<PAGE> 1
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
Kerr Group, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Kerr Group, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $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:
--------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------
3) Filing Party:
---------------------------------------------------------------------
4) Date Filed:
---------------------------------------------------------------------
<PAGE> 2
KERR GROUP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 26, 1994
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Kerr
Group, Inc., a Delaware corporation (the "Company"), will be held at the J.W.
Marriott Hotel, 2151 Avenue of the Stars, Los Angeles, California 90067, on
Tuesday, April 26, 1994 at 10:00 o'clock A.M., Pacific Daylight Time, for the
following purposes:
1. To elect three directors for the ensuing three year term; and
2. To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
In accordance with the provisions of the By-Laws, the Board of Directors
has fixed the close of business on March 8, 1994, as the record date for the
determination of the holders of Common Stock entitled to notice of, and to vote
at, the Annual Meeting.
Your attention is directed to the accompanying Proxy Statement.
Stockholders who do not expect to attend the meeting in person are
requested to date, sign and mail the enclosed Proxy as promptly as possible in
the enclosed stamped envelope.
By Order of the Board of Directors
ROGER W. NORIAN
Chairman, President and
Chief Executive Officer
Los Angeles, California
March 28, 1994
<PAGE> 3
PROXY STATEMENT
KERR GROUP, INC.
1840 CENTURY PARK EAST
LOS ANGELES, CALIFORNIA 90067
ANNUAL MEETING OF STOCKHOLDERS
APRIL 26, 1994
PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Kerr Group, Inc., a Delaware corporation (the "Company"). Any proxy given may
be revoked by filing with the Secretary of the Company an instrument revoking it
or a duly executed proxy bearing a later date. The Company has retained
Georgeson & Co. Inc. ("Georgeson & Co.") to assist in the solicitation of
proxies from brokers, bank nominees, institutional holders and certain
individual holders of record. Georgeson & Co. will receive a fee from the
Company of approximately $5,500 for its services, plus reimbursement for its
out-of-pocket expenses. All additional expenses of the solicitation of proxies
for the Annual Meeting, including the cost of mailing, will be borne by the
Company. In addition to the services performed by Georgeson & Co. and
solicitation by mail, officers and regular employees of the Company may solicit
proxies from stockholders by telephone, telegram or personal interview. Such
persons will receive no additional compensation for such services. In addition,
the Company and Georgeson & Co. intend to request persons holding stock in their
name or custody, or in the name of nominees, to send proxy materials to their
principals and request authority for the execution of the proxies, and the
Company will reimburse such persons for their expense in so doing.
The Company anticipates mailing proxy materials and the Annual Report for
the fiscal year ended December 31, 1993, to stockholders of record as of March
8, 1994, on or about March 28, 1994.
OUTSTANDING VOTING STOCK
Only holders of record of the Company's Common Stock, par value $.50 per
share ("Common Stock"), at the close of business on March 8, 1994, are entitled
to vote on the matters to be presented at the Annual Meeting. The number of
shares of Common Stock outstanding on such date and entitled to vote was
3,666,695. Each such share is entitled to one vote with respect to such matters.
The holders of the Company's $1.70 Class B Cumulative Convertible Preferred
Stock, Series D, par value $.50 per share ("Convertible Preferred Stock"), will
not be entitled to vote at the meeting.
<PAGE> 4
The following table sets forth information available to the Company as of
March 8, 1994, with respect to the ownership of Common Stock by (i) each person
known to the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each named executive officer designated in the
section of this Proxy Statement captioned "Executive Compensation," and (iii)
all directors and executive officers as a group. Information regarding the
beneficial ownership of Common Stock by each director and nominee for director
is set forth in the section of this Proxy Statement captioned "Election of
Directors." Except as otherwise indicated, each person named below has sole
investment and voting power with respect to the securities shown.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
BENEFICIAL SHARES
BENEFICIAL OWNER OWNERSHIP OUTSTANDING
---------------- ----------- -----------
<S> <C> <C>
The Gabelli Funds, Inc.
655 Third Avenue
New York, New York 1,180,217(1) 30.0%(1)
Kerr Group, Inc.
Employee Incentive Stock Ownership Plan,
effective March 19, 1985
("ESOP I") Los Angeles, California 228,666(2) 6.2%
Kerr Group, Inc.
1987 Employee Incentive Stock Ownership Plan,
effective October 19, 1987
("ESOP II") Los Angeles, California 275,143(2) 7.5%
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue
Suite 650
Santa Monica, California 272,700(3) 7.4%(3)
Wellington Management Company
75 State Street
Boston, Massachusetts 02109 241,900(4) 6.6%(4)
Roger W. Norian 127,367(5) 3.5%
D. Gordon Strickland 24,838(6) *
Robert S. Reeves 17,831(6) *
Norman N. Broadhurst 7,285(6) *
Richard Morse 12,292(6) *
All Directors and Executive 207,731(7) 5.6%
Officers as a Group (13 in number)
</TABLE>
- ---------------
* Less than one percent.
(1) According to Amendment No. 22 to the Schedule 13D filed jointly by Gabelli
Funds, Inc., GAMCO Investors, Inc., Gabelli & Company, Gabelli Performance
Partnership and Gabelli International, Limited (collectively, the "Gabelli
Entities") with the Securities and Exchange Commission (the "SEC") on July
30, 1992 (as amended, the "Schedule 13D"), the Gabelli Entities beneficially
owned 922,100 shares of Common Stock, which includes 15,000 shares of Common
Stock owned beneficially by Mr. Mario Gabelli for his own account. Under
applicable SEC rules, the Gabelli Entities are also deemed to own
beneficially an additional 258,117 shares of Common Stock which the Gabelli
Entities have the right to acquire at any time upon conversion of the
177,461 shares of Convertible Preferred Stock beneficially owned by the
Gabelli Entities.
The additional shares of Common Stock which may be acquired by the Gabelli
Entities upon such conversion, together with the 922,100 shares of Common
Stock indicated as beneficially owned by the Gabelli Entities and Mr. Mario
Gabelli in the table above, represent an aggregate of 1,180,217 shares, or
2
<PAGE> 5
approximately 30.0% of the total shares of Common Stock outstanding as of
March 8, 1994, including, for this calculation only, the number of shares
of Common Stock that the Gabelli Entities have the right to acquire upon
conversion of the Convertible Preferred Stock reported as beneficially
owned by them. The Schedule 13D states that the Gabelli Entities have not
acquired the shares of Common Stock for the purpose of changing or
influencing the control of the Company.
(2) All shares held by ESOP I and ESOP II are held for the benefit of
participants, the majority of whom are salaried employees of the Company or
its subsidiaries. Participants have the power to vote such shares, but may
not obtain or dispose of such shares except under limited circumstances. As
of March 8, 1994, 228,666 shares have been allocated to participants'
accounts under ESOP I and 208,728 shares have been allocated to
participants' accounts under ESOP II.
(3) According to Amendment No. 5 to the Schedule 13G filed by Dimensional Fund
Advisors, Inc. ("Dimensional") with the SEC on February 13, 1993 (as
amended, the "Schedule 13G"), Dimensional, an investment adviser, reported
that as of such date it beneficially owned and had dispositive power with
respect to 272,700 shares or 7.4% of the total shares of Common Stock
outstanding as of such date. Dimensional reported that it had the power to
vote and make investment decisions regarding all shares of Common Stock
owned beneficially by it on behalf of its clients, which are unrelated and
no one of whom owns beneficially more than 5% of the outstanding shares of
Common Stock. The Schedule 13G states that Dimensional has not acquired the
shares of Common Stock for the purpose of changing or influencing the
control of the Company.
(4) According to the Schedule 13G filed by Wellington Management Company
("Wellington") with the SEC on February 10, 1994, Wellington, an investment
adviser, reported that as of December 31, 1993, it beneficially owned and
had dispositive power with respect to 241,900 shares or 6.6% of the total
shares of Common Stock outstanding as of such date. Wellington reported that
it had the power to vote and make investment decisions regarding all shares
of Common Stock owned beneficially by it on behalf of its clients, which are
unrelated and no one of whom owns beneficially more than 5% of the
outstanding shares of Common Stock. The Schedule 13G states that Wellington
has not acquired the shares of Common Stock for the purpose of changing or
influencing the control of the Company.
(5) Includes 7,413 shares which have been allocated for voting and all other
purposes under ESOP I, and 6,673 shares which have been allocated for voting
purposes, of which 6,037 have been allocated for all purposes, under ESOP
II. Mr. Norian has sole voting power with respect to the 14,086 shares under
ESOP I and ESOP II, but no power to obtain or dispose of such shares, except
under limited circumstances.
(6) Includes, respectively for Messrs. Strickland, Reeves, Broadhurst, and
Morse, 15,000, 6,000, 0 and 4,800 shares issuable under presently
exercisable stock options held by such person. Also includes, respectively
for Messrs. Strickland, Reeves, Broadhurst, and Morse, 4,306, 5,937, 3,335
and 3,874 shares which have been allocated for voting and all other purposes
under ESOP I, and 5,532, 5,894, 3,950 and 3,618 shares which have been
allocated for voting purposes, of which 4,896, 5,258, 3,314 and 3,562 have
been allocated for all purposes, under ESOP II.
(7) Includes 28,200 shares (including shares designated in Note 6 above)
issuable upon exercise of stock options on or before May 9, 1994. Also
includes 28,539 shares (including shares designated in Notes 5 and 6 above)
which have been allocated for voting purposes, of which 28,539 shares have
been allocated for all purposes, under ESOP I and 30,426 shares (including
shares designated in Notes 5 and 6 above) which have been allocated for
voting purposes, of which 26,618 shares have been allocated for all
purposes, under ESOP II, for the Company's present officers included in the
group, who have the power to vote such shares, but may not obtain or dispose
of such shares except under limited circumstances.
3
<PAGE> 6
QUORUM REQUIREMENTS
The presence in person or by proxy of holders of record of a majority of
the outstanding shares of Common Stock is required for a quorum to transact
business at the Annual Meeting, but if a quorum should not be present, the
Annual Meeting may be adjourned from time to time until a quorum is obtained.
Under applicable Delaware law, abstentions will be counted for purposes of
determining the existence of a quorum at the Annual Meeting, but broker nonvotes
will not.
ELECTION OF DIRECTORS
The Certificate of Incorporation of the Company provides that the Board of
Directors of the Company shall consist of not less than three nor more than
seventeen individuals divided into three classes of equal number, so far as
possible, each class having a term of three years. The By-Laws of the Company
currently provide that the number of directors shall be seven. Each year the
term of office of one class of directors expires.
The Board of Directors intends to present for action at the Annual Meeting
the election of Gordon C. Hurlbert, Michael C. Jackson and Roger W. Norian,
whose present terms expire in 1994, to serve for a term of three years and until
their successors are duly elected and shall qualify. Mr. Norian was first
elected to the Board of Directors in 1975. Messrs. Hurlbert and Jackson were
first elected to the Board of Directors in 1985.
Unless authority to vote for such directors is withheld, the enclosed Proxy
will be voted for the election of such persons except that the persons
designated as Proxies reserve discretion to cast their votes for other persons
in the unanticipated event that any of such nominees is unable, or declines, to
serve.
Directors will be elected by the plurality vote of the holders of Common
Stock entitled to vote at the Annual Meeting and present in person or by proxy.
In tabulating the vote, abstentions and broker nonvotes will be disregarded and
have no effect on the outcome of the vote.
The following table sets forth the name, the age, the principal occupation
for the last five years, the beneficial ownership of Common Stock and the
percentage of outstanding Common Stock represented by such ownership of each
director of the Company. Unless otherwise indicated, all shares of Common Stock
are owned directly and of record and the director owning such shares has sole
voting and investment power with respect thereto. Mr. Norian has been the
President and Chief Executive Officer of the Company since 1980 and has also
been the Chairman of the Board since 1983. Messrs. O'Hara, Hurlbert, Jackson,
Mellor and Sperry have been executives and a partner, respectively, with the
corporations, including subsidiaries, or the firm, as the case may be, with
which they are now associated or its predecessor for more than the past five
4
<PAGE> 7
years. Mr. Kyle recently retired from his position as Senior Vice President of
Chemical Bank, a position he had held for more than the preceding five years.
<TABLE>
<CAPTION>
AMOUNT
AND
NATURE OF PERCENT OF
BENEFICIAL COMMON STOCK
OWNERSHIP OUTSTANDING
DIRECTOR AT MARCH 8, AT MARCH 8,
NAME PRINCIPAL OCCUPATION SINCE 1994(1) 1994
----- -------------------- -------- ----------- ------------
<S> <C> <C> <C> <C>
NOMINEES TO SERVE IN OFFICE UNTIL 1997
--------------------------------------
Gordon C. Hurlbert,
Age 69(2)........... Chairman of the Board of Directors, CSC 1985 2,000 *
Industries, Inc. (Copperweld Steel);
Director of Carolina Power & Light
Company, Midwest Resources, Inc. and
Weirton Steel Corporation.
Michael C. Jackson,
Age 53(3)........... Advisory Director, Lehman Brothers 1985 2,415(4) *
Inc., investment bankers; Director of
Hampshire Group, Limited.
Roger W. Norian,
Age 50(5)........... Chairman, President and Chief Executive 1975 127,367 3.5%
Officer of the Company.
DIRECTORS TO CONTINUE IN OFFICE UNTIL 1996
------------------------------------------
John D. Kyle,
Age 58(2)(5)........ Retired Senior Vice President, Chemical 1973 100 *
Bank
Harvey L. Sperry,
Age 63(3)(5)........ Partner, Willkie Farr & Gallagher, 1973 1,970 *
attorneys; Director of Weirton Steel
Corporation; Director of Hampshire
Group, Limited.
DIRECTORS TO CONTINUE IN OFFICE UNTIL 1995
------------------------------------------
James R. Mellor,
Age 63(3)........... President, Chief Executive Officer and 1980 200 *
Director of General Dynamics
Corporation, a defense, aerospace, and
shipbuilding company; Director of
Bergen Brunswig Corporation and
Computer Sciences Corporation.
Robert M. O'Hara,
Age 67(2)........... Chairman and Chief Executive Officer of 1980 0 *
Falcon Management (formerly OMS
Company), investments and management
services; Director of TBC Corp.
</TABLE>
- ---------------
* Less than one percent.
(1) Excludes the 1,825, 1,825, 1,047, 3,658, 3,658 and 1,825 shares of Common
Stock purchased for the accounts of Messrs. Hurlbert, Jackson, Kyle, Sperry,
Mellor and O'Hara, respectively, by the trustee under the Company's Common
Stock Purchase Plan for Non-Employee Directors (the "Director Stock
5
<PAGE> 8
Purchase Plan"). Currently, the participating directors have voting and
dispositive power with respect to such shares only upon termination of their
services as a director of the Company. Also excludes 10,000 shares issuable
under stock options granted to each non-employee director pursuant to the
Company's 1993 Stock Option Plan for Non-Employee Directors. These options
are not exercisable unless and until the closing price of the Common Stock
on the New York Stock Exchange reaches $12.50 per share and remains at or
above that level for at least 10 consecutive trading days.
(2) Member of the Audit Committee.
(3) Member of the Stock Option and Compensation Committee.
(4) Includes 415 shares issuable upon conversion of 285 shares of Convertible
Preferred Stock held by Mr. Jackson pursuant to a self-directed Keogh plan.
(5) Member of the Executive Committee.
The Audit Committee is composed of three directors who are not officers or
employees of the Company. The Audit Committee held two meetings during 1993. The
Company's independent public accountants have been informed that they may refer
to and discuss with the Audit Committee (with or without previous consultation
with officers of the Company) any matters which may develop or arise in
connection with any audit or the maintenance of internal accounting controls or
any other matter relating to the Company's financial affairs. The Company's
internal audit department has also been granted direct access to the Audit
Committee. The Audit Committee reviews, at least annually, the services
performed and to be performed by the Company's independent public accountants
and the fees charged therefor, and, in connection therewith, considers the
effect of any nonaudit services on the independence of such accountants. The
Audit Committee also reviews with the Company's independent public accountants
and its internal audit department the general scope of their respective audit
coverages, the procedures and internal accounting controls adopted by the
Company and any significant problems encountered by either group.
The Stock Option and Compensation Committee (the "Compensation Committee")
is composed of three directors who are not officers or employees of the Company.
The Compensation Committee reviews and approves compensation programs generally
and, specifically, salaries, bonuses and stock options for officers and certain
other salaried employees of the Company. The Compensation Committee held seven
meetings during 1993.
The Company does not have a nominating committee.
The Board of Directors held six meetings during 1993 and the Executive
Committee of the Board of Directors held four meetings during 1993.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation of
the Company's Chief Executive Officer and the four other most highly compensated
executive officers for each of the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------------
AWARDS
ANNUAL COMPENSATION -------------------------- PAYOUTS
----------------------------------- RESTRICTED SECURITIES --------
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($) (#) ($) ($)(1)(2)
- ----------------------------- ---- -------- ------- ------------- ----------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Roger W. Norian.............. 1993 570,000 15,000 60,807(3) 15,879 45,000 -- 2,249
Chairman, President and 1992 500,000 80,000(4) 47,055(3) 22,284(4) -- -- 2,182
Chief Executive Officer 1991 500,000 100,000 -- -- -- -- --
D. Gordon Strickland......... 1993 267,000 9,000 -- 9,522 5,000 -- --
Senior Vice President, 1992 225,000 48,000(4) -- 13,370(4) 10,000 -- 3,537
Finance, and Chief 1991 225,000 60,000 -- -- 25,000 -- --
Financial Officer
Robert S. Reeves............. 1993 224,000 12,200(5) 28,005(6) 12,914 5,000 -- 2,249
Senior Vice President, 1992 195,000 26,840(5) 56,801(6) 9,226(5) 5,000 -- 342
Sales and Marketing -- 1991 195,000 60,000 -- -- 10,000 -- --
Plastic Products Division
Norman N. Broadhurst......... 1993 225,000 10,000 -- 10,586 -- -- 2,925
Senior Vice President -- 1992 185,000 71,600(4) -- 19,944(4) 10,000 -- 1,999
President of Consumer 1991 185,000 55,000 -- -- -- -- --
Products Division
Richard Morse(7)............. 1993 154,500 5,250 -- 5,553 -- -- 1,825
Vice President, 1992 128,122 28,000 -- 7,794 2,000 -- 1,594
Employee Relations 1991 120,625 35,000 -- -- 8,000 -- --
</TABLE>
- ---------------
(1) Except as otherwise noted, perquisites and other personal benefits received
by each named executive officer (including, for certain of the named
executive officers, payments of premiums on life insurance policies, tax
preparation fees and car use allowances) in each instance aggregated less
than the lesser of $50,000 or 10% of such officer's annual salary and bonus.
(2) Includes for Messrs. Norian, Strickland, Reeves, Broadhurst and Morse,
respectively, $2,249, $0, $2,249, $2,925 and $1,825 for 1993 contributed by
the Company pursuant to the Company's Employees' Savings Plan.
(3) Represents payments to Mr. Norian of an amount which, after taxes, was equal
to his approximate income tax liability resulting from the release of
disposition restrictions in 1992 and 1993 with respect to certain shares of
Common Stock held by Mr. Norian pursuant to the terms of the 1984 Restricted
Stock Purchase Agreement.
(4) Pursuant to the 1992 and 1993 Key Executive Incentive Bonus Plans, Messrs.
Norian, Strickland, Broadhurst and Morse received 80% of their total bonus
($100,000, $60,000, $89,500 and $35,000, respectively) for 1992 and 50% of
their total bonus ($30,000, $18,000, $20,000 and $10,500, respectively) for
1993 in cash on or about March 1, 1993 with respect to the 1992 bonus
amounts and on or about March 1, 1994 with respect to the 1993 bonus
amounts. These amounts are reflected in the respective bonus columns for
1992 and 1993. The remaining 20% or 50% is reflected as an award of
restricted stock receivable by them on March 1, 1995 with respect to the
1992 bonus amounts and March 1, 1996 with respect to the 1993 bonus amounts,
provided that they are employed by the Company on such respective dates. The
number of shares of restricted stock awarded was calculated by dividing the
dollar equivalent of the remaining portion of their respective bonuses
($20,000, $12,000, $17,900 and $7,000, respectively) for 1992 and ($15,000,
$9,000, $10,000 and $5,250, respectively) for 1993, by a number equal to 90%
of the average closing price of the Common Stock during the months of
December 1992 and 1993, respectively. The average closing price of the
Common Stock during December 1992 was $6.482 and
7
<PAGE> 10
during December 1993 it was $8.789. The dollar value of the award of
restricted stock as reflected in the above table was calculated using the
closing price of the Common Stock on December 31, 1992 and 1993, the dates
of grant, which was $6.50 and, $8.375, respectively, per share.
(5) Under the terms of the 1992 Key Executive Incentive Bonus Plan, Mr. Reeves
was awarded a $41,400 bonus for services rendered in 1992, which bonus had a
$10,000 and a $31,400 dollar component. Mr. Reeves received 80% of the
$10,000 component and 60% of the $31,400 component of his bonus in cash on
or about March 1, 1993, for an aggregate of $26,840. In addition, 20% of the
$31,400 component of Mr. Reeves' bonus ($6,280) was paid in cash on March 1,
1994. This amount is reflected as other compensation. Further, the remaining
20% of each of the $10,000 component and the $31,400 component of Mr.
Reeves' bonus is reflected as an award of restricted stock receivable on
March 1, 1995. Pursuant to the 1993 Key Executive Incentive Bonus Plan, Mr.
Reeves received 50% of his total bonus ($24,400) for 1993 in cash on or
about March 1, 1994. This amount is reflected in the bonus column for 1993.
The remaining 50% is reflected as an award of restricted stock receivable on
March 1, 1996. The number of shares of restricted stock awarded was
calculated using the formula described above in Note 4. Restricted stock to
be received by Mr. Reeves in 1995 and 1996, respectively, is conditioned on
his employment by the Company on such respective dates. The dollar value of
the award of restricted stock was calculated using the closing price of the
Common Stock on December 31, 1992 and 1993, the dates of grant, which was
$6.50 and $8.375, respectively, per share.
(6) Includes reimbursement of moving expenses of $10,315 in 1993 and $40,631 in
1992.
(7) Mr. Morse retired effective as of February 1, 1994.
The following table sets forth information regarding grants of stock
options made during 1993 to each of the named executive officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------------ RATES OF STOCK
NUMBER OF % OF TOTAL PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM
OPTIONS/SARS EMPLOYEES IN EXERCISE OR BASE EXPIRATION -------------------
NAME GRANTED(#)(1) FISCAL YEAR PRICE ($/SH) DATE 5% 10%
---- ------------- ------------ ---------------- ---------- ----- -----------
<S> <C> <C> <C> <C> <C> <C>
Roger W. Norian.......... 45,000 28.6 8.3125 9/28/98 $0(2) $228,369(2)
D. Gordon Strickland..... 5,000 3.2 8.3125 9/28/98 $0(2) $ 25,374(2)
Robert S. Reeves......... 5,000 3.2 8.3125 9/28/98 $0(2) $ 25,374(2)
Norman N. Broadhurst..... -- -- -- -- -- --
Richard Morse............ -- -- -- -- -- --
</TABLE>
- ---------------
(1) The options granted during 1993 are not exercisable unless and until the
closing price of the Common Stock on the New York Stock Exchange reaches
$12.50 per share and remains at or above that level for at least 10
consecutive trading days.
(2) The options were granted on September 28, 1993 at an exercise price of
$8.3125, which was equal to the mean between the high and low prices of the
Common Stock on such day. Given that the options are not exercisable until
the stock price reaches and maintains $12.50 per share, as set forth above,
the options have no potential realizable value using the 5% rate of
appreciation mandated by the SEC over the period of the options' term.
8
<PAGE> 11
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table provides information regarding the exercise of options
during the Company's last fiscal year and the number and value of unexercised
options held at year end by each of the named executive officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY
SHARES FY-END (#) OPTIONS/SARS AT FY-END($)
ACQUIRED ON VALUE --------------------------- ------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE(1)
---- ----------- ----------- ----------- ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Roger W. Norian...................... 0 0 0 45,000 0 2,813
D. Gordon Strickland................. 0 0 15,000 25,000 18,750 42,813
Robert S. Reeves..................... 0 0 6,000 14,000 7,500 20,313
Norman N. Broadhurst................. 0 0 0 10,000 0 30,000
Richard Morse........................ 0 0 4,800 4,200 6,000 6,750
</TABLE>
- ---------------
(1) As noted above, in 1993 Messrs. Norian, Strickland, and Reeves were granted
options to purchase 45,000, 5,000 and 5,000 shares of Common Stock,
respectively, at an exercise price of $8.3125 per share. The amounts set
forth in this column were calculated using the difference in the fiscal
year-end closing price of the Common Stock, $8.375 per share, from the
exercise price per share. None of these options are exercisable unless and
until the stock price reaches and maintains $12.50 per share, as set forth
above. In addition, options granted in 1992 are not exercisable unless and
until the stock price reaches and maintains $10.00 per share and remains at
or above that level for at least ten consecutive trading days.
SALARIED PENSION PLAN
The Company's salaried pension plan provides eligible employees with
retirement benefits equal to 28% of final five year average remuneration up to
social security covered compensation, plus 43% of final five year average
remuneration in excess of social security covered compensation for 30 years of
service, with a proportionate reduction for less than 30 years of service. In no
event will an employee's benefit be less than his accrued annual retirement
benefit under the prior plan at December 31, 1988. Mr. Norian's current annual
retirement benefit is $101,817, payable on a straight life annuity basis upon
retirement at age 65, as determined under the prior plan. Five years of service
are required in order to vest under the plan.
The following table sets forth estimated annual retirement benefits payable
on a straight life annuity basis upon retirement at age 65 under the Company's
salaried pension plan (without regard to lower accruals on earnings below social
security covered compensation) for various classes of employees based on their
average remuneration and years of service. Remuneration covered by the pension
plan primarily includes salary, bonus and other items included in compensation.
However, the Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code") limits remuneration which may be taken into account under the pension
plan for 1994 to $150,000. Messrs. Norian, Strickland, Reeves, Broadhurst and
Morse have, as of December 31, 1993, 18, 7, 10, 5 and 42 years, respectively, of
credited service under the salaried pension plan.
<TABLE>
<CAPTION>
FINAL 5 YEAR YEARS OF SERVICE
AVERAGE ----------------------------------
REMUNERATION 10 20 30 OR MORE
------------- ------- ------- ----------
<S> <C> <C> <C>
$100,000................................... $14,333 $28,667 43,000
150,000................................... 21,500 43,000 64,500
200,000................................... 28,667 57,333 86,000
250,000................................... 35,833 71,667 107,500
</TABLE>
9
<PAGE> 12
COMPENSATION OF DIRECTORS
The directors who are not employees of the Company are currently
compensated for services as directors at the rate of $22,500 per year and $500
for each meeting of the Board of Directors attended. In addition, the Company
has established an unfunded retirement plan for directors of the Company who
serve in such capacity for ten years or more, retire after February 1, 1985, and
do not receive any other retirement benefits from the Company. Pursuant to such
plan, the Company will pay $1,000 per month for not more than ten years to a
qualifying director. In addition, in 1993 the six directors who were not
employees of the Company each received options to purchase 10,000 shares of
Common Stock at a price of $8.19 per share pursuant to the Company's Stock
Option Plan For Non-Employee Directors. These options are not exercisable unless
and until the closing price of the Common Stock on the New York Stock Exchange
reaches $12.50 per share and remains at or above that level for at least 10
consecutive trading days. In 1992, the Board of Directors adopted the Director
Stock Purchase Plan pursuant to which non-employee directors may elect to defer
the receipt of all or a portion of their fees. The amounts deferred are
contributed to a trust which will then purchase Common Stock using such amounts
on behalf of the participating directors. The Common Stock Purchase Plan for
Directors became effective on October 1, 1992.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Each of Messrs. Norian, Strickland, Reeves, Broadhurst and Morse has an
employment agreement with the Company which provides for continuation of such
officer's salary and specified insurance benefits for a certain period in the
event that notice of termination is given by the Company for reasons other than
"just cause" or permanent disability. The continuation period is currently two
years for Mr. Norian, eighteen months for Mr. Reeves, one year for each of
Messrs. Broadhurst and Morse and six months for Mr. Strickland. The salary
amounts which would be so payable currently range from a six month amount of
approximately $133,000 payable to Mr. Strickland to an annual amount of
approximately $570,000 payable to Mr. Norian.
Mr. Norian's employment agreement provides for (i) payments after
termination due to permanent disability equal to his monthly salary for a period
of two years and payments of $60,000 per year thereafter until age 65, (ii) an
annual salary supplement equal to the premium for a supplemental disability
insurance policy paying Mr. Norian $90,000 per annum (without offset for amounts
payable to him under any other policy) for five years after termination due to
disability and the sum of $800,000 at the end of such five year period and (iii)
supplemental life insurance in the amount of $2,000,000. Mr. Norian's employment
agreement also provides that if a change in control or sale of all of the assets
of the Company occurs such obligations of the Company will terminate and the
Company will pay $1,000,000 to Mr. Norian (the "Termination Payment"). The
Company's obligation for the Termination Payment and all other amounts due to
Mr. Norian under the employment agreement are secured by a letter of credit.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last completed fiscal year, Messrs. Jackson, Mellor and Sperry
served as members of the Compensation Committee. None of such members of the
Compensation Committee are or have been officers or employees of the Company.
Mr. Sperry is a partner in the law firm of Willkie Farr & Gallagher,
counsel to the Company.
Mr. Jackson is an Advisory Director of Lehman Brothers Inc., which performs
investment banking services for the Company from time to time.
10
<PAGE> 13
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
In establishing and monitoring the executive compensation program for the
Company, the Compensation Committee looks at both the total compensation program
and each component thereof to assure that it is both competitive and sensitive
to individual and Company performance. The Company has engaged a consultant in
the field of executive compensation matters to assist the Compensation Committee
in establishing and implementing compensation programs that are consistent with
these objectives and reflective of the Company's financial performance.
In 1993, the Compensation Committee established and implemented the Kerr
Group, Inc. Key Executive Incentive Bonus Program ("Program"). Under the
Program, each participating executive is eligible to receive incentive
compensation which is determined both qualitatively and quantitatively. The
qualitative portion is based on the achievement of specific objectives for each
participant and the quantitative portion is based on the achievement of
financial objectives established by the Compensation Committee with respect to
each respective business segment and the Company for the particular year. For
1993, each participant received a qualitative portion of the incentive
compensation, the participants in the Plastic Products segment received a
portion of the quantitative incentive compensation and one participant received
a cash award from the Compensation Committee for extraordinary individual
achievement which was not within the provisions of the Program. Fifty percent of
the amounts payable for 1993 pursuant to the Program is deferred for two years,
is payable in Common Stock and is conditioned upon continued employment.
In order to implement the provisions of the Program, the Compensation
Committee was required to eliminate a historical practice of the Company which
consisted of deferring a portion of the key executive annual compensation each
year, including 1992, and then paying that amount at the beginning of the
following year. Although the amount was described as a bonus, the Compensation
Committee concluded that it was, in fact, a deferral. In order to implement the
Program, which, in fact, is an incentive compensation program and not a deferral
of base compensation, without penalizing the participants, the Compensation
Committee eliminated the deferral practice by increasing the base salary of the
participants by an amount not in excess of seventy percent of the respective
bonus amount earned by each of them for services rendered in 1992. This
increase, which became effective January 1, 1993, was deemed by the Compensation
Committee to be fair both to the Company and to the participants.
On September 28, 1993, the Compensation Committee granted to key employees
options to purchase 147,000 shares of Common Stock of the Company at a purchase
price per share of $8.3125. The options provide that they may not be exercised
until the closing price of the Common Stock on the New York Stock Exchange
reaches $12.50 per share and remains at or above that level for at least 10
consecutive trading days.
COMPENSATION COMMITTEE
Michael C. Jackson
James R. Mellor
Harvey L. Sperry
11
<PAGE> 14
PERFORMANCE GRAPH
The graph set forth below charts the yearly percentage change in the
Company's cumulative total stockholder return against each of the Standard &
Poor's 500 Index and the Manufacturing-Diversified Industries Index, in each
case assuming an investment of $100 on December 31, 1988 and the cumulation and
reinvestment of dividends paid thereafter through December 31, 1993.
<TABLE>
<CAPTION>
Measurement Period Kerr Group, S & P 500 MFG-DIVFD
(Fiscal Year Covered) Inc. Index Industrials
<S> <C> <C> <C>
1988 100.00 100.00 100.00
1989 121.00 112.00 132.00
1990 60.00 111.00 128.00
1991 78.00 136.00 166.00
1992 82.00 147.00 179.00
1993 105.00 179.00 197.00
</TABLE>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Mr. Sperry is a partner in the law firm of Willkie Farr & Gallagher,
counsel to the Company.
Mr. Jackson is an Advisory Director of Lehman Brothers Inc., which performs
investment banking services for the Company from time to time.
On January 16, 1990 and June 11, 1991, the Board of Directors authorized
unsecured loans of $30,000 and $100,000, respectively, to Mr. Strickland. The
loan due January 16, 1990 bears interest at 6% per annum and accrued interest is
paid annually. The principal of the loan is to be paid in six equal annual
installments beginning in 1991, however, on January 1, 1992, $15,000 of
principal was forgiven by the Company. The loan due June 11, 1991 bears interest
at 7.76% per annum and principal and accrued interest are due on the earlier of
June 11, 1996 or on the fifth business day after Mr. Strickland's employment
with the Company is terminated. As of March 8, 1994, $110,000 in principal
amount and $21,260 of accrued interest remained outstanding.
12
<PAGE> 15
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholder proposals to be included in the Company's proxy statement with
respect to the 1995 Annual Meeting of Stockholders must be received by the
Company at its executive offices located at 1840 Century Park East, Los Angeles,
California 90067 no later than December 31, 1994.
RELATIONSHIP WITH AUDITORS
The Board of Directors has appointed the firm of KPMG Peat Marwick,
independent public accountants, as auditors of the Company for the year ending
December 31, 1994. This firm has audited the Company's accounts since 1960. It
is expected that representatives of KPMG Peat Marwick will be present at the
Annual Meeting of Stockholders where they will have an opportunity to address
the meeting, if they so desire, and to respond to appropriate questions.
OTHER BUSINESS OF THE MEETING
Management is not aware of any matters to come before the Annual Meeting
other than those stated in this Proxy Statement. However, inasmuch as matters of
which the management is not now aware may come before the meeting or any
adjournment, the proxies confer discretionary authority with respect to acting
thereon, and the persons named in such proxies intend to vote, act and consent
in accordance with their best judgment with respect thereto. Upon receipt of
such proxies (in the form enclosed and properly signed) in time for voting, the
shares represented thereby will be voted as indicated thereon and in this Proxy
Statement.
By Order of the Board of Directors
ROGER W. NORIAN,
Chairman, President and
Chief Executive Officer
Los Angeles, California
March 28, 1994
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1993 MAY BE OBTAINED WITHOUT CHARGE BY ANY STOCKHOLDER TO WHOM THIS
PROXY STATEMENT IS SENT, UPON WRITTEN REQUEST TO THE SECRETARY, KERR GROUP,
INC., 1840 CENTURY PARK EAST, LOS ANGELES, CALIFORNIA 90067.
13
<PAGE> 16
PROXY KERR GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS, APRIL 26, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of KERR GROUP, INC. hereby appoints Roger W. Norian
and Harvey L. Sperry, and each or any one of them, the true and lawful
attorneys, agents and proxies of the undersigned with full power of
substitution for and in the name of the undersigned, to vote all the shares of
Common Stock of KERR GROUP, INC. which the undersigned may be entitled to vote
at the Annual Meeting of Stockholders of the CORPORATION to be held at the J.W.
Marriott Hotel, 2151 Avenue of the Stars, Los Angeles, California 90067, on
Tuesday, April 26, 1994, at 10:00 A.M., Pacific Daylight Time, and at any and
all adjournments thereof, with all of the powers which the undersigned would
possess if personally present, for the following purposes:
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[ ] Mark here for address change.
New address:______________________________
__________________________________________
__________________________________________
<PAGE> 17
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
[______________________________________________________________________________]
1. ELECTION OF DIRECTORS
Nominees: Gordon C. Hurlbert, Michael C. Jackson and
Roger W. Norian as directors.
FOR all nominees [ ]
WITHHELD from all nominees [ ]
FOR all nominees except vote withheld from the following nominees(s).
[ ] _____________________________________________________________
(Instruction: To withhold authority to vote for any individual nominee or any
two nominees write the name or names of such nominee or nominees on the space
provided. To withhold authority to vote for all nominees, please mark in the
box next to "WITHHELD.") The Board of Directors recommends a vote FOR.
2. Considering and acting upon any other matters which may properly come
before the meeting or any adjournment thereof.
This Proxy will be voted for the choices specified. If no choice is specified
with respect to the election of directors, this Proxy will be voted FOR the
election of directors.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement dated March 28, 1994. (Please sign exactly as name or names
appear hereon. When signing as attorney, executor, administrator, trustee,
guardian or corporate officer, please give your full title as such. For joint
accounts, all co-owners must sign.)
_______________________________________ ____________________________
(Signature of Stockholder) (L.S.) Date
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY IN THE ENVELOPE PROVIDED.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
[______________________________________________________________________________]
