<PAGE> 1
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:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
PAXAR CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 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> 2
PAXAR CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 25, 1995
To the Shareholders of PAXAR Corporation:
Notice is hereby given that the Annual Meeting of Shareholders of PAXAR
Corporation, a New York corporation, will be held on April 25, 1995, at the
Intercontinental Hotel, 111 East 48th Street, New York, New York 10017, at 9:30
a.m., for the following purposes:
1. To elect four Directors of the Company to serve for the ensuing two
years and until their successors are duly elected and qualified;
2. To ratify the appointment of Arthur Andersen LLP, as the Company's
independent public accountants for the year ended December 31, 1995; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment or adjournments thereof.
Only Shareholders of record at the close of business on March 24, 1995, are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
By Order of the Board of Directors,
JACK PLAXE,
Secretary
Pearl River, New York
March 30, 1995
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE PROMPTLY COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS
OF THE COMPANY, AND RETURN IT TO THE COMPANY. THE PROXY MAY BE REVOKED AT ANY
TIME BEFORE IT IS VOTED, AND SHAREHOLDERS EXECUTING PROXIES MAY ATTEND THE
MEETING AND VOTE IN PERSON SHOULD THEY SO DESIRE.
<PAGE> 3
PAXAR CORPORATION
275 NORTH MIDDLETOWN ROAD
PEARL RIVER, NEW YORK 10965
-------------------------
PROXY STATEMENT
-------------------------
The Board of Directors of PAXAR Corporation (the "Company") presents this
Proxy Statement to all Shareholders and solicits their proxies for the Annual
Meeting of Shareholders to be held on April 25, 1995. All proxies duly executed
and received will be voted on all matters presented at the Annual Meeting in
accordance with the instructions given by such proxies. In the absence of
specific instructions, proxies so received will be voted for the named nominees
for election to the Company's Board of Directors and for the ratification of
Arthur Andersen LLP, as the Company's independent public accountants. The Board
of Directors does not anticipate that any of its nominees will be unavailable
for election and does not know of any other matters that may be brought before
the Annual Meeting. In the event that any other matter should come before the
Annual Meeting or that any nominee is not available for election, the persons
named in the enclosed proxy will have discretionary authority to vote all
proxies not marked to the contrary with respect to such matter in accordance
with their best judgment. The proxy may be revoked at any time before being
voted. The Company will pay the entire expense of soliciting these proxies,
which solicitation will be by use of the mails. This Proxy Statement is being
mailed on or about March 30, 1995.
The total number of shares of Common Stock of the Company outstanding as of
March 23, 1995 was 17,635,967. The Common Stock is the only outstanding class of
securities of the Company entitled to vote. Each share has one vote. Only
Shareholders of record as of the close of business on March 24, 1995 will be
entitled to vote at the Annual Meeting or any adjournment or adjournments
thereof.
The affirmative vote by holders of a majority of the shares of Common Stock
represented at the Annual Meeting is required for the election of Directors and
for the ratification of Arthur Andersen LLP, as the Company's independent public
accountants. Shares represented by proxies which are marked "abstain" with
respect to the ratification of the independent public accountants and proxies
which are marked to deny discretionary authority on all other matters will only
be counted for determining the presence of a quorum. Votes withheld in
connection with the election of one or more nominees for Director will not be
counted as votes cast for such individuals. In addition, where brokers are
prohibited from exercising discretionary authority for beneficial owners who
have not provided voting instructions (commonly referred to as "broker
non-votes"), those shares will not be included in the vote totals.
A list of Shareholders entitled to vote at the Annual Meeting will be
available at the Company's office, 275 North Middletown Road, Pearl River, New
York, for a period of ten (10) days prior to the Annual Meeting for examination
by any Shareholder.
<PAGE> 4
ACTIONS TO BE TAKEN AT THE ANNUAL MEETING
I. ELECTION OF DIRECTORS
The Directors to be elected at the Annual Meeting will serve for a term of
two years and until their successors are duly elected and qualified. Proxies not
marked to the contrary will be voted "FOR" the election of the following four
persons, all of whom are incumbent Directors who were previously elected by the
Shareholders. The terms of office of the following incumbent Directors expire in
1997:
<TABLE>
<CAPTION>
YEAR SHARES OF COMMON STOCK
FIRST OWNED BENEFICIALLY AT
BECAME A MARCH 22, 1995 AND
NAME AND AGE PRINCIPAL OCCUPATION DIRECTOR PERCENTAGE OF CLASS(1)
- ---------------------------- ---------------------------- -------- ----------------------
<S> <C> <C> <C>
Victor Hershaft (52)........ President and Chief 1989 707,207(2)(4.0%)
Operating Officer since
September 1994; President
since September 1992;
Executive Vice President
from February 1989 until
September 1992; President
of VHY Sales and Marketing
Corp., a manufacturer's
representative, for more
than the past five years
prior to February 1989.
Jack Becker (59)............ Practicing attorney in New 1968 84,433(3)(4)(5)
York State since 1960 and a
principal of Snow Becker
Krauss P.C., general
counsel to the Company.
Such firm has been
retained by the Company
for more than the past
three years and will be
retained by the Company
for the current fiscal
year.
Robert Laidlaw (67)......... Chairman Emeritus of Coats & 1987 18,603(4)(5)
Clark since March 1990;
Chairman of the Board of
Coats & Clark from 1966
until March 1990;
President of Coats & Clark
from 1964 to 1986; and a
Director of Milliken &
Company.
David E. McKinney (60)...... Self-employed; previously 1992 14,062(4)(5)
employed by International
Business Machines
Corporation (IBM) in
various capacities from
1956 until 1992, includ-
ing Senior Vice President,
Member, Corporate Manage-
ment Board (1991-2). Mem-
ber of the Board of
Directors of General
Re-Insurance; Organi-
zation Resource
Counselors; International
Executive Services Corps.;
and New York Philharmonic.
</TABLE>
2
<PAGE> 5
The terms of the following five incumbent Directors do not expire until
1996 and, accordingly, no vote is being taken on their re-election at this
Annual Meeting.
<TABLE>
<CAPTION>
YEAR SHARES OF COMMON STOCK
FIRST OWNED BENEFICIALLY AT
BECAME A MARCH 22, 1995 AND
NAME AND AGE PRINCIPAL OCCUPATION DIRECTOR PERCENTAGE OF CLASS(1)
- ---------------------------- ---------------------------- -------- ----------------------
<S> <C> <C> <C>
Arthur Hershaft (57)........ Chairman of the Board of 1961 2,830,267(6)(15.9%)
Directors since 1986, and
Chief Executive Officer of
the Company for more than
the past five years.
Sidney Merians (68)......... President of Capital 1986 103,975(4)(5)(7)
Investment Associates since
1986;Chairman of the Board
of Directors, Chief
Executive Officer and
President of Talon, Inc.
for more than five years
prior to 1986; and a
Director of Hygrade
Furniture Transport, Inc.
Thomas R. Loemker (64)...... Vice Chairman of the Board 1987 230,023(8)(1.3%)
of Directors from September
1992 until September 1994;
President and Chief
Operating Officer of the
Company from 1987 until
March 31, 1991; and
President of Pitney Bowes
Business Systems from 1985
to 1987.
Robert T. Puopolo (36)...... Associate Director, 1992 17,917(4)(5)(9)
Oppenheimer & Co., Inc.
since October 1993.
Associate Director, Cor-
porate Finance Department,
Bear, Stearns & Co. Inc.
from 1987 until September
1993. Member of the Board
of Directors of Eidetics,
Incorporated; and Research
Environmental Industries,
Inc.
Walter W. Williams (60)..... Self-employed; previously 1993 9,375(4)(5)
employed by Rubbermaid Inc.
in various capacities from
1987 until 1991, including
President and Chief
Executive Officer.
Employed by General
Electric Company from
1956-1987 in various
capacities. Member of the
Board of Directors of the
Stanley Works.
</TABLE>
3
<PAGE> 6
The business background of any Executive Officer of the Company, to the
extent not otherwise set forth herein, is described below.
<TABLE>
<S> <C>
Jack R. Plaxe (53).......... Vice President and Chief
Financial Officer of the
Company since August 1993.
Prior thereto, employed in
various capacities with
AmBase Corporation,
including Chief Financial
Officer and Executive Vice
President.
All Officers and Directors
as a Group (consisting of
10 persons).... 4,031,487(22.6%)(10)
</TABLE>
- ---------------
Arthur Hershaft and Victor Hershaft are first cousins.
(1) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them. A person is deemed to be the
beneficial owner of securities that can be acquired by such person within
60 days from the date hereof upon the exercise of options. Each beneficial
owner's percentage ownership is determined by assuming that options that
are held by such person (but not those held by any other person) and which
are exercisable within 60 days from the date hereof have been exercised.
(2) Includes 38,564 shares issuable upon the exercise of outstanding stock
options granted to Mr. Hershaft. In addition, includes 102,143 shares owned
of record by Mr. Hershaft's wife, and as to which Mr. Hershaft disclaims
beneficial ownership; and 75,041 shares held by Victor Hershaft as
custodian for his children, and as to which shares Mr. Hershaft disclaims
beneficial ownership. Does not include options to purchase 12,500 shares
which are not currently exercisable.
(3) Includes 51,238 shares owned of record by Mr. Becker's wife, and as to
which shares Mr. Becker disclaims beneficial ownership.
(4) Includes 9,375 options to acquire a like number of shares of Common Stock
at an exercise price of $11.00 per share.
(5) Represents less than 1% of the outstanding Common Stock of the Company.
(6) Includes 55,768 shares issuable upon the exercise of outstanding stock
options. In addition, includes 50,000 shares of Common Stock owned of
record by Mr. Hershaft's wife and with respect to such shares, Mr. Hershaft
disclaims beneficial ownership. Also includes 380,322 shares held by Arthur
Hershaft in trust for the benefit of his children, with respect to such
shares, Mr. Hershaft disclaims beneficial ownership. In addition, includes
87,812 shares of Common Stock owned of record by the Arthur and Carol
Hershaft Foundation, with respect to such shares Mr. Hershaft disclaims
beneficial ownership. Does not include 32,222 shares which may be acquired
upon exercise of options which are not currently exercisable.
(7) Includes 3,457 shares owned of record by Mr. Merians' wife, and as to which
shares Mr. Merians disclaims beneficial ownership.
(8) Includes 50,000 shares of Common Stock owned of record by the Thomas R.
Loemker Charitable Remainder Trust, as to which Mr. Loemker disclaims
beneficial ownership.
(9) Includes 1,220 shares owned of record by Mr. Puopolo's wife, and as to
which shares Mr. Puopolo disclaims beneficial ownership.
(10) Includes shares issuable upon exercise of outstanding stock options, as
described in the above footnotes. In addition, includes options
beneficially owned by Jack Plaxe, the Company's Chief Financial Officer and
Secretary. Excludes shares beneficially owned by Michael DeSisti and Earle
H. Grossman, who are not standing for re-election to the Company's Board of
Directors.
4
<PAGE> 7
II. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has been the independent public accountants of the
Company since November 1979. They have no financial interest, either direct or
indirect, in the Company. Selection of independent public accountants is made by
the Audit Committee of the Company's Board of Directors and is approved by the
entire Board of Directors, subject to Shareholder ratification. A representative
of Arthur Andersen LLP is expected to attend the Annual Meeting and to have an
opportunity to make a statement or respond to appropriate questions from
Shareholders.
Management recommends voting "FOR" the ratification of the appointment of
the independent public accountants.
MEETINGS OF THE BOARD OF DIRECTORS AND
INFORMATION REGARDING COMMITTEES
The Board of Directors has three standing committees, an Audit Committee, a
Compensation Committee and an Information Systems Committee. The Board of
Directors does not have a Nominating Committee.
The Audit Committee is composed of Sidney Merians (Chairman), Earle
Grossman, Michael DeSisti and Robert Puopolo. Messrs. Grossman and DeSisti are
not standing for re-election as Directors. Mr. Loemker will join the Audit
Committee effective April 25, 1995. The duties of the Audit Committee include
recommending the engagement of independent auditors, reviewing and considering
actions of Management in matters relating to audit functions, reviewing with
independent auditors the scope and results of its audit engagement, reviewing
reports from various regulatory authorities, reviewing the system of internal
controls and procedures of the Company, and reviewing the effectiveness of
procedures intended to prevent violations of law and regulation. The Audit
Committee held two meetings in 1994.
The Compensation Committee is composed of David McKinney (Chairman), Robert
Laidlaw and Walter Williams. Among the duties of this Committee are to recommend
to the Board remuneration for officers of the Company, to determine the number
and issuance of options pursuant to the Company's 1990 Employee Stock Option
Plan and to recommend the establishment of and to monitor a compensation and
incentive program for all executives of the Company. The Compensation Committee
held three meetings in 1994.
The Information Systems Committee is composed of Walter Williams
(Chairman), David McKinney and Thomas Loemker. The Committee was formed in
January 1995 to monitor the development and implementation of advanced,
integrated electronic data systems throughout the Company and to ensure that
such systems support the Company's strategic objectives.
The Board of Directors held four meetings in 1994. All Directors attended
at least 75% of the total number of Board meetings and of the meetings of
Committees on which each Director served.
The Company has also adopted a policy that no member of the Board of
Directors who attains the age of seventy years shall stand for re-election to
the Board of Directors.
5
<PAGE> 8
PRINCIPAL SHAREHOLDERS
The following table sets forth as of March 22, 1995 information with
respect to those persons known to the Company to be beneficial owners of more
than 5% of the Company's Common Stock.
<TABLE>
<CAPTION>
SHARES PERCENTAGE
NAME AND ADDRESS BENEFICIALLY OWNED OF CLASS
------------------------------------------------- ------------------ ----------
<S> <C> <C>
Arthur Hershaft 2,830,267(1) 15.9%
275 North Middletown Road
Pearl River, NY 10965
The Prudential Insurance
Company of America 1,718,435(2) 9.7%
Prudential Plaza
Newark, NJ 07102
</TABLE>
- ---------------
(1) Includes 55,768 shares issuable upon the exercise of outstanding stock
options. In addition, includes 50,000 shares of Common Stock owned of record
by Mr. Hershaft's wife with respect to which Mr. Hershaft disclaims
beneficial ownership. Also includes 380,322 shares held by Arthur Hershaft
in trust for the benefit of his children, with respect to such shares Mr.
Hershaft disclaims beneficial ownership. In addition, includes 87,812 shares
of Common Stock owned of record by the Arthur and Carol Hershaft Foundation,
with respect to such shares Mr. Hershaft disclaims beneficial ownership.
Does not include 32,222 shares which may be acquired upon exercise of
options which are not currently exercisable.
(2) Represents shares of Common Stock held for the benefit of The Prudential
Insurance Company of America's clients.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the aggregate compensation paid by the
Company to the Chief Executive Officer and the three other Executive Officers of
the Company during the last three fiscal years:
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------------------------
PAYOUTS
---------
ANNUAL COMPENSATION AWARDS
-------------------------------------------- (H) ------------
(E) (F) LONG-TERM
OTHER RESTRICTED (G) INCENTIVE (I)
(A) ANNUAL STOCK OPTIONS/ PLAN ALL
NAME AND (B) (C) (D) COMPENSATION AWARD(S) SARS PAYOUTS OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) ($) (#)(1) ($) COMPENSATION
- -------------------------------- ---- --------- -------- ------------ ---------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Arthur Hershaft................. 1994 $ 332,235 $383,731 -- -- 0 -- --
Chief Executive Officer and 1993 $ 321,000 $401,250 -- -- 31,250 -- --
Chairman of the Board of 1992 $ 312,903 $383,750 -- -- 9,766 -- --
Directors
Victor Hershaft................. 1994 $ 288,765 $266,819 -- -- 0 -- --
President and Director 1993 $ 279,000 $279,000 -- -- 12,500 -- --
1992 $ 272,134 $267,000 -- -- 6,836 -- --
Thomas Loemker.................. 1994 $ 134,615 $100,000 -- -- -- -- --
Vice Chairman of the Board 1993 $ 200,000 $ 0 -- -- -- -- --
1992 $ 57,692(2) $ 0 -- -- -- -- --
Jack Plaxe...................... 1994 $ 165,000 $127,050 -- -- 0 -- --
Chief Financial Officer and 1993 $ 66,635(3) $ 0 -- -- 15,625 -- --
Secretary
</TABLE>
- ---------------
(1) Represents incentive stock options granted under the Company's 1990 Employee
Stock Option Plan, as adjusted for stock splits effectuated in the form of
stock dividends and stock dividends declared and issued subsequent to the
grant of such options.
(2) Includes compensation paid from September 21, 1992 at the rate of $200,000
per annum, and excludes consulting fees of $13,707 paid to Mr. Loemker from
January 1, 1992 through September 21, 1992, the date Mr. Loemker became Vice
Chairman of the Board of Directors of the Company.
(3) Includes compensation paid from August 8, 1993 at the rate of $165,000 per
annum.
6
<PAGE> 9
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION SAR VALUES
<TABLE>
<CAPTION>
(E)
(D) VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
(B) OPTIONS/SARS OPTIONS/SARS
SHARES (C) AT FY-END (#) AT FY-END ($)
(A) ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#)(1) REALIZED UNEXERCISABLE UNEXERCISABLE
- -------------------------------------- -------------- -------- -------------- --------------
<S> <C> <C> <C> <C>
Arthur Hershaft....................... 0 0 46,841/16,149 $96,780/0
Victor Hershaft....................... 0 0 104,408/0 $615,043/0
Thomas Loemker........................ 0 0 0/0 $ 0/0
Jack Plaxe............................ 0 0 15,625/0 $2,500/0
</TABLE>
- ---------------
(1) As adjusted for stock splits effectuated in the form of stock dividends and
stock dividends declared and issued subsequent to the date of grant of such
options.
COMPENSATION OF DIRECTORS
The Company pays each of its Directors, who are not employees of the
Company, in their capacity as Directors, $12,000 per annum and the Company
grants each such Director options to purchase 5,000 shares upon becoming a
Director and options to purchase an additional 2,500 shares per year. In
addition, each such Director is entitled to receive $1,000 for attendance at
meetings of the Board of Directors and $600 for attendance at Committee
meetings. Committee chairmen receive $1,000 per annum in such capacity.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENT
See "Certain Transactions" for a description of employment contracts
between the Company and Arthur Hershaft and Victor Hershaft, and certain
compensation that may be payable to Arthur Hershaft and Victor Hershaft upon a
change in control of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee was an officer or employee of the
Company or of any of its subsidiaries during the prior year or was formerly an
officer of the Company or of any of its subsidiaries. None of the Executive
Officers of the Company has served on the Board of Directors or Compensation
Committee during the last fiscal year of any other entity, any of whose officers
served either on the Board of Directors of the Company or on the Compensation
Committee of the Company.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
EXECUTIVE COMPENSATION POLICY
The policy and objectives of the Compensation Committee of the Board of
Directors with respect to executive compensation are to improve shareholder
valuation by enhancing corporate performance through attracting and retaining
key executive personnel. The philosophy of the Committee is to base executive
compensation on short and long term performance criteria, thereby providing the
motivation and incentive for outstanding performance by executive officers.
The following statements summarize the policies that guide the Committee's
executive compensation decisions. The Company's executive compensation program
is designed to:
- Create an inducement and motivation for executive officers to sustain
Company growth and increase market share.
- Align the financial interests of the executive officers with those of the
Company's shareholders.
- Reward above-average returns to shareholders.
- Induce corporate loyalty in both the short and long term.
7
<PAGE> 10
The Company's executive compensation program has three major components:
base salaries, annual incentive, and long-term incentives.
BASE SALARIES
The Company's executive officers receive base salaries as compensation for
their job performance, abilities, knowledge, and experience. With respect to
Arthur Hershaft, the Chief Executive Officer and Chairman of the Board of
Directors of the Company, the base salary is determined pursuant to the terms of
his employment contract with the Company. Apart from any contractual
commitments, the base salaries paid to the executive officers are intended to be
maintained at competitive levels. This reflects the Committee's desire to place
more emphasis on the incentive portion of executive compensation, and thereby
correlating compensation to performance. The Committee reviews base salaries
annually and determines increases based upon an executive officer's contribution
to corporate performance and competitive market conditions.
In accordance with the terms of Arthur Hershaft's employment contract,
Arthur Hershaft is entitled to an increase every year equal to $10,000, provided
the Company's net profits after tax during the prior fiscal year are not less
than $1,000,000, plus an inflation factor equal to the Consumer Price Index not
to exceed 5%. Notwithstanding the foregoing, and subject to agreement by Arthur
Hershaft, the Committee has in certain instances recommended that the rate of
increase provided pursuant to the terms of the employment agreement be reduced
in a given year. Accordingly, the increase in compensation afforded Arthur
Hershaft for the 1994 calendar year was less than what was required under his
employment agreement with the Company.
ANNUAL INCENTIVE COMPENSATION
The Committee has adopted an annual incentive compensation program based
upon corporate performance criteria to augment the base salaries received by
executive officers. Under the incentive compensation program, performance is
measured as a function of the Company's improvement in earnings per share from
year to year. The Committee has established "target" bonus awards for each
executive officer which will be paid if the growth in earnings per share is 15%.
No bonus will be paid unless the growth in earnings per share is at least 5%.
The maximum bonus award of 200% of target is paid for growth in earnings per
share of 30% or more. The "target" bonus award with respect to Arthur Hershaft
is 75% of base salary.
LONG-TERM INCENTIVES
The Company has also established a Stock Option Plan, pursuant to which
stock options are awarded by the Committee periodically to executive officers.
The Stock Option Plan is designed to encourage executives to acquire an equity
interest in the Company, and thereby aligning their long-term financial
interests with those of the shareholders. In January 1995, the Committee
authorized a grant to Arthur Hershaft of 25,000 options to purchase a like
number of shares of the Company's Common Stock at an exercise price of $11.00
per share (110% of the closing market price on the date of grant). The Committee
believes this grant to be consistent with its compensation policies by
encouraging performance which contributes to the overall profitability of the
Company and which increases the price of the Company's Common Stock.
Submitted March 15, 1995 by the members of the Compensation Committee.
David McKinney, Chairman
Robert Laidlaw
Walter Williams
PERFORMANCE GRAPH
The following graph compares on a cumulative basis the yearly percentage
change, assuming dividend reinvestment, over the last five fiscal years in (a)
the total shareholder return on the Company's Common Stock with (b) the total
return on the Standard & Poor's 500 Composite Index ("S&P 500") and (c) the
total return on a selected peer group index (the "1994 Peer Group"). The S&P 500
has been selected as the
8
<PAGE> 11
required broad entity market index. The 1994 Peer Group is an index weighted by
the relative market capitalization of the following ten companies which were
selected for being in related industries to the Company's (product
identification, bar-code, apparel, textile, and printing), for having revenues
between $50 and $700 million in their most recently reported fiscal years and
for having 5 year compound annual revenue growth of at least 10%. The ten are:
W.H. Brady Co.; Cadmus Communications Corp.; Checkpoint Systems, Inc.; Merrill
Corporation; Sealright Co., Inc.; Sensormatic Electronics Corp.; Shorewood
Packaging Corporation; Symbol Technologies Inc.; Telxon Corp.; and Texfi
Industries Inc.
The exhibit below assumes that $100 had been invested in each of PAXAR
Corporation, the S&P 500, and the 10-member 1994 Peer Group on December 31,
1989.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG
PAXAR CORPORATION, S&P 500 INDEX & PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD PAXAR S&P 500 94 PEER GROUP
(FISCAL YEAR COVERED) CORPORATION INDEX INDEX
<S> <C> <C> <C>
1990 64.06 96.88 88.21
1991 153.18 126.42 146.39
1992 422.18 136.08 141.25
1993 411.44 149.80 181.91
1994 340.03 151.78 218.33
</TABLE>
The immediately preceding sections entitled "Report of the Compensation
Committee of the Board of Directors on Executive Compensation" and "Performance
Graph" do not constitute soliciting material for purposes of Rule 14a-9 of the
Securities and Exchange Commission (the "Commission"), will not be deemed to
have been filed with the Commission for purposes of Section 18 of the Securities
Exchange Act of 1934, and are not to be incorporated by reference into any other
filing made by the Company with the Commission.
CERTAIN TRANSACTIONS
The Company leases one plant located in Sayre, Pennsylvania from certain
present and former principals of the Company and certain of their heirs at an
annual rental of $108,000. The Company also occupies 10,000 square feet of
office space in a Pearl River, New York building owned by a partnership, the
partners of which are trusts for the benefit of the grandchildren of the former
Chairman of the Company who is now deceased, on a month-to-month basis at a
rental of $8,333. Management believes that the terms of these transactions are
no less favorable to the Company than the terms obtainable from non-affiliated
persons.
On December 16, 1986, Arthur Hershaft and the Company entered into an
employment agreement. The agreement provides for an initial term of five years
and is renewable, at the option of Mr. Hershaft, for an
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additional five years. In 1991, Mr. Hershaft exercised his option to renew his
agreement for an additional five years. Thereafter, the contract is
automatically renewed annually unless either the Company or Mr. Hershaft elect
to terminate it. Mr. Hershaft received a salary of $240,000 per annum for the
initial year of the agreement and, thereafter, received and will receive annual
increases equal to the percentage increase indicated by the Consumer Price Index
not to exceed five percent per annum, plus $10,000, provided that the Company
has net profits after taxes of not less than $1,000,000 ("fixed compensation").
Mr. Hershaft's fixed compensation for the fiscal year ended December 31, 1995
will be $343,863. Mr. Hershaft will also be a participant in the Company's
incentive compensation programs and he will be entitled to receive other fringe
benefits available to executives employed by the Company. The Company shall also
maintain a $1,000,000 life insurance policy on Mr. Hershaft's life, payable to
beneficiaries named by Mr. Hershaft, provided that the Company shall not pay
premiums for such policy in excess of $10,000 per annum. In the event of a
permanent disability, Mr. Hershaft will be entitled to $150,000 per annum
(inclusive of coverage provided by Social Security) pursuant to the proceeds of
the disability insurance policy maintained by the Company on Mr. Hershaft's
behalf, provided that the premiums for such disability insurance do not exceed
$15,000 per annum. Mr. Hershaft may resign as an active employee and become a
consultant to the Company following the conclusion of the term of the employment
agreement. In the event Mr. Hershaft becomes a consultant, he will be entitled
to receive annual compensation of $75,000 for each year in which he acts as a
consultant to the Company prior to his 65th birthday and annual compensation of
$150,000 for each year in which he acts as a consultant to the Company following
his 65th birthday. The aggregate length of Mr. Hershaft's consulting term is to
be 10 years. In the event there is a change in control of the Company which Mr.
Hershaft and a majority of the Corporation's Board of Directors oppose, Mr.
Hershaft will be entitled, upon such change of control, to terminate his
employment and receive 2.9 times his fixed compensation as defined in the
employment agreement. However, if Mr. Hershaft opposes a change in control, but
the majority of the Board of Directors vote in favor of such change, then Mr.
Hershaft may terminate his employment and receive 2.5 times his fixed
compensation. The employment agreement also contains various restrictive
covenants limiting Mr. Hershaft's ability to enter into competition with the
Company.
Arthur Hershaft, Victor Hershaft, Fred Hershaft and other family members
are parties to a Shareholders Agreement, as amended, whereby they each granted
the others rights of first refusal on future sales of Common Stock of the
Company owned by them so long as such persons own any shares.
On February 13, 1989, Victor Hershaft and the Company entered into an
employment agreement. The agreement provides for an initial term of six years
and is renewable for an additional four years unless either party elects to
terminate the agreement. Thereafter, the contract is automatically renewable
annually unless either the Company or Mr. Hershaft elects to terminate it. Mr.
Hershaft received a salary of $240,000 per annum for the initial year of the
agreement and, thereafter received and will receive annual increases equal to
the greater of (i) the average of the percentage increase of fixed compensation
of the three most senior executive officers of the Company granted during the
year then ended and (ii) five (5%) percent of Mr. Hershaft's fixed compensation.
Mr. Hershaft's fixed compensation for the fiscal year ending December 31, 1995
will be $298,872. Mr. Hershaft will also be a participant in the Company's
incentive compensation program and he will be entitled to receive other fringe
benefits available to executives employed by the Company. The Company shall also
maintain a $200,000 life insurance policy on Mr. Hershaft's life, payable to
beneficiaries named by Mr. Hershaft. In the event of a permanent disability, Mr.
Hershaft will be entitled to $150,000 per annum (inclusive of coverage provided
by Social Security) pursuant to the proceeds of the disability insurance policy
maintained by the Company on Mr. Hershaft's behalf, provided that the premiums
for such disability insurance do not exceed $7,500 per annum. Mr. Hershaft may
resign as an active employee and become a manufacturer's representative for the
Company at the expiration of the initial term or any renewed term. In the event
there is a change in control of the Company which Mr. Victor Hershaft, Mr.
Arthur Hershaft and a majority of the Corporation's Board of Directors oppose,
Mr. Victor Hershaft will be entitled, upon such change of control, to terminate
his employment and receive 2.9 times his fixed compensation as defined in the
employment agreement. However, if Mr. Victor Hershaft and Mr. Arthur Hershaft
oppose a change in control, but the majority of the Board of Directors vote in
favor of such change, then Mr. Victor Hershaft upon such change in control may
terminate his employment and receive 2.5 times
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his fixed compensation. The employment agreement also contains various
restrictive covenants limiting Mr. Victor Hershaft's ability to enter into
competition with the Company.
The law firm of Snow Becker Krauss P.C., of which Jack Becker, a Director
of the Company is a principal, serves as general counsel to the Company.
The Company has procured Directors and Officers' liability insurance from
Royal Indemnity Company under a contract dated March 1, 1995 at an aggregate
annual premium of $43,000. The policy insures the Company and the Directors and
Officers of the Company in accordance with the indemnification provisions of the
New York Business Corporation Law.
In December 1989, Arthur Hershaft and the Company entered into an
agreement, as amended, providing for restrictions on the transfer by Mr.
Hershaft, or by his relatives or legal representatives, of the issued and
outstanding Common Stock of the Company held by Mr. Hershaft. The agreement
prohibits Mr. Hershaft from selling or otherwise encumbering or disposing of his
Common Stock unless he first offers the shares in writing for sale to the
Company at a price equal to the market value of the shares, or, if Mr. Hershaft
receives an offer from a third party to purchase all or a portion of his Common
Stock, at a price per share equal to the price offered by the third party. The
agreement permits Mr. Hershaft to gift up to 100,000 shares per annum and to
encumber and/or pledge up to an additional 75,000 per annum during the term of
the agreement. In addition, the agreement permits Mr. Hershaft to transfer
Common Stock to his wife, children, grandchildren or a charitable trust
maintained by him, provided that any such permitted transferee enters into an
agreement with the Company on the same terms as Mr. Hershaft's December 1989
agreement. The agreement also allows Mr. Hershaft the following rights: (i) to
sell Common Stock on the open market in quantities permissible under Rule 144
promulgated by the Securities and Exchange Commission; and (ii) to sell Common
Stock pursuant to a merger or other corporate reorganization approved by the
Company's Board of Directors, provided that the same transaction is offered to
at least the holders of a majority of the Company's then outstanding shares of
Common Stock.
In the event of the death of Mr. Hershaft, the December 1989 agreement, as
amended, also requires the Company to purchase and the executor or administrator
of Mr. Hershaft's estate to sell (i) all of the shares of Common Stock owned by
the estate, if the total market value of such shares shall be $5,000,000 or
less, or (ii) the number of shares of a market value of $5,000,000, if the total
valuation of all of the Common Stock owned by Mr. Hershaft's estate shall be
more than $5,000,000. Under the agreement, the Company agreed to procure life
insurance on the life of Mr. Hershaft in the aggregate amount of $5,000,000 to
provide funds necessary to purchase Common Stock, as required upon his death. If
less than all of the Common Stock held by Mr. Hershaft's estate is sold to the
Company upon his death, the Company shall have the right, once during each
twelve-month period after closing of the purchase of Common Stock for the
estate, to purchase additional Common Stock for the estate in amounts equal to
the lesser of up to 30,000 shares or such number of shares as shall have an
aggregate market value of $350,000. The beneficiaries of Mr. Hershaft's estate
will be bound by the terms of the agreement.
On January 26, 1995, the Company granted 12,500 incentive stock options
exercisable at $10.00 per share to Victor Hershaft, a Director and President of
the Company, and 12,000 to Jack Plaxe, the Company's Vice President and Chief
Financial Officer. Twenty-five percent of such options became exercisable on the
first anniversary of the date such options were granted. Thereafter an
additional twenty-five percent becomes exercisable on each succeeding
anniversary. Once vested, the options remain exercisable until January 25, 2005.
On January 26, 1995, the Company granted 25,000 incentive stock options to
Arthur Hershaft, the Company's Chief Executive Officer. Such options are
exercisable at a price of $11.00 per share for a period of five years.
On April 27, 1994, the Company granted an aggregate of 75,000 options
(9,375 each) to the following of the Company's Directors: David McKinney, Robert
Laidlaw, Jack Becker, Sidney Merians, Walter Williams, Robert Puopolo, Michael
DeSisti and Earle Grossman. Such options are exercisable at $11.00 per share for
a
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period of ten years and were granted in connection with service on the Company's
Board of Directors. See "Executive Compensation -- Compensation of Directors."
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Officers and Directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, Directors and persons who own more than ten-percent of the Company's
equity securities are required by regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the period from
January 1, 1994 through December 31, 1994, all filing requirements applicable to
its officers, directors, and greater than ten-percent beneficial owners were
complied with.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company that are intended to be presented
at the Company's next Annual Meeting must be received by the Company no later
than November 30, 1995 in order for them to be included in the proxy statement
and form of proxy relating to that meeting.
By Order of the Board of Directors
Jack Plaxe,
Secretary
Pearl River, New York
March 30, 1995
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/X/ Please mark
your votes
as this
------------ ------------
COMMON ESPP
If you wish to withhold authority to vote for any indicated nominee, strike a
line through that nominee's name in the list below.
1. ELECTION OF Nominees: Victor Hershaft
DIRECTORS / / FOR / / WITHHELD Jack Becker
Robert Laidlaw
David E. McKinney
For all nominees listed below (except as indicated)
----------------------------------------------------
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP, AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE YEAR ENDED DECEMBER 31, 1995; and
upon each other matter or matters that may properly come before the meeting
or any adjournment or adjournments thereof.
/ / FOR / / AGAINST / / ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY SELECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR THE RATIFICATION
OF ARTHUR ANDERSEN LLP, AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS, AND AS
SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE
MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signatures Date
---------------------------------------- ---------------------
Signatures Date
---------------------------------------- ---------------------
NOTE: (This proxy should be marked, dated and signed by the shareholder(s)
exactly as his name appears hereon and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate.
If shares are held by joint tenants or as community property, both must
sign.)
