<PAGE>
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
[X] Definitive Proxy Statement only (as permitted by Rule 14a-6(e)(2)
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GUEST SUPPLY, 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)(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:
.................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
.................................................................
2) Form, Schedule or Registration Statement No.:
.................................................................
3) Filing party:
.................................................................
4) Date Filed:
.................................................................
<PAGE>
GUEST SUPPLY, INC.
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 5, 1997
---------------
Monmouth Junction, New Jersey
January 17, 1997
To the Holders of Common Stock
of GUEST SUPPLY, INC.:
The Annual Meeting of Shareholders (the "Meeting") of GUEST SUPPLY,
INC. (the "Company") will be held at the Novotel Hotel at 100 Independence
Avenue in Princeton, New Jersey on Wednesday, March 5, 1997 at 10:00 o'clock
A.M., local time, for the following purposes, as more fully described in the
accompanying Proxy Statement:
Proposal 1. To elect two Class B directors of the Company for the
three ensuing years.
Proposal 2. To consider and take action upon a proposal to ratify the
Board of Directors' selection of KPMG Peat Marwick LLP to serve as the Company's
independent auditors for the Company's fiscal year ending September 30, 1997.
Proposal 3. To transact such other business as may properly come
before the Meeting or any adjournment or adjournments thereof.
The close of business on January 8, 1997 has been fixed by the Board
of Directors as the record date for the determination of shareholders entitled
to notice of, and to vote at, the Meeting.
By Order of the Board of Directors,
Paul T. Xenis, Secretary
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. IF YOU DO
NOT EXPECT TO BE PRESENT, PLEASE MARK, SIGN AND DATE THE ENCLOSED FORM OF PROXY
AND MAIL IT IN THE ENCLOSED RETURN ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES, SO THAT YOUR VOTE CAN BE RECORDED.
<PAGE>
PROXY STATEMENT
This Proxy Statement, which will be mailed commencing on or about
January 17, 1997 to the persons entitled to receive the accompanying Notice of
Annual Meeting of Shareholders, is provided in connection with the solicitation
of Proxies on behalf of the Board of Directors of Guest Supply, Inc. (the
"Company") for use at the Annual Meeting of Shareholders (the "Meeting") to be
held on March 5, 1997, and at any adjournment or adjournments thereof, for the
purposes set forth in such Notice. The Company's executive office is located at
4301 U.S. Highway One, Monmouth Junction, New Jersey 08852.
Any Proxy may be revoked at any time before it is exercised by written
notice to the Secretary of the Meeting. The delivery of a subsequently dated
Proxy will have the effect of revoking an earlier Proxy. The casting of a
ballot at the Meeting by a shareholder who may theretofore have given a Proxy
will not have the effect of revoking the same unless the shareholder so notifies
the Secretary of the Meeting in writing at any time prior to the voting of the
shares represented by the Proxy.
At the close of business on January 8, 1997, the record date stated in
the accompanying Notice, the Company had outstanding 6,165,375 shares of common
stock, without par value (the "Common Stock"), each of which is entitled to one
vote with respect to each matter to be voted on at the Meeting. The Company has
no class or series of stock outstanding other than the Common Stock.
A majority of the issued and outstanding shares of Common Stock
present in person or by proxy will constitute a quorum for the transaction of
business at the Meeting. Abstentions and broker non-votes (as hereinafter
defined) will be counted as present for the purpose of determining the presence
of a quorum.
Directors are elected by plurality vote. Adoption of proposal 2 will
require the affirmative vote of a majority of the Common Stock present and
voting thereon at the Meeting. For the purpose of determining the vote required
for approval of matters to be voted on at the Meeting, shares held by
shareholders who abstain from voting will be treated as "present" and "entitled
to vote" on the matter and, thus, an abstention has the same legal effect as a
vote against the matter. However, in the case of a broker non-vote or where a
shareholder withholds authority from his proxy to vote the proxy as to a
particular matter, such shares will not be treated as "present" and "entitled to
vote" on the matter and, thus, a broker non-vote or the withholding of a proxy's
authority will have no effect on the outcome of the vote on the matter. A
"broker non-vote" refers to shares of Common Stock represented at the Meeting in
person or by proxy by a broker or nominee where such broker or nominee (i) has
not received voting instructions on a particular matter from the beneficial
owners or persons entitled to vote and (ii) the broker or nominee does not have
discretionary voting power on such matter.
<PAGE>
-2-
I. PROPOSAL ONE - ELECTION OF DIRECTORS
At the Meeting, shareholders will elect two directors, denominated as
Class B directors, to serve for a term of three years and until a successor
shall have been chosen and qualified. This is in accord with the Company's
Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation") which provides for the division of the Board of Directors into
three classes with the term of office of the Class B directors expiring at the
Meeting. Class C and Class A directors will be elected at the Annual Meetings
of Shareholders to be held in 1998 and 1999, respectively. If the number of
directors is increased, the increase will be apportioned among the classes so as
to make all classes as nearly equal in number as possible.
It is the intention of each of the persons named in the accompanying
form of Proxy to vote the shares represented thereby in favor of the two
nominees listed in the table under "Certain Information Concerning Nominees and
Directors" below, unless otherwise instructed in such Proxy. Such nominees are
presently serving as directors. In case either of the nominees is unable or
declines to serve, such persons reserve the right to vote the shares represented
by such Proxy for another person duly nominated by the Board of Directors in his
stead or, if no other person is so nominated, to vote such shares only for the
remaining nominee. The Board of Directors has no reason to believe that either
of the nominees will be unable or will decline to serve.
CERTAIN INFORMATION CONCERNING NOMINEES AND DIRECTORS
- -----------------------------------------------------
Certain information concerning the nominees for election as Class B
directors and the other directors of the Company is set forth below. Such
information was furnished by them to the Company.
<TABLE>
<CAPTION>
Shares of Common
Stock Owned Bene-
Name and Certain ficially as of Percent
Biographical Information December 31, 1996 (1) of Class
- -------------------------------------- ---------------------- ---------
<S> <C> <C>
Nominees for Election
- --------------------------------------
THOMAS M. HAYTHE (Class B director), 164,040 (2) 2.6%
age 57; Partner, Haythe & Curley
(attorneys) since February 1982;
Director: Novametrix Medical Systems
Inc. (manufacturer of electronic
medical instruments), Isomedix Inc.
(provider of sterilization services),
Westerbeke Corporation (manufacturer
of marine engine products), Ramsay
Health Care, Inc. (provider of
psychiatric health care services) and
Ramsay Managed Care, Inc. (provider
of managed mental health care
services); Director of the Company
since June 1983.
</TABLE>
<PAGE>
-3-
GEORGE S. ZABRYCKI (Class B director), 34,500 (3) *
age 54; President, Milwaukee
Seasonings (manufacturer of food
ingredients) since May 1992; Vice
President-Business Planning, Best
Foods Affiliate Group, a Division of
CPC International, Inc., from
November 1991 to May 1992;
Consultant, Aqua-Fab Industries, Inc.
from March 1991 to November 1991;
President and Chief Executive
Officer, Heldor Industries, Inc.
(manufacturer of swimming pools) from
March 1990 to March 1991; Director of
Strategic Development, Specialty
Chemicals Division, Union Carbide
Corporation from August 1989 to
February 1990; President, Amerchol
Corporation (manufacturer of
specialty chemicals) from April 1981
to August 1989; Director of the
Company since November 1990.
Other Directors Whose Term of Office
Will Continue After the Meeting
- ------------------------------------
PETER L. RICHARD (Class A director), 9,000 (4) *
age 49; Managing Director, Quasar
Corp. (investment consultants) since
May 1988; Private investor from
December 1987 to May 1988; Senior
Vice President, Moseley Securities
Corporation (formerly Moseley,
Hallgarten, Estabrook & Weeden Inc.)
(investment bankers) prior to
December 1987; Director: New Paraho
Corp. (oil shale technology);
Director of the Company since August
1983.
CLIFFORD W. STANLEY (Class C director), 510,338 (5) 7.7%
age 51; President of the
Company since January 1988;
Executive Vice President,
Chief Financial Officer,
Secretary and Treasurer of the
Company from April 1986 to
January 1988; Vice President -
Finance of the Company from
August 1985 to April 1986;
Vice President and Chief
Operating Officer, Transfer
Print Foils, Inc. (hot
stamping foils) from 1984 to
August 1985; Vice President of
Finance, Permacel Division,
Avery International from 1982
to 1984; Vice President,
Johnson & Johnson from 1979 to
1982; Director of the Company
since January 1987.
<PAGE>
-4-
TERI E. UNSWORTH (Class A director), 253,750 (6) 4.0%
age 45; Vice President - Market
Development of the Company since May
1985; Group Product Director of Vidal
Sassoon, Inc. from 1983 to 1985;
Product Director of Vidal Sassoon,
Inc. from 1981 to 1983; Director of
Sales of Vidal Sassoon, Inc. from
1979 to 1981; Director of the Company
since November 1989.
EDWARD J. WALSH (Class A director), 129,000 (7) 2.0%
age 64; President and Chief Executive
Officer, Sparta Group Ltd. (business
consultants) since 1987; President
and Chief Executive Officer, The Dial
Corporation (consumer products) from
1984 to 1987; President and Chief
Executive Officer, Armour
International (consumer products)
prior to 1984; Director: The WD-40
Company and Nortrust of Arizona
Holding Corporation; Director of the
Company since November 1987.
- -------------------
* Less than one percent.
(1) Each of the nominees and the other directors of the Company has sole voting
and investment power with respect to all shares shown in the table as
beneficially owned by such person.
(2) Includes 7,500 shares issuable upon the exercise of presently exercisable
stock options and 127,500 shares issuable pursuant to presently exercisable
warrants held by Mr. Haythe.
(3) Includes 7,500 shares issuable upon the exercise of presently exercisable
stock options and 25,500 shares issuable pursuant to presently exercisable
warrants held by Mr. Zabrycki.
(4) Consists of 7,500 shares issuable upon the exercise of presently exercisable
stock options and 1,500 shares issuable pursuant to presently exercisable
warrants held by Mr. Richard.
(5) Includes 195,000 shares issuable upon the exercise of presently exercisable
stock options and 270,000 shares issuable pursuant to presently exercisable
warrants held by Mr. Stanley.
(6) Includes 135,000 shares issuable upon the exercise of presently exercisable
stock options and 116,250 shares issuable pursuant to presently exercisable
warrants held by Ms. Unsworth.
(7) Includes 7,500 shares issuable upon the exercise of presently exercisable
stock options and 120,000 shares issuable pursuant to presently exercisable
warrants held by Mr. Walsh.
<PAGE>
-5-
During the past fiscal year, the Board of Directors of the Company met
seven times. Each of the persons named in the table above attended at least 75%
of the meetings of the Board of Directors and meetings of any committees of the
Board on which such person served which were held during the time that such
person served, except for Mr. Zabrycki who attended 67% of all such meetings.
The committees of the Board of Directors include a Stock Option Committee,
whose members are Messrs. Richard, Walsh and Zabrycki; a Personnel and
Compensation Committee, whose members are Messrs. Haythe, Richard, Walsh and
Zabrycki; an Audit Committee, whose members are Messrs. Haythe, Richard, Walsh
and Zabrycki; and a Nominating Committee, whose members are Mr. Stanley and Ms.
Unsworth. The Stock Option Committee administers the Company's 1983 Stock
Option Plan, the 1993 Stock Option Plan and the 1996 Long Term Incentive Plan
and determines the persons who are eligible to receive awards thereunder, the
number of shares to be subject to each award and the other terms and conditions
upon which awards under such plans are granted and made exercisable. The Stock
Option Committee also administers the Company's 1983 Employee Stock Purchase
Plan and the 1993 Employee Stock Purchase Plan. The Personnel and Compensation
Committee administers the formulation and submission to the Board of Directors
of recommendations on all matters related to the salaries, bonuses, fringe
benefits or compensation of any kind of the executives of the Company. The
Audit Committee is authorized to meet and discuss with the representatives of
any firm of certified public accountants retained by the Company the scope of
the audit of such firm and question such representatives with respect thereto,
and to meet with and question employees of the Company with respect to financial
matters pertaining to the Company. The Audit Committee is authorized to make
periodic reports to the Board of Directors of the Company of its actions and
findings. The Nominating Committee is authorized to nominate individuals to
serve as directors of the Company. The Nominating Committee will not consider
nominees recommended by shareholders. The Stock Option Committee met three
times during the fiscal year ended September 30, 1996. The Audit Committee and
the Personnel and Compensation Committee each met once during the fiscal year
ended September 30, 1996. The Nominating Committee did not meet during such
fiscal year.
The directors and officers of the Company, other than Messrs. Haythe,
Richard, Walsh and Zabrycki, are active in its business on a day-to-day basis.
No family relationships exist between any of the directors and officers of the
Company.
The Company's Certificate of Incorporation contains a provision,
authorized by New Jersey law, which eliminates the personal liability of a
director of the Company to the Company or to any of its shareholders for
monetary damages for a breach of his fiduciary duty as a director, except in the
case where the director breached his duty of loyalty, failed to act in good
faith or knowingly violated a law, or obtained an improper personal benefit.
<PAGE>
-6-
EXECUTIVE COMPENSATION
- ----------------------
The following table sets forth information for the fiscal years ended
September 30, 1996, 1995 and 1994 concerning the compensation paid or awarded to
the Chief Executive Officer and the executive officers of the Company whose
total annual salary and bonus exceeded $100,000 during the fiscal year ended
September 30, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Fiscal Compensation
Year Annual Compensation Awards
Name and Principal Ended ------------------- -------------- All Other
Position Sept. 30 Salary Bonus Options (#) Compensation (1)
- ---------------------- ----------- --------- -------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Clifford W. Stanley 1996 $226,696 - 50,000 $2,112
President, Chief 1995 217,977 $67,080 - 2,112
Executive Officer 1994 208,577 64,500 75,000 2,249
and Director
James H. Riesenberg 1996 $174,720 $40,000 - $2,310
Vice President - 1995 170,326 86,800 - 2,310
Operations 1994 162,769 85,000 37,500 2,249
Teri E. Unsworth 1996 $158,160 - 30,000 $1,729
Vice President - 1995 152,077 $46,800 - 2,156
Market Development 1994 145,096 45,000 37,500 2,080
and Director
Paul T. Xenis 1996 $128,110 - 30,000 $1,245
Vice President - 1995 123,182 $37,908 - 1,467
Finance 1994 111,980 36,450 30,000 1,241
</TABLE>
__________________________
(1) Amounts under "All Other Compensation" are contributions made by the
Company on behalf of the executive officer to the Guest Supply, Inc. 401(k) Plan
and Trust.
<PAGE>
-7-
The following table sets forth the grants of stock options to the
executive officers named in the Summary Compensation Table during the fiscal
year ended September 30, 1996. The amounts shown for each of the named
executive officers as potential realizable values are based on arbitrarily
assumed annualized rates of stock price appreciation of five percent and ten
percent over the exercise price of the options during the full terms of the
options, which would result in stock prices of approximately $24.84 and $39.55,
respectively. The amounts shown as potential realizable values for all
shareholders represent the corresponding increases in the market value of
6,156,075 outstanding shares of the Common Stock held by all shareholders as of
September 30, 1996, which would total approximately $59,036,759 and
$149,592,622, respectively. No gain to the optionees is possible without an
increase in stock price which will benefit all shareholders proportionately.
These potential realizable values are based solely on arbitrarily assumed rates
of appreciation required by applicable Securities and Exchange Commission
regulations. Actual gains, if any, on option exercises and holdings of Common
Stock are dependent on the future performance of the Common Stock and overall
stock market conditions. There can be no assurance that the potential
realizable values shown in this table will be achieved.
STOCK OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
Potential Realizable Value
at May 1, 2006 at Assumed
Annual Rates of
Stock Price Appreciation
for Option Term
----------------------------
If Stock At If Stock At
Individual Grants $24.84 $39.55
----------------------------------------------------- ----------- ------------
% of Total
Options
Granted to Exercise
Employees or
Options in Fiscal Base Price Expiration
Name Granted (#) Year ($/Sh) Date 5%($) 10%($)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
All Shareholders' N/A N/A N/A N/A $59,036,759 $149,592,622
Stock Appreciation
Clifford W. Stanley 50,000(1) 30.7% $15.25 May 1, 2006 $ 479,532 $ 1,215,229
Teri E. Unsworth 30,000(1) 18.4% $15.25 May 1, 2006 $ 287,719 $ 729,137
Paul T. Xenis 30,000(1) 18.4% $15.25 May 1, 2006 $ 287,719 $ 729,137
</TABLE>
(1) These options become exercisable in cumulative annual installments of 33-
1/3% on each of May 1, 1997, May 1, 1998 and May 1, 1999.
<PAGE>
-8-
The following table sets forth the number and value of options and
warrants held at September 30, 1996, by the executive officers named in the
Summary Compensation Table. During the fiscal year ended September 30, 1996,
none of such executive officers exercised any options or warrants to purchase
shares of Common Stock.
OPTION/WARRANT VALUES AT SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money
Options/Warrants at Options/Warrants at
Sept. 30, 1996 (#) Sept. 30, 1996 ($)(1)
-------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- --------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Clifford W. Stanley 435,000 110,000 $3,802,500 $515,000
James H. Riesenberg 243,750 15,000 $2,200,313 $128,750
Teri E. Unsworth 243,750 45,000 $2,200,313 $128,750
Paul T. Xenis 155,550 39,000 $1,371,888 $ 77,250
</TABLE>
__________
(1) In-the-money options or warrants are those where the fair market value of
the underlying Common Stock exceeds the exercise price of such option or
warrant. The value of in-the-money options and warrants is determined in
accordance with regulations of the Securities and Exchange Commission by
subtracting the aggregate exercise price of such option or warrant from the
aggregate year-end value of the underlying Common Stock.
EMPLOYMENT AGREEMENTS
- ---------------------
The Company entered into employment agreements with each of Clifford
W. Stanley, James H. Riesenberg, Teri E. Unsworth and Paul T. Xenis at annual
salaries subject to increases at the discretion of the Board of Directors. In
May 1996, the Board of Directors increased Mr. Stanley's salary to $232,544,
increased Ms. Unsworth's salary to $162,240 and increased Mr. Xenis' salary to
$131,414. Pursuant to the terms of the employment agreements, each agreement
with Mr. Stanley, Ms. Unsworth and Mr. Xenis has been automatically renewed
through the period ending December 31, 1997. Mr. Riesenberg will retire
effective January 31, 1997. Mr. Stanley is President, Chief Executive Officer
and a director of the Company, Mr. Riesenberg is Vice President-Operations, Ms.
Unsworth is Vice President-Market Development and a director of the Company and
Mr. Xenis is Vice President-Finance and Secretary. Each agreement also provides
for a cash payment of up to three years' annual salary upon termination by the
Company of the employee's employment other than for cause and upon the
employee's voluntary termination within one year following certain change of
control events involving the Company.
<PAGE>
-9-
COMPENSATION OF DIRECTORS
- -------------------------
The Company pays its directors an annual fee of $10,000 and $1,000 for
attending each meeting of the Board of Directors of the Company.
PERSONNEL AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
- -------------------------------------------------------------------------
Thomas M. Haythe, a director of the Company and a member of the
Personnel and Compensation Committee, is a partner of the law firm of Haythe &
Curley, which firm acted as legal counsel to the Company during the past fiscal
year. It is expected that Haythe & Curley will continue to render legal
services to the Company in the future.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
- -----------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Common Stock, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of Common
Stock. Officers, directors and greater than ten percent shareholders are
required by Securities and Exchange Commission regulations to furnish the
Company with copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and representations that no other reports
were required, during the fiscal year ended September 30, 1996 all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent shareholders were complied with, except that Ms. Unsworth failed to make
a timely filing of a statement on Form 4 regarding one transaction. Ms.
Unsworth has subsequently filed the required report.
PERSONNEL AND COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
- ------------------------------------
The report of the Personnel and Compensation Committee documents the
Committee's policies regarding executive officer compensation. The Company's
philosophy and objectives in setting compensation are:
. to offer levels of compensation which are competitive with those
offered by other companies in similar businesses;
. to compensate executives based on each executive's level of
responsibility and contribution to the Company's business goals;
. to link compensation with the Company's financial performance;
and
<PAGE>
-10-
. to align the interests of the Company's executives with the
interests of the Company's shareholders.
There are three components to executive compensation at the Company:
base salary, bonus and stock options.
Base Salary
-----------
Base salary is determined by level of responsibility, individual
performance and Company performance, as well as by the need to provide a
competitive package that allows the Company to retain key executives. After
reviewing individual and Company performance and market studies on salaries at
other companies of similar size, the Chief Executive Officer makes
recommendations to the Personnel and Compensation Committee concerning officers'
salaries, other than his own. The Personnel and Compensation Committee reviews
and, with any changes it deems appropriate, approves these recommendations.
Using the same review process, the Personnel and Compensation Committee makes
decisions pertaining to the Chief Executive Officer's salary.
Executive Bonus Plan
--------------------
The Executive Bonus Plan provides the opportunity for participating
executive officers to earn additional compensation by achieving specific net
income goals. Under the Executive Bonus Plan, the Company will pay a percentage
of each participant's annual base salary as an annual bonus, provided the
Company achieves specific net income objectives. These objectives are
established by the Board of Directors at the beginning of each fiscal year based
on recommendations from the Chief Executive Officer. For the fiscal year ended
September 30, 1996, no bonuses were paid.
Stock Options
-------------
The Company periodically grants stock options to its executive
officers and other key employees. The primary purpose of stock option grants is
to align the interests of the Company's executive officers more closely with the
interests of the Company's shareholders by offering the executives an
opportunity to benefit from increases in the market price of the Common Stock.
Stock options provide long-term incentives that have enabled the Company to
attract and retain key employees by encouraging their ownership of Common Stock.
The stock option plans are administered by the Stock Option Committee of the
Board of Directors, which determines the persons who are to receive options and
the number of shares to be subject to each option. In selecting individuals for
options and determining the terms thereof, the Stock Option Committee may take
into consideration any factors it deems relevant, including present and
potential contributions to the success of the Company.
<PAGE>
-11-
Compensation of Executive Officers
----------------------------------
The Company has employment agreements with each of Clifford W.
Stanley, President and Chief Executive Officer, James H. Riesenberg, Vice
President - Operations, Teri E. Unsworth, Vice President - Market Development
and Paul T. Xenis, Vice President - Finance. Pursuant to these agreements, the
annual base salary of each executive is subject to increases at the discretion
of the Board of Directors based upon performance of the Company and performance
of the executive. In May 1996, the Board of Directors approved a cost of living
increase of approximately 4% in the base salary payable to each of Clifford W.
Stanley, Teri E. Unsworth and Paul T. Xenis. In addition, for fiscal year 1996,
at Mr. Stanley's recommendation, the Company granted James H. Riesenberg a bonus
of $40,000 based upon individual performance and contribution to the growth of
the Company.
Personnel and Compensation Committee
Thomas M. Haythe
Peter L. Richard
Edward J. Walsh
George S. Zabrycki
<PAGE>
-12-
PERFORMANCE GRAPH
- -----------------
The following performance graph compares the cumulative total
shareholder return on the Common Stock to the NASDAQ Stock Market-US Index and
to the Standard and Poor's Lodging-Hotels Index for the Company's last five
fiscal years. The graph assumes that $100 was invested in each of the Common
Stock, the NASDAQ Stock Market-US Index and the Standard and Poor's Lodging-
Hotels Index on September 30, 1991 and that all dividends were reinvested.
FIVE YEAR CUMULATIVE TOTAL RETURN
COMPARISON GRAPH
<TABLE>
<CAPTION>
Cumulative Total Return
-----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
9/91 9/92 9/93 9/94 9/95 9/96
GUEST SUPPLY, INC. $ 100 $ 68 $ 125 $ 233 $ 380 $ 245
NASDAQ STOCK MARKET - US $ 100 $ 112 $ 147 $ 148 $ 204 $ 243
S&P LODGING-HOTELS $ 100 $ 121 $ 245 $ 229 $ 275 $ 332
</TABLE>
<PAGE>
-13-
INFORMATION CONCERNING CERTAIN SHAREHOLDERS
- -------------------------------------------
The shareholders (including any "group" as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934) who, to the knowledge
of the Board of Directors of the Company, owned beneficially more than five
percent of any class of the outstanding voting securities of the Company as of
December 31, 1996, each director and each executive officer named in the Summary
Compensation Table of the Company who owned beneficially shares of Common Stock
and all directors and executive officers of the Company as a group, and their
respective shareholdings as of such date (according to information furnished by
them to the Company), are set forth in the following table. Except as indicated
in the footnotes to the table, all of such shares are owned with sole voting and
investment power.
<TABLE>
<CAPTION>
Shares of
Common Stock Percent
Name and Address Owned Beneficially of Class
- -------------------------------------- ------------------- ---------
<S> <C> <C>
Dimensional Fund Advisors Inc......... 307,350 (1) 5.0%
1299 Ocean Avenue
Santa Monica, California 90401
Palisade Capital Management........... 340,000 (2) 5.5%
1 Bridge Plaza, Suite 695
Fort Lee, New Jersey 07024
RCM Capital Management................ 477,500 (3) 7.7%
Four Embarcadero Center, Suite 2900
San Francisco, California 94111
Rose Capital.......................... 531,287 (4) 8.6%
2480 Colts Neck Road
Blacklick, Ohio 43004
The Travelers Inc..................... 399,482 (5) 6.4%
388 Greenwich Street
New York, New York 10013
Thomas M. Haythe...................... 164,040 (6) 2.6%
237 Park Avenue
New York, New York 10017
Peter L. Richard...................... 9,000 (7) *
4301 U.S. Highway One
Monmouth Junction,
New Jersey 08852
James H. Riesenberg................... 266,942 (8) 4.2%
4301 U.S. Highway One
Monmouth Junction,
New Jersey 08852
</TABLE>
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<TABLE>
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Clifford W. Stanley................... 510,338 (9) 7.7%
4301 U.S. Highway One
Monmouth Junction,
New Jersey 08852
Teri E. Unsworth...................... 253,750 (10) 4.0%
4301 U.S. Highway One
Monmouth Junction,
New Jersey 08852
Edward J. Walsh....................... 129,000 (11) 2.0%
4301 U.S. Highway One
Monmouth Junction,
New Jersey 08852
Paul T. Xenis......................... 160,550 (12) 2.5%
4301 U.S. Highway One
Monmouth Junction,
New Jersey 08852
George S. Zabrycki.................... 34,500 (13) *
4301 U.S. Highway One
Monmouth Junction,
New Jersey 08852
All Directors and Officers
as a Group (eight persons)........... 1,528,120 (6) 20.1%
</TABLE>
(7)(8)
(9)(10)
(11)(12)(13)
- -------------------------
* Less than one percent.
(1) Information as to the holdings of Dimensional Fund Advisors Inc., a
registered investment advisor ("Dimensional"), is based upon a report on
Schedule 13G filed with the Securities and Exchange Commission. Such report
indicates that 307,350 shares were owned with sole dispositive power and
194,250 shares were owned with sole voting power. Such report indicates
that persons who are officers of Dimensional also serve as officers of DFA
Investment Dimensions Group Inc. (the "Fund") and The DFA Investment Trust
Company (the "Trust"), each an open-ended investment company registered
under the Investment Company Act of 1940 and in their capacity as officers
of the Fund and the Trust, such persons vote 107,100 shares owned by the
Fund and 6,000 shares owned by the Trust. Dimensional is deemed to have
beneficial ownership of 307,350 shares, all of which are held in portfolios
of the Fund or the Trust, investment vehicles for qualified employee benefit
plans. Dimensional serves as investment manager for the Fund and the Trust
and, based upon information provided to the Company, disclaims beneficial
ownership of all such shares.
(2) Information as to these holdings is based upon a report on Schedule 13G
filed with the Securities and Exchange Commission by Palisade Capital
Management, a registered investment advisor. This report indicates that
340,000 shares were owned with sole dispositive power and sole voting power.
(3) Information as to these holdings is based upon a report on Schedule 13G
filed with the Securities and Exchange Commission by RCM Capital Management,
RCM Limited L.P. (the general partner of RCM
<PAGE>
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Capital Management) and RCM General Corporation (the general partner of RCM
Limited L.P.). This report indicates that 467,000 shares were owned with
sole dispositive power, 422,000 shares were owned with sole voting power and
10,500 were owned with shared dispositive power.
(4) Information as to these holdings is based upon a report on Schedule 13G
filed with the Securities and Exchange Commission by Rose Capital, a
registered investment advisor. This report indicates that 531,287 shares
were owned with sole dispositive power and sole voting power.
(5) Information as to these holdings is based upon a report on Schedule 13G
filed with the Securities and Exchange Commission by Smith Barney Inc.
("SB"), Smith Barney Holdings Inc. ("SB Holdings"), the sole common stock
holder of SB, and The Travelers Inc. ("Travelers"), the sole stockholder of
SB Holdings. This report indicates that 399,482 shares were owned with
shared voting power and shared dispositive power.
(6) Includes 7,500 shares issuable upon the exercise of presently exercisable
stock options and 127,500 shares issuable pursuant to presently exercisable
warrants held by Mr. Haythe.
(7) Consists of 7,500 shares issuable upon the exercise of presently exercisable
stock options and 1,500 shares issuable pursuant to presently exercisable
warrants held by Mr. Richard.
(8) Includes 251,250 shares issuable upon the exercise of presently exercisable
stock options held by Mr. Riesenberg.
(9) Includes 195,000 shares issuable upon the exercise of presently exercisable
stock options and 270,000 shares issuable pursuant to presently exercisable
warrants held by Mr. Stanley.
(10) Includes 135,000 shares issuable upon the exercise of presently exercisable
stock options and 116,250 shares issuable pursuant to presently exercisable
warrants held by Ms. Unsworth.
(11) Includes 7,500 shares issuable upon the exercise of presently exercisable
stock options and 120,000 shares issuable pursuant to presently exercisable
warrants held by Mr. Walsh.
(12) Includes 160,050 shares issuable upon the exercise of presently exercisable
stock options held by Mr. Xenis.
(13) Includes 7,500 shares issuable upon the exercise of presently exercisable
stock options and 25,500 shares issuable pursuant to presently exercisable
warrants held by Mr. Zabrycki.
II. PROPOSAL TWO - RATIFICATION OF SELECTION
OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP to serve as
independent auditors for the Company for the fiscal year ending September 30,
1997. The Board of Directors considers KPMG Peat Marwick LLP to be eminently
qualified.
Although it is not required to do so, the Board of Directors is
submitting its selection of the Company's auditors for ratification at the
Meeting, in order to ascertain the views of shareholders regarding such
selection. If the selection is not ratified, the Board of Directors will
reconsider its selection.
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The Board of Directors recommends that shareholders vote FOR
ratification of the selection of KPMG Peat Marwick LLP to examine the financial
statements of the Company for the Company's fiscal year ending September 30,
1997. It is the intention of the persons named in the accompanying form of
Proxy to vote the shares represented thereby in favor of such ratification
unless otherwise instructed therein.
A representative of KPMG Peat Marwick LLP will be present at the
Meeting with the opportunity to make a statement if such representative desires
to do so and will be available to respond to appropriate questions.
III. OTHER MATTERS
The Board of Directors of the Company does not know of any other
matters which may be brought before the Meeting. However, if any other matters
are properly presented for action, it is the intention of the persons named in
the accompanying form of Proxy to vote the shares represented thereby in
accordance with their judgment on such matters.
IV. MISCELLANEOUS
If the accompanying form of Proxy is executed and returned, the shares
of Common Stock represented thereby will be voted in accordance with the terms
of the Proxy, unless the Proxy is revoked. If no directions are indicated in
such Proxy, the shares represented thereby will be voted FOR the nominees
proposed by the Board of Directors in the election of directors and FOR the
ratification of the Board of Directors' selection of independent auditors for
the Company.
All costs relating to the solicitation of Proxies will be borne by the
Company. Proxies may be solicited by officers, directors and regular employees
of the Company and its subsidiaries personally, by mail or by telephone or
telegraph, and the Company may pay brokers and other persons holding shares of
stock in their names or those of their nominees for their reasonable expenses in
sending soliciting material to their principals.
It is important that Proxies be returned promptly. Shareholders who
do not expect to attend the Meeting in person are urged to mark, sign and date
the accompanying form of Proxy and mail it in the enclosed return envelope,
which requires no postage if mailed in the United States, so that their votes
can be recorded.
ANNUAL REPORT ON FORM 10-K
- --------------------------
A copy of the Company's Annual Report on Form 10-K, including the
financial statements and financial statement schedule for the fiscal year ended
September 30, 1996, which is required to be filed with the Securities and
Exchange Commission, will be
<PAGE>
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sent without charge to shareholders to whom this Proxy Statement is mailed, upon
written request to the Secretary, Guest Supply, Inc., 4301 U.S. Highway One,
Monmouth Junction, New Jersey 08852.
SHAREHOLDER PROPOSALS
- ---------------------
Shareholder proposals intended to be presented at the 1998 Annual
Meeting of Shareholders of the Company must be received by the Company by
September 19, 1997 in order to be considered for inclusion in the Company's
proxy statement relating to such meeting.
January 17, 1997
<PAGE>
GUEST SUPPLY, INC.
PROXY - Annual Meeting of Shareholders - March 5, 1997
The undersigned, a shareholder of GUEST SUPPLY, INC., does hereby appoint
CLIFFORD W. STANLEY and PAUL T. XENIS, or either of them, with full power of
substitution, his proxies, to appear and vote all shares of Common Stock of the
Company which the undersigned is entitled to vote at the Annual Meeting of
Shareholders to be held on Wednesday, March 5, 1997 at 10:00 A.M., local time,
or at any adjournments thereof, upon such matters as may properly come before
the Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PLEASE The undersigned hereby instructs said proxies or their
SIGN AND substitutes to vote as specified below on each of the following
DATE matters and in accordance with their judgment on any other matters
ON THE which may properly come before the Meeting:
REVERSE
SIDE
AND
RETURN
PROMPTLY
<PAGE>
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1. Election of Directors. FOR all nominees listed below [_] WITHHOLD AUTHORITY to vote [_]
(except as marked to the contrary below) for all nominees listed below
</TABLE>
Thomas M. Haythe and George S. Zabrycki
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
<TABLE>
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<S> <C>
2. Ratification of appointment of KPMG Peat Marwick LLP FOR [_] AGAINST [_] ABSTAIN [_]
as independent auditors for fiscal 1997.
The Board of Directors favors a vote "FOR" each item.
The shares represented by this Proxy will be voted as directed. If no direction is indicated as to
Items 1 or 2 they will be voted in favor of the Item(s) for which no direction is indicated.
IMPORTANT: Before returning this Proxy, please sign your name or names
on the line below exactly as shown hereon. Executors, administrators,
trustees, guardians or corporate officers should indicate their full
titles when signing. Where shares are registered in the name of joint
tenants or trustees, each joint tenant or trustee should sign.
Dated:______________________, 1997
____________________________(L.S.)
Shareholder(s) Sign Here
</TABLE>
