<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Jostens, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF JOSTENS]
ROBERT P. JENSEN
Chairman
(612) 830-3300
Corporate Offices
5501 Norman Center Drive
Minneapolis, MN 55437
September 20, 1996
Dear Shareholder:
You are cordially invited to join us at the 1996 Annual Meeting of your
company, which will be held at 10 a.m. Thursday, October 24, 1996, in the
Auditorium of the company's headquarters at 5501 Norman Center Drive,
Minneapolis, Minnesota. The formal notice of the meeting and proxy statement
appear on the following pages.
At the meeting, shareholders will elect three individuals to serve as
directors for terms of three years, elect one individual to serve as a
director for a term of one year, consider amendments to the Jostens, Inc. 1992
Stock Incentive Plan, and consider the Board's proposal that shareholders
ratify the appointment of Ernst & Young as the company's independent
accountants for the 1997 fiscal year.
Directors and officers will be present before and after the meeting to talk
with shareholders. During the meeting there will be an opportunity for
shareholder questions regarding the affairs of the company and for discussion
of the business to be considered at the meeting.
We hope you will be able to attend and participate in the meeting. However,
whether or not you intend to attend the meeting in person, you can be assured
that your shares will be represented at the meeting by completing and
returning the enclosed proxy card in the envelope provided as soon as
possible. Remember, your vote is important!
Cordially,
/s/ Robert P. Jensen
Robert P. Jensen
Chairman of the Board
<PAGE>
[LOGO OF JOSTENS]
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 24, 1996
---------------------
To Our Shareholders:
The Annual Meeting of the Shareholders of Jostens, Inc., will be held at the
executive offices of the company, 5501 Norman Center Drive, Minneapolis,
Minnesota, Thursday, October 24, 1996, at 10 a.m. local time, for the
following purposes, as described in more detail in the accompanying Proxy
Statement.
1. To elect four directors, three to serve three-year terms ending in 1999
and one to serve a one-year term ending in 1997.
2. To approve amendments to the Jostens, Inc. 1992 Stock Incentive Plan.
3. To ratify the appointment of Ernst & Young to act as independent
auditors of the company for the fiscal year ending June 30, 1997.
4. To transact such other business that may be properly considered at the
meeting or any adjournment thereof.
Shareholders of record at the close of business on September 4, 1996, are
entitled to notice of and to vote at the Annual Meeting or any adjournments of
the meeting.
ON BEHALF OF THE BOARD OFDIRECTORS
/s/ Orville E. Fisher Jr.
Orville E. Fisher Jr., Secretary
September 20, 1996
PLEASE DATE AND SIGN THE ENCLOSED PROXY CARD
AND MAIL IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE.
<PAGE>
[LOGO OF JOSTENS]
---------------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 24, 1996
---------------------
GENERAL INFORMATION
This Proxy Statement is furnished to the shareholders of Jostens, Inc. in
connection with the solicitation by the Board of Directors of the company of
proxies for use at the Annual Meeting of Shareholders to be held Thursday,
October 24, 1996, at 10 a.m. local time, and at all adjournments thereof, for
the purposes set forth in the Notice of Annual Meeting of Shareholders.
A proxy may be revoked by the person giving it at any time before it is used
at the Annual Meeting. A proxy may be revoked by filing a revoking instrument
with the secretary of the company, by submitting a duly executed proxy bearing
a later date or by attending the Annual Meeting and voting in person.
Any proxy received pursuant to this solicitation will be voted at the Annual
Meeting as specified by the shareholder. A proxy signed by the shareholder
that lacks any such specification will be voted in favor of the proposals set
forth in the Notice of Annual Meeting of Shareholders and in favor of the
election of the nominees for director listed in this Proxy Statement. A proxy
in which authority is withheld for the election of a nominee for director or
voted as abstaining on any of the other proposals will be treated as shares
present and entitled to vote that were not cast in favor of a particular
matter, and will be counted as votes against that matter. Shares represented
by a proxy card, including any broker non-votes on a matter, will be treated
as shares not entitled to vote on that matter and will not be counted in
determining whether that matter has been approved.
The cost of solicitation will be borne by the company. Proxies will be
solicited primarily by mail. Morrow & Co., Inc., New York, N.Y. has been
retained to assist in the distribution of proxies at an estimated fee of
$5,500 plus expenses. Directors, officers and employees of the company may
solicit proxies in person, by telephone, by telegram or by facsimile. The
company may reimburse brokerage firms and others for expenses incurred in
forwarding proxy materials to the beneficial owners of the company's common
stock.
This Proxy Statement and the enclosed form of proxy are first being mailed
to Jostens shareholders on September 20, 1996.
OUTSTANDING SHARES
Only shareholders of record at the close of business September 4, 1996, are
entitled to vote at the Annual Meeting. On September 4, 1996, the company had
38,659,243 outstanding shares of common stock, each such share entitling the
holder thereof to one vote on each matter to be voted on at the Annual
Meeting. Holders of shares of common stock are not entitled to cumulative
voting rights. Representation in person or by proxy of a majority of the
shares outstanding is required to constitute a quorum.
1
<PAGE>
The following table sets forth certain information concerning persons known
to the company to be the beneficial owner of more than five percent of the
company's common stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS BENEFICIALLY OWNED PERCENT OF CLASS
---------------- ------------------ ----------------
<S> <C> <C>
FMR Corporation 4,330,849(/1/) 11.2%
82 Devonshire Street
Boston, MA 02109
State Farm Mutual Automobile 2,781,126(/2/) 7.2%
Insurance Company
One State Farm Plaza
Bloomington, IL 61710
</TABLE>
- ---------------------
(1) According to the Form 13G filed as of February 29, 1996, this entity had
sole voting or dispositive power over all of the shares set forth above
opposite its name.
(2) According to the Form 13G filed as of December 31, 1995, this entity had
sole voting or dispositive power over all of the shares set forth above
opposite its name.
ELECTION OF DIRECTORS
NOMINATION
The company's Articles of Incorporation currently provide that the Board of
Directors shall consist of not less than five nor more than 15 members, which
number shall be fixed from time to time by resolution of the Board and shall
be divided into three classes of as nearly equal size as possible. The
standard term of each class is three years and the term of one class expires
each year in rotation. The company has established a retirement age for
directors of 70 years old. The Board presently consists of eight members. At
the Annual Meeting, the terms of two current directors will expire and one
director has elected to retire prior to the end of his current term.
The term of Mr. Stodder expires at the Annual Meeting and he will retire
from the Board. Mr. Stodder has been associated with Jostens since the 1950s,
including 32 years of service as a director. Mr. Andres has elected to retire
as of the date of the Annual Meeting, one year prior to the end of his current
term, after 11 years of dedicated service. The company recognizes and
appreciates their many contributions and expresses its thanks to Mr. Stodder
and Mr. Andres for their service as directors.
The Board has determined that there will be seven directors of the company
for the ensuing year or until such time as the number of directors may be
changed by the Board. The Board of Directors has designated Lilyan H.
Affinito, Kendrick B. Melrose and Richard A. Zona as nominees for election to
three-year terms ending in 1999 or until their successors are duly elected and
qualified. The Board has nominated Robert P. Jensen to serve as a director for
a one-year term ending in 1997 or until his successor is duly elected and
qualified. Although under the Board of Directors policy Mr. Jensen has reached
the age of retirement, due to his key position as Chairman of the Board and
his significant contributions to the company, the Board has asked him to serve
an additional term of one year. Ms. Affinito, Mr. Jensen and Mr. Zona are
currently directors of the company. Mr. Zona was elected as a director of the
company by the Board in April 1996. Mr. Melrose has not previously served on
the Board and is being nominated for the first time. The Board has no reason
to believe that any nominee will be unable to serve if elected. If, prior to
the Annual Meeting, the Board should learn that any nominee will be unable to
serve by reason of death, incapacity or other unexpected occurrence, the
proxies that would have been voted for such nominee will be voted for a
substitute nominee as selected by the Board.
2
<PAGE>
The following information has been furnished to the company by the
respective directors and nominees. Except as otherwise stated, each of the
directors and nominees has held his or her present occupation for the past
five years. Set forth below each individual's name is the year during which
such director's term expires.
<TABLE>
<CAPTION>
DIRECTOR
PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS AGE SINCE
-------------------------------------------- --- --------
<S> <C> <C>
Lilyan H. Affinito, until 1991, served as Vice 65 1987
Chairman of the Board of Maxxam Group, Inc., a forest
products, real estate management and development
and integrated aluminum production company. She
previously served as President and Chief Operations
Officer of Maxxam Group. She is a director of Kmart
Corporation; Caterpillar, Inc.; Chrysler Corporation;
New York Telephone Company; New England Telephone
Company; Tambrands, Inc.; and Lillian Vernon Corp.
[PHOTO OF
Lilyan H. Affinito
(nominee)]
Robert C. Buhrmaster is the President and Chief Executive 49 1993
Officer of the company. Mr. Buhrmaster joined Jostens in
December 1992 as Executive Vice President and Chief Staff
Officer. He was named President and Chief Operating Officer
in June 1993 and was named to his current position in March
1994. Prior to joining the company, Mr. Buhrmaster was
with Corning, Inc. for 18 years, most recently as
Senior Vice President of Strategy and Business Development.
He is a director of The Toro Company.
[PHOTO OF
Robert C. Buhrmaster
(1998)]
Jack W. Eugster is Chairman, President and Chief Executive 49 1995
Officer of Musicland Stores Corp. He has been with Musicland
Stores Corp. since June 1980. He is also a director of Damark,
Inc.; Donaldson Company, Inc.; MidAmerican Energy Company; and
ShopKo Stores.
[PHOTO OF
Jack W. Eugster
(1998)]
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C>
Mannie L. Jackson is Chairman of Harlem Globetrotters, 57 1994
Inc., a sports and entertainment company. Until December
1, 1994, he was Senior Vice President--Corporate Marketing
and Administration of Honeywell Inc., a manufacturer
of control systems. He was with Honeywell since 1968,
serving in a variety of executive capacities. He is a
director of Stanley Products; Ashland Oil Corporation;
Martech Controls South Africa; and Reebok Corporation.
[PHOTO OF
Mannie L. Jackson
(1997)]
Robert P. Jensen is a private investor. He previously 70 1980
served as Chairman and Chief Executive Officer of G.K.
Technologies, Inc.; Tiger International, Inc.; and E.F.
Hutton LBO, Inc.
[PHOTO OF
Robert P. Jensen
(nominee)]
Kendrick B. Melrose is Chairman and Chief Executive Officer 56 --
of The Toro Company, a manufacturer of outdoor beautification
equipment. He has been with The Toro Company since 1970.
He is a director of The Valspar Corporation and Donaldson
Company, Inc.
[PHOTO OF
Kendrick B. Melrose
(nominee)]
Richard A. Zona is Vice Chairman--Finance of First Bank 51 1996
System, Inc., a regional bank holding company. He has
been with First Bank System, Inc. since September 1989.
He is a director of Olympic Financial Ltd.
[PHOTO OF
Richard A. Zona
(nominee)]
</TABLE>
4
<PAGE>
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
Committees. The business and affairs of the company are managed under the
direction of the Board of Directors, which met five times during the fiscal
year ended June 30, 1996. The Board maintains an Audit Committee, an Executive
Committee and a Compensation Committee. The Board does not maintain a
nominating committee, but instead the Board as a whole determines the nominees
for director based on a slate recommended by the Executive Committee. The
Board will consider nominees recommended by shareholders. During fiscal year
1996, no director attended fewer than 75 percent of the aggregate number of
meetings of the Board or the committees of which such director is a member.
The Audit Committee presently consists of directors Affinito, Andres,
Eugster, Jensen, Stodder and Zona. The committee, along with other duties,
reviews the company's financial and accounting practices and procedures, the
scope and results of the annual audit performed by the company's independent
auditors and the professional services provided by such auditors. The Audit
Committee met four times during fiscal year 1996.
The Compensation Committee presently consists of directors Affinito, Andres,
Eugster, Jackson and Stodder. The committee, along with other duties, reviews,
evaluates and approves the various levels and forms of compensation for key
management and officers of the company. In addition, the committee administers
the company's stock incentive plans. The Compensation Committee met three
times during fiscal year 1996.
The Executive Committee presently consists of directors Buhrmaster, Jackson,
Jensen and Stodder. The committee charter permits it to exercise most of the
powers of the Board of Directors during intervals between regular meetings of
the full Board. The Executive Committee met three times during fiscal year
1996.
The Board established a special committee consisting of directors Jensen and
Buhrmaster to review and authorize the implementation of the share repurchase
program. This special committee met one time during fiscal year 1996.
Directors' Fees. An annual retainer of $22,000 is paid to those members of
the Board of Directors who are not present or past employees of the company.
In addition, non-employee directors receive $1,000 for each Board or Committee
meeting attended and $500 for each telephone meeting. The Chair of each Board
committee is entitled to an additional $2,000 per year. Pursuant to the
company's 1992 Stock Incentive Plan, each non-employee director automatically
is granted, as of the date of each annual meeting of shareholders, a non-
qualified option to purchase 1,000 shares of the company's common stock at the
then current market value.
In August 1996, the Board eliminated the retirement program for non-employee
directors and implemented a stock-basked program that will more closely align
the directors' long-term retirement incentives with those of the company's
shareholders and will lead to greater stock ownership by the directors. As
part of the new compensation plan effective after this Annual Meeting, the
Board approved an increase in the annual option grant from 1,000 shares to
2,200 shares and added an annual grant of restricted stock units equal to 50
percent of the value of the then annual retainer. Such share units receive
dividend credits and are restricted until the director terminates service as a
director, at which time the share units are paid to the director in company
common stock.
Under the Jostens, Inc. Deferred Compensation Plan, a non-employee director
may elect to receive his or her fees currently in the form of either cash or
company stock or to defer such fees in an interest-bearing account and/or a
company share equivalent account. The interest-bearing account accrues
interest at a rate equivalent to the seven-year U.S. Treasury Note rate plus
one percentage point. Deferred compensation in the share equivalent account is
treated as though it were invested in company stock with such account credited
for dividend equivalents and adjusted to reflect share ownership changes
resulting from events such as a stock split or recapitalization. Participants
will have no voting rights with respect to the share equivalent account until
shares are distributed. Upon termination of service as a director, a
participant may elect to receive the balance in his or her account (in the
form of cash or shares, as the case may be) either in a lump sum or in
installments. Upon a change in control of the company, participants will
receive the balance in their accounts in a lump sum.
5
<PAGE>
Director Jensen serves as Chairman of the Board of Directors and of the
Executive Committee of the Board. Since these positions require Mr. Jensen to
be the key interface between the Board of Directors and the company's
management, the Board of Directors has entered into a consulting arrangement
with Mr. Jensen to pay him an additional fee of $25,000 per month. For each of
the fiscal years 1996, 1995 and 1994, respectively, Mr. Jensen received
aggregate cash compensation as follows: $335,000, $326,000, and $358,000.
Compensation paid is attributable to Mr. Jensen's service as Chairman along
with the standard compensation for services as a Board member. In addition,
pursuant to the company's stock option plan (as part of the standard
compensation for all non-employee directors), Mr. Jensen has received a grant
on the date of the annual meeting of shareholders of an option to purchase
1,000 shares of the company's common stock, vesting at the rate of 25 percent
per year and expiring 10 years after the date of grant at the following
exercise prices during fiscal years 1996, 1995, and 1994, respectively:
$22.94, $17.188, and $19.00.
Directors Retirement Program. Upon retirement from service as a director,
the company historically entered into a consulting agreement with each non-
employee director who has served as a director for at least five years and is
at least 55 years old. The retired director is paid an annual fee equal to the
then current annual retainer for active directors for providing consulting
advice and services as requested by the company. The agreement normally
extends no longer than the number of years the retired director served on the
board and only so long as the retired director does not make a major
investment in, become employed by or provide services of any kind to a
competitor of the company.
In August 1996, the Board terminated this policy effective after the Annual
Meeting and implemented the stock-based compensation program discussed above.
Each of the directors who has served as a director prior to 1996 (including
former directors who were receiving payments under the previous retirement
policy) will receive the present value of the benefit, accrued in accordance
with the previous retirement policy, credited into his or her Deferred
Compensation Plan account. A discount rate of 10 percent was used in the
calculation of the present value and it was assumed that current non-employee
directors accrued benefit would commence at a retirement age of 65. The
benefits will be paid out after termination of service as a director in
accordance with payout election made under the Deferred Compensation Plan.
SHARES HELD BY DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
COMMON SHARES OWNED BENEFICIALLY
AS OF SEPTEMBER 4, 1996
NAME (/1/)(/2/)
- ---- --------------------------------
<S> <C>
Lilyan H. Affinito(/3/) 17,122
Robert C. Buhrmaster 137,762
Jack W. Eugster(/3/) 1,826
Orville E. Fisher Jr. 114,282
Mannie L. Jackson(/3/) 3,898
Robert P. Jensen 9,968
John L. Jones 57,149
Kendrick B. Melrose 0
Trudy A. Rautio(/3/) 13,964
Charles W. Schmid 17,786
Richard A. Zona 0
All directors and executive
officers as a group (14 members) 419,210
</TABLE>
- ---------------------
(1) Unless otherwise noted, each person and group identified possesses sole
voting and investment power with respect to the shares shown opposite such
person's or group's name. Shares not outstanding but deemed
6
<PAGE>
beneficially owned by virtue of the right of an individual to acquire them
within 60 days are treated as outstanding only when determining the amount
and percent owned by such individual or group. All amounts shown for
individuals reflect less than 1 percent of the outstanding shares. The
group total reflects 1.1% of the shares outstanding.
(2) Includes the following number of shares which may be acquired by the named
persons or group within 60 days upon the exercise of options: Ms.
Affinito, 6,500 shares; Mr. Buhrmaster, 101,250 shares; Mr. Eugster, 250
shares; Mr. Fisher, 88,750 shares; Mr. Jackson, 750 shares; Mr. Jensen,
6,500 shares; Mr. Jones, 46,750 shares; Ms. Rautio, 6,875 shares; Mr.
Schmid, 10,000 shares; and all directors and executive officers as a
group, 267,625 shares. Also includes the following number of restricted
shares held subject to forfeiture: Mr. Buhrmaster, 17,070 shares; Mr.
Fisher, 5,356 shares; Mr. Jones, 5,356 shares; Ms. Rautio, 5,356 shares;
and Mr. Schmid, 5,356 shares; and all directors and executive officers as
a group, 303,625 shares.
(3) Includes the following number of shares held for the account of the named
person participating in the Jostens, Inc. Deferred Compensation Plan: Ms.
Affinito, 9,822 shares; Mr. Eugster, 576 shares; Mr. Jackson, 3,148
shares; and Ms. Rautio, 662 shares.
7
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
REGARDING EXECUTIVE COMPENSATION
TO JOSTENS, INC. STOCKHOLDERS:
The Compensation Committee of the Jostens Board of Directors has the
responsibility to establish and carry out the executive compensation
philosophy and programs of your company and to report to you the compensation
decisions and actions taken during the past fiscal year. Our Committee
consists exclusively of outside independent Board members. We have independent
access to and use of outside executive compensation consultants on matters of
plan design, administration and reviewing competitiveness. This report
discusses the Committee's work in establishing executive compensation for the
chief executive officer and executive officers of your company.
PHILOSOPHY
The Board of Directors has established a compensation philosophy and
programs that support and reinforce growth in shareholder value. Jostens
recognizes and rewards its employees for individual, team and overall company
performance. Jostens provides a competitive total compensation program that
delivers premium rewards for superior performance and below-competitive
rewards for performance that fails to meet our standards. Beyond structuring
base salary and benefits to be competitive in order to attract and retain
well-qualified executives, our philosophy is to strongly tie compensation to
company performance by placing a significant part of the executive officers'
compensation at risk.
The Committee believes that:
1. The interests of executives should be linked with shareholders through
the risks and rewards of Jostens stock ownership;
2. Executives should purchase and own Jostens stock;
3. A substantial portion of executive compensation should be at risk of not
being paid if the company's performance does not meet objectives;
4. All executives should have a portion of compensation tied to overall
corporate performance;
5. Executives responsible for specific business units should also have a
substantial portion of compensation tied to that business unit's
performance;
6. In addition to rewards for annual results, a significant portion of
executive compensation should be long term, to focus management on
achieving sustained long term results; and
7. Special benefits and perquisites for executives should be minimized.
ELEMENTS OF THE EXECUTIVE COMPENSATION PROGRAM
We directly link key executive officer compensation to the company's stock
performance and achievement of other long and short term performance goals and
objectives. Over 60 percent of an executive officer's targeted total
compensation is "at risk." If company performance targets are not achieved,
bonus and incentive awards are significantly reduced or not paid at all. If
performance targets are met or surpassed, shareholder value should increase
and executive officer performance-based compensation increases commensurate
with the company's performance.
8
<PAGE>
The key elements of Jostens' executive compensation are: base salary, an
annual bonus, and long term incentives in the form of stock options and
restricted stock. While we establish the elements and targets for
compensation, individual and corporate performance drive the actual
compensation paid.
In 1994 the company initiated a deposit share program that requires
executives to invest in the company through their ownership of company common
stock. In 1995 this program was expanded to apply to key Jostens managers.
Executive officers and key managers who are granted stock options must own
shares of common stock equal to 10 percent of the number of shares underlying
each grant of stock options they receive. These deposit shares must be held
for at least one year longer than the stock option vesting period. This
requirement is ongoing and will apply to future stock option grants for these
individuals.
In determining each component of compensation, we consider an executive's
TOTAL COMPENSATION package. We target total compensation for executive
officers at levels that reflect total compensation offered by companies of
similar size in general industry. The comparison companies we use to determine
appropriate executive compensation levels are not the same companies included
in the peer group performance graph in this Proxy Statement, because the peer
group index includes companies with revenues greater than Jostens and
companies in different industries.
We establish BASE SALARIES of executive officers that are competitive with
the market median for similar positions in other companies of similar size in
general industry. Each executive's base salary is initially determined
according to competitive pay practices, consideration of internal equity, his
or her level of responsibility, prior experience and breadth of knowledge.
Salaries are reviewed annually. Increases to executive officer base salary
depend primarily on individual performance and the executive officer's
contribution and future growth potential as well as company performance and
competitive market rates.
We establish ANNUAL BONUS targets as a percentage of base salary. Bonus
awards are designed to reward executives and other key managers for achieving
financial performance goals of the company and/or business unit level as well
as completing key business initiatives. If performance goals are exceeded,
award amounts increase, but if goals are not met, awards are reduced or not
paid at all. Annual bonus awards are paid to operating officers for achieving
total corporate and individual operating unit financial performance and key
business initiatives. Annual bonus awards for staff officers are tied to
achieving total corporate financial performance and key strategic initiatives.
LONG TERM INCENTIVE COMPENSATION for executive officers consists of stock
option grants and performance share unit grants payable in restricted stock.
We approve all grants of stock options, restricted stock and performance share
units. To further align management's interests with those of stockholders,
stock option awards for fiscal years 1995, 1996 and 1997 were made in fiscal
year 1995 through a long term incentive program, the Special Equity
Performance Program (SEPP). SEPP directly links long term executive incentive
compensation to the company's long range financial goals for fiscal years
1995, 1996 and 1997. The plan was designed to focus executive attention on
achieving and exceeding the company's historical earnings level.
The stock options granted under SEPP are in place of grants that would have
been made over the three-year period that includes fiscal years 1995, 1996 and
1997. The performance shares granted under SEPP also represent a three-year
long term incentive opportunity and are earned based on the company's earnings
performance over the same 1995-1997 period. Annual earnings goals have been
established as the basis for earning the performance share units. Once earned,
the performance share units are converted to restricted stock subject to an
additional two-year vesting requirement. These shares of restricted stock,
once earned, may be included in stock ownership for the deposit share program.
In fiscal year 1996, Jostens' earnings performance targets were not attained
and, as a result, the performance shares were not earned.
9
<PAGE>
FISCAL YEAR 1996 COMPENSATION DECISIONS RELATING TO THE CEO
Chief Executive Officer Robert C. Buhrmaster's fiscal year 1996 performance
was reviewed by the independent Directors as established in the CEO Evaluation
Process adopted by the Board of Directors in 1995. While Jostens' reported
financial results did not meet all of the goals established by the Board,
continuing progress was made in positioning the company for higher growth.
Mr. Buhrmaster's compensation reflects the Board's assessment of both
Jostens fiscal year 1996 results and his overall performance. Based on Mr.
Buhrmaster's partial achievement of fiscal year 1996 performance goals, the
Board approved a 1996 bonus for him of $126,800. This bonus is 25.5 percent of
Mr. Buhrmaster's 1996 base salary of $500,000.
Under SEPP, Mr. Buhrmaster was eligible for but did not earn 16,000
restricted performance shares because the company did not achieve the
designated financial target in fiscal year 1996.
The Board did not grant Mr. Buhrmaster a salary increase for fiscal year
1997. In addition, the Committee supported Mr. Buhrmaster's request to
increase the portion of his total compensation tied to performance by reducing
his base salary by 10 percent effective July 1, 1996, and raising his bonus
target from 50 percent to 60 percent for fiscal year 1997. After the 10
percent reduction, Mr. Buhrmaster's base salary is $450,000. Mr. Buhrmaster's
action expanded the corporate focus on pay for performance.
IRS LIMITATIONS
Under Section 162(m) of the Internal Revenue Code of 1986, as amended, no
deduction by a publicly held corporation is allowed for remuneration paid to
certain highly compensated employees to the extent that the amount of such
remuneration for a taxable year for such individual exceeds $1 million.
Section 162(m) provides for the exclusion of performance based compensation
from remuneration that is otherwise subject to the deduction limitation. It is
the policy of Jostens that the components of executive compensation that are
inherently performance based should qualify for the exclusion from deduction
limitation under Section 162(m). Those components, as described above,
currently consist of annual incentive awards, stock options and long term
incentive awards. While Jostens does not anticipate that compensation paid to
any executive during the current year will exceed the limitation, the company
has elected to submit an amendment to the Jostens 1992 Stock Incentive Plan to
shareholders for approval to meet Internal Revenue Code requirements.
SUMMARY
The Committee believes Jostens' executive compensation policies and programs
effectively serve the interests of the shareholders as well as the company.
The quality and motivation of the Jostens' executive leadership team are two
of the most crucial factors impacting the company's long term success. We
believe that recognizing and rewarding individual and group achievement
related to the company's performance is very important in reinforcing our
beliefs and in advancing the long term interests of you, the shareholder. We
also believe that the executive compensation actions we have taken are
consistent with our philosophy for the executive compensation program. As we
move forward, we will continue to link company performance to executive
rewards and to emphasize stock ownership as key components of the Jostens'
executive compensation program.
RESPECTFULLY SUBMITTED,
Members of the Compensation
Committee:
William A. Andres, Chair
Lilyan H. Affinito
Jack W. Eugster
Mannie L. Jackson
John W. Stodder
10
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the cash and non-cash compensation for each
of the last three fiscal years awarded to or earned by the Chief Executive
Officer and the four most highly compensated executive officers of the company
in fiscal year 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------- -------------------------------------
LONG TERM
INCENTIVE
OTHER ANNUAL SECURITIES RESTRICTED PLAN ALL OTHER
NAME AND BONUS(/1/) COMPENSA- UNDERLYING STOCK PAYOUTS COMPENSA-
PRINCIPAL POSITION YEAR SALARY ($) ($) TION(/2/) ($) OPTIONS (#) AWARDS(/3/) ($) ($) TION ($)
------------------ ---- ---------- ---------- ------------- ----------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert C. Buhrmaster, 1996 495,833 126,800 22,967 0 0 0 0
President and Chief 1995 470,833 237,500 80,104 216,000 341,488 0 0
Executive Officer(/4/) 1994 363,726 100,000 25,109 150,000 0 0 0
Charles W. Schmid, 1996 290,035 70,407 21,690 8,000 0 0 0
Executive Vice President 1995 254,340 114,844 16,653 72,000 113,815 0 0
and General Manager(/5/) 1994 58,814 8,750 2,700 20,000 0 0 0
John L. Jones, 1996 236,957 52,839 25,236 0 0 0 0
Senior Vice President-- 1995 227,474 101,787 25,570 72,000 113,815 0 0
International 1994 217,897 30,819 17,962 15,500 0 0 0
Orville E. Fisher Jr.,
Senior Vice President, 1996 230,806 53,060 20,128 0 0 0 11,196
General Counsel and 1995 220,696 100,107 20,261 72,000 113,815 0 11,196
Secretary(/6/) 1994 209,057 37,077 14,855 19,500 0 0 11,196
Trudy A. Rautio,
Senior Vice President 1996 216,667 49,718 15,974 0 0 0 0
and Chief Financial 1995 189,708 90,000 10,826 72,000 113,815 0 0
Officer(/7/) 1994 161,545 49,500 11,554 10,000 0 0 0
</TABLE>
- ---------------------
(1) Includes bonuses paid in August of each year for the prior fiscal year.
(2) Includes the amounts indicated after each officer's name for the following
items (a) automobile, (b) financial planning, (c) club dues and (d)
medical reimbursement for fiscal year 1996: Mr. Buhrmaster: $12,798, $0,
$7,704 and $2,465; Mr Schmid: $8,585, $5,800, $5,613 and $1,691; Mr.
Jones: $9,864, $5,290, $5,547 and $4,435; Mr. Fisher: $9,729, $2,500,
$4,639 and $3,260; and Ms. Rautio: $8,093, $2,600, $1,060 and $4,221.
Includes the amounts indicated after each officer's name for the following
items (a) automobile, (b) financial planning, and (c) club dues for fiscal
year 1995: Mr. Buhrmaster: $10,777, $10,000 and $56,401; Mr Schmid:
$10,881, $0 and $5,606; Mr. Jones $10,075, $7,500 and $5,287; Mr. Fisher:
$11,348, $1,365 and $4,243; and Ms. Rautio: $8,075, $787 and $1,442.
Includes the amounts indicated after each officer's name for the following
items (a) automobile, (b) financial planning, and (c) club dues for fiscal
year 1994: Mr. Buhrmaster: $11,100, $10,000 and $0; Mr Schmid: $0, $0 and
$0; Mr. Jones: $8,908, $0 and $7,616; Mr. Fisher: $7,750, $850 and $4,676;
and Ms. Rautio: $8,369, $2,575 and $0.
11
<PAGE>
(3) Fiscal year 1995 amounts reflect conversion of performance shares into
restricted stock pursuant to the Special Equity Performance Plan. No
restricted stock was earned during fiscal year 1996 under this Plan and
all related performance shares for fiscal year 1996 were forfeited.
(4) Mr. Buhrmaster joined the company in December 1992 as Executive Vice
President and Chief Staff Officer and was named President and Chief
Operating Officer in June 1993. He was appointed Chief Executive Officer
on March 10, 1994.
(5) Mr. Schmid joined the company in April 1994 as Senior Vice President and
Chief Marketing Officer. He was named Executive Vice President in August
1995.
(6) All Other Compensation includes life insurance premiums on the life of Mr.
Fisher paid by the company in the fiscal year indicated for the Executive
Supplemental Retirement Plan. The Executive Supplemental Retirement Plan
was established in 1986 and is funded through a life insurance policy
purchased on each individual. The insurance proceeds are assigned to the
company to reimburse it for the cost of the premiums paid. There is no
substantial net cost to the company for this plan.
(7) Ms. Rautio joined the company in June 1993 as Vice President--Finance in
the School Products Group. She was named a corporate Vice President and
Controller in August 1993 and Senior Vice President--Finance in October
1994. She was appointed to her current position in August 1995.
OPTION GRANTS IN FISCAL YEAR 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM(/1/)
------------------------------------ ---------------------------------------
NUMBER OF
SECURITIES PERCENT OF
UNDERLYING TOTAL OPTIONS
OPTIONS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION 5% 10%
NAME (#) FISCAL YEAR ($/SHARE) DATE(/2/) 0% ($37.261/SHARE) ($59.332/SHARE)
---- ---------- ------------- ----------- ---------- --- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert C. Buhrmaster.... 0 0 N/A N/A 0 N/A N/A
Charles W. Schmid....... 8,000 2.9% 22.875 8/2/05 0 $ 115,088 $ 291,656
John L. Jones........... 0 0 N/A N/A 0 N/A N/A
Orville E. Fisher Jr.... 0 0 N/A N/A 0 N/A N/A
Trudy A. Rautio......... 0 0 N/A N/A 0 N/A N/A
All Shareholders(/3/)... N/A N/A N/A N/A 0 655,596,706 1,661,413,118
</TABLE>
- ---------------------
(1) The "potential realizable value" shown is the potential gain on the last
day the option remains exercisable. This value will be achieved only if
the options have been held for the full 10 years and the stock price has
appreciated at the assumed rate. For the named executive officer, the
value is calculated from the option price per share of fiscal year 1996
granted options. For all shareholders, the gain is calculated from the
option price per share on August 2, 1995, based on the number of
outstanding shares of common stock on that date. Potential realizable
value is listed for illustration only. The values disclosed are not
intended to be and should not be interpreted as representations or
projections of future value of company stock or of the stock price.
(2) These options were granted under the Special Equity Performance Plan. The
options become exercisable on a cumulative basis as follows: 17 percent on
September 27, 1997; 33 percent on September 27, 1998; and 50 percent on
September 27, 1999, so long as employment with the company or any of its
subsidiaries continues. Options not yet exercisable generally become
exercisable upon a change in control of the company. A change of control
as defined in the 1992 Stock Incentive Plan occurs upon the sale of
substantially all of the assets of the company or other change of control
event that would require disclosure
12
<PAGE>
under federal securities laws. The exercise price may be paid in cash, in
shares of stock or pursuant to a cashless exercise procedure under which
the optionee instructs a brokerage firm to sell the purchased shares and
remit to the company out of the proceeds an amount equal to the exercise
price plus all applicable withholding taxes.
(3) Shown for comparative purposes only. The amounts indicate the increase in
the value of the company stock if the stock price appreciates at the rates
assumed in the table.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1996
AND FISCAL YEAR END 1996 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT FISCAL YEAR THE-MONEY OPTIONS AT
SHARES END FISCAL YEAR END(/1/)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert C. Buhrmaster.... 0 0 101,250 299,750 $149,750 $487,142
Charles W. Schmid....... 0 0 10,000 90,000 31,900 144,364
John L. Jones........... 0 0 46,750 79,750 14,493 126,957
Orville E. Fisher Jr.... 8,253 $82,872 88,750 81,750 35,301 130,697
Trudy A. Rautio......... 0 0 6,875 75,125 2,338 156,562
</TABLE>
- --------------------
(1) Based on a closing price of $19.75 on June 28, 1996.
JOSTENS RETIREMENT PLANS
The company maintains a non-contributory pension plan, Pension Plan D (Plan
D), that provides benefits for substantially all salaried employees.
Retirement income benefits are based upon a participant's highest average
annual cash compensation (base salary plus annual bonus, if any) during any
five consecutive calendar years, years of credited service (to a maximum of 35
years) and the Social Security covered compensation table in effect at
termination.
The company also maintains an unfunded supplemental retirement plan that
gives additional credit under Plan D for years of service as a company sales
representative to those salespersons who were hired as employees of the
company prior to October 1, 1991. In addition, benefits specified in Plan D
may exceed the level of benefits that may be paid from a tax-qualified plan
under the Internal Revenue Code of 1986, as amended. The benefits up to IRS
limits are paid from Plan D and benefits in excess, to the extent they could
have been earned in Plan D, are paid from the unfunded supplemental plan.
13
<PAGE>
The following table illustrates a reasonable estimate of the annual benefits
under Pension Plan D and the supplemental plan payable to employees, including
officers, under these plans. The table does not take into account transition
rule provisions of the plan for employees who were participants on June 30,
1988.
<TABLE>
<CAPTION>
PROJECTED ANNUAL BENEFIT AT NORMAL RETIREMENT AT AGE
65(/1/)
-----------------------------------------------------------------------
FINAL ANNUAL YEARS OF SERVICE AT RETIREMENT(/2/)
AVERAGE -----------------------------------------------------------------------
COMPENSATION 15 20 25 30 35
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$150,000 $ 28,400 $ 37,900 $ 47,400 $ 56,900 $ 66,300
200,000 39,700 52,900 66,100 79,400 92,600
300,000 62,200 82,900 103,600 124,400 145,100
400,000 84,700 112,900 141,100 169,400 197,600
500,000 107,200 142,900 178,600 214,400 250,100
600,000 129,700 172,900 216,100 259,400 302,600
700,000 152,200 202,900 253,600 304,400 355,100
800,000 174,700 232,900 291,100 349,400 407,600
900,000 197,200 262,900 328,600 394,400 460,100
950,000 208,400 277,900 347,400 416,900 486,300
</TABLE>
- ---------------------
(1) The projected benefits shown in the table are payable in a monthly benefit
for life upon retirement at age 65.
(2) The following individuals named in the Summary Compensation Table have the
respective number of years of service under Plan D: Mr. Buhrmaster, 3.5
years; Mr. Schmid, 2.25 years; Mr. Jones, 4.5 years; Mr. Fisher, 20.75
years; and Ms. Rautio, 3 years.
The company also maintains a non-contributory supplemental pension plan for
corporate vice presidents. Under the plan, vice presidents who retire after
age 55 with at least seven years of service as a corporate vice president are
eligible for a benefit equal to 1 percent of final salary for each year of
service, up to a maximum of 30 percent. Only service after age 30 is
recognized in the plan. The calculation of benefits is frozen at the levels
reached at age 60. For purposes of this plan, Mr. Jones will be eligible to
receive benefits under this plan if he has five years of service at age 60,
but the maximum benefit he may receive is limited to 5 percent of his salary
at age 60. Mr. Schmid will be eligible for benefits under this plan if he has
at least five years of service at retirement. Mr. Fisher is also eligible for
benefits under the old vesting rules in effect prior to 1995, which required
attainment of age 50, 15 years of service and eight years of service as a
corporate vice president. If they continue in their current positions at their
current levels of compensation and retire at age 60, the estimated total
annual pension amounts from this plan for Messrs. Buhrmaster, Schmid, Jones,
and Fisher and Ms. Rautio would be $73,689, $25,012, $12,044, $65,736 and
$42,729, respectively.
14
<PAGE>
PERFORMANCE GRAPH
Set forth below is a performance graph showing the company's total return to
shareholders the last five fiscal years as compared to the S&P 500 Index and
the S&P Miscellaneous Sub-Index, of which the company is part. The returns are
based on an assumed investment of $100 on July 1, 1991, in the company's
common stock and both of the indexes, with all dividends reinvested.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement Period S&P S&P
(Fiscal Year Covered) Jostens, Inc. 500 Index Miscellaneous
- --------------------- ------------- --------- -------------
<S> <C> <C> <C>
Measurement Pt. -
06/91 $100 $100 $100
06/92 $ 82 $113 $115
06/93 $ 67 $129 $136
06/94 $ 58 $131 $141
06/95 $ 80 $165 $166
06/96 $ 78 $208 $192
</TABLE>
15
<PAGE>
PROPOSAL TO AMEND THE JOSTENS, INC.
1992 STOCK INCENTIVE PLAN
INTRODUCTION
In August 1996, the Board approved amendments to the Jostens, Inc. 1992
Stock Incentive Plan (the Plan). These amendments relate to Section 162(m) of
the Internal Revenue Code (the Code) and to the termination of the non-
employee director retirement plan discussed above. Section 162(m) generally
disallows a tax deduction to publicly held companies for compensation
exceeding $1 million paid to a company's Chief Executive Officer and four
other most highly compensated executive officers. Qualifying performance-based
compensation will not be subject to the deduction limit if certain
requirements are met. Two of the requirements are that the plan limit the
amount of Incentive Awards which can be granted in any one year to an
individual participant and that the plan set forth the basis upon which the
performance is to be measured. While none of the company's individual
executive officer compensation exceeds the $1 million limitation, it is
possible that compensation in the form of stock options and restricted stock
awards could exceed the limitation due to the appreciation of the company's
stock over the term of the incentive awards. In order to preserve the
company's ability to receive the tax benefits of all compensation earned, the
company is requesting shareholder approval of the following amendments.
PROPOSAL
The company proposes to amend the Plan to add the following new language:
19. Option and Award Limitations. No participant who is an employee
at the time of the grant may be granted an Incentive Award, the value
of which is based on an increase in the value of the Common Stock after
the date of grant of such Incentive Award, for more than 500,000 shares
of Common Stock, in the aggregate, in any one calendar year. The
foregoing limitation specifically includes the grant of any Incentive
Awards representing qualified performance-based compensation within the
meaning of Section 162(m) of the Internal Revenue Code.
20. Performance-Based Incentive Awards. An Eligible Recipient may be
granted one or more Incentive Awards based upon company performance
over a period of time (a Performance-Based Incentive Award). The
Committee shall have the sole discretion to determine persons eligible
to receive Performance-Based Incentive Awards, the time frame over
which the performance is to be measured (Performance Period), company
performance factors applicable to the award (Performance Measures), and
the method of calculating the awards. At the time the Committee
establishes a Performance-Based Incentive Award, it shall also
establish the Performance Period, Performance Measures and targets to
be attained relative to the Performance Measures and Performance
Period. Performance Measures may be based on any of the following
factors, either alone or in combination, as the Committee may deem
appropriate: (a) shareholder return, (b) profitability as measured by
return ratios, (c) revenues, (d) earnings, (e) earnings per share, (f)
costs as measured by margins or other ratios, (g) cash flow and (h)
economic value added-measures. Performance Measures may be based on
total company or business unit performance, either alone or in
combination, in the absolute or based on comparative performance with
other companies.
and to amend Section 6.4(a) of the Plan to read as follows (proposed addition
is underscored):
An Option to purchase 2,200 shares of Common Stock (subject to
adjustment as provided in Section 4.3 of the Plan) shall be granted
automatically at each annual meeting of shareholders to each director
of the company who is, as of the date of such annual meeting of
shareholders, a Non-Employee Director.
16
<PAGE>
SUMMARY OF THE PLAN
A general description of the basic features of the Plan is outlined below.
This summary is qualified in its entirety by the terms of the Plan, a copy of
which is available from the company.
General. All full-time or part-time employees (including officers and
directors who are also employees) and all non-employee consultants and
independent contractors and agents of the company and its subsidiaries are
eligible to participate in the Plan. In addition, all non-employee directors
of the company are eligible to participate in the automatic grant provisions
of the Plan. The maximum number of shares of common stock that may be issued
under the Plan for any calendar year will be equal to 1 percent of the
outstanding shares of common stock as of July 1 of each fiscal year (of which
a maximum of 0.25 percent of such outstanding shares shall be available for
the grant or vesting of Incentive Awards other than Stock Options or Stock
Appreciation Rights), plus any shares of common stock available for issuance
under the Plan in previous fiscal years that are not actually issued and any
shares of common stock available for issuance under the Jostens, Inc. 1987
Stock Option Plan (the 1987 Plan) that have not been issued under the 1987
Plan. However, no more than 3 million shares may be cumulatively available for
issuance pursuant to the exercise of Incentive Options. In the event of any
reorganization, merger, recapitalization, stock dividend, stock split or
similar change in the corporate structure or shares of the company,
appropriate adjustments will be made to the number and kind of shares reserved
under the Plan and under outstanding Incentive Awards and to the exercise
price of outstanding Incentive Awards. The Board may amend the Plan in any
respect without shareholder approval, unless shareholder approval is then
required by federal securities or tax laws or the rules of the New York Stock
Exchange. The Plan will terminate August 13, 2002, and may be terminated
before that date by action of the Board. No right or interest in any Incentive
Award may be assigned or transferred by a participant, except by will or the
laws of descent and distribution, or subjected to any lien or otherwise
encumbered.
Administration. The Plan will be administered by a committee consisting of
not less than two members of the Board. The Board has appointed the
Compensation Committee (the Committee) to administer the Plan. The Plan vests
broad powers in the Committee to administer and interpret the Plan, including
the authority to select the participants that will be granted Incentive Awards
under the Plan, determine the nature, extent, time and the duration of the
Incentive Awards and prescribe all other terms and conditions of each
Incentive Award that are consistent with the Plan. The Committee may modify
the terms of any outstanding Incentive Award in any manner (with the consent
of the affected participant for most modifications) as long as the modified
terms are permitted by the Plan as then in effect.
Types of Incentive Awards Available. Options. Options must be granted with
an exercise price equal to at least the fair market value of the common stock
on the date of grant. On September 4, 1996, the the average of the high and
low sales price of one share of common stock on the New York Stock Exchange
Composite Tape was $18.75. Generally, Options will have a maximum term fixed
by the Committee, not to exceed 10 years from the date of grant with respect
to Incentive Options. The aggregate fair market value of shares of common
stock with respect to which "incentive stock options" (within the meaning of
Section 422 of the Internal Revenue Code) become exercisable for the first
time by a participant during any calendar year may not exceed $100,000. The
exercise price of Options must be paid in cash, except that the Committee may
allow payment to be made (in whole or in part) by delivery of a "broker
exercise notice" (pursuant to which the broker or dealer is instructed to sell
enough shares or loan the optionee enough money to pay the exercise price and
to remit such sums to the company) or promissory note or by transfer of shares
of common stock (either previously owned by the optionee or to be acquired
upon Option exercise).
Under the Plan, a Non-Statutory Option to purchase 1,000 shares of common
stock (subject to adjustment for changes in the corporate structure or shares
of the company) will be granted automatically at each annual meeting of
shareholders to each director of the company who, as of the date of such
annual meeting, is a
17
<PAGE>
non-employee director of the company. Such options will have an exercise price
equal to 100 percent of the fair market value of the common stock on the date
of grant, will terminate 10 years after its date of grant and will become
exercisable with respect to 25 percent of the shares covered by such Option
each year after the date of grant.
SARs. An SAR is a right to receive a payment from the company, in the form
of shares or cash or a combination of both (as determined by the Committee),
equal to the difference between the fair market value of one or more shares of
common stock and the exercise price of such shares. A Tandem SAR is
exercisable at the same time, to the same extent, at the same price and during
the same period as its related Option. A Stand-Alone SAR is exercisable at the
time and to the extent determined by the Committee. The exercise price of a
Stand-Alone SAR will be determined by the Committee, but may not be less than
100 percent of the fair market value of common stock on its date of grant. The
exercise of a Tandem SAR or the related Option will reduce the number of
shares represented by the other.
Restricted Stock Awards and Stock Awards. A Restricted Stock Award is an
award of common stock that vests at such times and in such installments as may
be determined by the Committee and, until it vests, is subject to restrictions
on transferability and the possibility of forfeiture. The Committee may impose
such restrictions or conditions to the vesting of Restricted Stock Awards as
it deems appropriate. The Committee has the authority to determine whether
quarterly dividends and other distributions on common stock subject to a
Restricted Stock Award that has not vested will be paid to the participant or
held by the company or a custodian and paid as the Restricted Stock Award
vests. A Stock Award is an award of common stock that is not subject to any
restrictions other than restrictions on transferability.
Performance Shares. A Performance Share is a right to receive a payment from
the company in the form of shares of common stock upon achieving established
performance goals. The Performance Shares will vest at times and installments
determined by the Committee, and the Committee may impose restrictions or
conditions to the vesting of Performance Shares as it deems appropriate. The
Committee will determine whether a participant's Performance Shares will be
credited for dividend equivalents.
Change in Control. Upon the occurrence of a change in control of the
company, all outstanding Options and SARs will become immediately exercisable
in full and will remain exercisable in accordance with their terms, and all
other outstanding Incentive Awards Units will become immediately fully vested
and non-forfeitable. In addition, the Committee, without the consent of any
affected participant, may determine that some or all participants holding
outstanding Options will receive cash in an amount equal to the excess of the
fair market value immediately prior to the effective date of such change in
control over the exercise price per share of the Options.
For purposes of the Plan, a change in control of the company will be deemed
to have occurred, among other things, upon (i) the sale or other transfer of
substantially all of the assets of the company to, or the merger or
consolidation of the company with, a corporation that is not controlled by the
company, (ii) the liquidation or dissolution of the company, (iii) any person
becoming the beneficial owner of 25 percent or more of the combined voting
power of the company's outstanding securities, or (iv) a change in the
composition of the Board such that the individuals who constitute the Board on
the effective date of the Plan cease for any reason to constitute at least a
majority of the Board (with exceptions for individuals who are nominated or
otherwise approved by the current Board).
Termination of Employment or Service. Under the Plan, the Committee has the
authority to determine and modify the manner in which Incentive Awards will
vest or become exercisable following termination of a participant's employment
or other service with the company and all subsidiaries.
18
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The following general description of federal income tax consequences is
based upon current statutes, regulations and interpretations. This description
is not intended to address specific tax consequences applicable to an
individual participant who receives an Incentive Award and does not address
special rules that may be applicable to directors, officers and greater-than-
10 percent shareholders of the company.
Options. There will not be any federal income tax consequences to either the
participant or the company as a result of the grant to a participant of an
Option under the Plan. The exercise by a participant of an Incentive Option
will also not result in any federal income tax consequences to the company or
the participant, except that an amount equal to the excess of the fair market
value of the shares acquired upon exercise of the Incentive Option, determined
at the time of exercise, over the consideration paid for the shares by the
participant will be a tax preference item for purposes of the alternative
minimum tax. Upon exercise of Non-Statutory Option, a participant will
recognize ordinary income on the date of exercise in an amount equal to the
difference between the fair market value of the shares purchased and the
consideration paid for the shares. In general, the company will be entitled to
a compensation expense deduction in connection with the exercise of a Non-
Statutory Option for any amounts includable in the taxable income of a
participant as ordinary income. At the time of the subsequent sale or
disposition of the shares obtained upon the exercise of an Option, any gain or
loss will be a capital gain or loss. Such capital gain or loss will be a long-
term capital gain or loss if the sale or disposition occurs more than one year
after the date of exercise and a short-term gain or loss if the sale or
disposition occurs one year or less after the date of exercise.
If a participant disposes of the shares acquired upon exercise of an
Incentive Option, the federal income tax consequences will depend upon how
long the participant has held the shares. If the participant does not dispose
of the shares within two years after the Incentive Option was granted, nor
within one year after the participant exercised the Incentive Option and the
shares were transferred to the participant, then the participant will
recognize a long-term capital gain or loss. The amount of the long-term
capital gain or loss will be equal to the difference between (i) the amount
the participant realized on disposition of the shares and (ii) the option
price at which the participant acquired the shares. The company is not
entitled to any compensation expense deduction under these circumstances.
If the participant does not satisfy both of the above holding period
requirements, then the participant will be required to report as ordinary
income in the year the participant disposes of the shares, the amount by which
the lesser of the fair market value of the shares at the time of exercise of
the Incentive Option or the amount realized on the disposition of the shares
(if the disposition is the result of a sale or exchange to one other than a
related taxpayer) exceeds the option price for the shares. The company will be
entitled to a compensation expense deduction in an amount equal to the
ordinary income includable in the taxable income of the participant. The
company may be required to withhold in order to receive a deduction. The
remainder of the gain or loss recognized on the disposition, if any, will be
treated as long-term or short-term capital gain or loss, depending on the
holding period.
Stock Appreciation Rights. A participant who receives an SAR will not
recognize any taxable income at the time of the grant. Upon the exercise of an
SAR, the participant will realize ordinary income in an amount equal to the
cash and the fair market value of any shares of common stock received by the
participant. Provided that proper withholding is made, the company will be
entitled to a compensation expense deduction for any amounts includable by the
participant as ordinary income.
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Restricted Stock Awards and Stock Awards. With respect to shares issued
pursuant to Stock Awards or Restricted Stock Awards that are not subject to a
risk of forfeiture, a participant will include as ordinary income in the year
of receipt an amount equal to the fair market value of the shares received on
the date of receipt. With respect to shares that are subject to a risk of
forfeiture, a participant may file an election under Section 83(b) of the Code
within 30 days after receipt to include as ordinary income in the year of
receipt an amount equal to the fair market value of the shares received on the
date of receipt (determined as if the shares were not subject to any risk of
forfeiture). If a Section 83(b) election is made, the participant will not
recognize any additional income when the restrictions on the shares issued in
connection with the Restricted Stock Award lapse. The company will receive a
corresponding tax deduction for any amounts includable in the taxable income
of a participant as ordinary income.
A participant who does not make a Section 83(b) election within 30 days of
the receipt of a Restricted Stock Award that is subject to a risk of
forfeiture will recognize ordinary income at the time of the lapse of the
restrictions in an amount equal to the then fair market value of the shares
freed of restrictions. The company will receive a corresponding tax deduction
for any amounts includable in the taxable income of a participant as ordinary
income.
Performance Shares. A participant who receives a Performance Share will not
recognize any taxable income at the time of the grant. Upon settlement of the
Performance Share, the participant will realize ordinary income in an amount
equal to the cash and the fair market value of any shares of common stock
received by the participant. Provided that proper withholding is made, the
company would be entitled to a compensation expense deduction for any amounts
includable by the participant as ordinary income.
Excise Tax on Parachute Payments. The Code also imposes a 20 percent excise
tax on the recipient of "excess parachute payments," as defined in the Code,
and denies tax deductibility to the company for such excess parachute
payments. Generally, parachute payments are compensation to employees of a
company who are officers, shareholders or highly compensated employees,
contingent upon a change in control of a company. Acceleration of the vesting
of Incentive Awards upon a change in control of the company may constitute
parachute payments and, in certain cases, "excess parachute payments."
VOTE REQUIRED; BOARD'S RECOMMENDATION
Adoption of the proposed amendments to 1992 Stock Incentive Plan will
require the affirmative vote of the holders of a majority of the outstanding
common shares of the company present and entitled to vote at the Annual
Meeting. The Board of Directors recommends a vote FOR the amendments to the
1992 Stock Incentive Plan. Unless otherwise instructed, proxies will be voted
in favor of the amendment.
APPOINTMENT OF AUDITORS
The Board of Directors has appointed Ernst & Young as independent auditors
to examine the accounts of the company for the fiscal year ending June 30,
1997, and to perform other appropriate accounting services. Although it is not
required to do so, the Board of Directors submits the appointment of Ernst &
Young to the shareholders for ratification.
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The Board recommends a vote for ratification of Ernst & Young as independent
auditors for the fiscal year ending June 30, 1997. Unless a contrary choice is
specified, proxies solicited by the Board will be voted for ratification of
Ernst & Young. If the appointment of Ernst & Young is not ratified, the Board
of Directors will reconsider its appointment.
The company has requested and expects representatives of Ernst & Young to be
present at the Annual Meeting to make a statement if they so desire and to
respond to appropriate questions.
OTHER BUSINESS
The Board of Directors knows of no other business that will be presented for
consideration at the Annual Meeting, other than that described in this Proxy
Statement. If, however, any other matters properly come before the meeting, it
is intended that proxies solicited by the Board will be voted in accordance
with the judgment of the individual or individuals voting the proxies.
SHAREHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING OF SHAREHOLDERS
Shareholder proposals intended to be presented in the proxy materials
relating to the 1997 Annual Meeting of Shareholders must be received by the
company at its principal executive offices on or before May 23, 1997.
MISCELLANEOUS
THE COMPANY WILL FURNISH UPON WRITTEN CONSENT AND WITHOUT CHARGE A COPY OF
ITS ANNUAL REPORT ON FORM 10-K (EXCLUDING EXHIBITS) FOR THE FISCAL YEAR ENDED
JUNE 30, 1996, TO EACH PERSON WHO IS A SHAREHOLDER OF THE COMPANY AS OF
SEPTEMBER 4, 1996. SUCH REQUESTS SHOULD BE SENT TO NORWEST BANK, SHAREOWNER
SERVICES, P.O. BOX 738, SOUTH ST. PAUL, MN 55075-9902, (800) 468-9716.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Orville E. Fisher Jr
Orville E. Fisher Jr., Secretary
September 20, 1996
YOUR VOTE IS IMPORTANT!
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN THE PROXY CARD
AND RETURN IT PRIOR TO THE MEETING DATE IN THE ENCLOSED STAMPED ENVELOPE.
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[RECYCLED SYMBOL]
This Proxy Statement is printed on recycled paper.
<PAGE>
[LOGO OF JOSTENS]
JOSTENS, INC.
ANNUAL MEETING
Auditorium of Jostens, Inc.
5501 Norman Center Drive
Minneapolis, Minnesota 55437
OCTOBER 24, 1996
10 A.M. LOCAL TIME
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THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE
VOTED FOR ITEMS 2 AND 3 ABOVE AND TO GRANT AUTHORITY TO VOTE FOR ALL NOMINEES
NAMED IN ITEM 1 ABOVE.
Please sign exactly as your name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated: __________________________, 1996
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(Signature)
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN
THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES.
<PAGE>
JOSTENS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints Robert C.
Buhrmaster and Orville E. Fisher, Jr., and each of them, as Proxies, each with
the power to appoint his substitute and to act without the other, and hereby
authorizes each of them to represent and to vote, as designated below, all
shares of common stock of Jostens, Inc. held of record by the undersigned on
September 4, 1996, at the Annual Meeting of Shareholders of the Company to be
held on October 24, 1996 or any adjournment thereof.
1. ELECTION OF DIRECTORS.
[_] FOR all nominees listed below [_] WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for all nominees listed
below.
Lilyan H. Affinito, Kendrick B. Melrose, Richard A. Zona (three year terms)
Robert P. Jensen (one year term)
(INSTRUCTION: To withhold authority to vote for any individual nominee, print
that nominee's name on the space below)
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2. APPROVAL OF AMENDMENTS TO THE JOSTENS, INC. 1992 STOCK INCENTIVE PLAN.
[_] FOR [_] AGAINST [_] ABSTAIN
3. RATIFICATION OF ERNST & YOUNG AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING JUNE 30, 1997.
[_] FOR [_] AGAINST [_] ABSTAIN
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
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