<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
<TABLE>
<S> <C>
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement [ ] Confidential, for use of
the Commission only
[ ] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-ll(c) or Rule 14a-12
</TABLE>
PAXAR CORPORATION
(Name of Registrant as Specified In Its Charter)
PAXAR CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:___________________________ (2) Aggregate number of
securities to which transaction applies:__________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule
0-11:1________________________
(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-ll(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 May 1, 1998
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 May 1, 1998, at the
Rihga Royal Hotel, 151 West 54th Street, New York, New York 10019, 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 approve the adoption of the Company's Deferred Compensation Plan
for Directors;
3. To approve the amendment to the Company's Certificate of
Incorporation to make a technical change of the Company's name from
"PAXAR Corporation" to "Paxar Corporation";
4. To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the year ending December 31,
1998; and
5. 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 25, 1998, are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
By Order of the Board of Directors,
Daniel S. Bishop, Secretary
White Plains, New York
March 31, 1998
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
105 CORPORATE PARK DRIVE
WHITE PLAINS, NEW YORK 10604
(914) 697-6800
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 May 1, 1998. 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, for the
Deferred Compensation Plan for Directors, for the amendment to the certificate
of incorporation to change the name of the Company, and for the ratification of
Arthur Andersen LLP as the Company's independent public accountants. The Board
of Directors anticipates that all of the nominees will be available 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
31, 1998.
The total number of shares of Common Stock of the Company outstanding
as of March [25], 1998 was [48,407,997] shares. 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 25,
1998 will be entitled to vote at the Annual Meeting or any adjournment or
adjournments thereof.
Directors will be elected by a plurality of the votes cast for
Directors. The affirmative vote by the holders of a majority of the votes cast
on each proposal is required for the approval of the Company's Deferred
Compensation Plan and for the ratification of the selection of Arthur Andersen,
LLP as the Company's independent public accountants. The affirmative vote by
holders of a majority of the issued and outstanding shares of the Company's
Common Stock is required for approval of the amendment to the Company's
Certificate of Incorporation to change the name of the Company to Paxar
Corporation. Shares represented by proxies which are marked "abstain" with
respect to the approval of the Deferred Compensation Plan, the amendment to the
certificate of incorporation and ratification of the independent public
accountants and proxies which are marked to deny discretionary authority on all
other matters will only be counted for the purpose of determining the presence
of a quorum on such questions. 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 Annual Meeting for examination by any Shareholder.
<PAGE> 4
ACTIONS TO BE TAKEN AT THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF FOUR 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 qualify.
Proxies not marked to the contrary will be voted "FOR" the election of the
following four persons, all of whom, with the exception of James C. McGroddy,
are incumbent Directors who were previously elected by the Shareholders. Mr.
McGroddy was appointed a Director by the Board in January 1998 to fill an
existing vacancy. If elected, the terms of such Directors will expire in 2000.
The following table sets forth information concerning the nominees:
Name Age Position with the Company Director Since
Arthur Hershaft 60 Chairman of the Board, President
and Chief Executive Officer 1961
Thomas R. Loemker 67 Director 1987
Walter W. Williams 63 Director 1993
James C. McGroddy 61 Director 1998
BIOGRAPHICAL INFORMATION ABOUT NOMINEES
Arthur Hershaft has been the Chairman of the Board of Directors and Chief
Executive Officer of the Company since 1986. Mr. Hershaft has been President of
the Company since January 1998.
Thomas R. Loemker was Vice Chairman of the Board of Directors of the
Company from September 1992 until September 1994. Mr. Loemker was also Chairman
of the Board of Directors of Paxar Corporation from 1995 to 1997 and President
and Chief Operating Officer of Monarch Marking Systems, Inc. from 1987 until
March 31, 1991.
Walter W. Williams has been a self-employed consultant since 1991. Mr.
Williams was previously employed by Rubbermaid Inc. in various capacities from
1987 until 1991, including Chairman and Chief Executive Officer. From 1956 to
1987 he was employed by General Electric Company in various capacities. Mr.
Williams is a member of the Board of Directors of the Stanley Works and Corrpro
Companies, Inc.
James C. McGroddy, Ph.D., has been a self-employed consultant since 1997.
Dr. McGroddy was employed by International Business Machines Corporation ("IBM")
in various capacities from 1965 through December 1996. From January 1996 through
December 1996, Dr. McGroddy served as Senior Vice President and Special Advisor
to the Chairman of IBM. From May 1989 to December 1995, Dr. McGroddy was Senior
Vice President of Research of IBM with responsibility for approximately 2,500
technical professionals in IBM's seven research laboratories around the world.
Dr. McGroddy is Chairman of the Board of Directors of Integrated Surgical
Systems, Inc.
-2-
<PAGE> 5
The terms of the following six Directors do not expire until 1999,
and accordingly, no vote is being taken on their re-election at this Annual
Meeting. All of the following Directors are incumbents who were previously
elected by the Shareholders.
Name Age Position with the Company Director Since
Victor Hershaft 55 Executive Vice President of the Company, 1989
President of the Apparel
Identification Group and Director
John W. Paxton 61 Executive Vice President of the Company, 1997
President of the Printing
Solutions Group and Director
Jack Becker 62 Director 1968
Leo Benatar 68 Director 1996
Robert Laidlaw 69 Director 1987
David E. McKinney 63 Director 1992
BIOGRAPHICAL INFORMATION ABOUT DIRECTORS
Victor Hershaft has been Executive Vice President and President of
Apparel Identification of the Company since January 1998. Prior to that time he
served in various executive capacities with the Company since 1989.
John W. Paxton has been Executive Vice President and President of
Printing Solutions of the Company since January 1998. Prior to that time, he
served as President and Chief Executive Officer and a director of Monarch
Marking Systems, Inc., a wholly owned subsidiary of the Company from 1995
through 1997. From 1994 to 1995, Mr. Paxton was Executive Vice President and
Chief Operating Officer of the Industrial Automation Systems Group of Western
Atlas Inc. From 1991 to 1994, Mr. Paxton was a Vice President of Litton
Industries. From 1988 to 1991, Mr. Paxton was Chairman, President and Chief
Executive Officer of Intermec Corporation.
Jack Becker is a practicing attorney in New York State and has been a
principal of Snow Becker Krauss P.C., outside counsel to the Company, since
1977. Such firm has been retained by the Company as its principal outside
counsel for more than the past three years and will be retained by the Company
in this capacity for the current fiscal year.
Leo Benatar is an Associated Consultant with A.T. Kearney, Inc. Mr.
Benatar was Chairman of the Board of Engraph, Inc from 1981 to 1996, and Chief
Executive Officer of Engraph, Inc. from 1981 to 1995. Mr. Benatar is a member of
the Board of Directors of Mohawk Industries, Inc., Johns Manville Corp.,
Interstate Bakeries Corporation, and Aaron Rents, Inc.
Robert Laidlaw has been Chairman Emeritus of Coats & Clark since
March 1990. Mr. Laidlaw was Chairman of the Board of Coats & Clark from 1966
until March 1990 and President of Coats & Clark from 1964 to 1986. Mr. Laidlaw
is a Director of Milliken & Company.
David E. McKinney is the Director of the Thomas J. Watson
Foundation. Mr. McKinney was previously employed by IBM in various capacities
from 1956 until 1992, including Senior Vice President and a Member of Corporate
Management Board. Mr. McKinney is a member of the Board of Directors of General
Re-Insurance;
-3-
<PAGE> 6
Organization Resource Counselors; International Executive Services Corps; and
the New York Philharmonic. Mr. McKinney is also a trustee of Brown University.
In addition to Messrs. Arthur Hershaft, Victor Hershaft and John
Paxton, the following individuals are Executive Officers of the Company:
Name Age Position with the Company
Jack R. Plaxe 56 Senior Vice President and Chief Financial Officer
Daniel S. Bishop 48 Vice President, Secretary and General Counsel
Jack R. Plaxe was Vice President and Chief Financial Officer of the
Company from August 1993 through March 1997, when he resigned. In December 1997,
he was appointed Senior Vice President and Chief Financial Officer. Prior to Mr.
Plaxe's service with the Company, Mr. Plaxe was employed in various capacities
with AmBase Corporation, including Chief Financial Officer and Executive Vice
President.
Daniel S. Bishop has been Vice President, Secretary and General
Counsel of the Company since November 1997. Prior to that time, Mr. Bishop was
General Counsel, Secretary and Vice President of Strategic Development and Human
Resources of Monarch Marking Systems, Inc., since October 1995. From March 1993
to September 1995, Mr. Bishop was Vice President and Associate General Counsel
of Western Atlas, Inc. From 1977 to February 1993, Mr. Bishop served in various
capacities with Litton Industries, Inc. including Vice President and Group
Counsel of the Industrial Automation Systems Group.
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 a Governance and Nominating Committee.
The Board of Directors also has an Information Systems Committee, which meets on
an ad hoc basis.
The Audit Committee is composed of Thomas Loemker (Chairman), Leo
Benatar, and James C. McGroddy. 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 one meeting in 1997.
The Compensation Committee is composed of David McKinney (Chairman),
Robert Laidlaw and Walter Williams. The duties of this Committee include
recommending to the Board remuneration for officers of the Company, determining
the number and issuance of options pursuant to the Company's 1990 Employee Stock
Option Plan and recommend the establishment of and monitoring a compensation and
incentive program for all executives of the Company. The Compensation Committee
held three meetings in 1997.
The Governance and Nominating Committee is composed of Leo Benatar
(Chairman), Walter Williams and David McKinney. The duties of this Committee
include recommending nominees to serve on the Board of Directors to fill
vacancies, administering searches for executive officers and evaluating and
improving the organization of the Company. The Governance and Nominating
Committee held one meeting in 1997. Shareholders desiring to recommend director
candidates for consideration by the Governance and Nominating Committee may do
so by writing to the Secretary of the Company, giving the recommended
candidate's name, biographical data, and qualifications.
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
-4-
<PAGE> 7
advanced, integrated electronic data systems throughout the Company and to
ensure that such systems support the Company's strategic objectives. The
Information Systems Committee held one meeting in 1997. The functions of this
Committee will move to the Audit Committee for 1998.
The Board of Directors held five meetings in 1997. 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 a policy that no member of the Board of Directors who
attains the age of 70 years shall stand for re-election to the Board of
Directors. Accordingly, Sidney Merians, who has been a director since 1986, will
not stand for re-election and a vacancy currently exists on the Board of
Directors. If the Governance and Nominating Committee identifies an appropriate
candidate, the Board of Directors will consider appointing the candidate to the
Board.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 6, 1998 certain
information, with respect to the beneficial ownership of Common Stock by (i)
each person known by the Company to be the owner of more than 5% of the
outstanding shares of Common Stock, (ii) each director, (iii) the Chief
Executive Officer and each of the other four most highly compensated officers of
the Company and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
Percentage of
Amount and Nature Outstanding
Name of Beneficial Ownership(1) Shares Owned(2)
- ---- -------------------------- ---------------
<S> <C> <C>
Arthur Hershaft 5,120,350 (3) 10.58%
Victor Hershaft 1,277,121 (4) 2.64%
Jack R. Plaxe 50,328 (5) *
Daniel S. Bishop 103,434 (6) *
John W. Paxton 528,667 (7) 1.11%
Jack Becker 183,218 (8)(9) *
Leo Benatar 24,584 (10) *
Robert Laidlaw 54,644 (8) *
Thomas R. Loemker 519,322 (11) 1.11%
James C. McGroddy 7,000 (12) *
David E. McKinney 54,369 (8)(13) *
Walter W. Williams 36,623 (8) *
Thomas W. Smith 3,791,254 (14) 7.8%
Thomas N. Tryforos
323 Railroad Avenue
Greenwich, CT 06830
All directors and 7,935,914 16.40%
executive officers
as a group (12 persons)
</TABLE>
-5-
<PAGE> 8
* Represents less than 1% of the outstanding Common Stock of the Company.
(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) Based on 48,407,997 shares issued and outstanding on March 6,1998
(3) Includes 136,263 shares issuable upon the exercise of presently
exercisable stock options. Also includes 668,051 shares held by Mr.
Hershaft in trust for the benefit of his children, as to which shares
Mr. Hershaft disclaims beneficial ownership. Does not include options
to purchase 81,738 shares of Common Stock which are not currently
exercisable.
(4) Includes 47,608 shares issuable upon the exercise of presently
exercisable stock options. In addition, includes 186,740 shares owned
of record by Mr. Hershaft's wife, as to which shares Mr. Hershaft
disclaims beneficial ownership; and 146,564 shares held by Mr. Hershaft
as custodian for his children, as to which shares Mr. Hershaft
disclaims beneficial ownership. Does not include options to purchase
45,751 shares of Common Stock which are not currently exercisable.
(5) Does not include options to purchase 105,031 shares of Common Stock
which are not currently exercisable.
(6) Includes 101,749 options to acquire a like number of shares of Common
Stock at an exercise price of $6.70 per share. Does not include options
to purchase 10,000 shares of Common Stock, which are not currently
exercisable.
(7) Includes 363,648 options to acquire a like number of shares of Common
Stock at an exercise price of $2.42 per share. Does not include options
to purchase 25,000 shares of Common Stock which are not currently
exercisable.
(8) Includes 18,311 options to acquire a like number of shares of Common
Stock at an exercise price of $5.63 per share, 6,104 options to acquire
a like number of shares of Common Stock at an exercise price of $7.68
per share, 6,104 options to acquire a like number of shares of Common
Stock at an exercise price of $10.24 per share and 6,104 options to
acquire a like number of shares of Common Stock at an exercise price of
$15.60 per share.
(9) Includes 100,072 shares owned of record by Mr. Becker's wife, as to
which shares Mr. Becker disclaims beneficial ownership and 6,250 shares
held by a charitable foundation of which Mr. Becker is the President.
(10) Includes 7,813 options to acquire a like number of shares of Common
Stock at an exercise price of $7.60 per share and 6,104 options to
acquire a like number of shares of Common Stock at an exercise price of
$10.24 per share and 6,104 options to acquire a like number of shares
of Common Stock at an exercise price of $15.60 per share.
(11) Includes 6,104 options to acquire a like number of shares of Common
Stock at an exercise price of $7.68 per share, and 6,104 options to
acquire a like number of shares of Common Stock at an exercise price of
$10.24 per share, 6,104 options to acquire a like number of shares of
Common Stock at an exercise price of $15.60 per share and 27,470 shares
held by Mr. Loemker's wife.
-6-
<PAGE> 9
(12) Includes 6,000 options to acquire a like number of shares of Common
Stock at an exercise price of $15.375 per share.
(13) Does not include 1,406 shares owned by Mr. McKinney's wife, as to which
Mr. McKinney disclaims beneficial ownership.
(14) Represents shares of Common Stock beneficially owned as of December 31,
1997, as indicated on the report on Form 13F, by Messrs. Smith and
Tryforos as investment managers for certain managed accounts consisting
of three private investment limited partnerships, of which each of
Messrs. Smith and Tryforos is a general partner, an employee profit
sharing plan of a corporation of which Mr. Smith is the sole
shareholder, for which both Messrs. Smith and Tryforos are trustees,
and a trust for the benefit of a family member of Mr. Smith, for which
Mr. Smith is a trustee.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the aggregate compensation
paid by the Company to the Chief Executive Officer and the four other most
highly compensated Executive Officers of the Company for services rendered
during the last three fiscal years:
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
-------------------------- ---------------------------------
All Other
Name and Principal Position Year Salary ($) Bonus ($) Options (#) (1) Compensation ($)
- --------------------------- ---- ---------- --------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Arthur Hershaft ........ 1997 $370,135 $147,450 30,000 --
President and CEO ...... 1996 $357,618 $502,918 39,063 $ 250,000(2)
1995 $343,863 $515,795 48,829 --
Victor Hershaft (4) .... 1997 $321,706 $102,550 20,000 --
Executive Vice President 1996 $310,827 $349,680 19,532 --
1995 $298,872 $358,646 24,414 --
John W. Paxton (5)(7) .. 1997 $297,214 $128,092 626,148 --
Executive Vice President
Daniel S. Bishop (6)(7) 1997 $156,876 $ 51,634 101,749 --
Vice President and
General Counsel
</TABLE>
(1) Represents stock options granted under either 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) Represents a special bonus paid in recognition of extraordinary services
performed in 1996, including the agreement to purchase the balance of the
interest of Monarch Holdings, Inc. not owned by the Company, the expansion of
the business of the Company overseas, and the general increase in the results of
operations.
-7-
<PAGE> 10
(4) Mr. Hershaft was appointed Executive Vice President of the Company and
President of the Company's Apparel Identification Group in January 1998. Prior
to that time, he served as President and Chief Operating Officer of PAXAR
Corporation.
(5) Mr. Paxton was appointed Executive Vice President and President of the
Company's Printing Solution Group in January 1998. Prior to that time, Mr.
Paxton served as President of Monarch Marking Systems, Inc. since October 1995.
(6) Mr. Bishop was appointed Vice President, General Counsel and Secretary of
the Company in November 1997. Prior to that time, Mr. Bishop was General Counsel
Secretary and Vice President of Strategic Development and Human Resources of
Monarch Marking Systems, Inc., since October 1995.
(7) Salary and bonus reflects compensation paid by the Company following the
Company's acquisition of Monarch Holdings, Inc. in March 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Number of Percent of Potential Realizable Value
Securities Total Options Exercise at Assumed Annual Rates
Underlying Granted to or Base of Stock Price Appreciation
Options Employees in Price Expiration for Option Term
Name Granted(#)(1) Fiscal Year(2) ( $/SH) Date 5% 10%
- ---- ---------------- --------------- ---------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Arthur Hershaft 37,500 (3) 1.8% $13.30 1/28/07 $ 363,300 $933,600
Victor Hershaft 25,000 (3) 1.2% $13.30 1/28/07 $ 236,200 $616,347
John W. Paxton 626,148 (3)(4) 2.9% $ 1.94 11/01/05 $5,392,018 $9,303,926
Jack Plaxe 105,031 6.2% $15.69 12/7/07 $1,036,378 $2,626,386
Daniel S. Bishop 101,749 (3)(4) 4.8% $ 6.70 3/20/06 $ 600,341 $1,267,382
</TABLE>
(1) Stock options granted under the Company's 1990 Employee Stock Option
Plan (the "1990 Plan") and 1997 Incentive Stock Option Plan (the "1997
Plan") are intended to qualify as incentive stock options ("ISO's")
under Section 422 of the Internal Revenue Code of 1986, as amended.
Under the terms of the 1990 Plan and the 1997 Plan, ISO's may be
granted to officers and other key employees of the Company for a
maximum term of 10 years. The price per share of an ISO may not be less
than the fair market value of the Company's shares on the date the ISO
is granted. However, ISO's granted to persons owning more than 10% of
the Company's Common Stock may not have a term in excess of five years
and may not have an option price of less than 110% of the fair market
value per share of the Company's shares on the date the ISO is granted.
The maximum number of ISO's is limited to such number so that the
aggregate fair market value, determined as of the date the ISO's are
granted, of the shares of Common Stock with respect to which ISO's are
exercisable for the first time during any calendar year shall not
exceed $100,000. Any options granted in excess of the $100,000
limitation would not qualify as ISO's under the Internal Revenue Code.
(2) The Company granted a total of 1,700,000 options to employees in the
fiscal year ended December 31, 1997.
(3) Adjusted to reflect the 25% stock dividend paid by the Company on
September 9, 1997.
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<PAGE> 11
(4) Represents options granted to these Executive Officers in March 1997
upon the Company's purchase of all of the shares of Monarch Holdings,
Inc. ("Holdings") it did not then own in exchange for options granted
to them by Holdings.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-the-
Shares Underlying Unexercised Money Options/SARs at
Options/SARs at FY-End (#) FY-End ($)(1)
Acquired on Value -------------------------- ----------------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable(1) Exercisable Unexercisable(1)
- ---- ------------ ------------ ----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Arthur Hershaft 19,073 $ 183,578 136,263 31,738 $1,133,014 $ 233,272
Victor Hershaft 13,351 $ 120,493 47,608 20,751 $ 432,853 $ 160,106
John W. Paxton . 210,000 $2,727,060 363,648 -- $4,680,877 --
Jack R. Plaxe .. 37,539 $ 334,694 0 20,625 -- $ 134,122
Daniel S. Bishop 0 0 0 0 -- $ 523,558
</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. On December 31, 1997, the last
reported sales price of the Company's Common Stock on the New York
Stock Exchange was $14.812.
COMPENSATION OF DIRECTORS
The Company established a policy in 1993 to pay each of its Directors
who are not employees of the Company in their capacity as Directors. The Company
amended the policy in 1997 to increase the Directors' annual fee from $12,000 to
$15,000, to increase the Directors' fee for attendance at Committee meetings
from $600 to $750, and to eliminate the initial stock option grant to new
Directors where the Director would also receive another grant of stock options
during his or her first year of service. Pursuant to the revised policy, the
grant of options to newly appointed Directors will be such that only one grant
is made during the first year of service, after which the newly appointed
Directors will receive the same grants on the same basis as all other Directors.
The revised policy continues to entitle each Director to be paid $1,000 for
attendance at each meeting of the Board of Directors and each Committee Chairman
to be paid $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.
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<PAGE> 12
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
value 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.
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, President and
Chairman of the Board of Directors of the Company, and Victor Hershaft,
Executive Vice President and President of the Apparel Identification Group, the
base salary is determined pursuant to the terms of their respective employment
contracts 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.
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, and in some cases a combination of return
on assets, growth in sales, cash flow and operating profit. Each year, the
Committee establishes "target" bonus awards for executive officers. For 1998,
the target incentive bonus award will be paid to Arthur Hershaft, Jack Plaxe and
Daniel Bishop if the growth in earnings per share is 20%. No bonus will be paid
unless the growth in earnings per share is at least 5%. The maximum bonus award
of 200% of target will be paid if growth in earnings per share is 40% or more.
The "target" bonus award with respect to Arthur Hershaft, the Company's Chief
Executive Officer, is 75% of base salary if the growth in earnings per share is
20% or more.
In respect to the other participants in the incentive compensation
program, including Victor Hershaft, John Paxton, James Wrigley, Ken Cassady and
Richard Marshall, incentive compensation would be allocated between earnings per
share of the Company and a combination of return on assets, growth in sales,
cash flow and operating profit, the percentage of which factors would depend
upon the circumstances of the operating unit that each participant is
responsible for.
Long-Term Incentives. The Company has also established two stock option plans,
pursuant to which stock options are awarded by the Committee periodically to
executive officers. Stock option plans are designed to encourage executives to
acquire an equity interest in the Company, thereby aligning their long-term
financial interests with those of the shareholders.
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On December 8, 1997, the Company authorized a grant to Jack Plaxe of
105,031 incentive stock options to purchase a like number of shares of the
Company's Common Stock at an exercise price of $15.688 (equal to the closing
market price on the date of the grant).
In January 1998, the Committee authorized a grant to Arthur Hershaft,
the Company's Chief Executive Officer, of 5,913 incentive stock options to
purchase a like number of shares of the Company's Common Stock at an exercise
price of $16.91 (equal to 110% of the closing market price on the date of grant)
and 39,087 non-qualified stock options to purchase a like number of shares of
the Company's Common Stock at an exercise price of $15.375 (equal to the closing
market price on the date of the grant), a grant to Victor Hershaft of 7,347
incentive stock options and 17,653 non-qualified stock options to purchase a
like number of shares of the Company's Common Stock at an exercise price of
$15.375 (equal to the closing market price on the date of the grant), a grant to
John W. Paxton of 25,000 incentive stock options to purchase a like number of
shares of the Company's Common Stock at an exercise price of $15.375 (equal to
the closing market price on the date of the grant) and a grant to Daniel S.
Bishop of 10,000 incentive stock options to purchase a like number of shares of
the Company's Common Stock at an exercise price of $15.375 (equal to the closing
market price on the date of the grant). The Committee believes these grants 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 27, 1998 by the members of the Compensation
Committee.
David E. McKinney, Chairman
Robert Laidlaw
Walter W. 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 "1997 Peer Group"). The
S&P 500 has been selected as the required broad entity market index. The 1997
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.; Eltron International; Merrill Corporation;
Sealright Co., Inc.; Sensormatic Electronics Corp.; Shorewood Packaging
Corporation; Symbol Technologies Inc.; and Telxon Corp.
The following graph assumes that $100 had been invested in each of
Paxar Corporation, the S&P 500, and the 10-member 1997 Peer Group on December
31, 1992.
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The immediately preceding sections entitled "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 RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases a 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. Management believes that the terms of this
transaction 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 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's fixed compensation for the fiscal year ending December 31, 1998 will
be $390,000. Mr. Hershaft is a participant in the Company's incentive
compensation programs and is entitled to receive other fringe benefits available
to executives employed by the Company. The Company has also agreed to maintain a
$1,000,000 life insurance policy on Mr. Hershaft's life, which requirement Mr.
Hershaft has waived. 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
$150,000 for each year in which he acts as a consultant to the Company prior to
his 65th birthday and annual compensation of $250,000 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.
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. In 1995, Mr. Hershaft exercised his option to renew his
agreement for an additional four
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years. Thereafter, the contract is automatically renewable annually unless
either the Company or Mr. Hershaft elects to terminate it. Mr. Hershaft receives
annual increases in salary 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, 1998 will be $332,000. Mr. Hershaft is
also a participant in the Company's incentive compensation program and is
entitled to receive other fringe benefits available to executives employed by
the Company. The Company also maintains 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 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 is a
principal, serves as the principal outside counsel to the Company.
The Company has procured Directors and Officers' liability insurance
from Federal Insurance Company under a contract dated March 1, 1998 at an
aggregate annual premium of $146,500. The policies insure 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 make gifts of 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.
On January 29, 1997, the Company granted 30,000 non-qualified stock
options to Arthur Hershaft, the Company's Chief Executive Officer and a Director
of the Company. Such options are exercisable at a price of $16.625 per share for
a period of ten years.
On January 29, 1997, the Company granted 11,415 incentive stock
options and 8,585 non-qualified stock options, all exercisable at $16.625 to
Victor Hershaft, President of the Company and a Director of the Company, and
15,000 incentive stock options at $16.625 to Jack Plaxe, the Company's Chief
Financial Officer and a Senior Vice President of the Company. 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 anniversary. Once vested, the options remain exercisable
until January 28, 2007.
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On March 3, 1997, the Company completed the acquisition of 495 shares
or 49% (the "Shares") of Common Stock, par value $.01 ("Holdings Common Stock")
of Monarch Holdings, Inc., a Delaware corporation ("Holdings"), from Odyssey
Partners, L.P. ("Odyssey"). The Company previously owned 495 or 49% of shares of
Holdings Common Stock. Holdings owned all of the outstanding capital stock of
Monarch Marking Systems, Inc. ("Monarch"). Immediately following the closing of
the acquisition, the Company merged with Holdings, as a consequence of which
Monarch became a wholly-owned subsidiary of the Company. Thomas R. Loemker, a
Director, and John W. Paxton, Executive Vice President of the Company, President
of the Printing Solutions Group and a Director, each received 125,229 shares of
the Company's Common Stock in the merger in exchange for 10 shares (1%) of
Holdings Common Stock owned by each of them. In the merger, Mr. Paxton received
incentive stock options to purchase am aggregate of 500,918 shares of the
Company's Common Stock at $2.42 a share pursuant to the Company's 1990 Employee
Stock Option Plan in exchange for outstanding options to purchase Holdings
Common Stock.
On January 21, 1998, the Company granted options as follows: (i) the
Company granted Arthur Hershaft 5,913 incentive stock options exercisable at
$16.91 and 44,087 non-qualified stock options exercisable at $15.375.
Twenty-five percent of such options become exercisable on the first anniversary
of the date such options were granted. Thereafter an additional twenty-five
percent becomes exercisable on each anniversary. Once vested, the options remain
exercisable until January 30, 2008 except for the incentive stock options, which
are exercisable only until January 20, 2003; (ii) the Company granted Victor
Hershaft 7,347 incentive stock options and 17,653 non-qualified stock options
exercisable at $15.375. Twenty-five percent of such options become exercisable
on the first anniversary of the date such options were granted. Thereafter an
additional twenty-five percent becomes exercisable on each anniversary. Once
vested, the options remain exercisable until January 20, 2008; (iii) the Company
granted John Paxton 25,000 incentive stock options exercisable at $15.375.
Twenty-five percent of such options become exercisable on the first anniversary
of the date such options were granted. Thereafter an additional twenty-five
percent becomes exercisable on each anniversary. Once vested, the options remain
exercisable until January 20, 2008; and (iv) the Company granted Daniel Bishop
10,000 incentive stock options exercisable at $15.375. Twenty-five percent of
such options become exercisable on the first anniversary of the date such
options were granted. Thereafter an additional twenty-five percent becomes
exercisable on each anniversary. Once vested, the options remain exercisable
until January 20, 2008.
On December 8, 1997, the Company granted Jack Plaxe 105,031 incentive
stock options exercisable at $15.6875. Twenty-five percent of such options
became exercisable on the first anniversary of the date such options were
granted. Therefore an additional twenty-five percent becomes exercisable on each
anniversary. Once vested, the options remain exercisable until December 7, 2007.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE NOMINEES LISTED IN PROPOSAL 1.
PROPOSAL 2. APPROVAL BY SHAREHOLDERS OF THE COMPANY'S DEFERRED COMPENSATION
PLAN FOR DIRECTORS
The Board of Directors of the Company, subject to the approval of
Shareholders, adopted the Company's Deferred Compensation Plan for Directors
(the "Plan"), which provides Directors of the Company who are not employees of
the Company the opportunity to defer to a future date the receipt of their
annual retainer fees, committee chairman fees and fees for attendance at Board
and Committee meetings ("Compensation") and to have any deferred Compensation
credited to an account ("Account") based on Units determined by reference to the
price of the Company's Common Stock.
GENERAL
The Board of Directors has deemed it in the best interest of the
Company to establish the Plan so as to encourage the Company's outside Directors
to defer their compensation and to have any appreciation thereof based upon
appreciation in the value of the Company's Common Stock, thereby further
aligning the independent Directors' interests with those of the Company.
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The following statements summarize certain provisions of the Plan.
All statements are qualified in their entirety by reference to the text of the
Plan, copies of which are available for examination at the Securities and
Exchange Commission and at the principal office of the Company, 105 Corporate
Park Drive, White Plains, New York 10604.
ELIGIBILITY FOR PARTICIPATION
Under the Plan, all Directors of the Company who are not employees of
the Company are eligible to participate. The Plan will be effective with respect
to any Compensation earned by a Director after approval by the Company's
Shareholders at the Annual Meeting of Shareholders to which this Proxy relates.
ADMINISTRATION
The Plan is to be administered by the Non-Employee Directors (as
defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended) of
the Company's Compensation Committee. The sole duty of the Committee with
respect to the Plan shall be to approve or disapprove elections to defer
Compensation under the Plan and any amendments to such elections.
DEFERRAL OF COMPENSATION AND PAYMENT OF DEFERRED AMOUNTS
If a Director elects to defer his Compensation, a number of Units
will be credited to his account equal to the amount of such Compensation divided
by the closing price of the Company's Common Stock (the "Stock Price") on the
business day immediately preceding the election. If the Company pays cash
dividends on its Common Stock, additional Units will be credited to the
Director's Account equal to the aggregate amount of cash dividends deemed to be
paid on the Units in his Account divided by the Stock Price on the record date
of the dividend. Units will also increased or decreased consistent with any
stock split or dividend or any reverse stock split or other reorganization. Upon
an election by a Director to receive payment of his deferred Compensation, he
will receive an amount equal to the number of Units to be paid multiplied by the
Stock Price on the day immediately preceding the election.
TERMINATION; MODIFICATION AND AMENDMENT
The Board of Directors of the Company may terminate the Plan at any
time, or from time to time make such modifications or amendments of the Plan, as
it deems advisable. However, the Board of Directors may not, without the
approval of a majority of the then outstanding shares of the Company entitled to
vote thereon, materially change the standards of eligibility under the Plan or
adopt a new plan.
No termination, modification or amendment of the Plan may affect
amounts previously credited to Directors' Accounts.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL 2
PROPOSAL 3. AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
CHANGE THE COMPANY'S NAME FROM "PAXAR CORPORATION" TO "PAXAR
CORPORATION"
The Company's Board of Directors has unanimously adopted a technical
amendment to the Company's Certificate of Incorporation changing the name of the
Company from "PAXAR Corporation" to "Paxar Corporation." This amendment is
intended to conform the Company's legal name with the name by which the Company
is known worldwide.
If the proposed Amendment is approved, Article "1" of the Company's
Certificate of Incorporation will be amended to read in its entirety as follows:
1. The name of the Corporation is Paxar Corporation.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL 3.
PROPOSAL 4. 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.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL 4.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 reports received by
it, or written representations from certain reporting persons that no Forms 5
were required for those persons, the Company is not aware of any failures to
file reports or report transactions in a timely manner during the Company's
fiscal year ended December 31, 1997, except that Arthur Hershaft filed one late
report concerning one transaction, Victor Hershaft filed two late reports
concerning two transactions, and David McKinney filed three late reports
concerning three transactions.
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 December 3, 1998 in order for them to be included in the proxy
statement and form of proxy relating to that meeting.
ANNUAL REPORT ON FORM 10-K
Copies of the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 as filed with the Securities and Exchange
Commission, including the financial statements, can be obtained without charge
by shareholders (including beneficial owners of the Company's Common Stock) upon
written request to Investor Relations: Attn: Ms. Annette Geraghty, Paxar
Corporation, 105 Corporate Park Drive, White Plains, New York 10604 and can be
found on the SEC's website at www.sec.gov.
White Plains, New York By Order of the Board of Directors
March 31, 1998
Daniel S. Bishop, Secretary
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Annex A
PAXAR CORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS
1. PURPOSE AND ELIGIBILITY
PAXAR CORPORATION (the "Corporation") hereby establishes the Deferred
Compensation Plan for Directors (the "Plan"), the purpose of which is to provide
Directors of the Corporation who are not employees of the Corporation the
opportunity to defer to a future date the receipt of their annual retainer fees,
committee chairman fees and fees for attendance at Board and Committee meetings
("Compensation"). The options which the Directors of the Corporation are
entitled to receive as additional compensation for serving as Director may not
be deferred under the Plan. Nothing contained in this Plan shall be deemed to
constitute an employment contract or agreement between the Directors and the
Corporation.
2. ELECTION
Subject to the approval of the Committee as described in Section 7 below, a
Director may elect to defer receipt of all or a portion of Compensation not yet
earned, effective as of (a) the Effective Date, as defined in Section 6 hereof,
if the election is made prior to the Effective Date or (b) the first day of any
taxable year after such election if the election is made after the Effective
Date. Such election shall be in
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writing and shall specify the method of payment of a Director's deferred amounts
in accordance with Section 4 below, and shall continue until amended or
terminated by written notice delivered to the Corporation and approved by the
Committee. Notwithstanding the foregoing, a Director may amend a prior election
to change the method of payment and/or extend the deferral period under Section
4 below of previously deferred Compensation provided that written notice of such
amendment is approved by the Committee prior to the last day of the taxable year
preceding the taxable year in which payments are scheduled to commence under the
terms of such Director's then current election and, if earlier, six (6) months
prior to the date benefit payments are scheduled to commence under the terms of
such Director's then current election.
3. MAINTENANCE OF DEFERRED ACCOUNTS
(a) Compensation which is deferred shall be credited, in accordance
with each Director's election as described in Section 2 above, to his or her
account ("Account") as of the date on which current payment otherwise would have
been made (the "Payment Date") based on Units. The number of Units credited from
time to time to each Account shall be:
With Respect to Deferred Compensation: The number obtained by
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dividing the amount of Compensation otherwise payable on
the Payment Date by 100% of the closing price of the
Corporation's common stock (the "Stock") on the New York
Stock Exchange (such closing price being the "Stock Price")
on the immediately preceding business day;
With Respect to Cash Dividends: The number obtained by
multiplying the number of Units in the Account by any cash
dividends declared by the Corporation on the Stock as of
the Payment Date and dividing the product by 100% of the
Stock Price on the related dividend record date; and
With Respect to Stock Dividends: The number obtained by
multiplying the number of Units in the Account by any stock
dividend declared by the Corporation on the Stock as of the
Payment Date.
(b) The number of Units credited to each Account shall be
appropriately adjusted to take into account any changes in the number of
outstanding shares of Stock resulting from split-ups or combinations of shares
or recapitalizations.
(c) The Plan is intended to constitute an "unfunded" plan for
deferred compensation. The establishment of or allocation to an Account shall
not vest in any
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participant any right, title or interest in or to any specific assets of the
Corporation nor shall the Corporation be required to purchase any Stock.
However, in the event the Corporation should purchase such Stock, the
Corporation shall not be required to exercise any option or right under such
Stock, or if the Corporation wishes to exercise any option or right under such
Stock, the Corporation shall not be required to exercise such option or right in
any particular manner. With respect to the Corporation's obligations under the
Plan, the participant shall have no rights that are greater than those of a
general creditor of the Corporation.
4. PAYMENT OF DEFERRED AMOUNTS
(a) Except as provided in this Section 4 and Section 5(a) below, an
Account shall be paid to the Director in cash either:
(i) in a lump sum on a date specified by the Director on
his election form and in an amount equal to the value of the Units then credited
to the Director's Account, or
(ii) in quarterly or annual installments over such period
and commencing at such time as the Director shall have elected on his or her
election form, each installment being equal to the value of the Units then
credited to the
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Account divided by the number of installments remaining to be paid.
For purposes of payments under this Section 4, the value of each Unit
shall be equal to the Stock Price on the business date which immediately
precedes the date as of which the payment is made.
(b) In the event of a Director's death or Disability (as defined
below), all amounts credited to his or her Account as of his or her date of
death or Disability shall be paid promptly in a lump sum, in an amount equal to
the value of the Units as of such date, to the Beneficiary designated on the
Director's election form or, if none, to his estate. "Disability" means the
inability, due to illness or injury, to engage in any gainful occupation for
which the individual is suited by education, training or experience, which
condition continues for at least six (6) consecutive months.
(c) If a Change in Control (as defined below) occurs and the
participant ceases to be a Director (other than by reason of death, Disability,
retirement or Termination for Cause) (as defined below) within two (2) years
thereafter, then upon the date of any such cessation, all amounts credited to
the participant's Account as of such date shall be paid promptly to the Director
in a lump sum, in an amount equal to the value of the Units as of such date. A
"Change in Control" shall occur if either (i) any person, including a "group" as
defined in Section 13(d)(3) of the Exchange
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Act, shall become the beneficial owner of shares of the Corporation with respect
to which 20% or more of the total number of votes for the election of the Board
of Directors of the Corporation may be cast; or (ii) as a result of, or in
connection with, any cash tender offer, exchange offer, merger or other business
combination, sale of assets or contested election or combination of the
foregoing, the persons who were prior to the institution thereof directors of
the Corporation shall cease to constitute a majority of the Board of Directors
of the Corporation; or (iii) stockholders of the Corporation shall approve an
agreement pursuant to which the Corporation will cease to be an independent
publicly owned corporation or providing for a sale or other disposition of all
or substantially all of the assets of the Corporation. "Termination for Cause"
means termination which is effected by reason of fraud, deceit, or other gross
misconduct by the Director performed within the scope of his or her duties as a
Director.
(d) Notwithstanding anything contained herein to the contrary, the
commencement of payment to a Director with respect to his Account shall not
start later than the time the Director obtains the age of seventy and one-half
(70-1/2) and end no later than such Director obtaining the age of seventy-five
(75).
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<PAGE> 25
5. LIMITATIONS ON PAYOUTS; NON-ASSIGNMENT
(a) In the case of payments of amounts credited to an Account under
Section 4 above, the Units shall be deemed to be paid out in the order in which
they were acquired, so that any earlier-acquired Units then credited to such
Account shall be paid out before payment with respect to later-acquired Units.
In addition, the provisions of Sections 4(a), 4(b), 4(c) and 4(d) above
notwithstanding, if any payment is to be made under Section 4(a), 4(b), 4(c) or
4(d) above with respect to a Unit acquired (X) less than six (6) months before
the date of payment and (Y) at a time that the participant was subject to
reporting under Section 16(a) of the Exchange Act, such payment shall be delayed
until the first business day that is more than six (6) months after the date
such Unit was acquired under the Plan. This six (6) month holding requirement
shall apply to acquisitions with respect to cash dividends and stock dividends,
as well as to acquisitions of Units upon deferral of fees. For purposes of the
Plan, Units will be deemed to be acquired at the date they are credited to an
Account.
(b) No right to receive payments under this Plan shall be
transferable or assignable by a Director except by such Director's last will and
testament or in accordance with the laws of descent and distribution of the
state of such Director's domicile at date of death. All amounts of Compensation
deferred under this Plan, all
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<PAGE> 26
property and rights which may be purchased by the Corporation with such amounts,
and all income attributable to such amounts, property and rights which may be
purchased by the Corporation shall remain the sole property and rights of the
Corporation (without being restricted to the provision of benefits under this
Plan) subject only to the claims of the Corporation's general creditors.
(c) Notwithstanding anything contained herein which may be to the
contrary, no modification of the time or manner of payment under the Plan shall
be authorized if and to the extent that such authorization or the making of such
modification would constitute "constructive receipt" on the part of a
participant of amounts credited to his or her Account under the then applicable
Federal income tax laws.
6. EFFECTIVE DATE AND TERMINATION
This Plan shall be effective with respect to any Compensation earned by a
Director after the Corporation's 1998 Annual Meeting of Shareholders, provided
the Plan is approved by the Corporation's shareholders at such meeting (the
"Effective Date"), and may be amended or terminated at any time by resolution of
the Board, but no amendment or termination shall affect amounts previously
credited to Directors' Accounts.
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<PAGE> 27
7. ADMINISTRATION
(a) The Non-Employee Directors (as such term is defined in Rule
16(b)-3 of the Exchange Act) of the Corporation's Compensation Committee shall
administer the Plan. The sole duty of the Committee with respect to the Plan
shall be to approve or disapprove elections to defer Compensation under the
Plan, and any amendments to such elections. No election to defer Compensation,
and no amendment to any such election, shall be valid unless and until approved
in writing by any two (2) members of the Committee, provided, however, that no
member of the Committee may approve his or her own election, or any amendment to
his or her election.
(b) The Plan shall be construed in a manner consistent with the
requirements of Rule 16b-3 of the Exchange Act and, if any provision of the Plan
does not comply with the requirements of Rule 16b-3 of the Exchange Act as then
applicable to any transaction by such a participant, such provision will be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of such Rule so that such participant shall avoid liability under
Section 16(b) of the Exchange Act.
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<PAGE> 28
8. APPLICABLE LAW.
This Plan shall be construed under the laws of the State of New York and
applicable Federal law.
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<PAGE> 29
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PAXAR CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
The undersigned, a holder of Common Stock of PAXAR
Corporation, a New York corporation (the "Company"), hereby acknowledges receipt
of the Notice of Annual Meeting of Shareholders and Proxy Statement, each dated
March 31, 1998, and hereby appoints ARTHUR HERSHAFT and DANIEL S. BISHOP, and
each of them, the proxies of the undersigned, each with full power to appoint
their substitutes, and hereby authorizes them to attend, represent and vote for
the undersigned, all of the shares of the Company held of record by the
undersigned on March 25, 1998 at the Annual Meeting of Shareholders of the
Company, to be held on May 1, 1998 at 9:30 a.m., at the Rihga Royal Hotel, 151
West 54th Street, New York, New York 10019, and any adjournment or adjournments
thereof, as follows:
(TO BE SIGNED ON REVERSE SIDE)
<PAGE> 30
1. ELECTION OF DIRECTORS, as provided in the Company's Proxy Statement:
FOR all nominees listed below WITHHOLD
AUTHORITY
To vote
for all
nominees
listed
below.
[ ] [ ]
(Instructions: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH OR OTHERWISE STRIKE OUT HIS NAME BELOW)
Nominees: Arthur Hershaft
Thomas R. Loemker
Walter W. Williams
James C. McGroddy
2. To approve the Company's Deferred Compensation Plan for Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve a technical amendment to the Company's Certificate of
Incorporation changing its name from "PAXAR Corporation" to "Paxar
Corporation."
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To ratify the appointment of Arthur Andersen LLP, as the Company's
independent auditors for the year ending December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The undersigned hereby revokes any other proxy to vote at such Annual Meeting,
and hereby ratifies and confirms all that said attorneys and proxies, and each
of them, may lawfully do by virtue hereof. With respect to matters not known at
the time of the solicitations hereof, said proxies are authorized to vote in
accordance with their best judgment.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED, OR, IF NO
CONTRARY DIRECTION IS INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS,
FOR THE ADOPTION OF PROPOSALS 2, 3 and 4, AND AS SAID PROXIES SHALL DEEM
ADVISABLE ON SUCH OTHER BUSINESS AS MAY COME BEFORE THE MEETING. EACH MATTER
ABOVE WAS PROPOSED BY THE BOARD OF DIRECTORS.
Please mark, sign, date and return the Proxy Card promptly using the enclosed
envelope.
Signature(s)
Date: ,1998
The signature(s) hereon should correspond exactly with the name(s) of the
Shareholder(s) appearing on the Stock Certificate. If stock is jointly held, all
joint owners should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If signer is a corporation,
please sign the full corporate name, and give title of signing officer.
