's proxy materials for, and voted
upon at, the 1999 Annual Meeting. All such proposals and nominations should be
submitted on or before such date by certified mail, return receipt requested, to
the Secretary of the Company at 2100 RiverEdge Parkway, Suite 1200, Atlanta,
Georgia 30328 (P.O. Box 105684, Atlanta, Georgia 30348).
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors of the Company knows of no matters other than those
referred to in the accompanying Notice of Annual Meeting of Shareholders which
properly may come before the Annual Meeting. However, if any other matter should
be presented properly for consideration and voting at the
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<PAGE> 34
Annual Meeting or any adjournments thereof, it is the intention of the persons
named as proxies on the enclosed proxy card(s) to vote the shares represented by
all valid proxy cards in accordance with their judgment of what is in the best
interests of the Company.
By Order of the Board of Directors
/s/ Dawn M Gray
DAWN M. GRAY
Secretary
Atlanta, Georgia
March 20, 1998
---------------------
The Company's 1997 Annual Report, which includes audited financial
statements, has been mailed to shareholders of the Company with these proxy
materials. The Annual Report does not form any part of the material for the
solicitation of proxies.
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<PAGE> 35
AMERICAN BUSINESS PRODUCTS, INC.
Dear Shareholder:
Please take note of the important information enclosed with this proxy
ballot. Your vote is very important and we would appreciate your taking a few
minutes to review the 1997 Annual Report and the Proxy Statement, which provide
background on the proposals being considered at this year's Annual Meeting.
Please read them carefully and decide how you would like to vote.
Please mark the boxes on the attached voting instruction card to vote your
shares. Then sign and date the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Thomas R. Carmody
Chairman and Interim President
and Chief Executive Officer
<PAGE> 36
APPENDIX A
AMERICAN BUSINESS PRODUCTS, INC.
COMMON STOCK
RECORD DATE SHARES:
1. The election as directors of the four nominees listed below to serve
until the 2001 Annual Meeting of Shareholders or until their respective
successors are elected and qualified.
// For All Nominees // Withhold // For All Except
LARRY L. GELLERSTEDT, III, HOLLIS L. HARRIS, W. STELL HUIE AND JAMES F. McDONALD
NOTE: If you do not wish your shares voted "For" a particular nominee, mark the
"For All Except" box and strike a line through the name(s) of the nominee(s).
Your shares will be voted for the remaining nominee(s).
2. Approval of Amendment to Company's 1993 Directors Stock Incentive Plan.
// For // Against // Abstain
3. Ratification of the appointment of Deloitte & Touche LLP as independent
auditors of the Company for the 1998 fiscal year.
// For // Against // Abstain
In their discretion, the proxies are authorized to vote upon such other
business that properly may come before the Annual Meeting and any adjournments
thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" EACH OF THE LISTED NOMINEES AND
PROPOSALS.
Please be sure to sign and date
this Proxy. Date:____________
Mark box at right if an address change or
comments has been noted on the reverse side
of this card. __
- ---------------------- ---------------------
Shareholder sign here Co-owner sign here
<PAGE> 37
AMERICAN BUSINESS PRODUCTS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR
THE 1998 ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Henry Curtis, VII and G. Harold
Northrop, and each of them, proxies, with full powers of substitution, to act
for and in the name of the undersigned to vote all shares of Common Stock of
American Business Products, Inc. (the "Company") which the undersigned is
entitled to vote at the 1998 Annual Meeting of Shareholders, to be held at The
Cobb Galleria Centre, Two Galleria Parkway, Atlanta, Georgia, on Friday, May 8,
1998 at 11:00 a.m., Atlanta time, and at any and all adjournments thereof, as
indicated below. Receipt of the Notice of Meeting and the accompanying Proxy
Statement hereby is acknowledged.
THIS PROXY CARD WILL BE VOTED AS DIRECTED. IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY CARD WILL BE VOTED "FOR" EACH OF THE NOMINEES AND EACH OF
THE PROPOSALS LISTED ON THE REVERSE SIDE OF THIS PROXY CARD. IF ANY OTHER
BUSINESS IS PROPERLY PRESENTED AT THE ANNUAL MEETING, THIS PROXY CARD
WILL BE VOTED BY THE PROXIES IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE
BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED TO A VOTE OF THE
SHAREHOLDERS AT THE ANNUAL MEETING.
If the undersigned elects to withdraw this proxy card on or before the
time of the Annual Meeting or any adjournments thereof by notifying the
Secretary of the Company in writing at or prior to the Annual Meeting of the
decision of the undersigned to withdraw this proxy card, then the power of said
proxies shall be deemed terminated and of no further force and effect. The
undersigned may withdraw this proxy card in the manner described above, or by
submitting a duly executed and later dated proxy card to the Secretary, or by
appearing and voting in person at the Annual Meeting all shares of Common Stock
of the Company owned by the undersigned as of the record date (March 2, 1998).
PLEASE VOTE, DATE AND SIGN ON THE REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please mark, date and sign exactly as your name appears on the proxy
card. When shares are held jointly, both holders should sign. When signing as
attorney, executor, administrator, trustee, custodian or guardian, please give
your full title. If the holder is a corporation or partnership, the full
corporate or partnership name should be signed by a duly authorized officer.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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<PAGE> 38
AMERICAN BUSINESS PRODUCTS, INC.
Dear Fellow Employee:
This proxy ballot represents shares of American Business Products, Inc.
Common Stock, which are owned for your benefit through participation in the
American Business Products, Inc. Profit Sharing Retirement Plan. If you invest
through the American Business Products, Inc. Employee Savings Plan ("ESP"), it
also includes shares of ABP Common Stock credited to your "ESP" account. As a
participant in either or both of these plans, you have the right as a beneficial
owner to direct the vote of the shares allocated to your account at the Annual
Meeting of Shareholders, which will be held May 8, 1998.
Your vote, as a beneficial owner, is very important and we would
appreciate your taking a few minutes to review the 1997 Annual Report and the
Proxy Statement, which provide background on the proposals being considered at
this year's Annual Meeting. Read them carefully and decide how you want to vote.
Then mark the boxes on the attached voting instruction card instructing the
Trustees how to vote shares allocated to your account. Then sign and date the
card, detach it and return your proxy vote in the enclosed postage-paid
envelope.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Thomas R. Carmody
Chairman and Interim President
and Chief Executive Officer
<PAGE> 39
APPENDIX B
AMERICAN BUSINESS PRODUCTS, INC.
EMPLOYEE SAVINGS PLAN
PROFIT SHARING RETIREMENT PLAN
1. The election as directors of the four nominees listed below to serve
until the 2001 Annual Meeting of Shareholders or until their respective
successors are elected and qualified.
// For All Nominees // Withhold // For All Except
LARRY L. GELLERSTEDT, III, HOLLIS L. HARRIS, W. STELL HUIE and JAMES F. McDONALD
NOTE: If you do not wish your shares voted "For" a particular nominee, mark the
"For All Except" box and strike a line through the name(s) of the nominee(s).
Your shares will be voted for the remaining nominee(s).
2. Approval of Amendment to Company's 1993 Directors Stock Incentive Plan.
// For // Against // Abstain
3. Ratification of the appointment of Deloitte & Touche LLP as independent
auditors of the Company for the 1998 fiscal year.
// For // Against // Abstain
In their discretion, the proxies are authorized to vote upon such other
business that properly may come before the Annual Meeting and any adjournments
thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" EACH OF THE LISTED NOMINEES AND
PROPOSALS.
Please be sure to sign and date
this Proxy. Date:____________
Mark box at right if an address change or
comments has been noted on the reverse side
of this card. __
- --------------------------------
Participant sign here
<PAGE> 40
AMERICAN BUSINESS PRODUCTS, INC.
EMPLOYEE SAVINGS PLAN AND PROFIT SHARING RETIREMENT PLAN
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
1998 ANNUAL MEETING OF SHAREHOLDERS
PURSUANT TO THE TERMS OF THE AMERICAN BUSINESS PRODUCTS, INC. EMPLOYEE
SAVINGS PLAN (THE "SAVINGS PLAN") AND THE AMERICAN BUSINESS PRODUCTS, INC.
PROFIT SHARING RETIREMENT PLAN (THE "PROFIT SHARING PLAN"), THE SHARES OF COMMON
STOCK TO WHICH THIS PROXY CARD RELATES MAY NOT BE VOTED IN PERSON AT THE ANNUAL
MEETING.
The undersigned hereby appoints Thomas R. Carmody, Henry Curtis VII,
John H. Karr, and Robert J. Dahl (as the Trustees of the Savings Plan and the
Profit Sharing Plan), and each of them, proxies, with full powers of
substitution, to act for and in the name of the undersigned to vote all shares
of Common Stock of American Business Products, Inc. attributable to the
undersigned's account pursuant to the Savings Plan and/or Profit Sharing Plan
which the undersigned is entitled to vote in connection with the 1998 Annual
Meeting of Shareholders, to be held at The Cobb Galleria Centre, Two Galleria
Parkway, Atlanta, Georgia, on Friday, May 8, 1998 at 11:00 a.m. Atlanta time,
and at any and all adjournments thereof, as indicated below. Receipt of the
Notice of Meeting and the accompanying Proxy Statement hereby is acknowledged.
THIS PROXY CARD WILL BE VOTED AS DIRECTED. IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY CARD WILL BE VOTED WITH REGARD TO THE PROPOSALS LISTED ON
THE REVERSE SIDE HEREOF IN ACCORDANCE WITH THE TERMS OF THE SAVINGS PLAN AND THE
PROFIT SHARING PLAN AS MORE FULLY DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT.
If any other business is properly presented at the Annual Meeting, this proxy
card will be voted by the proxies in their best judgment as Trustees of the
Plans. At the present time, the Board of Directors knows of no other business to
be presented to a vote of the shareholders at the Annual Meeting.
If the undersigned elects to withdraw this proxy card on or before the
time of the Annual Meeting or any adjournments thereof and notifies the Trustees
at or prior to the Annual Meeting of the decision of the undersigned to withdraw
this proxy card, then the power of said proxies shall be deemed terminated and
of no further force and effect. The undersigned may withdraw this proxy card in
the manner described above or by submitting to the Trustees a duly executed and
later dated proxy card.
PLEASE VOTE, DATE AND SIGN AND ON THE REVERSE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
Please mark, date and sign exactly as your name appears on the proxy card. When
signing as attorney, executor, administrator, trustee, custodian or guardian,
please give your full title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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