<PAGE> 1
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<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 Rule 14a-11(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:
------------------------------------------------------------------------
(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
MAY 7, 1999, 9:30 A.M.
RIHGA ROYAL HOTEL
151 WEST 54TH STREET
NEW YORK, NEW YORK 10019
To the Shareholders of Paxar Corporation:
We will hold the Annual Meeting of Shareholders of Paxar Corporation, a New
York corporation, at the time and place indicated above for the following
purposes:
1. To elect five Directors to serve for a two-year term;
2. To amend our Restated Certificate of Incorporation to permit us to make
loans to directors who are also officers as permitted by Section 714 of
the New York Business Corporation Law;
3. To ratify the appointment of Arthur Andersen LLP as our independent
public accountants for the year ending December 31, 1999; and
4. To transact any other business as may properly come before the meeting.
You must be a Shareholder of record at the close of business on March 26,
1999 to be entitled to notice of the 1999 Annual Meeting and to vote at the 1999
Annual Meeting.
By Order of the Board of Directors,
Daniel S. Bishop, Secretary
White Plains, New York
April 7, 1999
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE 1999 ANNUAL MEETING, PLEASE PROMPTLY
COMPLETE, SIGN AND DATE YOUR ENCLOSED PROXY CARD, WHICH IS SOLICITED BY THE
BOARD OF DIRECTORS, AND RETURN IT TO US IN THE ENCLOSED ENVELOPE. YOU MAY REVOKE
YOUR PROXY AT ANY TIME BEFORE IT IS VOTED. IF YOU DO EXECUTE A PROXY, YOU MAY
STILL ATTEND THE 1999 ANNUAL MEETING AND VOTE IN PERSON IF YOU PREFER.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
INFORMATION ABOUT THE ANNUAL MEETING........................ 1
Information About Attending the Annual Meeting............ 1
Information About this Proxy Statement.................... 1
Information About Voting.................................. 1
Information About Votes Necessary for Action to Be
Taken.................................................. 2
ACTIONS TO BE TAKEN AT THE ANNUAL MEETING................... 3
PROPOSAL 1: ELECTION OF FIVE DIRECTORS................... 3
Biographical Information About Nominees.............. 3
Biographical Information about Directors............. 4
MEETINGS OF THE BOARD OF DIRECTORS AND INFORMATION
REGARDING COMMITTEES.................................. 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT........................................... 6
EXECUTIVE COMPENSATION................................. 8
Option Grants in Last Fiscal Year.................... 9
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year End Option Values....................... 9
Compensation of Directors............................ 9
Employment Contracts and Termination and Change of
Control Arrangements................................ 10
Compensation Committee Interlocks and Insider
Participation....................................... 11
Report of the Compensation Committee of the Board of
Directors on Executive Compensation................. 12
Long Term Incentives................................. 12
PERFORMANCE GRAPH...................................... 14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......... 15
Plant Lease.......................................... 15
Other Relationships and Related Transactions......... 15
PROPOSAL 2: TO AMEND OUR RESTATED CERTIFICATE OF
INCORPORATION.......................................... 15
PROPOSAL 3: RATIFICATION OF INDEPENDENT PUBLIC
ACCOUNTANTS............................................ 16
SECTION 16(a) BENEFICIAL REPORTING COMPLIANCE............... 16
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS............... 16
PAXAR'S ANNUAL REPORT ON FORM 10K........................... 17
EXHIBIT A -- AMENDMENT TO CERTIFICATE OF INCORPORATION
</TABLE>
i
<PAGE> 4
PAXAR CORPORATION
105 CORPORATE PARK DRIVE
WHITE PLAINS, NEW YORK 10604
(914) 697-6800
------------------------
PROXY STATEMENT
------------------------
INFORMATION ABOUT THE ANNUAL MEETING
INFORMATION ABOUT ATTENDING THE ANNUAL MEETING
Our 1999 Annual Meeting of Shareholders will be held on Friday, May 7, 1999
at the Rihga Royal Hotel, 151 West 54th Street, New York, New York 10019, at
9:30 a.m. All shareholders of record at the close of business on March 26, 1999,
may attend and vote at the Annual Meeting.
INFORMATION ABOUT THIS PROXY STATEMENT
We sent you this Proxy Statement and the enclosed Proxy Card because our
Board of Directors is soliciting your proxy to vote your shares at the Annual
Meeting. This proxy statement summarizes information that we are required to
provide to you under the rules of the Securities and Exchange Commission and
that is designed to assist you in voting your shares. We began mailing these
proxy materials on April 7, 1999 to all shareholders of record at the close of
business on March 26, 1999. We will bear the entire expense of soliciting these
proxies by use of the mails.
INFORMATION ABOUT VOTING
You can vote on matters coming before the Annual Meeting by proxy or in
person.
- By Proxy -- You can vote by signing, dating and returning the proxy card.
If you do this, the individuals named on the card will be your proxies
and they will vote your shares in the manner you indicate. You may
specify on your proxy card whether they should vote your shares:
- for all, some or none of the nominees for director;
- for or against the amendment to our Restated Certificate of
Incorporation to permit us to make loans to our directors who are also
officers as provided by Section 714 of the New York Business
Corporation Law;
- for or against the ratification of Arthur Andersen LLP as independent
accountants for the year ending December 31, 1999.
If you do not indicate instructions on the card, your proxies will vote
your shares FOR the election of directors, FOR the approval of the
amendment to the Restated Certificate of Incorporation, and FOR the
ratification of Arthur Andersen.
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. If any other matter should come before
the Annual Meeting or any of the nominees for director is not available for
election, your proxies will have discretionary authority to vote in
accordance with their best judgment in such matters unless the proxy card
is marked to the contrary.
<PAGE> 5
- In Person -- You may attend the Annual Meeting and cast your vote there.
You may do this even if you have executed the enclosed proxy card.
You may revoke the proxy at any time before its is voted by sending a
written notice of revocation to our Secretary, Daniel S. Bishop, by providing a
later dated proxy, or by voting in person at the Annual Meeting. If you want to
vote at the 1999 Annual Meeting, but your shares are held in the name of a
broker or other nominee, you should obtain a proxy from your nominee naming you
as its proxy to vote the shares.
INFORMATION ABOUT VOTES NECESSARY FOR ACTION TO BE TAKEN
As of March 26, 1999, there were 47,224,744 shares of our common stock
issued and outstanding. The common stock is the only outstanding class of
securities entitled to vote. Each share has one vote. Only shareholders of
record as of the close of business on March 26, 1999 will be entitled to vote at
the Annual Meeting. A list of shareholders entitled to vote at the Annual
Meeting will be available at the Annual Meeting for examination by any
shareholder. The presence at the Annual Meeting, either in person or by proxy,
of holders of at least a majority of the shares outstanding on March 26, 1999,
is necessary to have a quorum allowing us to conduct business at the Annual
Meeting.
The following votes are required to approve each Proposal at the Annual
Meeting:
- We will elect five directors at the Annual Meeting by a plurality of all
the votes cast for directors at the Annual Meeting, which means that the
five nominees for director with the most votes will be elected.
- The affirmative vote by holders of a majority of the issued and
outstanding shares of the common stock is required for approval of the
amendment to our Restated Certificate of Incorporation.
- The affirmative vote by the holders of a majority of the votes cast is
required for the ratification of the selection of Arthur Andersen as our
independent public accountants for the year ending December 31, 1999 and
other matters coming before the meeting.
Proxies marked "abstain" with respect to the approval of the amendment to
the Restated Certificate of Incorporation and the ratification of the
independent public accountants and proxies marked to deny discretionary
authority on all other matters will only be counted for the purpose of
determining the presence of a quorum on those proposals. 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.
Broker non-votes and abstentions will have the effect of a negative vote on the
proposal to amend our Restated Certificate of Incorporation.
2
<PAGE> 6
ACTIONS TO BE TAKEN AT THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF FIVE DIRECTORS
Our Board is constituted of two classes of directors, each of which is
elected in alternate years and serves for a two-year term and until their
successors are duly elected and qualified. At this year's Annual Meeting, four
persons, all incumbents who have served a two-year term, have been nominated to
the Board. In addition, Craig O. Morrison, our President and Chief Operating
Officer, has been nominated to fill a vacancy in the class that was elected at
the 1998 Annual Meeting. We agreed to nominate him as a director when we hired
him as our President and Chief Operating Officer in October 1998. If elected,
Mr. Morrison will serve for a one-year term until the 2000 Annual Meeting of
Shareholders. Since we also extended a loan to Mr. Morrison when we hired him,
his service as a director will also be contingent on approval of Proposal 2, the
amendment to our Restated and Amended Certificate of Incorporation authorizing
us to make loans to directors.
Proxies not marked to the contrary will be voted "FOR" the election of the
following five persons:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY DIRECTOR SINCE
- ---- --- ------------------------- --------------
<S> <C> <C> <C>
Victor Hershaft.................... 56 Vice Chairman, President of Apparel 1989
Identification Operations and
Director
Craig O. Morrison.................. 43 President and Chief Operating --
Officer
Jack Becker........................ 63 Director 1968
Leo Benatar........................ 69 Director 1996
David E. McKinney.................. 64 Director 1992
</TABLE>
BIOGRAPHICAL INFORMATION ABOUT NOMINEES
VICTOR HERSHAFT has served as our Vice Chairman since December 1998 and
President of our Apparel Identification operations since January 1998. Prior to
that time he served in various executive capacities with us since 1989.
CRAIG O. MORRISON has served as our President and Chief Operating Officer
since October 1998. Prior to that time Mr. Morrison was President of Van Leer
Containers, USA, the North American Subsidiary of Royal Packaging Industries Van
Leer N.V., from 1993 to September 1998. Mr. Morrison has also held positions
with General Electric Co. and Bain & Company. Mr. Morrison served as an aviator
with the United States Marine Corps.
JACK BECKER is a practicing attorney in New York State and has been a
principal of the law firm of Snow Becker Krauss P.C., our outside counsel since
1977. We have retained that firm as our principal outside counsel for more than
the past three years, and we expect to retain it in that capacity for the
current fiscal year. Mr. Becker is a director of AFP Imaging Corporation.
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, Aaron Rents, Inc. and JPS Packaging, Inc.
DAVID E. MCKINNEY is the President of the Metropolitan Museum of Art. He is
also the Executive Secretary of the Thomas J. Watson Foundation and Director of
the Thomas J. Watson Fellowship Program. Mr. McKinney was previously employed by
International Business Machines Corporation 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 Organization
Resource Counselors; International Executive Services Corps; Fraunhofer Center
for Research in Computer Graphics; and the New York Philharmonic. Mr. McKinney
is also a fellow of Brown University.
3
<PAGE> 7
The terms of the following four directors do not expire until 2000, 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.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY DIRECTOR SINCE
- ---- --- ------------------------- --------------
<S> <C> <C> <C>
Arthur Hershaft............................... 61 Chairman of the Board and 1961
Chief Executive Officer
Thomas R. Loemker............................. 68 Director 1987
Walter W. Williams............................ 64 Director 1993
James C. McGroddy............................. 62 Director 1998
</TABLE>
BIOGRAPHICAL INFORMATION ABOUT DIRECTORS
ARTHUR HERSHAFT has been our Chairman of the Board of Directors and Chief
Executive Officer since 1986.
THOMAS R. LOEMKER was our Vice Chairman of the Board of Directors from
September 1992 until September 1994. Mr. Loemker was also Chairman of the Board
of Directors of Monarch Marking Systems, Inc. from 1995 to 1997.
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 Co. in various capacities. Mr. Williams
is a member of the Board of Directors of the Stanley Works, Corrpro Companies,
Inc. and Enamelon, Inc.
JAMES C. MCGRODDY, PH.D., has been a self-employed consultant since 1997.
Dr. McGroddy was employed by International Business Machines Corporation 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.
In accordance with our retirement policy for Board members, Robert Laidlaw,
who has been a director since 1987, will not stand for re-election. In addition
John Paxton resigned from the Board of Directors, effective October 28, 1998.
In addition to Messrs. Arthur Hershaft, Craig O. Morrison and Victor
Hershaft, the following individuals serve as our Executive Officers:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
<S> <C> <C>
Jack R. Plaxe........................... 57 Senior Vice President and Chief Financial Officer
Daniel S. Bishop........................ 49 Vice President, Secretary and General Counsel
</TABLE>
JACK R. PLAXE was our Vice President and Chief Financial Officer from
August 1993 through March 1997, when he resigned. In December 1997, he was
appointed our Senior Vice President and Chief Financial Officer. Prior to Mr.
Plaxe's service with us, he was employed in various capacities with AmBase
Corporation, including Chief Financial Officer and Executive Vice President.
DANIEL S. BISHOP has been our Vice President, Secretary and General Counsel
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 March 1996. From March 1993 to March 1996,
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.
4
<PAGE> 8
MEETINGS OF THE BOARD OF DIRECTORS AND
INFORMATION REGARDING COMMITTEES
The Board of Directors held five meetings in 1998. 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 Board of Directors has three standing committees, an Audit Committee, a
Compensation Committee and a Governance and Nominating Committee.
THE AUDIT COMMITTEE is composed of Thomas R. Loemker (Chairman), Leo
Benatar, and James C. McGroddy. The duties of the Audit Committee include
recommending the engagement of independent auditors and reviewing and
considering actions of management in matters relating to audit functions. The
Committee reviews, with independent auditors, the scope and results of its audit
engagement, the system of internal controls and procedures and reviews the
effectiveness of procedures intended to prevent violations of law and
regulation. The Committee also reviews the status of Year 2000 compliance and
reviews our Business Ethics Program, including a review of environmental issues.
The Audit Committee held five meetings in 1998.
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 our officers, determining the number and issuance
of options under our 1990 Employee Stock Option Plan and 1997 Incentive Stock
Option Plan and recommending the establishment of and monitoring a compensation
and incentive program for all of our executives. The Compensation Committee held
two meetings in 1998.
THE GOVERNANCE AND NOMINATING COMMITTEE is composed of Leo Benatar
(Chairman), Walter Williams and David E. 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 effectiveness of our organization. The Governance and Nominating
Committee held one meeting in 1998. 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.
5
<PAGE> 9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates how many shares of common stock was
beneficially owned, as of March 26, 1999 by (1) each person known by us to be
the owner of more than 5% of the outstanding shares of common stock, (2) each
director, (3) our Chief Executive Officer and each of our other four most highly
compensated officers and (4) all directors and executive officers as a group. In
general, "beneficial ownership" includes those shares a director or executive
officer has the power to vote or the power to transfer, and stock options and
other rights to acquire common stock that are exercisable currently or become
exercisable within 60 days. Except as indicated otherwise, the persons named in
the table below have sole voting and investment power with respect to all shares
shown as beneficially owned by them. We based our calculation of the percentage
owned on 47,224,744 shares outstanding on March 26, 1999. The address of each of
the directors and executive officers listed below is c/o Paxar Corporation, 105
Corporate Park Drive, White Plains, New York 10604.
<TABLE>
<CAPTION>
PERCENTAGE OF
AMOUNT AND NATURE OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP SHARES OWNED
---------------- ----------------------- -------------
<S> <C> <C>
Arthur Hershaft........................................... 4,744,919(1) 10.02%
Victor Hershaft........................................... 1,280,943(2) 2.70%
Craig O. Morrison......................................... -0-(3) -0-
John Paxton............................................... 284,550(4) *
Jack R. Plaxe............................................. 76,107(5) *
Daniel S. Bishop.......................................... 104,249(6) *
Jack Becker............................................... 189,218(7)(8) *
Leo Benatar............................................... 30,584(9) *
Thomas R. Loemker......................................... 511,222(10) 1.09%
James C. McGroddy......................................... 15,000(11) *
David E. McKinney......................................... 58,963(7)(12) *
Walter W. Williams........................................ 42,623(7) *
Thomas W. Smith 3,940,967(13) 8.35%
Thomas N. Tryforos......................................
323 Railroad Avenue
Greenwich, CT 06830
All directors and executive officers as a group (12 7,059,835(14) 14.80%
persons)................................................
</TABLE>
- ---------------
* Represents less than 1% of our outstanding common stock.
(1) Includes 93,908 shares issuable upon the exercise of presently exercisable
stock options. Also includes 643,512 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 131,504 shares
of common stock which are not currently exercisable.
(2) Includes 57,813 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 61,132 shares of common stock which
are not currently exercisable.
(3) Does not include options to purchase 335,000 shares of common stock which
are not presently exercisable.
(4) Includes 6,250 options to acquire a like number of shares of common stock
at an exercise price of $15.375 per share. Does not include options to
purchase 18,750 shares of common stock which are not currently
exercisable. Mr. Paxton resigned as Executive Vice President and President
of Printing Solutions effective October 28, 1998.
6
<PAGE> 10
(5) Includes 26,257 options to acquire a like number of shares of common stock
at an exercise price of $15.6875 per share. Does not include options to
purchase 93,774 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 and 2,500 options to acquire
a like number of shares of common stock at an exercise price of $15.375
per share. Does not include options to purchase 17,500 shares of common
stock, which are not currently exercisable.
(7) 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, 6,104 options to acquire a like number
of shares of common stock at an exercise price of $15.60 per share and
6,000 options to acquire a like number of shares of common stock at an
exercise price of $14.375 per share.
(8) 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.
(9) Includes 7,813 options to acquire a like number of shares of common stock
at an exercise price of $7.60 per share, 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 6,000 options to acquire a like
number of shares of common stock at an exercise price of $14.375 per
share.
(10) Includes 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,
6,104 options to acquire a like number of shares of common stock at an
exercise price of $15.60 per share 6,000 options to acquire a like number
of shares of common stock at an exercise price of $14.375 per share and
22,070 shares held by Mr. Loemker's wife.
(11) Includes 6,000 options to acquire a like number of shares of common stock
at an exercise price of $15.375 per share and 6,000 options to acquire a
like number of shares of common stock at an exercise price of $14.375 per
share.
(12) Does not include 1,406 shares owned by Mr. McKinney's wife, as to which
Mr. McKinney disclaims beneficial ownership.
(13) Represents shares of common stock beneficially owned as of February 12,
1999, as indicated on the report on Form 13G, by Messrs. Smith and
Tryforos as investment managers for certain managed accounts consisting of
three private investment limited partnerships, of which each of Messrs.
Smith and Tryforos is a general partner, an employee profit sharing plan
of a corporation of which Mr. Smith is the sole shareholder, for which
both Messrs. Smith and Tryforos are trustees, and a trust for the benefit
of a family member of Mr. Smith, for which Mr. Smith is a trustee. Each of
Messrs. Smith and Tryforos has shared power to vote or to direct the vote
and shared power to dispose or to direct the disposition of 3,537,464
shares; Mr. Smith has sole power to vote and dispose of 403,503 shares and
Mr. Tryforos has sole power to vote and dispose of 4,950 shares.
(14) Includes 472,429 shares issuable upon the exercise of currently
exercisable options. Does not include shares beneficially owned by John
Paxton.
7
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the aggregate compensation that we paid to
our Chief Executive Officer and our four other most highly compensated executive
officers for services rendered during the last three fiscal years:
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION -------------------------------
------------------------------ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)(1) COMPENSATION($)
- --------------------------- ---- ---------- ---------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Arthur Hershaft................... 1998 $407,692 0 50,000
Chairman and CEO 1997 $370,135 $ 147,450 37,500
1996 $357,618 $ 502,918 39,063 $250,000(2)
Victor Hershaft(3)................ 1998 $338,384 $ 16,107 25,000
Vice Chairman and President 1997 $321,706 $ 102,550 25,000
Apparel ID Operations 1996 $310,827 $ 349,680 19,532
Craig O. Morrison................. 1998 $ 96,635 $ 100,000(5) 300,000
President and Chief Operating
Officer(4)
John W. Paxton(6)(7).............. 1998 $363,000 $ 64,886 --
Executive Vice President 1997 $297,214 $ 128,092 626,148(8)
Jack Plaxe(9)..................... 1998 $234,423 0 --
Chief Financial Officer 1997 $ 59,223 -- 105,031
1996 $177,606 $ 166,506
Daniel S. Bishop(7)(10)........... 1998 $199,766 0 10,000
Vice President and General 1997 $156,876 $ 51,634 101,749(8)
Counsel
</TABLE>
- ---------------
(1) Represents stock options granted under either our 1990 Employee Stock
Option Plan or our 1997 Incentive 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. that we did not own, the expansion of
our business overseas, and the general increase in our results of
operations.
(3) Mr. Hershaft was appointed Vice Chairman in December 1998 and President of
our Apparel Identification operations in January 1998.
(4) Mr. Morrison became President and Chief Operating Officer effective October
1, 1998.
(5) Represents the bonus paid to Mr. Morrison on becoming President and Chief
Operating Officer.
(6) Mr. Paxton was appointed Executive Vice President and President of our
Printing Solutions operations in January 1998. Prior to that time, Mr.
Paxton served as President of Monarch Marking Systems, Inc., since October
1995. Mr. Paxton resigned as an officer on October 28, 1998.
(7) Salary and bonus reflect compensation we paid following our acquisition of
Monarch Holdings, Inc., in March 1997.
(8) Represents options granted under our 1990 Plan in exchange for options to
purchase shares of Monarch Holdings, Inc.
(9) Mr. Plaxe resigned as Vice President and Chief Financial Officer in March
1997 and was appointed Senior Vice President and Chief Financial Officer in
December 1997.
(10) Mr. Bishop was appointed Vice President, General Counsel and Secretary 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 March 1996.
8
<PAGE> 12
OPTION GRANTS IN LAST FISCAL YEAR
The following table gives more information on stock options granted during
the last fiscal year. We granted a total of 983,000 stock options to all of our
employees in the year ended December 31, 1998.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES
SECURITIES TOTAL OPTIONS EXERCISE OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5% 10%
- ---- ---------- ------------- -------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Arthur Hershaft............... 5,913 0.60% $ 16.91 1/21/03 $ 16,041 $ 46,426
44,087 4.48% $15.375 1/21/08 $ 426,288 $1,080,299
Victor Hershaft............... 25,000 2.54% $15.375 1/21/08 $ 241,731 $ 612,595
Craig O. Morrison............. 300,000 30.52% $ 9.625 8/5/08 $1,815,933 $4,601,931
John W. Paxton................ 25,000 2.54% $15.375 1/21/08 $ 241,731 $ 612,595
Jack Plaxe.................... -- -- -- -- -- --
Daniel S. Bishop.............. 10,000 1.02% $15.375 1/21/08 $ 96,693 $ 245,038
</TABLE>
Stock options granted under our 1990 Employee Stock Option Plan and 1997
Incentive Stock Option Plan are intended to qualify as incentive stock options
under Section 422 of the Internal Revenue Code of 1986, as amended. Under the
terms of both plans, incentive stock options may be granted to our officers and
other key employees for a maximum term of 10 years. The price per share of an
incentive stock option may not be less than the fair market value of our common
stock on the date the option is granted. However, incentive stock options
granted to persons owning more than 10% of our 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 our common stock on the date the option is
granted. Only options granted up to a fair market value of $100,000 worth of
common stock (the value being determined as of the date of the grant)
exercisable for the first time during any calendar year can qualify as incentive
stock options under the Internal Revenue Code.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table shows the number and value of stock options that each
of the persons named below exercised during the year ended December 31, 1998. It
also shows the number of exercisable and unexercisable options each of those
persons held at the end of 1998, as well as the amount he would have received
had he exercised his options on December 31, 1998. On that date, the last
reported sales price of our common stock was $8.9375.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
SHARES OPTIONS/SARS AT FY-END(#) AT FY-END($)(1)
ACQUIRED ON VALUE ------------------------------ ------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE(1) EXERCISABLE UNEXERCISABLE(1)
- ---- ----------- ----------- ----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Arthur Hershaft........ 61,036 $ 168,138 57,258 118,134 $146,719 $27,616
Victor Hershaft........ 24,417 $ 81,279 34,326 59,620 $ 79,834 $33,239
Craig O. Morrison...... -- -- -- 300,000 -- --
John W. Paxton......... 363,648 $2,943,701 -- 25,000 -- --
Jack R. Plaxe.......... -- -- 26,257 78,774 -- --
Daniel S. Bishop....... -- -- 101,749 10,000 $227,256 --
</TABLE>
- ---------------
(1) The figures have been 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
Directors who are also our employees receive no fee for their services as
directors. We established a policy in 1993 to compensate each of our outside
directors, and amended the policy in 1998 to increase the annual fee from
$12,000 to $15,000, to increase the fee for attendance at committee meetings
from $600 to $750,
9
<PAGE> 13
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 Company grants
6,000 stock options to each director every year. 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.
Under our Deferred Compensation Plan for Directors, which was approved at
our 1998 Annual Meeting, directors who are not employees can defer receipt of
their fees and have them credited to an account that is based on Units
determined by reference to our common stock. If a director elects to defer his
fees, we will credit his account with Units equal to that number of shares that
the fees would have bought based on the closing price of our common stock on the
previous day. The number of Units will increase with stock splits or stock
dividends and upon payment of cash dividends; the number of Units will decrease
with reverse stock splits and similar reorganizations. When a director elects to
receive payment for his deferred fees, he will receive an amount equal to the
number of Units in his account multiplied by the closing price of our common
stock on the day before the election.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
Arthur Hershaft's Employment Agreement
Basic package. On December 16, 1986, we entered into an employment
agreement with Arthur Hershaft, the Chairman of the Board and Chief Executive
Officer. The agreement provides for an initial term of five years and was
renewed at Mr. Hershaft's option, for an additional five years. Thereafter, the
contract is automatically renewed annually unless either we or Mr. Hershaft
elect to terminate it. Mr. Hershaft's fixed compensation for the fiscal year
ending December 31, 1999 will be $420,000.
Incentive compensation and other features. Mr. Hershaft is a participant
in our incentive compensation programs and is entitled to receive other fringe
benefits available to our executives. In the event of his 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 that we maintain for Mr. Hershaft, provided that the premiums
for such disability insurance do not exceed $15,000 per annum.
Termination and change in control features. Mr. Hershaft may resign as an
active employee and become a consultant to us following the conclusion of the
term of the employment agreement. If 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 prior to his 65th birthday and annual compensation of
$250,000 for each year in which he acts as a consultant following his 65th
birthday. The aggregate length of Mr. Hershaft's consulting term is to be 10
years. If there is a change in the persons that control us that Mr. Hershaft and
a majority of our 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 compete with
us.
Victor Hershaft's Employment Agreement
Basic package. On February 13, 1989, we entered into an employment
agreement with Victor Hershaft, which was amended as of October 1, 1998. The
amended contract provides for Mr. Hershaft to be our Vice Chairman, the
President of the Apparel Identification operations and a member of the Executive
Management Committee. Mr. Hershaft will receive annual cost of living increases
in salary. Mr. Hershaft's fixed compensation for the fiscal year ending December
31, 1999 will be $348,000.
Incentive compensation. Mr. Hershaft is also a participant in our
incentive compensation program and is entitled to receive other fringe benefits
available to our executives. We also maintain a $200,000 life
10
<PAGE> 14
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 we maintain on Mr.
Hershaft's behalf, provided that the premiums for such disability insurance do
not exceed $7,500 per annum.
Termination and change in control features. The term of Mr. Hershaft's
agreement ends on February 13, 2004; however, Mr. Hershaft may terminate the
agreement effective February 13, 2000, on proper notice. After February 13,
2004, the agreement is automatically renewed annually unless either we or Mr.
Hershaft elects to terminate it. If the agreement is not renewed, in some
circumstances, Mr. Hershaft may act as our exclusive manufacturers'
representative on agreed terms and conditions, or may elect to receive full
compensation and benefits for two years, including the continued exercisability
of stock options, or may act as a part-time consultant for up to ten years at
$125,000 per year. If there is a change in the persons that control us that
Victor Hershaft, Arthur Hershaft and a majority of our Board of Directors
oppose, 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 Victor Hershaft and Arthur Hershaft
oppose a change in control, but the majority of the Board of Directors vote in
favor of such change, then Victor Hershaft may terminate his employment upon
such change in control and receive 2.5 times his fixed compensation. The
employment agreement also contains various restrictive covenants limiting Victor
Hershaft's ability to compete with us.
Craig O. Morrison's Employment Agreement
Basic Package. On August 6, 1998, we entered into an employment agreement
with Craig O. Morrison, our President and Chief Executive Officer. We granted
Mr. Morrison an option to purchase 300,000 shares and have agreed to grant him
annual stock options to purchase a minimum of 35,000 shares. He also received a
bonus of $100,000 on signing the agreement. We have also agreed to nominate Mr.
Morrison for election to the Board of Directors, subject to the shareholders
approval of the amendment to our Restated Certificate of Incorporation to permit
loans to directors who are also officers. Mr. Morrison fixed compensation for
the fiscal year ending December 31, 1999 will be $375,000.
Incentive Compensation. Mr. Morrison is also a participant in our
incentive compensation program and is entitled to receive other fringe benefits
available to our other executives.
As part of his compensation arrangement, we made a $200,000 interest free
loan to Mr. Morrison, which he is required to repay in three annual installments
of $66,666 beginning October 1, 2002. We have agreed to forgive the repayment of
one-half of the loan if our adjusted share price reaches $20 per share and stays
at that price for 30 consecutive trading days anytime before October 1, 2002. In
addition, if thereafter the adjusted share price reaches $30 per share for
thirty consecutive trading days, the balance will also be forgiven. Any balances
that are not forgiven will have to be repaid. We also made an interest-free
$122,500 loan to Mr. Morrison to assist him with the purchase of his house. This
loan is payable on demand.
Termination and change in control features. The employment agreement
provides for an initial term until January 1, 2002. If we terminate Mr.
Morrison's employment without cause prior to that date or we do not make him our
Chief Executive Officer prior to that date and he elects to terminate his
employment, we will pay him one year's salary and all previously granted stock
options will become immediately exercisable. In either case, Mr. Morrison will
have to pay the outstanding balance of all our loans to him.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Members of the Compensation Committee have never served as our officers or
employees or officers or employees of any of our subsidiaries. During the last
fiscal year, none of our executive officers served on the Board of Directors or
Compensation Committee of any other entity whose officers served either on our
Board of Directors or Compensation Committee.
11
<PAGE> 15
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
Executive Compensation Policy. The Compensation Committee of the Board of
Directors seeks to attract and retain key executive personnel to improve
shareholder value by enhancing corporate performance. The Committee's philosophy
is to base executive compensation on short and long term performance criteria.
It believes that those criteria will provide the motivation and incentive for
outstanding performance by executive officers.
The following statements summarize the policies that guide the Committee's
executive compensation decisions. Our executive compensation program is designed
to:
- Create an inducement and motivation for executive officers to sustain our
growth and increase market share.
- Align the financial interests of the executive officers with those of the
our shareholders by encouraging executive officers to have significant
ownership of our common stock.
- Reward above-average returns to shareholders.
- Induce corporate loyalty in both the short and long term.
Our executive compensation program has three major components: base
salaries, annual incentives, and long-term incentives.
Base Salaries. Our executive officers receive base salaries as
compensation for their job performance, abilities, knowledge, and experience.
The base salaries of Arthur Hershaft, our Chief Executive Officer and Chairman
of the Board of Directors, Craig O. Morrison, our President and Chief Operating
Officer and Victor Hershaft, our Vice Chairman and President of the Apparel
Identification operations, are determined under the terms of their respective
employment contracts with us. Apart from any contractual commitments, the
Compensation Committee intends to maintain base salaries at competitive levels
in the marketplace for comparable executive ability and experience and to place
more emphasis on the incentive portion of executive compensation, 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 Compensation Committee has adopted an
annual incentive compensation program based upon corporate performance criteria
to augment the base salaries paid to executive officers. Under the incentive
compensation program, performance is measured as a function of our improvement
in earnings per share from year to year, and, in some cases, a combination of
operating profit and improvements in working capital as a percent of sales. Each
year, the Compensation Committee establishes "target" bonus awards for executive
officers. For 1999, the target incentive bonus award will be paid to Arthur
Hershaft, Craig O. Morrison, Jack Plaxe and Daniel Bishop if the growth in
earnings per share is approximately 20%. We will not pay any bonus unless the
growth in earnings per share is at least 5%. We will pay the maximum bonus award
of 200% of target if growth in earnings per share is 40% or more. The "target"
bonus award with respect to Arthur Hershaft, Paxar's Chief Executive Officer, is
75% of base salary if the growth in earnings per share is 20% or more.
The incentive compensation for the other officers in the program, including
Victor Hershaft, James Wrigley, Kenneth Cassady and Richard Marshall, will be
based on our earnings per share and a combination of certain criteria, return on
assets, growth in sales, cash flow and operating profit, weighted to reflect the
particular circumstances of the operating unit for which each participant is
responsible.
For 1998, we paid Victor Hershaft a bonus of $16,107. We did not pay any
other bonuses to executive officers for 1998.
Long-Term Incentives. We have also established two stock option plans,
under which we award executive officers periodically with stock options. 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.
12
<PAGE> 16
In September 1998, we authorized a grant of 300,000 ten-year options at an
exercise price of $9.625 per share to Craig O. Morrison in connection with
hiring him as our President and Chief Operating Officer. These options vest
100,000 shares per year beginning October 1, 2001. In January 1999, we
authorized the grants of stock options to the executive officers listed below.
Unless otherwise indicated, the exercise price of the options was equal to the
closing market price on the date of grant, and the options vest 25% per year
over four years and expire ten years from the date of grant. We believe that
these grants are consistent with our compensation policies as they encourage
performance that contributes to our overall profitability and increases the
price of our common stock.
<TABLE>
<CAPTION>
EXECUTIVE NUMBER OF OPTIONS EXERCISE PRICE
- --------- ----------------- --------------
<S> <C> <C>
Arthur Hershaft....................................... 40,106 $ 9.188
9,894* 10.107*
Victor Hershaft....................................... 25,000 9.188
Craig O. Morrison..................................... 35,000 9.188
Jack Plaxe............................................ 15,000 9.188
Daniel S. Bishop...................................... 10,000 $ 9.188
</TABLE>
- ---------------
* These incentive stock options expire five years after date of grant and have
an exercise price of 110% of the closing market price on the date of grant.
Submitted March 28, 1999 by the members of the Compensation Committee.
David E. McKinney, Chairman
Robert Laidlaw
Walter W. Williams
13
<PAGE> 17
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 our common stock with (b) the total return on
the Standard & Poor's 500 Composite Index, (c) the total return on the Russell
2000 Index, and (d) the total return on a peer group index. We have added the
Russell 2000 Index this year, because we believe we fit better into the category
of companies that it covers than into the S&P 500. The Russell 2000 Index is a
small capitalization index. The average market capitalization of companies
included in the Index is approximately $592 million, with the largest company
having a capitalization of approximately $1.4 billion. The peer group is an
index weighted by the relative market capitalization of the following nine
companies which were selected for being in industries related to ours (product
identification, bar-code, apparel, textile, ribbon manufacturing and printing),
for having revenues between $100 million and $2.5 billion in their most recently
reported fiscal years and for having five-year compound annual revenue growth of
at least 10%. The nine are: Moore Corporation Limited, PSC Inc., The Reynolds &
Reynolds Company, Standard Register Co., Symbol Technologies, Inc., Wallace
Computer Services, Inc., Zebra Technologies Corporation, Unova, Inc. and Telxon
Corporation.
The following graph assumes that $100 had been invested in each of Paxar
Corporation, the S&P 500, the Russell 2000,and the nine-member 1998 Peer Group
on December 31, 1993.
[5-Year Cumulative Total Return line graph]
<TABLE>
<CAPTION>
PAXAR PEER GROUP RUSSELL 2000
CORPORATION INDEX S&P 500 INDEX INDEX
----------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
Dec 93 100.00 100.00 100.00 100.00
Dec 94 82.64 105.69 101.32 98.19
Dec 95 136.88 143.40 139.40 126.11
Dec 96 222.75 172.19 171.41 147.05
Dec 97 239.10 165.51 228.59 179.90
Dec 98 144.26 188.93 293.92 174.86
</TABLE>
The immediately preceding sections entitled "Executive Compensation" and
"Performance Graph" do not constitute soliciting material for purposes of SEC
Rule 14a-9, will not be deemed to have been filed with the SEC for purposes of
Section 18 of the Securities Exchange Act of 1934, and are not to be
incorporated by reference into any other filing that we make with the SEC.
14
<PAGE> 18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PLANT LEASE
We lease a plant located in Sayre, Pennsylvania, from certain present and
former principal shareholders 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 Paxar than the terms obtainable from non-affiliated persons.
OTHER RELATIONSHIPS AND RELATED TRANSACTIONS
The law firm of Snow Becker Krauss P.C., of which Jack Becker is a
principal, serves as our principal outside counsel.
We have procured directors and officers' liability insurance from Federal
Insurance Company under a contract dated March 31, 1998 at an aggregate annual
premium of $146,500. The policies insures us and our directors and officers in
accordance with the indemnification provisions of the New York Business
Corporation Law.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
THE NOMINEES LISTED IN PROPOSAL 1.
PROPOSAL 2. TO AMEND OUR RESTATED CERTIFICATE OF INCORPORATION TO ALLOW US TO
MAKE LOANS TO DIRECTORS WHO ARE ALSO OFFICERS
Before 1997, Section 714 of the New York Business Corporation Law
prohibited a New York corporation from making or guaranteeing loans to its
directors without shareholder approval. The New York BCL was amended in 1997 to
permit a New York corporation to make loans to its directors if shareholders
specifically approve the loan or guarantee or if the board determines that the
loan or guarantee benefits the corporation and either approves the loan or
guarantee or a plan authorizing loans or guaranties.
It is our policy to provide compensation packages to our directors,
officers and employees that are commensurate with those offered by our
competitors. Those compensation packages frequently include interest-free or
low-interest loans or loan guarantees and, in the case of officers, provide that
the officer will be nominated to the company's board of directors. We have found
that we may be at a competitive disadvantage in attracting and retaining high
caliber personnel if we cannot make loans to directors who are also our
officers. The Board has determined that to remain competitive in the market for
qualified officers, it is necessary for us to have the ability to make loans to
our directors who are also officers.
Since we were incorporated before the BCL was amended in 1997 to permit New
York corporations to make or guarantee loans to their directors, the BCL
requires us to amend our Restated Certificate of Incorporation to permit us to
make those loans. Therefore, our Board of Directors has approved an amendment to
our Restated Certificate of Incorporation authorizing us to make loans to
directors who are also our officers, if the Board determines that the loan or
guarantee benefits us and either approves the specific loan or guarantee or a
general plan authorizing loans and guarantees. A copy of the text of the
amendment is attached to this Proxy Statement as Exhibit A.
When we hired Craig O. Morrison as our President and Chief Operating
Officer in October 1998, we made a loan to him as described under "Certain
Relationships and Related Transactions" above. This prevented us from also
appointing him as a director at that time. We agreed, however, to nominate him
for election as a director subject to shareholder approval of this amendment. If
the shareholders do not approve this amendment, Mr. Morrison would either have
to repay his loan or he would have to decline to serve as a director.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL 2.
15
<PAGE> 19
PROPOSAL 3. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee and the approval of the
Board of Directors, Arthur Andersen LLP has been appointed to serve as our
independent public accountants for the fiscal year 1999. The Board seeks to have
the shareholders ratify the appointment of Arthur Andersen.
Arthur Andersen has been our independent public accountants since November
1979. We paid Arthur Andersen $870,000 for audit and audit related fees during
the past fiscal year. They have no financial interest, either direct or
indirect, in us. We expect a representative of Arthur Andersen to attend our
1999 Annual Meeting and to have an opportunity to make a statement or respond to
appropriate questions from shareholders. If our shareholders do not ratify the
appointment of Arthur Andersen, the Board of Directors may appoint other
independent public accountants upon the recommendation of the Audit Committee.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL 3.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires our officers and
directors, and persons who own more than ten percent of a registered class of
our equity securities, to file reports of ownership and changes in ownership
with the SEC. Officers, directors and persons who own more than ten percent of
our equity securities are required by regulation to furnish us with copies of
all Section 16(a) forms they file.
Based solely on our review of the copies of those reports we have received,
or written representations that no other reports were required for those
persons, we are not aware of any failures to file reports or report transactions
in a timely manner during the fiscal year ended December 31, 1998.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
If you wish to submit proposals for possible inclusion in the Proxy
Statement intended for our 2000 Annual Meeting of Shareholders, we must receive
them no later than December 3, 1999 in order for them to be included in the
Proxy Statement and form of proxy relating to that Annual Meeting. Proposals
should be mailed to Paxar Corporation, to the attention of our Secretary, Daniel
S. Bishop, 105 Corporate Park Drive, White Plains, New York 10604. In addition,
our bylaws specify procedures for notifying us of nominations for director and
other business to be properly brought before any meeting of shareholders. You
may also obtain a copy of our bylaws from the Secretary.
16
<PAGE> 20
OUR ANNUAL REPORT ON FORM 10-K
If you own our common stock, you can obtain copies of our Annual Report on
Form 10-K for the fiscal year ended December 31, 1998, as filed with the SEC,
including the financial statements, without charge, by writing to Investor
Relations: Attn: Ms. Annette Geraghty, Paxar Corporation, 105 Corporate Park
Drive, White Plains, New York 10604 and you can also find our Annual Report on
the SEC's website at www.sec.gov.
By Order of the Board of Directors
Daniel S. Bishop, Secretary
White Plains, New York
April 7, 1999
17
<PAGE> 21
EXHIBIT A
AMENDMENT TO CERTIFICATE OF INCORPORATION
NINTH: Pursuant to Section 714 of the Business Corporation Law of the State of
New York, the Corporation may make or guarantee a loan to a director who is also
an officer of the corporation if the board determines that the loan or guarantee
benefits the corporation and either approves the specific loan or guarantee or a
general plan authorizing loans and guarantees.
<PAGE> 22
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 April 7, 1999,
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 Paxar held of record by the undersigned on March 26, 1998
at the Annual Meeting of Shareholders of Paxar, to be held on May 7, 1999 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> 23
1. ELECTION OF DIRECTORS, as provided in Paxar'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: Victor Hershaft
Craig O. Morrison
Jack Becker
Leo Benatar
David E. McKinney
2. To approve the amendment to Paxar's Restated Certificate Of Incorporation
to permit it to make loans to directors who are also officers.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the appointment of Arthur Andersen LLP, as Paxar's independent
auditors for the year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Upon such other matters as may properly come before the meeting or any
adjournments thereof.
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 AND 3, 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: ______________________________,1999
