<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 [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
[ ] 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)
Nashua Corporation
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] 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:
- --------------------------------------------------------------------------------
<PAGE> 2
NASHUA CORPORATION
44 FRANKLIN STREET
NASHUA, NEW HAMPSHIRE 03060
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 30, 1999
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 30, 1999 at 10:00 a.m., for the following purposes:
1. To elect a Board of Directors for the ensuing year.
2. To approve the 1999 Shareholder Value Plan.
3. 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 23, 1999,
as the record date for determining the stockholders having the right to notice
of and to vote at the meeting.
PETER C. ANASTOS
Vice President, General
Counsel and Secretary
March 24, 1999
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 30, 1999, 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 26, 1999.
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 23, 1999, are entitled
to vote at the annual meeting and at any adjournment thereof. As of the close of
business on such date, there were 6,084,159 shares of common stock outstanding
(excluding 853,238 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 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 to approve all matters to be acted upon at the
meeting. Accordingly, a vote that is expressly withheld on a particular matter
will be treated as present and entitled to vote 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.
1
<PAGE> 4
The following table sets forth for each nominee his name, age, length of
service as a director, position now held with Nashua, principal occupation and
business experience for the last five years, and the names of other companies of
which he serves as a director:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE BUSINESS EXPERIENCE
---- --- -------- -------------------
<S> <C> <C> <C>
Sheldon A. Buckler(a)(c)(d)... 67 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 1993 until his
retirement in 1994. He is also a Director of Aseco
Corporation, Parlex Corporation and Lord Corporation.
Gerald G. Garbacz............. 62 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 prior to 1993 to 1994.
Charles S. Hoppin (a)(c)...... 67 1979 Mr. Hoppin has been Senior Counsel to the law firm of Davis
Polk & Wardwell since January 1999. He was a partner of
Davis Polk & Wardwell from prior to 1994 through December
1998.
John M. Kucharski (a)(b)...... 63 1988 Mr. Kucharski has been Chairman of the Board of EG&G, Inc.
(technical and scientific products and services) since
prior to 1994. He was Chief Executive Officer from prior to
1994 through December 1998 and President from prior to 1994
until February 2, 1998. He is also a Director of New
England Electric System and State Street Boston
Corporation.
David C. Miller, Jr. (b)(c)... 56 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. He is
also President of the Corporate Council on Africa and a
Director of Georgetown University's Institute for the Study
of Diplomacy.
Peter J. Murphy (a)(b)........ 50 1997 Mr. Murphy has been Chief Executive Officer of Parlex
Corporation (electrical components) since July 1997,
President since July 1995 and a Director since March 1994.
He was Chief Operating Officer from May 1994 to July 1997,
Executive Vice President from May 1994 to July 1995, and
Vice President and General Manager, Flexible Circuit
Products Division from prior to 1994 until May 1994.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE BUSINESS EXPERIENCE
---- --- -------- -------------------
<S> <C> <C> <C>
James F. Orr III (b)(c)....... 56 1989 Mr. Orr has been Chairman of the Board, Chief Executive
Officer and President of UNUM Corporation (insurance) since
prior to 1994.
</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
Dr. Buckler as 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 committees of the Board of
Directors are:
AUDIT/FINANCE AND INVESTMENT COMMITTEE
The Audit/Finance and Investment Committee 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 1998.
LEADERSHIP AND COMPENSATION COMMITTEE
The Leadership and Compensation 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 senior management
compensation. The Leadership and Compensation Committee held two meetings in
1998.
GOVERNANCE COMMITTEE
The Governance 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, nomination of candidates for election to
the Board, assignments to Board committees, and recommendations for improving
governance processes of the Board. The Governance Committee held one meeting in
1998.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
During 1998, the Board of Directors held six regular meetings and three
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.
3
<PAGE> 6
COMPENSATION OF DIRECTORS
Directors of Nashua, except employees 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 in cash.
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.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the annual and long-term compensation paid
to Nashua's Chief Executive Officer and four most highly paid executive officers
in 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------------------- -------------------------------
PERFORMANCE
BASED
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS(1) OPTIONS COMPENSATION(2)
--------------------------- ---- ------ ----- ------------ ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gerald G. Garbacz................. 1998 $384,596 -- -- $ 400,000(3) -- $20,342
Chairman, President 1997 $410,000 -- -- -- 90,000 $16,262
and Chief Executive Officer 1996 $400,538 $240,000 $173,920(4) $1,680,000(5) -- $10,831
John J. Ireland(6)................ 1998 $199,154 $144,520 -- $ 223,750(7)(8) -- $ 5,290
Vice President 1997 $190,000 $ 38,000 -- -- 15,000 $ 4,260
Specialty Coated Products
Division
Joseph I. Gonzalez-Rivas(6)....... 1998 $198,693 -- -- $ 160,000(8) -- $ 4,553
Vice President
Imaging Supplies Division
Eugene P. Pache(6)................ 1998 $174,697 $ 69,831 $ 5,945(4) $ 160,000(8) -- $ 5,376
Vice President 1997 $165,000 $ 33,000 $ 10,050(4) $ 62,500(9) 15,000 $ 4,570
Label Products Division
John L. Patenaude(6).............. 1998 $156,058 $ 38,426(10) -- $ 326,250(8)(11) -- $ 4,393
Vice President-Finance,
Chief Financial Officer
and Treasurer
</TABLE>
- ---------------
(1) Market value of performance based restricted shares on the date of grant.
As of December 31, 1998, the market value (closing price on the New York
Stock Exchange of Nashua's common stock -- $13.3125) and number of
performance based restricted shares were: Mr. Garbacz -- $1,930,313
(145,000 shares); Mr. Ireland -- $199,688 (15,000 shares); Mr.
Gonzalez-Rivas -- $199,688 (15,000 shares); Mr. Pache -- $199,688 (15,000
shares); and Mr. Patenaude -- $266,250 (20,000 shares).
4
<PAGE> 7
(2) The amounts listed are for Company contributions to the Employees' Savings
Plan, life insurance income and cash payments in lieu of medical benefits.
In 1998, these amounts were:
(a) as to the Employees' Savings Plan -- Mr. Garbacz, $3,500; Mr. Ireland,
$3,000; Mr. Gonzalez-Rivas, $3,500; Mr. Pache, $3,500; and Mr.
Patenaude, $3,401.
(b) as to life insurance income -- Mr. Garbacz, $16,062; Mr. Ireland,
$2,290; Mr. Gonzalez-Rivas, $1,053; Mr. Pache, $1,876; and Mr.
Patenaude, $992.
(c) as to cash payments in lieu of medical benefits -- Mr. Garbacz, $780.
(3) Includes 25,000 shares of performance based restricted stock (granted when
the price of Nashua shares was $16.00), 12,500 shares of which will vest
when the average closing price over a ten trading day period of Nashua
shares (the "Ten Day Average Closing Price") reaches $21.00; and 12,500
shares of which will vest when the Ten Day Average Closing Price reaches
$23.00. However, any shares which have not vested upon the earlier of (i)
December 15, 2003 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.
(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), 60,000 shares of which will vest
when the Ten Day Average Closing Price reaches $19.00; and 60,000 shares of
which will vest when the Ten Day Average Closing Price reaches $21.00.
However, any shares which have not vested upon the earlier of (i) October
24, 2002 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.
(6) Messrs. Ireland, Gonzalez-Rivas and Pache became executive officers in
September 1997. Mr. Patenaude became an executive officer in May 1998.
(7) Includes 5,000 shares of performance based restricted stock (granted when
the price of Nashua shares was $12.75), 2,500 shares of which will vest
when the Ten Day Average Closing Price reaches $18.00; and 2,500 shares of
which will vest when the Ten Day Average Closing Price reaches $20.00.
However, any shares which have not vested upon the earlier of (i) February
25, 2003 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) Includes 10,000 shares of performance based restricted stock (granted when
the price of Nashua shares was $16.00), 5,000 shares of which will vest
when the Ten Day Average Closing Price reaches $21.00; and 5,000 shares of
which will vest when the Ten Day Average Closing Price reaches $23.00.
However, any shares which have not vested upon the earlier of (i) December
15, 2003 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.
(9) Includes 5,000 shares of performance based restricted stock (granted when
the price of Nashua shares was $12.50), 2,500 shares of which will vest
when the Ten Day Average Closing Price reaches $18.00; and 2,500 shares of
which will vest when the Ten Day Average Closing Price reaches $20.00.
However, any shares which have not vested upon the earlier of (i) December
16, 2002 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.
(10) Includes market value of performance based restricted stock as of the date
the performance target was met and such stock was acquired.
(11) Includes 10,000 shares of performance based restricted stock (granted when
the price of Nashua shares was $16.625), 5,000 shares of which will vest
when the Ten Day Average Closing Price reaches $19.00;
5
<PAGE> 8
and 5,000 shares of which will vest when the Ten Day Average Closing Price
reaches $21.00. However, any shares which have not vested upon the earlier
of (i) May 12, 2003 or (ii) termination of employment, will be forfeited.
Dividends, if any, will accumulate on such performance based restricted
stock and be paid when and if the underlying shares vest.
STOCK OPTIONS
There were no stock option grants to the individuals listed in the Summary
Compensation Table in 1998.
The following table sets forth information regarding stock options held at
the end of 1998 by the individuals listed in the Summary Compensation Table:
AGGREGATED OPTION EXERCISES IN 1998 AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED,
UNDERLYING UNEXERCISED IN-THE-MONEY, OPTIONS AT
OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gerald G. Garbacz........... 0 0 90,000 0 $ 80,625 0
John J. Ireland............. 0 0 33,500 0 $ 14,063 0
Joseph I. Gonzalez-Rivas.... 30,000 $206,875(2) 40,000 20,000 $120,001 $73,751
Eugene P. Pache............. 15,000 $ 53,313(3) 18,500 0 0 0
John L. Patenaude........... 0 0 14,500 0 $ 5,282 0
</TABLE>
- ---------------
(1) Represents the difference between the closing price on the New York Stock
Exchange of Nashua's common stock on December 31, 1998 ($13.3125) and the
exercise price of the options, multiplied by the number of shares subject to
such options.
(2) Represents the difference between the closing price on the New York Stock
Exchange of Nashua's common stock on the date of exercise ($16.3125 as to
10,000 shares, $16.50 as to 10,000 shares and $16.75 as to 10,000 shares)
and the exercise price of the options, multiplied by the number of shares
subject to such options.
(3) Represents the difference between the closing price on the New York Stock
Exchange of Nashua's common stock on the date of exercise ($16.00 as to
6,500 shares and $15.875 as to 8,500 shares) and the exercise price of the
options, multiplied by the number of shares subject to such options.
6
<PAGE> 9
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, 1994 25 OR
TO RETIREMENT 5 YEARS 10 YEARS 15 YEARS 20 YEARS MORE YEARS
----------------- -------- -------- -------- -------- ----------
<S> <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, 1998, the individuals listed in the
Summary Compensation Table had the following years of service credited under the
Retirement Plan: Mr. Garbacz, 3 years; Mr. Ireland, 4.5 years; Mr.
Gonzalez-Rivas, 2.5 years; Mr. Pache, 4.5 years; and Mr. Patenaude, 7 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 who began their credited service before age
40 and terminate employment with Nashua before 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, Ireland,
Gonzalez-Rivas, Pache and Patenaude.
SEVERANCE AGREEMENTS
The Company has entered into severance agreements with Messrs. Garbacz,
Ireland, Gonzalez-Rivas, Pache and Patenaude in order to ensure their continued
service to Nashua in the event of a change in control of Nashua, or, with
respect to Messrs. Ireland, Gonzalez-Rivas and Pache, in the event of the sale
of the divisions for which they have operating responsibility. Such severance
agreements provide that upon termination of employment under certain
circumstances within three years of a change in control of Nashua, the employee
would receive severance pay equal to three times the sum of his annual salary
and bonus in the case of Messrs. Garbacz and Patenaude, or the sum of two year's
annual salary and bonus in the case of
7
<PAGE> 10
Mr. Gonzalez-Rivas, or the sum of one year's annual salary and bonus in the case
of Messrs. Ireland and Pache. In addition, each of Messrs. Garbacz, Ireland,
Gonzalez-Rivas, Pache and Patenaude can terminate his employment after a change
in control of Nashua and receive such severance pay if he determines in good
faith that any assignment of duties is inconsistent with his duties prior to a
change of control or certain action by the Company results in a diminution in
position, duties, authority or responsibilities. In the event of a sale of their
divisions, Messrs. Ireland and Pache would receive severance pay equal to one
year's annual salary and bonus and Mr. Gonzalez-Rivas would receive severance
pay equal to two year's annual salary and bonus. If the employment of any of
Messrs. Garbacz, Ireland, Gonzalez-Rivas, Pache or Patenaude is terminated by
the Company apart from the circumstances above for reasons other than
misconduct, the executive would receive one year's salary. In addition, the
agreements provide for the continuation for specified periods of certain other
benefits upon severance.
THE LEADERSHIP AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Leadership and Compensation 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 key managers and succession to their positions and
deciding on top management compensation. The Committee administers the
Management Incentive 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 1998 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. As a
result of the sale of the Company's Photofinishing Group in April 1998, the
Committee reduced the Chief Executive Officer's salary to place his salary
in line with salaries for chief executive officers at comparable sized
companies. The Committee also tied his overall compensation heavily to
stock performance by awarding him 25,000 shares of performance based
restricted stock. The base salaries for the four Vice Presidents listed in
the Summary Compensation Table are competitive with the base salaries for
similar positions included in the 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 Incentive 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 1998 were based on
the Company's pretax operating income budget and personal performance
objectives. For the Vice Presidents in charge of operating units, award
targets were based on the respective unit's pretax operating income budget.
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. The Committee's policy has been to award
performance-based
8
<PAGE> 11
restricted stock and stock option grants 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
significant operational changes.
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 1999 will
be below the compensation limitation.
Leadership and Compensation
Committee
James F. Orr III, Chairman
John M. Kucharski
David C. Miller, Jr.
Peter J. Murphy
9
<PAGE> 12
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, 1993 and ending December 31, 1998. A peer
group comparison is used because, offering a diverse mix of products and
services, the Company did not believe that a single industry or line-of-business
index provided an adequate measure for comparison to the Company as a whole.
The Company's products and services include thermal papers, thermosensitive
and pressure sensitive labels, and specialty papers, as well as toners,
developers and remanufactured laser printer cartridges. In constructing a
composite peer group, the Company selected published indices to represent
various products. The indices are: for thermal papers, thermosensitive and
pressure sensitive labels and specialty papers - the S&P Paper and Forest
Products Index, and for toners, developers and remanufactured laser printer
cartridges - the S&P Office Equipment & Supplies Index. The Company then
weighted the two indices in proportion to the 1998 revenues of Nashua's products
and services represented by the respective indices.
In April 1998, the Company sold its Photofinishing Group. Accordingly, the
Company did not use in the presentation of this year's performance graph the
peer companies, Eastman Kodak Company and Seattle Filmworks, Inc.,
representative of the Company's former Photofinishing Group as was used in last
year's proxy statement.
<TABLE>
<CAPTION>
NASHUA CORPORATION S&P 500 INDEX COMPOSITE PEER GROUP
------------------ ------------- --------------------
<S> <C> <C> <C>
'1993' 100.00 100.00 100.00
'1994' 76.84 101.32 103.60
'1995' 52.64 139.40 125.22
'1996' 46.36 171.40 146.18
'1997' 44.91 228.58 184.61
'1998' 51.43 293.91 226.65
</TABLE>
10
<PAGE> 13
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 listed in the Summary Compensation Table above
and by all directors and executive officers of Nashua as a group, as of March
23, 1999:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF SHARES
NAME BENEFICIAL OWNERSHIP(1) OUTSTANDING
---- ----------------------- -----------------
<S> <C> <C>
Sheldon A. Buckler.............................. 10,194(2) *
Gerald G. Garbacz............................... 266,447(3)(9) 4.4%
Joseph I. Gonzalez-Rivas........................ 76,000(4) 1.2%
Charles S. Hoppin............................... 11,194(2) *
John J. Ireland................................. 49,140(5)(9) *
John M. Kucharski............................... 11,694(2) *
David C. Miller, Jr............................. 6,194(2) *
Peter J. Murphy................................. 4,257(2) *
James F. Orr III................................ 13,194(2) *
Eugene P. Pache................................. 33,500(6) *
John L. Patenaude............................... 36,674(7)(9) *
Directors and Executive Officers as a group (14
persons)...................................... 658,456(8)(9)(10) 10.8%
</TABLE>
- ---------------
* Less than 1%
(1) 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.
(2) Includes shares each non-employee director has a right to acquire through
the exercise of stock options as of May 31, 1999 - Mr. Buckler, 4,000
shares; Mr. Hoppin, 6,000 shares; Mr. Kucharski, 6,000 shares; Mr. Miller,
3,000 shares; Mr. Murphy, 2,000 shares; and Mr. Orr, 6,000 shares.
(3) Includes 90,000 shares Mr. Garbacz has a right to acquire through the
exercise of stock options as of May 31, 1999. Also includes 120,000 shares
of performance based restricted stock, 60,000 shares of which will vest
when the average closing price over a ten trading day period of Nashua
shares (the "Ten Day Average Closing Price") reaches $19.00; and 60,000
shares of which will vest when the Ten Day Average Closing Price reaches
$21.00. However, any shares which have not vested upon the earlier of (i)
October 24, 2002 or (ii) termination of employment, will be forfeited. Also
includes 25,000 shares of performance based restricted stock, 12,500 shares
of which will vest when the Ten Day Average Closing Price reaches $21.00;
and 12,500 shares of which will vest when the Ten Day Average Closing Price
reaches $23.00. However, any shares which have not vested upon the earlier
of (i) December 15, 2003 or (ii) termination of employment, will be
forfeited.
(4) Includes 60,000 shares Mr. Gonzalez-Rivas has a right to acquire through
the exercise of stock options as of May 31, 1999. Also includes 5,000
shares of performance based restricted stock, 2,500 shares of which will
vest when the Ten Day Average Closing Price reaches $18.00; and 2,500
shares of which will vest when the Ten Day Average Closing Price reaches
$20.00. However, any shares which have not vested upon the earlier of (i)
December 16, 2002 or (ii) termination of employment, will be forfeited.
Also includes 10,000 shares of performance based restricted stock, 5,000
shares of which will vest when the Ten Day Average Closing Price reaches
$21.00; and 5,000 shares of which will vest when the Ten
11
<PAGE> 14
Day Average Closing Price reaches $23.00. However, any shares which have
not vested upon the earlier of (i) December 15, 2003 or (ii) termination of
employment, will be forfeited.
(5) Includes 33,500 shares Mr. Ireland has a right to acquire through the
exercise of stock options as of May 31, 1999. Also includes 5,000 shares of
performance based restricted stock, 2,500 shares of which will vest when
the Ten Day Average Closing Price reaches $18.00; and 2,500 shares of which
will vest when the Ten Day Average Closing Price reaches $20.00. However,
any shares which have not vested upon the earlier of (i) February 25, 2003
or (ii) termination of employment, will be forfeited. Also includes 10,000
shares of performance based restricted stock, 5,000 shares of which will
vest when the Ten Day Average Closing Price reaches $21.00; and 5,000
shares of which will vest when the Ten Day Average Closing Price reaches
$23.00. However, any shares which have not vested upon the earlier of (i)
December 15, 2003 or (ii) termination of employment, will be forfeited.
(6) Includes 18,500 shares Mr. Pache has a right to acquire through the
exercise of stock options as of May 31, 1999. Also includes 5,000 shares of
performance based restricted stock, 2,500 shares of which will vest when
the Ten Day Average Closing Price reaches $18.00; and 2,500 shares of which
will vest when the Ten Day Average Closing Price reaches $20.00. However,
any shares which have not vested upon the earlier of (i) December 16, 2002
or (ii) termination of employment, will be forfeited. Also includes 10,000
shares of performance based restricted stock, 5,000 shares of which will
vest when the Ten Day Average Closing Price reaches $21.00; and 5,000
shares of which will vest when the Ten Day Average Closing Price reaches
$23.00. However, any shares which have not vested upon the earlier of (i)
December 15, 2003 or (ii) termination of employment, will be forfeited.
(7) Includes 14,500 shares Mr. Patenaude has a right to acquire through the
exercise of stock options as of May 31, 1999. Also includes 10,000 shares
of performance based restricted stock, 5,000 shares of which will vest when
the Ten Day Average Closing Price reaches $19.00; and 5,000 shares of which
will vest when the Ten Day Average Closing Price reaches $21.00. However,
any shares which have not vested upon the earlier of (i) May 12, 2003 or
(ii) termination of employment, will be forfeited. Also includes 10,000
shares of performance based restricted stock, 5,000 shares of which will
vest when the Ten Day Average Closing Price reaches $21.00; and 5,000
shares of which will vest when the Ten Day Average Closing Price reaches
$23.00. However, any shares which have not vested upon the earlier of (i)
December 15, 2003 or (ii) termination of employment, will be forfeited.
(8) Includes 310,400 shares which the directors and executive officers of
Nashua have the right to acquire through exercises of stock options as of
May 31, 1999.
(9) Includes shares held in trust under the Employee's Savings Plan under which
the participating employee has voting power as to the shares in his
account. As of December 31, 1998, 1,447 shares are held in trust for Mr.
Garbacz's account; 640 shares are held in trust for Mr. Ireland's account;
1,174 shares are held in trust for Mr. Patenaude's account; and 5,629
shares are held in trust for the accounts of all directors and executive
officers as a group. No director other than Mr. Garbacz participates in the
Plan.
(10) Includes 280,000 shares of performance based restricted stock.
12
<PAGE> 15
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 23, 1999:
<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 1,290,899(b) 21.2%(c)
International Limited/Gabelli International II Limited/
Gabelli Performance Partnership L.P./Gabelli Advisers,
Inc./Marc J. Gabelli/Mario J. Gabelli(a)..................
One Corporate Center, Rye, NY 10580
Pioneer Investment Management, Inc. (a/k/a Pioneering
Management Corp.)(d)...................................... 646,900(e) 10.6%
60 State Street, Boston, MA 02109
David L. Babson and Company Incorporated (f)................ 594,320(e) 9.8%
One Memorial Drive, Cambridge, MA 02142-1300
The TCW Group, Inc./Robert Day (g).......................... 511,200(h) 8.4%
865 South Figueroa Street, Los Angeles, CA 90017
Franklin Resources, Inc./Charles B. Johnson/Rupert H. 442,000(j) 7.3%
Johnson, Jr./Franklin Advisory Services, Inc.(i)..........
777 Mariners Island Boulevard, San Mateo, CA 94404
Dimensional Fund Advisors Inc.(k)........................... 418,200(l) 6.9%
1299 Ocean Avenue, Santa Monica, CA 90401
</TABLE>
- ---------------
(a) Information is based on a joint Schedule 13D (Amendment No. 17) dated
February 9, 1999, furnished by such beneficial owners which are affiliated
with one another ("Gabelli Schedule 13D") and a letter dated March 3, 1999
from Gabelli Funds, Inc. (the "Gabelli Letter").
(b) Pursuant to the Gabelli Schedule 13D, Gabelli Funds, Inc. owns 356,000
shares for which it has sole voting power and sole dispositive power, GAMCO
Investors, Inc. owns 913,899 shares, for which it has sole voting power as
to 910,899 shares and sole dispositive power, Gabelli International II
Limited owns 15,000 shares for which it has sole voting power and sole
dispositive power and Gabelli Advisers, Inc. owns 6,000 shares for which it
has sole voting power and sole dispositive power (collectively "Gabelli").
According to the Gabelli Letter, such holdings in the aggregate will be
reduced as promptly as practicable below 20% of the Company's outstanding
common stock calculated as of February 25, 1999, or 6,191,259 shares.
(c) Based on information in the Gabelli Letter, the Company's Board of Directors
determined that Gabelli's recent acquisition of common stock bringing its
holdings to more than 20% of Nashua's outstanding shares was inadvertent and
that, accordingly, Gabelli would not be deemed an "Acquiring Person" as that
term is defined in the Company's 1996 Rights Plan for any purposes under
said plan, provided that it divests such holdings as promptly as practicable
below 20% of the total outstanding common stock as of February 25, 1999, or
6,191,259 shares, as the Gabelli Letter states that Gabelli will do.
(d) Information is based on Schedule 13G (Amendment No. 1), dated December 1,
1998, furnished by such beneficial owner.
(e) Sole voting power and sole dispositive power.
(f) Information is based on Schedule 13G dated February 3, 1999, furnished by
such beneficial owner.
13
<PAGE> 16
(g) Information is based on Schedule 13G (Amendment No. 3), dated February 12,
1999, furnished by such beneficial owners.
(h) Shared voting power and shared dispositive power.
(i) Information is based on Schedule 13G (Amendment No. 1) dated January 28,
1999, furnished by such beneficial owners.
(j) Franklin Advisory Services, Inc. has sole voting power and sole dispositive
power.
(k) Information is based on Schedule 13G dated February 11, 1999, furnished by
such beneficial owner.
(l) Sole voting power and sole dispositive power. Dimensional Fund Advisors Inc.
("Dimensional"), an investment advisor registered under Section 203 of the
Investment Advisors Act of 1940, furnishes investment advice to four
investment companies registered under the Investment Company Act of 1940,
and serves as investment manager to certain other investment vehicles,
including commingled group trusts. (These investment companies and
investment vehicles are the "Portfolios"). In its role as investment advisor
and investment manager, Dimensional possesses both voting and investment
power over the securities of Nashua that are owned by the Portfolios. These
securities are owned by the Portfolios. Dimensional disclaims beneficial
ownership of such securities.
APPROVAL OF THE 1999 SHAREHOLDER VALUE PLAN
The Board of Directors has adopted, subject to stockholder approval, a new
1999 Shareholder Value Plan (the "1999 Plan"). Presently, 53,873 shares are
reserved for future awards under Nashua's 1996 Stock Incentive Plan (the
"Existing Plan"). In addition, 469,000 shares are reserved for past awards under
the Existing Plan. Under the Existing Plan, shares subject to awards that lapse
or are forfeited are available for reissuance. The Existing Plan will not be
affected if the 1999 Plan is approved by the Shareholders.
The full text of the 1999 Plan is set forth in Appendix A hereto. Some of
its more important features are summarized as follows:
Purpose. The purpose of the 1999 Plan is to advance the interests of the
Company's stockholders by enhancing the Company's ability to attract, retain and
motivate persons who make (or are expected to make) important contributions to
the Company by providing such persons with equity ownership opportunities and
performance based incentives and thereby better aligning the interests of such
persons with those of the Company's stockholders.
Administration. The 1999 Plan is administered by the Leadership and
Compensation Committee (the "Committee") of the Board of Directors of Nashua,
the members of which are "disinterested persons" within the meaning of Rule
16b-3 of the Securities Exchange Act of 1934. Subject to the provisions of the
1999 Plan, the Committee has discretion to determine when awards are made, which
employees are granted awards, the number of shares subject to each award and all
other relevant terms of the awards. The Committee also has broad discretion to
construe and interpret the 1999 Plan and adopt rules and regulations thereunder.
The Committee may also delegate to one or more executive officers, the power to
make awards and exercise other powers under the 1999 Plan as the Committee may
determine, provided that the Committee shall fix the maximum number of shares
subject to awards and the maximum number of shares for any one participant to be
made by such executive officers.
Eligibility. All of the Company's employees, officers, directors,
consultants and advisors (and any individuals who have accepted an offer for
employment) ("Participants") are eligible to be granted options, restricted
stock awards and other stock-based awards under the 1999 Plan. The Committee
expects that
14
<PAGE> 17
approximately 130 Participants of the Company will be eligible for grants based
upon their level of responsibility and performance.
Shares Subject to the 1999 Plan. The shares to be issued under the 1999
Plan are shares of Nashua's common stock ($1.00 par value), which may be newly
issued shares or shares held in the treasury. No more than 600,000 shares will
be issued under the 1999 Plan. The maximum number of shares of common stock with
respect to which an award may be granted to any Participant shall be 150,000 per
calendar year. The foregoing limits are subject to adjustment for stock
dividends, stock splits or other changes in Nashua's capitalization.
Stock Options. The Committee in its discretion may issue stock options
which qualify as incentive stock options under the Internal Revenue Code (the
"Code") or non-statutory stock options. The Committee will determine the time or
times when each stock option becomes exercisable, the period within which it
remains exercisable, the price per share at which it is exercisable and other
conditions and limitations, provided that incentive stock options shall only be
granted to employees and shall be subject to and construed consistently with the
requirements of the Code. No option, however, shall be granted for a term in
excess of 10 years. The Committee establishes the exercise price at the time any
option is granted at not less than 100% of the fair market value of the common
stock at such time.
Payment for shares purchased upon exercise of any option must be made in
full in cash when the option is exercised or by delivery of shares of Nashua's
common stock.
Restricted Stock. The Committee has authority to grant Restricted Stock
entitling Participants to acquire shares of common stock, subject to the right
of the Company to repurchase all or part of such shares at their issue price or
other stated or formula price (or to require forfeiture of such shares if issued
at no cost) in the event that conditions specified by the Committee are not
satisfied.
The Committee has sole and complete authority to determine the Participants
to whom shares of Restricted Stock shall be granted, the number of shares of
Restricted Stock to be granted to each Participant, and the other terms and
conditions of such awards.
Stock certificates issued in respect of shares of Restricted Stock will be
registered in the name of the Participant and, unless otherwise determined by
the Committee, deposited by such Participant together with a stock power
endorsed in blank, with the Company. At the expiration of the applicable
restricted period, the Company will deliver such certificates to the Participant
or the Participant's legal representative.
Other Stock Based Awards. The Committee has the right to grant other
awards based upon the common stock authorized to be issued under the 1999 Plan
having such terms and conditions as the Committee may determine, including the
grant of shares based upon certain conditions, the grant of securities
convertible into common stock and the grant of stock appreciation rights.
Amendments. The Committee may amend, suspend or terminate the 1999 Plan at
any time, except to the extent inconsistent with the provisions of the Code.
Transferability. Except as the Committee may determine, awards may not be
sold, assigned, transferred, pledged or otherwise encumbered by the person to
whom they are granted, either voluntarily or by operation of law, except by will
or the laws of descent and distribution, and during the life of the Participant,
shall be exercisable only by the Participant.
Federal Income Tax Consequences. The grant of a stock option does not
produce ordinary income to the Participant or a deduction to the Company. The
tax consequences associated with the exercise of a stock option granted under
the 1999 Plan, and with the subsequent disposition of common stock acquired
under
15
<PAGE> 18
such an option, will depend in part on whether the option is an incentive stock
option or a non-statutory stock option.
Incentive Stock Options. Generally, a Participant will not recognize
ordinary taxable income at the time of exercise of an incentive stock option and
no deduction will be available to the Company, provided the option is exercised
while the Participant is an employee or within three months following
termination of employment (longer, in the case of termination of employment by
reason of disability or death). If an incentive stock option granted under the
1999 Plan is exercised after these periods, the exercise will be treated for tax
purposes as the exercise of a non-statutory stock option. Also, incentive stock
options granted under the 1999 Plan will be treated as non-statutory stock
options to the extent they (together with any other incentive stock options
granted after 1986 under other plans of the Company and its subsidiaries) first
become exercisable in any calendar year for shares having a fair market value,
determined as of the date of grant, in excess of $100,000.
If shares acquired upon exercise of an incentive stock option are sold or
exchanged more than one year after the date of exercise and more than two years
from the date of grant of the option, income from the disposition of the shares
will be characterized a long-term capital gain or loss. If shares acquired upon
exercise of an incentive stock option are disposed of prior to the expiration of
these one-year or two-year holding periods (a "disqualifying disposition"), the
Participant will recognize ordinary income at time of disposition, and the
Company will be eligible to claim a deduction, in an amount equal to the excess
of the fair market value of the shares at date of exercise over the exercise
price. Any additional gain from a disqualifying disposition will be treated as
long-term or short-term capital gain depending on the holding period of the
shares. For shares which are sold or exchanged (other than in certain related
party transactions) for an amount less than their fair market value at date of
exercise, the ordinary income recognized in connection with the disqualifying
disposition will be limited to the amount of gain recognized. Shares sold at
less than the exercise price will generate either a long-term or short-term
capital loss depending on the holding period.
Although the exercise of an incentive stock option as described above will
not produce ordinary taxable income to the Participant, the exercise will
produce an increase in the Participant's alternative minimum taxable income and
may result in an alternative minimum tax liability.
Non-Statutory Stock Options. Upon the exercise of a non-statutory stock
option, the Participant will recognize ordinary taxable income equal to the
excess of the fair market value of the shares at the time of exercise over the
exercise price. The employer will be able to claim a deduction in an equivalent
amount provided it satisfies federal employment tax withholding requirements.
Gain or loss upon a subsequent sale or exchange of the shares will generate
either a capital gain or loss, which will be characterized as either long-term
or short-term depending on the holding period for the shares.
In General. Special rules will apply in determining the tax basis of the
shares received upon exercise where employee held shares are utilized in the
exercise of a stock option.
Restricted Stock. A Participant who receives shares of Restricted Stock
will recognize ordinary income and the Company will be entitled to claim a
correlative deduction (subject to satisfaction of federal withholding tax
requirements) upon the earlier of the date when the shares become transferable
to the Participant or the date when the substantial risk of forfeiture
associated with the shares lapses. The amount of ordinary income recognized by
the Participant, and of the correlative deduction, will be equal to the fair
market value of the shares at the time the income is recognized, determined
without regard to any restrictions other than restrictions which by their terms
will never lapse. Generally, any dividends paid with respect to shares that are
nontransferable and subject to a substantial risk of forfeiture will be
deductible to the Company at the same time they are includible in the
Participant's income as compensation.
16
<PAGE> 19
In lieu of the treatment described above, a Participant may elect immediate
recognition of income under Section 83(b) of the Internal Revenue Code of 1986,
as amended. In such event, the Participant will recognize as income the fair
market value of the restricted stock at the time of the award (determined
without regard to any restrictions other than restrictions which by their terms
will never lapse), and the Company will be entitled to a corresponding deduction
(subject to satisfaction of the federal withholding tax requirements). Dividends
paid with respect to shares as to which a proper Section 83(b) election has been
made will not be deductible to the Company.
Payment of Withholding Taxes. The Participant must pay to the Company an
amount sufficient to satisfy any federal, state or local withholding tax
requirements associated with awards under the 1999 Plan. The Participant may
satisfy such tax withholding requirements by delivery to the Company of shares
of common stock owned by the Participant, including shares acquired from the
award creating the tax obligation.
Expiration. No awards will be granted under the 1999 Plan after April 30,
2009.
All awards granted under the 1999 Plan are discretionary, and, therefore,
the Company cannot determine the benefits to be received by any particular
individual or particular group of individuals.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the shares of the
common stock entitled to vote held by stockholders present at the meeting in
person or by proxy is required for approval of the 1999 Plan.
The Board of Directors recommends that you vote FOR the proposal to approve
the 1999 Plan. Members of the Board of Directors are entitled to receive option
grants under the 1999 Plan and, therefore, have a direct interest in the
approval of the 1999 Plan.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, Nashua's independent accountants for the year
1998, are also Nashua's independent accountants for the year 1999.
Representatives of PricewaterhouseCoopers 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 2000 annual meeting must be received by Nashua on or before November 25,
1999. 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.
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 properly brought
before the annual meeting or any adjournment thereof, the persons named in the
accompanying form of proxy intend 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
17
<PAGE> 20
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
$10,000.
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,
1998. 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.
PETER C. ANASTOS
Vice President, General
Counsel and Secretary
Nashua, New Hampshire
March 24, 1999
18
<PAGE> 21
APPENDIX A
NASHUA CORPORATION
1999 SHAREHOLDER VALUE PLAN
1. PURPOSE
The purpose of this 1999 Shareholder Value Plan (the "Plan") of Nashua
Corporation, a Delaware corporation (the "Company"), is to advance the interests
of the Company's stockholders by enhancing the Company's ability to attract,
retain and motivate persons who make (or are expected to make) important
contributions to the Company by providing such persons with equity ownership
opportunities and performance-based incentives and thereby better aligning the
interests of such persons with those of the Company's stockholders. Except where
the context otherwise requires, the term "Company" shall include any of the
Company's present or future subsidiary corporations as defined in Section 424(f)
of the Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder (the "Code").
2. ELIGIBILITY
All of the Company's employees, officers, directors, consultants and
advisors (and any individuals who have accepted an offer for employment) are
eligible to be granted options, restricted stock awards, or other stock-based
awards (each, an "Award") under the Plan. Each person who has been granted an
Award under the Plan shall be deemed a "Participant".
3. ADMINISTRATION, DELEGATION
(a) Administration by Board of Directors. The Plan will be administered
by the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable.
The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem expedient to carry the Plan into effect and it shall be the sole and final
judge of such expediency. All decisions by the Board shall be made in the
Board's sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award. No director or person acting
pursuant to the authority delegated by the Board shall be liable for any action
or determination relating to or under the Plan made in good faith.
(b) Delegation to Executive Officers. To the extent permitted by
applicable law, the Board or any Committee as defined in Section 3(c) may
delegate to one or more executive officers of the Company the power to make
Awards and exercise such other powers under the Plan as the Board may determine,
provided that the Board shall fix the maximum number of shares subject to Awards
and the maximum number of shares for any one Participant to be made by such
executive officers.
(c) Appointment of Committee. The Board shall appoint a committee or
subcommittee of the Board (a "Committee") consisting of not less than two
members, each member of which shall be an "outside director" within the meaning
of Section 162(m) of the Code and a "non-employee director" as defined in Rule
16b-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange Act")
and shall delegate its powers under the Plan to such Committee. All references
in the Plan to the "Board" shall mean the Board or a Committee of the Board or
the executive officer referred to in Section 3(b) to the extent that the Board's
powers or authority under the Plan have been delegated to such Committee or
executive officer.
A-1
<PAGE> 22
4. STOCK AVAILABLE FOR AWARDS
(a) Number of Shares. Subject to adjustment under Section 8, Awards may
be made under the Plan for up to 600,000 shares of common stock, $1.00 par value
per share, of the Company (the "Common Stock"). If any Award expires or is
terminated, surrendered or canceled without having been fully exercised or is
forfeited in whole or in part or results in any Common Stock not being issued,
the unused Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan, subject, however, in the case of Incentive Stock
Options (as hereinafter defined), to any limitation required under the Code.
Shares issued under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares.
(b) Per-Participant Limit. Subject to adjustment under Section 8, the
maximum number of shares of Common Stock with respect to which an Award may be
granted to any Participant under the Plan shall be 150,000 per calendar year.
The per-Participant limit described in this Section 4(b) shall be construed and
applied consistently with Section 162(m) of the Code.
5. STOCK OPTIONS
(a) General. The Board may grant options to purchase Common Stock (each,
an "Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".
(b) Incentive Stock Options. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.
(c) Exercise Price. The Board shall establish the exercise price at the
time each Option is granted at not less than 100% of the fair market value of
the Common Stock, as determined by the Board, at the time the Option is granted
("Fair Market Value"), and shall specify that option price in the applicable
option agreement.
(d) Duration of Options. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Board may specify in the
applicable option agreement, provided, however, that no Option will be granted
for a term in excess of 10 years.
(e) Exercise of Option. Options may be exercised by delivery to the
Company of a written notice of exercise signed by the proper person or by any
other form of notice (including electronic notice) approved by the Board
together with payment in full as specified in Section 5(f) for the number of
shares for which the Option is exercised.
(f) Payment Upon Exercise. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as the Board may, in its sole discretion, otherwise provide
in an option agreement, by (i) delivery of an irrevocable and unconditional
undertaking by a creditworthy broker to deliver promptly to the Company
sufficient funds to pay the exercise price or (ii) delivery by the
Participant to the
A-2
<PAGE> 23
Company of a copy of irrevocable and unconditional instructions to a
creditworthy broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price;
(3) by delivery of shares of Common Stock owned by the Participant
valued at their fair market value as determined by (or in a manner approved
by) the Board in good faith ("Fair Market Value"), provided (i) such method
of payment is then permitted under applicable law and (ii) such Common
Stock was owned by the Participant at least six months prior to such
delivery;
(4) to the extent permitted by the Board, in its sole discretion by
(i) delivery of a promissory note of the Participant to the Company on
terms determined by the Board, or (ii) payment of such other lawful
consideration as the Board may determine; or
(5) by any combination of the above permitted forms of payment.
6. RESTRICTED STOCK
(a) Grants. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, a "Restricted Stock Award").
(b) Terms and Conditions. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name of
the Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
7. OTHER STOCK-BASED AWARDS
The Board shall have the right to grant other Awards based upon the Common
Stock having such terms and conditions as the Board may determine, including the
grant of shares based upon certain conditions, the grant of securities
convertible into Common Stock and the grant of stock appreciation rights.
8. ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS
(a) Changes in Capitalization. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the per-Participant limit set forth in Section 4(b), (iii) the number and
class of securities and exercise price per share subject to each outstanding
Option, (iv) the repurchase price per share subject to each outstanding
Restricted Stock Award, and (v) the terms of each other outstanding Award shall
be appropriately adjusted by the Company (or substituted Awards may be made, if
applicable) to the extent the Board shall determine, in good faith, that such an
adjustment (or substitution) is necessary and appropriate. If this Section 8(a)
applies and Section 8(c) also
A-3
<PAGE> 24
applies to any event, Section 8(c) shall be applicable to such event, and this
Section 8(a) shall not be applicable.
(b) Liquidation or Dissolution. In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation or
dissolution on any Restricted Stock Award or other Award granted under the Plan
at the time of the grant of such Award.
(c) Acquisition Events
(1) Definition. An "Acquisition Event" shall mean: (a) any merger or
consolidation of the Company with or into another entity as a result of
which the Common Stock is converted into or exchanged for the right to
receive cash, securities or other property or (b) any exchange of shares of
the Company for cash, securities or other property pursuant to a statutory
share exchange transaction.
(2) Consequences of an Acquisition Event on Options. Upon the
occurrence of an Acquisition Event, or the execution by the Company of any
agreement with respect to an Acquisition Event, the Board shall provide
that all outstanding Options shall be assumed, or equivalent options shall
be substituted, by the acquiring or succeeding corporation (or an affiliate
thereof). For purposes hereof, an Option shall be considered to be assumed
if, following consummation of the Acquisition Event, the Option confers the
right to purchase, for each share of Common Stock subject to the Option
immediately prior to the consummation of the Acquisition Event, the
consideration (whether cash, securities or other property) received as a
result of the Acquisition Event by holders of Common Stock for each share
of Common Stock held immediately prior to the consummation of the
Acquisition Event (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the
outstanding shares of Common Stock); provided, however, that if the
consideration received as a result of the Acquisition Event is not solely
common stock of the acquiring or succeeding corporation (or an affiliate
thereof), the Company may, with the consent of the acquiring or succeeding
corporation, provide for the consideration to be received upon the exercise
of Options to consist solely of common stock of the acquiring or succeeding
corporation (or an affiliate thereof) equivalent in fair market value to
the per share consideration received by holders of outstanding shares of
Common Stock as a result of the Acquisition Event.
Notwithstanding the foregoing, if the acquiring or succeeding
corporation (or an affiliate thereof) does not agree to assume, or
substitute for, such Options, then the Board shall, upon written notice to
the Participants, provide that all then unexercised Options will become
exercisable in full as of a specified time prior to the Acquisition Event
and will terminate immediately prior to the consummation of such
Acquisition Event, except to the extent exercised by the Participants
before the consummation of such Acquisition Event; provided, however, that
in the event of an Acquisition Event under the terms of which holders of
Common Stock will receive upon consummation thereof a cash payment for each
share of Common Stock surrendered pursuant to such Acquisition Event (the
"Acquisition Price"), then the Board may instead provide that all
outstanding Options shall terminate upon consummation of such Acquisition
Event and that each Participant shall receive, in exchange therefor, a cash
payment equal to the amount (if any) by which (A) the Acquisition Price
multiplied by the number of shares of Common Stock subject to such
outstanding Options (whether or not then exercisable), exceeds (B) the
aggregate exercise price of such Options.
(3) Consequences of an Acquisition Event on Restricted Stock
Awards. Upon the occurrence of an Acquisition Event, the repurchase and
other rights of the Company under each outstanding Restricted
A-4
<PAGE> 25
Stock Award shall inure to the benefit of the Company's successor and shall
apply to the cash, securities or other property which the Common Stock was
converted into or exchanged for pursuant to such Acquisition Event in the
same manner and to the same extent as they applied to the Common Stock
subject to such Restricted Stock Award.
(4) Consequences of an Acquisition Event on Other Awards. The Board
shall specify the effect of an Acquisition Event on any other Award granted
under the Plan at the time of the grant of such Award.
9. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) Transferability of Awards. Except as the Board may otherwise
determine or provide in an Award, Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution, and, during the life of the Participant, shall be
exercisable only by the Participant. References to a Participant, to the extent
relevant in the context, shall include references to authorized transferees.
(b) Documentation. Each Award shall be evidenced by a written instrument
in such form as the Board shall determine. Each Award may contain terms and
conditions in addition to those set forth in the Plan.
(c) Board Discretion. Except as otherwise provided by the Plan, each
Award may be made alone or in addition or in relation to any other Award. The
terms of each Award need not be identical, and the Board need not treat
Participants uniformly.
(d) Termination of Status. The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
(e) Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. Participants may, to the extent then
permitted under applicable law, satisfy such tax obligations in whole or in part
by delivery of shares of Common Stock, including shares retained from the Award
creating the tax obligation, valued at their Fair Market Value. The Company may,
to the extent permitted by law, deduct any such tax obligations from any payment
of any kind otherwise due to a Participant.
(f) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
(g) Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
A-5
<PAGE> 26
(h) Acceleration. The Board may at any time provide that any Options
shall become immediately exercisable in full or in part, that any Restricted
Stock Awards shall be free of restrictions in full or in part or that any other
Awards may become exercisable in full or in part or free of some or all
restrictions or conditions, or otherwise realizable in full or in part, as the
case may be.
10. MISCELLANEOUS
(a) No Right To Employment or Other Status. No person shall have any
claim or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.
(b) No Rights As Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.
(c) Effective Date and Term of Plan. The Plan shall become effective on
the date on which it is approved by the Company's stockholders. No Awards shall
be granted under the Plan after the completion of ten years from the date the
Plan was approved by the Company's stockholders, but Awards previously granted
may extend beyond that date.
(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that to the extent required by
Section 162(m) of the Code, no Award granted to a Participant designated as
subject to Section 162(m) by the Board after the date of such amendment shall
become exercisable, realizable or vested, as applicable to such Award (to the
extent that such amendment to the Plan was required to grant such Award to a
particular Participant), unless and until such amendment shall have been
approved by the Company's stockholders as required by Section 162(m) (including
the vote required under Section 162(m)).
(e) Governing Law. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.
A-6
<PAGE> 27
NASH-PS-99
<PAGE> 28
PROXY
NASHUA CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - APRIL 30, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) PETER C. ANASTOS, JOHN L. PATENAUDE and
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 the
name(s) of the undersigned to vote and act at the annual meeting of
stockholders of Nashua Corporation, to be held at the Crowne Plaza, 2 Somerset
Parkway, Nashua, New Hampshire, on April 30, 1999 at 10:00 a.m., or any
adjournment thereof, upon or in respect of all shares of stock of 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 possess, if
personally present, upon all matters which may properly come before said
meeting, as described in the Proxy Statement and Notice dated March 24, 1999,
receipt of which is hereby acknowledged.
Unless a contrary direction is indicated, this Proxy will be voted FOR all
nominees listed in Proposal 1 and FOR Proposal 2 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 and a vote FOR Proposal 2.
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 SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE> 29
Nashua Stockholders:
The Annual Meeting of Stockholders of Nashua Corporation will be held at
10:00 a.m. on Friday, April 30, 1999, at the Crowne Plaza, 2 Somerset Parkway,
Nashua, New Hampshire.
The Proxies will vote your shares in accordance with your directions on this
proxy card. If you sign and return the proxy card and do not indicate your
choices, the Proxies will vote your shares in accordance with the directors'
recommendations.
Please fill in the boxes to indicate how your shares should be voted, sign and
date the proxy card and return it as soon as possible in the enclosed postpaid
envelope. If you do not sign and return the proxy card, the Proxies cannot
vote your shares at the Annual Meeting.
Peter C. Anastos
Vice President, General
Counsel and Secretary
DETACH HERE
- --------------------------------------------------------------------------------
[X] PLEASE MARK
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, this 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.
<TABLE>
<S> <C>
- ---------------------------------------------------------------- ---------------------------------------------------------------
The Board of Directors Recommends a vote FOR Proposal 1. The Board of Directors Recommends a vote FOR Proposal 2.
- ---------------------------------------------------------------- ---------------------------------------------------------------
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 AGAINST ABSTAIN
FOR [ ] [ ] WITHHELD 2. Approval of 1999 Shareholder Value Plan. [ ] [ ] [ ]
ALL FROM ALL
NOMINEES NOMINEES
[ ] ________________________________________
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: _________________
</TABLE>
