PAGE
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to e240.14a-11(c) or e240.14a-12
Gibson Greetings, Inc.
--------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction
applies:
------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: 1/
------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------
1/ Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------
_____
Notes:
PAGE
<PAGE>
GIBSON GREETINGS, INC.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Harold L. Caldwell, William L.
Flaherty and Stephen M. Sweeney, and each of them, attorneys with the
powers which the undersigned would possess if personally present,
including the power of substitution, to vote all shares of the
undersigned at the Annual Meeting of Stockholders of Gibson Greetings,
Inc. to be held in the Auditorium of the Cincinnati Art Museum, Eden
Park, Cincinnati, Ohio, on April 21, 1994 at 11:00 a.m., Cincinnati
time, and at any adjournments thereof.
The proxy will be voted as specified. If no specification is
made, the proxy shall be voted FOR the nominees listed on the reverse
side. As to any other matter or if any of said nominees are not
available for election, said attorneys shall vote in accordance with
their best judgment.
[CONTINUED AND TO BE SIGNED ON REVERSE SIDE]
1. Election of Frank Stanton and Roger T. Staubach as directors.
[ ] FOR all nominees
[ ] WITHHELD from all nominees
[ ] *EXCEPTIONS (as marked below)
For all nominees except as noted on line below.
*EXCEPTIONS ____________________________________________
2. Upon such other business as may properly come before the
meeting. (Strike through if you wish authority withheld.)
[ ] Mark here if you plan to attend the meeting.
[ ] Mark here for address change and note at right.
IMPORTANT: Please date and sign
exactly as name appears. If shares
are held jointly, each stockholder
named should sign. Executors,
administrators, trustees, etc. should
so indicate when signing. If the
signer is a corporation, please sign
full corporate name by duly
authorized officer.
Dated _________________, 1994
_____________________________
_____________________________
(Signature of Stockholder)
Votes must be indicated (x) in Black
or Blue ink.
Please Sign, Date and Return the Proxy Promptly Using the Enclosed
Envelope.
PAGE
<PAGE>
GIBSON GREETINGS, INC.
2100 Section Road
Cincinnati, Ohio 45237
NOTICE OF ANNUAL MEETING
The Annual Meeting of Stockholders of Gibson Greetings, Inc.
will be held in the Auditorium of the Cincinnati Art Museum, Eden Park,
Cincinnati, Ohio, at 11:00 a.m., Cincinnati time, on April 21, 1994 for
the following purposes:
1. To elect two directors; and
2. To transact such other business as properly may come
before the meeting.
Stockholders of record at the close of business on
February 28, 1994 are entitled to receive notice of, and to vote at, the
meeting.
------------------------------------------------------------------------
BY ORDER OF THE BOARD OF DIRECTORS, March 21, 1994
HAROLD L. CALDWELL
SECRETARY
------------------------------------------------------------------------
IMPORTANT:
TO VOTE YOUR SHARES, PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY
CARD AND MAIL IT PROMPTLY. THE ENCLOSED RETURN ENVELOPE REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES OR CANADA.
------------------------------------------------------------------------
PAGE
<PAGE>
GIBSON GREETINGS, INC.
2100 Section Road
Cincinnati, Ohio 45237
(513) 841-6600
PROXY STATEMENT
This Proxy Statement is furnished in connection with
the solicitation by the Board of Directors of Gibson Greetings,
Inc. of proxies to be voted at the Annual Meeting of Stockholders
on April 21, 1994. Except as otherwise indicated, "the Company"
as used herein refers to Gibson Greetings, Inc., its subsidiary
corporations and its predecessor corporations taken as a whole.
This Proxy Statement and the accompanying proxy card are being
mailed to stockholders on or about March 21, 1994.
OUTSTANDING VOTING SECURITIES
The number of voting securities of the Company
outstanding on February 28, 1994, the record date for the
meeting, was 16,064,755 shares of common stock, $.01 par value,
all of one class and each entitled to one vote. The holders of
at least a majority of the outstanding shares of common stock
must be represented in person or by proxy at the Annual Meeting
for the meeting to be held.
PROXIES AND VOTING
Stockholders are urged to: read carefully the material
in this Proxy Statement; specify their choice on each matter by
marking the appropriate boxes on the enclosed proxy card; and
sign, date and return the card in the enclosed stamped envelope.
A stockholder who executes a proxy may revoke or revise that
proxy in writing at any time before the meeting by notice to the
Company's Secretary or may, by voting by ballot at the meeting,
cancel any proxy previously returned.
The Company's Proxy Committee consists of three
individuals, each of whom is an officer of the Company. If a
stockholder's proxy card is properly executed and returned, but
no choice is specified, the shares will be voted by the Proxy
Committee as recommended by the Company. At the present time it
is intended that proxies which contain no instructions to the
contrary will be voted "for" the nominees for director named in
this Proxy Statement. Should any nominee not be available for
election, the proxies will be voted for the election of such
other person as may be recommended by the Company in place of
such nominee. Proxy cards, unless otherwise indicated by the
stockholder, also confer upon the Proxy Committee discretionary
authority to vote all shares of the stock represented by the
proxies on any matter which properly may be presented for action
at the meeting. At the present time, the Company is not aware of
any business or matter which properly may be presented for action
at the meeting other than as is described in this Proxy
Statement.
In accordance with the General Corporation Law of the
State of Delaware and the Company's By-Laws, the affirmative vote
of a plurality of the shares of the Company's
common stock present in person or represented by proxy at the
meeting and entitled to vote on the election of directors will be
sufficient for election of the nominees as directors. Any other
matter which might arise at the meeting would be determined by a
vote of a majority of the shares of common stock present in
person or represented by proxy and voting on that matter.
Abstentions and broker non-votes have the effect of negative
votes as to the election of directors but generally are deemed to
be absent shares as to other matters. Votes at the meeting will
be tabulated by financial officers of the Company, who act as
Judges of Election. The Company has not established a system for
confidential voting.
ATTENDANCE AT ANNUAL MEETING
To ensure the availability of adequate space for
stockholders wishing to attend the meeting, attendance may be
limited to stockholders of record, beneficial owners of the
Company's stock having evidence of such ownership, or their
respective authorized representatives, and invited guests of
Management. Please indicate whether you plan to attend the
Annual Meeting by checking the appropriate box on the enclosed
proxy card.
THE BOARD OF DIRECTORS
Pursuant to the Delaware General Corporation Law, as
implemented by the Company's Restated Certificate of
Incorporation and By-Laws, all corporate powers are exercised,
and the Company's business, property and affairs are managed, by
or under the direction of the Board of Directors. The Company's
Board of Directors is divided into three classes.
After extensive consideration, the Company determined
in early 1994 that a smaller Board of Directors than it has
maintained in recent years would facilitate communications and
decision-making processes between the Company and its directors
and among the directors themselves. Accordingly, the size of the
Company's Board of Directors is being reduced to eight directors,
three in each of Classes I and III and two in Class II.
Effective April 15, 1994, Messrs. Julius Koppelman, Ralph J.
Olson, Thomas J. Smith, Burton B. Staniar and Harry N. Walters
will retire from the Board of Directors.
The nominees in Class II will be nominated for election
as directors to serve until the Annual Meeting in 1997 and until
their successors are elected and qualified. The directors in
Class I have been elected to serve until the Annual Meeting in
1996 and the directors in Class III have been elected to serve
until the Annual Meeting in 1995.
Set forth below is certain information with respect to
each of the nominees and continuing directors.
Class I
(Terms expiring in 1996)
CHARLES D. LINDBERG, age 65. Mr. Lindberg has been a
partner in the law firm of Taft, Stettinius & Hollister, counsel
to the Company, for more than the past five years and currently
serves as Managing Partner. He has been a director of the
Company since May 1991.
ALBERT R. PEZZILLO, age 65. Mr. Pezzillo is currently
a business consultant. He retired in 1990 from his position as
Senior Vice President of American Home Products Corporation, a
manufacturer and marketer of ethical pharmaceuticals, medical
supplies and hospital, consumer health care, food and household
products. Prior to joining American Home Products in 1981, he
held a variety of executive positions with Warner Lambert Company
and Colgate Palmolive Company. Mr. Pezzillo became a director of
the Company in April 1990.
C. ANTHONY WAINWRIGHT, age 60. Mr. Wainwright has been
Vice Chairman of Campbell-Mithun-Esty, a national advertising
agency, since 1989. From 1980 until 1989 he was President, Chief
Operating Officer and a director of The Bloom Companies, Inc., a
holding company for a national advertising agency group. Prior
to 1980, Mr. Wainwright held various executive positions with
companies in the advertising and marketing industries. He is
also a director of American Woodmark Corporation, Del Webb Corp.
and Specialty Retail Group, Inc. He has been a director of the
Company since March 1988.
Class II
(Nominees for election to serve until 1997)
FRANK STANTON, age 64. Until his retirement in 1990,
Mr. Stanton had served as Chairman and Chief Executive Officer of
MRB Group, Inc., a world-wide media and marketing research
organization, which he founded in 1987. From 1974 until 1989 he
was President and Chief Executive Officer of Simmons Market
Research Bureau, a leading rating service for the magazine
industry and now a subsidiary of MRB Group, Inc. He has been a
director of the Company since June 1985.
ROGER T. STAUBACH, age 52. Mr. Staubach has been
Chairman of the Board and Chief Executive Officer of The Staubach
Company, a Dallas, Texas-based integrated real estate service
company, since 1990. He was President of that company from 1981
until 1990 and was active in other real estate brokerage
businesses prior to 1981. From 1969 through 1979 he was a member
of The Dallas Cowboys professional football team. He is also a
director of Brinker International, Inc., First USA, Inc.,
Halliburton Company and Life Partner's Group, Inc. Mr. Staubach
became a director of the Company in January 1992.
Class III
(Terms expiring in 1995)
THOMAS M. COONEY, age 68. Mr. Cooney was the Company's
Chairman of the Board from 1986 until 1989 and currently serves
as Chairman Emeritus of the Company and as President of Gibson
Foundation, Inc., a charitable foundation established by the
Company. He joined the Company as its President and Chief
Executive Officer in 1978 and served as President until 1986 and
as Chief Executive Officer until 1987. He is also a director of
Genovese Drug Stores, Inc. Mr. Cooney has been a director of the
Company since 1982.
BENJAMIN J. SOTTILE, age 56. Mr. Sottile has been the
Company's Chairman of the Board since 1989, its Chief Executive
Officer since 1987 and its President since 1986. From 1986 to
1987 he was the Company's Chief Operating Officer. Mr. Sottile
was President of Group I, Revlon Beauty Group, Revlon Corp., a
manufacturer of cosmetic and beauty supplies, from 1984 to 1986.
From 1981 to 1984 he was a Senior Vice President of Warner
Communications, Inc., where he was chiefly responsible for the
operating activities of consumer product companies including The
Franklin Mint, Warner Cosmetics and Fragrances and Knickerbocker
Toy Company. He became a director of the Company in January
1987.
CHARLOTTE A. ST. MARTIN, age 48. Ms. St. Martin has
been Executive Vice President of Loews Hotels and President and
Chief Executive Officer of Loews Anatole Hotel, Dallas, Texas,
since 1989. Previously she served Loews Hotels in a variety of
other executive capacities. Loews Hotels owns and operates
fourteen hotels nationally and internationally. Ms. St. Martin
is also a former President of the Dallas Convention and Visitors'
Bureau. She has been a director of the Company since August
1993.
Compensation of Directors. Effective January 1, 1993,
directors are entitled to receive fees of $900 for each Board
meeting attended and $650 for each committee meeting attended,
plus reimbursement of expenses. In addition to these fees, the
Company pays an annual fee of $13,500 for services of directors
who are not employees of the Company and an annual fee of $2,500
per chairmanship to each committee chairman. Pursuant to the
Company's 1989 Stock Option Plan for Nonemployee Directors (the
"Directors Plan") each nonemployee director of the Company, at
the close of business on the day of the Annual Meeting of
Stockholders, receives an option to purchase 1,000 shares of
common stock.
In order to continue to attract and retain outstanding
individuals to serve as nonemployee directors of the Company
("Outside Directors"), the Company also has a Retirement Plan for
Outside Directors (the "Directors Retirement Plan"). Outside
Directors are defined by the Directors Retirement Plan as
directors not employed by the Company or a subsidiary and include
former or retired employees if they are not vested under any
other Company retirement plan. In order to qualify for benefits
under the Directors Retirement Plan, an Outside Director must
have served the Company as such for at least nine years. An
Outside Director who does qualify for benefits under the
Directors Retirement Plan will receive an annual benefit, payable
quarterly for life, equal to the amount of the Company's annual
fee (not including payments for serving as chairman of a Board
committee) paid to Outside Directors on the date on which the
Outside Director's service to the Company ceases (the "Annual
Retainer"). Benefits under the Directors Retirement Plan
commence upon termination of service for directors who have
attained age 65 and are payable beginning at age 65 to those
whose services terminate prior to that age. Should an Outside
Director who has qualified for benefits under the Plan die before
receiving any benefits, his designated beneficiary or estate will
be entitled to receive a payment equal to five times the Annual
Retainer; should an Outside Director die after the commencement
of benefits but prior to having received them for five years, his
beneficiary or estate will receive an amount equal to five times
the Annual Retainer less any benefits already paid.
In connection with their retirements from the Board on
April 15, 1994, each of Messrs. Koppelman, Smith, Staniar and
Walters will receive a special terminating director's fee of
approximately $4,000.
Mr. Walters has entered into a two-year consulting
agreement with the Company having a base fee of $25,000 per year
plus per diem payments of $150 per hour (not to exceed $1,000 per
day).
Meetings; Committees of the Board. The Board of
Directors held four meetings in 1993. The Board of Directors has
a Nominating Committee, composed in 1993 of Messrs. Cooney, Chm.,
Koppelman, Wainwright and Walters, which recommends to the Board
for nomination, or to a class for election in the event of
vacancy, nonemployee directors of the Company. By virtue of his
position as Chairman of the Board and President of the Company,
Mr. Sottile is also a member of the Nominating Committee. The
Nominating Committee held one meeting in 1993. The Nominating
Committee has not established procedures for consideration of
nominees recommended by stockholders. The Board also has an
Audit Committee, which deals with financial reporting and control
of the Company's assets. This Committee, consisting of
Messrs. Stanton, Chm., Pezzillo and Smith in 1993, held two
meetings during that year. The Compensation Committee of the
Board is discussed below. Each incumbent director attended at
least 75% of the aggregate of the total number of Board of
Directors meetings which he was eligible to attend and the total
number of meetings of committees of the Board on which the
director served during the 1993 calendar year.
Compensation Committee Interlocks and Insider
Participation. The Board has a Compensation Committee, currently
composed of Messrs. Smith, Chm., Staniar, Stanton and Wainwright.
The Compensation Committee sets cash compensation for the
Company's executive officers and other key employees, approves
terms and conditions of employment contracts for key executives
and establishes terms and conditions of the Company's bonus and
retirement plans. The Committee also administers all of the
Company's Stock Option and Incentive Plans (except the Directors
Plan, which is administered by the full Board), selects the
persons to whom awards will be made under those Plans and,
subject to the limitations imposed by the Plans, establishes the
terms and conditions of each award. The Compensation Committee
held three meetings in 1993.
In accordance with an agreement assigned to it in March
1983, Harding Service Corporation ("Harding") provided the
Company with management consulting services through January 31,
1994; payments to Harding pursuant to the agreement totalled
$122,500 in 1993 and $10,000 in 1994. Mr. Koppelman, a retiring
director and a member until April 1993 of the predecessor
committee to the Company's Compensation Committee, is the
Chairman of Harding.
EXECUTIVE COMPENSATION
AND OTHER INFORMATION
Summary Information. The following table sets forth, for
each of the three years in the period ending December 31, 1993,
amounts of cash and certain other compensation paid by the
Company in respect of the year to (i) Mr. Sottile and (ii) each
of the Company's four most highly compensated executive officers
other than Mr. Sottile who were serving as executive officers at
the end of 1993. Mr. Sottile and these four other executive
officers are sometimes referred to hereafter as the "named
executive officers."
PAGE
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Annual Compensation Compensation Awards
----------------------------- -------------------- Secur-
Secur-
Other ities All
Annual Restricted Under- Other
Compen- Stock lying Compen
Name and Salary Bonus sation Award(s) Options sation
Principal Position Year ($) ($) ($)(1) ($)(2) (#) ($)(3)
- ----------------------- ---- -------- -------- ------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Benjamin J. Sottile 1993 $419,250 $260,000 -- -- -- $61,819
Chief Executive Officer
1992 $409,125 $200,000 -- -- 45,000 $20,746
1991 $404,167 $325,000 * $575,000 -- *
Michael A. Pietrangelo 1993 $268,750 -- -- -- -- $ 9,636
Vice President
1992 $268,750 $ 95,000 -- -- 27,000 $ 7,908
1991 $258,333 $151,000 * -- -- *
Ralph J. Olson 1993 $261,300 $230,000 -- -- -- $17,299
Vice President
1992 $251,183 $105,000 -- -- 21,000 $ 6,651
1991 $183,814 $ 85,000 * $257,500 20,000 *
L.R. Jalenak, Jr. 1993 $124,200 $ 95,000 $28,649 -- -- $ 6,772
Vice President
1992 $207,000 $ 75,244 $40,088 -- -- $12,434
1991 $207,000 $100,677 * -- -- *
Stephen M. Sweeney 1993 $142,875 $ 85,000 -- -- -- $ 5,378
Vice President
1992 $140,771 $ 60,000 -- -- 15,000 $ 5,505
1991 $137,500 $ 85,000 * -- -- *
</TABLE>
[FN]
____________________________
* In accordance with Securities and Exchange Commission
transitional regulations, information for fiscal year 1991 is
not provided.
(1) For 1993, none, other than perquisites which did not exceed
the lesser of $50,000 or 10% of salary and bonus for any named
executive except Mr. Jalenak, whose perquisites included
professional fee reimbursements of $7,350 and a Company car
allowance of $11,864.
(2) At December 31, 1993, aggregate restricted stock holdings
were as follows: Mr. Sottile, 25,000 shares; Mr. Pietrangelo,
10,000 shares; and Mr. Olson, 10,000 shares. Aggregate award
values at December 31, 1993 (based upon the closing price of
$21.125 per share on that date for the Company's common stock)
were $503,125, $201,250 and $201,250, respectively. Each person
received dividends on the full number of restricted shares held
by him. Mr. Sottile's award began vesting, at the rate of 5,000
shares (20%) per year, on September 15, 1991. Mr. Olson's award
began vesting, at the rate of 2,000 shares (20%) per year, on
April 5, 1993.
(3) For 1993, includes the following: (i) matching
contributions to the Company's Matched PaySaver (401(k)) Plan on
behalf of each of Messrs. Sottile ($1,769), Pietrangelo ($1,716),
Jalenak ($1,507) and Sweeney ($1,557) in respect of their 1993
contributions to the Plan; (ii) group term life insurance
payments for Mr. Sottile ($5,400), Mr. Pietrangelo ($4,320), Mr.
Olson ($2,280), Mr. Jalenak ($5,265) and Mr. Sweeney ($3,821);
(iii) whole-life insurance premiums of $46,500 for the benefit of
Mr. Sottile; (iv) directors meeting fees of $8,150 for Mr.
Sottile and $3,600 for each of Messrs. Pietrangelo and Olson; and
(v) moving and relocation expenses ($10,977) and miscellaneous
awards ($442) for Mr. Olson.
Stock Options. The Company has six existing plans pursuant
to which options for shares of common stock may be granted to key
employees. These are the 1982, 1983, 1985 and 1987 Stock Option
Plans and the 1989 and 1991 Stock Incentive Plans (together, the
"Plans"). None of the Plans provides for the grant of stock
appreciation rights ("SARs"). There were no stock option grants
under the Plans to the named executive officers during the year
ended December 31, 1993.
With respect to each named executive officer, the following
table sets forth information concerning unexercised options held
at December 31, 1993. No named executive officer exercised
options during 1993.
PAGE
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
and FY-End Option Values
Number of
Securities Value of
Underlying Unexercised
Value Unexercised In-the-Money
Realized Options Options
($) at FY-End (#) at FY-End ($)
(Market
Shares Price on
Acquired Exercise
on Less
Exercise Exercise Exercisable/ Exercisable/
Name (#) Price) Unexercisable Unexercisable
- --------------------- -------- -------- -------------- -------------------
<S> <C> <C> <C> <C>
Benjamin J. Sottile -- -- 190,000/30,000 $285,000/$82,500
Michael A. Pietrangelo -- -- 39,000/18,000 $ 51,000/$49,500
Ralph J. Olson -- -- 20,333/20,667 $ 19,250/$38,500
L.R. Jalenak, Jr. -- -- 30,000/ -- $ 26,250/ --
Stephen M.Sweeney -- -- 14,500/10,000 $ 39,813/$27,500
</TABLE>
Pension Plans. The Pension Plan Table set forth below shows
estimated annual pension benefits payable to a covered
participant under the Company's Retirement Income Plan (the
"Retirement Plan"), a qualified defined benefit pension plan, and
under the Gibson Greetings, Inc. ERISA Makeup Plan (the "Makeup
Plan"), a nonqualified supplemental pension plan providing
benefits that would otherwise be denied participants because of
certain Internal Revenue Code limitations on qualified plan
benefits. Benefits shown are computed as a straight life annuity
for an employee retiring at age 65 in 1994 with no offsets.
PAGE
<PAGE>
<TABLE>
<CAPTION>
Pension Plan Table
Years of Service
--------------------------------------------------------------------------
Remuneration 5 10 15 20 25 30 35
-- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C>
$ 200,000 $14,280 $ 28,560 $ 42,840 $ 57,120 $ 71,400 $ 85,680 $ 99,960
300,000 21,780 43,560 65,340 87,120 108,900 130,680 152,460
400,000 29,280 58,560 87,840 117,120 146,400 175,680 204,960
500,000 36,780 73,560 110,340 147,120 183,900 220,680 257,460
600,000 44,280 88,560 132,840 177,120 221,400 265,680 309,960
700,000 51,780 103,560 155,340 207,120 258,900 310,680 362,460
800,000 59,280 118,560 177,840 237,120 296,400 355,680 414,960
900,000 66,780 133,560 200,340 267,120 333,900 400,680 467,460
1,000,000 74,280 148,560 222,840 297,120 371,400 445,680 519,960
</TABLE>
Benefits under the Retirement and Makeup Plans are based
upon the highest average sixty consecutive months' salary and
bonus (as shown on the Summary Compensation Table) during the 120
months immediately preceding retirement. Compensation covered by
the Plans at the end of 1993 for each named executive officer is
as follows: Mr. Sottile, $861,731; Mr. Pietrangelo, $362,392;
Mr. Olson, $390,884; Mr. Jalenak, $500,685; and Mr. Sweeney,
$218,637. For the purpose of computing a benefit under the table
above, on December 31, 1993, Mr. Sottile had 7 years of credited
service, Mr. Pietrangelo, 4 years, Mr. Olson, 3 years, Mr.
Jalenak, 34 years, and Mr. Sweeney, 6 years.
In addition to the Retirement Plan and the Makeup Plan,
certain executives designated by the Compensation Committee are
eligible for benefits under the Company's Supplemental Executive
Retirement Plan (the "SERP"), which was adopted to attract and
retain highly qualified executives by providing retirement
benefits at levels which the Company believes to be competitive.
A participant in the SERP who retires at age 65 is entitled to
receive supplemental retirement benefits equal to the difference
between (i) that percentage of the participant's final monthly
average earnings determined by crediting 2%, 1-2/3% and 1-1/3%
per year, respectively, for each of the first 10, next 10 and
next 10 years of credited service, up to a maximum of 30 years of
credited service and (ii) the aggregate of the participant's
monthly benefits from the Retirement Plan and the Makeup Plan
plus supplemental retirement benefits under any individual
agreement with the Company. The SERP provides for adjustments to
the basic benefit formula in the event of a participant's early
retirement, disability retirement, death or other termination of
employment. As of December 31, 1993, Messrs. Sottile, Olson and
Sweeney had been designated as participants in the SERP.
PAGE
<PAGE>
Employment Contracts. Mr. Sottile has an employment
contract with the Company which runs from April 1, 1993 until
March 31, 1998, and renews automatically from year to year
thereafter unless notice is given by either party. Mr. Sottile's
contract sets a minimum annual base salary of $430,000, subject
to increase from time to time, and provides for an annual
executive bonus based upon a plan to be approved annually by the
Company's Compensation Committee. Mr. Sottile's contract further
provides that if any person gains control of 50% or more of the
voting power of the Company's securities and thereafter his
employment terminates, he is entitled under specified
circumstances to be paid $1.5 million; such amount is to be
increased by an additional amount related to the excise tax which
would be imposed upon excess "parachute" payments by the Internal
Revenue Code.
Additionally, Mr. Olson has an employment agreement with the
Company, which currently expires April 4, 1995, providing for a
base annual salary of $250,000, subject to increase from time to
time, and for participation in the Company's annual executive
bonus plan. The original term of Mr. Olson's contract was from
April 5, 1991 through April 4, 1994; the contract renews
automatically from year to year unless he is otherwise notified
by the Company. In the event that employment is terminated for
reasons other than cause or disability, the contract provides for
severance pay equal to 1-1/2 times total salary and bonus for the
previous 12 months; the agreement also provides for payment of
approximately three times annual salary and bonus upon
termination of employment following a change in control of the
Company.
Mr. Jalenak, who retired on December 31, 1993, had an
employment agreement with the Company pursuant to which he
received a base salary of $124,200 during 1993 plus incentive
compensation under the Company's annual executive bonus plan. In
accordance with this contract, Mr. Jalenak also will receive
$120,000 as a result of his retirement, to be paid in ten annual
installments beginning in June 1994. Such amount does not
include $696,750 to be paid under a prior employment contract.
Mr. Sweeney has an employment agreement with the Company
which provides for a base annual salary of $136,000, subject to
increase by the Company from time to time, and for participation
in the Company's executive bonus plan. The agreement is subject
to termination by the Company upon one year's advance written
notice and as is otherwise provided therein. Mr. Sweeney's
agreement also provides that he is entitled to one year's salary
(subject to offset under certain circumstances) if he is not
retained in substantially the same capacity and salary for at
least six months after any person becomes the beneficial owner of
50% or more of the Company's securities.
PAGE
<PAGE>
Other executive officers have employment agreements with the
Company which specify base salaries and provide for participation
in the Company's executive bonus plan. The Company's employment
agreements also generally provide additional miscellaneous
compensation in the form of some combination of perquisites such
as club membership fees, use of automobiles, insurance benefits
and tax and estate planning services.
In connection with his resignation, in February 1994, as an
officer and director of the Company, Mr. Pietrangelo's employment
agreement with the Company, which was due to expire on May 31,
1995, was terminated. Mr. Pietrangelo will be paid $550,000 over
the next two years. In addition, he will receive, under certain
circumstances, continuation of health insurance coverage for this
same period.
Mr. Cooney is entitled, under the terms of his prior
employment agreements with the Company, to receive periodic
payments aggregating $1,005,000; these payments began in 1991 and
will continue through 2000.
Report of the Compensation Committee on Executive
Compensation. The Compensation Committee submits this report,
which covers the objectives and components of the Company's
Executive Compensation Program, 1993 actions taken by the Company
and the Chief Executive Officer's compensation.
Objectives of the Executive Compensation Program
* To provide compensation opportunities that approximate
those offered by other successful consumer products companies, so
that the Company can attract and retain the key executive talent
needed to achieve its goals.
* To reward executives for achieving the financial goals
of the Company and its business units and for accomplishing their
individual goals that relate to improved management of internal
operations and to the needs of the Company's customers.
* To motivate executives to take a long-term view of the
Company's opportunities, so as to produce long-term value for
shareholders.
Components of the Executive Compensation Program
The executive compensation program is comprised of four
elements: base salary, annual incentives, long-term incentives,
and benefits.
Base Salaries. Generally, minimum base salaries for the
Company's executive officers are established in employment
agreements with the Company. Base salaries are targeted at the
50th percentile of those provided by other consumer products
companies with which the Company competes for key executive
talent. Levels of salary of various jobs are reviewed
periodically to determine their competitiveness. Executives'
salaries are reviewed every 15 months, and are subject to
adjustment based on the general movement in salaries in the job
market, as well as the individuals' job performance, their
relative contributions to the Company, and changes in their job
responsibilities and accountabilities. Because the Company
competes with a wide and diverse range of consumer products
companies for executive talent, the group of companies used for
compensation comparisons is not the same as that believed
appropriate for a comparison of shareholder returns in the
Performance Graph shown below, although there may be some overlap
between the groups.
In February 1993, an independent human resources consulting
firm reviewed base salaries for the Company's senior officers.
This firm concluded that senior officers' base salaries were, on
average, comparable to those offered by other similarly sized
companies in the consumer products industry.
Annual Incentives. The Company places significant emphasis
on achieving its annual profit objectives. Accordingly, under
the annual incentive plan, specific targeted levels of before-tax
income are established for each fiscal year at both the corporate
and division levels. A pool for incentive awards is funded after
year-end results are known, with the size of the pool calculated
based upon the achievement of predetermined percentages of the
target levels. Individual awards are made from this pool, with
the size of each award based on (1) the objective level of
corporate/division profitability and (2) an assessment of the
individual's contributions to the business.
Eligibility for annual incentive awards is limited to key
executives who play important roles in the achievement of the
Company's objectives. In addition, other managers may receive
incentive awards in a particular year, to reward their
extraordinary results or achievements for that year.
Achievement of target incentives (for meeting the Company's
demanding profit objectives) can place executives' annual cash
compensation (that is, base salary plus annual incentive award)
somewhat above the median for competitive practice.
Long-Term Incentives. The Company provides two different
types of long-term incentives to its senior executives:
(1) stock options (nonqualified and incentive stock options),
which are typically awarded every other year, and (2) restricted
stock grants, awarded on a periodic basis, and only to the most
senior executives.
Eligibility for long-term incentives is targeted to key
corporate and division executives and managers who can have a
significant effect on the achievement of the Company's long-term
strategic objectives. The use of Company stock as a key element
of the executive compensation program is intended to strengthen
the link between the interests of senior management and the
Company's shareholders. Long-term incentives are granted based
upon the individual's performance and responsibilities.
PAGE
<PAGE>
Benefits. The Company's benefits program is comprised of
retirement income and group insurance plans. The objective of
the program is to provide executives with reasonable and
competitive levels of protection against the four contingencies
(retirement, death, disability, and ill health) that can
interrupt their employment and/or income.
The Company's retirement income program consists of two
tax-qualified plans (a defined benefit pension plan and a matched
savings plan) that cover all salaried full-time employees,
including the Company's executives, and two non-tax-qualified
plans for executives (an ERISA "Makeup" plan, that restores
defined benefit pension benefits denied by the federal tax laws,
and a supplemental defined benefit retirement plan).
The group insurance program consists of life, disability,
and health insurance benefit plans that cover all salaried
full-time employees, including the Company's executives. The
employment agreements of individual executive officers may also
provide for perquisites in the form of supplemental insurance
benefits and/or Company payment of the premiums relating to
insurance benefits.
1993 Actions
In September 1992, in response to the unanticipated Chapter
11 bankruptcy filing of Phar-Mor, previously the Company's
largest customer, senior management immediately undertook a
broad-based cost reduction program. As part of that program, Mr.
Sottile, the Chairman of the Board, President and Chief Executive
Officer, voluntarily reduced his own salary by 10%. The other
four highest-paid executive officers of the Company followed
suit, accepting salary reductions of 10%. Other corporate
officers and managers also accepted salary reductions. In
addition, the level of annual incentive awards for 1992 was
reduced substantially.
Consistent with its projections for substantially improved
profitability in 1993, the Company restored, effective in April
1993, the base salaries of those who accepted salary reductions,
including each of the named executive officers, to the levels
that were in effect before September 1992. The restoration of
the salary cuts was not made retroactively. With the exception
of one named executive officer who received a salary increase, no
other salary increases and no long-term incentive compensation
opportunities were granted to the Company's five highest-paid
executive officers in 1993.
The Company does not anticipate that the total annual
taxable compensation of any of its executive officers will exceed
$1,000,000 in 1994 or the near term. Therefore, it expects that
all taxable compensation for these individuals will be
tax-deductible to the Company. The Company intends to preserve
its tax deduction for executive officers and to take steps
necessary to do so if and as appropriate.
PAGE
<PAGE>
CEO Compensation
As previously noted, Mr. Sottile reduced his salary by 10%,
effective September 1992, in response to the Phar-Mor bankruptcy.
In April 1993, based upon the Company's projected 1993 financial
results, Mr. Sottile's base salary was restored and he entered
into a new employment agreement with the Company. The minimum
annual base salary of $430,000 provided for in the new agreement
equals the pre-September 1992 adjusted base salary which Mr.
Sottile was receiving under his prior employment agreement with
the Company. Mr. Sottile received no other salary increase for
1993.
Mr. Sottile's employment agreement provides for his
participation in the Company's executive bonus plan. The amount
of his annual incentive award from the pool is determined by the
Compensation Committee in the same manner in which other
individuals' awards are determined -- that is (1) the objective
level of Company profitability, compared to predetermined
before-tax income objectives and (2) an evaluation of the Chief
Executive Officer's contributions to annual results and the
achievement of the Company's long-term strategic objectives. Mr.
Sottile's annual incentive award for 1993 approximated the
targeted amount for his position.
Compensation Committee Thomas J. Smith, Chairman
Burton B. Staniar
Frank Stanton
C. Anthony Wainwright
Performance Graph. The following graph compares, over the
period shown, the cumulative total shareholder return of the
Company's common stock to the cumulative total return of
companies included in the Standard & Poor's 500 Stock Index and
in a peer group index.(1) In each case cumulative total return
assumes reinvestment of dividends.
[graph filed under cover of Form SE]
(1) The peer group is composed of companies having seasonal
businesses which market consumer products through similar
channels of distribution. The returns of each company have been
weighted according to their respective stock market
capitalization for purposes of arriving at a group average. The
members of the group are as follows: Action Industries, Inc.,
American Greetings Corporation, A.T. Cross & Co., CSS Industries,
Inc., Devon Group, Inc., Fisher-Price, Inc., C.R. Gibson Co.,
Handleman Co., Jostens, Inc., Russ Berrie & Co., Inc., Tyco Toys,
Inc. and Western Publishing Group, Inc.
PAGE
<PAGE>
PRINCIPAL STOCKHOLDERS AND
HOLDINGS OF MANAGEMENT
The following table sets forth certain information with
regard to the beneficial ownership of the Company's common stock
by (i) each of the Company's stockholders known to hold more than
5% of the outstanding shares of common stock, (ii) except as
noted, each director and nominee and each executive officer named
on the Summary Compensation Table, individually, and (iii) all
directors and executive officers as a group. Information
relating to the Company's directors and executive officers is as
of February 28, 1994. Information on 5% stockholders is as
reported by them to the Company subsequent to December 31, 1993.
<TABLE>
<CAPTION>
Name Position Beneficial Ownership (1)
-------------------------------- ------------------------ --------------------------
Number Of Shares Percent
---------------- -------
<S> <C> <C> <C>
Thomas M. Cooney Chairman of the
Board, Emeritus 31,542
Benjamin J. Sottile Chairman of the
Board, President &
Chief Executive Officer 215,000 1.3%
Ralph J. Olson(2) Vice President & Director 37,000
Julius Koppelman(2) Director 4,000
Charles D. Lindberg Director 2,600
Albert R. Pezzillo Director 5,700
Charlotte A. St. Martin Director --
Thomas J. Smith(2) Director 4,000
Burton B. Staniar(2) Director 3,000
Frank Stanton Director 10,300
Roger T. Staubach Director 2,000
C. Anthony Wainwright Director 5,100
Harry N. Walters(2) Director 5,000
Stephen M. Sweeney Vice President 19,000
Harris Associates L.P.,
2 North LaSalle Street,
Chicago, Illinois 60602 1,330,700 8.3%
The Prudential Insurance Company
of America, Prudential Plaza,
Newark, New Jersey 07102 1,518,334 9.5%
All directors and executive
officers as a group
(17 persons) 391,063 2.4%
</TABLE>
[FN]
____________________________
(1) Except as indicated, the percentage of shares held by each
person is less than 1%. Includes shares which may be purchased
upon exercise of presently exercisable options and options
exercisable within 60 days after February 28, 1994, in the
following amounts: Mr. Cooney, 1,000 shares; Mr. Sottile,
190,000 shares; Mr. Olson, 27,000 shares; Messrs. Stanton and
Wainwright, 5,000 shares each; Messrs. Koppelman, Pezzillo, Smith
and Walters, 4,000 shares each; Mr. Staniar, 3,000 shares;
Messrs. Lindberg and Staubach, 2,000 shares each; Mr. Sweeney,
14,500 shares; and all directors and executive officers as a
group, 299,500 shares. No information is presented for named
executive officers who retired (Mr. Jalenak) or resigned (Mr.
Pietrangelo) on or prior to February 28, 1994.
(2) Retiring as a director on April 15, 1994.
(3) Includes the following numbers of shares as to which
beneficial ownership is disclaimed: 300 shares held by the wife
of Mr. Stanton.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountants are selected
by, and serve subject to change by, the Board of Directors. The
Board has voted to appoint Arthur Andersen & Co., Certified
Public Accountants, as independent public accountants of the
Company for the year 1994. Arthur Andersen & Co. has served as
the Company's principal independent public accountants since
1990. Representatives of Arthur Andersen & Co. are expected to
be present at the meeting, with the opportunity to make a
statement if they desire. Additionally, they will be available
to respond to appropriate questions from stockholders.
PROXY STATEMENT PROPOSALS
Stockholder proposals will be considered for inclusion in
the Proxy Statement for the 1995 Annual Meeting if they are
received by the Company before the close of business on
November 21, 1994.
PROXY SOLICITATION AND REVOCATION
The solicitation of the enclosed proxy is being made on
behalf of the Board of Directors, and the Company will bear the
cost of solicitation. In addition to solicitation by mail,
officers and regular employees of the Company may solicit proxies
personally, by telephone or by telegraph. The Company will
reimburse brokers, banks or other persons for their reasonable
out-of-pocket expenses in sending proxy material to beneficial
owners. To assist in the solicitation of proxies, the Company
has engaged Georgeson & Company, Inc. for a fee estimated at
$9,000, plus out of pocket expenses. Any stockholder giving a
proxy has the power to revoke it at any time prior to the voting
thereof.
