<PAGE> 1
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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
CML Group, Inc.
(Name of Registrant as Specified In Its Charter)
CML Group, Inc.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11:
4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE> 2
CML
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 1, 1994
The Annual Meeting of Stockholders of CML Group, Inc. (the "Company") will
be held at BayBank Boston, 175 Federal Street, 10th Floor, Boston,
Massachusetts, on Thursday, December 1, 1994 at 10:30 a.m., local time, to
consider and act upon the following matters:
1. To elect three Class A Directors for the ensuing three years.
2. To ratify the appointment by the Board of Directors of Deloitte &
Touche LLP as the Company's independent accountants for the 1995 fiscal
year.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on October 27, 1994 will be
entitled to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors,
PAUL P. BROUNTAS, Secretary
Acton, Massachusetts
November 3, 1994
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE SO THAT
YOUR SHARES ARE REPRESENTED. NO POSTAGE IS NEEDED IF THE PROXY IS MAILED IN THE
UNITED STATES.
<PAGE> 3
CML GROUP, INC.
524 MAIN STREET, ACTON, MA 01720
PROXY STATEMENT FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 1, 1994
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of CML Group, Inc. (the "Company") for use at
the Annual Meeting of Stockholders to be held on December 1, 1994 and at any
adjournment of that meeting (the "Meeting"). All proxies will be voted in
accordance with the instructions contained in them. If no choice is specified,
the proxies will be voted in favor of the matters set forth in the accompanying
Notice of Meeting. Any proxy may be revoked by a stockholder at any time before
its exercise by delivery of written revocation to the Secretary of the Company.
On October 27, 1994, the record date for the determination of stockholders
entitled to vote at the Meeting, there were outstanding and entitled to vote an
aggregate of 49,987,789 shares of Common Stock, $.10 par value per share
("Common Stock"), of the Company. Each share is entitled to one vote.
The Company's Annual Report for the fiscal year ended July 31, 1994 is
being mailed to stockholders with the mailing of this Notice and Proxy Statement
beginning on or about November 3, 1994.
VOTES REQUIRED
A majority of the issued and outstanding shares of Common Stock entitled to
vote constitutes a quorum at the Meeting. The affirmative vote of the holders of
a plurality of the votes cast at the Meeting is required for the election of
directors. The affirmative vote of the holders of a majority of the shares of
Common Stock present or represented at the Meeting is required for the
ratification of the appointment of the Company's independent accountants.
Shares of Common Stock represented in person or by proxy at the Meeting
(including shares which abstain or do not vote with respect to one or more of
the matters presented at the Meeting) will be tabulated by the inspectors of
election appointed for the Meeting and will determine whether or not a quorum is
present. Abstentions will be counted as shares that are present and entitled to
vote for purposes of determining the number of shares that are present and
entitled to vote with respect to any particular matter, but will not be counted
as votes in favor of such matter. Accordingly, an abstention from voting on a
matter by a stockholder present in person or represented by proxy at the Meeting
will have the same legal effect as a vote "against" the matter even though the
stockholder or interested parties analyzing the results of the voting may
interpret such vote differently. If a broker holding stock in "street name"
indicates on the proxy that it does not have discretionary authority as to
certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
Accordingly, a "broker non-vote" on a matter has no effect on the voting on such
matter.
<PAGE> 4
<TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of August 31, 1994,
with respect to the beneficial ownership of the Company's Common Stock by (i)
each person known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock; (ii) each director and director nominee of
the Company; (iii) each executive officer of the Company named in the Summary
Compensation Table set forth in this Proxy Statement; and (iv) all directors and
executive officers of the Company as a group.
<CAPTION>
NUMBER PERCENTAGE
OF OF
SHARES COMMON
BENEFICIALLY STOCK
BENEFICIAL OWNER OWNED(1) OUTSTANDING
---------------- ------------ -----------
<S> <C> <C>
Principal Stockholders
Wisconsin Investment Board.................................... 4,997,000 10.0%
121 E. Wilson Street
Madison, WI 53702
The Reader's Digest Association, Inc.......................... 2,890,950 5.8
Reader's Digest Road
Pleasantville, NY 10570
Directors and Nominees
Charles M. Leighton........................................... 1,279,310(2)(6) 2.5
G. Robert Tod................................................. 1,006,572(3)(6) 2.0
Howard H. Callaway............................................ 27,300(4)(6) *
Thomas H. Lenagh.............................................. 108,000(5)(6) *
Homer L. Luther, Jr........................................... 114,080(6) *
Dr. Roy W. Menninger.......................................... 26,710(6) *
Alison Taunton-Rigby.......................................... 100 *
Ralph F. Verni................................................ 6,010 *
Executive Officers
Robert J. Samuelson........................................... 147,073(6) *
Glenn E. Davis................................................ 55,751(6) *
All directors and executive officers as a group (10
persons).................................................... 2,770,906(6) 5.5
- ---------------
<FN>
* Percentage is less than 1% of the total number of outstanding shares of
Common Stock of the Company.
(1) The inclusion herein of any shares deemed beneficially owned does not
constitute an admission of beneficial ownership of those shares. Unless
otherwise indicated, each stockholder referred to above has sole voting and
investment power with respect to the shares listed.
(2) Does not include 23,128 shares of Common Stock held by Mr. Leighton's
wife, as to which Mr. Leighton disclaims beneficial ownership.
(3) Does not include 12,732 shares of Common Stock held by Mr. Tod's wife on
her own behalf and as custodian for their children, as to which Mr. Tod
disclaims beneficial ownership.
(4) Does not include 900 shares of Common Stock held by Mr. Callaway's wife,
as to which Mr. Callaway disclaims beneficial ownership.
(5) Does not include 40,000 shares of Common Stock held by Mr. Lenagh's
wife, as to which Mr. Lenagh disclaims beneficial ownership.
(6) Includes shares of Common Stock which may be acquired pursuant to stock
options exercisable within 60 days after August 31, 1994. The following persons
have the right to acquire within such 60-day period the number of shares set
forth after their respective names: Mr. Leighton, 222,605 shares; Mr. Tod,
222,605 shares; Mr. Callaway, 27,000 shares; Mr. Lenagh, 75,000 shares; Mr.
Luther, 75,000 shares; Dr. Menninger, 25,500 shares; Mr. Verni, 3,000 shares;
Mr. Samuelson, 140,910 shares; Mr. Davis, 45,716 shares; and all directors and
executive officers as a group, 837,336 shares.
</TABLE>
2
<PAGE> 5
ELECTION OF DIRECTORS
The Company has a classified Board of Directors consisting of three Class A
directors, two Class B directors and three Class C directors. The Class A, Class
B and Class C directors will serve until the annual meetings of stockholders to
be held in 1994, 1995 and 1996, respectively, and until their respective
successors are elected and qualified. At each annual meeting of stockholders,
directors are elected for a full term of three years to succeed those whose
terms are expiring.
The persons named in the enclosed proxy will vote to elect as directors
Charles M. Leighton, Thomas H. Lenagh and Ralph F. Verni, the three Class A
director nominees named below, unless the proxy is marked otherwise. Messrs.
Leighton, Lenagh and Verni are currently directors of the Company.
Each Class A director will be elected to hold office until the 1997 annual
meeting of stockholders and until his successor is elected and qualified. Each
of the nominees has indicated his willingness to serve, if elected; however, if
any nominee should be unable to serve, the proxies may be voted for a substitute
nominee designated by the Nominating Committee of the Board of Directors.
For each member of the Board of Directors, including those who are nominees
for election as Class A directors, there follows information given by each
concerning his or her principal occupation and business experience for the past
five years, the names of other publicly held companies of which he or she serves
as a director, his or her age and length of service as a director of the
Company.
NOMINEES FOR TERMS EXPIRING IN 1997 (CLASS A DIRECTORS)
Charles M. Leighton.............. Chairman of the Board and Chief Executive
Officer of the Company since 1969;
director of The New England. Age 59,
director of the Company since 1969.
Thomas H. Lenagh................. Financial Consultant since 1986; director
of Adams Express Company, Clemente Global
Growth Fund, Gintel Fund, Inc., ICN
Biomedicals, Irvine Sensors Corp., V-Band
Corp., US LIFE Corp., Franklin Quest Co.
and Styles on Video. Age 74, director of
the Company since 1976.
Ralph F. Verni................... Chairman and Chief Executive Officer of
State Street Research & Management
Company since August 1992; President and
Chief Executive Officer of New England
Investment Companies, Inc. and Chief
Investment Officer of The New England
from 1990 to 1992; President-
Institutional Investment Group of The New
England from 1988 to 1989; director of
State Street Research & Management
Company; State Street Capital Trust;
State Street Exchange Trust; State Street
Research Securities Trust; State Street
Growth Trust; State Street Master
Investment Trust; MetLife - State Street
Equity Trust; MetLife - State Street
Financial Trust; MetLife - State Street
Income Trust; MetLife - State Street
Money Market Trust and MetLife - State
Street Tax-Exempt Trust. Age 51, director
of the Company since 1991.
3
<PAGE> 6
DIRECTORS WHOSE TERMS EXPIRE IN 1995 (CLASS B DIRECTORS)
G. Robert Tod.................... President and Chief Operating Officer of
the Company since 1969; director of SCI
Systems, Inc. and EG&G, Inc. Age 55,
director of the Company since 1969.
Dr. Roy W. Menninger............. Chairman of the Board of the Menninger
Foundation since 1993; Chief Executive
Officer of the Menninger Foundation from
1991 to 1993; President of the Menninger
Foundation from 1967 to 1993; director of
The New England. Age 68, director of the
Company since 1989.
DIRECTORS WHOSE TERMS EXPIRE IN 1996 (CLASS C DIRECTORS)
Howard H. Callaway............... Chairman of the Board of Crested Butte
Mountain Resort since 1977 and President
of Mountain Creek, Inc. since 1989;
director of SCI Systems, Inc. Age 67,
director of the Company since 1983.
Homer L. Luther, Jr.............. Chairman of the Board of Eagle Management &
Trust Company from 1969 to 1988; Private
Investor since 1988; director of Offshore
Logistics, Inc. Age 55, director of the
Company since 1969.
Alison Taunton-Rigby............. President and Chief Executive Officer of
Mitotix, Inc. since September 1993;
Senior Vice President of Genzyme
Corporation from 1987 to 1993. Age 50,
director of the Company since 1994.
BOARD AND COMMITTEE MEETINGS
The Board of Directors has a standing Audit Committee which provides the
opportunity for direct contact between the Company's independent accountants and
the Board. The Audit Committee has responsibility for recommending the
appointment of the Company's independent accountants, reviewing the scope and
results of audits and reviewing the Company's internal accounting control
policies and procedures. The Audit Committee, which currently consists of Dr.
Menninger and Messrs. Callaway, Lenagh, Verni and Luther, as Chairman, held two
meetings during the 1994 fiscal year.
The Company has a standing Executive Compensation and Stock Option
Committee (the "Compensation Committee") which provides recommendations to the
Board regarding executive compensation and administers the Company's Incentive
Deferred Compensation Plan, 1993 Employee Stock Purchase Plan, 1987 Employees'
Severance Benefit Plan, 1982 Stock Option Plan and 1991 Stock Option Plan. The
Compensation Committee held one meeting during the 1994 fiscal year. The current
members of the Compensation Committee are Messrs. Callaway, Verni and Lenagh, as
Chairman.
The Company has a standing Nominating Committee which recommends to the
Board nominees for election to the Board. The Nominating Committee, which
consists of Messrs. Callaway and Verni, did not meet during the 1994 fiscal
year. The Nominating Committee will consider nominees recommended by
stockholders of the Company. The names of proposed nominees should be forwarded
in writing, within the time period of stockholder proposals generally, to
Charles M. Leighton, Chairman of the Board and Chief Executive Officer, CML
Group, Inc., 524 Main Street, Acton, Massachusetts 01720, who will submit the
names of the nominees to the Nominating Committee for consideration.
4
<PAGE> 7
During the 1994 fiscal year, the Board of Directors held five meetings
(including consents in lieu of a meeting). Each director attended at least 75%
of the aggregate number of meetings of the Board of Directors and all committees
of the Board on which he served. There are no arrangements or understandings
between any director or officer and any other person pursuant to which such
officer or director is to be selected as a director or officer.
COMPENSATION FOR DIRECTORS
Directors who are not officers or employees of the Company are entitled to
$2,500 for each Board meeting attended ($500 for each telephonic meeting), plus
expenses. Members of the Audit Committee and the Compensation Committee receive
$500 for each committee meeting attended and the chairman of each of these
committees receives $2,000 for services as chairman. Messrs. Leighton and Tod,
Chairman and President of the Company, respectively, receive no compensation for
their services as directors.
On December 3, 1992 (the date of stockholder approval of the Company's 1993
Director Option Plan), the $10,000 annual retainer fee payable to non-employee
directors was discontinued for a period of three years. Under the 1993 Director
Option Plan (the "Director Plan"), (i) each of Messrs. Callaway, Lenagh, Luther
and Verni and Dr. Menninger received an option to purchase 9,000 shares of
Common Stock at $20.67 per share, the fair market value of the Common Stock on
the date of stockholder approval of the Director Plan, (ii) Ms. Taunton-Rigby
received an option to purchase 9,000 shares of Common Stock at $20.62 per share,
the fair market value of the Common Stock on the date of her election to the
Board of Directors (February 28, 1994), and (iii) each person who subsequently
becomes a non-employee director will be granted an option to purchase 9,000
shares of Common Stock at its fair market value on the date of his or her
initial election to the Board of Directors. Each option vests in equal annual
installments of 3,000 shares beginning on the first anniversary date of the
option grant.
DEFERRED COMPENSATION PLAN
The Company's Incentive Deferred Compensation Plan provides for the grant
of incentive compensation awards in the form of shares of Common Stock to senior
executive employees of the Company and its subsidiaries. These shares (the
"Deferred Shares") will be issued to the participants and distributed to them no
later than one year after their retirement, disability or death, or their 65th
birthday, whichever occurs first. No awards have been made under the Deferred
Plan in the last seven fiscal years. As of August 31, 1994, 38,310, 38,310 and
76,620 Deferred Shares were credited to the accounts of Messrs. Leighton, Tod
and all executive officers as a group, respectively.
1987 EMPLOYEES' SEVERANCE BENEFIT PLAN
The Board of Directors believes that it is in the best interest of the
Company and its stockholders to foster the continuous employment of personnel of
the Company and its subsidiaries. The Board of Directors recognizes that, as is
the case with many corporations, the possibility of a change in control of the
Company exists and that such possibility, and the uncertainty and questions
which it may raise among employees, may result in the departure or distraction
of employees to the detriment of the Company and its stockholders. Thus, in
October 1987, the Board of Directors adopted an Employees' Severance Benefit
Plan (the "Severance Plan"), which provides for the lump sum cash payment to a
participant of his or her annual base salary upon a change of control of the
Company, as defined in the Severance Plan, and termination of the participant's
employment within one year of such change in control. The Severance Plan may be
terminated or amended at any time by a vote of two thirds of the Board of
Directors of the Company, unless a change of control has occurred.
5
<PAGE> 8
All employees who have been full-time employees of the Company or any of
its subsidiaries for a period of at least two consecutive years prior to the
date of a change in control of the Company, or who have been designated by the
Company's Chief Executive Officer or Chief Operating Officer, or their
authorized designees, are eligible to participate in the Severance Plan.
Messrs. Leighton and Tod are not eligible to participate in the Severance
Plan, nor is any employee of the Company or its subsidiaries who is or has been
a director of the Company.
The Severance Plan's term commenced on October 7, 1987 and will continue
through July 31, 1995 and thereafter, unless the Board of Directors takes
affirmative action to terminate the Severance Plan at least six months prior to
the beginning of any succeeding fiscal year. The Severance Plan is administered
by the Compensation Committee.
RETIREMENT INCOME AND SURVIVOR SECURITY PROGRAM
The Company maintains a Retirement Income and Survivor Security Program
(the "Program") which covers certain current and former executive officers of
the Company and certain officers of the Company's subsidiaries. The Program is
funded by permanent life insurance policies covering each of these officers. The
policies are owned by the Company and purchased at its expense. The right to
receipt of benefits under the Program is fully vested. Vesting was contingent on
continued employment by the Company. Retirement benefits are payable for a
period of ten years in equal monthly installments generally after the employee
reaches age 65. Under the Program, Messrs. Leighton and Tod and all executive
officers as a group are entitled to annual payments over their applicable
ten-year period of $168,431, $188,827 and $357,258, respectively.
CERTAIN TRANSACTIONS
In August 1989, the Company announced its intent to sell its wholly-owned
subsidiary, Carroll Reed, Inc. ("Carroll Reed"). In September 1989, Frederick L.
Leighton ("FLL") rejoined Carroll Reed as President, a position he held from
1970 to 1985. FLL is the brother of Charles M. Leighton, Chief Executive Officer
of the Company. FLL oversaw management of the day-to-day operations and assisted
the Company in finding a buyer for Carroll Reed. In 1990, the Company and FLL
entered into a severance agreement (the "Severance Agreement") which provided
for severance compensation to FLL conditioned on the sale of Carroll Reed. The
Severance Agreement provided for payments of $120,000 upon the sale of
substantially all the assets of Carroll Reed and $183,291 on October 1 of 1992,
1993 and 1994.
On August 24, 1990, the Company sold substantially all of Carroll Reed's
assets related to its ready to wear and mail order businesses to certain
affiliates of Swire Pacific Limited ("Swire"). On September 20, 1990, Carroll
Reed sold certain remaining assets related to its ski operations (the "Ski
Business"), which Swire elected not to purchase, to Tuckerman's Outfitters
("Tuckerman's"), a corporation formed by FLL to purchase the Ski Business.
Payment for the assets was in the form of a $200,000 unsecured promissory note
due in twelve equal quarterly installments. In addition, Tuckerman's subleased
retail space in five locations from the Company. The Company previously
determined that all amounts due from Tuckerman's were not collectible and
provided reserves for such amounts. To facilitate the sale of the Ski Business,
the Company made a $400,000 working capital loan to FLL with interest at 8.5%
per annum, due in three installments of $170,185 each on September 23, 1992,
1993 and 1994. This loan has been paid in full.
6
<PAGE> 9
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Executive Compensation Program (the "Program") is
administered by the Compensation Committee composed of the three non-employee
directors listed below.
The Program is designed to retain and reward executives who are responsible
for leading the Company in achieving its business objectives. All decisions by
the Compensation Committee relating to the compensation of the Company's
executive officers are reviewed by the full Board. This report is submitted by
the Compensation Committee and addresses the Company's compensation policies for
the fiscal year ended July 31, 1994 ("fiscal 1994") as they affected Mr.
Leighton, in his capacity as Chairman of the Board and Chief Executive Officer
of the Company, and the other executive officers of the Company.
COMPENSATION PHILOSOPHY
The objectives of the Program are to (i) align compensation with Company
performance, the interests of the Company's stockholders and the Company's
business objectives, (ii) encourage and reward high levels of performance and
(iii) enable the Company to attract, retain and reward executive officers who
contribute to the long-term success of the Company.
The Company's executive compensation philosophy is to tie a substantial
portion of executive compensation to the performance of the Company and is based
on the following:
- The Committee annually reviews the compensation of its executive
officers on the basis of each executive's responsibility, position and
level of experience in conjunction with an assessment of salaries being
paid for similar positions by other companies. A significant portion of
each executive's cash compensation is, however, tied to annual changes
in the Company's earnings per share performance.
- The Committee believes that an executive compensation program that links
compensation to the Company's earnings per share performance serves both
as an influential motivator to its executives and as an effective
instrument for aligning their interests with those of the stockholders
of the Company.
- The Committee also believes that a portion of the compensation of the
Company's executives should be linked to the success of the Company's
stock in the marketplace. This linkage is achieved through the Company's
stock option program which also serves to more fully align the interests
of management with those of the Company's stockholders.
Since fiscal 1983, a major portion of each executive's cash compensation
has been tied to the Company's earnings per share ("EPS") performance. The
Program currently provides that an executive's total cash compensation (annual
base salary and bonus) paid for a particular fiscal year ("Current Year") shall
be the executive's total cash compensation for the preceding fiscal year,
increased or decreased by 50% of the percentage increase or decrease (as the
case may be) in the Company's EPS from continuing operations for the Current
Year as compared to the preceding year, but in no event less than the minimum
base salary established by the Compensation Committee for each executive.
Total compensation at the executive level also includes long-term
incentives offered by stock options. Stock options are designed to promote the
identity of long-term interests between the Company's employees and stockholders
and assist in the retention of key employees. In the case of stock options, the
size of option grants is generally intended to reflect the executive's position
with the Company and his contributions to the Company. It has been the Company's
practice to fix the exercise price of option grants at 100% of the fair market
value per share on the date of grant.
7
<PAGE> 10
For the executive officers of the Company, the Compensation Committee
determines the size of the stock option grant for the Current Year by increasing
(or decreasing) the dollar value of the preceding year's stock option grant
(valued at the time of grant) by that percentage of the increase (or decrease)
used in determining total cash compensation for the Current Year and dividing
the product by the fair market value per share on the date of grant of the new
option.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER IN FISCAL 1994
Messrs. Leighton and Tod each receive the same compensation. As set forth
on the Summary Compensation Table, in fiscal 1994, each executive's total cash
compensation decreased by $61,914, or 5% (50% of the 10% decrease in EPS for
fiscal 1994). For fiscal 1995, each executive will be entitled to receive his
fiscal 1994 total cash compensation, subject to adjustment, either up or down,
equal to 50% of the increase or decrease in the Company's fiscal 1995 EPS.
On July 31, 1994, each of Mr. Leighton and Mr. Tod was granted an option
for the purchase of 78,525 shares. The size of the option grant was determined
by decreasing the dollar value of the preceding year's grant by 50% of the
percentage decrease in EPS (10% decrease in fiscal 1994) and dividing that
amount by the closing price on the date of grant.
TAX CONSIDERATIONS
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), enacted in 1993, generally disallows a tax deduction to public
companies for compensation over $1 million paid to the corporation's Chief
Executive Officer and four other most highly compensated executive officers for
tax years beginning on or after January 1, 1994. Compensation awarded under a
performance-based plan approved by the stockholders will generally not be
subject to the deduction limit. Any fiscal 1995 cash compensation to any of the
five most highly paid executive officers which exceeds $1 million will not be
deductible by the Company because the performance-based portion of cash
compensation has not been submitted to the stockholders for approval. The
provisions of Section 162(m) did not apply to the Company in fiscal 1994.
Compensation Committee
Thomas H. Lenagh, Chairman
Howard H. Callaway
Ralph F. Verni
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Messrs. Callaway, Verni and
Lenagh, as Chairman. No Compensation Committee interlocks or insider
participation existed during fiscal 1994.
8
<PAGE> 11
SUMMARY COMPENSATION
<TABLE>
The following table sets forth certain information with respect to the annual and long-term compensation of the Chief
Executive Officer of the Company and each of the three other most highly compensated executive officers of the Company (the "Named
Executive Officers") for the three fiscal years ended July 31, 1994.
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
COMPENSATION(2)
------
ANNUAL COMPENSATION AWARDS
-------------------------------- ------
OTHER SECURITIES ALL
ANNUAL UNDERLYING OTHER
NAME AND SALARY BONUS COMPENSATION OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(1) ($) (#) ($)(3)
------------------ ---- ------ ------- ------------ ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Charles M. Leighton 1994 $595,000 $581,366 $ 0 78,525 $143,520
Chairman of the Board 1993 595,000 643,280 0 38,450 149,672
and Chief Executive Officer 1992 595,000 393,650 0 42,000 93,829
G. Robert Tod 1994 595,000 581,366 0 78,525 131,444
President and 1993 595,000 643,280 0 38,450 137,862
Chief Operating Officer 1992 595,000 393,650 0 42,000 87,936
Robert J. Samuelson 1994 240,000 177,977 0 30,850 6,006
Senior Vice President, 1993 240,000 199,976 0 15,100 6,280
Chief Financial Officer and
Treasurer 1992 240,000 103,275 0 16,500 5,834
Glenn E. Davis 1994 130,000 96,385 0 16,825 5,977
Vice President and 1993 130,000 108,300 0 8,250 3,586
Controller 1992 130,000 55,925 0 9,000 1,793
- ---------------
<FN>
(1) Amounts in this column represent bonuses earned under the Company's executive compensation program for the respective
fiscal years.
(2) The Company does not have a long-term compensation program that includes long-term incentive payouts. No restricted
stock awards or stock appreciation rights (SARs) were granted to any of the Named Executive Officers during fiscal 1994.
(3) The amounts shown in this column for fiscal 1994 represent split-dollar life insurance premiums of $21,074, $8,998,
$2,149 and $1,721 paid by the Company for each of Messrs. Leighton, Tod, Samuelson and Davis, respectively, and the Company's
contributions under its 401(k) savings plan of $3,696, $3,696, $3,857 and $4,256 to each of Messrs. Leighton, Tod, Samuelson and
Davis, respectively. In addition, the amounts include, for each of Messrs. Leighton and Tod, a $118,750 (decreased from $125,000 in
fiscal 1993) payment for the purchase of a split-dollar life insurance policy for the funding of a non-qualified deferred
compensation arrangement.
</TABLE>
9
<PAGE> 12
STOCK OPTION GRANTS
<TABLE>
The following table summarizes certain information regarding options granted during fiscal 1994 to the Named Executive
Officers. No SARs were granted during fiscal 1994.
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
- ---------------------------------------------------------------------------------------------- STOCK PRICE
NUMBER OF APPRECIATION
SECURITIES PERCENT OF FOR OPTION
UNDERLYING TOTAL OPTIONS EXERCISE TERM (2)
OPTIONS GRANTED TO OR -----------------------
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION 5% 10%
NAME (#) (1) FISCAL YEAR ($/SHARE) DATE ($) ($)
- ---- --------- ------------- ---------- ---------- --- ---
<S> <C> <C> <C> <C> <C> <C>
Charles M. Leighton................ 78,525 19% $ 9.50 7/30/04 $469,148 $1,188,912
G. Robert Tod...................... 78,525 19 9.50 7/30/04 469,148 1,188,912
Robert J. Samuelson................ 30,850 8 9.50 7/30/04 184,313 467,086
Glenn E. Davis..................... 16,825 4 9.50 7/30/04 100,521 254,740
- ---------------
<FN>
(1) Options become exercisable on a cumulative basis, with 20% of the shares covered thereby becoming exercisable on the
date of grant and an additional 20% of the shares becoming exercisable on each successive anniversary date, with full vesting
occurring on the fourth anniversary date.
(2) Amounts represent hypothetical gains that could be achieved for the options if exercised at the end of the option terms.
These gains are based on assumed rates of stock appreciation of 5% and 10% compounded annually from the date the respective options
were granted. Actual gains, if any, on stock option exercises will depend on the future performance of the Common Stock and the date
on which the options are exercised.
</TABLE>
<TABLE>
YEAR-END OPTION TABLE
The following table summarizes certain information regarding stock options exercised during the fiscal year ended July 31,
1994 and stock options held as of July 31, 1994 by the Named Executive Officers. No SARs were held or exercised during fiscal 1994.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF
SHARES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS
ACQUIRED FISCAL AT FISCAL
ON VALUE YEAR-END YEAR-END
EXERCISE REALIZED (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)
NAME (#) ($)(1) (#) ($)(2)
- ---- -------- -------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
Charles M. Leighton................ 75,000 $2,071,875 172,805/177,570 $771,165/$386,338
G. Robert Tod...................... 75,000 $2,071,875 172,805/177,570 771,165/386,338
Robert J. Samuelson................ -- -- 135,120/58,730 569,326/173,200
Glenn E. Davis..................... -- -- 36,896/35,762 144,387/61,336
- ---------------
<FN>
(1) Represents the difference between the exercise price and the last sales price of the Common Stock on the date of exercise.
(2) Value based on the last sales price per share ($9.50) of the Company's Common Stock on July 31, 1994, as reported on the
New York Stock Exchange, less the exercise price.
</TABLE>
10
<PAGE> 13
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total stockholder return on the
Common Stock of the Company for the period from July 31, 1989 through July 31,
1994 with the cumulative total return on (i) Standard & Poor's Midcap 400 Index
and (ii) Standard & Poor's Specialty Retail Index (assuming an investment of
$100 in the Company's Common Stock and each of the other indices on July 31,
1989, and reinvestment of all dividends).
[COMPARATIVE STOCK PERFORMANCE GRAPH]
<TABLE>
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
7/89 7/90 7/91 7/92 7/93 7/94
- -----------------------------------------------------------------------------------------------------------
CML Group, Inc. $100 $ 91 $188 $401 $541 $253
- -----------------------------------------------------------------------------------------------------------
S & P Midcap 400 Index $100 $106 $130 $153 $178 $185
- -----------------------------------------------------------------------------------------------------------
S & P Retail Stores - Specialty $100 $120 $134 $165 $191 $186
- -----------------------------------------------------------------------------------------------------------
</TABLE>
The next graph sets forth the Company's earnings per share, fully diluted,
from continuing operations for the period from July 31, 1989 through July 31,
1994.
[EPS GRAPH]
11
<PAGE> 14
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed the firm of Deloitte & Touche LLP as
the Company's independent accountants for the 1995 fiscal year and recommends to
stockholders that they vote FOR ratification of that appointment.
Deloitte & Touche LLP is currently the Company's independent accountants.
Representatives of Deloitte & Touche LLP are expected to be present at the
Meeting. They will have the opportunity to make a statement if they desire to do
so and will also be available to respond to appropriate questions from
stockholders.
OTHER BUSINESS
Management does not know of any other matters which may come before the
Meeting. However, if any other matters are properly presented to the Meeting, it
is the intention of the persons named in the accompanying proxy to vote, or
otherwise act, in accordance with their judgment on such matters.
SOLICITATION OF PROXIES
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph, telecopy and personal interviews. Brokers, custodians and fiduciaries
will be requested to forward proxy soliciting material to the owners of stock
held in their names and the Company will reimburse them for their out-of-pocket
expenses incurred in connection with the distribution of proxy materials.
PROPOSALS FOR THE 1995 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 1995 Annual
Meeting of Stockholders must be received by the Company at its principal office
in Acton, Massachusetts not later than July 6, 1995 for inclusion in the proxy
statement for that meeting.
By Order of the Board of Directors,
PAUL P. BROUNTAS, Secretary
November 3, 1994
THE BOARD OF DIRECTORS HOPES THAT YOU WILL ATTEND THE MEETING. WHETHER OR
NOT YOU PLAN TO ATTEND, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED
PROXY IN THE ACCOMPANYING ENVELOPE PROMPTLY. IF YOU ATTEND THE MEETING, YOU MAY
VOTE YOUR STOCK PERSONALLY BY DELIVERING A WRITTEN REVOCATION OF YOUR PROXY TO
THE SECRETARY OF THE COMPANY.
12
<PAGE> 15
APPENDIX
COMPARATIVE STOCK PERFROMANCE
<TABLE>
The graph on the top of page 11 compares the cumulative total
stockholder return on the Common Stock of the Company for the period from July
31, 1989 through July 31, 1994 with the cumulative total return on (i) Standard
& Poor's Midcap 400 Index and (ii) Standard & Poor's Specialty Retail Index
(assuming an investment of $100 in the Company's Common Stock and each of the
other indices on July 31, 1989, and reinvestment of all dividends).
<CAPTION>
7/89 7/90 7/91 7/92 7/93 7/94
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CML Group, Inc. $100 $ 91 $188 $401 $541 $253
- ------------------------------------------------------------------------
S&P Midcap 400 Index $100 $106 $130 $153 $178 $185
- ------------------------------------------------------------------------
S&P Retail Stores - Specialty $100 $120 $134 $165 $191 $186
- ------------------------------------------------------------------------
</TABLE>
<TABLE>
The graph on the bottom of page 11 sets forth the Company's earnings per shares, fully
diluted, from continuing operations for the period from July 31, 1989 through
July 31, 1994.
<CAPTION>
90 91 92 93 94
<S> <C> <C> <C> <C>
$0.33 $0.45 $0.71 $1.11 $1.00
</TABLE>
<PAGE> 16
PROXY CML GROUP, INC. PROXY
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 1, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE COMPANY
The undersigned, revoking all prior proxies, hereby appoint(s) Charles M.
Leighton, G. Robert Tod and Paul P. Brountas, and each of them, with full power
of substitution, as proxies to represent and vote as designated herein, all
shares of stock of CML Group, Inc. (the "Company") which the undersigned would
be entitled to vote if personally present at the Annual Meeting of
Stockholders of the Company to be held at BayBank Boston, 175 Federal Street,
10th Floor, Boston, Massachusetts, on Thursday, December 1, 1994 at 10:30 a.m.,
local time, and at any adjournment thereof.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
CONTINUED, AND TO BE SIGNED ON THE REVERSE SIDE
<PAGE> 17
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2 AND 3. ATTENDANCE OF THE UNDERSIGNED
AT THE MEETING OR ANY ADJOURNMENT THEREOF WILL NOT BE DEEMED TO REVOKE THIS
PROXY UNLESS THE UNDERSIGNED SHALL REVOKE THIS PROXY IN WRITING.
1. To elect the following three Class A Directors
(except as marked below):
Nominees: Charles M. Leighton, Thomas H. Lenagh and Ralph F. Verni
___ ___
/__/ FOR all nominees /__/ WITHHELD from all nominees
For, except vote withheld from the following nominee(s):
___
/__/ ________________________________________________
2. To ratify the appointment of For Against Abstain
Deloitte & Touche LLP as the ___ ___ ___
Company's Independent Accountants. /__/ /__/ /__/
3. To transact such other business For Against Abstain
as may properly come before the ___ ___ ___
meeting or any adjournment thereof. /__/ /__/ /__/
MARK HERE FOR ___ MARK HERE IF YOU ___
ADDRESS CHANGE /__/ PLAN TO ATTEND /__/
AND NOTE AT LEFT THE MEETING
Please sign exactly as name appears hereon. When shares are held by joint
owners, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Signature: __________________________ Date_________________
Signature: __________________________ Date_________________
