<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 (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
[X] Definitive Proxy Statement Commission only (as permitted by
[_] Definitive Additional Materials Rule 14a-6(e)(2)
[_] 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 January 20, 2000
___________
Monmouth Junction, New Jersey
December 16, 1999
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 Thursday, January 20, 2000 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
next three years.
Proposal 2. To consider and take action upon a proposal to ratify the
Board of Directors' selection of KPMG LLP to serve as the Company's independent
auditors for the Company's fiscal year ending September 29, 2000.
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 December 1, 1999 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
December 17, 1999 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 January 20, 2000, 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 December 1, 1999, the record date stated
in the accompanying Notice, the Company had outstanding 6,357,860 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. In the case of a broker non-vote, abstention 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, abstention 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-
1. PROPOSAL ONE - ELECTION OF DIRECTORS
At the Meeting, shareholders will be asked to 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 2001 and 2002, 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 for Class B director listed in the table under "Certain Information
Concerning Nominees and Directors" below, unless otherwise instructed not to
vote by withholding authority under 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 November 1, 1999 (1) of Class
------------------------ ------------------- --------
Nominees for Election as Class B Directors
- ------------------------------------------
<S> <C> <C>
THOMAS M. HAYTHE (Class B director), 164,040 (2) 2.6%
age 60; Partner, Tory Haythe (law firm)
from 1982 to December 1999; Director:
Novametrix Medical Systems Inc.
(manufacturer of electronic medical
instruments), Ramsay Youth Services,
Inc. (provider of youth and educational
services) and Westerbeke Corporation
(manufacturer of marine engine products);
Director of the Company since June 1983.
GEORGE S. ZABRYCKI (Class B director), 34,500 (3) *
age 56; 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
</TABLE>
<PAGE>
-3-
<TABLE>
<S> <C> <C>
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), -0- -
age 52; 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), 420,338 (4) 6.3%
age 53; President and Chief Executive
Officer 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.
TERI E. UNSWORTH (Class C director), 221,250 (5) 3.4%
age 48; 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.
</TABLE>
<PAGE>
-4-
<TABLE>
<S> <C> <C>
EDWARD J. WALSH (Class A director),
age 67; President and Chief Executive 110,700 (6) 1.7%
Officer, Sparta Group Ltd. (business
consultants) since 1987; President and
Chief Executive Officer, 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.
</TABLE>
___________
* 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 60,000 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) Includes 225,000 shares issuable upon the exercise of presently exercisable
stock options and 127,500 shares issuable pursuant to presently exercisable
warrants held by Mr. Stanley.
(5) Includes 75,000 shares issuable upon the exercise of presently exercisable
stock options and 116,250 shares issuable pursuant to presently exercisable
warrants held by Ms. Unsworth.
(6) Includes 7,500 shares issuable upon the exercise of presently exercisable
stock options and 67,500 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
five 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.
The committees of the Board of Directors include a Stock Option
Committee, whose members are Messrs. Richard, Walsh and Zabrycki; a Compensation
Committee, whose members are Messrs. Haythe, Richard and Zabrycki; an Audit
Committee, whose members are Messrs. Richard, Walsh and Zabrycki; an Executive
Committee, whose members are Messrs. Haythe, Richard, Stanley and Zabrycki; and
a Nominating Committee, whose members are Messrs. Haythe and 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 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 Executive Committee is authorized to act in place of the Board of Directors
to the extent permitted by law on matters which require Board action between
meetings of the Board of Directors. 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 once and the Audit Committee and the Compensation Committee
each met twice during the fiscal year ended October 1, 1999. The Nominating
Committee and the Executive 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.
On November 15, 1999, Barry Igdaloff resigned from his position as a
director of the Company. The vacancy has not been filled and the number of
directors of the Company has been fixed at six.
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
October 1, 1999, September 30, 1998 and September 30, 1997 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 October 1, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
------------------- --------------------
Name and Principal All Other
Position Fiscal Year Salary Bonus Options (#) Compensation (1)
------------------- ----------- ------ ----- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Clifford W. Stanley 1999 $264,367 $159,911 30,000 $2,112
President and Chief 1998 242,961 - - 2,112
Executive Officer 1997 233,617 - - 2,112
R. Eugene Biber 1999 $184,977 $112,789 15,000 $2,500
Vice President - 1998 173,855 - - 2,473
Operations 1997 167,168 - 10,000 -
Teri E. Unsworth 1999 $150,294 - - $2,003
Vice President - 1998 169,508 - - 1,853
Market Development 1997 162,989 - - 1,798
Paul T. Xenis 1999 $174,916 $105,840 20,000 $1,615
Vice President - 1998 153,939 - - 1,339
Finance 1997 132,163 - - 1,295
</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.
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 October 1, 1999. 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 $15.58 and $24.80,
respectively. The amounts shown as potential realizable values for all
shareholders represent the corresponding increases in the market value of
6,576,460 outstanding shares of the Common Stock held by all shareholders as of
October 1, 1999, which would total approximately $39,590,289, and $100,225,250
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.
<PAGE>
-7-
STOCK OPTION GRANTS IN FISCAL 1999
<TABLE>
<CAPTION>
Potential Realizable Value
at April 20, 2009 at
Assumed Annual Rates of
Stock Price Appreciation
for Option Term
------------------------
If Stock At If Stock At
Individual Grants $15.58 $24.80
--------------------------------------------------------------------------------- ----------- ------------
% of Total Options
Granted to Employees Exercise or Base
Name Options Granted (#) in Fiscal Year Price ($/Sh) Expiration Date 5%($) 10%($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
All Shareholders' N/A N/A N/A N/A $39,590,289 $100,225,250
Stock Appreciation
Clifford W. Stanley 30,000(1) 28.6% $9.56 April 20, 2009 $ 180,414 $ 457,205
R. Eugene Biber 15,000(2) 14.3% 9.56 April 20, 2009 90,207 228,602
Paul T. Xenis 20,000(1) 19.0% 9.56 April 20, 2009 120,276 304,803
</TABLE>
(1) These options become exercisable in cumulative annual
installments of 33-1/3% commencing on April 20, 2000.
(2) These options become exercisable in cumulative annual
installments of 20% commencing on April 20, 2000.
The following table sets forth the number and value, net of exercise
price, of shares of Common Stock acquired upon exercise of options and warrants
on the date of exercise by the executive officers named in the Summary
Compensation Table during the past fiscal year, and the number and value of
options and warrants held by such executive officers at October 1, 1999.
AGGREGATED OPTION/WARRANT EXERCISES IN
THE FISCAL YEAR ENDED OCTOBER 1, 1999
AND FISCAL YEAR END OPTION/WARRANT VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money
Options/Warrants at Options/Warrants at
October 1, 1999 (#) October 1, 1999 ($)(1)
-------------------------- ---------------------------
Shares Acquired
Name on Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Clifford W. Stanley 37,500 $279,686.25 352,500 30,000 $3,164,055.75 $136,875.00
R. Eugene Biber 0 0 31,000 39,000 41,125.00 110,437.50
Teri E. Unsworth 0 0 191,250 0 1,812,027.38 0
Paul T. Xenis 60,000 327,498.00 97,500 20,000 857,186.25 91,250.00
</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.
<PAGE>
-8-
On November 1, 1999, the Company purchased 120,000, 40,000 and 35,000
shares of Common Stock from Mr. Stanley, Ms. Unsworth and Mr. Xenis,
respectively, at a price of $13.19 per share. The closing price for the Common
Stock on October 29, 1999 (the last trading day prior to the purchase) was
$13.44 per share.
Employment Agreements
- ---------------------
Effective August 1, 1997, the Company entered into employment
agreements with each of Clifford W. Stanley, R. Eugene Biber, Teri E. Unsworth
and Paul T. Xenis at annual salaries subject to increases at the discretion of
the Board of Directors. The term of each employment agreement is for a three-
year period with automatic yearly extensions. Mr. Stanley is President, Chief
Executive Officer and Chairman of the Board of Directors of the Company, Mr.
Biber 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. In July 1999, the Board of Directors increased Mr. Stanley's salary to
$267,000, increased Mr. Biber's salary to $188,000 and increased Mr. Xenis's
salary to $177,000. In April 1999, the Board of Directors approved an amendment
to Ms. Unsworth's employment agreement reflecting a reduced work schedule for
Mr. Unsworth at an annual salary of $100,000. In November 1999, Ms. Unsworth
resumed her full-time work schedule at an annual salary of $175,420.
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.
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
During 1999, Thomas M. Haythe, a director of the Company and a member
of the Compensation Committee, was a partner of the law firm of Tory Haythe,
which firm acted as legal counsel to the Company during the past fiscal year. It
is expected that Tory Haythe will continue to render legal services to the
Company in the future.
In addition, pursuant to an agreement dated August 6, 1997 between the
Company and Thomas M. Haythe (the "Agreement"), Mr. Haythe acts as general
counsel for the Company. The Agreement provides, among other things, for the
payment of a monthly retainer of $7,500 (credited on a current basis against
fees of Tory Haythe for services rendered to the Company) and the payment of up
to three years of such retainer upon the termination of the Agreement in the
case of certain change of control events involving the Company. The term of the
Agreement is for a three-year period with automatic yearly extensions.
<PAGE>
-9-
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 October 1, 1999 all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent shareholders were complied with.
Compensation Committee Report
on Executive Compensation
- -------------------------
The report of the 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
. 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 Compensation Committee concerning officers' salaries,
other than his own. The Compensation Committee reviews and, with any changes it
deems appropriate, approves these recommendations. Using the same review
process, the Compensation Committee makes decisions pertaining to the Chief
Executive Officer's salary.
<PAGE>
-10-
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
October 1, 1999, the following bonuses were earned under this plan: Mr. Stanley
- - $159,911; Mr. Biber - $112,789; and Mr. Xenis - $105,840.
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.
Compensation of Executive Officers
----------------------------------
The Company has employment agreements with each of Clifford W.
Stanley, President and Chief Executive Officer, R. Eugene Biber, 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 July 1999, the Board of Directors approved an increase ranging
from approximately 4 1/2% to 6% in the base salary payable to each of Clifford
W. Stanley, R. Eugene Biber and Paul T. Xenis.
Compensation Committee
Thomas M. Haythe
Peter L. Richard
George S. Zabryck
<PAGE>
-11-
Performance Graph
- -----------------
The following performance graph compares the cumulative total
shareholder return on the Common Stock to the Dow Jones Industrial Average 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 Dow Jones Industrial Average and the Standard and Poor's Lodging-
Hotels Index on September 30, 1994 and that all dividends were reinvested.
FIVE-YEAR CUMULATIVE TOTAL RETURN
COMPARISON GRAPH
[GRAPH APPEARS HERE]
Cumulative Total Return
-------------------------------------------
9/94 9/95 9/96 9/97 9/98 9/99
GUEST SUPPLY, INC. $ 100 $ 163 $ 105 $ 123 $ 94 $ 114
DOW JONES INDUSTRIAL $ 100 $ 128 $ 161 $ 221 $ 222 $ 298
S&P LODGING-HOTELS $ 100 $ 120 $ 145 $ 193 $ 130 $ 151
<PAGE>
-12-
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
November 1, 1999, 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..... 423,450 (1) 6.7%
1299 Ocean Avenue
Santa Monica, California 90401
Investment Counselors of.......... 471,000 (2) 7.4%
Maryland, Inc.
803 Cathedral Street
Baltimore, Maryland 21201
Rose Capital...................... 536,637 (3) 8.4%
2480 Colts Neck Road
Blacklick, Ohio 43004
Summerset Group LLC............... 595,900 (4) 9.4%
1640 Dartmouth Lane
Deerfield, Illinois 60015
R. Eugene Biber................... 31,628 (5) *
4301 U.S. Highway One
Monmouth Junction,
New Jersey 08852
Thomas M. Haythe.................. 164,040 (6) 2.6%
4301 U.S. Highway One
Monmouth Junction,
New Jersey 08852
Peter L. Richard.................. -0- -
4301 U.S. Highway One
Monmouth Junction,
New Jersey 08852
Clifford W. Stanley............... 420,338 (7) 6.3%
4301 U.S. Highway One
Monmouth Junction,
New Jersey 08852
</TABLE>
<PAGE>
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<TABLE>
<S> <C> <C>
Teri E. Unsworth.................. 221,250 (8) 3.4%
4301 U.S. Highway One
Monmouth Junction,
New Jersey 08852
Edward J. Walsh................... 110,700 (9) 1.7%
4301 U.S. Highway One
Monmouth Junction,
New Jersey 08852
Paul T. Xenis..................... 130,050 (10) 2.0%
4301 U.S. Highway One
Monmouth Junction,
New Jersey 08852
George S. Zabrycki................ 34,500 (11) *
4301 U.S. Highway One
Monmouth Junction,
New Jersey 08852
All Directors and Officers
as a Group (eight persons)....... 1,112,506 (5) (6) 15.4%
(7)(8)
(9)(10)
(11)
</TABLE>
_______________
* 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 423,450 shares were owned with sole dispositive power and
with sole voting power. Dimensional furnishes investment advice to
registered investment companies and serves as investment manager to certain
other investment vehicles. In its role as investment advisor and investment
manager, Dimensional possesses both voting and investment power over the
shares owned by its clients. All 423,450 shares are owned by clients of
Dimensional and Dimensional 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 Investment Counselors
of Maryland, Inc., a registered investment advisor. Based upon such
information, 471,000 shares were owned with sole dispositive power and sole
voting power.
(3) Information as to these holdings is based upon a report on Schedule 13D
filed with the Securities and Exchange Commission by Rose Capital, a
registered investment advisor. Based upon such information, 536,637 shares
were owned with sole dispositive power and sole voting power.
(4) Information as to these holdings is based upon a report on Schedule 13D
filed with the Securities and Exchange Commission by Summerset Group LLC, a
limited liability company, whose principal business is to invest in and
hold securities. This report indicates that 595,900 shares were owned with
sole dispositive power and sole voting power.
(5) Includes 31,000 shares issuable upon the exercise of presently exercisable
stock options held by Mr. Biber.
(6) Includes 7,500 shares issuable upon the exercise of presently exercisable
stock options and 60,000 shares issuable pursuant to presently exercisable
warrants held by Mr. Haythe.
<PAGE>
-14-
(7) Includes 225,000 shares issuable upon the exercise of presently exercisable
stock options and 127,500 shares issuable pursuant to presently exercisable
warrants held by Mr. Stanley.
(8) Includes 75,000 shares issuable upon the exercise of presently exercisable
stock options and 116,250 shares issuable pursuant to presently exercisable
warrants held by Ms. Unsworth.
(9) Includes 7,500 shares issuable upon the exercise of presently exercisable
stock options and 67,500 shares issuable pursuant to presently exercisable
warrants held by Mr. Walsh.
(10) Includes 97,500 shares issuable upon the exercise of presently exercisable
stock options held by Mr. Xenis.
(11) 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 LLP to serve as independent
auditors for the Company for the fiscal year ending September 29, 2000. The
Board of Directors considers KPMG 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.
The Board of Directors recommends that shareholders vote FOR
ratification of the selection of KPMG LLP to examine the financial statements of
the Company for the Company's fiscal year ending September 29, 2000. 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 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 printed
terms of the Proxy, unless the Proxy is properly 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
<PAGE>
-15-
in the election of Class B 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, and consultants to, the Company and its subsidiaries personally, by mail or
by telephone or facsimile, 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 for the fiscal year ended October 1, 1999, which is
required to be filed with the Securities and Exchange Commission, will be 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 2001 Annual
Meeting of Shareholders of the Company must be received by the Company by August
19, 2000 in order to be considered for inclusion in the Company's proxy
statement relating to such meeting. Such a proposal must also comply with the
requirements as to form and substance established by the Securities and Exchange
Commission for such proposals.
A shareholder otherwise desiring to bring matters before an annual
meeting of shareholders must, pursuant to the Company's By-Laws, submit a
proposal in writing that is received by the Secretary of the Company at the
principal executive offices of the Company not less than 60 nor more than 90
days prior to the anniversary date of the immediately preceding annual meeting.
In the event that the date of the annual meeting is called for a date that is
not within 30 days before or after such anniversary date, the By-Laws provide
that notice by a shareholder of a shareholder proposal must be received in
writing by the Secretary of the Company on the tenth day following the day on
which such notice of the date of the annual meeting was mailed or such public
disclosure was made. If any shareholder proposals are presented for action at
the Annual Meeting, but are not submitted within the time periods described
above, it is the intention of the persons named in the accompanying proxy to
vote the shares to which the proxy relates in accordance with their judgment.
December 16, 1999
<PAGE>
GUEST SUPPLY, INC.
PROXY - Annual Meeting of Shareholders - January 20, 2000
The undersigned, a shareholder of GUEST SUPPLY, INC., does hereby
appoint CLIFFORD W. STANLEY and THOMAS M. HAYTHE, 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 Thursday, January 20, 2000 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 SIGN The undersigned hereby instructs said proxies or their
AND DATE ON substitutes to vote as printed on the reverse on each of the
THE REVERSE following matters and in accordance with their judgment on any
SIDE AND other matters which may properly come before the Meeting:
RETURN
PROMPTLY
<PAGE>
<TABLE>
<S> <C> <C>
1. Election of Class B Directors. FOR all nominees [_] WITHHOLD AUTHORITY to vote for all nominees listed [_]
(except as marked
to the contrary
below)
</TABLE>
Thomas M. Haythe and George S. Zabrycki
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR EITHER CLASS B NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE LINE PROVIDED BELOW.)
__________________________________________________________
<TABLE>
<S> <C> <C> <C>
2. Ratification of appointment of KPMG LLP FOR AGAINST ABSTAIN
as independent auditors for fiscal 2000. [_] [_] [_]
</TABLE>
The Board of Directors favors a vote "FOR" Items 1 and 2.
The shares represented by this Proxy will be voted as directed.
If no direction is indicated as to Items 1 and 2, they will be voted
in favor of the Items 1 and 2.
IMPORTANT: Before returning this Proxy,
please sign your name or names on the
line(s) 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:__________________
_______________________(L.S.)
_______________________(L.S.)
Shareholder(s) Sign Here
