<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14c-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SCHAWK, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------------------
(5) Total fee paid:
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[ ] Fee paid with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
[ ] (1) Amount Previously Paid:
- -------------------------------------------------------------------------------
[ ] (2) Form, Schedule or Registration Statement No.:
- -------------------------------------------------------------------------------
[ ] (3) Filing Party:
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[ ] (4) Date Filed:
<PAGE> 2
SCHAWK, INC.
1695 RIVER ROAD
DES PLAINES, ILLINOIS 60018
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1998
-----------------------
To the Stockholders of SCHAWK, INC.:
Notice is hereby given that the 1998 Annual Meeting of the Stockholders of
Schawk, Inc. will be held at 10:00 a.m. (local time), Wednesday, May 27, 1998,
at Schawk, Inc., 1695 River Road, Des Plaines, Illinois, for the following
purposes:
1. Election of the Board of Directors for Schawk, Inc.
2. Ratification of the selection of Ernst & Young LLP as the
independent auditors of Schawk, Inc. for fiscal year 1998.
3. Transaction of such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The close of business on March 30, 1998, has been fixed as the record date for
the determination of stockholders entitled to receive notice of and to vote at
said meeting and any adjournment or adjournments thereof. The stock transfer
books of Schawk, Inc. will not be closed.
By Order of the Board of Directors,
/s/ A. ALEX SARKISIAN
Des Plaines, Illinois A. ALEX SARKISIAN, Esq.
April 16, 1998 Executive Vice President and
Corporate Secretary
<PAGE> 3
SCHAWK, INC.
1695 RIVER ROAD
DES PLAINES, ILLINOIS 60018
(847) 827-9494
PROXY STATEMENT
FOR THE 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1998
INTRODUCTION
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of Schawk, Inc. ("Schawk" or
the "Company") for use at the 1998 Annual Meeting of Stockholders to be held at
10:00 a.m. (local time), Wednesday, May 27, 1998, at Schawk, Inc., 1695 River
Road, Des Plaines, Illinois, and at any adjournment thereof (the "Annual
Meeting"). This Proxy Statement and the accompanying Proxy are first being
mailed on or about April 16, 1998, to stockholders of record at the close of
business on March 30, 1998.
PROPOSALS
The purpose of the Annual Meeting is to: (i) elect the Board of Directors
of the Company; (ii) ratify the appointment of Ernst & Young LLP as the
independent auditors of the Company for fiscal year 1998; and (iii) transact
such other business as may properly come before the meeting or any adjournment
or adjournments thereof.
PROXIES AND SOLICITATION
Any person signing and mailing the enclosed proxy may revoke the proxy at
any time prior to its exercise by: (i) executing a subsequent proxy; (ii)
notifying the Corporate Secretary of the Company of such revocation in a
written notice received by him at Schawk, Inc., 1695 River Road, Des Plaines,
Illinois 60018, prior to the Annual Meeting; or (iii) attending the Annual
Meeting and voting in person.
The cost of solicitation of proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited personally or by
telephone or facsimile, by Directors of the Company (each a "Director" and
collectively, the "Directors") and executive officers and regular employees of
the Company. The Company does not now expect to pay any compensation for the
solicitation of proxies, but may reimburse brokers and other persons holding
shares in their names or in the names of nominees for their expenses in sending
proxy material to principals and obtaining their proxies. First Chicago Trust
Company of New York, the transfer agent and registrar of the Company's Class A
Common Stock, may aid in the solicitation of proxies and will be reimbursed for
any expenses incurred as a result of any such activity.
Shares of the Company represented by properly executed proxies will,
unless such proxies have been previously revoked, be voted in accordance with
the instructions indicated in the proxies. Unless otherwise instructed in the
proxy, the agent named in the proxy intends to cast the proxy votes in the
following manner: (i) FOR the election of the nominees for Directors of
Schawk; (ii) FOR the ratification of Ernst & Young LLP as independent auditors
of the Company for fiscal year 1998; and (iii) in the best judgment of the
persons named in the proxy as agent, upon any other matters which may properly
come before the Annual Meeting.
QUORUM REQUIREMENTS AND VOTING
The presence, in person or by proxy, of the holders of a majority of
the Company's Class A Common Stock outstanding on the record date is required
for a quorum at the Annual Meeting. Abstentions will be treated as shares
present and entitled to vote for purposes of determining whether a quorum is
present, but will not be voted for purposes of determining the approval of any
matter submitted to the stockholders for a vote. If a proxy returned by a
broker
<PAGE> 4
indicates that the broker does not have discretionary authority to vote
some or all of the shares covered thereby for any matter submitted to the
stockholders for a vote, such shares will be considered to be present for
purposes of determining whether a quorum is present, but will not be considered
to be present and entitled to vote at the Annual Meeting.
As to all anticipated votes, each share of Class A Common Stock will have
one (1) vote as to each matter to be voted on at the Annual Meeting.
Stockholders entitled to vote or to execute proxies are stockholders of record
at the close of business on March 30, 1998. The Company had 22,268,451 shares
of Class A Common Stock outstanding on such date. The stock transfer books of
the Company will not be closed.
INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
No person being nominated as a director is being proposed for election
pursuant to any agreement or understanding between any such person and the
Company.
PROPOSAL 1: ELECTION OF DIRECTORS
At the meeting, seven Directors are to be elected to the Company's Board.
The size of the Company's Board of Directors has been fixed at eight members in
accordance with the Company's By-laws. The Board intends to fill the vacancy
on the Board, but has not identified any candidate to date. Any person
appointed by the Board to fill such vacancy in accordance with the Company's
By-laws during 1998 will be up for election at the 1999 Annual Meeting.
Each of the Directors elected at the Annual Meeting will hold office for a
term of one year, expiring at the Annual Meeting of Stockholders to be held in
1999, and thereafter until a successor shall be duly elected and qualified.
Unless authority to vote is withheld, proxies received in response to this
solicitation will be voted FOR the election of the nominees named hereafter,
each of whom presently serves as a Director of the Company. It is not
contemplated that any of the nominees will be unable or will decline to serve;
however, if such a situation arises, the shares represented by the proxies
being solicited will be voted FOR the election of a nominee or nominees
designated by the Board of Directors of the Company. Proxies may not be voted
for more than the seven nominees included in this Proxy Statement.
Assuming a quorum is present, an affirmative vote of the holders of a
plurality of the shares, present and voting at the meeting, is required for a
nominee to be elected as a Director. Therefore, abstentions and shares for
which authority to vote is not given will have no effect on the election of
directors.
The Board of Directors is responsible for the overall affairs of the
Company. The Board of Directors had six meetings in 1997. Each member of the
Board of Directors attended at least 75% of the aggregate of: (i) the total
number of meetings of the Board of Directors held; and (ii) the total number of
meetings held by all committees of the Board of Directors on which such
Director served.
The Board of Directors currently has an Executive Committee, an Audit
Committee, a 401(k) Administration Committee and an Option Committee, whose
members are elected by the Board of Directors. The present members of the
Executive Committee are: Clarence W. Schawk, David A. Schawk, A. Alex
Sarkisian and John T. McEnroe. The Executive Committee is authorized to act on
behalf of the Board of Directors in the management of the business and the
affairs of the Company and acts as the Compensation Committee for the Board of
Directors. The Executive Committee met twice in 1997.
Judith W. McCue, Robert F. Meinken and Hollis W. Rademacher have been
appointed as members of the Audit Committee. The Audit Committee recommends
the selection of the Company's independent public accountants, reviews and
approves their fee arrangements, examines their detailed findings and reviews
areas of possible conflicts of interest and sensitive payments. The Audit
Committee met three times in 1997.
The 401(k) Administration Committee is composed of David A. Schawk and A.
Alex Sarkisian. The 401(k) Administration Committee reviews and selects the
agent managing the 401(k) plan and evaluates the participative values. The
401(k) Administration Committee met once in 1997.
- 2 -
<PAGE> 5
The Option Committee members are Judith W. McCue, Robert F. Meinken, John
T. McEnroe and Hollis W. Rademacher. The Option Committee evaluates the
performance of key personnel and makes incentive awards in the form of future
exercisable options. The Option Committee met once in 1997.
The following is a list of the nominees for election as Directors of the
Company, followed by a brief biographic statement of each nominee:
NOMINEES FOR ELECTION AS DIRECTORS
OF THE COMPANY
----------------------------------
CLARENCE W. SCHAWK
DAVID A. SCHAWK
A. ALEX SARKISIAN, ESQ.
JUDITH W. MCCUE, ESQ.
ROBERT F. MEINKEN
JOHN T. MCENROE, ESQ.
HOLLIS W. RADEMACHER
Clarence W. Schawk has been Chairman of the Board of the Company since
September 1992, when he was also appointed to the Executive Committee. He
served as Chief Executive Officer of Filtertek Inc., the Company's predecessor
("Filtertek"), from September 1992 until February 1993. Clarence W. Schawk
also served as Chairman of the Board of the corporation previously known as
Schawk, Inc. ("Old Schawk") from 1953 until the merger (the "Merger") of Old
Schawk and affiliated companies into Filtertek in 1994 and served as Chief
Executive Officer until June 1994. He is the father of David A. Schawk,
President and Chief Executive Officer of the Company. Clarence W. Schawk
previously served as President and a Director of the International Prepress
Association. Mr. Schawk also served as a Director of Old Schawk until the
Merger. Age: 72
David A. Schawk was appointed Chief Operating Officer of the Company in
September 1992 and elected Chief Executive Officer and President in February
1993. He was appointed to the Board of Directors in September 1992. David A.
Schawk served as the President of Old Schawk from 1987 until the Merger. David
A. Schawk serves on the Company's Executive and 401(k) Administration
Committees. David A. Schawk is the son of Clarence W. Schawk. David A. Schawk
currently serves as a Director of the International Prepress Association. Mr.
Schawk also served as a Director of Old Schawk until the Merger. Age: 42
A. Alex Sarkisian, Esq., was appointed Executive Vice President in 1994
and has served on the Company's Board of Directors and as Corporate Secretary
since September 1992. Mr. Sarkisian was the Executive Vice President and
Secretary of Old Schawk from 1988 and 1986, respectively, until the Merger.
Mr. Sarkisian also served as a Director of Old Schawk until the Merger. He is
a member of the Executive and 401(k) Administration Committees. Age: 46
Judith W. McCue has been a partner with McDermott, Will & Emery since
1995. Prior thereto, Ms. McCue was a partner with Keck, Mahin & Cate where she
practiced from 1972 to 1995. Ms. McCue was appointed Director of the Company
in September 1992 and is a member of the Audit and Option Committees. Age: 50
Robert F. Meinken has been a retired private investor and businessman
since 1988, after an extensive career in sales and marketing. Mr. Meinken was
appointed Director of the Company in September 1992 and is a member of the
Audit and Option Committees. Age: 72
John T. McEnroe, Esq., has been a partner with the law firm of Vedder,
Price, Kaufman & Kammholz, counsel to the Company, since May 1992. Prior to
this position, he was a partner with the law firm of Keck, Mahin & Cate where
he practiced from 1976 to 1992. Mr. McEnroe was appointed a Director of the
Company in September 1992 and is a member of the Executive and Option
Committees. Age: 46
- 3 -
<PAGE> 6
Hollis W. Rademacher held various positions with Continental Bank, N.A.,
Chicago, Illinois, from 1957 to 1993 and was Chief Financial Officer of
Continental Bank Corporation, Chicago, Illinois, from 1988 to 1993. Mr.
Rademacher is currently self-employed in the fields of consulting and
investments in Chicago, Illinois. Mr. Rademacher is a member of the Audit and
Option Committees. Mr. Rademacher also serves as a Director of Cityscape
Financial Corporation, College Television Network and Wintrust Financial
Corporation. Age: 62
Currently, all Directors of the Company (except for Mr. McEnroe) receive a
$500 fee for attendance at each regularly scheduled or special board or
committee meeting. All Directors are also reimbursed for ordinary and
necessary expenses incurred in attending Board or committee meetings.
Directors' fees are paid to Directors who are compensated employees of the
Company as part of such employees' overall compensation. All nonemployee
Directors have received options under the Company's 1991 Outside Directors'
Formula Stock Option Plan (the "Outside Directors' Plan"). See "Executive
Compensation -- Stock Option Plans -- 1991 Outside Directors' Formula Stock
Option Plan."
The following is a brief biographical statement of James J. Patterson, the
Chief Financial Officer of the Company:
James J. Patterson was appointed Senior Vice President and Chief Financial
Officer in December 1997. Prior to joining the Company, Mr. Patterson was Vice
President of IMC Global Inc. from 1996 to September 1997. Mr. Patterson was
Vice President and Chief Financial Officer of The Vigoro Corporation from 1993
until it was acquired by IMC Global Inc. in 1996. From 1990 to 1992, Mr.
Patterson was Vice President and Controller of Great American Management and
Investment, Inc., a diversified holding company, and Vice President and
Controller of Capsure Holdings, Inc., a holding company in the specialty
insurance business. Mr. Patterson is a Certified Public Accountant. Age: 41
Officers are elected by the Board of Directors at the first meeting of the
newly elected Board of Directors held after each Annual Meeting of
Stockholders. Officers hold office for a term of one year and thereafter until
a successor has been duly elected and qualified.
- 4 -
<PAGE> 7
EXECUTIVE COMPENSATION
The table below sets forth certain information for fiscal years 1997, 1996
and 1995 with respect to the annual and other compensation paid by the Company
to: (i) the Chairman of the Board of Directors; (ii) the President and Chief
Executive Officer; and (iii) the other executive officers of the Company who
were most highly compensated in 1997 (collectively, the "Named Executive
Officers") for services rendered in all capacities to the Company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- -----------------------------------
PAYOUTS PAYOUTS
------------------------ -------
RESTRICTED SECURITY
NAME AND OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDS OPTIONS/SARS PAYOUTS COMPENSATION(2)
------------------ ---- ------ ----- --------------- ---------- ------------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Clarence W. Schawk, 1997 $176,014 $130,000 -- -- 75,000 -- $6,400
Chairman 1996 176,014 -- -- -- -- -- 3,000
1995 273,450 -- -- -- -- -- 7,500
David A. Schawk, 1997 390,625 78,000 $10,432 -- 100,000 -- 6,400
President and CEO 1996 325,000 -- 11,401 -- -- -- 3,000
1995 356,250 -- 12,239 -- -- -- 7,500
A. Alex Sarkisian, 1997 191,667 153,345 8,086 -- 10,000 -- 6,400
Executive Vice 1996 150,000 200,000 8,086 -- 25,000 -- 3,000
President and 1995 150,000 57,000 8,086 -- -- -- 7,500
Corporate Secretary
James J. Patterson, 1997 6,667 -- 638 -- 15,000 -- --
Senior Vice 1996 -- -- -- -- -- -- --
President and Chief 1995 -- -- -- -- -- -- --
Financial
Officer(3)
</TABLE>
___________________
(1) Consists primarily of life insurance premiums.
(2) Reflects matching contributions made pursuant to the Company's 401(k)
plans to the accounts of such individuals.
(3) Mr. Patterson joined the Company in December 1997.
The table below sets forth certain information with respect to stock
options granted during fiscal year 1997 to the Named Executive Officers.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN 1997
NUMBER OF
SHARES OF PERCENTAGE OF POTENTIAL REALIZABLE VALUE
CLASS A TOTAL AT ASSUMED ANNUAL RATES OF
COMMON STOCK OPTIONS/SARS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION ----------------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ------------------ ------------ ------------- -------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Clarence W. Schawk 75,000 30.1% $ 7.8125 2/26/07 $368,493 $ 933,833
David A. Schawk 100,000 40.1 7.8125 2/26/07 491,324 1,245,111
A. Alex Sarkisian 10,000 4.0 7.8125 2/26/07 49,132 124,511
James J. Patterson 15,000 6.0 11.00 12/16/07 103,768 262,968
</TABLE>
-5-
<PAGE> 8
The table below sets forth certain information with respect to options and
SARs exercised by the Named Executive Officers during fiscal year 1997 and with
respect to options and SARs held by the Named Executive Officers at the end of
fiscal year 1997. The value of unexercised options and SARs at the end of
fiscal year 1997 is based on the closing price of $11.25 reported on the New
York Stock Exchange ("NYSE") on December 31, 1997.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
SHARES DECEMBER 31, 1997 AT DECEMBER 31, 1997
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------ ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Clarence W. Schawk -- -- 85,059 50,001 $190,413 $171,878
David A. Schawk -- -- 93,393 66,667 219,062 229,168
A. Alex Sarkisian -- -- 37,692 23,334 94,345 93,753
James J. Patterson -- -- 5,000 10,000 1,250 2,500
</TABLE>
EMPLOYMENT AGREEMENTS
In January 1991, the Company entered into employment agreements with
Clarence W. Schawk and David A. Schawk to serve as executive officers. These
agreements, upon review of comparable base salaries for executives of similarly
situated companies, have been amended and restated effective October 1, 1994.
Each employment agreement, as amended and restated in October 1994, provides
for an initial term of 10 years (through December 31, 2004), with one-year
extensions thereafter unless terminated by either the Company or the executive.
Each employment agreement provides for payment of a base salary, adjustable
annually by the Board of Directors based upon a merit review and to account for
inflation, as well as an annual bonus consisting of short- and long-term
incentives. Clarence W. Schawk's employment agreement provided for a base
salary of $176,014 for the calendar year 1997, and David A. Schawk's employment
agreement provided for a base salary of $390,625 for the calendar year 1997.
The short-term bonus plan contemplates cash payments of 5.0% and 3.0% of
the excess of "adjusted net income" over $10.0 million with respect to Clarence
W. Schawk and David A. Schawk, respectively. "Adjusted net income" means
annual net income after taxes but before bonuses to the Chairman and the
President of the Company and amortization of goodwill resulting from
acquisitions of the Company consummated after January 1, 1995. The amounts of
such cash payments are subject to adjustment based upon the Company's financial
performance during the relevant fiscal year. The long-term bonus plan
contemplates a noncash distribution of options calculated to equal 5.0% and
3.0% of the excess of "adjusted net income" over $10.0 million for Clarence W.
Schawk and David A. Schawk, respectively.
STOCK OPTION PLANS
1988 Equity Option Plan
On March 25, 1988, the Company adopted the 1988 Equity Option Plan ("Stock
Incentive Plan") pursuant to which 2,252,250 shares of Class A Common Stock
reserved for issuance pursuant to options and other benefits which may be
granted to officers, key employees and nonaffiliated directors. The Committee
of the Board of Directors administers the Stock Incentive Plan. Under the
Stock Incentive Plan, the Committee is authorized to determine the officers and
other key employees to whom, and the times at which, options and other benefits
are to be granted, the number of shares subject to each award, its term and any
applicable vesting provisions.
The Option Committee may award nonqualified stock options ("NSOs") or
incentive stock options ("ISOs") for shares of restricted stock or stock
appreciation rights under the Stock Incentive Plan. The exercise price with
respect to any ISOs may not be less than the fair market value of the Class A
Common Stock on the date of grant and the
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<PAGE> 9
exercise price with respect to any NSOs may not be less than eighty-five
percent (85%) of the fair market value of the Class A Common Stock on the date
of grant. "Fair market value" will be determined by averaging the highest and
lowest sales prices for the Class A Common Stock reported on the NYSE on the
date of the grant.
Shares of Class A Common Stock granted as restricted stock under the Stock
Incentive Plan will be restricted as to transfer and subject to forfeiture
prior to the expiration of the restriction period determined by the Option
Committee. The expiration of the restriction period may be tied to the
attainment of certain performance objectives or based upon a period of
continued employment. To the extent that the restriction period expires, the
shares of Class A Common Stock will be released to the award recipient free of
all restrictions. If the performance objectives are not met in the required
time period or if the recipient's employment terminates prior to completing the
required service period, the recipient's right to the shares will be forfeited.
Stock appreciation rights may be granted alone or with respect to options
granted concurrently or previously under the Stock Incentive Plan. Each stock
appreciation right permits the recipient thereof to receive a cash payment
equal to the difference between the fair market value of the Class A Common
Stock on the date the stock appreciation right is exercised and such fair
market value on the date the stock appreciation right was awarded. To the
extent that a stock appreciation right was awarded with respect to an option,
exercise of the stock appreciation right will result in a pro rata
extinguishment of such option.
NSOs or ISOs may be granted to officers and other key employees of the
Company. The right of the recipient to exercise the options will be subject to
such vesting and forfeiture requirements and provisions as determined by the
Option Committee and must be exercised within 10 years of the date of grant.
1991 Outside Directors' Formula Stock Option Plan
The Company's Outside Directors' Plan, as amended, provides that each
"Outside Director" (defined in the Outside Directors' Plan as any Director who
is not a compensated employee of the Company) receive a nonqualified stock
option to purchase 5,000 shares upon his or her election, and subsequent
reelection, to the Board of Directors at an exercise price equal to the fair
value of such shares on the date of election or reelection as a Director. Only
the number of shares specified by such formula is eligible for grant under the
Outside Directors' Plan. Options granted under the Outside Directors' Plan are
exercisable for a term of 10 years from the date of grant and vest in one-third
increments on the date of grant and on the first and second anniversaries of
the date of grant. In 1997, Mr. McEnroe, Ms. McCue, Mr. Meinken and Mr.
Rademacher each received options to purchase 5,000 shares at a per share
exercise price of $8.50.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Decisions regarding the cash compensation paid to Clarence W. Schawk,
David A. Schawk and Mr. Sarkisian were made by the Board of Directors for
fiscal year 1997. Messrs. Clarence W. Schawk, David A. Schawk and Sarkisian
are, and were during all of fiscal 1997, Directors of the Company. All
decisions regarding the cash compensation of the Company's executive officers
prior to 1997 were made by the Executive Committee of the Board of Directors.
Awards under the Stock Incentive Plan are administered by the Option Committee.
The members of the Executive Committee are Clarence W. Schawk, David A. Schawk,
A. Alex Sarkisian and John T. McEnroe. Mr. McEnroe does not receive cash
compensation from the Company. The Option Committee is comprised of the
Company's Outside Directors. Messrs. Clarence W. Schawk, David A. Schawk and
Sarkisian participated in the deliberations of the Executive Committee with
regard to the compensation of executive officers other than themselves.
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<PAGE> 10
JOINT REPORT ON EXECUTIVE COMPENSATION
Under the supervision of the Executive Committee and the Option Committee,
the Company has developed and implemented compensation policies, plans and
programs which seek to enhance the profitability of the Company, and thus
stockholder value, by aligning the financial interests of the Company's
executive officers with those of its stockholders. In furtherance of these
goals, annual base salaries are generally set at or below competitive levels.
The Company relies to a large degree on annual bonus, if any, and stock option
incentives to attract and retain executive officers and other key employees of
outstanding ability, and to motivate them to perform to the full extent of
their abilities. Both types of incentive compensation are closely tied to the
performance of the Company and the individual in a manner that encourages a
sharp and continuing focus on building profitability and stockholder value.
During 1993, the Executive Committee reviewed, reevaluated and approved an
annual salary plan for the Company. This salary plan was developed based on
industry, peer group and market surveys and performance judgments as to the
past and expected future contributions of each individual executive officer,
targeting the salaries to the median level of comparable companies. The plan
was reviewed and updated in 1997.
Individual bonus arrangements can be established for certain key executive
officers to attain a particular or group of particular goals or levels of
performance.
The cash compensation paid to Clarence W. Schawk, David A. Schawk and Mr.
Sarkisian was determined by the Board of Directors of the Company for fiscal
year 1997. The Board of Directors considered the Directors' fees paid to
Clarence W. Schawk, David A. Schawk and Mr. Sarkisian as part of their overall
compensation.
In January 1991, the Company entered into employment contracts with
Clarence W. Schawk and David A. Schawk, respectively, after approval by the
Board of Directors (Clarence W. Schawk and David A. Schawk abstaining from such
vote). These agreements were amended and restated effective October 1, 1994,
after a review of comparable base salaries for executives of similarly situated
companies. The agreements provide for base salary, and annual bonuses based on
formula performance measures. The Board of Directors can adjust the base
salary annually based upon merit review. See "Executive Compensation --
Employment Agreements."
During each fiscal year the Option Committee considers the desirability of
granting executive officers and other key employees of the Company stock
options under the 1988 Equity Option Plan. The granting of stock options is
based upon the overall performance of the Company and the performance of each
particular employee. The Option Committee considers such performance and the
recommendations of management in determining the amounts recommended to be
granted. The Option Committee believes its pattern of grants has successfully
focused the Company's executive officers and other key employees on building
profitability and stockholder value. For fiscal 1997, options were granted to
executive officers in furtherance of this philosophy. The number of options
granted to the respective executive officers reflects the Option Committee's
assessment of the particular officer's level of responsibility and its desire
to match the award level with the executive's responsibility level. The
purpose of these awards is to reward such officers for their performance with
respect to the Company and to give such officers a stake in the Company's
future, which is directly aligned with the creation of stockholder value.
The Executive Committee does not believe that the provisions of the
Revenue Reconciliation Act of 1993 will limit the deductibility of compensation
expected to be paid by the Company; however, the Executive Committee will
continue to evaluate the impact of such provisions and take such actions as it
deems appropriate.
This report is submitted by the members of the Company's Executive
Committee and Option Committee.
Executive Committee: Option Committee:
Clarence W. Schawk Judith W. McCue
David A. Schawk Robert F. Meinken
A. Alex Sarkisian John T. McEnroe
John T. McEnroe Hollis W. Rademacher
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<PAGE> 11
PERFORMANCE GRAPH
The graph below sets forth a comparison of the yearly percentage change in
the cumulative total return for the five-year period beginning December 31,
1992, on the Company's Class A Common Stock, the RUSSELL 2000 Small Stock Index
("RUSSELL 2000"), a broad-based market index, and a peer group of common stocks
of five companies (the "Peer Group"), which the Company selected based on the
comparable businesses of these companies.
The relative performance of the Company's Class A Common Stock, the
RUSSELL 2000 and the Peer Group is as follows:
<TABLE>
<CAPTION>
NAME 1992 1993 1994 1995 1996 1997
------------------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Schawk, Inc. 100.00 99.94 117.93 76.20 104.06 137.48
RUSSELL 2000 Index 100.00 118.91 116.55 149.70 174.30 213.00
Peer Group 100.00 134.02 235.05 239.44 273.03 411.89
</TABLE>
The Joint Report on Executive Compensation and the Performance Graph shall
not be deemed incorporated by reference by any general statement incorporating
by reference this proxy statement into any filing under the Securities Act of
1933 (the "Securities Act") or under the Securities Exchange Act of 1934 (the
"Exchange Act"), except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
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<PAGE> 12
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the shares
beneficially owned as of March 30, 1998: (i) by each person who is known by
the Company to own beneficially more than 5% of the outstanding shares of Class
A Common Stock; (ii) by each Director of the Company, including the nominees
for reelection as Directors; and (iii) by all Directors and executive officers
of the Company as a group. All information with respect to beneficial
ownership has been furnished to the Company by the respective stockholders.
<TABLE>
<CAPTION>
AMOUNT OF PERCENTAGE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS OUTSTANDING
- ------------------------ ----------------------- -----------------
<S> <C> <C>
Clarence W. Schawk(2)...................... 10,259,476(3) 45.2%
David A. Schawk(2)......................... 1,512,370(4) 6.7
A. Alex Sarkisian.......................... 1,337,730(5)(6) 5.9
James J. Patterson......................... 8,000(7) *
John T. McEnroe............................ 31,737(8) *
Judith W. McCue............................ 24,511(9) *
Robert F. Meinken.......................... 20,210(10) *
Hollis W. Rademacher....................... 16,000(11) *
Cathy Ann Schawk(2)(12).................... 1,098,871(13) 4.8
Judith Lynn Gallo(2)(14)................... 904,262(15) 4.0
Lisa Beth Stearns(2)(16)................... 863,760(17) 3.8
Executive Officers and Directors as a group
(10 persons)............................. 11,949,589(18) 52.7
</TABLE>
___________
* Less than 1%
(1) Unless otherwise indicated, beneficial ownership is direct and the person
indicated has sole voting and investment power.
(2) Each is a member of Clarence W. Schawk's immediate family (the "Schawk
Family"). The address for each of the Schawk Family members is 1695 River
Road, Des Plaines, Illinois 60018.
(3) Includes currently exercisable options to purchase 122,095 shares;
630,313 shares held directly by Mr. Schawk's wife; and 8,017,524 shares
held by SGK Investments Limited Partnership (the "Schawk Family
Partnership"), a family limited partnership, with respect to which Mr.
Schawk or his wife has voting power. Clarence W. Schawk is the managing
general partner of the Schawk Family Partnership and has investment power
with respect to all of the 9,194,822 shares of Class A Common Stock held
by the Schawk Family Partnership. Does not include 1,177,298 shares held
by the Schawk Family Partnership for which Clarence W. Schawk does not
have voting power, shares beneficially owned by Clarence W. Schawk's son,
David A. Schawk, or shares beneficially owned by Clarence W. Schawk's
daughters, Cathy Ann Schawk, Judith Lynn Gallo and Lisa Beth Stearns, or
held in family trusts for the benefit of certain of his grandchildren.
Clarence W. Schawk does not share voting power over shares of the Company
held by or on behalf of his children or grandchildren.
(4) Includes currently exercisable options to purchase 133,948 shares and
91,673 shares held by the Schawk Family Partnership with respect to which
Mr. Schawk has voting power. Mr. Schawk is a general partner of the
Schawk Family Partnership. Does not include shares beneficially owned by
David A. Schawk's father, Clarence W. Schawk, or shares beneficially owned
by or held in family trusts for the benefit of David A. Schawk's sisters,
Cathy Ann Schawk, Judith Lynn Gallo and Lisa Beth Stearns, and certain of
Clarence W.
-10-
<PAGE> 13
Schawk's grandchildren. Includes 475 shares held in joint tenancy and as
custodian for minors gifted to David A. Schawk's friends.
(5) Includes currently exercisable options to purchase 56,025 shares.
(6) Includes 812,967 shares held by various Schawk Family trusts for the
benefit of certain of Clarence W. Schawk's grandchildren and 465,777
shares held by the Schawk Family Partnership with respect to which Mr.
Sarkisian has voting power as trustee for Clarence W. Schawk's
grandchildren.
(7) Includes currently exercisable options to purchase 5,000 shares.
(8) Includes currently exercisable options to purchase 20,010 shares and
4,726 shares owned indirectly by his spouse.
(9) Includes currently exercisable options to purchase 20,010 shares and the
indirect ownership of 4,501 shares held in retirement trust accounts.
(10) Includes currently exercisable options to purchase 20,010 shares.
(11) Includes currently exercisable options to purchase 15,000 shares.
(12) Ms. Schawk is the daughter of Clarence W. Schawk and sister of David A.
Schawk, Judith Lynn Gallo and Lisa Beth Stearns.
(13) Includes 289,500 shares held by the Schawk Family Partnership with
respect to which Ms. Schawk has voting power.
(14) Ms. Gallo is the daughter of Clarence W. Schawk and the sister of David
A. Schawk, Cathy Ann Schawk and Lisa Beth Stearns.
(15) Includes 156,000 shares held by the Schawk Family Partnership with
respect to which Ms. Gallo has voting power. Does not include shares held
in trust for the benefit of Ms. Gallo's child.
(16) Ms. Stearns is the daughter of Clarence W. Schawk and the sister of David
A. Schawk, Cathy Ann Schawk and Judith Lynn Gallo.
(17) Includes 174,348 shares held by the Schawk Family Partnership with
respect to which Ms. Stearns has voting power. Does not include shares
held in trusts for the benefit of Ms. Stearns' children.
(18) Includes currently exercisable options to purchase an aggregate of
406,580 shares held by certain executive officers and Directors.
CERTAIN TRANSACTIONS
Clarence W. Schawk owns Geneva Waterfront, Inc., a Wisconsin corporation
that owns The Geneva Inn, a hotel in Geneva, Wisconsin. Geneva Waterfront,
Inc. employees are eligible to participate in the Company's health plan.
Schawk believes that this arrangement benefits the Company because it enhances
the Company's bargaining power with its health insurance providers. The
arrangement is beneficial to Geneva Waterfront, Inc. because it enables Geneva
Waterfront, Inc. to purchase health insurance for its employees at a lower cost
than it would be able to obtain independently. In 1995, 1996 and 1997, the
Company received $174,875, $223,591 and $220,101, respectively, in insurance
premium reimbursements from Geneva Waterfront, Inc. The amount due from Geneva
Waterfront, Inc. at December 31, 1997 was $780,878. Interest on the balance
due is charged at prime.
-11-
<PAGE> 14
Pursuant to a lease entered into on January 1, 1991, the Company's
facilities at 1200 West Monroe Street, Chicago, Illinois are leased from The
Clarence W. Schawk 1979 Children's Trust, a trust established for the benefit
of the children of Clarence W. Schawk, including David A. Schawk. Based on
third-party appraisals, management believes that the gross rent and other terms
and conditions of this lease are comparable to those that would have been
obtained in an arm's-length transaction. The amount paid by the Company in
1995, 1996 and 1997 under this lease was $380,000 per year.
The Company's facility at 1600 East Sherwin Avenue, Des Plaines, Illinois
is leased from C.W. Properties, Chicago, a group consisting of a Missouri
corporation and certain individuals, all of whom are unrelated to the Schawk
Family. The lease provides for an option to purchase the building and the
adjoining property at 70% of the fair market value. The option is held by
Graphics IV, Ltd., an Illinois limited partnership ("Graphics IV"). The
limited partners of Graphics IV are David A. Schawk and the daughters of
Clarence W. Schawk. Based on third-party appraisals, management believes that
the gross rent and other terms and conditions of this lease are comparable to
those that would have been obtained in an arm's-length transaction. The amount
paid by the Company in 1995, 1996 and 1997 under this lease was $670,986,
$679,347 and $679,347, respectively.
As part of the final settlement of certain stockholders' litigation
against the Company and its directors relating to the Merger, Clarence W.
Schawk and David A. Schawk transferred 159,521 shares of Class A Common Stock
to a settlement fund for the benefit of settlement class members. The shares
are subject to a put agreement whereby the class members may require the
Company to purchase the shares at a price ranging from $7.00 to $9.50 per
share. The actual price depends upon the time of exercise over the exercise
period which begins on the final settlement date and ends on the later of the
second anniversary of the final court approval of the settlement agreement
(which occurred on May 21, 1997) or 180 days after the shares are distributed
to class members (which is not anticipated to occur prior to May 1, 1998).
PROPOSAL 2: RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors, based upon the recommendation of the Audit
Committee, has selected Ernst & Young LLP as the independent auditors for the
Company for fiscal year 1998, subject to ratification of such selection by the
stockholders. The affirmative vote of a majority of the holders of the
outstanding shares of the Class A Common Stock of the Company present or
represented and entitled to vote at the Annual Meeting is required to ratify
the selection of Ernst & Young LLP. Abstentions will have the effect of voting
against Proposal 2.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting and will be available to respond to any appropriate questions
raised at the meeting and to make a statement if such representatives so wish.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2 TO RATIFY THE
SELECTION OF THE INDEPENDENT AUDITORS.
OTHER MATTERS
The Board of Directors knows of no matters other than those described
above that may come before the Annual Meeting. As to other matters, if any,
that properly may come before the Annual Meeting, the Board of Directors
intends that proxies in the accompanying form will be voted in respect thereof
in accordance with the judgment of the person voting the proxies.
-12-
<PAGE> 15
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Stockholder proposals for inclusion in the Company's Proxy Statement for
the 1999 Annual Meeting of Stockholders must be received by the Company not
later than December 17, 1998. The person submitting the proposal must have
been a record or beneficial owner of shares of Class A Common Stock for at
least one year, and the securities so held must have a market value of at least
$1,000.
By Order of the Board of Directors,
/s/ A. ALEX SARKISIAN
Des Plaines, Illinois A. ALEX SARKISIAN, Esq.
April 16, 1998 Executive Vice President and
Corporate Secretary
THE COMPANY'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997 (EXCLUDING
EXHIBITS UNLESS SPECIFICALLY INCORPORATED THEREIN) IS AVAILABLE WITHOUT CHARGE
UPON REQUEST TO A. ALEX SARKISIAN, ESQ., CORPORATE SECRETARY, AT SCHAWK, INC.,
1695 RIVER ROAD, DES PLAINES, ILLINOIS 60018, (847) 827-9494.
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<PAGE> 16
SCHAWK, INC.
SCHAWK, INC.
1695 RIVER ROAD, DES PLAINES, ILLINOIS 60018
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The
undersigned hereby appoints A. Alex Sarkisian, Esq. as Proxy, with the power
to appoint his substitute and hereby authorizes him to represent and to vote as
designated below, all the shares of Schawk, Inc. Class A Common Stock held on
record by the undersigned on March 30, 1998, at the Annual Meeting of
Stockholders to be held on May 27, 1998, or any adjournment thereof.
1. FOR the Election of the nominees for Directors of Schawk.
Clarence W. Schawk Judith W. McCue, Esq.
David A. Schawk Hollis W. Rademacher
A. Alex Sarkisian, Esq. John T. McEnroe, Esq.
Robert F. Meinken
(Continued on reverse side)
- --------------------------------------------------------------------------------
THE PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2.
THE BOARD OF DIRECTORS OF SCHAWK, INC. RECOMMEND A VOTE FOR PROPOSALS 1 AND 2.
1. Election of Directors (See Reverse).
________ FOR _________ WITHHELD FOR ALL
For, except vote withheld for the following nominee(s):
__________________________________________
__________________________________________
2. FOR ratification of the selection of Ernst & Young LLP as independent
auditors of Schawk, Inc. for fiscal year 1998.
________ FOR ________ AGAINST ________ ABSTAIN
3. In his discretion, the Proxy is authorized to vote upon such other
business as may properly come before the meeting.
<PAGE> 17
Please sign exactly as name appears hereon; joint owners should each sign. When
signing as Attorney, Executor, Administrator, or Guardian, please give full
title as such. If signer is a corporation, please sign with the full
corporation name by duly authorized officer or director.
Please mark, sign, date, and return your proxy without delay in the return
envelope provided for that purpose, which requires no postage if mailed within
the United States or Puerto Rico.
---------------------------------------
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Signature(s) Date
