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Preliminary Copies
HUNT MANUFACTURING CO.
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LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held on April 13, 1994
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To Our Shareholders:
The Annual Meeting of Shareholders of Hunt Manufacturing Co. will be
held at 10:00 o'clock a.m. on April 13, 1994, on the 8th floor, Mellon
Bank Center, 1735 Market Street, Philadelphia, Pennsylvania, for the
following purposes:
1. To elect three directors to serve for a three-year term;
2. To vote on a proposal to amend Article 5th of the Company's
Restated Articles of Incorporation, as described in the enclosed proxy
statement, to increase the total number of authorized Common Shares,
par value $.10 per share, of the Company from 20,000,000 shares to
40,000,000 shares;
3. To vote on a proposal to approve the Company's 1994
Non-Employee Directors' Stock Option Plan;
4. To vote on a proposal to ratify the appointment of independent
auditors; and
5. To transact such other business as may properly come before the
meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on February 15,
1994, as the record date for the determination of shareholders entitled to
notice of, and to vote at, the meeting and any adjournments thereof.
All shareholders are cordially invited to attend the meeting in
person. However, whether or not you plan to attend, please promptly sign,
date and mail the enclosed proxy card in the enclosed return envelope
which requires no postage if mailed in the United States. Returning your
proxy card does not deprive you of your right to attend the meeting and
vote your shares in person.
By order of the Board of Directors,
WILLIAM E. CHANDLER, Secretary
March 4, 1994
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HUNT MANUFACTURING CO.
230 South Broad Street
Philadelphia, PA 19102
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PROXY STATEMENT
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This proxy statement, which is being sent to shareholders on or about
March 8, 1994, is furnished in connection with the solicitation of proxies
by the Board of Directors of Hunt Manufacturing Co. (the "Company") for
use at the forthcoming Annual Meeting of Shareholders (the "Meeting") to
be held on April 13, 1994, and at any adjournments thereof.
At the close of business on February 15, 1994, the record date for
determination of shareholders entitled to notice of, and to vote at, the
meeting, there were outstanding an aggregate of 16,123,240 of the
Company's Common Shares. Pursuant to the Company's 1990 shareholders'
Rights Agreement, rights to purchase securities of the Company under
certain circumstances are deemed to be attached to outstanding Common
Shares.
Voting and Revocability of Proxies
Each Common Share is entitled to one vote on all matters to come
before the Meeting, except that shareholders have the right to cumulate
their votes in the election of directors. This means that shareholders may
multiply the number of votes to which they are entitled by the number of
directors to be elected, and the whole number of such votes may be cast
for one nominee or distributed among any two or more nominees. If you wish
to cumulate your votes in this manner, you must clearly indicate on your
proxy card your desire to cumulate and how many votes you wish to cast for
each nominee.
In the election of directors, assuming a quorum is present, the three
nominees receiving the highest number of votes cast at the Meeting will be
elected. The affirmative vote of a majority of the votes cast at the
meeting is required for approval of Proposals 2, 3 and 4 , assuming a
quorum is present with respect to such matter, and further assuming, with
respect to Proposal 3, that the total vote cast represents a majority of
the outstanding Common Shares entitled to vote at the Meeting. Abstentions
(except with respect to Proposal 3) or the specific direction not to cast
any vote on a specific matter, such as broker non-votes, will not
constitute the casting of a vote on such matter.
Your proxy may be revoked at any time prior to its exercise by giving
written notice to the Secretary of the Company, by presenting a duly
executed proxy bearing a later date or by voting in person at the Meeting,
but your mere attendance at the Meeting will not revoke your proxy. Your
proxy, when properly executed, will be voted in accordance with the
specific instructions indicated on your proxy card. Unless contrary
instructions are given, your proxy will be voted FOR the election of the
three nominees for director, as provided under "Election of Directors"
below (in equal amounts or cumulatively, as the persons voting the proxies
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may determine); FOR approval of the amendment to the Restated Articles of
Incorporation increasing the number of authorized Common Shares; FOR
approval of the 1994 Non-Employee Directors' Stock Option Plan; FOR
ratification of the appointment of Coopers & Lybrand as the Company's
independent auditors for the 1994 fiscal year; and, to the extent
permitted by the rules of the Securities and Exchange Commission, in
accordance with the judgment of the persons voting the proxies upon such
other matters as may come before the Meeting and any adjournments.
1. ELECTION OF DIRECTORS
The Restated Articles of Incorporation and By-laws of the Company
provide that the number of directors shall be eleven, to be divided into
three classes as nearly equal in number as possible. The class which comes
up for election at the 1994 Annual Meeting consists of three directors.
The Board of Directors has nominated, and recommends the election of, the
following three persons to serve as directors of the Company until the
1997 Annual Meeting or until their successors are elected and have
qualified:
Jack Farber Gordon A. MacInnes, Jr. Ronald J. Naples
All the nominees are presently serving as directors of the Company,
having previously been elected by the shareholders of the Company.
Although the Board of Directors has no reason to believe any of the
nominees will be unable to serve, if such should occur, proxies will be
voted (unless marked to the contrary) for such person or persons, if any,
as shall be recommended by the Board of Directors. However, proxies will
not be voted for the election of more than three directors.
The following table sets forth, as of February 1, 1994, certain
information with respect to each nominee for election as a director and
each director whose term of office will continue after the Meeting:
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<TABLE>
<CAPTION>
Present
Name, Age and Director Term
Occupation(1) Since Expires
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<S> <C> <C>
Vincent G. Bell, Jr., 68 1986 1996
President of Verus Corporation, a financial management company.
Director of Safeguard Scientifics, Inc. and of BHC Securities, Inc.
Jack Farber, 60 1970 1994
Chairman of the Board and President of CSS Industries, Inc., a
diversified holding company. Trustee of Pennsylvania Real Estate
Investment Trust.
Robert B. Fritsch, 62 1987 1996
President and Chief Operating Officer of the Company.
William F. Hamilton, Ph.D., 54 1986 1995
Landau Professor of Management and Technology, The Wharton School of
the University of Pennsylvania. Director of Centocor Inc. and of
Marlton Technologies, Inc.
Mary R. (Nina) Henderson, 43 1991 1995
President of CPC Specialty Products, Inc., a subsidiary of CPC
International, Inc., a manufacturer and marketer of specialty foods
and non-food products.
Gordon A. MacInnes, Jr., 52(2) 1970 1994
New Jersey State Senator (since 1994) and writer under contract with
20th Century Fund, an operating charitable foundation. Previously
consultant in fund raising and public policy (1985-1990).
Wilson D. McElhinny, 64................................................. 1993 1995
Chairman of the Board of Irex Corporation, a specialty contract and
insulation company (since 1992). Previously Chairman, President and
Chief Executive Officer (1988-1990), and Chairman of Executive
Committee (1983-1992), of Hamilton Bank, and Vice Chairman of
CoreStates Financial Corp. (1986-1990). ..............................
Ronald J. Naples, 48 1982 1994
Chairman of the Board and Chief Executive Officer of the Company.
Director of Quaker Chemical Co. and of Advanta Corp.
Robert H. Rock, D.B.A., 43 1989 1996
Chairman of IDD Holdings, Inc. and President of MLR Enterprises, Inc.,
publishing companies which produce business publications and
information. Director of R.P. Scherer Corporation and of Opinion
Research Corp.
Roderic H. Ross, 63 1978 1995
Chairman of the Board, President and Chief Executive Officer of
Keystone State Life Insurance Co. Director of PNC Financial Corp.
Victoria B. Vallely, 43(2) 1976 1996
Director of the Company.
</TABLE>
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(1) Except as otherwise noted, the named individuals have had the
occupations indicated (other than directorships) for at least five
years.
(2) Mr. MacInnes is married to Ms. Vallely's sister. Both Mrs. MacInnes
and Ms. Vallely are daughters of the late George E. Bartol III, a
former Chairman of the Board, Chief Executive Officer and principal
shareholder of the Company.
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Information Concerning Meetings and Certain Committees
The Board of Directors held six formal meetings during fiscal 1993.
The Company has standing Audit, Compensation, and Nominating Committees of
its Board of Directors. The Audit Committee members are Messrs. Farber and
Hamilton and Ms. Henderson. This Committee makes recommendations to the
Board of Directors concerning the engagement, retention and discharge of
independent auditors, reviews with the Company's independent auditors the
plans and results of the auditing engagement, the Company's financial
statements and the adequacy of the Company's system of internal accounting
controls, and directs any investigations into matters within the scope of
the foregoing duties. During fiscal 1993, the Audit Committee met twice.
The Compensation Committee is composed of Messrs. Bell, MacInnes, Rock and
Ross. This Committee establishes the salaries of executive officers and
makes recommendations to the Board of Directors regarding the adoption,
extension, amendment and termination of compensation plans in which
officers or directors may participate. It also exercises administrative
powers pursuant to certain of those plans. The Compensation Committee held
five formal meetings during fiscal 1993. The members of the Nominating
Committee are Messrs. Farber, MacInnes and Naples. The purpose of this
Committee, which held one formal meeting during fiscal 1993, is to
identify and recommend to the Board qualified individuals to serve as
directors of the Company. The Nominating Committee has not determined
whether it will consider nominees recommended by shareholders.
During fiscal 1993, all directors attended in person or by conference
telephone at least 75% of the total number of meetings of the Board of
Directors and committees of the Board on which they served.
Compensation of Directors
The Company pays annual directors' fees of $10,000, plus $750 for each
Board meeting and $750 ($1,000 for Committee Chairmen) for each committee
meeting attended, to each of its non-officer directors. (The fees until
September 1993 were $8,000 plus $500 for each Board meeting and $350 for
each committee meeting). The Company also reimburses directors for certain
expenses incurred in attending Board and committee meetings. From time to
time, the Company also compensates non-officer directors for special
services but did not do so in fiscal 1993.
The non-officer directors also have received a grant of stock options
under the 1994 Non-Employee Directors' Stock Option Plan, subject to
shareholder approval of that Plan. See Proposal 3 below.
2. AMENDMENT TO RESTATED ARTICLES OF INCORPORATION
On January 26, 1994, the Company's Board of Directors unanimously
adopted, subject to shareholder approval, an amendment to Article 5th of
the Company's Restated Articles of Incorporation, increasing the total
number of shares of authorized capital stock of the Company from the
current 21,000,000 shares, comprised of 20,000,000 Common Shares, par
value $.10 per share, and 1,000,000 Preferred Shares, par value $.10 per
share, to 41,000,000 shares, consisting of 40,000,000 Common Shares and
1,000,000 Preferred Shares. The shareholders will be asked to approve this
amendment at the Meeting.
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As of February 15, 1994, out of the 20,000,000 Common Shares currently
authorized, 16,123,240 shares were outstanding and only 3,876,760 shares
were available for issuance by the Company. Of this latter number,
2,445,058 shares were reserved for issuance under options or grants
outstanding or authorized under the Company's employee stock option and
long-term incentive compensation plans, and an additional 90,000 shares
were reserved for issuance under the 1994 Non-Employee Directors' Stock
Option Plan described in Proposal 3 below, subject to shareholder approval
of that Plan. The Board of Directors believes that the additional
20,000,000 Common Shares proposed to be authorized will provide
flexibility for steps the Company might wish to take in the future
relating to possible employee stock benefit plans, financings,
acquisitions, stock splits and other appropriate corporate transactions.
If the issuance of Common Shares is deemed advisable in connection with
such matters, the existence of authority to issue the additional shares
may avoid the necessity for, and the expense and delay of, a special
shareholders, meeting to increase the Company's authorized Common Shares.
Although the Board of Directors is not proposing the authorization of
the additional Common Shares as an "anti-takeover" device, it is
possible that such additional shares could be used to discourage or impede
a tender offer or other attempt to gain control of the Company.
In August 1990, as many other public companies have done, the Company
adopted a shareholders' Rights Agreement (the "Rights Plan") in order to
provide the Board of Directors with flexibility in protecting the
interests of the Company's shareholders and other constituencies in the
event of an actual or potential unsolicited hostile, coercive or unfair
takeover of the Company. Pursuant to the Rights Plan, the Company then
declared a dividend of one right (a "Right") for each outstanding Common
Share. The Rights initially are deemed to be attached to the outstanding
Common Shares and detach and become exercisable only if (with certain
exceptions and limitations) a person or group obtains or attempts to
obtain beneficial ownership of 15% or more of the outstanding Common
Shares (an "Acquiring Person") or is determined to be an "Adverse
Person" by the Board of Directors of the Company, and if the Company's
right to redeem the Rights (as referred to below) has expired. Each Right,
if and when it becomes exercisable, initially entitles holders of Common
Shares (other than Acquiring Persons and Adverse Persons) to purchase one
one-thousandth of a share of Junior Participating Preferred Shares (Series
A, of which 50,000 shares currently are authorized for issuance) for $60,
subject to adjustment. However, in certain potential or actual takeover
situations, each Right converts, subject to adjustment, into the right to
purchase, for $60, $120 worth of Common Shares (assuming there are
sufficient authorized Common Shares for such purpose) or other securities
or property of the Company or an acquiring company. The Rights are
redeemable by the Company at $.01 per Right in certain circumstances and
expire, unless earlier exercised or redeemed, on December 31, 2000.
Because of the flexible powers vested by the Rights Plan in the Board of
Directors, the Plan should not interfere with a proposed merger or similar
business transaction which has been approved by a majority of the
disinterested directors.
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The Company's Restated Articles of Incorporation and By-laws also
currently contain certain provisions which may be viewed as having
potential anti-takeover effects. The classification of the Company's Board
of Directors into three classes serving staggered three-year terms reduces
the effect of shareholders' cumulative voting rights and makes it more
difficult for a shareholder or group of shareholders to gain control of
the Board of Directors. The Company's Restated Articles of Incorporation
also require the affirmative vote of at least 70% of all of the securities
of the Company entitled to vote in order: (i) to effect certain mergers,
sales of assets, or other dispositions or stock issuances involving the
Company and a "Related Person" (defined generally as a person or entity
which directly or indirectly beneficially owns 5% or more of the voting
securities of the Company), unless such transaction is approved by a
majority of the "Continuing Directors" of the Company (which term
includes all directors duly elected prior to the time the other party to
the transaction became a "Related Person", as well as all the Company's
present directors who have served since April 1982); (ii) generally to
change the number of authorized directors from eleven (unless approved by
two-thirds of the directors then in office) or to remove a director; or
(iii) to amend the provisions of the Company's Restated Articles of
Incorporation and By-laws relating to items (i) and (ii) above.
Further, the 1,000,000 presently authorized but unissued Preferred
Shares (which includes the 50,000 shares of Series A Junior Participating
Preferred Stock reserved for issuance under the Rights Plan described
above) may be issued in one or more series and with such designations,
preferences and relative rights, including voting and conversion rights,
as the Board of Directors may fix by resolution. In the event of a
threatened takeover of the Company, it could be possible for the Board to
authorize the issuance of one or more additional series of Preferred
Shares, either alone or in conjunction with issuances of the additional
20,000,000 Common Shares proposed to be authorized, which could make it
difficult for such takeover to succeed. Since holders of Common Shares are
not entitled to preemptive rights, issuances by the Company of Preferred
Shares or additional Common Shares, other than to existing shareholders,
could have the effect of reducing the voting power of, and would dilute
the percentage ownership in the Company of, existing shareholders.
If the 20,000,000 additional Common Shares are authorized, no further
action or authorization by the Company's shareholders will be necessary
prior to the issuance of such Common Shares, except as might be required
for a particular transaction by applicable law or by agreements with or
policies of the New York Stock Exchange and any other stock exchanges on
which the Company's securities then may be listed. The Board of Directors
has no present plans with respect to the issuance of any of the additional
Common Shares proposed to be authorized.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT.
---
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3. APPROVAL OF THE 1994 NON-EMPLOYEE DIRECTORS' STOCK
OPTION PLAN
The shareholders also will be asked to approve the 1994 Non-Employee
Directors' Stock Option Plan (the "Directors' Plan") which the Company's
Board of Directors unanimously adopted on January 26, 1994, subject to
shareholder approval.
The purpose of the Directors' Plan is to assist the Company in
attracting and retaining capable outside directors, and to motivate them
to promote the best interests of the Company and its shareholders.
The text of the Directors' Plan is attached as an Appendix to this
proxy statement. The following description of the Directors' Plan is
intended merely as a summary of its principal features and is qualified in
its entirety by reference to the provisions of the Plan itself.
The Directors' Plan authorizes up to an aggregate of 90,000 Common
Shares for the granting of nonqualified stock options. Shares subject to
options which remain unexercised upon expiration or termination of such
options will once again become available for the granting of options under
the Plan.
The Directors' Plan is administered by the Compensation Committee of
the Board (the "Committee"). However, in order that the Plan and various
other Company stock plans may be eligible for exemption under Rule 16b-3
under the Securities Exchange Act of 1934 ("Rule 16b-3"), the
Compensation Committee is not given discretion under the Plan with respect
to the selection of directors to receive options, the number of shares
subject to the Plan, the amount, timing or exercise price of options
granted under the Plan or with respect to any other matter which would
cause the Plan to fail to comply with Rule 16b-3.
The Plan provides for automatic, one-time grants of nonqualified stock
options to purchase 5,000 Common Shares to each Non-Employee Director on
January 26, 1994, the effective date of the Plan. Non-Employee Directors
are those directors who are not, and during the past twelve months have
not been, employees of the Company or any related corporation. A person
who was not a Non-Employee Director on the effective date but who later
becomes a Non-Employee Director will be granted a similar 5,000 share
option on the date such person becomes a Non-Employee Director. The
exercise price of options granted under the Plan must be equal to the
higher of the fair market value of the Common Shares on the date of grant
or the par value of such shares.
On January 26, 1994, there were nine persons who were Non-Employee
Directors (Messrs. Bell, Farber, Hamilton, MacInnes, McElhinny, Rock and
Ross, Ms. Henderson and Ms. Vallely), each of whom was granted on that
date, subject to shareholder approval of the Plan, a 5,000 share option at
an exercise price of $16.875 per share. No other options have been granted
under the Plan. The closing price of the Common Shares on the New York
Stock Exchange on February 15, 1994 was $18.125, resulting in an aggregate
value of the 45,000 Common Shares underlying the outstanding options under
the Directors' Plan of $815,625 on that date.
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Options under the Plan extend for a term of ten years (subject to
earlier termination in certain circumstances) and become exercisable at
the rate of 20% per year over five years commencing one year after the
date of grant, subject to acceleration in limited circumstances. The
exercise price must be paid in cash or its equivalent. Options generally
remain exercisable for a period of one year following the time an optionee
ceases to be a director for any reason or until the earlier expiration of
the options' stated term. During such period, options continue to vest,
except if an optionee ceases to be a director because of his or her death,
in which case the option immediately accelerates and becomes exercisable
in full. Options are not transferable other than by will or pursuant to
the laws of descent and distribution.
The Directors' Plan provides that proportionate adjustments will be
made in the number of Common Shares issuable under the Plan, and in the
exercise price and number of Common Shares subject to options granted
thereunder, in the event of a stock split, stock dividend, combination or
similar change in capitalization. In the event of a merger or other
specified corporate transaction, if options are not assumed by the
surviving corporation, the options will accelerate and become exercisable
in full, but any unexercised options will terminate upon the consummation
of such corporate transaction.
Subject to certain limitations, the Board of Directors may discontinue
or amend the Plan as it deems necessary, but no discontinuance or
amendment may adversely affect the rights of an optionee with respect to
an outstanding option without his or her consent. Shareholder approval,
however, will be required for any amendment which would materially: (i)
increase the benefits accruing to Non-Employee Directors under the Plan;
(ii) increase the number of Common Shares which may be issued to
Non-Employee Directors under the Plan; or (iii) modify the requirements as
to eligibility to participate in the Plan. Unless earlier terminated by
the Board of Directors, the Plan will automatically terminate in January
2004, although options granted prior to the termination may be exercised
after termination in accordance with their terms.
In general, for federal income tax purposes, the grant of a
nonqualified stock option does not result in income to the optionee or
in a deduction to the Company. The exercise of a nonqualified stock option
results in ordinary income to the optionee and a deduction to the Company,
measured by the difference between the option price and the fair market
value of the Common Shares received at the time of exercise.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
DIRECTORS' PLAN. ---
4. RATIFICATION OF APPOINTMENT OF AUDITORS
The firm of Coopers & Lybrand served as the Company's independent
public accountants for fiscal 1993 and has been selected by the Board of
Directors to serve in the same capacity for fiscal 1994. The shareholders
will be asked to ratify this appointment at the Meeting.
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A representative of Coopers & Lybrand is expected to be present at the
Meeting and will be available to respond to appropriate questions. The
representative will also have the opportunity to make a statement if he or
she desires to do so.
5. OTHER MATTERS
The Board of Directors knows of no matters to be presented for action
at the Annual Meeting, other than those set forth in the attached Notice
and customary procedural matters. However, if any other matters should
properly come before the Meeting or any adjournments thereof, the proxies
solicited hereby will be voted on such matters, to the extent permitted by
the rules of the Securities and Exchange Commission, in accordance with
the judgment of the persons voting such proxies.
ADDITIONAL INFORMATION
Common Share Ownership by Certain Beneficial Owners and Management
The following table sets forth, as of February 1, 1994, certain
information concerning the beneficial ownership of Common Shares by: (i)
each person who is known by the Company to be the beneficial owner of more
than 5% of such shares, (ii) each director and nominee for director of the
Company, (iii) each of the executive officers of the Company named in the
Summary Compensation Table appearing later in this proxy statement, and
(iv) all directors and executive officers of the Company as a group. Such
information is based upon information provided to the Company by such
persons.
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<TABLE>
<CAPTION>
Common Shares Percent
Name of Beneficial Owner Beneficially Owned(1) of Class(1)
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<S> <C> <C>
Blair Bartol MacInnes................................. 2,319,677(2) 14.4(2)
Gordon A. MacInnes, Jr., director..................... 2,770,461(2)(3) 17.2(2)(3)
c/o Hunt Manufacturing Co.
230 S. Broad Street
Philadelphia, PA 19102
Lewis H. Van Dusen, Jr................................ 2,253,061(4) 14.0
1100 Philadelphia Nat'l. Bank Bldg.
1345 Chestnut Street
Philadelphia, PA 19107
Ariel Capital Management, Inc......................... 2,064,160(5) 12.8
307 North Michigan Avenue
Chicago, IL 60601
Vincent G. Bell, Jr., director........................ 5,750 *
Jack Farber, director................................. 23,960 *
Robert B. Fritsch, director and executive officer..... 188,528(6) 1.2
William F. Hamilton, director......................... 1,500(7) *
Mary R. (Nina) Henderson, director.................... 400 *
Wilson D. McElhinny, director......................... 1,750 *
Ronald J. Naples, director and executive officer...... 449,148(8) 2.8
Robert H. Rock, director.............................. 300 *
Roderic H. Ross, director............................. 6,475 *
Victoria B. Vallely, director......................... 136,520(9) *
William E. Chandler, executive officer................ - -
Spencer W. O'Meara, executive officer................. 64,661(10) *
W. Ernest Precious, executive officer................. 54,099(11) *
All directors and executive officers as a group (18
persons)............................................ 3,795,500(12) 22.9
</TABLE>
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*Less than 1%
(1) Except as otherwise indicated, the beneficial ownership of Common
Shares reflected in this proxy statement is based upon sole voting
and dispositive power with respect to such shares. Further, for the
purposes of computing beneficial ownership and the percent of class
of an individual, Common Shares which the individual has the right,
upon exercise of options and in certain other circumstances, to
acquire within 60 days, are deemed to be outstanding and
beneficially owned by the individual.
(2) Includes 2,160,482 shares as to which Blair Bartol MacInnes and Gordon
A. MacInnes, Jr., her husband, share voting and dispositive power as
the co-trustees of a 1988 trust (comprised of two subtrusts)
established by the late George E. Bartol III (a former Chairman of the
Board, Chief Executive Officer and principal shareholder of the
Company, and the father of Mrs. MacInnes) for the benefit of his
family. Does not include, in the case of Mrs. MacInnes, 219,300 shares
owned by The Stockton Rush Bartol Foundation (a charitable foundation
formed and funded by Mr. Bartol) of which Mrs. MacInnes is a director,
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or shares beneficially owned by Mr. MacInnes (other than shares in
the 1988 trust referred to above), the beneficial ownership of which
shares is disclaimed by Mrs. MacInnes.
(3) Also includes 532,293 shares as to which Mr. MacInnes has shared
voting and dispositive power as co-trustee (with Katherine B. Lunt,
another daughter of the late George E. Bartol III) of an irrevocable
trust established by Mr. Bartol for the benefit of his grandchildren,
and 72,594 shares held by Mr. MacInnes as custodian for his children.
Does not include shares beneficially owned by Mrs. MacInnes (other
than shares in the 1988 trust referred to in note 2 above), the
beneficial ownership of which shares is disclaimed by Mr. MacInnes.
(4) Includes an aggregate of 2,069,766 shares held by Mr. Van Dusen as
sole trustee under four irrevocable trusts established by the late
George E. Bartol III for the benefit of Mr. Bartol's four adult
daughters.
(5) According to information supplied by Ariel: the reported
shareholdings include 249,700 as to which it has shared voting power,
Ariel is a registered investment adviser; and all shares held by it
are owned by its investment advisory clients, none of whom, to the
knowledge of Ariel, owns more than 5% of the Company's Common Shares.
(6) Includes 85,851 shares which Mr. Fritsch has the right to acquire by
exercise of stock options, but does not include 31,787 shares owned
by his wife, the beneficial ownership of which shares is disclaimed
by Mr. Fritsch.
(7) Represents shares held jointly with his wife.
(8) Includes 202,746 shares which Mr. Naples has the right to acquire
by exercise of stock options and 7,900 shares held by the RSN
Foundation (a charitable foundation) of which Mr. Naples and his
wife are the trustees. Does not include 1,591 shares owned by his
wife, the beneficial ownership of which shares is disclaimed by Mr.
Naples.
(9) Includes 5,707 shares owned jointly with her husband. Does not
include 219,300 shares owned by The Stockton Rush Bartol Foundation
(a charitable foundation formed and funded by the late George E.
Bartol III) of which Ms. Vallely is a director, or an aggregate of
50,054 shares beneficially owned by her husband directly or as
trustee or custodian for their children, the beneficial ownership
of which shares is disclaimed by Ms. Vallely.
(10) Includes 54,597 shares which Mr. O'Meara has the right to acquire
by exercise of stock options.
(11) Includes 52,455 shares which Mr. Precious has the right to acquire
by exercise of stock options.
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(12) Includes an aggregate of 479,341 shares which certain executive
officers have the right to acquire by exercise of stock options.
Excludes: (i) shares the beneficial ownership of which is
disclaimed in the notes above, and (ii) an aggregate of 39,183
shares owned by the spouses of certain executive officers, the
beneficial ownership of which shares is disclaimed by such
officers.
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Executive Compensation
Compensation Committee Report on Executive Compensation
The Company's Compensation Committee (the "Committee") is composed
of four outside directors, none of whom has ever been an employee of the
Company or any of its subsidiaries. The Committee makes recommendations to
the full Board of Directors regarding the adoption, extension, amendment,
and termination of the Company's compensation plans and also administers
certain of these plans. The Committee also reviews in conjunction with the
Company's Chairman/Chief Executive Officer (the "CEO") the performance
of other executive officers and establishes the salaries of the CEO and
other executive officers. The Committee has provided the following report
on executive compensation:
The Committee continues to be guided by the following executive
compensation philosophy of the Company:
1. Align the interests of shareholders and management through a
compensation program that provides a substantial proportion of
executive officers' total compensation in the form of Company shares
and options.
2. Make a significant portion of total compensation for executive
officers contingent upon the attainment of demanding performance goals
that support growth in the Company's share value over time.
3. Balance the objectives of short-term earnings increases and
investment in the long-term financial health of the Company with an
incentive compensation program that rewards improved profit
performance with annual cash bonuses and stimulates a long-term
perspective with cash and stock awards that are earned over a number
of years.
4. Enable the Company to attract and retain superior management by
providing a very competitive total compensation package.
Executive compensation consists primarily of three components: base
salary, incentive compensation, and stock options/stock grants.
Base Salary
The Company's policy is to set base salaries for each executive
officer position, including that of the CEO, at a level up to the
seventy-fifth percentile when compared to compensation survey data
avaliable for equivalent positions with other industrial, bonus-paying
employers. The Company uses compensation studies, surveys and outside
consultants to monitor the Company's competitive executive compensation
position, and to recommend salary ranges and compensation changes to the
Committee. These studies may include but are not limited to the peer group
of companies used for the Shareholder Return Performance Graph on page 22
of this proxy statement. The base salaries of Executive Officers other
than the CEO are set by the Compensation Committee with input from the
CEO.
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The performance of the executive officers other than the CEO are
reviewed annually by their superiors, and the results of such reviews are
reported to the Committee by the CEO. The performance of the CEO is
reviewed by the Board of Directors. The Committee adjusts executive
officer salaries with input from the CEO based on the quality of their
individual performance and the relationship of their salary to their
established salary range. Merit increases in the form of a one-time
payment (as distinct from the annual bonuses) are granted under certain
circumstances.
Adjustments to the base salary of the CEO are governed by the same
factors as other executive officers but also specifically take into
account the Company's current financial performance as measured by
earnings, balance sheet strength, and overall financial soundness. The
Committee also considers the CEO's leadership in setting high standards
for financial performance, motivating his management colleagues, and
representing the Company and its values to internal and external
constituencies. These factors are largely subjective in nature and are not
specifically weighted.
Incentive Compensation
The Company's incentive compensation program has annual and long-term
(currently three-year) components. The Committee approves goals at the
beginning of each year for both the annual and three-year periods. Annual
bonuses are based on achievement of a specific operating profit (profit
before taxes) threshold which is established with reference to the
Company's prior year's results and management's budget for the current
year. The maximum potential annual bonus award for executive officers is
30% to 35% of base salary, depending on the executive's position. For
fiscal 1993, an annual bonus of up to 24% of base salary was paid to all
executive officers resulting from an increase in profit before tax over
prior year of 11.2%
The purpose of the long-term component is to give incentives to
executive officers to strive for sustained Company financial performance
and to encourage balance in long-term and short-term decision making.
Through grants by the Committee of performance units and performance
shares under the Company's 1988 Long-Term Incentive Compensation Plan,
executives are afforded the opportunity to earn cash and Company stock
depending upon the extent to which return-on-capital-employed and earnings
per share goals are met over a specified performance period, currently
three years. (See note 2 to the Long-Term Incentive Plans-Awards table on
page 17 of this proxy statement for information concerning the operation
of this Plan). Depending on the executive's position, the full award which
may be earned may reach 30% to 70% of base salary measured at the
beginning of the performance period. The long-term compensation earned in
any fiscal year is dependent upon performance for the full trailing
three-year period. For the three-year performance period ending at the end
of fiscal 1993, the long-term compensation earned was equal to 22% of the
full cash amount, and 30% of the maximum amount of shares, which could
have been earned. This was based on a three-year return-on-capital-employed
of 18.1% and three-year cumulative earnings per share of $2.36.
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Stock Options/Stock Grants
The Company's 1993 Stock Option and Stock Grant Plan provides for
grants by the Compensation Committee of incentive and/or non-qualified
stock options, as well as grants of stock, to executive officers and
others, thus tying a portion of executive compensation directly to the
performance of the Company stock. The exercise price of the stock options
under the Plan (and predecessor option plans) may not be less than 100% of
the fair market value of the Company's stock on the date of grant. Stock
options become exercisable at least one year (usual practice has been two
years) from the date of grant and usually expire ten years following the
date of grant. Executive officers typically are granted stock options each
year for a number of shares, the market value of which shares on the date
of grant is in a range of 80% to 120% of the executive officer's base
salary. Stock options at the general level of 100% of executive officers'
base salaries were awarded in fiscal 1993. Stock options for multi-year
periods may be granted from time to time by the Committee, as was the case
with respect to options which have been granted in fiscal 1994. The Plan
also provides for stock grants which require the payment of no purchase
price and vest in not less than one year nor more than five years. No
stock grants were awarded under the Plan in fiscal 1993.
As previously indicated, executive officer compensation is designed to
make a substantial portion of total compensation contingent on attainment
of demanding performance goals. This is particularly true for the CEO,
whose variable incentive compensation comprises a significantly higher
percentage of potential total compensation than for any other executive
and is most heavily weighted toward sustained long-term Company
performance.
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The following graphs illustrate this point. They show that during the
fiscal 1991 period when the Company's earnings and
return-on-capital-employed fell below the prior year, the total
compensation of the CEO fell. In fiscal 1992, the CEO's total compensation
continued to decline, even though the Company's financial performance
improved, due to the requirement that both annual and long-term
performance goals be achieved in order for potential total compensation to
be realized. The CEO's total compensation increased in fiscal 1993
reflecting, in large part, improvements in both the Company's annual and
long-term performance in fiscal 1992 and 1993.
RETURN ON CAPITAL EMPLOYED -- FISCAL YEARS 1990-1993
25- |-----------------------------------------|
| |
| |
20- | 20.2% |
| 18.9% | |
| 17.9% | | |
15- | | 15.2% | | |
| | | | | |
| | | | | |
10- |------|--------|--------|--------|-------|
1990 1991 1992 1993
YEAR
EARNINGS PER SHARE -- FISCAL YEARS 1990-1993
1.00- |-----------------------------------------|
| $0.93 |
.90- | | |
| $0.83 | |
.80- | | | |
| $0.75 | | |
.70- | | | | |
| | | | |
.60- | | $0.60 | | |
| | | | | |
.50- |------|--------|--------|--------|-------|
1990 1991 1992 1993
YEAR
CEO TOTAL COMPENSATION -- FISCAL YEARS 1990-1993
550,000- |-----------------------------------------|
| $509,088 |
500,000- | | |
| $457,871 | |
450,000- | | | |
| | $429,908 | |
400,000- | | | | |
| | | $377,707 | |
350,000- |-----|---------|--------|--------|-------|
1990 1991 1992 1993
YEAR
February 9, 1994 Compensation Committee:
Vincent G. Bell, Jr., Chairman
Gordon A. Macinnes, Jr.
Robert H. Rock
Roderic H. Ross
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Summary Compensation Table
The following table sets forth certain information concerning the
annual and long-term compensation paid or accrued to or for: (i) the
Company's Chief Executive Officer and (ii) the Company's four most highly
compensated other executive officers whose total annual salary and bonus
exceeded $100,000 (collectively, the "Named Officers"), for services
rendered to the Company and its subsidiaries during fiscal years 1993,
1992 and 1991:
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------------------------------------------------------------------------------
Annual Compensation Awards Payouts
-------------------------------------------------------------------------------------------------
Other Restricted Long-Term All Other
Name and Annual Stock Securities Incentive Compen-
Principal Bonus Compen- Award(s) Underlying Plans sation
Position Year Salary (1) sation (2) Options (3) (4)
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ronald J. Naples 1993 $357,900 $86,520 - - 27,000 $64,668 $2,249
Chairman and Chief 1992 $343,217 $34,490 - - 27,000 - $3,051
Executive Officer 1991 $329,900 $66,960 - - 20,000 $33,048 $3,712
Robert B. Fritsch 1993 $221,083 $52,325 - - 16,800 $25,967 $2,249
President and Chief 1992 $212,177 $21,650 - - 16,800 - $3,134
Operating Officer 1991 $205,537 $41,818 - - 12,500 $13,532 $5,401
William E. Chandler 1993 $188,801 $44,390 $256,675(6) - 13,000 $13,103 $2,794
Senior Vice President, 1992 $ 39,965 $ 3,997 - - - - -
Finance and 1991 - - - - - - -
Secretary (5)
Spencer W. O'Meara 1993 $165,930 $39,537 - - 11,000 $11,087 $2,249
Vice President and 1992 $154,032 $19,793 - - 10,000 - $3,226
General Manager 1991 $144,375 $29,000 - - 7,000 $ 5,561 $3,078
W. Ernest Precious 1993 $147,400 $33,902 - - 11,000 $10,404 $2,249
Vice President and 1992 $137,667 $13,900 $ 31,935(6) - 10,000 - $3,349
General Manager 1991 $135,000 $27,000 $ 33,083(6) - 7,000 $ 5,505 $3,201
</TABLE>
----------
(1) Includes annual bonuses awarded under the Company's Incentive
Compensation Program for the respective fiscal years. Also includes a
salary merit increase in the form of a one-time payment which was
granted to Mr. O'Meara ($4,350) in fiscal 1992.
(2) There were no outstanding unvested stock grants at the end of fiscal
1993, 1992 or 1991. In 1987 a grant of 22,500 Common Shares was made
to Mr. Fritsch which vested in four annual installments of 5,625
shares each year. The fair market value of the 5,625 shares which
vestedin Mr. Fritsch during fiscal 1991 was $77,695.
(3) Includes cash and Common Shares, valued using the share price on the
date of vesting, paid in respect of Performance Units and Performance
Shares awarded under the Company's 1988 Long-Term Compensation Plan
for the three-year performance periods 1991-1993 and 1989-1991. No
payments were made in respect of the performance period 1990-1992,
since the performance threshold was not met.
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(4) Includes contributions made by the Company under its Savings Plan and
premiums paid by the Company for group term life insurance coverage.
Does not include contributions made by the Company with respect to the
Pension Plan and Supplemental Executive Benefit Plan (see the Pension
Table on page 19 of this proxy statement).
(5) Mr. Chandler was hired in September, 1992 to succeed Rudolph M. Peins,
Jr., the previous Senior Vice President of the Company, who retired in
February 1993. The annual salary amount with respect to fiscal 1992
represents the portion of Mr. Chandler's initial salary of $185,000
earned from his hire date. Mr. Chandler's 1992 bonus was paid on a
prorata basis.
(6) Includes reimbursements for $149,003 of relocation expenses and
$104,009 of related taxes for Mr. Chandler in 1993, and reimbursements
for $30,653 of relocation expenses and $30,060 of related taxes for
Mr. Precious in 1991 and 1992, respectively. Also includes various
other perquisites or personal benefits.
Long-Term Incentive Plans - Awards in Fiscal 1993
The table below sets forth certain information concerning Performance
Unit Awards and Performance Share Awards (collectively "Incentive
Awards") granted to the Named Officers pursuant to the Company's 1988
Long-Term Incentive Compensation Plan (the "Long-Term Plan") during
fiscal 1993:
<TABLE>
<CAPTION>
Estimated Future Payouts
under Non-Stock
Price-Based Plans
Performance -------------------------------
Number of Period Until
Shares or Other Maturities or Threshold Target Maximum
Name(1) Rights(#)(2) Payout (#) (#)(3) (#)
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ronald J. Naples 40,690 Performance Units fiscal 1993-95 4,069 22,380 40,690
7,288 Performance Shares fiscal 1993-95 729 4,009 7,288
Robert B. Fritsch 16,420 Performance Units fiscal 1993-95 1,642 9,031 16,420
2,941 Performance Shares fiscal 1993-95 294 1,618 2,941
William E. Chandler 12,472 Performance Units fiscal 1993-95 1,247 6,860 12,472
2,234 Performance Shares fiscal 1993-95 223 1,229 2,234
Spencer W. O'Meara 7,808 Performance Units fiscal 1993-95 781 4,295 7,808
1,399 Performance Shares fiscal 1993-95 140 770 1,399
W. Ernest Precious 7,028 Performance Units fiscal 1993-95 703 3,866 7,028
1,259 Performance Shares fiscal 1993-95 126 693 1,259
</TABLE>
----------
(1) See the Summary Compensation Table for titles of the individual Named
Officers.
(2) The Incentive Award grants set forth above represent the maximum
potential amounts of Performance Units and Performance Shares which
may be earned by the recipients. The performance levels established
for determining the number (as opposed to the value) of Performance
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Units and Performance Shares, if any, which are actually earned by the
recipients under the particular grants are based upon the Company's
return on capital employed (i.e. earnings before interest and taxes,
divided by the average of total assets less total current liabilities)
("ROCE") for this performance period. The maximum amount of the
indicated Performance Units and Performance Shares will be deemed
earned if the average ROCE for the fiscal 1993-95 performance period
equals or exceeds established levels, with lesser amounts of such
awards being earned for various levels of ROCE, down to a minimum
level. No portion of the indicated Performance Unit or Performance
Share Awards will be deemed earned if the ROCE is below the minimum
level. The value of each of the Performance Units (i.e. the amount of
cash which participants will be entitled to receive for each
Performance Unit earned) will be equal to the cumulative net earnings
per Common Share for the performance period. The value of Common
Shares earned pursuant to Performance Share Awards will depend upon
the market value of the earned shares at the time.
(3) The Long-Term Plan does not recognize the concept of a "target"
award, since awards will be prorated if the ROCE achieved during the
performance period is between the threshold and maximum levels. The
amounts set forth in this column assume the attainment of ROCE midway
between the threshold and maximum levels.
Stock Option Grants, Exercises and Holdings
The following table sets forth certain information concerning stock
options granted to and exercised by the Named Officers during fiscal 1993
and unexercised stock options held by them at the end of fiscal 1993:
Option Grants in Fiscal 1993
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------------------------------------
Number of Percentage of
Shares Total Options Exercise
Underlying Granted to or Base Grant
Options Employees in Price Expiration Date
Name (1) Granted (2) Fiscal 1993 ($/Sh) Date Value(3)
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ronald J. Naples 27,000 18% $ 13.06 1/8/03 $116,910
Robert B. Fritsch 16,800 11% $ 13.06 1/8/03 $ 72,744
William E. Chandler 13,000 9% $ 13.06 1/8/03 $ 56,290
Spencer W. O'Meara 11,000 8% $ 13.06 1/8/03 $ 47,630
W. Ernest Precious 11,000 8% $ 13.06 1/8/03 $ 47,630
</TABLE>
----------
(1) See the Summary Compensation Table for titles of the individual Named
Officers.
(2) All of the options were granted under the 1983 Stock Option and Stock
Grant Plan (the "1983 Plan") on January 8, 1993 at fair market
value and become exercisable two years from the date of grant, subject
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<PAGE> 21
to possible acceleration in certain events. The 1983 Plan since has
expired and has been replaced by the 1993 Stock Option and Stock Grant
Plan.
(3) Based on the modified Black-Scholes extended binomial option valuation
model adapted for use in valuing executive stock options. The
estimated value under this model assumes: (i) an expected option term
of six years, which represents the assumed average period from grant
date of option to their exercise date, (ii) an interest rate that
represents the interest rate on a U.S. Treasury bond with a maturity
date corresponding to that of the adjusted option term, (iii)
volatility calculated using monthly stock prices for the ten years
prior to the grant date, and (iv) dividends at a rate of 1.91% based
on the average dividends paid over the ten-year period prior to the
grant date. The actual value, if any, an executive may realize will
depend on the excess of the stock price over the existing price on the
date the option is exercised, so that there is no assurance the value
realized will be at or near the value estimated by the model.
Aggregate Option Exercises in Fiscal 1993
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at FY-End (#) FY-End ($)
Shares Value (shares) (4)
Acquired on Realized -----------------------------------------------------------------
Name (1) Exercise (2) (3) Exercisable Unexercisable Exercisable Unexercisable
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ronald J. Naples 18,540 $130,336 175,746 54,000 $754,142 $72,630
Robert B. Fritsch 1,600 $ 12,408 71,951 33,600 $227,380 $45,192
William E. Chandler - - - 13,000 - $34,970
Spencer W. O'Meara - - 44,597 21,000 $118,974 $29,590
W. Ernest Precious 5,812 $ 45,799 42,455 21,000 $128,413 $29,590
</TABLE>
----------
(1) See the Summary Compensation Table for titles of the individual Named
Officers.
(2) All options reflected in this table were granted under the Company's
1978 Stock Option Plan or its 1983 Plan.
(3) The value is calculated by subtracting the exercise price from the
fair market value of the shares underlying the options as of the
exercise date.
(4) The values are calculated by subtracting the exercise price from the
fair market value of the securities underlying the options at November
28, 1993.
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Pension Plans
The following table sets forth the estimated annual retirement
benefits payable under the Company's Pension Plan and Supplemental
Executive Benefit Plan (the "Supplemental Plan") to participants in both
Plans, assuming they retired at age 65 in fiscal 1994 with the indicated
levels of compensation and years of benefit service:
<TABLE>
<CAPTION>
Years of Service
-----------------------------------------------------------------------------------------------------
Remun-
eration 10 15 20 25 30 35 40 or More
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$100,000 $ 20,000 $ 30,000 $ 40,000 $ 50,000 $ 55,000 $ 60,000 $ 60,000
150,000 $ 30,000 $ 45,000 $ 60,000 $ 75,000 $ 82,500 $ 90,000 $ 90,000
200,000 $ 40,000 $ 60,000 $ 80,000 $100,000 $110,000 $120,000 $ 120,000
250,000 $ 50,000 $ 75,000 $100,000 $125,000 $137,500 $150,000 $ 150,000
300,000 $ 60,000 $ 90,000 $120,000 $150,000 $165,000 $180,000 $ 180,000
350,000 $ 70,000 $105,000 $140,000 $175,000 $192,500 $210,000 $ 210,000
400,000 $ 80,000 $120,000 $160,000 $200,000 $220,000 $240,000 $ 240,000
450,000 $ 90,000 $135,000 $180,000 $225,000 $247,500 $270,000 $ 270,000
500,000 $ 100,000 $150,000 $200,000 $250,000 $275,000 $300,000 $ 300,000
550,000 $ 110,000 $165,000 $220,000 $275,000 $302,500 $330,000 $ 330,000
600,000 $ 120,000 $180,000 $240,000 $300,000 $330,000 $360,000 $ 360,000
</TABLE>
----------
(1) For the 1993 Plan year, amounts of benefits in the above table
exceeding $118,800 could not be paid under the Pension Plan but would
be paid pursuant to the Supplemental Plan.
As used in the above table, the term, "Remuneration" means covered
compensation (as defined below) averaged over a participant's highest five
consecutive calendar years out of the last ten calendar years of
employment. Covered compensation essentially means wages or salary, bonus,
salary reductions elected under the Company's Savings Plan, and any cash
awards under the Company's Long-Term Incentive Compensation Plan, except
that, for the purposes of determining Remuneration under the Pension Plan,
but not the Supplemental Plan, only covered compensation not in excess of
limitations imposed by the Internal Revenue Code ($150,000 for the 1993
Plan year) may be taken into account. The covered compensation of the
Named Officers for fiscal 1993 was approximately as follows: Mr. Naples -
$509,088; Mr. Fritsch - $299,375; Mr. Chandler - $246,294; Mr. O'Meara -
$216,554; and Mr. Precious - $191,706.
The approximate present years of benefit service for the Named
Officers are as follows: Mr. Naples - 17 years; Mr. Fritsch - 25 years;
Mr. Chandler - 1 year; Mr. O'Meara - 14 years; and Mr. Precious - 16
years. For purposes of calculating benefits, a participant may not be
credited with more than 40 years of service under the Pension Plan or 35
years of service under the Supplemental Plan.
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Retirement benefits shown in the above table have been computed on a
single-life annuity basis and are not subject to any deduction for Social
Security or other offset amount.
The Pension Plan generally covers employees (including executive
officers but excluding certain non-resident aliens) who are not covered by
a collective bargaining agreement. The Supplemental Plan, which was
adopted during fiscal 1992, provides supplemental benefits only to
executive officers and other vice presidents.
Employment-Severance Agreements
The Company has employment-severance (change in control) agreements
with all executive officers, as well as with other officers and certain
key employees. Under the agreements with executive officers, in the event
of a change in control (as defined) of the Company, the agreements would
become effective and would provide for the executive officers' continued
employment by the Company, generally for a period of two years following
the change in control and generally at not less than their recent
compensation and benefit levels. If within such two-year period an
executive officer's employment is terminated by the Company without cause
or if such executive officer resigns in certain specified circumstances,
then the executive officer generally is entitled to the payment of a
severance allowance equal to approximately twice (2.99 times in the case
of the Chairman and Chief Executive Officer) his or her recent annual cash
compensation level (including cash amounts earned under incentive
compensation plans) and to the continuation of life and health insurance
plans and certain other benefits for up to two years (three years in the
case of the Chairman and Chief Executive Officer) following such
termination of employment.
The Company also has an additional severance agreement with William E.
Chandler, Senior Vice President, Finance and Chief Financial Officer of
the Company. Under the terms of this agreement the Company is obligated to
pay Mr. Chandler severance equivalent to up to two years' base
compensation if he is terminated within varying periods up to five years
from his date of hire (September 1992) as a result of top management
turnover or for any other reason other than his death, disability,
voluntary resignation or discharge for cause. In the event of a
termination of Mr. Chandler's employment, which is covered under the terms
of the employment-severance agreement described in the preceding
paragraph, the terms of that employment-severance agreement would
supersede the severance arrangement described in this paragraph.
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Shareholder Return Performance Graph
The following graph compares for fiscal years 1989 through 1993 the
yearly change in the cumulative total return to holders of Common Shares
of the Company with the cumulative total return of the Standard & Poor's
Composite - 500 Index (the "S&P 500") and of an index of peer group
companies selected by the Company (the "Peer Group").
The Company elected to use the Peer Group Index rather than a
published industry or line of business index because the Company is not
aware of any such published index which it believes is as appropriate for
comparative cumulative total return purposes. The Peer Group consists of
20 publicly-held companies of various sizes.(1) Although none of these
Peer Group companies is directly comparable with the Company in terms of
all businesses engaged in, there are similarities in respect of certain
products offered, specific lines of business and/or channels of
distribution. For the purposes of the Peer
220 -|-----------------------------------------------------------------------|
| |
200- | $198 = |
| |
180- | $180 = |
| |
160- | |
| $152 = |
140- | $131 = |
| $124 * $126 = $126 * |
120- | $123 + |
| |
100- X $94 * $100 * $106 * |
| $96 + |
80- | $88 + $84 + |
| $67 + |
60- | |
| |
40- |-------------|-------------|-------------|-------------|------------|--|
1988 1989 1990 1991 1992 1993
+ Hunt Manufacturing Co. = S&P 500 Index * Peer Group Index
----------
(1) The Peer Group consists of Acme United Corporation; American Business
Products Inc.; Aspen Imaging International Inc.; Avery Dennison
Corporation; Bush Industries Inc.; A.T. Cross Company; Dixon
Ticonderoga Company; Duplex Products Inc.; Ennis Business Forms Inc.;
General Binding Corporation; Herman Miller Inc.; HON Industries; Moore
Corporation Limited; Nashua Corporation; Paris Business Forms Inc.; S
L Industries Inc.; Shelby Williams Industries Inc.; Tab Products Co.;
Virco Mfg. Corporation; and Zero Corporation.
23
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Group Index, the Peer Group companies have been weighted based upon their
relative market capitalizations. In calculating the value of a given
index, the returns of the individual Peer Group companies are weighted
according to their market capitalization as of the beginning of each
period for which a return is indicated. In future years, the Company may
utilize another published index, rather than the Peer Group Index, if an
appropriate published index can be found.
The above graph assumes that the value of the investment in Hunt
Manufacturing Co., the S&P Composite-500 Index companies and the Peer
Group Index companies was $100 on November 30, 1988, and that all
dividends were reinvested. The performance as reported above provides no
assurances that this performance will continue in the future.
Certain Relationships and Related Transactions
Under the terms of separate agreements between the Company and Mr.
Naples and Mr. Fritsch, the Company agreed to lend to Mr. Naples and Mr.
Fritsch each year, if they so request, an amount up to the total
incremental taxes incurred by them for such year as a result of the
receipt of Common Shares upon vesting of stock grants under the 1983 Plan.
Such loans may be for terms of up to ten years, are secured by Common
Shares or other collateral satisfactory to the Board of Directors, and
bear interest, payable annually, based upon the minimum applicable
interest rate established under the Internal Revenue Code. The terms of
certain of these loans were extended (but not beyond ten years from the
date of their origination) and the interest rates reset during fiscal
1993. From the beginning of the Company's 1993 fiscal year through
February 1, 1994, the largest aggregate amount of loans to Mr. Naples and
Mr. Fritsch under these agreements were $582,644 and $42,157,
respectively, which were the amounts outstanding as of the latter date.
These loans bore interest at rates ranging from 3.61% to 4.64% during
fiscal 1993.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, as well as persons
beneficially owning more than 10% of the Company's Common Shares and
certain other holders of such shares (collectively, "Covered Persons")
to file with the Securities and Exchange Commission and the New York Stock
Exchange, within specified time periods, initial reports of ownership, and
subsequent reports of changes in ownership, of Common Shares and other
equity securities of the Company.
Based solely upon the Company's review of copies of such reports
furnished to it and upon representations of Covered Persons that no other
reports were required, to the Company's knowledge all of the Section 16(a)
filing requirements applicable to Covered Persons were complied with on a
timely basis in fiscal 1993.
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Solicitation of Proxies
The cost of soliciting the proxies will be paid by the Company.
Directors, officers and employees of the Company may solicit proxies in
person, or by mail, telephone or telegraph, but no such person will be
specially compensated for such services. The Company will request banks,
brokers and other nominees to forward proxy materials to beneficial owners
of stock held of record by them and will reimburse them for their
reasonable out-of-pocket expenses in so doing.
Shareholder Proposals
In order to be eligible for inclusion in the Company's proxy materials
for the 1995 Annual Meeting, shareholders' proposals to take action at
such meeting must comply with applicable Securities and Exchange
Commission rules and regulations, must be directed to the Secretary of the
Company at its offices set forth on page 1 of this proxy statement, and
must be received by the Company not later than November 19, 1994.
Miscellaneous
A copy of the Company's 1993 Annual Report to Shareholders is also
enclosed but is not to be regarded as proxy solicitation material.
The Company, upon request, will furnish to record and beneficial
holders of its Common Shares, free of charge, a copy of its Annual Report
on Form 10-K (including financial statements and schedules but without
exhibits) for fiscal 1993. Copies of exhibits to the Form 10-K also will
be furnished upon request and the payment of a reasonable fee. All
requests should be directed to the Secretary of the Company at the offices
of the Company set forth on page 1 of this proxy statement.
By order of the Board of Directors,
WILLIAM E. CHANDLER, Secretary
March 4, 1994
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APPENDIX
HUNT MANUFACTURING CO.
1994 NON-EMPLOYEE DIRECTORS'
STOCK OPTION PLAN
1. Purpose
This 1994 Non-Employee Directors' Non-Qualified Stock Option Plan (the
"Plan") is intended to provide a means whereby Hunt Manufacturing Co.
(the "Company") through the grant to Non-Employee Directors (as defined
in Section 3 herein) of non-qualified stock options ("Options") to
purchase common shares of the Company, may attract and retain capable
independent directors and motivate them to promote the best interests of
the Company and Related Corporations.
For purposes of the Plan, a Related Corporation of the Company shall
mean either a corporate subsidiary of the Company, as defined in section
424(f) of the Internal Revenue Code of 1986, as amended ("Code"), or the
corporate parent of the Company, as defined in section 424(e) of the Code.
2. Administration
The Plan shall be administered by the Company's Compensation Committee
(the "Committee"), which shall consist of not less than two directors of
the Company who shall be appointed by, and shall serve at the pleasure of,
the Company's Board of Directors (the "Board"). Each member of such
Committee, while serving as such, shall be deemed to be acting in his or
her capacity as a director of the Company.
The Committee shall have full authority, subject to the terms of the
Plan, to interpret the Plan, but shall have no discretion with respect to
the selection of Non-Employee Directors to receive Options, the number of
shares subject to the Plan, setting the purchase price for shares subject
to an Option at other than fair market value, the method or methods for
determining the amount of Options to be granted to each Non-Employee
Director, the timing of grants hereunder or with respect to any other
matter which would cause this Plan to fail to comply with Rule 16b-3 under
the Securities Exchange Act of 1934 (the "Exchange Act"). Subject to the
foregoing, the Committee may correct any defect, supply any omission and
reconcile any inconsistency in this Plan and in any Option granted
hereunder in the manner and to the extent it shall deem desirable. The
Committee also shall have the authority to establish such rules and
regulations, not inconsistent with the provisions of the Plan, for the
proper administration of the Plan, and to amend, modify or rescind any
such rules and regulations, and to make such determinations and
interpretations under, or in connection with, the Plan, as it deems
necessary or advisable. All such rules, regulations, determinations and
interpretations shall be binding and conclusive upon the Company, its
shareholders and all Non-Employee Directors (including former Non-Employee
Directors), and upon their respective legal representatives,
beneficiaries, successors and assigns and upon all other persons claiming
under or through any of them.
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No member of the Board or the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Option
granted under it.
3. Eligibility
The persons who shall be eligible to receive Options under the Plan
shall be Non-Employee Directors, which term shall mean those directors of
the Company who:
(i) are not employees of the Company or any Related Corporation;
and
(ii) have not been employees of the Company or any Related
Corporation during the immediately preceding 12-month period.
4. Stock Subject to the Plan
Options may be granted under the Plan to purchase up to a maximum of
90,000 Common Shares, par value $.10 per share ("Common Shares" or
"Shares"), subject to adjustment as provided in Section 7 herein. Shares
issuable under the Plan may be authorized but unissued Shares or
reacquired Shares, and the Company may purchase Shares required for this
purpose, from time to time, if it deems such purchase to be advisable.
If any Option granted under the Plan expires or otherwise terminates,
in whole or in part, for any reason whatever (including, without
limitation, a Non-Employee Director's surrender thereof) without having
been exercised, the Shares subject to the unexercised portion of such
Option shall continue to be available for the granting of Options under
the Plan as fully as if such Shares had never been subject to an Option.
5. Granting of Options
Subject to Section 9 herein, an Option to purchase 5,000 Shares (as
adjusted pursuant to Section 7 herein) automatically shall be granted:
(i) On January 26, 1994 to each director who is a Non-Employee
Director on such date; and
(ii) Upon the date a person who was not a Non-Employee Director
on January 26, 1994 subsequently becomes a Non-Employee Director,
whether by reason of his or her subsequent election by shareholders,
appointment by the Board to be a director or, if applicable, the
expiration of the 12-month period specified in Section 3(ii) herein
with respect to a present or future director who had previously been
an employee of the Company or any Related Corporation; provided,
however, that if a Non-Employee Director who previously received a
grant of Options ceases to be a Non-Employee Director but subsequently
again becomes a Non-Employee Director, such person shall not be
eligible to receive a second grant of Options under this Section 5.
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6. Terms and Conditions of Options
Options granted pursuant to the Plan shall be non-qualified Options
not intended to qualify under section 422 of the Code and shall be subject
to the following terms and conditions:
(a) Price. The exercise price shall be the greater of 100% of the fair
market value of the optioned Shares, or the par value thereof, on the date
the Option is granted. As used in the Plan, fair market value shall mean:
(i) if the principal market for the Shares is a registered securities
exchange, the mean between the highest and lowest quoted selling prices of
such Shares on such exchange on the date of grant, or, if there are no
such reported sales on that date but there are sales on dates within a
reasonable period both before and after the date of grant, the weighted
average of the means between the highest and lowest sales on the nearest
date before and the nearest date after the date of grant, or (ii) if
clause (i) above is inapplicable, such other method of determining fair
market value as shall be authorized by the Code, or the rules or
regulations thereunder, and adopted by the Committee.
Where the fair market value of the optioned Shares is determined under
clause (i) above, the average of the means between the highest and lowest
sales on the nearest date before and the nearest date after the date of
grant shall be weighted inversely by the respective numbers of trading
days between the selling dates and the date of grant (i.e., the valuation
date), in accordance with Treas. Reg. Section 20.2031-2(b)(1).
(b) Term. Subject to earlier termination as provided in Subsection (d)
below and in Section 7 herein, the stated term of each Option shall be ten
years from the date of grant.
(c) Exercise. Options shall be exercisable in five equal annual
installments commencing one year after the date of grant. Except as
otherwise provided in Subsections (d) and (e) below and Section 7 herein,
Options shall only be exercisable by a Non-Employee Director while he or
she remains a director of the Company. Any Option Shares, the right to the
purchase which has accrued, may be purchased at any time up to the
expiration or termination of the Option. Exercisable Options may be
exercised, in whole or in part, from time to time by giving written notice
of exercise to the Company at its principal office, specifying the number
of Shares to be purchased and accompanied by payment in full of the
aggregate price for such Shares. Only full Shares shall be issued under
the Plan, and any fractional Share which might otherwise be issuable upon
exercise of an Option granted hereunder shall be forfeited.
The Option price shall be payable in cash or its equivalent.
(d) Effect of Ceasing to be a Director. If a Non-Employee Director
ceases to be a director of the Company for any reason, his or her then
outstanding Option shall continue to mature in accordance with its terms
(except that if such cessation is due to death, such then outstanding
Option immediately shall accelerate and become exercisable in full), and
shall remain outstanding and exercisable, but only for a period of one
year following such cessation as a director or until the earlier
expiration of the stated term of such Option or its earlier termination
pursuant to Section 7 herein.
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(e) Non-Transferability. No Option shall be assignable or transferable
by a Non-Employee Director otherwise than by will or by the laws of
descent and distribution, and during the lifetime of a Non-Employee
Director, his or her Option shall be exercisable only by him or her or by
his or her guardian or legal representative. If a Non-Employee Director is
married at the time of exercise and if the Non-Employee Director so
requests at the time of exercise, the certificate or certificates for the
Option Shares shall be registered in the name of the Non-Employee Director
and the Non-Employee Director's spouse, jointly, with right of
survivorship.
(f) Rights as a Shareholder. A holder of an Option shall have no
rights as a shareholder with respect to any Shares covered by such Option
until the issuance of a stock certificate for such Shares to such holder.
(g) Listing and Registration of Shares. Each Option shall be subject
to the requirement that, if at any time the Committee shall determine, in
its discretion, that the listing, registration or qualification of the
Shares covered thereby upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with,
the granting of such Option or the purchase of Shares thereunder, or that
action by the Company or by the Non-Employee Director should be taken in
order to obtain an exemption from any such requirement, no such Option may
be exercised, in whole or in part, unless and until such listing,
registration, qualification, consent, approval, or action shall have been
effected, obtained, or taken under conditions acceptable to the Committee.
Without limiting the generality of the foregoing, each Non-Employee
Director or his or her legal representative or beneficiary may also be
required to give satisfactory assurance that Shares purchased upon
exercise of an Option are being purchased for investment and not with a
view to distribution, and certificates representing such Shares may be
legended accordingly.
(h) Option Agreements. Options granted under the Plan shall be
evidenced by a written document or documents (an "Option Agreement") in
such form as the Committee shall, from time to time, approve, which Option
Agreement shall contain such provisions, not inconsistent with the
provisions of the Plan as the Committee shall deem advisable. Each
Non-Employee Director shall enter into, and be bound by, an Option
Agreement.
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7. Capital Adjustments, Acceleration and Cancellation of Options
The number of Shares which may be issued under the Plan, as stated in
Section 4 herein, and the number of Shares issuable upon exercise of
outstanding Options under the Plan (as well as the Option price per Share
under such outstanding Options), shall, subject to the provisions of
section 424(a) of the Code, be adjusted proportionately to reflect any
stock dividend, stock split, share combination, or similar change in the
capitalization of the Company.
In the event of a corporate transaction (as that term is described in
section 424(a) of the Code and the Treasury Regulations issued thereunder,
such as, for example, a merger, consolidation, acquisition of property or
stock, separation, reorganization, or liquidation), and, provision is not
made for the continuance and assumption of Options under the Plan, or the
substitution for such Options of new Options to acquire securities or
other property to be delivered in connection with the transaction, all
unexercised Options shall accelerate and become fully exercisable, but all
unexercised Options shall terminate on the day immediately prior to the
consummation of such corporate transaction. The Committee shall give the
holders of outstanding Options not less than ten days prior written notice
of any such acceleration and termination pursuant to this Section 7, and
such outstanding Options thereafter may be exercised in whole or in part
up to and including the date of such termination or until their earlier
stated expiration date or their earlier termination pursuant to Section
6(d) herein.
8. Amendment or Discontinuance of the Plan
The Board from time to time may suspend or discontinue the Plan or
amend it in any respect whatsoever; provided, however, that an amendment
to the Plan shall require shareholder approval (given in compliance with
Rule 16b-3 under the Exchange Act) if such amendment would materially:
(i) increase the benefits accruing to Non-Employee Directors under
the Plan;
(ii) increase the number of Shares which may be issued to Non-
Employee Directors under the Plan other than as provided in Section 7
herein; or
(iii) modify the requirements as to eligibility to participate in
the Plan.
Notwithstanding the foregoing, no such suspension, discontinuance or
amendment shall materially impair the rights of any holder of an
outstanding Option without the consent of such holder. Further, the
provisions of the Plan establishing the directors eligible to receive
Options under the Plan, the timing of the grants of such Options, the
purchase price for Shares subject to Options, the number of Shares covered
by each Option, the method or methods for determining the amount of
Options to be granted to each Non-Employee Director, and any other
provision of the Plan which, if amended more than once every six months,
would cause the Plan to fail to comply with Rule 16b-3 under the Exchange
Act, shall not be amended more than once every six months.
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9. Effective Date and Duration
The Plan shall become effective on January 26, 1994, the date on which
it was adopted by the Board; provided, however, that if the Plan is not
approved by the shareholders of the Company in the manner required by Rule
16b-3 under the Exchange Act within one year after said date, the Plan and
all Options granted hereunder shall be null and void.
Unless earlier terminated as provided in the Plan, the Plan shall
terminate absolutely at 12:00 midnight on January 25, 2004, and no Options
hereunder shall be granted thereafter. Nothing contained in this Section
9, however, shall terminate or affect the continued existence of rights
created under Options issued hereunder and then outstanding which by their
terms extend beyond such date.
10. Miscellaneous
(a) Governing Law. The operation of, and the rights of Non-Employee
Directors under, the Plan, the Option Agreements and any Options granted
hereunder shall be governed by applicable Federal law, and otherwise by
the laws of the Commonwealth of Pennsylvania.
(b) Rights. Neither the adoption of the Plan nor any action of the
Board or the Committee shall be deemed to give any individual any right to
be granted an Option, or any other right hereunder, unless and until the
Committee shall have granted such individual an Option, and then his or
her rights shall be only such as are provided by the Option Agreement.
(c) Application of Funds. The proceeds received by the Company from
the sale of Shares pursuant to Options granted under the Plan shall be
used for general corporate purposes.
(d) No Obligation to Exercise Option. The granting of an Option shall
impose no obligation upon a Non-Employee Director to exercise such Option.
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<PAGE> 33
HUNT MANUFACTURING CO. - Proxy Solicited on Behalf of the Board of
Directors
Annual Meeting of Shareholders - April 13, 1994
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The undersigned hereby appoint(s) Ronald J. Naples, Robert B.
Fritsch and William E. Chandler, or any of them, with full power of
substitution, proxies to vote, as designated below, all the Common Shares
of Hunt Manufacturing Co. held of record by the undersigned on February
15, 1994, at the Annual Meeting of Shareholders to be held on April 13,
1994, and at any adjournments thereof.
(1) Election of directors:
/ / AUTHORITY GRANTED / / AUTHORITY WITHHELD
to vote for all nominees
(except as marked to the contrary below)
Jack Farber, Gordon A. MacInnes, Jr. and Ronald J. Napes
If you wish to withhold authority to vote for one or more but less
than all of the nominees named above, or to cumulate your votes for any
such nominee(s), so indicate on the line provided below.
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(2) Adoption of the Amendment to the Company's Restated Articles
of Incorporation:
/ / FOR / / AGAINST / / ABSTAIN
(3) Approval of 1994 Non-Employee Directors' Stock Option Plan:
/ / FOR / / AGAINST / / ABSTAIN
(4) Ratification of the appointment of Coopers & Lybrand as the
independent auditors of the Company for fiscal 1994:
/ / FOR / / AGAINST / / ABSTAIN
and, to the extent permitted by the Rules of the Securities and Exchange
Commission, upon such other matters as may properly come before the
meeting and any adjournments thereof.
(Continued, and to be dated and signed, on other side)
(Continued from other side)
This proxy when properly executed will be voted in the manner directed
herein by the undersigned. If no contrary direction is made, this proxy
will be voted FOR the nominees listed in item 1 above (in equal amounts or
cumulatively, as the proxies may determine) or, if any such nominee(s)
should be unable to serve, for such other person(s) as may be recommended
by the Board of Directors; FOR the proposals set forth in items 2, 3 and
4; and in accordance with the proxies' best judgment upon other matters
properly coming before the meeting and any adjournments thereof.
Please date and sign exactly as your name appears below. In case of
joint holders, each should sign. If the signer is a corporation or
partnership, sign in full the corporate or partnership name by an
authorized officer or partner. When signing as attorney, executor,
trustee, officer, partner etc. give full title.
Dated ......................... , 1994
......................................
Signature
......................................
Signature
PLEASE DATE, SIGN AND RETURN THIS PROXY
PROMPTLY IN THE ENCLOSED ENVELOPE
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<PAGE> 34
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Exchange Act Rule 14a-11 or 14a-12
Hunt Manufacturing Co.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(Name of Registrant as Specified In Its Charter)
Same
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2).
/ / $500 per each part to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which the transaction applies;
------------------------------------------------------------------------
3) Per unit or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
/ / Check box if any part of the fee is offset by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-----------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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