<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [ ] 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
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Nashua Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE> 2
NASHUA CORPORATION
44 FRANKLIN STREET
NASHUA, NEW HAMPSHIRE 03060
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 25, 1997
Notice is hereby given that the Annual Meeting of Stockholders of Nashua
Corporation will be held at the Crowne Plaza, 2 Somerset Parkway, Nashua, New
Hampshire, on April 25, 1997 at 10:00 a.m., for the following purposes:
1. To elect a Board of Directors for the ensuing year.
2. To act upon any other business as may properly be brought before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 18, 1997,
as the record date for determining the stockholders having the right to notice
of and to vote at the meeting.
PAUL BUFFUM
Vice President, General
Counsel and Secretary
March 25, 1997
IF YOU ARE ENTITLED TO VOTE AT THE MEETING,
KINDLY EXECUTE AND MAIL THE ENCLOSED PROXY.
<PAGE> 3
PROXY STATEMENT
GENERAL
The accompanying proxy is solicited on behalf of the Board of Directors of
Nashua Corporation ("Nashua" or the "Company"), a Delaware corporation, whose
principal executive offices are located at 44 Franklin Street, Nashua, New
Hampshire 03060, for use at the annual meeting of the stockholders of Nashua to
be held on April 25, 1997, and at any adjournment thereof. Each proxy executed
and returned by a stockholder may be revoked by delivering written notice of
such revocation to the Secretary of Nashua or by executing and delivering to the
Secretary a proxy bearing a later date at any time at or before the meeting
except as to any matters upon which, prior to such revocation, a vote shall have
been cast pursuant to the authorization conferred by such proxy. This proxy
statement is being mailed to stockholders on or about March 25, 1997.
VOTING SECURITIES
The only outstanding class of voting securities of Nashua is its common
stock, each share of which entitles the holder thereof to one vote. Only
stockholders of record at the close of business on March 18, 1997, are entitled
to vote at the annual meeting and at any adjournment thereof. As of the close of
business on such date, there were 6,623,225 shares of its common stock
outstanding (excluding 24,030 shares held in Nashua's treasury). The holders of
a majority of the issued and outstanding stock entitled to vote, present in
person or by proxy, constitute a quorum for the transaction of business.
Shares which abstain from voting as to a particular matter, and shares held
in "street name" by brokers or nominees who indicate on their proxies that they
do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes in favor of such matter, and, except for
the election of directors, will also not be counted as votes cast or shares
voting on such matter. Under Nashua's bylaws, the affirmative vote of the
holders of a majority of the shares of Nashua's common stock entitled to vote
held by stockholders present at the meeting in person or by proxy is required
for the election of directors. Accordingly, a vote that is withheld from a
particular nominee will be treated as entitled to vote and present and thus have
the effect of a negative vote.
NOMINEES FOR ELECTION AS DIRECTORS
Pursuant to the bylaws of Nashua, the Board of Directors has fixed at seven
the number of directors to be elected at the annual meeting. Nashua's directors
are elected annually by the stockholders and hold office until successors are
elected and qualified or until death, resignation or removal. Vacancies and
newly created directorships resulting from any increase in the authorized number
of directors may be filled until the next annual meeting of stockholders by the
majority of directors then in office.
Each proxy executed and returned by a stockholder will be voted for the
election of the nominees for directors listed below, unless authority to do so
is withheld. If, however, any nominee becomes unavailable (which is not now
anticipated), the persons named as proxies may, in their discretion, vote for
another nominee.
All of the nominees for directors named below are now directors of Nashua,
except for Mr. Murphy.
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<PAGE> 4
The business experience of each nominee for the last five years and the
year he first became a director of Nashua are as follows:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE BUSINESS EXPERIENCE
---- --- -------- -------------------
<S> <C> <C> <C>
Sheldon A. Buckler(a)(c)(d)...... 65 1994 Dr. Buckler has been Chairman of the Board of
Commonwealth Energy System since May 1995. He
was Vice Chairman of the Board of Polaroid
Corporation from prior to 1992 until his
retirement in 1994. He is also a Director of
Aseco Corporation, Parlex Corporation,
Spectrum Information Technologies, Inc. and
Cerion Technologies Inc.
Gerald G. Garbacz................ 60 1996 Mr. Garbacz has been Chairman of the Board of
Nashua Corporation since June 14, 1996 and
President and Chief Executive Officer since
January 2, 1996. From 1994 through 1995, Mr.
Garbacz was a private investor. He was
Chairman and Chief Executive Officer of Baker
& Taylor Inc. (information distribution) from
1992 to 1994. He is also a Director of Handy &
Harman Inc. and Chairman of the Board of
Cerion Technologies Inc.
Charles S. Hoppin(a)(b).......... 65 1979 Mr. Hoppin has been a partner in the law firm
of Davis Polk & Wardwell since prior to 1992.
John M. Kucharski(a)(b).......... 61 1988 Mr. Kucharski has been Chairman of the Board,
Chief Executive Officer and President of EG&G,
Inc. (technical and scientific products and
services) since prior to 1992. He is also a
Director of New England Electric System, Eagle
Industry Co., Ltd. and State Street Boston
Corporation.
David C. Miller, Jr.(a)(c)....... 54 1996 Mr. Miller has been President and Chief
Executive Officer of ParEx, Inc. (privately
held investment company) since December 1994.
From 1994 through 1995, Mr. Miller served as
President of Kennedy International Consulting,
Inc. and from prior to 1992 through December
1993 he served as Executive Vice President of
The Investigative Group Inc. During this
period, Mr. Miller also provided international
business consulting services to U.S.
corporations. He is also President of the
Corporate Council on Africa and a Director of
Georgetown University's Institute for the
Study of Diplomacy.
</TABLE>
3
<PAGE> 5
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE BUSINESS EXPERIENCE
---- --- -------- -------------------
<S> <C> <C> <C>
Peter J. Murphy.................. 48 -- Mr. Murphy has been President of Parlex
Corporation (electrical components) since July
1995, Chief Operating Officer since May 1994
and a Director since March 1994. He was
Executive Vice President from May 1994 to July
1995, Vice President and General Manager,
Flexible Circuit Products Division, from
February 1993 to May 1994 and Assistant to the
President from December 1992 to February 1993.
Prior to December 1992, he was President of
Teledyne Electro-Mechanisms. He is also a
Director of Kyzen Corporation.
James F. Orr III(b)(c)........... 54 1989 Mr. Orr has been Chairman of the Board, Chief
Executive Officer and President of UNUM
Corporation (insurance) since prior to 1992.
</TABLE>
- ---------------
(a) Member of the Audit/Finance and Investment Committee of Nashua's Board of
Directors.
(b) Member of the Leadership and Compensation Committee of Nashua's Board of
Directors.
(c) Member of the Governance Committee of Nashua's Board of Directors.
(d) Lead Director.
BOARD OF DIRECTORS COMMITTEES
In June 1996, the Board of Directors elected Mr. Buckler as Lead Director
and streamlined the Committee framework within which it operates. The Lead
Director acts as Chairman in the Chairman's absence, chairs the Governance
Committee and spearheads all activities related to Chief Executive Officer
performance and succession. The Board reorganized the Audit, Executive Salary,
Nominating and Pension Plan Review Committees into three new committees. The new
committees of the Board of Directors are as follows:
AUDIT/FINANCE AND INVESTMENT COMMITTEE
The Audit/Finance and Investment Committee, consolidating and augmenting
the functions of the former Audit and Pension Plan Review Committees, is charged
to take measures to protect the assets of the Company. In doing so, the
committee supervises the soundness of the Company's financial records and
reporting and its relationship with its independent accountants and provides the
Board, the independent accountants, and the internal auditors with direct,
non-management access to each other on a regular basis. The Audit/Finance and
Investment Committee is also charged with responsibility for supervising
policies and decisions relating to financing and major cash management, pension
fund and capital investment decisions. The Audit/Finance and Investment
Committee held two meetings in 1996. Prior to its reorganization, the Audit
Committee held one meeting in 1996 and the Pension Plan Review Committee held
one meeting in 1996.
LEADERSHIP AND COMPENSATION COMMITTEE
The Leadership and Compensation Committee, formerly the Executive Salary
Committee, is charged with the responsibility of screening candidates for the
chief executive officer position; developing performance evaluation criteria;
reviewing the caliber of and succession to key management positions and deciding
on top
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<PAGE> 6
management compensation. The Leadership and Compensation Committee held one
meeting in 1996. Prior to its reorganization, the Executive Salary Committee
held one meeting in 1996.
GOVERNANCE COMMITTEE
The Governance Committee, formerly the Nominating Committee, is charged
with responsibility for recommending to the entire Board the size and
composition of the Board, policies regarding tenure and retirement of Directors,
evaluation of Board and Director performance and recommendations for improvement
on an annual basis, nomination of candidates for election to the Board,
assignments to Board committees, and recommendations for improving governance
processes of the Board. The Governance Committee will consider potential
nominees for election to the Board of Directors recommended by any stockholder
provided such recommendation is submitted in writing to the Secretary on or
before November 25, 1997 for the 1998 annual meeting. The Nominating Committee
held one formal meeting in 1996. While the newly created Governance Committee
held no formal meetings in 1996, the Committee was active telephonically and
informally during the year in discussions with directors and key management
members which led to changes in the Board's composition and structure.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
During 1996, the Board of Directors held eight regular meetings and four
special meetings. Each of the directors attended at least 75% of the aggregate
of (1) the total number of meetings of the Board of Directors held while he was
a director and (2) the total number of meetings held by all committees of the
Board on which he served.
COMPENSATION OF DIRECTORS
Directors of Nashua, except employees and officers of the Company, receive
an annual retainer payable in shares of Nashua's common stock with a market
value of $15,000. They also receive $1,000 in cash plus expenses for each Board
meeting and Board committee meeting attended and are each year awarded options
to purchase 1,000 shares of common stock having an exercise price equal to the
fair market value for such shares on the date of award under the provisions of
Nashua's 1996 Stock Incentive Plan. The Lead Director is compensated an
additional $7,500 annually.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of copies of reports filed pursuant to Section
16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or written representations from persons required to file such reports
("Reporting Persons"), the Company believes that all such filings required to be
made by such Reporting Persons were timely made in accordance with the
requirements of the Exchange Act.
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<PAGE> 7
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the annual and long-term compensation paid
to Nashua's five most highly paid executive officers in 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
----------------------------
ANNUAL COMPENSATION PERFORMANCE
------------------------------------ BASED SHARES
OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION STOCK AWARDS(1) OPTIONS COMPENSATION(2)
- ---------------------------- ---- -------- -------- ------------ --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gerald G. Garbacz(3)........ 1996 $400,538 $240,000 $173,920(4) $ 1,680,000(5) -- $10,831
Chairman, President and
Chief Executive Officer
Charles E. Turnbull(6)...... 1996 $289,615 $231,473 $147,878(4) -- -- $ 5,541
Vice President 1995 $ 83,154 $ 47,900 -- $ 334,375(7) 40,000 $ 553
Commercial Products Group
Robin J. T. Clabburn(6)..... 1996 $234,462 $ 87,420 -- -- -- --
Vice President and 1995 $217,607(8) -- $ 277(9) $ 334,375(7) 20,000 --
Chief Technical Officer
Daniel M. Junius(6)......... 1996 $199,808 $ 80,000 -- -- 3,000 $ 3,243
Vice President-Finance, 1995 $146,374 -- $ 561(10) $ 334,375(7) 11,500 $ 5,653
Chief Financial Officer
and Treasurer
Michael D. Jeans(11)........ 1996 $193,269 -- $106,999(4) $ 337,500(12) 40,000 $ 3,272
Vice President
Photo Group
</TABLE>
- ---------------
(1) The value of performance based restricted stock awards was determined by
multiplying the fair market value of Nashua's common stock on the date of
grant by the number of shares awarded.
(2) Includes Company contributions to the Employees' Savings Plan, life
insurance income and cash payments in lieu of medical benefits. In 1996,
these amounts were:
(a) as to the Employees' Savings Plan - Mr. Garbacz, $2,600; Mr.
Turnbull, $2,600; Mr. Junius, $2,600 and Mr. Jeans, $2,228.
(b) as to life insurance income - Mr. Garbacz, $7,511; Mr. Turnbull,
$2,161; Mr. Junius, $643 and Mr. Jeans, $1,044.
(c) as to cash payments in lieu of medical benefits - Mr. Garbacz, $720
and Mr. Turnbull, $780.
(3) Mr. Garbacz first became an executive officer on January 2, 1996 succeeding
Mr. Joseph A. Baute who resigned as President and Chief Executive Officer
on that day. Mr. Baute received no compensation in respect of his duties as
President and Chief Executive Officer in 1996.
(4) Includes moving expense reimbursement and tax equalization payments.
(5) Includes 120,000 shares of performance based restricted stock (granted when
the price of Nashua shares was $14.00), 40,000 shares of which will vest
when the average closing price over a 30 trading day period of Nashua
shares (the "average closing price") reaches $20.00; 40,000 shares of which
will vest when the average closing price of Nashua shares reaches $25.00;
and 40,000 shares of which will vest when the average closing price of
Nashua shares reaches $30.00. However, any shares which have not vested
upon the earlier of (i) December 18, 2000 or (ii) termination of
employment, will be forfeited.
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<PAGE> 8
Dividends, if any, will accumulate on such performance based restricted
stock and be paid when and if the underlying shares vest.
(6) Messrs. Turnbull, Clabburn and Junius first became executive officers in
1995. Mr. Turnbull joined the Company in August 1995.
(7) Includes 25,000 shares of performance based restricted stock (granted when
the price of Nashua shares was $13.375), 8,333 shares of which will vest
when the average closing price reaches $20.00; 8,333 shares of which will
vest when the average closing price reaches $25.00; and 8,334 shares of
which will vest when the average closing price reaches $30.00. However, any
shares which have not vested upon the earlier of (i) December 15, 2000 or
(ii) termination of employment, will be forfeited. Dividends, if any, will
accumulate on such performance based restricted stock and be paid when and
if the underlying shares vest.
(8) Mr. Clabburn received an additional $31,674 for consulting services
performed in 1995 prior to becoming an employee of Nashua.
(9) Tax equalization payments.
(10) Includes executive medical reimbursement income and tax equalization
payments relating thereto.
(11) Mr. Jeans first became an executive officer on April 22, 1996. On an
annualized basis, Mr. Jeans' 1996 salary compensation would have been
$250,000.
(12) Includes 25,000 shares of performance based restricted stock (granted when
the price of Nashua shares was $13.50), 8,333 shares of which will vest
when the average closing price reaches $20.00; 8,333 shares of which will
vest when the average closing price reaches $25.00; and 8,334 shares of
which will vest when the average closing price reaches $30.00. However, any
shares which have not vested upon the earlier of (i) April 22, 2001 or (ii)
termination of employment, will be forfeited. Dividends, if any, will
accumulate on such performance based restricted stock and be paid when and
if the underlying shares vest.
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<PAGE> 9
STOCK OPTIONS
The following table sets forth certain information as to options granted
during 1996 to the individuals listed in the Summary Compensation Table. In
accordance with SEC rules, also shown are the hypothetical gains or "option
spreads", on a pretax basis, that would exist for the respective options. These
gains are based on assumed rates of annual compound stock price appreciation of
5% and 10% from the date the options were granted over the full option term. To
put this data into perspective, the resulting Nashua stock prices for the grant
expiring on April 23, 2006 would be $21.99 at a 5% rate of appreciation and
$35.02 at a 10% rate of appreciation, and for the grant expiring on June 15,
2006, $26.06 at a 5% rate of appreciation and $41.50 at a 10% rate of
appreciation.
OPTION GRANTS IN YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES
OF STOCK PRICE
APPRECIATION
OPTIONS % OF TOTAL OPTIONS EXERCISE OR FOR OPTION TERM
GRANTED GRANTED TO EMPLOYEES BASE PRICE EXPIRATION -------------------------
NAME (#) IN 1996 ($/SHARE) DATE 0% 5% 10%
---- ---------- -------------------- ----------- ---------- --- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Gerald G. Garbacz... -- -- -- -- -- -- --
Charles E.
Turnbull.......... -- -- -- -- -- -- --
Robin J. T.
Clabburn.......... -- -- -- -- -- -- --
Daniel M. Junius.... 3,000(1) 2.1% $ 16.00 6/15/2006 $ 0 $ 30,187 $ 76,500
Michael D. Jeans.... 40,000(2) 27.6% $ 13.50 4/23/2006 $ 0 $339,603 $860,621
</TABLE>
- ---------------
(1) These options will become exercisable on June 14, 1997.
(2) These options will become exercisable on April 22, 1997.
The following table sets forth information as to options exercised in 1996
and unexercised options held at the end of 1996, by the individuals listed in
the Summary Compensation Table:
OPTION EXERCISES IN 1996 AND
VALUE OF OPTIONS AT END OF 1996
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED,
NUMBER OF UNEXERCISED IN-THE-MONEY, OPTIONS AT
OPTIONS HELD AT YEAR END YEAR END(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gerald G. Garbacz........... 0 $0 0 0 $ 0 $ 0
Charles E. Turnbull......... 0 $0 40,000 0 $ 0 $ 0
Robin J. T. Clabburn........ 0 $0 20,000 0 $ 0 $ 0
Daniel M. Junius............ 0 $0 17,250 8,750 $ 0 $ 0
Michael D. Jeans............ 0 $0 0 40,000 $ 0 $ 0
</TABLE>
- ---------------
(1) Represents the difference between the closing price on the New York Stock
Exchange of Nashua's common stock on December 31, 1996 ($12.00) and the
exercise price of the options. The exercise prices of all such options were
more than the closing price on December 31, 1996.
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<PAGE> 10
PENSION PLAN
The following table shows estimated annual benefits payable upon retirement
under the Nashua Corporation Retirement Plan for Salaried Employees (the
"Retirement Plan"), which includes the individuals listed in the Summary
Compensation Table:
ESTIMATED PENSION BENEFITS
<TABLE>
<CAPTION>
AVERAGE ANNUAL YEARS OF SERVICE
COMPENSATION FROM ------------------------------------------------------
JANUARY 1, 1992 25 OR
TO RETIREMENT 5 YEARS 10 YEARS 15 YEARS 20 YEARS MORE YEARS
- ----------------- -------- -------- -------- -------- ----------
<C> <C> <C> <C> <C> <C>
$ 125,000 ... $ 13,750 $ 27,500 $ 41,250 $ 55,000 $ 68,750
250,000 ... 27,500 55,000 82,500 110,000 137,500
375,000 ... 41,250 82,500 123,750 165,000 206,250
500,000 ... 55,000 110,000 165,000 220,000 275,000
625,000 ... 68,750 137,500 206,250 275,000 343,750
750,000 ... 82,500 165,000 247,500 330,000 412,500
875,000 ... 96,250 192,500 288,750 385,000 481,250
1,000,000 ... 110,000 220,000 330,000 440,000 550,000
</TABLE>
Compensation covered by the Retirement Plan generally refers to total
annual cash compensation, including salary and bonus, but excluding certain
items such as the value of stock option awards and employer allocations to the
Employees' Savings Plan. As of December 31, 1996, the individuals named in the
Summary Compensation Table had the following years of service credited under the
Retirement Plan: Mr. Clabburn is not eligible; Mr. Garbacz, 1 year; Mr.
Turnbull, 1 year; Mr. Junius, 12 years; and Mr. Jeans, 0.5 years.
The estimated annual benefits shown above are subject to an offset for 50%
of a participant's primary Social Security benefit. Benefits as shown above,
minus the 50% offset for Social Security benefit, are available for participants
whose pensions start after reaching age 65. Participants who have five or more
years of service are eligible to receive pensions after reaching age 60 and
participants who have ten or more years of service are eligible to receive
pensions after reaching age 55, but payments are reduced 4.2% per year for each
year that a recipient starts receiving benefits earlier than at age 65. Payments
are further reduced for participants whose credited service began before age 40
and terminate employment with Nashua prior to reaching age 55.
The Employee Retirement Income Security Act of 1974 places limitations on
pensions which may be paid under plans qualified under the Internal Revenue
Code. Amounts exceeding such limitations may be paid outside of qualified plans.
Nashua has a Supplemental Unfunded Excess Retirement Benefit Plan providing for
such amounts for its employees including Messrs. Garbacz, Turnbull, Junius and
Jeans.
CERTAIN TRANSACTIONS AND INDEBTEDNESS
In conjunction with Mr. Garbacz's relocation from Connecticut to New
Hampshire, the Company granted to Mr. Garbacz an interest free residential
bridge loan in the amount of $340,000 pending the sale of Mr. Garbacz's
Connecticut home. Mr. Garbacz has repaid the loan.
In conjunction with Mr. Jeans' relocation from California to New England,
the Company has granted to Mr. Jeans an interest free residential bridge loan in
the amount of $395,000 pending the sale of Mr. Jeans' California home.
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<PAGE> 11
SEVERANCE AGREEMENTS
The Company has entered into severance agreements with Messrs. Garbacz,
Turnbull, Clabburn, Junius and Jeans in order to ensure their continued service
to Nashua in the event of a change in control of Nashua. Such severance
agreements provide that upon termination of employment under certain
circumstances within three years of a "change in control" as defined in these
agreements, the employee would receive severance pay equal to three times the
sum of his annual salary and bonus for Messrs. Garbacz, Turnbull, Junius and
Jeans and, in the case of Mr. Clabburn, the sum of one year's annual salary and
bonus. In addition, each of Messrs. Garbacz, Turnbull, Junius and Jeans would be
entitled to their severance pay if he were to voluntarily terminate his
employment with Nashua during the 30 day period immediately after one year
following a change in control; and Mr. Clabburn would be entitled to his
severance pay if he were to voluntarily terminate his employment with Nashua
during the 60 day period following the change in control. Additional payments
are required with respect to Messrs. Turnbull and Junius in amounts such that
after the payment of all taxes, the executive will be in the same after tax
position as if no excise tax under Section 4999 of the Internal Revenue Code had
been imposed. In addition, the agreements provide for the continuation for
specified periods of certain other benefits.
THE LEADERSHIP AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Leadership and Compensation Committee, formerly the Executive Salary
Committee, is composed of non-employee directors and is charged with the
responsibility of screening candidates for the chief executive officer position;
developing performance evaluation criteria; reviewing the caliber of and
succession to key management positions and deciding on top management
compensation. The Committee administers the Management Bonus Plan and the
Company's stock option and stock incentive plans. Each year the Committee
reviews the performance of the Chief Executive Officer against objectives and
sets the Chief Executive Officer's base salary. The Committee also reviews the
performance and the salary levels of other executive officers including the
executives listed in the compensation table and makes decisions regarding the
above plans.
The Committee's compensation policies applicable to the Company's executive
officers during 1996 are set forth below:
The Committee believes that base salaries should be at competitive
levels so as to attract and retain well qualified executives. With respect
to the Chief Executive Officer's salary, the Committee considered a number
of factors including survey data, the size and performance of the Company,
past practice at the Company, each Committee member's own individual
experiences in compensation matters and the inter-relationship of salary to
cash incentive compensation and long-term equity based compensation. The
Committee set the Chief Executive Officer's salary at essentially the same
level it had been for chief executive officers at the Company for the past
six years and tied his overall compensation heavily to stock performance by
awarding him 120,000 shares of performance based restricted stock described
below. The aggregate amount of base salaries for the four Vice Presidents
listed in the compensation table was substantially equal to the aggregate
amount of median base salaries for similar positions according to survey
data.
The Committee believes that incentive compensation paid in cash should
be awarded to support company objectives based on company, group, division
and personal performance during the preceding year. The Company's
Management Bonus Plan provides that cash awards may be granted each year by
the Committee based on corporate, group, division and personal performance.
For the individuals who served as Chief Executive Officer and principal
corporate staff officers, award targets for 1996 were based on the
Company's pretax operating income budget and personal performance
objectives. For the Vice Presidents in charge of Nashua's Commercial
Products Group and Photofinishing Group, award targets
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<PAGE> 12
were based on the respective group's pretax operating income budget,
working capital budget (for Commercial Products Group only) and personal
performance objectives. Bonus payments were authorized by the Committee to
be paid to four of the officers listed in the compensation table (Messrs.
Garbacz, Turnbull, Clabburn and Junius) for performance in 1996, since
their predetermined targets had been exceeded.
The Committee believes that long-term equity-based compensation should
be awarded to provide incentive to executives to create value for
stockholders and give the executives a substantive ownership interest in
the Company's success. In 1996, the Company awarded performance based
restricted stock to two key executives (Messrs. Garbacz and Jeans). These
awards will become unrestricted when the average price per share of the
Company's stock over a thirty trading day period reaches certain levels,
namely $20.00, $25.00 and $30.00 per share. During the past two years, the
Committee's policy has been to award performance based restricted stock and
stock option grants in greater numbers than preceding years in order to
more closely align the interests of management with those of stockholders
and to attract and retain executives during a period when the Company has
been undergoing an operating and financial turnaround.
The Committee has not adopted a policy on the tax law disallowing
deductions on compensation in excess of $1 million for certain executives of
public companies. The Company believes that options and performance based
restricted stock awards granted under its stock incentive plans are exempt from
the limitation and that other compensation expected to be paid during 1997 will
be below the compensation limitation.
Leadership and Compensation Committee
James F. Orr III, Chairman
Charles S. Hoppin
John M. Kucharski
11
<PAGE> 13
PERFORMANCE GRAPHS
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's common stock against
the cumulative total return of the S&P 500 Index and a composite peer group for
the five years commencing December 31, 1991 and ending December 31, 1996. The
Company selected a peer group because, offering a diverse mix of products and
services, it did not believe that published industry or line-of-business indices
provided an adequate measure for comparison to the Company as a whole.
The Company's products and services include facsimile and thermal papers,
pressure sensitive labels, specialty papers, copier and laser printer supplies
and photofinishing services. In constructing a composite peer group, the Company
selected published indices to represent various products and, because no
published photofinishing index was available, has selected a peer group for that
segment. The indices are: for facsimile and thermal papers, pressure sensitive
labels and specialty papers -- the S&P Paper and Forest Products Index and for
copier and laser printer supplies -- the S&P Office Equipment & Supplies Index.
As peer companies in the photofinishing segment, the Company selected Eastman
Kodak Company and Seattle Filmworks, Inc. and weighted them by market
capitalization. The Company then weighted the two indices and photofinishing
peer group in proportion to the 1996 revenues of Nashua's products and services
represented by the respective indices and peer group.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Nashua Corporation Composite Peer Group S&P 500 Index
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 126.25 107.62 103.19
1993 125.61 118.45 128.66
1994 96.52 120.01 137.65
1995 66.12 165.11 185.51
1996 58.23 203.02 224.37
</TABLE>
12
<PAGE> 14
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the number of shares and percentage of Nashua's
common stock deemed to be beneficially owned by each director and nominee for
director, each executive officer named in the Summary Compensation Table above
and by all directors and officers of Nashua as a group, as of March 25, 1997:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF SHARES
NAME BENEFICIAL OWNERSHIP(A) OUTSTANDING
- ------------------------------------------------- ----------------------- -----------------
<S> <C> <C>
Sheldon A. Buckler............................... 5,937(b) *
Robin J. T. Clabburn............................. 48,814(c)(d) *
Gerald G. Garbacz................................ 132,848(e)(k) 2.0
Charles S. Hoppin................................ 6,937(b) *
Michael D. Jeans................................. 65,000(f)(g) *
Daniel M. Junius................................. 46,689(c)(h)(k) *
John M. Kucharski................................ 7,437(b) *
David C. Miller, Jr.............................. 1,937(b) *
Peter J. Murphy.................................. 0 --
James F. Orr III................................. 8,937(b) *
Charles E. Turnbull.............................. 69,000(c)(i) 1.0
Directors and Officers as a group (21 persons)... 552,510(j)(k)(l) 8.3
</TABLE>
*Less than 1%
(a) Information as to the interests of the respective nominees has been
furnished in part by them. The inclusion of information concerning shares
held by or for their spouses or children or by corporations in which they
have an interest does not constitute an admission by such nominees of
beneficial ownership thereof. Unless otherwise indicated, all persons have
sole voting and dispositive power as to all shares they are shown as owning.
(b) Includes shares each non-employee director has a right to acquire through
the exercise of stock options as of May 31, 1997 - Mr. Buckler, 2,000
shares; Mr. Hoppin, 4,000 shares; Mr. Kucharski, 4,000 shares; Mr. Miller,
1,000 shares; and Mr. Orr, 4,000 shares.
(c) Includes 25,000 shares of performance based restricted stock, 8,333 shares
of which will vest when the average closing price over a 30 trading day
period of Nashua shares (the "average closing price") reaches $20.00; 8,333
shares of which will vest when the average closing price reaches $25.00; and
8,334 shares of which will vest when the average closing price reaches
$30.00. However, any shares which have not vested upon the earlier of (i)
December 15, 2000 or (ii) termination of employment, will be forfeited.
(d) Includes 20,000 shares Mr. Clabburn has a right to acquire through the
exercise of stock options as of May 31, 1997.
(e) Includes 120,000 shares of performance based restricted stock, 40,000 shares
of which will vest when the average closing price reaches $20.00; 40,000
shares of which will vest when the average closing price reaches $25.00; and
40,000 shares of which will vest when the average closing price reaches
$30.00. However, any shares which have not vested upon the earlier of (i)
December 18, 2000 or (ii) termination of employment, will be forfeited.
(f) Includes 40,000 shares Mr. Jeans has a right to acquire through the exercise
of stock options as of May 31, 1997.
13
<PAGE> 15
(g) Includes 25,000 shares of performance based restricted stock, 8,333 shares
of which will vest when the average closing price reaches $20.00; 8,333
shares of which will vest when the average closing price reaches $25.00; and
8,334 shares of which will vest when the average closing price reaches
$30.00. However, any shares which have not vested upon the earlier of (i)
April 22, 2001 or (ii) termination of employment, will be forfeited.
(h) Includes 16,300 shares Mr. Junius has a right to acquire through the
exercise of stock options as of May 31, 1997.
(i) Includes 40,000 shares Mr. Turnbull has a right to acquire through the
exercise of stock options as of May 31, 1997.
(j) Includes 250,350 shares which the directors and officers of Nashua have the
right to acquire through exercises of stock options as of May 31, 1997.
(k) Includes shares held in trust under the Employees' Savings Plan under which
the participating employee has voting power as to the shares in his account.
As of December 31, 1996, 348 shares are held in trust for Mr. Garbacz's
account; 3,652 shares are held in trust for Mr. Junius' account; and 14,554
shares are held in trust for the accounts of all directors and officers as a
group. No director other than Mr. Garbacz participates in the Plan.
(l) Includes 245,000 shares of performance based restricted stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows the number of shares and percentage of Nashua's
common stock beneficially owned by all persons known to Nashua to be the
beneficial owners of more than 5% of its common stock, as of March 25, 1997:
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF BENEFICIAL COMMON STOCK
NAME OF BENEFICIAL OWNER OWNERSHIP OUTSTANDING
- ------------------------------------------------------------- -------------------- ------------
<S> <C> <C>
Gabelli Funds, Inc./GAMCO Investors, Inc./Gabelli............ 637,800(b) 9.63%
International Limited/Gabelli International II Limited/
Gabelli Performance Partnership L.P./Mario J. Gabelli(a)
One Corporate Center, Rye, NY 10580
The TCW Group, Inc./Robert Day(c)............................ 431,600(d) 6.52%
865 South Figueroa Street, Los Angeles, CA 90017
Gouws Capital Management, Inc.(e)............................ 367,735(f) 5.55%
511 Congress Street, Portland, ME 04101
GeoCapital Corporation(g).................................... 355,800(h) 5.37%
767 Fifth Avenue, New York, NY 10153
Pioneering Management Corporation(i)......................... 348,800(j) 5.27%
60 State Street, Boston, MA 02109
Capital Technology, Inc.(k).................................. 332,000 5.01%
8314 Pineville-Matthews Road, Suite 295 Charlotte, NC 28247
</TABLE>
- ---------------
(a) Information is based on a joint Schedule 13D (Amendment No. 9) dated
February 5, 1997, furnished by such beneficial owners which are affiliated
with one another.
14
<PAGE> 16
(b) Gabelli Funds, Inc. owns 292,500 shares for which it has sole voting power
and sole dispositive power. GAMCO Investors, Inc. owns 311,800 shares, for
which it has sole voting power and sole dispositive power. Gabelli
Performance Partnership L.P. owns 15,000 shares for which it has sole
voting power and sole dispositive power. Gabelli International Limited owns
12,000 shares for which it has sole voting power and sole dispositive
power. Gabelli International II Limited owns 6,500 shares for which it has
sole voting power and sole dispositive power.
(c) Information is based on Schedule 13G (Amendment No. 1), dated February 12,
1997, furnished by such beneficial owners.
(d) Sole voting power and sole dispositive power.
(e) Information is based on Schedule 13G (Amendment No. 1), dated February 5,
1997, furnished by such beneficial owner.
(f) Sole voting power as to 41,127 shares and sole dispositive power as to
367,735 shares.
(g) Information is based on Schedule 13G, dated February 15, 1997, furnished by
such beneficial owner.
(h) Sole dispositive power only.
(i) Information is based on Schedule 13G, dated January 23, 1997, furnished by
such beneficial owner.
(j) Sole voting power as to 348,800 shares, sole dispositive power as to 32,800
shares and shared dispositive power as to 316,000 shares.
(k) Information is based upon a general review of an ownership summary of
Nashua provided by Disclosure Information Group's retrieval database
services. Such information is insufficient to determine whether the
beneficial owner has sole voting or dispositive powers.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, Nashua's independent accountants for the year 1996,
are also Nashua's independent accountants for the year 1997. Representatives of
Price Waterhouse LLP are expected to be present at the stockholders' meeting
with the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Any stockholder proposal which is to be included in the proxy materials for
the 1998 annual meeting must be received by Nashua on or before November 25,
1997. Such proposals should be directed to Nashua Corporation, 44 Franklin
Street, P.O. Box 2002, Nashua, New Hampshire 03061-2002, Attention: Suzanne L.
Ansara, Assistant Secretary.
15
<PAGE> 17
MISCELLANEOUS
The Board of Directors does not presently know of any other matters to be
presented to the annual meeting. If any other matters are brought before the
annual meeting, or any adjournment thereof, it is the intention of the persons
named in the accompanying form of proxy to vote the proxies on such matters in
accordance with their best judgment, pursuant to the discretionary authority
granted by the proxy.
The cost of solicitation of proxies will be borne by Nashua. In addition to
the use of the mails, proxies may be solicited by officers and regular employees
of Nashua, without extra compensation, by telephone or by other means of
communication. Nashua will reimburse banks, brokers or other similar agents or
fiduciaries for forwarding proxy material to beneficial owners of common stock.
Nashua has also retained Morrow & Co., Inc. to aid in the solicitation of
proxies by personal interview, or by telephone or by other means of
communication. Nashua anticipates that the cost of such service will not exceed
$7,500.
Nashua will provide free of charge to any stockholder from whom a proxy is
solicited pursuant to this proxy statement, upon written request from such
stockholder, a copy of Nashua's annual report filed with the Securities and
Exchange Commission on Form 10-K for Nashua's fiscal year ended December 31,
1996. Requests for such report should be directed to Nashua Corporation, 44
Franklin Street, P.O. Box 2002, Nashua, New Hampshire 03061-2002, Attention:
Suzanne L. Ansara, Assistant Secretary.
PAUL BUFFUM
Vice President, General
Counsel and Secretary
Nashua, New Hampshire
March 25, 1997
16
<PAGE> 18
NASHUA CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - APRIL 25, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) PAUL BUFFUM, DANIEL M. JUNIUS and
P BRUCE T. WRIGHT and each of them attorneys or attorney of the undersigned
(with full power of substitution in them and in each of them), for and in
R the name(s) of the undersigned to vote and act at the annual meeting of
the stockholders of Nashua Corporation, to be held at the Crowne Plaza, 2
O Somerset Parkway, Nashua, New Hampshire, on April 25, 1997 at 10:00 a.m.,
or any adjournment thereof, upon or in respect of all shares of stock of
X Nashua Corporation upon or in respect of which the undersigned would be
entitled to vote or act, and with all the powers the undersigned would
Y possess, if personally present, upon all matters which may properly come
before said meeting, as described in the Proxy Statement and Notice dated
March 25, 1997, receipt of which is hereby acknowledged.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED IN PROPOSAL 1 AS MORE SPECIFICALLY SET FORTH IN THE
PROXY STATEMENT; IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE
VOTED IN ACCORDANCE THEREWITH.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES NAMED IN
PROPOSAL 1.
In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting or any adjournment
thereof.
-----------
SEE REVERSE
CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE SIDE
-----------
<PAGE> 19
Please mark
[X] votes as in
this example.
NOTE: Signature should be exactly as name appears on imprint. If stock is
registered in the names of two or more persons as joint owners, trustees or
otherwise, the proxy should be personally signed by each of them or
accompanied by proof of authority of less than all to act. In the case of
executors, administrators, trustees, guardians and attorneys, unless the
stock is registered in their names, proof of authority should accompany this
proxy.
1. Election of Directors
NOMINEES: Sheldon A. Buckler, Gerald G. Garbacz, Charles S.
Hoppin, John M. Kucharski, David C. Miller, Jr., Peter J. Murphy
James F. Orr III.
FOR WITHHELD
[ ] [ ]
[ ]
----------------------------------------
For all nominees except as noted above
MARK HERE
FOR ADDRESS [ ]
CHANGE AND
NOTE AT LEFT
PLEASE FILL IN DATE, SIGN AND MAIL THIS PROXY IN THE
ENCLOSED POST PAID RETURN ENVELOPE.
Signature: Date: Signature: Date:
----------------- ------- ----------------- -------
