SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
AMERICAN FILTRONA CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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) or
Item 22(a)(2) of Schedule 14A.
( ) $500 per each party 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:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
AMERICAN FILTRONA CORPORATION
3951 WESTERRE PARKWAY, SUITE 300
RICHMOND, VIRGINIA 23233
March 8, 1996
ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
We enclose our annual report for the fiscal year ended December 31, 1995.
We hope you will read this report as it summarizes major developments during the
year and contains much information on the products, markets, facilities, and
future of our Corporation.
We cordially invite you to attend the annual meeting of shareholders to be
held on Tuesday, April 23, 1996, at 2:00 p.m. in the Second Floor Conference
Room at NationsBank Center, 12th and Main Streets, Richmond, Virginia.
A formal notice of the meeting, together with a proxy statement and a proxy
form, is enclosed with this letter. Please read the notice and proxy statement
carefully.
The notice points out that you will be asked to elect a Board of Directors
and approve the designation of independent accountants. The list of proposed
Directors is contained in the proxy statement. In addition to the formal agenda,
we expect to report on our activities and to answer any questions you might
have.
We would appreciate your voting, signing, dating and promptly returning the
enclosed proxy in the enclosed postage-paid envelope. By doing so, you will be
sure that your shares will be represented and voted at the meeting. If, as we
hope, you attend the meeting, you may revoke your proxy and vote in person.
Sincerely,
/s/ ANNE B. GIBBS
ANNE B. GIBBS
Secretary
<PAGE>
AMERICAN FILTRONA CORPORATION
RICHMOND, VIRGINIA
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of the holders of Common
Stock of American Filtrona Corporation (the "Corporation") will be held in the
Second Floor Conference Room at NationsBank Center, 12th and Main Streets,
Richmond, Virginia on April 23, 1996, at 2:00 p.m., for the following purposes:
1. To elect a Board of Directors to serve for the ensuing year;
2. To consider and act upon the designation by the Board of Directors of
Coopers & Lybrand L.L.P. as independent accountants for the fiscal year ending
December 31, 1996; and
3. To transact such other business as may properly come before the meeting.
The Board of Directors has fixed March 1, 1996, at the close of business,
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting or at any adjournment thereof.
You are requested to fill in, sign, date and return the enclosed proxy
promptly, whether or not you expect to attend the meeting. A self-addressed,
stamped envelope is enclosed for your convenience.
If you are present at the meeting, you may vote in person even if you have
already sent in your proxy.
By Order of the Board of Directors,
ANNE B. GIBBS
Secretary
March 8, 1996
<PAGE>
AMERICAN FILTRONA CORPORATION
3951 WESTERRE PARKWAY, SUITE 300
RICHMOND, VIRGINIA 23233
March 8, 1996
PROXY STATEMENT
Proxies in the form enclosed are solicited by the Board of Directors for
the Annual Meeting of Shareholders to be held on April 23, 1996. Any person
giving a proxy may revoke it at any time before it is voted. A proxy, when
executed and not so revoked, will be voted, and if it contains any specific
instructions, will be voted in accordance with such instructions.
On March 1, 1996, the date for determining shareholders entitled to vote at
the meeting, there were 3,739,101 outstanding shares of Common Stock of the
Corporation, $1.00 par value (the "Common Stock"). Each share of Common Stock is
entitled to one vote.
The cost of the solicitation of proxies will be borne by the Corporation.
In addition to the use of the mails, proxies may be solicited, personally or by
telephone, by regular employees of the Corporation.
ELECTION OF DIRECTORS
Proxies will be voted for the election of the persons named below as
Directors for the ensuing year unless otherwise instructed. If for any reason
any of the persons named below should become unavailable to be elected as a
Director, then the proxies will be voted for such substitute nominee as the
Board of Directors may designate. The Corporation has no reason to believe that
any of the nominees will be unavailable. All of the nominees currently are
members of the Board. The number of shares of Common Stock owned by each of the
nominees is shown in the next section.
The election of each nominee for Director requires the affirmative vote of
the holders of a plurality of the shares of Common Stock cast in the election of
Directors. Votes that are withheld and shares held in street name that are not
voted in the election of Directors will not be included in determining the
number of votes cast. Unless otherwise specified in the accompanying form of
proxy, it is intended that votes will be cast for the election of all of the
nominees as Directors.
1
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH CORPORATION,
PRINCIPAL OCCUPATION
FOR LAST 5 YEARS,
DIRECTORSHIPS IN PUBLIC DIRECTOR
NAME AGE CORPORATIONS SINCE
<S> <C> <C> <C>
JOHN D. BARLOW, JR. 61 Vice President -- Finance of the 1982
Corporation.
RUDOLPH H. BUNZL (a) 73 Former Chairman of the Board of the 1954
Corporation (1987-1994), and prior thereto
Chairman and Chief Executive Officer.
MANUEL DEESE 54 Executive Vice President, Major Accounts 1986
Business Unit, of Trigon Blue Cross Blue
Shield, health care insurer, Richmond,
Virginia. Director of Central Fidelity
National Bank, Richmond, Virginia.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH CORPORATION,
PRINCIPAL OCCUPATION
FOR LAST 5 YEARS,
DIRECTORSHIPS IN PUBLIC DIRECTOR
NAME AGE CORPORATIONS SINCE
<S> <C> <C> <C>
LEO C. DROZESKI, JR. 56 President (since January 1995) and Chief 1993
Operating Officer of the Corporation
(since January 1993), having previously
served as Executive Vice President and
Chief Operating Officer (since January
1993), Executive Vice President (since
1992), and prior thereto Vice
President -- Plastic Products.
BENNETT L. KIGHT 55 Partner, Sutherland, Asbill & Brennan, law 1990
firm, Atlanta, Georgia.
JOHN L. MORGAN (a) 61 Chairman (since January 1995) and Chief 1973
Executive Officer of the Corporation,
having previously served as President and
Chief Executive Officer.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH CORPORATION,
PRINCIPAL OCCUPATION
FOR LAST 5 YEARS,
DIRECTORSHIPS IN PUBLIC DIRECTOR
NAME AGE CORPORATIONS SINCE
<S> <C> <C> <C>
STANLEY F. PAULEY (a) 68 Chairman and Chief Executive Officer of 1976
Carpenter Company, manufacturer of comfort
cushioning products, Richmond, Virginia.
GILBERT M. ROSENTHAL (a) 70 Retired (since October 1993); formerly 1984
Chairman and Chief Executive Officer of
Standard Drug Company, retail drug chain,
Richmond, Virginia. Director of Jefferson
Bankshares Corporation, Charlottesville,
Virginia.
WALLACE STETTINIUS (a) 63 Retired (since February 1995); formerly 1978
Chairman of Cadmus Communications
Corporation, printer, Richmond, Virginia
(since October 1992), having previously
served as Chairman and Chief Executive
Officer of that corporation. Director of
Cadmus Communications Corporation and
Chesapeake Corporation, Richmond,
Virginia.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH CORPORATION,
PRINCIPAL OCCUPATION
FOR LAST 5 YEARS,
DIRECTORSHIPS IN PUBLIC DIRECTOR
NAME AGE CORPORATIONS SINCE
<S> <C> <C> <C>
BERNARD C. WAMPLER 64 Chairman (since December 1993) and Chief 1990
Executive Officer of Pulaski Furniture
Corporation, manufacturer of furniture,
Pulaski, Virginia, having previously
served as President and Chief Executive
Officer of that corporation. Director of
Pulaski Furniture Corporation, Pulaski,
Virginia.
HARRY H. WARNER 60 Financial Consultant. Director of 1988
Chesapeake Corporation, Richmond,
Virginia; Pulaski Furniture Corporation,
Pulaski, Virginia; and Allied Research
Corporation, Vienna, Virginia.
</TABLE>
(a) Member of Executive Committee
Seven meetings of the Corporation's Board of Directors and six meetings of
its Executive Committee were held during 1995. The Corporation also has standing
Audit, Executive Compensation and Nominating Committees of the Board of
Directors. Three meetings of the Audit Committee, two meetings of the Executive
Compensation Committee and one meeting of the Nominating Committee were held
during 1995. Each of the nominees attended at least 75% of the aggregate of the
total number of meetings held by the Board of Directors and committees of the
Board on which he served during 1995.
During 1995, in addition to its formal meetings, the Audit Committee
maintained informal contact with the auditors and management throughout the
year. Messrs. Kight, Rosenthal, Stettinius and
Wampler served on the Audit Committee during 1995. The Audit Committee reviews
the Corporation's internal audit and financial reporting functions and the scope
and results of the audit performed by the Corporation's independent accountants
and matters relating thereto and reports thereon to the Board of Directors.
5
<PAGE>
Messrs. Bunzl, Deese, Pauley and Warner served on the Executive
Compensation Committee during 1995. The Executive Compensation Committee
determines compensation of the Corporation's key executives and administers all
stock option and executive compensation plans of the Corporation.
Messrs. Pauley, Rosenthal and Wampler served on the Nominating Committee
during 1995. The Nominating Committee reviews the qualifications of, and
recommends candidates for, election as Directors.
The by-laws provide that a shareholder of the Corporation entitled to vote
for the election of Directors may nominate persons for election to the Board by
mailing written notice to the Secretary of the Corporation not later than (i)
with respect to an election to be held at an annual meeting of shareholders, 60
days prior to such meeting, and (ii) with respect to an election to be held at a
special meeting of shareholders for the election of Directors, the close of
business on the seventh day following the date on which notice of such meeting
is first given to shareholders. Such shareholder's notice shall include (i) the
name and address of the shareholder and of each person to be nominated, (ii) a
representation that the shareholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate each person specified, (iii) a description
of all understandings between the shareholder and each nominee and any other
person (naming such person) pursuant to which the nomination is to be made by
the shareholder, (iv) such other information regarding each nominee as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission, had the nominee been nominated by the
Board of Directors and (v) the consent of each nominee to serve as a Director of
the Corporation if so elected. The chairman of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure.
Based solely on its review of the forms required by Section 16(a) of the
Securities Exchange Act of 1934 (the "34 Act") that have been received by the
Corporation, the Corporation believes that all filing requirements applicable to
its officers, Directors and holders of greater than 10% of the Common Stock have
been complied with, except that (i) Frances B. Bunzl did not timely file an
Annual Statement of Changes in Beneficial Ownership on Form 5 upon her
acquisition in September 1992 of 24,174 shares of Common Stock through
appointment as a co-trustee of two testamentary trusts for the benefit of her
children; and (ii) a marital trust for the benefit of Frances B. Bunzl, of which
Bennett L. Kight and Frances B. Bunzl are co-trustees, did not timely file an
Initial Statement of Beneficial Ownership of Securities on Form 3 in September
1995 upon becoming the holder of more than 10% of the Common Stock.
6
<PAGE>
STOCK OWNERSHIP
By reason of the positions of Rudolph H. Bunzl, Bennett L. Kight and
Wallace Stettinius with the Corporation, their beneficial ownership of Common
Stock, and the family and trust relationships described below, Rudolph H. Bunzl,
Frances B. Bunzl (Rudolph H. Bunzl's sister-in-law), Bennett L. Kight, Wallace
Stettinius and the various trusts and other entities described below may be
deemed to be "parents" of the Corporation as defined by the rules and
regulations of the Securities and Exchange Commission. Pursuant to the rules and
regulations of the 34 Act, Messrs. Bunzl, Kight and Stettinius and Mrs. Frances
B. Bunzl also may be deemed to be members of a "group" (as that term is used in
Section 13(d)(3) of the 34 Act) with respect to all securities of the
Corporation owned by each of them. Each of the foregoing persons expressly
disavows the existence of any such group by virtue of the relationships
described below and, to the extent any such groups may be deemed to exist,
expressly disclaims membership in any such group and beneficial ownership of all
shares deemed to be beneficially owned as a result thereof. The following table
lists any person (including any "group" as that term is used in Section 13(d)(3)
of the 34 Act) who, to the knowledge of the Corporation, was the beneficial
owner, as of January 31, 1996, of more than five percent of the outstanding
shares of Common Stock. The number of shares shown for each of the foregoing
persons under column (3) below excludes shares that may be deemed to be
beneficially owned under the rules and regulations of the 34 Act as a result of
a group being deemed to exist.
7
<PAGE>
<TABLE>
<CAPTION>
(2) NAME AND (3) AMOUNT AND
(1) TITLE ADDRESS OF NATURE OF (4) PERCENT
OF BENEFICIAL BENEFICIAL OF
STOCK OWNERS OWNERSHIPS CLASS
<S> <C> <C> <C>
Common Stock Rudolph H. Bunzl 331,807 shares (a) 8.9
5540 Falmouth Street, Suite 305
Richmond, Virginia 23230
Frances B. Bunzl 996,164 shares (b) 26.7
3649 Peachtree Rd., Apt. 105
Atlanta, Georgia 30319
Bennett L. Kight 1,589,704 shares (c) 42.5
c/o Sutherland, Asbill, & Brennan
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
Wallace Stettinius 515,540 shares (d) 13.8
P.O. Box 27367
Richmond, Virginia 23261
Quest Advisory Corp. 226,400 shares (e) 6.1
Charles M. Royce
1414 Avenue of the Americas
New York, New York 10019
David L. Babson & Company, Inc. 327,600 shares (f) 8.8
One Memorial Drive
Cambridge, Massachusetts 02142
</TABLE>
(a) Includes 251,389 shares held in a revocable trust of which Rudolph H.
Bunzl is the sole trustee, sole beneficiary and has sole voting and investment
power, and 80,418 shares as to which Rudolph H. Bunzl has shared voting and
investment power. Of the shares in the latter category, 80,000 are held in
certain trusts for the benefit of Rudolph H. Bunzl's wife and others, of which
Rudolph H. Bunzl's wife and Bennett L. Kight are trust committee members and the
remainder are held by Rudolph H. Bunzl's wife. Rudolph H. Bunzl disclaims
beneficial ownership of 80,418 of such shares.
(b) Frances B. Bunzl (the sister-in-law of Rudolph H. Bunzl) and Bennett L.
Kight are co-trustees of a marital trust for the benefit of Mrs. Bunzl. Frances
B. Bunzl and Bennett L. Kight share voting and investment power with respect to
429,298 of such shares that are owned by the trust. In addition, Frances B.
Bunzl has shared voting and investment power with respect to 530,066 of such
shares that are held in certain trusts for the benefit of the children of Walter
H. Bunzl, of which Frances B. Bunzl and Bennett L. Kight are co-trustees or
members of the trust committee. Frances B. Bunzl, Bennett L. Kight and Mrs.
Bunzl's children also share voting and investment power with respect to 36,800
shares owned by a charitable foundation of which each is a director. Frances B.
Bunzl disclaims beneficial ownership of all shares held in the trusts for the
children of Walter H. Bunzl and by the charitable foundation.
(c) Bennett L. Kight and Frances B. Bunzl are co-trustees of a marital
trust for the benefit of Mrs. Bunzl. Bennett L. Kight and Frances B. Bunzl share
voting and investment power with respect to 429,298 of such shares that are
owned by the trust. Bennett L. Kight disclaims beneficial ownership of all of
such trust shares. In addition, Bennett L. Kight has shared voting and
investment power with
8
<PAGE>
respect to 530,066 such shares, which are held in certain trusts for the benefit
of the children of Walter H. Bunzl, of which Bennett L. Kight and Frances B.
Bunzl are co-trustees or members of the trust committee. Bennett L. Kight also
shares voting and investment power with respect to 80,000 shares held in certain
trusts for the benefit of Rudolph H. Bunzl's wife and others of which Bennett L.
Kight and Rudolph H. Bunzl's wife are trust committee members. Bennett L. Kight
disclaims beneficial ownership of all shares held in all such trusts. Bennett L.
Kight, Frances B. Bunzl and Mrs. Bunzl's children also share voting and
investment power with respect to 36,800 shares owned by a charitable foundation
of which each is a director. Bennett L. Kight disclaims beneficial ownership of
all shares held in such charitable foundation. Bennett L. Kight also shares
voting and investment power with respect to 513,540 shares held in certain
trusts for the benefit of the children of Rudolph H. Bunzl, of which Bennett L.
Kight and Wallace Stettinius are co-trustees. Bennett L. Kight disclaims
beneficial ownership of all shares held in such trusts.
(d) Includes 2,000 shares as to which Wallace Stettinius has sole voting
and investment power and 513,540 shares as to which Wallace Stettinius has
shared voting and investment power. All of the shares in the latter category are
held in certain trusts for the benefit of the children of Rudolph H. Bunzl of
which Wallace Stettinius and Bennett L. Kight are co-trustees. Wallace
Stettinius disclaims beneficial ownership of all shares held in such trusts.
(e) The information contained herein with respect to Quest Advisory Corp.
and Charles M. Royce, is based solely on a Schedule 13G filed by such entities
with the Securities and Exchange Commission, a copy of which was received by the
Corporation on February 23, 1996. Such filing further stated that the
acquisition of such shares was in the ordinary course of business and not in
connection with or as a participant in any transaction having the purpose or
effect of changing or influencing the control of the Corporation.
(f) The information contained herein with respect to David L. Babson &
Company, Inc. is based solely on a Schedule 13G filed by such entity with the
Securities and Exchange Commission, a copy of which was received by the
Corporation on February 15, 1996. Such filing further stated that the
acquisition of such shares was in the ordinary course of business and not in
connection with or as a participant in any transaction having the purpose or
effect of changing or influencing the control of the Corporation.
The Board of Directors knows of no other person (including any "group") who
is the beneficial owner of more than five percent of the Corporation's Common
Stock.
9
<PAGE>
The following table provides information, as of January 31, 1996, as to the
shares of Common Stock owned by each Director, the Chief Executive Officer and
the four other most highly compensated executive officers of the Corporation and
by all Directors and officers of the Corporation as a group:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
NAME OF PERSON OR OF BENEFICIAL PERCENT OF
NUMBER OF PERSONS OWNERSHIP (A) CLASS IF
IN GROUP (B) MORE THAN 1%
<S> <C> <C>
John D. Barlow, Jr. 34,199 shares(c)
Rudolph H. Bunzl 331,807 shares 8.9
Manuel Deese 400 shares
Leo C. Drozeski, Jr. 39,545 shares(c) 1.1
Bennett L. Kight 1,589,704 shares 42.5
John L. Morgan 91,939 shares(c) 2.5
Stanley F. Pauley 1,100 shares
Gilbert M. Rosenthal 1,000 shares
Wallace Stettinius 515,540 shares 13.8
Bernard C. Wampler 500 shares
Harry H. Warner 1,500 shares
Randall L. Hagan 31,744 shares(c)
Anthony M. Vincent 16,730 shares(c)
All Officers and Directors
as a Group (16) 2,070,691 shares(d) 55.4
</TABLE>
(a) Includes 1,590,372 shares held by spouses, children and in certain
trust relationships, which may be deemed to be beneficially owned by the
nominees under the rules and regulations of the Securities and Exchange
Commission, but as to which the nominees and officers disclaim beneficial
ownership.
(b) Except in situations described in Note (a) above where beneficial
ownership is disclaimed, and except as set forth in the preceding table and the
notes thereto, the beneficial owner of each share shown in the table has sole
voting and investment power.
(c) Includes 13,700, 19,200, 39,500, 16,000, and 9,400 shares that may be
acquired by Messrs. Barlow, Drozeski, Morgan, Hagan and Vincent, respectively,
on or before March 30, 1996, under the Corporation's stock option plans.
(d) Includes the shares described in Note (c) above and 7,500 shares that
may be acquired by other officers on or before March 30, 1996, under the
Corporation's stock option plans.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following table lists all compensation paid by the Corporation to the
Chief Executive Officer and the four other most highly compensated executive
officers of the Corporation for services rendered in fiscal years 1995, 1994 and
1993.
10
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL AWARDS PAYOUTS ($)1
COMPENSATION OPTIONS/ ALL OTHER
NAME AND SALARY BONUS SARS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C>
John L. Morgan 1995 275,000 150,000 15,000 0 11,250(2)
Chief Executive Officer 1994 250,000 110,000 0 0 10,500
and Chairman 1993 235,000 95,000 12,000 53,000 15,786
Leo C. Drozeski, Jr. 1995 175,000 100,000 12,000 0 11,250(3)
Chief Operating Officer 1994 154,000 80,000 0 0 10,500
and President 1993 140,000 65,000 8,000 26,500 13,059
Randall L. Hagan 1995 123,000 49,000 2,500 0 13,500(4)
Vice President -- Bonded 1994 118,000 40,000 0 0 12,000
Fiber Products 1993 113,300 35,000 2,500 26,500 11,864
John D. Barlow, Jr. 1995 146,600 22,000 2,500 0 11,250(5)
Vice President -- Finance 1994 141,400 19,000 0 0 10,500
1993 136,000 17,000 2,000 26,500 10,430
Anthony M. Vincent 1995 112,000 18,000 2,000 0 11,100(6)
Vice President 1994 107,500 18,0007 0 0 6,987
1993 103,000 25,000 2,000 26,500 4,920
</TABLE>
(1) The amounts in this column represent the value of shares of Common Stock
received at the completion of the 1991-1993 Performance Cycle of the
Corporation's Performance Plan based on a per-share price of $26.50.
(2) Includes contributions to the 401(k) Savings and Profit Sharing Plan
($10,125, $9,375 and $14,017) and ESOP ($1,125, $1,125 and $1,769) for 1995,
1994 and 1993, respectively.
(3) Includes contributions to the 401(k) Savings and Profit Sharing Plan
($10,125, $9,375 and $11,649) and ESOP ($1,125, $1,125 and $1,410) for 1995,
1994 and 1993, respectively.
(4) Includes contributions to the 401(k) Savings and Profit Sharing Plan
($12,375, $10,875 and $10,752) and ESOP ($1,125, $1,125 and $1,112) for 1995,
1994 and 1993, respectively.
(5) Includes contributions to the 401(k) Savings and Profit Sharing Plan
($10,125, $9,375 and $9,313) and ESOP ($1,125, $1,125 and $1,117) for 1995, 1994
and 1993, respectively.
(6) Includes contributions to the 401(k) Savings and Profit Sharing Plan
($9,990, $5,862 and $3,997) and ESOP ($1,110, $1,125 and $923) for 1995, 1994
and 1993, respectively.
(7) In addition, Anthony M. Vincent received a one-time payment of $134,375 in
1994 related to the sale of Dollinger Corporation and paid from proceeds of the
sale.
11
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information on options or Stock Appreciation
Rights ("SAR") grants made during the 1995 fiscal year by the Corporation to the
Chief Executive Officer and the four other most highly compensated executive
officers of the Corporation.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS/SARS STOCK PRICE
UNDERLYING GRANTED TO EXERCISE OR APPRECIATION FOR
OPTIONS/SARS EMPLOYEES IN BASE PRICE OPTION TERM
NAME GRANTED (#) FISCAL YEAR ($) EXPIRATION DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
John L. Morgan 15,000(1) 20.3% 26.8125 1-25-05 252,933 640,983
Leo C. Drozeski, Jr. 12,000(2) 16.3% 26.8125 1-25-05 202,346 512,786
Randall L. Hagan 2,500(3) 3.4% 26.8125 1-25-05 42,156 106,831
John D. Barlow, Jr. 2,500(3) 3.4% 26.8125 1-25-05 42,156 106,831
Anthony M. Vincent 2,000(3) 2.7% 26.8125 1-25-05 33,724 85,464
</TABLE>
(1) Mr. Morgan's options become exercisable as follows: 2,300, 3,700, 3,700,
3,700 and 1,600 options on January 25, 1999, 2000, 2001, 2002 and 2003.
(2) Mr. Drozeski's options become exercisable as follows: 1,600, 2,000, 2,000,
3,200 and 3,200 options on January 25, 1996, 1997, 1998, 1999 and 2000.
(3) Each of these options becomes exercisable in 20% increments on January 25,
1996, 1997, 1998, 1999 and 2000.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
The following table provides information on option/SAR exercises by the
Chief Executive Officer and the four other most highly compensated executive
officers of the Corporation and the value of each officer's unexercised options.
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
<TABLE>
<CAPTION>
SHARES NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS/SARS AT IN-THE-MONEY OPTIONS
ON VALUE FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(1)
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
<S> <C> <C> <C> <C>
John L. Morgan 0 0 35,600/27,400 459,700/211,613
Leo C. Drozeski, Jr. 0 0 17,000/17,400 198,163/135,750
Randall L. Hagan 0 0 14,900/ 4,600 184,413/ 39,619
John D. Barlow, Jr. 0 0 12,800/ 4,100 151,663/ 34,219
Anthony M. Vincent 0 0 8,400/ 3,800 71,250/ 33,675
</TABLE>
(1) Value of unexercised options based on the December 31, 1995, closing price
of $34.50 per share.
12
<PAGE>
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
The following table provides information on all grants made pursuant to the
1988 Performance Shares Plan during 1995 by the Corporation to the Chief
Executive Officer and the other most highly compensated executive officers of
the Corporation.
LONG-TERM INCENTIVE PLAN
AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE
PERFORMANCE PAYOUTS UNDER NON-STOCK
PERIOD PRICE-BASED PLANS
NUMBER UNTIL THRESHOLD TARGET MAXIMUM
NAME OF SHARES MATURATION # # #
<S> <C> <C> <C> <C> <C>
John L. Morgan 1,250(1) 2 Years 1,250 1,250 1,250
1,250(2) 2 Years 1,250 1,250 1,250
1,250(3) 2 Years 1,250 1,250 1,250
1,250(4) 2 Years 1,250 1,250 1,250
Leo C. Drozeski, Jr. 750(1) 2 Years 750 750 750
750(2) 2 Years 750 750 750
750(3) 2 Years 750 750 750
750(4) 2 Years 750 750 750
Randall L. Hagan 250(1) 2 Years 250 250 250
250(2) 2 Years 250 250 250
250(3) 2 Years 250 250 250
250(4) 2 Years 250 250 250
John D. Barlow, Jr. 250(1) 2 Years 250 250 250
250(2) 2 Years 250 250 250
250(3) 2 Years 250 250 250
250(4) 2 Years 250 250 250
</TABLE>
(1) Shares of Common Stock to be awarded upon continued employment with the
Corporation throughout the Performance Period.
(2) Shares of Common Stock to be awarded upon achievement of certain corporate
earnings per share goals by the end of the Performance Period.
(3) Shares of Common Stock to be awarded upon achievement of an established
return on shareholders' equity by the end of the Performance Period.
(4) Shares of Common Stock to be awarded at the end of the Performance Period
based on individual performance at discretion of the Executive Compensation
Committee.
13
<PAGE>
RETIREMENT BENEFITS
The following table illustrates annual retirement benefits payable under
the Retirement Plan and the supplemental benefit plan, as amended in 1993 (the
"Supplemental Plan"), to participants based on Final Average Earnings and years
of credited service, assuming normal retirement at age 65.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
ANNUAL RETIREMENT BENEFITS PAYABLE FOR CREDITED
FINAL AVERAGE SERVIVCE OF
EARNINGS 5 YEARS 10 YEARS 15 YEARS 20 OR MORE YEARS
<S> <C> <C> <C> <C>
$100,000............. $ 6,250 $12,500 $ 18,750 $ 25,000
150,000............. 9,375 18,750 28,125 37,500
200,000............. 12,500 25,000 37,500 50,000
250,000............. 15,625 31,250 46,875 62,500
300,000............. 18,750 37,500 56,250 75,000
350,000............. 21,875 43,750 65,625 87,500
400,000............. 25,000 50,000 75,000 100,000
450,000............. 28,125 56,250 84,375 112,500
500,000............. 31,250 62,500 93,750 125,000
550,000............. 34,375 68,750 103,125 137,500
</TABLE>
Under the Retirement Plan, "Final Average Earnings" is the highest annual
average compensation during any five consecutive calendar years within the
ten-year period prior to the date the participant's benefits are determined.
Annual retirement benefits at age 65 for all participants equal 25% of Final
Average Earnings. The benefits under the Retirement Plan may be reduced
depending upon the number of years of service with the Corporation or one of its
subsidiaries or divisions.
To the extent that benefits determined under the Retirement Plan's benefit
formula are reduced because of compensation limitations imposed by the Internal
Revenue Code, they will be paid under the Supplemental Plan.
Benefit amounts are stated as payments in the form of a life annuity with a
guarantee of 120 monthly payments and are in addition to Social Security
benefits. Other actuarially equivalent forms of benefit may be selected.
At December 31, 1995, Messrs. Morgan, Drozeski, Hagan, Barlow and Vincent
had 26, 23, 17, 15 and 16 years of credited service for purposes of calculating
retirement benefits, respectively, and $385,000, $255,000, $163,000, $165,600
and $130,000 Rates of Earnings, respectively.
The Supplemental Plan provides certain key management personnel with
additional supplemental retirement benefits. The Executive Compensation
Committee selects participants and determines the amount payable to each
participant under the Supplemental Plan. Benefits are paid at retirement and may
be payable at death or disability. A participant's benefit may be reduced
depending on the number of years of service with the Corporation or any of its
subsidiaries. Benefit amounts under the Supplemental Plan are stated as annual
payments in the form of a life annuity with a guarantee of 120
14
<PAGE>
monthly payments. Benefits are paid in the form of benefit selected by the
participant under the Retirement Plan. At December 31, 1995, Messrs. Morgan and
Barlow were entitled to annual benefits under the Supplemental Plan of $12,000
and $5,000, respectively, at normal retirement age.
REMUNERATION OF DIRECTORS
During the year ended December 31, 1995, each of the Directors except
Messrs. Barlow, Drozeski and Morgan was paid $750 for attendance at each Board
meeting, $500 for attendance at each meeting of a Committee of the Board of
which he was a member and $6,000 per year as a retainer. Such Directors' fees
may, at the Director's election, be deferred until retirement. Interest will
accrue thereon semi-annually at an interest rate equal to the 26-week U.S.
Treasury Bill rate in effect on January 1 and July 1 of each year. Each chairman
of a Committee of the Board received $2,000 per year as an additional retainer.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
One member of the Executive Compensation Committee, Mr. Bunzl, was the
Chairman of the Board of the Corporation until December 31, 1994 and was
formerly the Chief Executive Officer of the Corporation.
REPORT OF EXECUTIVE COMPENSATION COMMITTEE
The Corporation's executive compensation program, as administered by the
Executive Compensation Committee (the "Committee"), encompasses several
components: base salary, cash bonus and long-term, stock-based incentive awards.
The Committee determines base salaries based on a review of salaries paid
to executives of companies of comparable size and type and on the inflation
rate. The Committee attempts to set base salaries slightly below the middle of
the range of salaries paid by such companies. The companies considered do not
include all of the companies reflected in the Performance Graph on page 17. The
Committee also takes into account level of responsibility, time in position and
past performance in setting base salary. The Committee approved a base salary
for Mr. Morgan for 1995 that reflected an increase of 10% above his 1994 base
salary in response to inflation and to bring his salary more in line with the
Committee's general sense of competitive salaries.
In determining the cash bonuses for the Corporation's executives, the
Committee reviews the Corporation's financial results as well as each
individual's contribution to the Corporation's performance, especially his level
of responsibility and leadership efforts. The procedure is essentially
discretionary and subjective. When establishing Mr. Morgan's cash bonus, the
Committee considers his total cash compensation (base salary and bonus) on a
year to year basis. In determining Mr. Morgan's 1995 cash bonus, the Committee
also reviewed the Corporation's performance for the year, as well as Mr.
Morgan's individual efforts in enhancing that performance and his consistently
strong performance as Chief Executive Officer. Mr. Morgan's cash bonus of
$150,000 was 36% above his 1994 cash bonus. However, his total cash compensation
increased only 18%, which was less than the Corporation's 30% increase in
earnings per share from continuing operations.
15
<PAGE>
In 1995, the Corporation made stock-based incentive awards pursuant to the
1988 Stock Option Plan (the "Option Plan") and the 1988 Performance Shares Plan
(the "Performance Plan") to its executives who have contributed, and are
expected to contribute, to the long-term financial performance of the
Corporation. The Option Plan provides for the grant of incentive stock options
to purchase shares of Common Stock at no less than the fair market value of the
Common Stock on the date of grant and non-qualified stock options to purchase
shares of Common Stock at no less than 85% of the fair market value of the
Common Stock on the date of grant. All option grants under the Option Plan have
been incentive stock options. The Performance Plan provides that an executive
may receive one share of Common Stock for each Performance Share that vests
after a pre-determined performance cycle (i) upon continued employment with the
Corporation, (ii) upon satisfaction of certain pre-established performance
goals, including achievement of corporate earnings per share and return on
equity goals, and (iii) at the discretion of the Committee, based on individual
performance. Achievement of these goals inures to the benefit of the
shareholders, as well as the executives. On January 25, 1995, the executives
listed on page 11 were awarded 34,000 options and the executives listed on page
13 were awarded 10,000 Performance Shares. Mr. Morgan received 15,000 of such
options and 5,000 of such Performance Shares because of his critical long-term
role in the Corporation's development.
No additional awards can be made under either the Option Plan or the
Performance Plan. At the 1995 Annual Meeting, the shareholders of the
Corporation approved the American Filtrona Corporation 1995 Stock Incentive
Plan, pursuant to which future option and Performance Share grants will be made.
Because none of the Corporation's executive officers receives annual
compensation in excess of $1 million, the Corporation has not taken any position
with respect to the cap on tax deductibility of compensation in excess of that
amount established under the Omnibus Budget Reconciliation Act of 1993.
Executive Compensation Committee
Rudolph H. Bunzl
Manuel Deese
Stanley F. Pauley
Harry H. Warner (Chairman)
16
<PAGE>
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG AMERICAN FILTRONA, S&P 500, AND NASDAQ NON-FINANCIAL STOCKS
[INSERT GRAPH HERE]
1991 1992 1993 1994 1995
American Filtrona 135 161 163 177 233
NASDAQ Non-Financial Stocks 161 176 203 195 268
S&P 500 131 141 155 157 215
ASSUMES $100 INVESTED ON JANUARY 1, 1991 WITH DIVIDENDS REINVESTED.
APPROVAL OF INDEPENDENT ACCOUNTANTS
The Board of Directors, upon recommendation of its Audit Committee, has
designated Coopers & Lybrand L.L.P., independent accountants, as auditors of the
financial statements for the fiscal year ending December 31, 1996, subject to
shareholder approval. Coopers & Lybrand L.L.P. previously served as auditors of
the Corporation and reported on its financial statements as of December 31,
1995, and for the year then ended.
Although shareholder approval of this action is not required under
applicable law, the Board believes it is in the best interests of the
shareholders to afford them a vote on this matter. Should this designation not
be so approved, the Board intends to reconsider its action in light of this
result. Representatives of Coopers & Lybrand L.L.P. are expected to be present
at the meeting with the opportunity to make a statement if they desire to do so
and to respond to appropriate questions.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE DESIGNATION OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT
ACCOUNTANTS TO AUDIT AND REPORT UPON THE FINANCIAL STATEMENTS OF THE CORPORATION
FOR THE YEAR 1996. IT IS INTENDED THAT PROXIES WILL BE VOTED FOR APPROVAL UNLESS
INSTRUCTIONS TO THE CONTRARY ARE GIVEN IN THE PROXY.
17
<PAGE>
SHAREHOLDER PROPOSALS
Under the rules and regulations of the Securities and Exchange Commission,
any proposal that a shareholder intends to present at the next annual meeting
must be received by the Corporation at its principal office in Richmond,
Virginia on or before November 7, 1996, if the shareholder desires it to be
considered for inclusion in the Corporation's proxy statement and form of proxy
relating to that meeting.
The Corporation's by-laws provide that in addition to any other applicable
requirements, for business to be properly brought before the annual meeting by a
shareholder, the shareholder must give timely notice in writing to the Secretary
of the Corporation not later than 60 days prior to the meeting. As to each
matter, the notice should contain (i) a brief description of the matter and the
reasons for addressing it at the annual meeting, (ii) the name and record
address of (and class and number of shares beneficially owned by) the
shareholder proposing such business, and (iii) any material interest of the
shareholder in such business.
OTHER MATTERS
The Corporation is not aware of any matters to be presented for action at
the meeting other than the election of Directors and approval of independent
accountants. However, if any other matters properly come before the meeting, or
any adjournment thereof, the person or persons voting the proxies will vote in
accordance with their best judgment.
A copy of the Corporation's 1995 Annual Report on Form 10-K as required to
be filed with the Securities and Exchange Commission will be provided on written
request without charge to any shareholder whose proxy is being solicited by the
Board of Directors. The written request should be directed to the Secretary of
the Corporation, P. O. Box 31640, Richmond, Virginia 23294.
By Order of the Board of
Directors,
ANNE B. GIBBS
Secretary
18
<PAGE>
PROXY
AMERICAN FILTRONA CORPORATION
ANNUAL MEETING OF SHAREHOLDERS[fcmd]APRIL 23, 1996
The undersigned hereby appoints John L. Morgan and John D. Barlow, Jr., or
either of them, with full power of substitution in each, proxies (and if the
undersigned is a proxy, substitute proxies) to vote all Common Stock of the
undersigned in American Filtrona Corporation at the Annual Meeting to be held on
April 23, 1996, and at any and all adjournments thereof, as specified below:
1. ELECTION OF DIRECTORS
John D. Barlow, Jr.; Rudolph H. Bunzl; Manuel Deese; Leo C. Drozeski, Jr.;
Bennett L. Kight; John L. Morgan; Stanley F. Pauley; Gilbert M. Rosenthal;
Wallace Stettinius; Bernard C. Wampler; and Harry H. Warner.
FOR all nominees listed above WITHHOLD AUTHORITY
(except as indicated to the to vote for all nominees
contrary below) listed above
(Instruction: To withhold authority to vote for any individual nominee write
that nominee's name in the space provided below.)
2. PROPOSAL TO APPROVE THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS
INDEPENDENT ACCOUNTANTS OF THE CORPORATION.
__ FOR __ AGAINST __ ABSTAIN
[Please sign and date on reverse side]
Dated: , 1996
Please sign name exactly
as it appears on stock
certificate. Only one of
several joint owners need
sign. Fiduciaries should
give full title.
This proxy is solicited by the Board of Directors. If no
specification is made, this Proxy will be voted FOR Proposals 1
and 2.
