SEALRIGHT CO., INC.
9201 Packaging Drive
DeSoto, Kansas 66018
Notice of Annual Meeting of Shareholders
To Be Held May 23, 1997
TO ALL SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of
Shareholders of Sealright Co., Inc., a Delaware corporation, will
be held the 23rd day of May, 1997, 9:00 a.m., at the Dallas Room,
Doubletree Hotel, 10100 College Boulevard, Overland Park, Kansas,
for the following purposes:
(1) To elect the members of the Board of Directors for
the ensuing year or until their successors are duly
elected and qualified;
(2) To appoint KPMG Peat Marwick LLP as independent
auditors of the Company for 1997;
(3) To vote on a shareholder proposal to engage an
investment banking firm to explore alternatives to
enhance shareholder value; and
(4) To transact such other business as may properly come
before the Annual Meeting or any adjournments or
postponements thereof.
The Board of Directors has fixed the close of business on
March 28, 1997 as the record date for the determination of the
shareholders entitled to notice of, and to vote at, the Annual
Meeting or any adjournments or postponements thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Charles F. Marcy
Charles F. Marcy
President and Chief Executive Officer
Date: March 31, 1997
Important - Your Proxy is Enclosed
You are urged to sign, date and mail your Proxy even
though you may plan to attend the Annual Meeting. No postage is
required if mailed in the United States. If you attend the
Annual Meeting, you may vote by Proxy or you may withdraw your
Proxy and vote in person. By returning your Proxy promptly, a
quorum will be assured at the Annual Meeting, which will prevent
costly follow-up and delays.
<PAGE>
SEALRIGHT CO., INC.
9201 Packaging Drive
DeSoto, KS 66018
Annual Meeting of Shareholders
To Be Held May 23, 1997
PROXY STATEMENT
The accompanying Proxy is solicited by the Board of
Directors of Sealright Co., Inc., a Delaware corporation (the
"Company"), for use at its Annual Meeting of Shareholders (the
"Annual Meeting") to be held on Friday, May 23, 1997, 9:00 a.m.,
at the Dallas Room, Doubletree Hotel, 10100 College Boulevard,
Overland Park, Kansas, and any adjournments or postponements
thereof. Shares represented by duly executed Proxies received
prior to the Annual Meeting will be voted at the Annual Meeting.
If a shareholder specifies a choice on the form of Proxy with
respect to any proposal set forth therein, the shares will be
voted in accordance with such directions made therein with
respect to the proposals described in this Proxy Statement. Any
person giving a Proxy has the power to revoke it at any time
before it is exercised by giving written notice to the Secretary
of the Company at any time prior to its use.
The Company will bear all the costs of solicitation of
Proxies. In addition to the use of the mails, Proxies may be
solicited by personal contact or telephone by officers or
representatives of the Company, and the Company may reimburse
brokers or other persons holding stock in their names or in the
names of nominees for their expenses in sending proxy soliciting
material to beneficial owners. This Proxy Statement and the
accompanying form of Proxy are first being mailed or given to
shareholders on or about March 31, 1997.
Only shareholders of record at the close of business on
March 28, 1997 will be entitled to notice of, and to vote at, the
Annual Meeting. On the record date, the Company had 11,071,991
shares of common stock issued and outstanding and entitled to
vote. Each outstanding share of common stock is entitled to one
vote on each matter brought to a vote. The affirmative vote of a
plurality of the shares of common stock voting is required for
the election of each nominee for director. The affirmative vote
of a majority of the issued and outstanding shares of common
stock is required for approval of the appointment of the
independent public accountants and the shareholder proposal
regarding the engagement of an investment banking firm. In
instances where brokers are prohibited from exercising
discretionary authority for beneficial owners who have not
returned proxies to the brokers (so called "broker non-votes"),
those shares will not be included in the vote totals and,
therefore, will have no effect on the vote.
Management does not know of any matters, other than those
referred to in the accompanying Notice of Annual Meeting of
Shareholders, which are to come before the Annual Meeting. If
any other matters are properly presented to the Annual Meeting
for action, it is intended that the persons named in the
accompanying form of Proxy, or their substitutes, will vote in
accordance with their judgment of the best interests of the
Company on such matters.
<PAGE>
Stock Ownership of Certain Beneficial Owners and Management
The following table sets forth with respect to the Company's
common stock as of December 31, 1996: (i) the only persons known
to be beneficial owners of more than 5% of the Company's common
stock; (ii) shares beneficially owned by all directors and
nominees; (iii) each of the executive officers named in the
Summary Compensation Table set forth herein; and (iv) shares
beneficially owned by all directors and executive officers as a
group.
Number of Shares and
Name and Address Nature of Beneficial Percent
of Beneficial Owner Ownership(1) Of Class
G. Kenneth Baum 4,155,115(2)(3) 37.5%
William D. Thomas 3,812,700(3)(4) 34.4%
George K. Baum Group, Inc. 3,412,500(5) 30.8%
120 West 12th Street
Kansas City, Missouri 64105
T. Rowe Price Associates, Inc. 675,500 6.1%
100 East Pratt Street
Baltimore, Maryland 21202
David L. Babson & Co., Inc. 606,800 5.5%
One Memorial Drive
Cambridge, Massachusetts
02142-1300
Marvin W. Ozley 169,878(6) 1.7%
Frederick O. DeSieghardt 125,200(7) 1.1%
Charles F. Marcy 34,935(8) *
John T. Carper 25,202(9) *
Lawrence D. Boyle 20,095(10)(11) *
Richard F. Anderson 17,742(12) *
Charles A. Sullivan 5,000 *
Robert F. Hagans 4,200(13) *
A. Lawrence Walton 1,800(14) *
D. Patrick Curran 1,000 *
Arthur R. Schulze 1,000 *
John T. Slattery 1,000(15) *
Shawn K. Nicholas 237(16) *
Directors and Executive 4,893,128 44.1%
Officers as a Group
(15 persons)
* Percentages do not exceed 1% of the issued and outstanding
shares of common stock.
(1) Calculated in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934. Nature of beneficial
ownership of securities is direct unless indicated
otherwise by footnote. Beneficial ownership as shown in
the table arises from sole voting power and sole
investment power unless otherwise indicated by footnote.
(2) Includes 742,615 shares held indirectly by Mr. Baum as
trustee of a revocable trust established by him.
(3) Includes 3,412,500 shares owned by George K. Baum
Group, Inc. (Group) Mr. Baum and Mr. Thomas are each a
director, officer and shareholder of Group and have
shared voting and investment power over these shares.
(4) Includes 300,000 shares held directly and 100,000 shares
held by his spouse and 200 shares held by his spouse as
custodian for their children, in which he disclaims beneficial
ownership.
(5) Excludes shares owned by officers and employees of Group
and its subsidiaries.
(6) Includes 104,500 shares held indirectly by Mr. Ozley as
trustee of a revocable trust established by him; 41,750
shares held by his spouse as trustee of a revocable trust
established by her; 19,500 shares held in trust for the
benefit of Mr. Ozley's daughter, of which his spouse is
trustee; 127 shares which are owned in the Company's Long-Term
Savings Plan (LTSP); and options to acquire 2,667
units. Each unit consists of one share of common stock and
one-half share of restricted stock. These options are
currently exercisable.
(7) Such shares held indirectly by Mr. DeSieghardt as trustee
of a revocable trust established by him.
(8) Includes 10,500 shares owned by Mr. Marcy, 1,000 shares held
jointly with his wife, 227 shares owned in the LTSP, 20,000
shares issuable pursuant to options which are currently
exercisable, 208 shares which are owned in the LTSP but are
voted by the Plan's Administration Committee, of which Mr.
Marcy is not a member, and 3,000 shares held by the
Sealright Foundation, Inc., a 501(c)(3) foundation of which
Mr. Marcy and Mr. Carper are trustees.
(9) Includes 13,000 shares owned by Mr. Carper, 960 shares owned
in the LTSP, 8,000 shares issuable pursuant to options which
are currently exercisable, 242 shares which are owned in the
LTSP but are voted by the Plan's Administration Committee,
of which Mr. Carper is not a member, and 3,000 shares held
by the Sealright Foundation, Inc., a 501(c)(3) foundation of
which Mr. Marcy and Mr. Carper are trustees.
(10) Includes 1,863 shares owned by Mr. Boyle, 432 restricted
shares, 16,500 shares issuable pursuant to options which
were exercisable, 336 shares owned in the LTSP, and 259
shares owned in the LTSP but are voted by the Plan's
Administration Committee, of which Mr. Boyle is not a
member. In addition, Mr. Boyle owned options to acquire 470
units. Each unit consisted of one share of common stock and
one-half share of restricted stock.
(11) Mr. Boyle resigned from the Company on January 4, 1997. All
options and restricted shares were forfeited.
(12) Includes 1,292 shares owned by Mr. Anderson; 646 restricted
shares; 4,500 shares held jointly with his spouse; 242
shares which are owned in the LTSP, but are voted by the
Plan's Administration Committee, of which Mr. Anderson is
not a member, 10,000 shares issuable pursuant to options
which are currently exercisable; and options to acquire 708
units. Each unit consists of one share of common stock and
one-half share of restricted stock.
(13) Such shares held indirectly by Mr. Hagans as trustee of
a revocable trust established by him.
(14) Includes 1,000 shares held jointly with his wife, 569 shares
owned in the LTSP and 231 shares which are owned in the LTSP
but are voted by the Plan's Administration Committee, of
which Mr. Walton is not a member.
(15) Ownership is comprised of 1,000 options which are currently
exercisable.
(16) Includes 225 shares owned in the LTSP and 12 shares which
are owned in the LTSP but are voted by the Plan's
Administration Committee, of which Mr. Nicholas is not a
member.
Proposal One: Election of Directors
The shares represented by the enclosed Proxy will be voted,
unless otherwise indicated, for the election of the nine nominees
for director named below. The directors elected at the Annual
Meeting will serve for one year or until their successors are
duly elected and qualified. In the unanticipated event that
any nominee for director should become unavailable, the Board of
Directors, at its discretion, may designate a substitute nominee,
in which event such shares will be voted for such substitute
nominee.
MANAGEMENT RECOMMENDS A VOTE FOR THE ELECTION OF THE
NINE NOMINEES FOR DIRECTOR NAMED BELOW.
<PAGE>
Name of Nominee Director Principal Occupation for Last
for Director Since Age Five Years and Directorships
G. Kenneth Baum(1) 1983 66 Chairman of the Board of George
K. Baum Group, Inc., an
investment company in Kansas
City, Missouri, since May 1994.
Chairman of the Board of George
K. Baum & Company, an investment
banking firm, from April 1982
until May 1994. Mr. Baum is also
a director of H & R Block, Inc.,
Unitog Company (Unitog), and
Interstate Bakeries Corporation
(Interstate).
D. Patrick
Curran(2) 1992 52 Chairman of the Board and
President of Curran Companies, a
manufacturer and supplier of
specialty chemicals, since August
1979. Mr. Curran is also a
director of Unitog, Applebee's
International, Inc. and American
Safety Razor Co.
Frederick O.
DeSieghardt 1983 72 Retired Vice Chairman of the
Board of the Company from
February 1988 until his
retirement in 1990. Mr.
DeSieghardt has been associated
with the Company since September
1964.
Robert F.
Hagans(1)(2) 1983 70 Retired Chairman of the Board of
Unitog, a publicly held company
engaged in the design,
<PAGE>
Name of Nominee Director Principal Occupation for Last
for Director Since Age Five Years and Directorships
manufacture and rental of
business and work garments, prior
to his retirement in September
1991. Mr. Hagans is also a
director of Unitog.
Charles F. Marcy 1995 46 President and CEO of the Company
since August 1995. President of
the Golden Grain Company (Golden
Grain), a subsidiary of Quaker
Oats, Inc. (Quaker) from April
1993 to August 1995. President
of National Dairy Products Corp.,
a division of Kraft General
Foods, Inc. from January 1991 to
April 1993
Marvin W. Ozley 1986 63 Retired Chairman of the Board,
President and CEO of the Company
from April 1989 to August 1995.
Arthur R. Schulze 1993 66 Retired Vice Chairman of the
Board of General Mills, Inc.
from October 1989 until his
retirement in April 1993. Mr.
Schulze is also a director of
Interra Financial, Inc.
Charles A.
Sullivan 1992 61 Chairman of the Board of
Interstate since May 1991.
President and CEO of Interstate
since March 1989. Mr. Sullivan is
a director of UMB Bank, n.a. and
The Andersons, Inc.
William D.
Thomas(1)(2) 1983 53 President of George K. Baum
Group, Inc. since May 1994. Vice
Chairman of George K. Baum &
Company from June 1991 until May
1994. Mr. Thomas is also a
director of Unitog.
_________________________
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
The Board of Directors of the Company held nine meetings
during 1996. No director standing for election at the Annual
Meeting attended fewer than 75% of the total number of meetings
of the Board of Directors and the committees of the Board on
which he served during 1996.
The Compensation Committee held three meetings during 1996.
The functions performed by the Compensation Committee are the
review of salaries of certain officers and bonuses of executive
officers, the administration of the Leadership Incentive Plan,
and the Stock Option Plans and the overall administration of the
Company's compensation program.
The Audit Committee held four meetings during 1996. The
functions performed by the Audit Committee are review of
significant financial information of the Company, ascertainment
of the existence of an effective accounting and internal control
system, oversight of the audit function and recommendation of the
appointment of the independent public accountants of the Company.
The Company does not have a standing nominating committee.
Executive Officers
In addition to those executive officers listed in the
foregoing table of director nominees, the Company's other
executive officers as of March 12, 1997 were as follows:
<PAGE>
Name of Non-Director Principal Occupation for
Executive Officers Age Last Five Years
Richard F.
Anderson 53 Senior Vice President International
since December 1995. From October
1992 to December 1995, he was Senior
Vice President of Flexible Packaging
of the Company. From August 1986
through September 1992 he was the
Executive Vice President and General
Manager of Jaite Packaging, Inc., a
wholly owned subsidiary of the
Company.
John T. Carper 45 Senior Vice President of Finance and
CFO of the Company since May 1994.
From July 1989 to May 1994, he was a
partner with KPMG Peat Marwick LLP,
independent public accountants.
Mark E. Dowey 45 Vice President of Dairy Sales since
March 1997. From 1988 to 1997 he
was Director of Sales of Sweetheart
Packaging, a strategic business unit
of Sweetheart Cup Co. Inc. From
1986 to 1988 he was Director of
Marketing of Fort Howard Corporation.
J. Patrick Muldoon 37 Vice President of Marketing and
Strategy of the Company since
January 1996. Since August 1996, he
has also overseen the Research and
Development function. From July
1995 to January 1996, he was
Director of Customer Marketing for
Golden Grain. From July 1989 to
July 1995, he held various marketing
positions with Quaker.
<PAGE>
Name of Non-Director Principal Occupation for
Executive Officers Age Last Five Years
Shawn K. Nicholas 33 Director of Customer Service of the
Company since February 1996. From
November 1995 to February 1996, he
was Director of Strategic
Transition. From March 1995 to
November 1995, he was Manager of
Process Improvement. From December
1992 to March 1995, he was the
Facility Project Manager. From
February 1991 to December 1992, he
was a Division Accounting Manager.
Steven D. Saucier 43 Senior Vice President of Supply
Chain since April 1996. From
January 1992 to April 1996, he was
the Manufacturing Manager for the
flexible films division of Mobil
Corporation.
John T. Slattery 49 Vice President of Information
Systems and Chief Information
Officer of the Company since
December 1995. From March 1993 to
December 1995, he was Vice President
and Chief Information Officer of
James River Corporation. From
January 1990 to March 1993, he was
Vice President/General Manager of
James River.
T. Carl Walker, II 43 Vice President of Human Resources of
the Company since July 1996. From
January 1995 to July 1996, he was
Director of Human Resources for
Quaker. From November 1978 to
January 1995, he held various
managerial positions with Hewlett-Packard.
Name of Non-Director Principal Occupation for
Executive Officers Age Last Five Years
A. Lawrence Walton 52 Vice President of Food and Beverage
Sales of the Company since August
1996. From February 1996 to August
1996, he was Vice President of
Research and Development. Mr.
Walton was Vice President, Marketing
and Technical Services of Packaging
Industries, Inc., a wholly owned
subsidiary of the Company, from June
1994 to February 1996. From July
1991 to June 1994, he was Vice
President of Marketing & Sales with
Glenroy, Inc., a flexible packaging
company.
<PAGE>
Executive Compensation And Other Information Summary
The following table provides certain summary information
concerning compensation paid or accrued by the Company to or on
behalf of the Company's Chief Executive Officer and each of the
four other most highly compensated executive officers of the
Company whose salary and bonus exceeded $100,000 (determined as
of December 31, 1996) for the years ended December 31,
1996, 1995 and 1994:
Summary Compensation Table (Part 1 of 2)
Annual Compensation
Name and Other Annual
Principal Salary Bonus Compensation
Position Year ($) ($) ($)
Charles F. Marcy, 1996 300,000 150,000 -
President and 1995 114,808 107,535 -
CEO 1994 N/A N/A N/A
Richard F. 1996 207,495 -0- -
Anderson, 1995 205,800 -0- -
Senior Vice 1994 197,240 60,326 -
President, International
Lawrence D. 1996 188,400 -0- -
Boyle, 1995 188,400 -0- -
Senior Vice 1994 181,400 66,974 -
President, Sales
John T. Carper, 1996 168,000 -0- -
Senior Vice 1995 164,670 12,000 -
President, Finance 1994 100,005 27,900 -
and CFO
J. Patrick Muldoon 1996 155,000 -0- -
Vice President of 1995 N/A N/A N/A
Marketing and 1994 N/A N/A N/A
Strategy, Research
and Development
Summary Compensation Table (Part 2 of 2)
Long-Term Compensation
Awards Payouts
Restricted Securities
Stock Underlying LTIP All Other
Awards(a) Options(b)Payouts Compensation
Year ($) (#) ($) ($)
Charles F. Marcy, 1996 -0- -0- N/A 9,824(1)
President and 1995 -0- 100,000 N/A 194,556(2)
CEO 1994 N/A N/A N/A N/A
Richard F. 1996 -0- -0- N/A 5,467(3)
Anderson, 1995 2,422 -0- 43,750 6,947(4)
Senior Vice 1994 -0- 7,000 -0- 5,077(5)
President, International
Lawrence D. 1996 -0- -0- N/A 4,945(6)
Boyle, 1995 1,620 -0- 29,167 6,678(7)
Senior Vice 1994 -0- 11,333 -0- 4,817(8)
President, Sales
John T. Carper, 1996 -0- -0- N/A 4,406(9)
Senior Vice 1995 -0- -0- N/A 2,450(10)
President, 1994 -0- 20,000 N/A -0-
Finance and CFO
J. Patrick Muldoon 1996 -0- 15,000 N/A 74,070(11)
Vice President 1995 N/A N/A N/A N/A
Marketing and 1994 N/A N/A N/A N/A
Strategy, Research
and Development
____________________
(a) Dividends were paid on restricted stock at the same rate
as to holders of the Registrant's common stock.
(b) Mr. Anderson's 1994 options consist of options to acquire
5,000 shares of common stock pursuant to the 1987 Stock
Option Plan (1987 Plan) and an option to acquire 2,000
Units pursuant to the Long Term Incentive Plan (LTIP).
Each Unit consists of one share of common stock and one-half
share of restricted stock. Mr. Boyle's 1994 options
consist of options to acquire 10,000 shares of common
stock pursuant to the 1987 Plan and an option to acquire
1,333 Units pursuant to the LTIP.
(c) Messrs. Anderson and Boyle exercised options issued
pursuant to the LTIP on February 28, 1995 and received the
cash units indicated in the "LTIP Payouts" column.
(1) Company's payments for reimbursement of moving expenses
($7,387) and Long-Term Savings Plan ($2,437).
(2) Company's payments for reimbursement of moving expenses
($51,699) and tax protected home equity loss ($142,857).
(3) Company's payments for Long-Term Savings Plan ($3,970),
Deferred Compensation ($1,191) and term life insurance
premiums ($306).
(4) Company's payments for Long-Term Savings Plan ($3,351),
Deferred Compensation ($3,302) and term life insurance
premiums ($294).
(5) Company's payments for Long-Term Savings Plan ($2,910),
Deferred Compensation ($1,873) and term life insurance
premiums ($294).
(6) Company's payments for Long-Term Savings Plan ($3,974),
Deferred Compensation ($665) and term life insurance
premiums ($306).
(7) Company's payments for Long-Term Savings Plan ($3,322),
Deferred Compensation ($3,062) and term life insurance
premiums ($294).
(8) Company's payments for Long-Term Savings Plan ($3,750),
Deferred Compensation ($785) and term life insurance
premiums ($282).
(9) Company's payments for Long-Term Savings Plan ($3,971) and
Deferred Compensation ($435).
(10) Company's payments for Long Term Savings Plan ($2,450).
(11) Company's payments for signing bonus ($26,000),
reimbursement of moving expenses ($17,070), and guaranteed
bonus of $31,000.
Option Grants, Exercises and Holdings
The following table provides further information concerning
grants of stock options pursuant to the 1995 Stock Option Plan:
Option Grants In Last Fiscal Year (Part 1 of 2)
Individual Grants (1)
Number of
Securities Percent of Total
Underlying Options Granted Exercise
Options to Employees or Expiration
Name Granted(#) in Fiscal Year Base Price Date
J. Patrick Muldoon 15,000(2) 26.3% $11.00 06/21/06
Option Grants In Last Fiscal Year (Part 2 of 2)
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
for Option Term
0% 5% 10%
J. Patrick Muldoon $-0- $104,000 $263,000
(1) All options were granted with an exercise price equal to
the closing sale price for the Company's common stock on
the date of grant, as reported on the NASDAQ National
Market System. Except in the event of death, disability
or retirement, if any of the named executive officers
ceases to be employed by the Company, his options shall
terminate immediately. Upon a merger or consolidation in
which the Company is not the surviving corporation, all
options outstanding shall become vested and exercisable
immediately prior to such merger or consolidation.
(2) Each option vests ratably over five years on each
anniversary date after the date of grant.
The following table provides information with respect to the
named executive officers concerning exercised and unexercised
options as of the end of 1996:
Option Exercises and Year End Option Values
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options at
Options at Fiscal
Shares Fiscal Year-End
Acquired Year-End (#) ($)
on Value
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
Charles F. -0- -0- 20,000/ -0-/
Marcy 80,000 -0-
Richard F.
Anderson -0- -0- 10,708/ -0-/
3,000 -0-
Lawrence D.
Boyle -0- -0- 16,970/ -0-/
3,000 -0-
John T.
Carper -0- -0- 8,000/ -0-/
12,000 -0-
J. Patrick
Muldoon -0- -0- -0-/ -0-/
15,000 -0-
Retirement Income Plan
The retirement benefits pursuant to the Company's pension
plan are generally based on the average annual compensation of
the highest five consecutive years of annual compensation (salary
and bonus, as identified in the Summary Compensation Table,
above) during the previous ten years of credited service. The
following table sets forth the estimated annual retirement
benefits payable (on a straight-life annuity basis) upon normal
retirement to participating employees in the specified
remuneration and years-of-service classifications. Such
retirement benefits are not subject to reduction for Social
Security benefits. The estimated credited years of service for
the named executive officers based on continued service to normal
retirement age would be: Mr. Marcy, 20 years; Mr. Anderson, 22
years; Mr. Carper, 21 years; Mr. Muldoon, 28 years.
In 1994, the Company amended the payout formula of the
pension plan that covers salaried employees. All of the named
executives with the exception of Mr. Anderson will receive
pension payments set forth in the following table. Mr.
Anderson's pension payments are substantially similar to those
shown in the following table.
Pension Plan Table
Remuneration Years of Service
15 20 25 30 35
$125,000 $17,250 $23,000 $28,750 $34,500 $40,250
$150,000 $20,700 $27,600 $34,500 $41,400 $48,300
$175,000 $24,150 $32,200 $40,250 $48,300 $56,350
$200,000 $27,600 $36,800 $46,000 $55,200 $64,400
$225,000 $31,050 $41,400 $51,750 $62,100 $72,450
$250,000 $34,500 $46,000 $57,500 $69,000 $80,500
$300,000 $41,400 $55,200 $69,000 $82,800 $96,600
$400,000 $55,200 $73,600 $92,000 $110,400 $128,800
$450,000 $62,100 $82,800 $103,500 $124,200 $144,900
$500,000 $69,000 $92,000 $115,000 $138,000 $161,000
Payment of the specified retirement benefits is contingent
upon continuation of the plans in their present form until the
employee retires and, in the case of those subject to reduction
of benefits under the Internal Revenue Code, selection by the
administrative committee of the Deferred Compensation Plan to
participate in the Company's supplemental executive retirement
provisions under such Deferred Compensation Plan.
Compensation of Directors
During fiscal year 1996, each non-officer director was paid
an annual director's fee of $12,000 and $500 for each meeting of
the Board of Directors or its committees which he attended. The
Company paid a total of $116,000 in directors' fees in 1996. Mr.
Marcy and Mr. Ozley do not receive any fees for attendance at
meetings.
In order to more closely align director interests with those
of the Company's shareholders, the Board of Directors adopted a
compensation plan whereby at least 50% of the Board's annual
compensation will be paid in the form of Sealright common stock
with the remaining compensation in the form of cash. The
compensation plan is effective January 1, 1997. The new
compensation plan did not increase the value of director
compensation, which remained at $12,000 annually and $500 for
each board and committee meeting attended. The stock received by
the directors is restricted from resale for three years following
issuance. The directors are entitled to any dividends declared
on such shares.
Compensation Committee Interlocks
The Compensation Committee consists of G. Kenneth Baum,
Robert F. Hagans and William D. Thomas. There are no
Compensation Committee interlocks with other companies.
Agreements
In January, 1996, the Company entered into an employment
agreement with J. Patrick Muldoon, the Company's Vice President
of Marketing and Strategy and Research and Development. Under
the agreement, Mr. Muldoon's beginning base salary is $155,000
with a guaranteed bonus of $31,000 for the year ended 1996. Mr.
Muldoon is eligible to participate in the bonus program made
available to other Company executives following 1996. Mr.
Muldoon received an initial signing bonus of $26,000. In
addition, Mr. Muldoon was granted a ten-year option to purchase
15,000 shares of common stock at $11.00 per share, the fair
market value of the Company's common stock at the date of grant.
The options vest in five equal annual installments, commencing
January 8, 1997, subject to accelerated vesting in the event of a
change of control of the Company during the five year vesting
period. Upon termination of employment by the Company, except
for cause, Mr. Muldoon is entitled to a payment equal to 12
months salary.
Compensation Committee Report on Executive Compensation
On an annual basis, the Compensation Committee reviews the
salaries and bonuses of the executive officers and other employees,
administers the 1987 Stock Option Plan (the "1987 Plan"), the 1995
Stock Option Plan (the "1995 Plan"), and oversees the administration
of the Company's compensation program. From time to time, the
Committee engages the use of independent compensation consultants to
aid in focusing and implementing the Company's compensation policies
and objectives.
In accordance with the Securities and Exchange Commission's rules
designed to enhance disclosure of companies' policies toward executive
compensation, the following report is submitted by the committee
members in their capacity as the Board's Compensation Committee. The
report addresses the Company's compensation policy as it related to
the executive officers for the 1996 fiscal year.
General Compensation Policy
The Compensation Committee has been, and continues to be, guided
by a belief that executive compensation should reflect the Company's
ability to create shareholder value. To this end, the Company
recently adopted a uniform performance measurement system that aligns
the goals, objectives, and ultimately compensation, of each executive
officer and senior manager with the strategic goals of the Company.
In 1995, the Board of Directors, along with senior management, re-defined
the Company's strategic goals. Base compensation, merit and
bonus awards are based primarily on the individual's attainment of
predetermined goals and objectives as well as the Company's ability to
increase shareholder value. The Company measures shareholder value
using the concepts of "economic profit" and "Sealright Value Added",
or SVA. The Compensation Committee also relies on underlying earnings
performance in determining performance-based compensation. The
Compensation Committee has not yet adopted a policy with respect to
the $1,000,000 limitation on deductibility of executive compensation
under Section 162(m) of the Internal Revenue Code of 1986, as amended,
since current compensation levels fall significantly below that
amount.
Fiscal 1996 Compensation
Beginning with 1996 compensation, the first year under which the
new compensation policy was effective, the Company's executive
compensation integrated annual base salary and bonuses. Executive
bonuses are determined as part of the Leadership Incentive Plan (LIP).
The LIP's goal attainment is based on the Company achieving its SVA
target as well as attaining other strategic goals. The compensation
policies, as implemented, endeavor to enhance the profitability of the
Company, and thus shareholder value, by tying the financial interests
of the management with those of the Company.
Base Salary
As a general matter, an executive officer's base salary is
subjectively positioned so as to reflect the experience and
performance of such executive officer and the performance of the
Company. The Compensation Committee initially determines the amount
of base salary based on factors such as prior level of pay, quality of
resume, responsibilities of the position and salary levels of
similarly positioned executives in other companies of comparable size
within the Company's industry. Since many of the companies in the
Company's peer group (for purposes of the performance graph, below)
are much larger than the Company, the Compensation Committee does not
directly compare the salaries of the Company's executives exclusively
with those of its peer group. The Committee believes that such a
comparison would result in overstating the appropriate level of
executive compensation.
The Compensation Committee subjectively granted a raise to one
executive's base salary and reduced another executive's base salary by
5% based on, in the order of priority: (i) published surveys of other
executive officer median base salary increases of manufacturing
companies (not just those companies listed in the Company's peer
group), (ii) overall Company performance (based primarily on SVA), and
(iii) the executive officer's individual performance (as evidenced by
informal evaluations by other executives and/or the Board of
Directors). The surveys referred to in (i) above are produced by a
leading executive compensation publication and reflect the percentage
increases to annual base salary of other manufacturing companies'
executive officers.
Leadership Incentive Plan
For its executive officers and other key employees, the Company's
Leadership Incentive Plan couples compensation to the Company's SVA
target and other strategic goals. Under the LIP, each participating
officer and key employee is assigned a payout percentage which, when
multiplied by his/her base salary, establishes the amount of his/her
annual bonus. The bonus payout is paid in a combination of cash and
common stock of the Company, depending on the percent of goal
attainment. As the percent of goal attainment increases, the percent
of bonus payout in the form of common stock increases. The common
stock would be issued at a 25% discount to the market price at the
date of award and placed in trust, restricted from resale for three
years following the bonus payout date. Dividends declared on the
common stock, if any, are paid to the employee.
For 1996, the Company did not achieve its minimum LIP target.
However, three executive officers received cash bonus payouts which
were made under the terms of pre-existing employment agreements.
Stock Option Awards
The Compensation Committee also awards stock options to executive
officers and key employees under the 1987 Plan, the 1995 Plan, or
otherwise. The Committee believes that stock options are an effective
incentive for executives to create value for shareholders since the
value of an option bears a direct relationship to appreciation in the
Company's stock price. The Compensation Committee subjectively and
informally determines the granting of stock options. In making the
determination, the Committee examines (I) the Company's performance,
as determined by SVA , other subjective measures, and the market price
of its common stock, (ii) the number and exercise price of options
then held by each executive, (iii) the total stock holdings of the
executive officer, (iv) the individual performance of the executive
(as informally evaluated by other executives and/or the Board), (v)
the executive's potential contribution to the Company, and (vi) the
executive's position with the Company. The Compensation Committee
does not separately weigh such criteria, but rather views the mix of
information with respect to each executive officer.
During 1996, the Compensation Committee granted 55,000 options to
four executive officers in conjunction with each officers' new
responsibilities with the Company. No options were awarded to
existing officers during 1996.
President and CEO Compensation
The Compensation Committee decided not to change Mr. Marcy's base
annual salary during 1996, nor were any options granted to Mr. Marcy.
Mr. Marcy received a cash bonus which was made under the terms of a
pre-existing employment agreement. Mr. Marcy's base compensation and
bonus were set based on the foregoing policies.
Summary
The Compensation Committee believes that the executive officers
of the Company are dedicated to achieving significant improvements in
long-term financial performance, and that the compensation policies
and programs contribute to achieving this focus. The Compensation
Committee believes that the compensation levels during fiscal 1996
adequately reflected the Company's compensation goals and policies.
The Compensation Committee report is submitted by:
G. Kenneth Baum
Robert F. Hagans
William D. Thomas
<PAGE>
Company Performance
The following graph shows a five-year comparison of
cumulative total returns for the Company, the NASDAQ Composite
and an index of peer companies selected by the Company.
Comparison Of Five-Year Cumulative Total Return
(Sealright Co., Inc., NASDAQ Composite, and Peer Group)
Dollars
1991 1992 1993 1994 1995 1996
Sealright 100.00 109.18 77.69 95.77 60.36 58.71
Peer Group 100.00 119.54 120.67 127.68 151.59 189.55
NASDAQ 100.00 115.45 132.48 128.25 179.44 220.19
The total cumulative return on investment (change in the
year-end stock price plus dividends reinvested at the ex-dividend
date) for each of the periods for the Company, the peer group and the
NASDAQ Composite is based on the stock prices at the end of fiscal
year 1991, assuming a $100 investment. The graph compares the
performance of the Company with that of the NASDAQ Composite and peer
companies selected by the Company with the investment weighted at the
beginning of the period based on market capitalization.
The peer group consists of the following companies: Bemis
Company, Inc., James River Corporation of Virginia, Kerr Group, Inc.,
Liqui-Box, Inc., Shorewood Packaging Corporation and Sonoco Products
Company. The peer group was approved by the Compensation Committee.
Proposal Two: Approval of Independent Auditors
For 1996, KPMG Peat Marwick LLP audited the consolidated
financial statements of the Company and its subsidiaries.
Representatives of KPMG Peat Marwick LLP will attend the Annual
Meeting, will have the opportunity to make a statement if they desire
to do so, and will be available to respond to questions by
shareholders.
The Board of Directors has selected KPMG Peat Marwick LLP as
independent public accountants of the Company for 1997 and is
therefore asking the shareholders to approve the appointment.
Proposal Three: Shareholder Proposal Relating to the Sale
or Merger of the Company
Dr. Charles Miller, 23 Park Circle, Great Neck, New York, who owns 600
shares of common stock, has indicated that he will introduce the
following resolution at the Annual Meeting:
Resolved: that the shareholders of the Company recommend and deem it
desirable and in their best interest that the board of directors
immediately engage the services of a nationally recognized investment
banker to explore all alternatives to enhance the value of the
Company. These alternatives should include, but not be limited to,
the possible sale, merger or other transaction involving the Company.
Shareholder's Supporting Statement
In support of the above resolution, the proponent believes that in
view of the unacceptable performance of the Company over the past five
years, the deplorable stock price, and in my opinion, ineffective
management, the board of directors should take immediate action to
engage the services of an investment banker to explore all
alternatives to enhance the value of the Company
I am a co-founder of the Investor Rights Association of America and it
is my opinion that the value of the Company can be enhanced if the
above resolution is carried out and the shareholders would at long
last be able to salvage meaningful monetary rewards for their patience
and long suffering.
Nell Minow, a highly acclaimed corporate governance specialist, and
principal of the LENS Fund, which specializes in increasing the value
of under-performing companies, has stated:
"Companies can only justify asking investors to
take the risk of investing in equities by
delivering a competitive rate of return on the
invested capital. When a company's management
and board cannot meet that goal, they owe it to
their investors to submit themselves to an
independent evaluation by an outside firm, to
insure that all options are objectively
evaluated.
If a company's performance lags over a sustained
period, it is time for the shareholders to send
a message of no confidence to the board,
reminding them that they have to hold management
- and themselves - to a higher standard."
I URGE YOUR SUPPORT. VOTE FOR THIS RESOLUTION
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
The Board of Directors believes that this proposal to engage an
investment banker would not be in the Company's best interests at this
time and recommends a vote AGAINST the proposal.
The Board and management believe that maximizing shareholder value is
best accomplished by causing the Company to be operated efficiently in
order to increase operating earnings. To this end, the Company
continues to develop strategic business plans and implement procedures
to improve the operating performance of the Company. The Board and
management believe that the continued focus on improvement in the
Company's performance and the diligent pursuit of the Company's
strategic business plans will maximize shareholder value.
The Board is opposed to the proposal to engage an investment banker at
this time to explore all alternatives available to enhance the value
of the Company. During the last 18 months, the Company has undergone
extensive restructuring and personnel changes in order to improve the
operating efficiency of the Company in an effort to maximize
shareholder value. In addition, the Board has implemented a strategic
plan that focuses on building partnerships with customers. These
changes were made at great expense to the Company, and the Board
believes that the Company and its shareholders are best served by
allowing the changes a reasonable time to take effect. The Board
believes that it would be imprudent and not in the best interests of
the Company and its shareholders if the Company's recently implemented
strategic business plans are abandoned before such plans are given the
proper time to achieve results.
For the foregoing reasons, the Board of Directors recommends a vote
AGAINST this proposal.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED AGAINST THE
RESOLUTION UNLESS SHAREHOLDERS SPECIFY A CONTRARY VOTE.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires
directors and certain officers of the Company, as well as persons who
own more than 10% of the Company's outstanding common stock
("Reporting Persons"), to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange
Commission. The Company believes that during the preceding year all
Reporting Persons timely complied with all filing requirements
applicable to them.
1998 Shareholder Proposals
In the event any shareholder intends to present a proposal
at the Annual Meeting of Shareholders to be held in 1998, such
proposal must be received by the corporate secretary of the Company,
in writing, on or before December 1, 1997, to be considered for
inclusion in the Company's next Proxy Statement.
<PAGE>
Voting Proxies and Other Matters
Proxies will be voted in accordance with the choices
specified on the form of proxy. If no choice is specified,
shares will be voted: (i) "FOR" the nominees listed on the Proxy
and in this Proxy Statement, (ii) "FOR" the appointment of KPMG Peat
Marwick LLP as independent auditors of the Company for 1997, and (iii)
"AGAINST" approval of the shareholder proposal requiring the Company
engage an investment banker to explore alternatives to enhance
shareholder value.
Management of the Company does not intend to present any
business to the Shareholders at the Annual Meeting except as indicated
herein and presently knows of no other business to be presented at the
Annual Meeting. Should any other business come before the Annual
Meeting, the persons named in the accompanying form of Proxy will vote
the Proxy in accordance with their judgment of the best interests of
the Company on such matters.
BY ORDER OF THE BOARD OF DIRECTORS
/S/ Charles F. Marcy
Charles F. Marcy
President and CEO
March 31, 1997
SEALRIGHT CO., INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 23, 1997
THIS PROXY AND EACH OF THE PROPOSALS ARE SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS.
The undersigned hereby appoints Charles F. Marcy and John T. Carper,
jointly and individually, as Proxies, each with full power of substitution,
and hereby authorizes them to represent and to vote, as designated below,
all the shares of common stock of Sealright Co., Inc. which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Stockholders to be held on May 23, 1997, or any adjournments or postponements
thereof.
1. ELECTION OF DIRECTORS
[ ] FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below).
to vote for all nominees listed below.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee
strike a line through the nominee's name.)
G. KENNETH BAUM, D. PATRICK CURRAN, FREDERICK O. DESIEGHARDT,
ROBERT F. HAGANS, CHARLES F. MARCY, MARVIN W. OZLEY, ARTHUR R. SCHULZE,
CHARLES A. SULLIVAN, and WILLIAM D. THOMAS
2. APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT PUBLIC ACCOUNTANTS
OF THE COMPANY FOR 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. STOCKHOLDER PROPOSAL REGARDING ENGAGEMENT OF INVESTMENT BANKING FIRM.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the Annual Meeting.
(Please see reverse side)
<PAGE>
SEE REVERSE SIDE FOR MATTERS TO BE VOTED ON.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. NONE OF THE PROPOSALS
ARE RELATED TO OR CONDITIONED ON THE APPROVAL OF ANY OTHER PROPOSAL. IF
NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR
DIRECTOR, FOR PROPOSAL 2, AND AGAINST PROPOSAL 3.
Please mark, date, sign and return this Proxy card by mail in the enclosed,
postage prepaid envelope.
DATED:____________________________________, 1997
________________________________________________
Signature
_________________________________________________
Signature
(Please sign exactly as name appears on stock certificate. Where
stock is registered jointly, all owners must sign. Corporate owners
should sign full corporate name by an authorized person. Executors,
administrators, trustees or guardians should indicate their status
when signing.)
