SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CADMUS COMMUNICATIONS CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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(i)(2) or
Item 22(a)(2) of Schedule 14A.
( ) $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 (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>
[CADMUS LOGO]
Dear Shareholder:
You are cordially invited to attend the 1996 Annual
Meeting of Shareholders of Cadmus Communications Corporation.
The meeting will be held on November 13, 1996, at 11:00 a.m.,
local time in the Auditorium of the Crestar Center, 919 East
Main Street, Richmond, Virginia.
The primary business of the meeting will be the election
of directors, the approval of an amendment to the 1990 Long
Term Incentive Stock Plan and the ratification of independent
public accountants, as more fully explained in the enclosed
proxy statement.
During the meeting, we also will report to you on the
condition and performance of Cadmus and its subsidiaries,
including developments during the past fiscal year. You will
have an opportunity to question management on matters of
interest to all shareholders.
We hope to see you on November 13, 1996. Whether you
plan to attend or not, please complete, sign, date and return
the enclosed proxy card as soon as possible in the
postage-paid envelope provided. Your vote is important. We
appreciate your continued interest in and support of Cadmus.
Cordially,
/s/ C. Stephenson Gillispie, Jr.
--------------------------------
C. Stephenson Gillispie, Jr.
Chairman of the Board,
President and Chief
Executive Officer
October 2, 1996
CADMUS COMMUNICATIONS CORPORATION
6620 West Broad Street, Suite 240, Richmond, Virginia 23230
<PAGE>
[CADMUS LOGO]
---------------------------------------------
NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
---------------------------------------------
TO BE HELD NOVEMBER 13, 1996
The 1996 Annual Meeting of Shareholders of Cadmus Communications
Corporation will be held on November 13, 1996, at 11:00 a.m., in the Auditorium
of the Crestar Center, 919 East Main Street, Richmond, Virginia, for the
following purposes:
1. To elect three Class I directors to serve until the 1999 Annual Meeting
of Shareholders.
2. To approve a proposed amendment to the 1990 Long Term Incentive Stock
Plan, as more fully described in the Proxy Statement.
3. To ratify the designation of Arthur Andersen LLP as independent public
accountants for the current fiscal year.
4. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on September 13,
1996, as the record date for determination of shareholders entitled to notice of
and to vote at the meeting and any adjournments thereof.
By Order of the Board of Directors
/s/ Bruce V. Thomas
----------------------------------
Bruce V. Thomas
Vice President and Chief Financial
Officer
October 2, 1996
Please complete and return the enclosed proxy. If you attend the meeting in
person, you may withdraw your proxy and vote your own shares.
<PAGE>
CADMUS COMMUNICATIONS CORPORATION
6620 West Broad Street, Suite 240, Richmond, Virginia 23230
-----------------------------------------------------------
PROXY STATEMENT
-----------------------------------------------------------
1996 ANNUAL MEETING OF SHAREHOLDERS
To Be Held on November 13, 1996
General
The enclosed proxy is solicited by the Board of Directors of Cadmus
Communications Corporation ("Cadmus" or "Company") for the 1996 Annual Meeting
of Shareholders ("Annual Meeting") of Cadmus to be held November 13, 1996, at
the time and place set forth in the accompanying Notice of Annual Meeting of
Shareholders and for the following purposes: (i) to elect three Class I
directors to serve until the 1999 Annual Meeting of Shareholders (see "Election
of Directors" pages 4-10); (ii) to approve a proposed amendment to the 1990 Long
Term Incentive Stock Plan (see "Proposal to Approve Amendment to 1990 Long Term
Incentive Stock Plan" pages 20-21); (iii) to ratify the designation of Arthur
Andersen LLP as independent public accountants for the current fiscal year (see
"Ratification of the Selection of Independent Public Accountants" page 22); and
(iv) to transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
If a shareholder is a participant in the Cadmus Dividend Reinvestment Plan,
the enclosed proxy card represents the number of full shares in the dividend
reinvestment plan account, as well as shares registered in the participant's
name.
Cadmus will pay all costs for this proxy solicitation. Proxies are being
solicited by mail and may also be solicited personally, by telephone or
telegraph, by directors, officers, and employees of Cadmus. Cadmus may reimburse
banks, brokerage firms, and other custodians, nominees, and fiduciaries for
their reasonable expenses in sending proxy materials to the beneficial owners of
the stock. All shares of the common stock of Cadmus ("Common Stock") represented
by properly executed and delivered proxies will be voted according to their
terms and conditions at the Annual Meeting or any adjournments thereof.
Shareholders may revoke proxies at any time prior to their exercise by written
notice to Cadmus, by submitting a proxy bearing a later date, or by attending
the Annual Meeting and requesting to vote in person.
The approximate mailing date of this proxy statement and the accompanying
proxy is October 2, 1996.
Voting Rights
Only those shareholders of record at the close of business on September 13,
1996, are entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof. The number of shares of Common Stock outstanding and
entitled to vote as of the record date was 7,907,556. A majority of the
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<PAGE>
votes entitled to be cast, represented in person or by proxy, will constitute a
quorum for the transaction of business.
With regard to the election of directors, votes may be cast in favor or
withheld. If a quorum is present, the nominees receiving a plurality of the
votes cast at the Annual Meeting will be elected directors; therefore, votes
withheld will have no effect. The approval of the proposed amendment to the 1990
Long Term Incentive Stock Plan and the ratification of Arthur Andersen LLP as
independent public accountants requires the affirmative vote of a majority of
the shares cast on the matter. Thus, although abstentions and broker non-votes
(shares held by customers which may not be voted on certain matters because the
broker has not received specific instructions from the customer) are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business, they are generally not counted for purposes of determining whether
such proposals have been approved and therefore have no effect.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of July 31, 1996, the number and
percentage of shares of Common Stock held by each of the Cadmus directors and
nominees for director, the executive officers named in the "Summary Compensation
Table," and all directors and executive officers as a group. Cadmus knows of no
person that owns more than five percent of the issued and outstanding shares of
Common Stock.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address Beneficial Ownership Common Stock Issued
of Beneficial Owner of Common Stock (1) and Outstanding
- ------------------- -------------------- -------------------
<S> <C>
Robert I. Dalton, Jr. 10,738(2) *
Charlotte, North Carolina
Frank Daniels, III 12,000(3) *
Charlotte, North Carolina
Michael Dinkins 20,965(4) *
Richmond, Virginia
C. Stephenson Gillispie, Jr. 137,811(5) 1.7%
Richmond, Virginia
Price H. Gwynn, III 14,466(6) *
Charlotte, North Carolina
Jeanne M. Liedtka 1,000(7) *
Charlottesville, Virginia
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address Beneficial Ownership Common Stock Issued
of Beneficial Owner of Common Stock (1) and Outstanding
- ------------------- -------------------- -------------------
<S> <C>
Frank G. Louthan, Jr. 140,771(8) 1.8%
Richmond, Virginia
Gregory Moyer 20,750(9) *
Richmond, Virginia
John D. Munford, II 49,003 *
Virginia Beach, Virginia
John H. Phillips 81,830(10) 1.0%
Richmond, Virginia
John C. Purnell, Jr. 7,907 *
Richmond, Virginia
Russell M. Robinson, II 18,272 *
Charlotte, North Carolina
John W. Rosenblum 5,000 *
Charlottesville, Virginia
Wallace Stettinius 218,022(11) 2.7%
Richmond, Virginia
Bruce V. Thomas 21,623(12) *
Richmond, Virginia
Bruce A. Walker 4,800 *
Seattle, Washington
All Directors and Executive
Officers as a Group (18
persons) 788,283(13) 9.6%
</TABLE>
- --------------
* Indicates that percent of class does not exceed one percent.
(1) Except as otherwise indicated, each nominee, director, or executive officer
has sole voting and investment power with respect to the shares shown.
Except as otherwise noted, beneficial ownership for each non-employee
director includes 3,000 shares as to which each such director holds
presently exercisable options under the Non-Employee Director Stock Option
Plan.
(2) Includes 300 shares held by Mr. Dalton's wife as to which shares Mr. Dalton
disclaims beneficial ownership. Mr. Dalton is the brother-in-law of Mr.
Robinson.
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<PAGE>
(3) Mr. Daniels holds 1,000 of his shares in the form of presently exercisable
options.
(4) Includes 20,000 shares as to which Mr. Dinkins holds presently exercisable
options and 115 shares held for his account in the Cadmus account under the
Cadmus Thrift Savings Plan and the Cadmus Non-Qualified Thrift Plan (the
"Cadmus Thrift Savings Plans").
(5) Includes 107,000 shares as to which Mr. Gillispie holds presently
exercisable options, 986 shares held in a trust of which he is the trustee
and 594 shares held for his account in the Cadmus account under the Cadmus
Thrift Savings Plans.
(6) Mr. Gwynn holds 2,000 of his shares in the form of presently exercisable
options.
(7) Ms. Liedtka holds all of her shares in the form of presently exercisable
options.
(8) Includes 14,298 shares held by Mr. Louthan's wife, as to which shares Mr.
Louthan disclaims beneficial ownership.
(9) Includes 20,000 shares as to which Mr. Moyer holds presently exercisable
options and 250 shares held for his account in the Cadmus account under the
Cadmus Thrift Savings Plans.
(10) Includes 51,500 shares as to which Mr. Phillips holds presently exercisable
options and 498 shares held for his account in the Cadmus account under the
Cadmus Thrift Savings Plans.
(11) Includes: 181,106 shares held in an agency account by NationsBank of
Virginia, N.A., as to all of which shares Mr. Stettinius is the beneficial
owner; 2,222 shares, also held in an agency account by NationsBank of
Virginia, N.A., for Mr. Stettinius' wife, as to which shares Mr. Stettinius
disclaims beneficial ownership; 34,000 shares as to which Mr. Stettinius
holds presently exercisable options; and 694 shares held for his account in
the Cadmus account under the Cadmus Thrift Savings Plans.
(12) Includes 20,000 shares as to which Mr. Thomas holds presently excisable
options and 196 shares held for his account in the Cadmus account under the
Cadmus Thrift Savings Plans.
(13) In addition to the executive officers named in the Summary Compensation
Table, the beneficial ownership shown for executive officers of Cadmus
reflects shares beneficially owned by David E. Bosher, Vice President and
Treasurer and Edward B. Fernstrom, Vice President, Information Technology.
Election of Directors
The Board of Directors is divided into three classes (I, II and III), with
one class being elected every year for a term of three years. Jeanne M. Liedtka
and Wallace Stettinius currently serve as Class I directors of the Company and
will be nominated to serve as Class I directors for terms of three years
expiring at the 1999 annual meeting. The Company's Articles of Incorporation
require that the classes of directors be maintained as nearly equal in number as
possible. Accordingly, John D. Munford, II, who was elected by the shareholders
of the Company to serve until the 1997 annual meeting of shareholders as a Class
II director, will be nominated to serve as a Class I director. In accordance
with the Company's Articles of Incorporation, in the event Mr. Munford is not
elected as a Class I director, he will continue to serve as a Class II director.
The persons named in the proxy will vote for the election of the nominees named
below unless authority is withheld. If, for any reason, any of the
4
<PAGE>
persons named below should become unavailable to serve, an event which
management does not anticipate, proxies will be voted for the remaining nominees
and such other person or persons as the Board of Directors of Cadmus may
designate. In the alternative, the Board may reduce the size of Class I to the
number of remaining nominees for whom the proxies will be voted.
Certain information concerning the nominees for election at the Annual
Meeting as Class I directors is set forth below, as well as certain information
about the Class II and Class III directors, who will continue in office after
the Annual Meeting until the 1997 and 1998 annual meeting of shareholders,
respectively.
NOMINEES FOR ELECTION AS
CLASS I DIRECTORS
(To Serve Until 1999 Annual Meeting)
<TABLE>
<CAPTION>
Principal Occupation During
Director Past Five Years and Directorships
Name and (Age) Since(1) in Other Public Companies
-------------- -------- ---------------------------------
<S> <C>
1995 Associate Professor at the Darden Graduate School
[PHOTO] of Business Administration, University of
Jeanne M. Liedtka (41) Virginia. Formerly, Associate Professor at
Rutgers University and Simmons College.
- --------------------------------------------------------------------------------------
1965 Retired. Formerly, Vice Chairman, Executive Vice
[PHOTO] President, Union Camp Corporation, Franklin,
John D. Munford, II (68) Virginia. Director, Pulaski Furniture
Corporation, Universal Corporation, and Caraustar
Industries, Inc.
- --------------------------------------------------------------------------------------
1967 Senior Executive Fellow at the School of Business,
[PHOTO] Virginia Commonwealth University, Richmond,
Wallace Stettinius (63) Virginia. Formerly, Chairman of the Board,
President and Chief Executive Officer, Cadmus.
Director, American Filtrona Corporation and
Chesapeake Corporation.
- --------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
CLASS II DIRECTORS
(Serving Until 1997 Annual Meeting)
<TABLE>
<CAPTION>
Principal Occupation During
Director Past Five Years and Directorships
Name and (Age) Since(1) in Other Public Companies
-------------- -------- ---------------------------------
<S> <C>
1994 Chairman and Chief Executive Officer of KOZ, Inc.,
[PHOTO] a Raleigh-based provider of Web-based data.
Frank Daniels, III (40) Formerly, Publisher, Nando.net and Vice
President, Editor and Director of Operations of
The News and Observer Publishing Company.
- --------------------------------------------------------------------------------------
1991 Chairman of the Board, President and Chief
[PHOTO] Executive Officer, Cadmus. Formerly, Chief
C. Stephenson Gillispie, Jr. (54) Operating Officer, Cadmus, and President and
Chief Executive Officer, The William Byrd Press,
Incorporated.
- --------------------------------------------------------------------------------------
1977 President, Valco Graphics, Inc., a Seattle
[PHOTO] publication and tabloid printing firm. Formerly,
Bruce A. Walker (62) Marketing Representative, Pacific Northwest,
Anderson Lithograph Company, Los Angeles,
California.
- --------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
CLASS III DIRECTORS
(To Serve Until 1998 Annual Meeting)
<TABLE>
<CAPTION>
Principal Occupation During
Director Past Five Years and Directorships
Name and (Age) Since(1) in Other Public Companies
-------------- ---------- ----------------------------------
<S> <C>
1984 Chairman, Presbyterian Publishing Corporation,
[PHOTO] Louisville, Kentucky. Formerly Vice President,
Price H. Gwynn, III (73) Lance, Inc., Charlotte, North Carolina.
- --------------------------------------------------------------------------------------
1979 Executive Director, Friends Association for
[PHOTO] Children, Richmond, Virginia, a non-profit child
John C. Purnell, Jr. (55) welfare organization.
- --------------------------------------------------------------------------------------
1984 Attorney-at-law, President, Director and
[PHOTO] shareholder of Robinson, Bradshaw & Hinson, P.A.,
Russell M. Robinson, II (64) Charlotte, North Carolina. Director, Caraustar
Industries, Inc. and Duke Power Company.
- --------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation During
Director Past Five Years and Directorships
Name and (Age) Since(1) in Other Public Companies
-------------- -------- ---------------------------------
<S> <C>
1988 Dean, The Jepson School of Leadership Studies,
[PHOTO] University of Richmond, Richmond, Virginia.
John W. Rosenblum (52) Formerly, Tayloe Murphy Professor and Dean, the
Darden Graduate School of Business Adminis-
tration, University of Virginia. Director,
Chesapeake Corporation, Comdial Corporation, Cone
Mills Corporation, and T. Price Associates.
- --------------------------------------------------------------------------------------
</TABLE>
(1) All service by Cadmus directors prior to June 30, 1984, refers to service as
directors of Cadmus' subsidiaries, The William Byrd Press, Incorporated or
Washburn Graphics, Inc.
Cadmus Board and Committee Meetings and Attendance
The Board of Directors of Cadmus held eleven meetings during the fiscal
year ended June 30, 1996. All directors attended at least 75% of all meetings of
the Board and committees on which they served, except Ms. Liedtka attended 60%
of such meetings.
The Board has four standing committees: the Executive Committee, the Audit
Committee, the Executive Compensation and Organization Committee and the
Benefits and Investment Committee.
The Executive Committee has a wide range of powers, but its primary duty is
to act if necessary between scheduled Board meetings. For such purpose, the
Executive Committee possesses all the powers of the Board in management of the
business and affairs of Cadmus except as otherwise limited by Virginia law. The
Executive Committee has also assumed responsibility for the nominating function
previously exercised by a separately constituted nominating committee. In this
capacity, the Executive Committee selects and recommends to the Board a slate of
nominees to be voted on for election as directors at each annual meeting, and
makes recommendations concerning committee membership, appointment of officers
and nominees to fill vacancies occurring on the Board. The Executive Committee
met two times during the fiscal year ended June 30, 1996. Members of the
Committee are Messrs. Gillispie (Chairman), Gwynn, Louthan, Munford, Robinson
and Stettinius.
The function of the Audit Committee is to recommend the appointment of a
firm of independent public accountants to audit the Company's consolidated
financial statements, to review and approve the scope, purpose and type of audit
services to be performed internally and by the external auditors, to review the
activities and findings of all the external auditors and employees conducting
internal audits, to determine the effectiveness of the audit function and to
render regular reports to the Board on its activities and findings. The Audit
Committee met four times during the fiscal year ended June 30,
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<PAGE>
1996. Members of the Committee are Messrs. Dalton, Louthan (Chairman), Munford
and Purnell and Ms. Liedtka.
The primary function of the Executive Compensation and Organization
Committee (the "ECOC") is to review and approve the design and administration of
salary, benefits and incentive plans for senior management. This Committee also
evaluates the Company's organizational structure and the development, goals and
performance of senior management. The ECOC met four times during the fiscal year
ended June 30, 1996. Members of the ECOC are Messrs. Gwynn, Munford, Robinson
(Chairman), Rosenblum and Walker.
The primary function of the Benefits and Investment Committee is to review
the operation of employee benefit plans and programs and to evaluate the
performance of Plan administrators, trustees and investment managers. The
Benefits and Investment Committee met four times during the fiscal year ended
June 30, 1996. Members of the Committee are Messrs. Dalton, Daniels, Gwynn,
Purnell (Chairman) and Walker.
Compensation Committee Interlocks and Insider Participation
Members of the ECOC are Messrs. Gwynn, Munford, Robinson (Chairman),
Rosenblum and Walker. No member of the ECOC is or has been an employee of
Cadmus. Furthermore, none of Cadmus' executive officers has served on the board
of directors of any company of which an ECOC member is an employee except for
John H. Phillips, Vice President, Support and Development of Cadmus, who serves
as a director of Valco Graphics, Inc., a privately-held Seattle publication and
tabloid printing firm, of which Bruce A. Walker, an ECOC member, is President.
The firm of Robinson, Bradshaw & Hinson, P.A. of which Russell M. Robinson,
II, a Class III director, is President, a Director and a shareholder, was
retained to perform legal services for Cadmus during fiscal year 1996. It is
anticipated that the firm will continue to provide legal services to Cadmus
during fiscal year 1997.
Directors' Compensation
Cash Compensation. Each director of Cadmus who is not also an executive
officer of Cadmus receives: (a) an annual retainer of $10,000; (b) $1,000 for
attendance at each Board meeting; (c) $750 for attendance at each committee
meeting; and (d) $300 for each conference call Board meeting in which he
participates. The Chairmen of the Audit, the Executive Compensation and
Organization, and the Benefits and Investment Committees each receive an
additional $2,000 annually. Each director also is reimbursed for usual and
ordinary expenses of meeting attendance. A director who also is an employee of
Cadmus or its subsidiaries receives no additional compensation for serving as a
director.
Cadmus has in effect a plan under which directors may elect to defer their
annual retainers and attendance fees generally until after the termination of
their service on the Board.
Non-Employee Director Stock Compensation Plan. Under the 1992 Non-Employee
Director Stock Compensation Plan, a portion of the anticipated future increases
in the annual retainer are paid in stock options. Each Director who is not an
employee of Cadmus or its subsidiaries receives an option grant
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<PAGE>
covering 1,000 shares of Common Stock on August 15 of each year during the term
of the Plan, with the fourth grant made under the Plan on August 15, 1996, at a
per share exercise price of $13.18. The options granted under the Plan are not
exercisable for six months from date of grant except in the case of death or
disability. Options that are not exercisable at the time a director's services
on the Board terminate for any reason other than death, disability or retirement
in accordance with Cadmus' policy will be forfeited.
Certain Relationships and Other Transactions with Management
See "Compensation Committee Interlocks and Insider Participation" for
information relating to Mr. Robinson's relationship to the Company.
From time to time, Cadmus and its subsidiaries may purchase products from
or utilize services of, other corporations of which a Cadmus director is a
director, officer or employee. Such transactions occur in the ordinary course of
business and are not deemed material.
Executive Compensation
The following table shows, for the fiscal years ended June 30, 1996, 1995,
and 1994, all compensation paid or accrued by Cadmus and its subsidiaries to the
Company's Chief Executive Officer and its four other most highly compensated
executive officers.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
--------------------------------------------------------- --------------------------
Other Securities All Other
Annual Underlying Compen-
Name (Age) and Compen- Options/ sation
Principal Position Year Salary ($)(1) Bonus ($)(2) sation($) SARs (#s) ($)
------------------ ---- ------------- ------------ ------------ ----------- ----------
<S> <C>
C. Stephenson Gillispie, Jr. (54) FY96 $ 310,000 $ 0 $ 46,575(3) 20,000 $29,185(9)
Chairman, President and FY95 297,500 160,000 -- 42,200 4,500
Chief Executive Officer FY94 290,200 150,000 -- 25,000 4,497
Michael Dinkins (42)
Group President, Cadmus FY96 190,000 0 -- 10,000 12,769(10)
Graphic Communications Group, FY95 182,000 90,000 -- 20,800 --
Inc. FY94 179,200 75,000 115,922(4) 10,000 --
Gregory Moyer (47) FY96 180,000 0 108,459(5) 8,000 8,709(11)
Vice President, Human FY95 175,000 70,000 154,176(6) 30,800 --
Resources and Quality FY94 -- -- -- -- --
John H. Phillips (52) FY96 172,000 0 25,777(7) 8,000 10,105(12)
Vice President, Support FY95 165,000 83,000 -- 10,800 4,500
and Development FY94 163,840 83,000 -- 13,500 4,497
Bruce V. Thomas (39) FY96 165,000 0 21,344(8) 8,000 7,952(13)
Vice President and FY95 156,000 82,000 -- 10,800 4,500
Chief Financial Officer FY94 154,200 80,000 -- 12,000 1,875
</TABLE>
10
<PAGE>
(1) Reflects salary before pretax contributions under the Cadmus Thrift Savings
Plans.
(2) Reflects short-term incentive awards accrued for each of the three fiscal
years ended June 30, 1996 under the Cadmus Executive Incentive Plan
described in the Report of the Compensation Committee on Executive
Compensation on pages 15-18.
(3) Of the total amount reported as "Other Annual Compensation" for Mr.
Gillispie in fiscal year 1996, $34,875 was paid, pursuant to a change in
the Cadmus vacation policy, for previously accrued vacation not taken in
prior fiscal years and $11,700 was paid as an automobile allowance.
(4) Of the total amount reported as "Other Annual Compensation" for Mr. Dinkins
in fiscal year 1994, $50,000 was paid as a reimbursement for the value of
stock options forfeited by Mr. Dinkins when he left his previous employer
to join Cadmus during fiscal year 1994 with the balance of the amount so
reported attributable in the aggregate to other relocation expenses,
including tax payments on moving expenses, settlement and closing costs,
temporary living and travel expenses and moving expenses, each of which
individually amounts to less than 25% of the total amount reported.
(5) Of the total amount reported as "Other Annual Compensation" for Mr. Moyer
in fiscal year 1996, $93,046 was for reimbursement of costs and expenses
related to the sale of his former home.
(6) Of the total amount reported as "Other Annual Compensation" for Mr. Moyer
in fiscal year 1995, $43,311 was paid for closing costs related to the
purchase of his new home, $65,486 for mortgage and bridge loan payments,
$40,000 for discretionary expenses and $5,379 was attributable to other
relocation expenses, including temporary living and travel expenses, which
other relocation expenses individually amount to less than 25% of the total
amount reported.
(7) Of the total amount reported as "Other Annual Compensation" for Mr.
Phillips in fiscal year 1996, $19,350 was paid, pursuant to a change in the
Cadmus vacation policy, for previously accrued vacation not taken in prior
fiscal years.
(8) Of the total amount reported as "Other Annual Compensation" for Mr. Thomas
in fiscal year 1996, $12,163 was paid, pursuant to a change in the Cadmus
vacation policy, for previously accrued vacation not taken in prior fiscal
years and $9,181 was paid as an automobile allowance.
(9) Reflects $26,809 contributed or matched by Cadmus or its subsidiaries for
fiscal year 1996 under the Cadmus Thrift Savings Plans and the remainder
paid by Cadmus for life insurance premiums.
(10) Reflects $12,182 contributed or matched by Cadmus or its subsidiaries for
fiscal year 1996 under the Cadmus Thrift Savings Plans and the remainder
paid by Cadmus for life insurance premiums.
(11) Reflects $7,752 contributed or matched by Cadmus or its subsidiaries for
fiscal year 1996 under the Cadmus Thrift Savings Plans and the remainder
paid by Cadmus for life insurance premiums.
(12) Reflects $8,600 contributed or matched by Cadmus or its subsidiaries for
fiscal year 1996 under the Cadmus Thrift Savings Plans and the remainder
paid by Cadmus for life insurance premiums.
(13) Reflects $7,635 contributed or matched by Cadmus or its subsidiaries for
fiscal year 1996 under the Cadmus Thrift Savings Plans and the remainder
paid by Cadmus for life insurance premiums.
11
<PAGE>
Stock Options
The following table reflects grants of stock options made during the fiscal
year ended June 30, 1996 to each of the named executive officers.
OPTIONS GRANTED IN LAST FISCAL YEAR
<TABLE>
<CAPTION> Potential
Realizable
Value at
Assumed Annual
Number of Rates of Stock
Securities Percentage of Price Appreciation
Underlying Total Options/ Exercise For Option
Options SARs Granted or Base Term (2)
Granted to Employees Price Expiration --------------------
Name (#) (1) in Fiscal Year ($/SH) Date 5% 10%
---- ----------- --------------- ------- ---------- -- --
<S> <C>
C. Stephenson Gillispie, Jr. 20,000 12% $16.75 05/08/06 $210,715 $533,990
Michael Dinkins 10,000 6 16.75 05/08/06 105,358 266,995
Gregory Moyer 8,000 5 16.75 05/08/06 84,286 213,596
John H. Phillips 8,000 5 16.75 05/08/06 84,286 213,596
Bruce V. Thomas 8,000 5 16.75 05/08/06 84,286 213,596
</TABLE>
(1) All grants were made under the Company's 1990 Long Term Incentive Stock
Plan, and are exercisable approximately two to five years from the date of
grant, depending upon the Common Stock's "cumulative total return" relative
to the Company's peer group, as reflected in the performance graph included
in the Company's proxy statements.
(2) The dollar amounts under these columns are the result of calculations at
assumed annual rates of stock price appreciation set by the Securities and
Exchange Commission. The dollar amounts shown are not intended to forecast
possible future appreciation, if any, of the price of the Common Stock.
12
<PAGE>
The following table reflects certain information regarding the exercise of
stock options during the fiscal year ended June 30, 1996, as well as information
with respect to unexercised options held at such date by each of the named
executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of
Unexercised Unexercised
Options at "In the Money"
Fiscal Options at Fiscal
Number of Year End (#) Year End ($)
Shares Acquired Value Exercisable/ Exercisable/
on Exercise (#) Realized ($) Unexercisable Unexercisable
--------------- ------------ -------------- ------------------
<S> <C>
C. Stephenson Gillispie, Jr. 0 $0 107,000/62,200 $668,000/0
Michael Dinkins 0 0 20,000/20,800 55,650/0
Gregory Moyer 0 0 20,000/18,800 0/0
John H. Phillips 0 0 51,500/18,800 336,562/0
Bruce V. Thomas 0 0 20,000/18,800 121,500/0
</TABLE>
Change-in-Control Agreements
Cadmus has entered into agreements with Messrs. Gillispie, Dinkins, Moyer,
Phillips, Thomas, Bosher and Fernstrom and five other managers that provide for
severance payments and certain other benefits if their employment terminates
after "a change in control" (as defined therein) of Cadmus. Payments and
benefits will be paid under these agreements only if, within three years
following a change in control (or such shorter period from the date of any
change in control to normal retirement), the employee (i) is terminated
involuntarily without "cause" (as defined therein) and not as a result of death,
disability or normal retirement, or (ii) terminates his employment voluntarily
for "good reason" (as defined therein). "Change in control" is defined generally
to include (i) an acquisition of 20% of Cadmus' voting stock, (ii) certain
changes in the composition of the Cadmus Board of Directors, (iii) shareholder
approval of certain business combinations or asset sales in which Cadmus'
historic shareholders hold less than 60% of the resulting or purchasing company
or (iv) shareholder approval of the liquidation or dissolution of Cadmus.
In the event of such termination following a change in control, the
employee will be entitled to receive a lump sum severance payment, certain other
payments and a continuation of employee welfare benefits. Severance payments
under these agreements are determined by a formula that takes into account base
salary, annual bonus and years of employment. Under this formula, Mr. Gillispie
will be entitled to the maximum severance payment, which will be an amount equal
to three times the sum of his base salary and annual bonus for the year in which
termination occurs, or for the fiscal year ended June 30, 1992, whichever is
higher. The total amount payable to Mr. Gillispie may not exceed the maximum
amount that may be paid without the imposition of a federal excise tax on Mr.
Gillispie and denial of a tax deduction to the payer.
13
<PAGE>
Retirement Benefits
Pension Plan. Substantially all employees of Cadmus and its participating
subsidiaries who are 21 years of age or older and who are credited with at least
one year of service with Cadmus or a participating subsidiary are covered by the
Cadmus Pension Plan (the "Pension Plan"). The Pension Plan is a non-contributory
defined benefit pension plan under which retirement benefits are generally based
on periods of active participation. For the period July 1, 1979 through June 30,
1985, a participant earned a retirement benefit expressed as an annuity for life
equal to 2% of his or her base compensation (exclusive of non-guaranteed
commissions, bonuses, overtime pay and similar payments) for each year of
service. For periods after June 30, 1985, a participant earns a retirement
benefit generally equal to 1.6% of his or her base compensation each year
(limited to the inflation adjusted compensation cap each year starting July 1,
1989). Under a special rule, employees who were participants on June 30, 1985
generally accrued further benefits after June 30, 1985 and before January 1,
1992 at no less than the amount of accrual for the fiscal year ended June 30,
1985. This special rule ceased to apply effective for accruals after December
31, 1991. Prior to July 1, 1979, several different benefit formulas applied, and
employees who were participants before July 1, 1979 will retain their accrued
past service benefit for service before July 1, 1979 based on the benefit
formulas then in effect.
Because retirement benefits under the Pension Plan are based on career
average compensation, a table showing annual retirement benefits based upon
final average compensation and years of service is inappropriate and has been
omitted. Based on the benefit formula in effect on and after July 1, 1985, and
on the assumption that the individuals named will continue to receive, until
normal retirement age, covered compensation in the same amounts paid for the
fiscal year ended June 30, 1996, the estimated annual benefits which are not
subject to any deduction for Social Security or other offset amount payable for
the named executive officers are $65,208 for Mr. Gillispie, $60,600 for Mr.
Dinkins, $47,004 for Mr. Moyer, $64,140 for Mr. Phillips, and $69,876 for Mr.
Thomas.
Cadmus Supplemental Executive Retirement Plan. Cadmus maintains the Cadmus
Supplemental Executive Retirement Plan (the "SERP") to provide supplemental
retirement benefits for certain key employees of Cadmus and its participating
subsidiaries who are credited with at least five years of service as group 1
employees and who are selected by the Board of Directors of Cadmus for
participation in the SERP. The Board may waive all or any part of the five year
service requirement. The SERP is a non-qualified unfunded plan which covers 17
active key employees of Cadmus and its participating subsidiaries. The
retirement or death benefit payable under the SERP is a 15-year term certain
annuity equal to 30% of the participant's final average (highest three years out
of last ten) base compensation (exclusive of non-guaranteed commissions,
bonuses, overtime pay or similar payments) generally commencing at the
participant's normal retirement age (which is age 65 for employees last hired
prior to age 60 or otherwise is the fifth anniversary of commencement of
participation). Benefits are not subject to any reduction for Social Security or
other offset amount.
14
<PAGE>
The following table shows the estimated annual retirement benefits payable
to SERP participants in the following average final compensation and years of
service classifications assuming retirement at age 65. Average compensation
under the SERP includes only the amounts set forth under "Salary" in the Summary
Compensation Table on page 10.
SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
Highest 3-Year -----------------------------------------------
Average Compensation 5 10 15 20 and over
- --------------------
<S> <C>
100,000 $ 7,500 $15,000 $22,500 $ 30,000
125,000 9,375 18,750 28,125 37,500
150,000 11,250 22,500 33,750 45,000
175,000 13,125 26,250 39,375 52,500
200,000 15,000 30,000 45,000 60,000
225,000 16,875 33,750 50,625 67,500
250,000 18,750 37,500 56,250 75,000
300,000 22,500 45,000 67,500 90,000
350,000 26,250 52,500 78,750 105,000
400,000 30,000 60,000 80,000 120,000
</TABLE>
Credited years of service under the SERP as of the fiscal year ended June
30, 1996 are: Mr. Gillispie -- 19; Mr. Dinkins -- 2; Mr. Moyer -- 1; Mr.
Phillips -- 21; and Mr. Thomas -- 4.
Report of the Compensation Committee on Executive Compensation
The Executive Compensation and Organization Committee (the "Committee"),
composed of five non-employee directors, has responsibility for all aspects of
the compensation program for Cadmus executive officers. Working in collaboration
with Cadmus senior management and outside consultants, the Committee administers
this executive compensation program to fulfill the objectives outlined below.
Principal Objectives. As set forth in the Company's Executive Compensation
Policy and Philosophy Statement, the principal objectives of the executive
compensation program are: (i) to attract and retain a highly-qualified
management team; (ii) to motivate this team to achieve corporate objectives and
to control and justify the costs of executive incentives; (iii) to ensure that
executive compensation is integral to, and supportive of, other Cadmus
management benefits, systems and processes; and (iv) to link pay with
performance in a number of respects, most notably linking executive compensation
and shareholder value so that increases in executive compensation are directly
related to the creation of value for the Company's shareholders.
15
<PAGE>
The primary components of the Company's executive compensation program are
base salaries, short-term incentive payments and long-term incentive awards,
historically in the form of stock options.
The Committee considered the deductibility of executive compensation under
Section 162(m) of the Internal Revenue Code which was enacted in 1993. Under
this provision, beginning in 1994 a publicly held corporation would not be
permitted to deduct compensation in excess of one million dollars per year paid
to the chief executive officer or any one of the other named executive officers
except to the extent the compensation was paid under compensation plans meeting
certain tax code requirements. The Committee noted that the Company does not
currently face the loss of this deduction for compensation. The Committee
nevertheless determined that, in reviewing the design of and administering the
executive compensation program, the Committee will continue in the future to
preserve the Company's tax deductions for executive compensation unless this
goal conflicts with the primary objectives of the Company's compensation
program.
Salaries. Salaries for Cadmus executive officers are established and
administered by means of salary grades and salary ranges. All Cadmus executive
officers are assigned a base salary grade which is reviewed annually. With
outside consultants, senior management prepares a schedule of salary ranges by
grade, which schedule also is reviewed annually. At the beginning of each fiscal
year, the Committee reviews management's recommendations concerning adjustments
in grade designation and base salaries for each executive officer. Based on this
review, the Committee makes such salary adjustments as it deems appropriate.
Base salaries are generally competitive with the market based on peer group
comparisons provided by outside consultants.
Short-term Incentive Payments. The Company utilizes an Executive Incentive
Plan under which its executive officers may earn annual incentive payments based
on Company performance. A formula that focuses primarily upon "return on capital
employed" or "ROC" establishes at each Cadmus business unit "curves" that
generate a "pool" from which the short-term incentives are paid. As ROC improves
and operating profits increase, the pool grows. No pool is created, and no
incentives are earned, however, until cost of capital devoted to the business is
recovered and a minimum earnings threshold is achieved.
At the beginning of each fiscal year, senior management presents for
consideration and approval by the Committee the recommended short-term incentive
curves for Cadmus and each Cadmus business unit. At the conclusion of the fiscal
year, senior management recommends to the Committee specific short-term awards
for each executive officer. Those recommendations are based, among other
factors, on that executive's individual performance, as well as the performance
and profitability of that executive's business unit. A portion of each
executive's incentive award also is determined by the financial performance of
Cadmus, in the case of Group Presidents, and each Group, in the case of Division
Leaders. The Committee then considers and approves, to the extent it believes
appropriate, the incentive pools generated by the incentive curves and the
incentive award recommendations of senior management. At budgeted performance
levels, the Executive Incentive Plan generally should have the potential to
generate awards in the range of 30-60% of base salary.
16
<PAGE>
The Plan also contains a quarterly payment feature. To the extent that
budgeted performance levels are exceeded, that portion of the pool associated
with such exceptional performance may be distributed on a quarterly basis to
individual participants. At year end, incentive pools are adjusted for total
year performance. This plan feature, new to the Plan for fiscal 1997, is
designed to motivate executives and managers to not only meet but to exceed
quarterly financial goals.
Long-Term Incentive Awards. The long-term incentive component of executive
compensation for Cadmus executive officers is provided under the 1984 Stock
Option Plan and the 1990 Long Term Incentive Stock Plan. The 1984 Plan, under
which no additional shares are available for grant, provides solely for the
award of stock options and tandem SARs. The 1990 Plan, an omnibus plan, provides
for awards of incentive and non-qualified stock options, SARs, restricted stock
grants, performance units or shares, as well as "other stock-unit" awards. In
practice, however, stock options have been the only form of awards made under
the 1990 Plan to date.
Options are exercisable no earlier than six months from date of grant, nor
later than five years from date of grant, depending upon whether the Company's
performance exceeds specific standards adopted by the Compensation Committee.
Options generally have a ten-year term subject to early termination under
certain circumstances and typically have an option exercise price equal to the
market value of the Common Stock at the date of grant. Thus, the Common Stock
must appreciate before an executive officer receives any benefit from an option
grant.
At the beginning of each year, determination is made as to the number of
shares that the Company can reasonably issue for that year (typically 2% of
outstanding shares per year). Contemporaneously senior management, working
periodically with outside consultants, makes recommendations concerning awards
to specific executives. These awards generally are recommended only for those
relatively few executives who are in a position and have the ability to
influence materially Cadmus financial performance. These recommendations are
acted upon by the Committee at its August meeting. Although the Committee has no
specific target equity ownership in mind for Cadmus executives, an overall
guideline is that the long-term incentive potential should equal short-term
incentive amounts and should be directed at creating a meaningful equity
position for top management. (See "Executive Compensation -- Stock Options,"
page 12 for information concerning specific grants made in fiscal 1996.)
Chief Executive Officer Compensation. Compensation for the Company's
Chairman and Chief Executive Officer is established in accordance with the
principles and objectives outlined above. The Committee retained outside
consultants to assist them in recommending an appropriate base salary increase
for Mr. Gillispie for fiscal year 1996. Based upon external information and
data, including a survey of chief executive officer compensation at other public
manufacturing companies deemed comparable to the Company, the consultants
recommended a merit increase of 4% over last year's base salary. The Committee
approved this recommendation and set Mr. Gillispie's salary as Chief Executive
Officer for fiscal 1996 at $310,000, slightly below the anticipated industry
median for 1996.
17
<PAGE>
In determining the short-term and long-term incentive portions of Mr.
Gillispie's compensation for fiscal year 1996, the Committee considered both the
operating performance and the strategic progress of the Company. From an
operating perspective, the following aspects of the Company's performance were
considered: while the Company experienced a significant decline in earnings in
fiscal 1996 and a resultant decline in its stock price from $23 3/4 per share on
July 1, 1995, to $15 3/8 per share on June 30, 1996, the Company completed the
"unification" of Cadmus, a reorganization which organized the Company around
products and markets rather than around small, local operating subsidiaries; the
Company successfully placed 1,725,000 shares of the Company's stock, providing
the funds required to repay certain high-coupon debt and to complete several
strategic acquisitions without increasing materially the Company's debt to
capital ratio; the Company completed a refinancing of its credit facilities,
further reducing its borrowing costs and amending certain overly-restrictive
loan covenants; and the Company secured several "preferred supplier" and similar
significant agreements from major Fortune 500 companies. From a strategic
perspective, the following aspects of the Company's performance were considered:
the Company completed several strategic acquisitions -- the acquisition of
Lancaster Press, Inc., which further strengthened the Company's world leadership
position in the production and dissemination of scientific, technical and
medical journals, the acquisition of The Software Factory, Inc., which brought
to the Company the software replication and fulfillment capabilities required to
complete the Company's full-service offering to technology companies, and the
acquisitions of Peach Web, Inc. and The Mowry Company, which enhanced the
Company's interactive/internet and direct marketing offerings, respectively; the
Company recruited and retained Steve Isaac as the Company's Marketing Group
President, thus completing its leadership team and bringing to the Company the
marketing expertise and operational experience required to manage effectively
the growth and development of the Company's marketing businesses; and the
Company continued, through its human resources, information technology, and
finance groups, to develop the systems and infrastructure required to support
the growth and development of the "Unified" Cadmus.
Based on the foregoing, the Committee approved no short-term incentive for
Mr. Gillispie, but did approve a stock option grant for fiscal 1996 covering
20,000 shares for Mr. Gillispie.
EXECUTIVE COMPENSATION AND ORGANIZATION COMMITTEE
Price H. Gwynn, III
John D. Munford, II
Russell M. Robinson, II (Chairman)
John W. Rosenblum
Bruce A. Walker
18
<PAGE>
Performance Graph
Securities and Exchange Commission regulations require the Company to
include in its proxy statement the following Performance Graph. The Graph is
intended to permit shareholders to more easily relate executive compensation to
company performance based on the market price of a company's stock. The Graph
shows the percentage change in the market price for the Common Stock from June
30, 1991 to June 30, 1996.
The Graph assumes $100 invested on June 30, 1991 in the Company, the S&P
500 and a Peer Group and shows the total return on such an investment, assuming
reinvestment of dividends, as of June 30, 1996. The Peer Group consists of Devon
Group, Graphic Industries, Banta Corporation, Courier Corporation, Donnelly
Corporation, Bowne & Co., Merrill Corporation, and the Media General Book and
Magazine Publishing Index, each weighted as one-eighth of the Peer Group. The
total return information for the Peer Group has been weighted by market
capitalization.
Comparison of Five-Year Cumulative Total Return
Among Cadmus, the S&P 500 Index and Peer Group
[GRAPH]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C>
Cadmus 100 131 127 262 353 232
S&P 500 100 113 128 130 164 207
Peer Group 100 139 197 212 237 267
</TABLE>
19
<PAGE>
Section 16(a) Beneficial Ownership Compliance
Based on a review of the reports of changes in beneficial ownership of
Common Stock and written representations furnished to Cadmus, Cadmus believes
that its officers and directors filed on a timely basis the reports required to
be filed under Section 16(a) of the Securities Exchange Act of 1934 during the
fiscal year ended June 30, 1996, except that (i) two Forms 4 reporting 18
purchases were filed late by Mr. Daniels and (ii) one Form 4 reporting one
purchase was filed late by Mr. Walker.
Proposal to Approve Amendment to 1990 Long Term Incentive Stock Plan
Summary. Cadmus historically has used stock options as an important part of
its executive compensation plan. This practice has been based on the belief that
options, particularly performance vesting options such as Cadmus', (i) are an
effective means of attracting and retaining key employees, and (ii) align the
interests of shareholders and management. Under the Cadmus 1990 Long Term
Incentive Stock Plan (the "1990 Plan"), as of June 30, 1996, Cadmus had only
128,000 shares of Common Stock available for issuance. The proposed amendment to
the 1990 Plan would make an additional 360,000 shares available for issuance.
General. In 1990, the shareholders approved the 1990 Plan. The 1990 Plan
was intended to replace the 1984 Stock Option Plan (the "1984 Plan") under which
no further options would be granted, but which would continue to govern
outstanding options previously granted thereunder until their exercise,
expiration or forfeiture. The 1990 Plan as initially adopted and approved by
shareholders provided that 360,000 shares of the Common Stock could be issued to
key employees of Cadmus and its subsidiaries pursuant to stock options, stock
appreciation rights, performance shares, performance units, restricted stock and
other stock unit awards ("Awards").
The 1990 Plan is administered by the Executive Compensation and
Organization Committee (the "Committee"), none of the members of which are
eligible for Awards under such plan. The Committee selects executive officers
and other key personnel to whom Awards may be granted and determines the
particular terms of each Award. Approximately 55 persons (including those
persons named in the Summary Compensation Table) are eligible for Awards under
the 1990 Plan. The nature and extent of a recipient's participation, the
benefits or amounts to be received by each recipient and any consideration to be
received by the Company for granting or awarding such benefits are determined by
the Committee. Unless specified by the 1990 Plan, the prices, expiration dates,
consideration to be received by the Company, and other terms of each Award are
determined by the Committee and are set forth in a written agreement between the
Company and the recipient. Awards may not be assigned, transferred, pledged or
otherwise encumbered by a participant, other than by will or the laws of descent
and distribution. Awards may be exercised during the recipient's lifetime only
by the recipient or, in the case of disability, by the recipient's legal
representative. Such Awards also are not exercisable until at least six months
after the grant of the Award. For additional information on the Plan, see
"Report of the Compensation Committee on Executive Compensation -- Long-Term
Incentive Awards" on page 17.
1994 Amendments to the 1990 Plan. In 1994 shareholders approved a number of
amendments to the 1990 Plan (the "1994 Amendments"). The 1994 Amendments
increased the number of shares of
20
<PAGE>
Common Stock available for issuance under the 1990 Plan to 740,000 shares,
subject to future adjustment as provided in the 1990 Plan. The 1994 Amendments
also affected several changes to the 1990 Plan to eliminate certain provisions
generally viewed as unfavorable to shareholders. Specifically, the 1994
Amendments reduced from one-half to one-third the total number of shares
issuable under the 1990 Plan in the form of restricted stock awards, performance
awards or other stock unit awards, decreased the maximum discount from market
value permissible in setting the option exercise price for non-qualified options
from 50% to 15% (as a result, the option exercise price of a non-qualified
option may be no less than 85% of the fair market value of the Common Stock on
the date of grant), provided that no participant may be granted options covering
more than 75,000 shares of Common Stock in any one calendar year, eliminated the
ability of the Committee to grant so-called "reload options" (a reload option is
one granted to a participant who has exercised an outstanding option and paid
the exercise price by delivering previously owned shares; the reload option has
the same expiration date as the previously exercised option, covers the same
number of shares as were surrendered in payment of the exercise price, but has
an exercise price equal to the market value of the Common Stock on the date of
its grant), and eliminated the Committee's discretion to lower the option
exercise price of outstanding options as part of any modification, extension or
renewal of such options.
In addition, the Company acted to make all option grants "performance
vesting." Under the terms of all grants made subsequent to 1994, options granted
pursuant to the 1990 Plan first become exercisable approximately two to five
years from the date of grant, depending upon the Common Stock's "cumulative
total return" relative to the Company's peer group, as reflected in the
performance graph included in the Company's proxy statements. The Company
expects that options granted in the future under the 1990 Plan will also have
performance-based vesting.
Information About Outstanding Awards. At June 30, 1996, only 128,000 shares
were available for future Awards under the 1990 Plan. As of the same date,
options covering 595,500 and 87,900 shares of Common Stock were outstanding
under the 1990 Plan and the 1984 Plan, respectively.
Information with respect to options granted in the fiscal year ended June
30, 1996 to the named executive officers under the 1990 Plan is set forth in the
Summary Compensation Table on page 10 and the table entitled "Options Granted in
Last Fiscal Year" on page 12. During the fiscal year ended June 30, 1996, a
total of 64,400 options were awarded under the 1990 Plan to all executive
officers as a group and 92,700 options were awarded under the 1990 Plan to
employees other than executive officers. On September 13, 1996, the closing
price of the Common Stock as reported by the NASDAQ National Market was $15.75.
Proposal to Amend 1990 Plan. Effective August 14, 1996, the Board of
Directors approved a proposed amendment to the 1990 Plan that would increase the
number of shares of Common Stock available for issuance under the 1990 Plan by
an additional 360,000 shares, subject to future adjustment as provided in the
1990 Plan. The Board believes this amendment is necessary in order to make
shares available for further Awards under the 1990 Plan so that the Company and
its subsidiaries will continue to be able to provide an effective means of
attracting and retaining key employees and aligning to the maximum extent
possible the interests of these employees and Cadmus shareholders.
21
<PAGE>
Ratification of the Selection of Independent Public Accountants
Arthur Andersen LLP served as the Company's independent accountants for the
fiscal year ended June 30, 1996, and has been selected as independent public
accountants for Cadmus for the fiscal year ending June 30, 1997, subject to
ratification by the shareholders.
Coopers & Lybrand L.L.P. served as the Company's independent accountants
for the fiscal year ended June 30, 1994 and through August 18, 1994. The change
in accounting firms was recommended by the Audit Committee of the Company and
was approved by the Board of Directors.
If not otherwise specified, proxies will be voted in favor of ratification
of the appointment. Representatives of Arthur Andersen LLP are expected to be
present at the Annual Meeting, will have an opportunity to make a statement if
they so desire, and are expected to be available to respond to appropriate
questions.
Shareholder Proposals and Nominations for the 1997 Annual Meeting
The Board of Directors need not include an otherwise appropriate
shareholder proposal in its proxy statement or form of proxy for the 1997 annual
meeting of shareholders unless the proposal is received by the Secretary of
Cadmus at the Company's principal place of business on or before
June 4, 1997.
The Company's Bylaws prescribe the procedures a shareholder must follow to
make nominations for director candidates. Notice of shareholder nominations must
be submitted in writing to the Secretary at the Company's principal place of
business at least 90 days prior to the anniversary date of the previous year's
annual meeting (or not later than 10 days after the record date in the case of a
special meeting). The notice must contain all information specified in Section 6
of Article II of the Bylaws. Any shareholder desiring a copy of the Cadmus
Bylaws will be furnished one without charge upon written request to the
Secretary.
Other Matters
As of the date of this Proxy Statement, management of Cadmus has no
knowledge of any matters to be presented for consideration at the Annual Meeting
other than those referred to above. If any other matter properly comes before
the Annual Meeting, the persons named in the accompanying proxy intend to vote
such proxy, to the extent entitled, in accordance with their best judgment.
22
<PAGE>
Annual Report on Form 10-K
A copy of the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission for the year ended June 30, 1996 can be
obtained without charge by writing to the Corporate Secretary at P.O. Box 27367,
Richmond, Virginia 23261.
By Order of the Board of Directors
/s/ Bruce V. Thomas
Vice President and Chief Financial Officer
23
<PAGE>
CADMUS COMMUNICATIONS CORPORATION
1990 LONG TERM INCENTIVE STOCK PLAN
ARTICLE I.
Establishment, Purpose, and Duration
1.1 Establishment of the Plan. Cadmus Communications Corporation
(hereinafter referred to as the "Company"), a Virginia corporation, hereby
establishes an incentive compensation plan to be known as the "1990 Long Term
Incentive Stock Plan" (hereinafter referred to as the "Plan"), as set forth in
this document. Unless otherwise defined herein, all capitalized terms shall have
the meanings set forth in Section 2.1 herein. The Plan permits the grant of
Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights,
Restricted Stock, Performance Awards in the form of Performance Units and
Performance Shares and Other Stock Unit Awards.
The Plan was adopted by the Board of Directors on, and shall become
effective, as of August 1, 1990 (the "Effective Date"), subject to the approval
by vote of shareholders of the Company in accordance with applicable laws.
Awards may be granted prior to shareholder approval of the Plan, but each such
Award shall be subject to the approval of the Plan by the shareholders.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
success of the Company and its Subsidiaries by providing incentives to Key
Employees that will promote the identification of their personal interest with
the long-term financial success of the Company and with growth in shareholder
value. The Plan is designed to provide flexibility to the Company in its ability
to motivate, attract, and retain the services of Key Employees upon whose
judgment, interest, and special effort the successful conduct of its operation
is largely dependent.
1.3 Duration of the Plan. The Plan shall commence on the Effective
Date, as described in Section 1.1 herein, and shall remain in effect, subject to
the right of the Board of Directors to terminate the Plan at any time pursuant
to Article 14 herein, until July 31, 2000, at which time it shall terminate
except with respect to Awards made prior to, and outstanding on, that date which
shall remain valid in accordance with their terms.
ARTICLE II.
Definitions
2.1 Definitions. Except as otherwise defined in the Plan, the
following terms shall have the meanings set forth below:
(a) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(b) "Agreement" means a written agreement implementing the
grant of each Award signed by an authorized officer of the Company and
by the Participant.
<PAGE>
(c) "Award" means, individually or collectively, a grant under
this Plan of Incentive Stock Options, Nonqualified Stock Options, Stock
Appreciation Rights, Restricted Stock, Performance Units, Performance
Shares or other Stock Unit Awards.
(d) "Award Date" or "Grant Date" means the date on which an
Award is made by the Committee under this Plan.
(e) "Beneficial Owner" shall have the meaning ascribed to such
term in Rule 13d-3 under the Exchange Act.
(f) "Board" or "Board of Directors" means the Board of
Directors of the Company.
(g) "Change in Control" shall be deemed to have occurred if
the conditions set forth in any one of the following paragraphs shall
have been satisfied:
(i) any person (other than the Company, any
Subsidiary, a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or its
Subsidiaries), who or which, together with all Affiliates and
Associates of such Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the
Company's then outstanding securities; or
(ii) if, at any time after the Effective Date, the
composition of the Board of Directors shall change such that a
majority of the Board shall no longer consist of Continuing
Directors; or
(iii) if at any time, (w) the Company shall
consolidate with, or merge with, any other Person and the
Company shall not be the continuing or surviving corporation,
(x) any Person shall consolidate with, or merge with, the
Company, and the Company shall be the continuing or surviving
corporation and in connection therewith, all or part of the
outstanding Stock shall be changed into or exchanged for stock
or other securities of any other Person or cash or any other
property, (y) the Company shall be a party to a statutory
share exchange with any other Person after which the Company
is Subsidiary of any other Person, or (z) the Company shall
sell or otherwise transfer 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons.
(h) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(i) "Committee" means the committee of the Board appointed to
administer the Plan pursuant to Article 3 herein, all of the members of
which shall be "disinterested persons" as defined in Rule 16b-3 under
the Exchange Act or any similar or successor
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rule. Unless otherwise determined by the Board, the members of the
committee responsible for executive compensation who are not employees
of the Company or its Subsidiaries shall constitute the Committee.
(j) "Company" means Cadmus Communications Corporation, or any
successor thereto as provided in Article 16 herein.
(k) "Continuing Director" means an individual who was a member
of the Board of Directors on the Effective Date or whose subsequent
nomination for election or election to the Board of Directors was
recommended or approved by the affirmative vote of two-thirds of the
Continuing Directors then in office.
(l) "Fair Market Value" of a Share means the mean between the
high and low sales price of the Stock on the relevant date if it is a
trading date, or if not, on the most recent date on which the Stock was
traded prior to such date, as reported by the NASDAQ National Market
System, or if, in the opinion of the Committee, this method is
inapplicable or inappropriate for any reason, the fair market value as
determined pursuant to a reasonable method adopted by the Committee in
good faith for such purpose.
(m) "Incentive Stock Option" or "ISO" means an option to
purchase Stock, granted under Article 6 herein, which is designated as
an incentive stock option and is intended to meet the requirements of
Section 422A of the Code.
(n) "Key Employee" means an officer or other key employee of
the Company or its Subsidiaries, who, in the opinion of the Committee,
can contribute significantly to the growth and profitability of, or
perform services of major importance to, the Company and its
Subsidiaries. "Key Employee" does not include directors of the Company
who are not also employees of the Company or its Subsidiaries.
(o) "Nonqualified Stock Option" or "NQSO" means an option to
purchase Stock, granted under Article 6 herein, which is not intended
to be an Incentive Stock Option.
(p) "Option" means an Incentive Stock Option or a Nonqualified
Stock Option.
(q) "Other Stock Unit Award" means awards of Stock or other
awards that are valued in whole or in part by reference to, or are
otherwise based on, Shares or other securities of the Company.
(r) "Participant" means a Key Employee who has been granted an
Award under the Plan.
(s) "Performance Award" means a performance-based Award, which
may be in the form of either Performance Shares or Performance Units.
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(t) "Performance Share" means an Award, designated as a
performance share, granted to a participant pursuant to Article 9
herein.
(u) "Performance Unit" means an Award, designated as a
performance unit, granted to a Participant pursuant to Article 9
herein.
(v) "Period of Restriction" means the period during which the
transfer of Shares of Restricted Stock is restricted, pursuant to
Article 8 herein.
(w) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and
14(d) thereof, including a "group" as defined in Section 13(d).
(x) "Plan" means the Cadmus Communication Corporation 1990
Long Term Incentive Stock Plan as herein described and as hereafter
from time to time amended.
(y) "Related Option" means an Option with respect to which a
Stock Appreciation Right has been granted.
(z) "Restricted Stock" means an Award of Stock granted to a
Participant pursuant to Article 8 herein.
(aa) "Subsidiary" shall mean a corporation at least 50% of the
total combined voting power of all classes of stock of which is owned
by the Company, either directly or through one or more of its
Subsidiaries.
(bb) "Stock" or "Shares" means the common stock of the
Company.
(cc) "Stock Appreciation Right" or "SAR" means an Award,
designated as a stock appreciation right, granted to a Participant
pursuant to Article 7 herein.
ARTICLE III.
Administration
3.1 The Committee. The Plan shall be administered by the Committee
which shall have all powers necessary or desirable for such administration. The
express grant in this Plan of any specific power to the Committee shall not be
construed as limiting any power or authority of the Committee. In addition to
any other powers and, subject to the provisions of the Plan, the Committee shall
have the following specific powers: (i) to determine the terms and conditions
upon which the Awards may be made and exercised; (ii) to determine all terms and
provisions of each Agreement, which need not be identical; (iii) to construe and
interpret the Agreements and the Plan; (iv) to establish, amend or waive rules
or regulations for the Plan's administration; (v) to accelerate the
exercisability of any Award, the end of a Performance Period or termination of
any Period of Restriction; and (vi) to make all other determinations and take
all other actions necessary or advisable for the administration of the Plan.
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3.2 Selection of Participants. The Committee shall have the authority
to grant Awards under the Plan, from time to time, to such Key Employees as may
be selected by it. Each Award shall be evidenced by an Agreement.
3.3 Decisions Binding. All determinations and decisions made by the
Board or the Committee pursuant to the provisions of the Plan shall be final,
conclusive and binding.
3.4 Rule 16b-3 Requirements. Notwithstanding any other provisions of
the Plan, the Board or the Committee may impose such conditions on any Award,
and amend the Plan in any such respects, as may be required to satisfy the
requirements of Rule 16b-3, as amended (or any successor or similar rule), under
the Exchange Act.
3.5 Indemnification of Committee. In addition to such other rights of
indemnification as they may have as directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against
reasonable expenses, including attorneys' fees, actually and reasonably incurred
in connection with the defense of any action, suit or preceding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any Award granted or made hereunder, and against all amounts reasonably
paid by them in settlement thereof or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, if such members acted in good faith and
in a manner which they believed to be in, and not opposed to, the best interests
of the Company and its Subsidiaries.
ARTICLE IV.
Stock Subject to the Plan
4.1 Number of Shares. Subject to adjustment as provided in Section 4.4
herein, the maximum aggregate number of Shares that may be issued pursuant to
Awards made under the Plan shall not exceed 1,100,000. No more than one third of
the aggregate number of such Shares shall be issued in connection with
Restricted Stock Awards, Performance Awards or Other Stock Unit Awards. Except
as provided in Sections 4.2 and 4.3 herein, the issuance of Shares in connection
with the exercise of, or as other payment for Awards, under the Plan shall
reduce the number of Shares available for future Awards under the Plan.
4.2 Lapsed Awards or Forfeited Shares. If any Award granted under this
Plan terminates, expires, or lapses for any reason other than by virtue of
exercise of the Award, or if Shares issued pursuant to Awards are forfeited, any
Stock subject to such Award again shall be available for the grant of an Award
under the Plan, subject to Section 7.2.
4.3 Delivery of Shares as Payment. In the event a Participant pays the
Option Price for Shares pursuant to the exercise of an Option with previously
acquired Shares, the number of Shares available for future Awards under the Plan
shall be reduced only by the net number of new Shares issued upon the exercise
of the Option.
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4.4 Capital Adjustments. The number and class of Shares subject to each
outstanding Award, the Option Price and the aggregate number and class of Shares
for which Awards thereafter may be made shall be subject to such adjustment, if
any, as the Committee in its sole discretion deems appropriate to reflect such
events as stock dividends, stock splits, recapitalizations, mergers,
consolidations or reorganizations of or by the Company.
ARTICLE V.
Eligibility
Persons eligible to participate in the Plan include all employees of
the Company and its Subsidiaries who, in the opinion of the Committee, are Key
Employees. Key Employees may not include directors of the Company who are not
employees of the Company or its Subsidiaries.
ARTICLE VI.
Stock Options
6.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Key Employees at any time and from time to time as
shall be determined by the Committee. The Committee shall have complete
discretion in determining the number of Shares subject to Options granted to
each Participant, provided, however, that (a) no Participant may be granted
Options in any calendar year for more than 75,000 shares of Common Stock and (b)
the aggregate Fair Market Value (determined at the time the Award is made) of
Shares with respect to which any Participant may first exercise ISOs granted
under the Plan during any calendar year may not exceed $100,000 or such amount
as shall be specified in Section 422A of the Code and rules and regulation
thereunder.
6.2 Option Agreement. Each Option grant shall be evidenced by an
Agreement that shall specify the type of Option granted, the Option Price (as
hereinafter defined), the duration of the Option, the number of Shares to which
the Option pertains, any conditions imposed upon the exercisability of Options
in the event of retirement, death, disability or other termination of
employment, and such other provisions as the Committee shall determine. The
Agreement shall specify whether the Option is intended to be an Incentive Stock
Option within the meaning of Section 422A of the Code, or a Nonqualified Stock
Option not intended to be within the provisions of Section 422A of the Code.
6.3 Option Price. The exercise price per share of Stock covered by an
Option ("Option Price") shall be determined by the Committee subject to the
following limitations. In the case of an ISO, the Option Price shall not be less
than 100% of the Fair Market Value of such Stock on the Grant Date. An ISO
granted to an Employee who, at the time of grant, owns (within the meaning of
Section 425(d) of the Code) Stock possessing more than 10% of the total combined
voting power of all classes of Stock of the Company, shall have an Option Price
which is at least equal to 110% of the Fair Market Value of the Stock. In the
case of a NQSO, the Option Price shall not be less than 85% of the Fair Market
Value of the Stock on the Grant Date.
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6.4 Duration of Options. Each Option shall expire at such time as the
Committee shall determine at the time of grant provided, however, that no ISO
shall be exercisable later than the tenth (10th) anniversary date of its Award
Date.
6.5 Exercisability. Options granted under the Plan shall be exercisable
at such times and be subject to such restrictions and conditions as the
Committee shall determine, which need not be the same for all Participants. No
Option, however, shall be exercisable until the expiration of at least six
months after the Award Date, except that such limitation shall not apply in the
case of death or disability of the Participant.
6.6 Method of Exercise. Options shall be exercised by the delivery of a
written notice to the Company in the form prescribed by the Committee setting
forth the number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares. The Option Price shall be payable to
the Company in full either in cash, by delivery of Shares of Stock valued at
Fair Market Value at the time of exercise, delivery of a promissory note or by a
combination of the foregoing. As soon as practicable, after receipt of written
notice and payment, the Company shall deliver to the Participant, stock
certificates in an appropriate amount based upon the number of Options
exercised, issued in the Participant's name. No Participant who is awarded
Options shall have rights as a shareholder until the date of exercise of the
Options.
6.7 Restrictions on Stock Transferability. The Committee shall impose
such restrictions on any Shares acquired pursuant to the exercise of an Option
under the Plan as it may deem advisable, including, without limitation,
restrictions under applicable Federal securities law, under the requirements of
the National Association of Securities Dealers, Inc. or any stock exchange upon
which such Shares are then listed and under any blue sky or state securities
laws applicable to such Shares.
6.8 Nontransferability of Options. No Option granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. Further, all
Options granted to a Participant under the Plan shall be exercisable during his
lifetime only by such Participant or his guardian or legal representative.
ARTICLE VII.
Stock Appreciation Rights
7.1 Grant of Stock Appreciation Rights. Subject to the terms and
conditions of the Plan, Stock Appreciation Rights may be granted to
Participants, at the discretion of the Committee, in any of the following forms:
(a) In connection with the grant, and exercisable in lieu of
Options ("Tandum SARs");
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(b) In connection with and exercisable in addition to the grant
of Options ("Additive SARs");
(c) Independent of grant of the Options ("Freestanding SARs");
or
(d) In any combination of the foregoing.
7.2 Exercise of Tandem SARs. Tandem SARs may be exercised with respect
to all or part of the Shares subject to the Related Option. The exercise of
Tandem SARs shall cause a reduction in the number of Shares subject to the
Related Option equal to the number of Shares with respect to which the Tandem
SAR is exercised. Conversely, the exercise, in whole or part, of a Related
Option, shall cause a reduction in the number of Shares subject to the Tandem
Option equal to the number of Shares with respect to which the Related Option is
exercised. Shares with respect to which the Tandem SAR shall have been exercised
may not be subject again to an Award under the Plan.
Notwithstanding any other provision of the Plan to the contrary, a
Tandem SAR shall expire no later than the expiration of the Related Option,
shall be transferable only when and under the same conditions as the Related
Option and shall be exercisable only when the Related Option is eligible to be
exercised. In addition, if the Related Option is an ISO, a Tandem SAR shall be
exercised for no more than 100% of the difference between the Option Price of
the Related Option and the Fair Market Value of Shares subject to the Related
Option at the time the Tandem SAR is exercised.
7.3 Exercise of Additive SARs. Additive SARs shall be deemed to be
exercised upon, and in addition to, the exercise of the Related Options. The
deemed exercise of Additive SARs shall not reduce the number of Shares with
respect to which the Related Options remains unexercised.
7.4 Exercise of Freestanding SARs. Freestanding SARs may be exercised
upon whatever terms and conditions the Committee, in its sole discretion,
imposes upon such SARs.
7.5 Other Conditions Applicable to SARs. No SAR granted under the Plan
shall be exercisable until the expiration of at least six months after the Grant
Date, except that such limitation shall not apply in the case of the death or
disability of the Participant. In no event shall the term of any SAR granted
under the Plan exceed ten years from the Grant Date. A SAR may be exercised only
when the Fair Market Value of a Share exceeds either (a) the Fair Market Value
per Share on the Grant Date in the case of a Freestanding SAR or (b) the Option
Price of the Related Option in the case of either a Tandem or Additive SAR. A
SAR shall be exercised by delivery to the Committee of a notice of exercise in
the form prescribed by the Committee.
7.6 Payment Upon Exercise of SARs. Subject to the provisions of the
Agreement, upon the exercise of a SAR, the Participant is entitled to receive,
without any payment to the Company (other than required tax withholding
amounts), an amount equal to the product of
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multiplying (i) the number of Shares with respect to which the SAR is exercised
by (ii) an amount equal to the excess of (A) the Fair Market Value per Share on
the date of exercise of the SAR over (B) either (x) the Fair Market Value per
Share on the Award Date in the case of a Freestanding SAR or (y) the Option
Price of the Related Option in the case of either a Tandem or Additive SAR.
Payment to the Participant shall be made in Shares, valued at the Fair
Market Value of the date of exercise, in cash if the Participant has so elected
in his written notice of exercise and Committee has consented thereto, or a
combination thereof. To the extent required to satisfy the conditions of Rule
16b-3(e) under the Exchange Act, or any successor or similar rule, or as
otherwise provided in the Agreement, the Committee shall have the sole
discretion to consent to or disapprove the election of any Participant to
receive cash in full or partial settlement of an SAR. In cases where an election
of settlement in cash must be consented to by the Committee, the Committee may
consent to, or disapprove, such election at any time after such election, or
within such period for taking action as is specified in the election, and
failure to give consent shall be disapproval. Consent may be given in whole or
as to a portion of the SAR surrendered by the Participant. If the election to
receive cash is disapproved in whole or in part, the SAR shall be deemed to have
been exercised for Shares, or, if so specified in the notice of exercise and
election, not to have been exercised to the extent the election to receive cash
is disapproved.
7.7 Nontransferability of SARs. No SAR granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. Further, all
SARs granted to a Participant under the Plan shall be exercisable during his
lifetime only by such Participant or his guardian or legal representative.
ARTICLE VIII.
Restricted Stock
8.1 Grant of Restricted Stock. Subject to the terms and provisions of
the Plan, the Committee, at any time and from time to time, may grant shares of
Restricted Stock under the Plan to such Participants and in such amounts as it
shall determine. Participants receiving Restricted Stock Awards are not required
to pay the Company therefor (except for applicable tax withholding) other than
the rendering of services.
8.2 Restricted Stock Agreement. Each Restricted Stock grant shall be
evidenced by an Agreement that shall specify the Period of Restriction, the
number of Restricted Stock Shares granted, and such other provisions as the
Committee shall determine.
8.3 Transferability. Except as provided in this Article 8 and subject
to the limitation in the next sentence, the Shares of Restricted Stock granted
hereunder may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the termination of the applicable Period of
Restriction or upon earlier satisfaction of other conditions as specified by the
Committee in its sole discretion and set forth in the Agreement. No shares of
Restricted Stock shall be sold until the expiration of at least six months after
the Award Date, except that
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such limitation shall not apply in the case of death or disability of the
Participant. All rights with respect to the Restricted Stock granted to a
Participant under the Plan shall be exercisable during his lifetime only by such
Participant or his guardian or legal representative.
8.4 Other Restrictions. The Committee shall impose such other
restrictions on any Shares of Restricted Stock granted pursuant to the Plan as
it may deem advisable including, without limitation, restrictions under
applicable Federal or state securities laws, and may legend the certificates
representing Restricted Stock to give appropriate notice of such restrictions.
8.5 Certificate Legend. In addition to any legends placed on
certificates pursuant to Section 8.4 herein, each certificate representing
shares of Restricted Stock granted pursuant to the Plan shall bear the following
legend:
The sale or other transfer of the Shares of Stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is
subject to certain restrictions on transfer set forth in the 1990 Long
Term Incentive Stock Plan of Cadmus Communications Corporation, in the
rules and administrative procedures adopted pursuant to such Plan, and
in an Agreement dated ______________. A copy of the Plan, such rules
and procedures, and such Restricted Stock Agreement may be obtained
from the Secretary of Cadmus Communications Corporation.
8.6 Removal of Restrictions. Except as otherwise provided in this
Article, Shares of Restricted Stock covered by each Restricted Stock Award made
under the Plan shall become freely transferable by the Participant after the
last day of the Period of Restriction. Once the Shares are released from the
restrictions, the Participant shall be entitled to have the legend required by
Section 8.5 herein removed from his Stock certificate.
8.7 Voting Rights. During the Period of Restriction, Participants
holding Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares.
8.8 Dividends and Other Distributions. During the Period of
Restriction, Participants holding shares of Restricted Stock granted hereunder
shall be entitled to receive all dividends and other distributions paid with
respect to those shares while they are so held. If any such dividends or
distributions are paid in Shares, the Shares shall be subject to the same
restrictions on transferability as the Shares of Restricted Stock with respect
to which they were distributed.
8.9 Termination of Employment Due to Retirement. Unless otherwise
provided in the Agreement, in the event that a Participant terminates his
employment with the Company or one of its Subsidiaries because of normal
retirement (as defined in the rules of the Company in effect at the time), any
remaining Period of Restriction applicable to the Restricted Stock Shares
pursuant to Section 8.3 herein shall automatically terminate and, except as
otherwise provided in Section 8.4 herein the Shares of Restricted Stock shall
thereby be free of restrictions and freely transferable. Unless otherwise
provided in the Agreement, in the event that a Participant terminates his
employment with the Company because of early retirement (as defined in the rules
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of the Company in effect at the time), the Committee, in its sole discretion,
may waive the restrictions remaining on any or all Shares of Restricted Stock
pursuant to Section 8.3 herein and add such new restrictions to those Shares of
Restricted Stock as it deems appropriate.
8.10 Termination of Employment Due to Death or Disability. In the event
a Participant's employment is terminated because of death or disability during
the Period of Restriction, any remaining Period of Restriction applicable to the
Restricted Stock pursuant to Section 8.3 herein shall automatically terminate
and, except as otherwise provided in Section 8.4 herein the shares of Restricted
Stock shall thereby be free of restrictions and fully transferable.
8.11 Termination of Employment for Other Reasons. Unless otherwise
provided in the Agreement, in the event that a Participant terminates his
employment with the Company for any reason other than for death, disability, or
retirement, as set forth in Sections 8.9 and 8.10 herein, during the Period of
Restriction, then any shares of Restricted Stock still subject to restrictions
as of the date of such termination shall automatically be forfeited and returned
to the Company.
ARTICLE IX.
Performance Awards
9.1 Grant of Performance Awards. Subject to the terms and provisions of
the Plan, Performance Awards in the form of either Performance Units or
Performance Shares may be granted to Participants at any time and from time to
time as shall be determined by the Committee. The Committee shall have complete
discretion in determining the number of Performance Units or Performance Shares
granted to each Participant. Participants receiving Performance Awards are not
required to pay the Company therefor (except for applicable tax withholding)
other than the rendering of services.
9.2 Value of Performance Awards. The Committee shall set performance
goals in its discretion for each Participant who is granted a Performance Award.
The extent to which such performance goals are met will determine the value of
the Performance Unit or Performance Share to the Participant. Such performance
goals may be particular to a Participant, may relate to the performance of the
Subsidiary which employs him, or may be based on the performance of the Company
generally. The performance goals may be based on earnings or earnings growth,
return on assets, equity, capital employed or investment, regulatory compliance,
satisfactory internal or external audits, improvement of financial ratings,
achievement of balance sheet or income statement objectives, or any other
objective goals established by the Committee. The performance goals may be
absolute in their terms or measured against or in relationship to other
companies comparably, similarly or otherwise situated. The Committee shall
determine the time period during which the performance goals must be met
("Performance Period"), provided, however, that the Performance Period may not
be less than six months from the Award Date. The terms and conditions of each
Performance Award will be set forth in an Agreement.
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9.3 Settlement of Performance Awards. After a Performance Period has
ended, the holder of a Performance Unit or Performance Share shall be entitled
to receive the value thereof based on the degree to which the performance goals
established by the Committee and set forth in the Agreement have been satisfied.
9.4 Form of Payment. Payment of the amount to which a Participant shall
be entitled upon the settlement of Performance Award shall be made in cash,
Stock, or a combination thereof as determined by the Committee. Payment may be
made in a lump sum or installments as prescribed by the Committee.
9.5 Nontransferability. No Performance Units or Performance Shares
granted under the Plan may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, otherwise than by will or by the laws of descent and
distribution. All rights with respect to Performance Units and Performance
Shares granted to a Participant under the Plan shall not be exercisable until
the expiration of six months after the Award Date and thereafter during his
lifetime only by such Participant or his guardian or personal representative.
ARTICLE X.
Other Stock Unit Awards
10.1 Grant. The Committee is authorized to grant to Participants,
either alone or in addition to other Awards made under the Plan, Other Stock
Unit Awards to be issued at such times, subject to or based upon achievement of
such performance or other goals and on such other terms and conditions as the
Committee shall deem appropriate and specify in the Agreement relating thereto,
which need not be the same with respect to each Participant. Stock or other
securities granted pursuant to Other Stock Unit Awards may be issued for no cash
consideration or for such minimum consideration as may be required by applicable
law. Stock or other securities purchased pursuant to Other Stock Unit Awards may
be purchased for such purchase price as the Committee shall determine, which
price shall be not less than 50% of the Fair Market Value of the Stock or other
securities on the Award Date.
10.2 Sale and Transferability. Stock or other securities issued
pursuant to Other Stock Unit Awards may not be sold by a Participant until the
expiration of at least six months from the Award Date, except that such
limitation shall not apply in the case of death or disability of a Participant.
To the extent Other Stock Unit Awards are deemed to be derivative securities
within the meaning of Rule 16b-3 under the Exchange Act, a Participant's rights
with respect to such Awards shall not vest or be exercisable until the
expiration of at least six months from the Award Date. To the extent an Other
Stock Unit Award granted under the Plan is deemed to be a derivative security
within the meaning of Rule 16b-3 of the Exchange Act, it may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. All rights
with respect to such Other Stock Unit Awards granted to a Participant under the
Plan shall be exercisable during his lifetime only by such Participant or his
guardian or personal representative.
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ARTICLE XI.
Loans to Participants
The Committee is authorized to make loans to Participants, upon such
terms and conditions as deemed appropriate by the Committee, for the purpose of
enabling Participants to pay the Option Price for Shares or other purchase price
of Awards made under the Plan. Such loans may include amounts necessary to pay
Participant's tax liability in connection with an Award.
ARTICLE XII.
Change in Control
In the event of a Change in Control of the Company, the Committee, as
constituted before such Change in Control, in its sole discretion may, as to any
outstanding Award, either at the time the Award is made or any time thereafter,
take any one or more of the following actions: (i) provide for the acceleration
of any time periods relating to the exercise or realization of any such Award so
that such Award may be exercised or realized in full on or before a date
initially fixed by the Committee; (ii) provide for the purchase or settlement of
any such Award by the Company, upon a Participant's request, for an amount of
cash equal to the amount which could have been obtained upon the exercise of
such Award or realization of such Participant's rights had such Award been
currently exercisable or payable; (iii) make such adjustment to any such Award
then outstanding as the Committee deems appropriate to reflect such Change in
Control; or (iv) cause any such Award then outstanding to be assumed, or new
rights substituted therefor, by the acquiring or surviving corporation in such
Change in Control.
ARTICLE XIII.
Modification, Extension and Renewal of Awards
Subject to the terms and conditions and within the limitations of the
Plan, the Committee may modify, extend or renew outstanding Awards, or if
authorized by the Board, accept the surrender of outstanding Awards (to the
extent not yet exercised) granted under the Plan and authorize the granting of
new Awards pursuant to the Plan in substitution therefor, and the substituted
Awards may specify a longer term than the surrendered Awards or may contain any
other provisions that are authorized by the Plan, provided, however, that the
substituted Awards may not specify a lower exercise price than the surrendered
Awards. The Committee may also modify the terms of an outstanding Agreement.
Notwithstanding the foregoing, however, no modification of an Award, shall,
without the consent of the Participant, adversely affect the rights or
obligations of the Participant.
ARTICLE XIV.
Amendment, Modification and Termination of the Plan
14.1 Amendment, Modification and Termination. At any time and from
time to time, the Board may terminate, amend, or modify the Plan. Such amendment
or modification may be without shareholder approval except to the extent that
such approval is required by the Code,
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pursuant to the rules under Section 16 of the Exchange Act, by any national
securities exchange or system on which the Stock is then listed or reported, by
any regulatory body having jurisdiction with respect thereto or under any other
applicable laws, rules or regulations.
14.2 Awards Previously Granted. No termination, amendment or
modification of the Plan other than pursuant to Section 4.4 herein shall in any
manner adversely affect any Award theretofore granted under the Plan, without
the written consent of the Participant.
ARTICLE XV.
Withholding
15.1 Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, State and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any grant, exercise, or payment made under or as a result of this Plan.
15.2 Stock Withholding. With respect to withholding required upon the
exercise of Nonqualified Stock Options, or upon the lapse of restrictions on
Restricted Stock, or upon the occurrence of any other similar taxable event,
participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares of Stock having a Fair Market Value equal to the amount required to be
withheld. The value of the Shares to be withheld shall be based on Fair Market
Value of the Shares on the date that the amount of tax to be withheld is to be
determined. All elections shall be irrevocable and be made in writing, signed by
the Participant on forms approved by the Committee in advance of the day that
the transaction becomes taxable.
ARTICLE XVI.
Successors
All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise, of all or substantially all of the business
and/or assets of the Company.
ARTICLE XVII.
General
17.1 Requirements of Law. The granting of Awards and the issuance of
Shares of Stock under this Plan shall be subject to all applicable laws, rules,
and regulations, and to such approvals by any governmental agencies or SROs as
may be required.
17.2 Effect of Plan. The establishment of the Plan shall not confer
upon any Key Employee any legal or equitable right against the Company, a
Subsidiary or the Committee, except as expressly provided in the Plan. The Plan
does not constitute an inducement or
14
<PAGE>
consideration for the employment of any Key Employee, nor is it a contract
between the Company or any of its Subsidiaries and any Key Employee.
Participation in the Plan shall not give any Key Employee any right to be
retained in the service of the Company or any of its Subsidiaries.
17.3 Creditors. The interests of any Participant under the Plan or any
Agreement are not subject to the claims of creditors and may not, in any way, be
assigned, alienated or encumbered.
17.4 Governing Law. The Plan, and all Agreements hereunder, shall be
governed, construed and administered in accordance with and governed by the laws
of the Commonwealth of Virginia and the intention of the Company is that ISOs
granted under the Plan qualify as such under Section 422A of the Code.
17.5 Severability. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
15
<PAGE>
[CADMUS LOGO]
<PAGE>
CADMUS COMMUNICATIONS CORPORATION
Proxy Solicited on Behalf of the Board of Directors
The undersigned hereby appoints C. Stephenson Gillispie, Jr. and Bruce V.
Thomas, jointly and severally, proxies, with full power to act alone, and with
full power of substitution, to represent the undersigned and to vote, as
designated below and upon any and all other matters which may properly be
brought before such meeting, all shares of Common Stock which the undersigned
would be entitled to vote at the Annual Meeting of Shareholders of Cadmus
Communications Corporation to be held on November 13, 1996, or any adjournments
thereof.
1. ELECTION OF THREE CLASS I DIRECTORS TO SERVE UNTIL THE 1999 ANNUAL MEETING OF
SHAREHOLDERS.
/ / FOR all nominees listed / / WITHHOLD AUTHORITY to vote
(except as written on the line for all nominees listed below
below)
Nominees: Jeanne M. Liedtka, John D. Munford, II and Wallace Stettinius
(INSTRUCTION: To withhold authority to vote for any individual nominee listed
above, write that nominee's name on the space provided below.)
2. Approval of the proposal to amend the 1990 Long Term Incentive Stock Plan as
more particularly described in the accompanying Proxy Statement.
/ / FOR / / AGAINST / / ABSTAIN
3. Ratification of the designation of Arthur Andersen LLP as independent public
accountants for the Corporation and its subsidiaries for the current fiscal
year.
/ / FOR / / AGAINST / / ABSTAIN
(Continued, and to be signed, on reverse side)
<PAGE>
4. In their discretion, the proxies are authorized to vote upon such other
business and matters incident to the conduct of the meeting as may properly come
before the meeting or any adjournments thereof.
Unless otherwise specified in the squares provided, the undersigned's vote
will be cast for items 1, 2 and 3. If, at or before the time of the meeting, any
of the nominees listed above has become unavailable for any reason, the proxies
have the discretion to vote for a substitute nominee or nominees. This proxy may
be revoked at any time prior to its exercise.
________________________________
Signature
________________________________
Signature
Dated:__________________ , 1996
(In signing as Attorney,
Administrator, Executor,
Guardian or Trustee, please add
your title as such.)
