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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Exchange Act Rule 14a-11(c) or 14a012
HUNT MANUFACTURING CO.
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(Name of Registrant as Specified In Its Charter)
HUNT MANUFACTURING CO.
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(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:
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3) Per unit or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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/ / 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:
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2) Form, Schedule or Registration Statement No.
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4) Date Filed:
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Set forth the amount on which the filing fee is calculated and state how it
was determined.
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HUNT MANUFACTURING CO.
LOGO ------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held on April 17, 1996
------
To Our Shareholders:
The Annual Meeting of Shareholders of Hunt Manufacturing Co. will be held
at 10:00 o'clock a.m. on April 17, 1996, in the Seminar Room at the
Philadelphia Museum of Art (West Entrance), 26th Street and Benjamin Franklin
Parkway, 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 ratify the appointment of independent
accountants; and
3. 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 16,
1996, 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 1, 1996
<PAGE>
HUNT MANUFACTURING CO.
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
------
PROXY STATEMENT
------
This proxy statement, which is being sent to shareholders on or about
March 6, 1996, 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 17, 1996, and at any adjournments thereof.
At the close of business on February 16, 1996, the record date for
determination of shareholders entitled to notice of, and to vote at, the
meeting, there were outstanding an aggregate of 10,968,068 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 Proposal 2 assuming a quorum is present with
respect to such matter. Abstentions 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 may determine); FOR
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ratification of the appointment of Coopers & Lybrand L.L.P. as the Company's
independent accountants for the 1996 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 Board of Directors has
nominated, and recommends the election of, the following three persons to
serve as directors of the Company until the 1999 Annual Meeting or until
their successors are elected and have qualified:
Robert B. Fritsch Robert H. Rock, D.B.A.
Victoria B. Vallely
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, your proxy 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, your proxy will not be voted
for the election of more than three directors. Two vacancies currently exist
on the Board of Directors (in the classes of 1996 and 1997) due to the
resignation during fiscal 1995 of Ronald J. Naples, former Chairman and Chief
Executive Officer of the Company, and to the fact that Vincent G. Bell, Jr.,
who has served as a director since 1986, will be retiring from the Board at
the expiration of his present term (i.e. on the date of the Meeting) in
accordance with the Company's director retirement policy. The Board may
consider appointing directors to fill these vacancies at a later date.
The following table sets forth, as of February 2, 1996, certain
information with respect to each nominee for election as a director and each
director whose term of office will continue after the Meeting:
<TABLE>
<CAPTION>
Present
Name, Age and Director Term
Occupation(1) Since Expires
------------- -------- -------
<S> <C> <C>
Jack Farber, 62 1970 1997
Chairman of the Board and President of CSS Industries, Inc., a
diversified holding company. Trustee of Pennsylvania Real
Estate Investment Trust.
Robert B. Fritsch, 64 1987 1996
President (since 1987) and Chief Executive Officer (since
April 1995) of the Company.
</TABLE>
2
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<TABLE>
<CAPTION>
Present
Name, Age and Director Term
Occupation(1) Since Expires
------------- -------- -------
<S> <C> <C>
William F. Hamilton, Ph.D., 56 1986 1998
Landau Professor of Management and Technology, The Wharton
School, University of Pennsylvania. Director of Centocor Inc.,
Neose Technologies, Inc. and of Marlton Technologies, Inc.
Mary R. (Nina) Henderson, 45 1991 1998
President of CPC Specialty Markets Group, affiliated companies
of CPC International, Inc., a manufacturer and marketer of
specialty foods and non-food products.
Gordon A. MacInnes, 54((2)) 1970 1997
Chairman of the Board of the Company. New Jersey State Senator
(since 1994) and author.
Wilson D. McElhinny, 66 1993 1998
Chairman of the Board of IREX Corporation, a specialty
contract company (since 1992). Previously Chairman, President
and Chief Executive Officer (1988-1990), and Chairman of
Executive Committee (1983-1992) of Hamilton Bank.
Robert H. Rock, D.B.A., 45 1989 1996
President of MLR Holdings, L.L.C., a publishing company which
produces business publications, executive conferences and
community newspapers. Director of R.P. Scherer Corporation and
of Alberto-Culver Company.
Roderic H. Ross, 65 1978 1998
Chairman of the Board and Chief Executive Officer of Keystone
State Life Insurance Company. Director of PNC Bank Corp.
Victoria B. Vallely, 45((2) 1976 1996
Principal of Bartol Capital Management, an investment advisory
company (since 1995).
</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.
INFORMATION CONCERNING MEETINGS AND CERTAIN COMMITTEES
The Board of Directors held eight formal meetings during fiscal 1995. The
Company has standing Audit, Compensation, and Nominating Committees of its
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Board of Directors. The Audit Committee members currently are Messrs. Farber,
Hamilton and McElhinny. This Committee makes recommendations to the Board of
Directors concerning the engagement, retention and discharge of independent
accountants, reviews with members of the Company's management and internal
auditors and with the Company's independent accountants 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 1995, the Audit Committee met three times. The Compensation
Committee currently is composed of Messrs. Bell, Rock and Ross and Ms.
Henderson. 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 eight
formal meetings during fiscal 1995. Mr. MacInnes also served on the
Compensation Committee until April, 1995 when he was succeeded by Ms.
Henderson. (See "Compensation of Directors" and the third paragraph of
"Certain Relationships and Related Transactions" herein for information
concerning compensation paid to Mr. MacInnes and the repurchase of Common
Shares by the Company from Mr. MacInnes' mother-in-law, respectively.) The
members of the Nominating Committee currently are Messrs. Farber, MacInnes
and Rock. The purpose of this Committee, which held one meeting during fiscal
1995, 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.
The Board of Directors also has an Executive Committee whose current
members are Messrs. MacInnes, Farber, Fritsch and Rock. The Executive
Committee generally is empowered, subject to certain limitations, to exercise
the authority of the Board between Board meetings. The Board also, from time
to time, appoints special committees for specific purposes.
During fiscal 1995, all directors attended in person or by conference
telephone at least 75% of the aggregate 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 Chairpersons) for each committee
meeting attended, to each of its non-officer directors other than Mr.
MacInnes. Mr. MacInnes was appointed Vice Chairman of the Company in April
1995 and Chairman of the Board in August 1995. For fiscal 1995 Mr. MacInnes
received compensation of $83,177 which included compensation at a rate of
$100,000 per year for serving as Vice Chairman and Chairman (both non-officer
positions) and the regular non-officer director fees earned prior to his
appointment as Vice Chairman. In addition, the Company 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 1995, except as set forth above with
respect to Mr. MacInnes.
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The non-officer directors also participate in the 1994 Non-Employee
Directors' Stock Option Plan. Pursuant to this Plan, each of the nine current
non-officer directors on January 26, 1994 received one-time automatic grants
of nonqualified stock options to purchase 5,000 Common Shares at an exercise
price of $16.875 per share, which was the fair market value of a Common Share
on the date of grant. Options granted 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. No
other options have been granted, or as of February 2, 1996 have been
exercised, under the Plan.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The firm of Coopers & Lybrand L.L.P. served as the Company's independent
accountants for fiscal 1995 and has been selected by the Board of Directors
to serve in the same capacity for fiscal 1996. The shareholders will be asked
to ratify this appointment at the Meeting.
A representative of Coopers & Lybrand L.L.P. 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.
3. 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.
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ADDITIONAL INFORMATION
COMMON SHARE OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 2, 1996, 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.
<TABLE>
<CAPTION>
Common Shares Percent
Name of Beneficial Owner Beneficially Owned(1) of Class(1)
------------------------ --------------------- -----------
<S> <C> <C>
Richard J. Bove ....................................... 2,069,766(2) 18.9
3700 Bell Atlantic Towers
Philadelphia, PA 19103
Ariel Capital Management, Inc. ....................... 1,395,905(3) 12.7
307 North Michigan Avenue
Chicago, IL 60601
Vincent G. Bell, Jr., director ....................... 7,750(4) *
Jack Farber, director ................................ 10,960(4) *
Robert B. Fritsch, director and executive officer .... 56,636(5) *
William F. Hamilton, director ........................ 3,500(4)(6) *
Mary R. (Nina) Henderson, director ................... 2,400(4) *
Gordon A. MacInnes, director ......................... 614,559(4)(7) 5.6
Wilson D. McElhinny, director ........................ 3,750(4) *
Robert H. Rock, director ............................. 2,300(4) *
Roderic H. Ross, director ............................ 8,475(4) *
Victoria B. Vallely, director ........................ 118,906(4)(8) 1.1
John W. Carney, executive officer .................... 59,849(9)(10) *
William E. Chandler, executive officer ............... 28,898(10)(11) *
Spencer W. O'Meara, executive officer ................ 86,322(10)(12) *
W. Ernest Precious, executive officer ................ 72,007(10)(13) *
Ronald J. Naples, former director and executive
officer ............................................. 63,442(14) *
All current directors and executive officers as a
group (15 persons) .................................. 1,097,767(15) 10.0
</TABLE>
- ------
*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) Represents shares held by Mr. Bove as successor and sole trustee under
four irrevocable trusts established by the late George E. Bartol III (a
former Chairman of the Board, Chief Executive Officer and principal
shareholder of the Company) for the benefit of Mr. Bartol's four adult
daughters.
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(3) According to information supplied by Ariel: the reported shareholdings
include 1,328,755 shares as to which Ariel has sole voting power and
18,750 shares as to which Ariel 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.
(4) Includes 2,000 shares which the named individual has the right to acquire
by exercise of stock options under the 1994 Non-Employee Directors' Stock
Option Plan.
(5) Includes 41,300 shares which Mr. Fritsch has the right to acquire by
exercise of stock options.
(6) Includes 1,500 shares held jointly with his wife.
(7) Includes 532,293 shares as to which Mr. MacInnes has shared voting and
dispositive power as co-trustee (with Katherine B. Lunt) of an
irrevocable trust established by the late George E. Bartol III for the
benefit of his grandchildren, and 74,529 shares held by Mr. MacInnes as
custodian for his children. Does not include 159,840 shares beneficially
owned by Mr. MacInnes' wife, the beneficial ownership of which shares is
disclaimed by Mr. MacInnes. Mrs. Lunt and Mrs. MacInnes are daughters of
the late George E. Bartol III.
(8) Does not include an aggregate of 23,301 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.
(9) Includes 57,395 shares which Mr. Carney has the right to acquire by
exercise of stock options.
(10) Does not include 12,000 unvested stock grants which were made to the
named individual in fiscal 1995 (see Summary Compensation Table herein).
(11) Includes 26,100 shares which Mr. Chandler has the right to acquire by
exercise of stock options.
(12) Includes 72,935 shares which Mr. O'Meara has the right to acquire by
exercise of stock options.
(13) Includes 66,685 shares which Mr. Precious has the right to acquire by
exercise of stock options.
(14) Includes 47,250 shares which Mr. Naples has the right to acquire by
exercise of stock options and 11,250 shares held by the RSN Foundation
(a charitable foundation) of which Mr. Naples and his wife are the
trustees.
(15) Includes an aggregate of 300,967 shares which certain directors and
current executive officers have the right to acquire by exercise of
stock options. Excludes shares the beneficial ownership of which is
disclaimed in the notes above.
-------
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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
President and 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 actions of the Committee were significantly impacted by the
resignation during fiscal 1995 of Ronald J. Naples as Chairman of the Board
and Chief Executive Officer and the appointments of Robert B. Fritsch as
Chief Executive Officer and Gordon A. MacInnes as Vice Chairman and then
Chairman of the Board. Mr. Naples' Transition Agreement is described later in
this proxy statement under the caption, "Termination of Employment". The
payments made or to be made to Mr. Naples were determined by the Committee
based on a number of factors, including a recognition of Mr. Naples'
contributions to the Company, the rights which Mr. Naples had accrued under
various Company plans and programs, and the Company's practices with respect
to other key executives, as well as the practices of other companies. (See
"Compensation of Directors" and the Summary Compensation Table herein for
information concerning Mr. MacInnes' and Mr. Fritsch's compensation
arrangements, respectively.)
The Committee has been 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.
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Executive compensation consists primarily of three components: base
salary, incentive compensation, and stock options/stock grants.
BASE SALARY
The Company's policy has been 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 available
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 herein. The base salaries of Executive
Officers other than the CEO are set by the Compensation Committee with input
from the CEO.
The performances of the executive officers other than the CEO are
conducted by the CEO, 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 officers' 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 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 as in effect during fiscal
1995 had annual and long-term (three-year) components. The Committee approves
goals at the beginning of each year for the annual period. Annual bonuses are
based on achievement of a specific operating profit (profit before taxes)
threshold which is established with references to the Company's prior year's
results and management's budget for the current year. Under the program as in
effect through fiscal 1995, the maximum potential annual bonus award for
executive officers was 30% to 35% of base salary, depending on the
executive's position. For fiscal 1995, an annual bonus of up to 35% of base
salary was paid to all executive officers resulting from an increase in
profit before tax over prior year (excluding the provision for organizational
changes and relocation and consolidation of operations) of 9.1%.
The purpose of the long-term component in the past was to give incentives
to executive officers to strive for sustained Company financial performance
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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 have been
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 three-year performance period. Depending on the executive's position, the
full award that could have been earned was 30% to 70% of base salary measured at
the beginning of the performance period. The long-term compensation earned in
any fiscal year has been dependent upon performance for the full trailing
three-year period. For the three-year performance period ending at the end of
fiscal 1995, the long-term compensation earned was equal to 51% of the full cash
amount and 57% of the maximum amount of shares which could have been earned.
This was based on a three-year return-on-capital-employed of 19.8% and
three-year cumulative earnings per share from continuing operations of $3.06.
This represented a decrease from the three-year performance period ending at the
end of fiscal 1994 when the long-term compensation earned was equal to 69
percent of the full cash amount and 58 percent of the maximum amount of shares
which could have been earned. The decrease was due primarily to a reduction in
the Company's 1995 return-on-capital-employed to 18.3 percent which was due
primarily to the 1995 provision for consolidation of operations of $2.9 million.
(The 1995 provision for organizational changes of $2.4 million was excluded from
the return-on-capital-employed and three-year cumulative earnings per share
from continuing operations calculations for the three-year performance period
ending at the end of fiscal 1995.) No action was taken to set performance
requirements and potential awards for future periods under the Long-Term
Incentive Compensation Plan in fiscal 1995.
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,
subject to possible acceleration in certain circumstances, and usually expire
ten years following the date of grant. Executive officers typically have been
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 granted for fiscal 1995. However,
in anticipation of then proposed accounting rule changes that would have
adversely affected the accounting treatment of stock options granted in the
future, the Committee also granted in fiscal 1994 and 1995 one additional
year's worth of options which become exercisable in three years after the
date of grant. These additional options were in lieu of options that would
have been granted in future years.
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<PAGE>
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.
During fiscal 1995, stock grants for an aggregate of 12,000 common shares
each were awarded to four executive officers (see the Summary Compensation
Table herein).
As previously indicated, executive officers' compensation has been
designed to make a substantial portion of total compensation contingent upon
attainment of demanding performance goals. The Committee is in the process of
revising the incentive compensation program so that it is more closely
aligned with growth in shareholder value. Accordingly, the Long-Term
Incentive Compensation Plan has been terminated. During 1996, the Company's
executive officers will receive the performance shares and performance unit
awards under that Plan for the 1994-1996 performance period which had been
earned through the end of fiscal 1995. Going forward, it is the Committee's
intention to have a greater portion of total compensation based on annual
incentive compensation and stock options.
To acknowledge the significant new responsibilities assumed by Mr. Fritsch
upon his appointment as Chief Executive Officer and in recognition of his
agreeing to defer his planned retirement, the Committee awarded him a
one-time payment of $250,000 in 1995. No change in Mr. Fritsch's base
compensation was instituted in fiscal 1995. The Committee believes Mr.
Fritsch's total compensation in 1995 is appropriate based upon his
performance and places him within the range of compensation paid to other
chief executive officers in similar sized manufacturing companies.
February 14, 1996 Compensation Committee:
Robert H. Rock, Chairman
Vincent G. Bell, Jr.
Mary R. (Nina) Henderson
Roderic H. Ross
11
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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 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 1995, 1994, and 1993:
<TABLE>
<CAPTION>
Annual Compensation
----------------------------------------------------
Other
Annual
Name and Bonus Compen-
Principal Position Year Salary (1) sation
------------------------- ------ ------------- ---------- -------------
<S> <C> <C> <C> <C>
Robert B. Fritsch 1995 $ 250,000 $ 87,500 $250,000(5)
President and 1994 $ 236,875 $ 61,550
Chief Executive Officer 1993 $ 221,083 $ 52,325
William E. Chandler 1995 $ 201,917 $ 62,100
Senior Vice President, 1994 $ 193,000 $ 48,994
Finance and Secretary 1993 $ 188,801 $ 44,390 $256,675(6)
Spencer W. O'Meara 1995 $ 207,604 $ 65,490
Executive Vice President 1994 $ 179,327 $ 44,230
and General Manager 1993 $ 165,930 $ 39,537
W. Ernest Precious 1995 $ 178,400 $ 53,520
Executive Vice President 1994 $ 162,200 $ 39,934
and General Manager 1993 $ 147,400 $ 33,902
John W. Carney 1995 $ 132,629 $ 40,500
Vice President, Human 1994 $ 116,592 $ 31,267
Resources/Strategic Plng. 1993 $ 110,758 $ 22,560
Ronald J. Naples 1995 $ 251,649(7) $ 58,380
Former Chairman and 1994 $ 378,583 $102,926
Chief Executive Officer 1993 $ 357,900 $ 86,520
</TABLE>
<TABLE>
<CAPTION>
Long-Term Compensation
---------------------------------------------------------------
Awards Payouts
---------------------------- -------------
Restricted Long-Term All Other
Stock Securities Incentive Compen-
Name and Award(s) Underlying Plans sation
Principal Position (2) Options (3) (4)
------------------------- ------------ ------------ ------------- ---------------
<S> <C> <C> <C> <C>
Robert B. Fritsch 34,000 $ 67,223 $ 2,250
President and 34,000 $ 58,985 $ 2,250
Chief Executive Officer 16,800 $ 25,967 $ 2,249
William E. Chandler $177,000 26,200 $ 43,082 $ 6,473
Senior Vice President, 26,200 $ 45,434 $ 2,250
Finance and Secretary 13,000 $ 13,103 $ 2,794
Spencer W. O'Meara $177,000 22,500 $ 29,968 $ 6,392
Executive Vice President 22,500 $ 29,048 $ 2,250
and General Manager 11,000 $ 11,087 $ 2,249
W. Ernest Precious $177,000 22,500 $ 26,974 $ 5,684
Executive Vice President 22,500 $ 25,390 $ 2,250
and General Manager 11,000 $ 10,404 $ 2,249
John W. Carney $177,000 16,500 $ 18,846 $ 5,340
Vice President, Human 16,500 $ 19,422 $ 1,886
Resources/Strategic Plng. 8,200 $ 8,512 $ 2,158
Ronald J. Naples 54,500 $ 169,769(8) $ 1,746,984(7)
Former Chairman and 54,500 $ 146,928 $ 2,250
Chief Executive Officer 27,000 $ 64,668 $ 2,249
</TABLE>
12
<PAGE>
- ------
(1) Includes annual bonuses awarded under the Company's Incentive
Compensation Program for the respective fiscal years.
(2) Represents the fair market value (based on the closing sales price of the
Company's Common Shares on the date of grant) of stock grants for 12,000
Common Shares awarded to each of Messrs. Chandler, O'Meara, Precious, and
Carney under the 1993 Stock Option and Stock Grant Plan. The fair market
value of 12,000 Common Shares as of December 3, 1995 was $178,500. The
stock grants vest in full at the latest during 1997. A cash bonus,
equivalent to the amount of all dividends on the unvested shares under
these stock grants is being paid during the vesting period.
(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 Incentive Compensation Plan for
the three-year performance periods 1993-1995, 1992-1994, and 1991-1993.
(4) Includes contributions made by the Company under its Savings Plan,
premiums paid by the Company for group term life insurance coverage, and
in 1995, $2,280 of dividends to each of Messrs. Chandler, O'Meara,
Precious, and Carney on their unvested stock grants. Does not include
contributions made by the Company with respect to the Pension Plan or,
except for matching contributions, to the Supplemental Executive Benefits
Plan (see "Pension Plans" herein).
(5) In connection with his elevation to the position of Chief Executive
Officer in April, 1995 succeeding Ronald J. Naples, Mr. Fritsch received
a one-time cash payment of $250,000 in fiscal 1995 (see
"Employment-Severance Agreements" herein).
(6) Includes reimbursements for $149,003 of relocation expenses and $104,009
of related taxes for Mr. Chandler in 1993. Also includes various other
perquisites or personal benefits.
(7) Represents salary through July 19, 1995 when Mr. Naples resigned as
Chairman; All Other Compensation includes $199,561 of payments in fiscal
1995, and $1,538,140 accrued (but subject to reduction), under a
Transition Agreement (see "Termination of Employment" herein).
(8) Represents long-term incentive awards that vested through April 30, 1995.
LONG-TERM INCENTIVE PLANS - AWARDS IN FISCAL 1995
No action was taken to set performance requirements and potential awards
for future periods under the Company's Long-Term Incentive Compensation Plan
in fiscal 1995 (see "Compensation Committee Report on Executive Compensation"
herein).
STOCK OPTION GRANTS, EXERCISES AND HOLDINGS
The following table sets forth certain information concerning stock
options granted to and exercised by the Named Officers during fiscal 1995 and
unexercised stock options held by them at the end of fiscal 1995:
OPTION GRANTS IN FISCAL 1995
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------------------------------------
Percentage of
Number of Total Options Exercise
Shares Underlying Granted to or Base Grant
Options Employees in Price Expiration Date
Name(1) Granted(2) Fiscal 1995 ($/Sh) Date Value(3)
------------------- ----------------- --------------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Robert B. Fritsch 34,000 11% $14.19 12/06/04 $142,460
William E. Chandler 26,200 8% $14.19 12/06/04 $109,778
Spencer W. O'Meara 22,500 7% $14.19 12/06/04 $ 94,275
W. Ernest Precious 22,500 7% $14.19 12/06/04 $ 94,275
John W. Carney 16,500 5% $14.19 12/06/04 $ 69,135
Ronald J. Naples 54,500 17% $14.19 10/19/98 $183,665
</TABLE>
- ------
(1) See the Summary Compensation Table for titles of the individual Named
Officers.
(2) All options were granted under the 1993 Stock Option and Stock Grant Plan
on December 6, 1994 at fair market value and become exercisable in
13
<PAGE>
essentially equal amounts two years and three years after the date of grant,
subject to possible acceleration in certain events. In anticipation of then
proposed accounting rule changes that would have adversely affected the
accounting treatment of stock options in the future, the equivalent of two
years worth of options were granted in fiscal 1995.
(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
(four years for Mr. Naples), 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 2.07% 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 exercise 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 1995
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Shares
Underlying Unexercised Value of Unexercised
Options at FY-End In-the-Money Options at
Shares Value (shares) FY-End(4)
Acquired on Realized -------------------------------- -------------------------------
Name(1) Exercise(2) (3) Exercisable Unexercisable Exercisable Unexercisable
------------------- ------------- ---------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert B. Fritsch -- -- 100,277 68,000 $163,592 $23,375
William E. Chandler -- -- 13,000 52,400 $ 23,563 $18,013
Spencer W. O'Meara 1,912 $ 14,068 63,685 45,000 $ 97,801 $15,469
W. Ernest Precious 3,808 $ 27,779 59,647 45,000 $103,303 $15,469
John W. Carney 1,794 $ 12,975 49,145 33,000 $ 75,303 $11,344
Ronald J. Naples 37,125 $251,324 192,621 109,000 $369,616 $37,469
</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 or 1993 Plans.
(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 value is calculated by subtracting the exercise price from the fair
market value of the securities underlying the options at December 3,
1995.
14
<PAGE>
PENSION PLANS
The following table sets forth the estimated annual retirement benefits
payable under the Company's Pension Plan and the retirement benefits portion
of the Supplemental Executive Benefits Plan (the "Supplemental Plan") to
participants in both Plans, assuming they retired at age 65 in fiscal 1996
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 $350,000 $360,000 $360,000
</TABLE>
- ------
(1) For the 1995 Plan year, amounts of benefits in the above table exceeding
$120,000 could not be paid under the Pension Plan but would be paid
pursuant to the retirement benefits portion of 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 1995 Plan year) may be
taken into account. The covered compensation of the Named Officers for fiscal
1995 was as follows: Mr. Fritsch -- $654,723; Mr. Chandler -- $307,099; Mr.
O'Meara -- $303,062; Mr. Precious -- $258,894; Mr. Carney -- $191,975; and
Mr. Naples -- $679,359.
The approximate present years of benefit service for the Named Officers
are as follows: Mr. Fritsch -- 27 years; Mr. Chandler -- 3 years; Mr. O'Meara
- -- 16 years; Mr. Precious -- 18 years; Mr. Carney -- 11 years; and Mr. Naples
- --19 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 retirement benefits portion of the Supplemental
Plan.
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.
15
<PAGE>
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, provides supplemental
benefits only to executive officers and other officers. Effective January 1,
1995, the Company added to the Supplemental Plan an elective salary deferral
feature with a Company matching contribution of 25% of an officer's elective
deferral but not to exceed 6% of the officer's compensation. The Company made
matching contributions to this portion of the Supplemental Plan for executive
officers of $29,246 in fiscal 1995.
EMPLOYMENT-SEVERANCE AGREEMENTS
In January 1996, the Company and Mr. Fritsch agreed that Mr. Fritsch will
continue to serve as President and Chief Executive Officer of the Company
until September 30, 1996 or until a new Chief Executive Officer is employed,
whichever comes first. Under the terms of this arrangement, Mr. Fritsch's
salary was increased to $450,000 annually effective December 1, 1995; a
special bonus award of $112,000 was paid to Mr. Fritsch in January 1996; and
Mr. Fritsch will receive a payment of up to $240,000 the day the new Chief
Executive Officer begins employment with the Company. This latter payment
will be in lieu of any 1996 pro-rated bonus based on the annual incentive
plan. Under certain circumstances, Mr. Fritsch has agreed to continue as
President and Chief Executive Officer through December 31, 1996, in which
case he would be entitled to receive the greater of the up to $240,000
payment referred to above or his pro rated portion of the 1996 annual bonus.
Mr. Fritsch also has agreed to serve in a transitional role for up to seven
months after a new President and Chief Executive Officer takes over, during
which period Mr. Fritsch will continue to receive his salary and certain
benefits. Upon retirement, Mr. Fritsch will also receive title to his company
automobile.
Since 1990 the Company has had change in control agreements with all
executive officers, as well as with other officers and certain key employees.
In 1994 these agreements were extended, with relatively minor modifications,
through December 31, 1999. 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 (generally 2.99 times in the case of a
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 (generally three years in the case of the 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
16
<PAGE>
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.
TERMINATION OF EMPLOYMENT
During fiscal 1995, the Company entered into a Transition Agreement with
Ronald J. Naples in connection with his resignation as Chairman of the Board
and Chief Executive Officer and in recognition of his contributions to the
Company. Pursuant to this agreement Mr. Naples is continuing as a consultant
to the Company through July 19, 1998 at a compensation rate of $565,000 per
year, subject to reduction in the third year by the amount of compensation
earned by Mr. Naples from other employment. Upon termination of his
employment with the Company, his stock options outstanding for more than a
year under two of the Company's stock option plans vested in full, and upon
termination of his consultancy with the Company, his stock options
outstanding for more than a year under a third plan are to vest in full. He
continues to participate, to a limited extent, in certain of the Company's
benefit plans and programs. The agreement also provided for: transfer to Mr.
Naples of title to the automobile that was being provided by the Company on
his behalf; for payment of an office allowance for a limited period of time
while he remained an employee of the Company; and for reimbursement of
certain expenses. (See the Summary Compensation Table and other tables herein
for additional information concerning Mr. Naples' compensation and benefits
during fiscal 1995.) Under the terms of the agreement, Mr. Naples also agreed
not to compete with the Company through July 19, 1998.
17
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph compares for fiscal years 1991 through 1995 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").
$220|---------------------------------------------------------------&--|
| |
| |
$200|------------------------------------------------------------------|
| |
| |
$180|------------------------------------------------------------------|
| |
| # |
$160|------------------------------------&------------&----------------|
| |
| * |
$140|-----------------------&------------*-----------------------------|
| * # #* |
| * |
$120|------------&-----------------------------------------------------|
| # |
| # |
$100|-*&#--------|----------|------------|------------|-------------|--|
1990 1991 1992 1993 1994 1995
*=Hunt Manufacturing Co. &=S & P 500 Index #=Peer Group Index
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Hunt Manufacturing Co. 100.00 131.00 125.00 143.00 135.00 144.00
S & P 500 Index 100.00 120.00 143.00 157.00 159.00 217.00
Peer Group Index 100.00 106.00 113.00 134.00 134.00 165.00
</TABLE>
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
- ------
(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.
18
<PAGE>
Group Index, the Peer Group companies including the Company 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 and the Company
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, 1990, 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 Messrs.
Fritsch and Naples, the Company agreed to lend to them each year, if they so
requested, 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 Stock Option and Stock Grant Plan. Such loans may be
for terms of up to ten years, are collateralized 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. From the beginning of the Company's 1995 fiscal
year through February 2, 1996, the largest aggregate amount of loans to Mr.
Fritsch and Mr. Naples under these agreements were $42,157 and $582,644,
respectively. These loans bore interest at rates ranging from 3.61% to 3.96%
during fiscal 1995. As of February 2, 1996, the outstanding balance of loans
to Mr. Naples was $412,051. Mr. Fritsch had no outstanding loans as of that
date.
Under the terms of the Transition Agreement with Mr. Naples, the loans
currently outstanding remain outstanding in accordance with their current
terms. Mr. Naples must repay such loans in full not later than the earliest
of: (i) September 17, 1998, (ii) 60 days following termination of his
consultancy under the Agreement if such termination occurs prior to July 19,
1998, and (iii) the date such loans become due and payable in accordance with
their terms.
As previously reported, on December 19, 1995, the Company purchased from
Mary F. Bartol an aggregate of 2,150,165 of the Company's Common Shares (the
"MFB Shares") constituting approximately 13% of the Common Shares then
outstanding, for a cash purchase price of $16.32 per share, an aggregate of
$35,090,692 (the "MFB Purchase"). Approximately $35 million of the funds for
the MFB Purchase were borrowed by the Company from NationsBank, N.A. pursuant
to a new credit facility. Mrs. Bartol is the widow of George E. Bartol III,
the late Chairman of the Board of the Company, the mother-in-law of Gordon A.
MacInnes, the current Chairman of the Board, and the mother of Victoria B.
Vallely, another director of the Company. The per share purchase price of
$16.32 paid by the Company for the MFB Shares was determined by negotiation
19
<PAGE>
between representatives of the Company and Mrs. Bartol and was considered and
unanimously approved by a Special Committee (consisting entirely of seven
outside directors not related to Mrs. Bartol) of the Board of Directors of the
Company. Subsequently, on December 21, 1995, the Company commenced a tender
offer to purchase up to an additional 3,230,000 of its Common Shares at $17 per
share, pursuant to which an aggregate of 2,954,378 shares were tendered to and
purchased by the Company. The Board received a written opinion from Alex. Brown
& Sons, Incorporated to the effect that, based upon the procedures followed,
factors considered and assumptions made by Alex, Brown as set forth in the
opinion, the MFB Purchase was fair to the Company and its shareholders other
than Mrs. Bartol and that the consideration offered by the Company in the tender
offer was fair, from a financial point of view, to the Company.
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 1995 except as follows. As a result of a miscommunication
concerning the date certain share transfers were effected, Gordon A.
MacInnes, Chairman of the Board, inadvertently was late in filing one Form 4
to reflect a distribution of Common Shares from a trust of which he is a
trustee to Mary F. Bartol, the beneficiary of such trust, and Mary F. Bartol
inadvertently was late in filing a Form 3 indicating her initial ownership of
Common Shares. Messrs. John W. Carney, William E. Chandler, Spencer W.
O'Meara and W. Ernest Precious, executive officers of the Company, each
inadvertently was late in filing a Form 5 for fiscal 1995 to reflect his
receipt of a stock grant under the Company's 1993 Stock Option and Stock
Grant Plan.
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 1997 Annual Meeting, shareholders' proposals to take action at such
20
<PAGE>
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 18, 1996.
MISCELLANEOUS
A copy of the Company's 1995 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 1995. 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,
/s/ William E. Chandler
-------------------------------------
WILLIAM E. CHANDLER, Secretary
March 1, 1996
21
<PAGE>
HUNT MANUFACTURING CO.
PROXY SOLICITED ON BEHALF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS -- APRIL 17, 1996
- -------------------------------------------------------------------------------
The undersigned hereby appoint(s) Robert B. Fritsch and William E. Chandler,
or any of them, with full power of substitution, proxies to vote, as designated
on the reverse side of this proxy card, all the Common Shares of Hunt
Manufacturing Co. held of record by the undersigned on February 16, 1996, at
the Annual Meeting of Shareholders to be held on April 17, 1996, and at any
adjournments thereof.
(Continued, and to be dated and signed, on other side)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
/X/ Please mark your
votes as in this
example.
AUTHORITY GRANTED Nominees: Robert B. Fritsch
to vote for all Robert H. Rock, D.B.A.
nominees (except as Victoria B. Vallely
marked to the AUTHORITY
(1) ELECTION contrary below) WITHHELD
OF / / / /
DIRECTORS
FOR AGAINST ABSTAIN
If you wish to withhold (2) Ratification of the / / / / / /
authority to vote for appointment of
one or more but less Coopers & Lybrand L.L.P.
than all of the nominees as the independent
named at right, or to accountants of the
cumulate your votes for Company for fiscal 1996;
any such nominee(s), so
indicate on the line (3) and, to the extent permitted by the Rules of the
provided below. Securities and Exchange Commission, upon such
other matters as may properly come before the
- ------------------------- meeting and any adjournments thereof.
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 at left (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
proposal set forth in item 2 and in accordance with
the proxies' best judgment upon other matters
properly coming before the meeting and any
adjournments thereof.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY
IN THE ENCLOSED ENVELOPE
SIGNATURE DATED , 1996
--------------------------- ---------------
SIGNATURE DATED , 1996
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(SIGNATURE IF HELD JOINTLY)
NOTE: Please date and sign exactly as your name appears herein. 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.
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