<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 (AMENDMENT NO. )
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 14a-6(e)(2).
[x] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.
SCHAWK, INC.
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(Name of Registrant as Specified in Its Charter)
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(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)(1) 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 previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
SCHAWK, INC.
1695 RIVER ROAD
DES PLAINES, ILLINOIS 60018
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 24,2000
To the Stockholders of SCHAWK, INC.:
Notice is hereby given that the 2000 Annual Meeting of the Stockholders of
Schawk, Inc. will be held at 10:00 a.m. (local time), Wednesday, May 24, 2000,
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 2000.
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 29, 2000, 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,
Des Plaines, Illinois A. ALEX SARKISIAN, Esq.
April 10, 2000 Executive Vice President and
Corporate Secretary
<PAGE> 3
SCHAWK, INC.
1695 RIVER ROAD
DES PLAINES, ILLINOIS 60018
(847) 827-9494
PROXY STATEMENT
FOR THE 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 24,2000
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 2000 Annual Meeting of Stockholders to be held at 10:00 a.m.
(local time), Wednesday, May 24, 2000, 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 10, 2000, to stockholders of record at the close of business on March 29,
2000.
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 2000; 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. Equiserve, First
Chicago Trust Division, 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 2000; 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
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.
<PAGE> 4
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 29, 2000. The Company had 21,276,319 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
2000 will be up for election at the 2001 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
2001, 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 four meetings in 1999. 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 40 1 (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,
John T. McEnroe and Hollis W. Rademacher. 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 once in 1999.
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
four times in 1999.
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 1999.
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 twice in 1999.
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<PAGE> 5
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: 74
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 40 1 (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: 44
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: 48
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: 52
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: 74
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:
48
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 Executive,
Audit and Option Committees. Mr. Rademacher also serves as a Director of
Cityscape Financial Corporation, College Television Network and Wintrust
Financial Corporation. Age: 64
Currently, all nonemployee 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. All nonemployee Directors have
-3-
<PAGE> 6
received options under the Company's 1991 Outside Directors' Formula Stock
Option Plan (the "Outside Directors' Plan"). See "Executive Compensation -Stock
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: 43
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.
EXECUTIVE COMPENSATION
The table below sets forth certain information for fiscal years 1999, 1998
and 1997 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 1999 (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, 1999 $142,408 - - - 50,000 - $8,800
Chairman 1998 176,014 $150,000 - - 36,111 - 8,000
1997 176,014 130,000 - - 75,000 - 6,400
David A. Schawk, President 1999 436,800 70,500 $ 8,041 - 95,000 - 8,800
and CEO 1998 408,000 240,000 9,316 - 59,167 - 8,000
1997 390,625 78,000 10,432 - 100,000 - 6,400
A. Alex Sarkisian, Executive 1999 218,400 120,000 8,086 4,237 40,000 - 8,800
Vice President and Corporate 1998 204,000 200,000 8,686 3,565 20,000 - 8,000
Secretary 1997 191,667 153,345 8,086 - 10,000 - 6,400
James J. Patterson, 1999 173,250 15,000 - - 25,000 - 8,800
Senior Vice President and 1998 163,960 10,000 - - - - 3,888
Chief Financial Officer 1997 6,667 - 638 - 15,000 - -
</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.
-4-
<PAGE> 7
The table below sets forth certain information with respect to stock
options granted during fiscal year 1999 to the Named Executive Officers.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN 1999
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 50,000 9.44% 9.4375 2/23/09 306,940 768,258
David A. Schawk 95,000 17.94% 9.4375 2/23/09 583,186 1,459,690
A. Alex Sarkisian 40,000 7.55% 9.4375 2/23/09 245,552 614,606
James J. Patterson 25,000 4.72% 9.4375 2/23/09 153,470 384,129
</TABLE>
The table below sets forth certain information with respect to options and
SARs exercised by the Named Executive Officers during fiscal year 1999 and with
respect to options and SARs held by the Named Executive Officers at the end of
fiscal year 1999. The value of unexercised options and SARs at the end of fiscal
year 1999 is based on the closing price of $8.50 reported on the New York Stock
Exchange ("NYSE") on December 31, 1999.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUE
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARs at OPTIONS/SARs
SHARES DECEMBER 31, 1999 AT DECEMBER 31, 1999
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Clarence W. Schawk - - 175,393 45,778 60,938 -
David A. Schawk - - 230,460 83,767 81,250 -
A. Alex Sarkisian - - 87,426 33,600 48,750 -
James J. Patterson - - 23,250 16,750 - -
</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 $142,408 for the calendar year 1999, and David A. Schawk's employment
agreement provided for a base salary of $436,800 for the calendar year 1999.
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.
-5-
<PAGE> 8
STOCK 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 Option
Committee of the Board of Directors administers the Stock Incentive Plan. Under
the Stock Incentive Plan, the Option 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 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 1999, Mr. McEnroe, Ms. McCue, Mr. Meinken and Mr. Rademacher
each received options to purchase 5,000 shares at a per share exercise price of
$11.594.
Employee Stock Purchase Plan
The Schawk, Inc. Employee Stock Purchase Plan (the "Stock Purchase Plan")
was established to provide employees of the Company and participating
subsidiaries an opportunity to own an equity interest in the Company and,
through such ownership, to promote their identification with the interest of
stockholders, to stimulate their commitment to the business objectives of the
Company and the maintain their motivation through the opportunity to share in
the growth of the Company. Employees that participate in the plan may buy Class
A Common Stock through payroll deductions at a price equal to 85% of the lesser
of the fair market value of the Class A Common Stock on the first trading day of
the quarter or the last trading day of the quarter. The maximum number of shares
issuable under the
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<PAGE> 9
Stock Purchase Plan shall not exceed I million. The maximum amount of Class A
Common Stock that may be purchased by an individual employee in any fiscal year
is $25,000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Decisions regarding the cash compensation paid to Clarence W. Schawk, David
A. Schawk, Mr. Sarkisian and Mr. Patterson were made by the Board of Directors
for fiscal year 1999. Messrs. Clarence W. Schawk, David A. Schawk and Sarkisian
are, and were during all of fiscal 1999, Directors of the Company. All decisions
regarding the cash compensation of the Company's executive officers prior to
1999 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, John T. McEnroe and Hollis W. Rademacher. 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.
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.
Generally, 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, Mr.
Sarkisian and Mr. Patterson was determined by the Executive Committee and
approved by the Board of Directors of the Company for fiscal year 1999. The
Executive Committee 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. 'Me 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 1999, 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.
-7-
<PAGE> 10
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
Hollis W. Rademacher
-8-
<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,
1994, 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.
[PERFORMANCE GRAPH]
The relative performance of the Company's Class A Common Stock, the RUSSELL
2000 and the Peer Group is as follows:
NAME 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ----
Schawk, Inc. 100.00 64.62 88.24 116.58 146.54 92.05
RUSSELL 2000 Index 100.00 128.44 149.55 182.75 177.76 209.46
Peer Group 100.00 100.00 204.94 370.29 118.84 64.30
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 29, 2000: (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; (iii) by each Named Executive Officer; and (iv) 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) ....................................... 10,707,878(3) 47.9%
David A. Schawk(2) .......................................... 1,650,339(4) 7.4
A. Alex Sarkisian ........................................... 1,371,380(5)(6) 6.2
James J. Patterson .......................................... 43,236(7) *
John T. McEnroe ............................................. 50,687(8) *
Judith W. McCue ............................................. 39,960(9) *
Robert F. Meinken ........................................... 20,160(10) *
Hollis W. Rademacher ........................................ 25,950(11) *
Cathy Ann Schawk(2)(12) ..................................... 1,098,871(13) 4.9
Judith Lynn Gallo(2)(14) .................................... 904,262(15) 4.0
Lisa Beth Stearns(2)(16) .................................... 863,760(17) 3.9
Myron M. Kaplan ............................................. 1,161,900(18) 5.2
Executive Officers and Directors as a group
(10 persons) .............................................. 12,677,651(19) 56.5%
</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 194,161 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 Steams, 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 271,917 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 Steams, and certain of Clarence
W. 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 97,416 shares.
-10-
<PAGE> 13
(6) Includes 800,649 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 31,500 shares.
(8) Includes currently exercisable options to purchase 29,960 shares and 17,726
shares owned indirectly by his spouse.
(9) Includes currently exercisable options to purchase 29,960 shares and the
indirect ownership of 6,500 shares held in retirement trust accounts.
(10) Includes currently exercisable options to purchase 19,960 shares.
(11) Includes currently exercisable options to purchase 24,950 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) Based on information disclosed in a Schedule 13G filed by Mr. Kaplan with
the Securities and Exchange Commission. Mr. Kaplan's address if P.O. Box
385, Leonia, New Jersey 07605.
(19) Includes currently exercisable options to purchase an aggregate of 728,424
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 1997, 1998 and 1999, the Company
received $220,101, 266,754 and $107,964, respectively, in insurance premium
reimbursements from Geneva Waterfront, Inc. The amount due from Geneva
Waterfront, Inc. at December 31, 1999 was $1,855. Interest on the balance due is
charged at prime.
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 1997,
1998 and 1999 under this lease was $380,355 per year.
-11-
<PAGE> 14
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 1997, 1998 and 1999 under this lease was $679,347 in each year.
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 2000, 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.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Stockholder proposals for inclusion in the Company's Proxy Statement for
the 2001 Annual Meeting of Stockholders must be received by the Company not
later than December 11, 2000. 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.
Additionally, if a proponent of a stockholder proposal at the 2001 Annual
Meeting of Stockholders fails to provide notice of the intent to make such
proposal by personal delivery or mail to the Company on or before February 24,
2001 (or by an earlier or later date, if such date is established by amendment
to the Company's Bylaws), then any proxy solicited by management may confer
discretionary authority to vote on such proposal.
By Order of the Board of Directors,
Des Plaines, Illinois A. ALEX SARKISIAN, Esq.
April 10, 2000 Executive Vice President and
Corporate Secretary
THE COMPANY'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999 (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> 15
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 on the reverse side, all the shares of Schawk, Inc. Class A Common
Stock held on record by the undersigned on March 29, 2000, at the Annual
Meeting of Stockholders to be held on May 24, 2000, 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)
- --------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
[SCHAWK LOGO]
ADMISSION TICKET [ART]
- --------------------------------------------------------------------------------
2000 ANNUAL
MEETING OF
STOCKHOLDERS
Wednesday, May 24, 2000
Schawk, Inc.
1695 River Road
Des Plaines, IL 60018
(847) 827-9494
AGENDA
9:00 a.m. Doors Open
10:00 a.m. Introduction and Welcome
Chairman's Remarks
Business Meeting
Management Presentation
- --------------------------------------------------------------------------------
For further information, contact the Investor See reverse for map of area.
Relations Department at (847)827-9494, ext. 238
<PAGE> 16
<TABLE>
<S> <C>
[X] PLEASE MARK YOUR ----- |
VOTE AS IN THIS | |
EXAMPLE. | -----
THIS 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.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR WITHHELD FOR ALL FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. FOR ratification of the selection of Ernst [ ] [ ] [ ]
Directors & Young LLP as independent auditors of Schawk,
(See Reverse) Inc. for fiscal year 2000.
For, except vote withheld for the following nominee(s): 3. In his discretion, the Proxy is authorized to vote upon such other
business as may properly come before the meeting.
- --------------------------------------------------------
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 IN THE UNITED STATED
OR PUERTO RICO.
---------------------------------------------------------
---------------------------------------------------------
SIGNATURE(S) DATE
</TABLE>
- --------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
SCHAWK, INC.
2000 ANNUAL MEETING OF STOCKHOLDERS
SCHAWK, INC.
1695 River Road
Des Plaines, IL 60018
DIRECTIONS
FROM THE NORTH:
Take 294 South and exit at Golf Rd. At
the first stop sign, take a left. At the
first light (Golf Rd.) take a right. At
the second light, go left on River Rd.
Continue south on River Rd. & through
Des Plaines. Offices located just past
Oakton Ave. on the left.
[MAP] FROM O'HARE AIRPORT:
Take 190 out of O'Hare, following signs
to Chicago. Exit at River Rd. (north).
Offices located one half mile past Touhy
Ave. on the right.
FROM CHICAGO:
Take 90 West to 190 West. Stay in right
lane, exit River Rd. North. Offices
located one half mile past Touhy Ave. on
the right.
