June 13, 1997
Dear Shareholder,
It is my pleasure to invite you to attend the 1997 Annual Meeting
of Shareholders of Peerless Tube Company. The meeting, will be
held on Friday, July 25, 1997 at 10:00 A.M. local time at the
Corporation's headquarters, 58-76 Locust Avenue, Bloomfield, New
Jersey. The Notice of Annual Meeting and Proxy Statement
accompanying this letter describes business to be conducted at
this meeting.
Our Company's executive committee and I will report to you on our
progress and we look forward to your questions and comments.
It is important that your shares be represented at the meeting,
regardless of the number you may hold. Whether or not you plan
to attend the meeting, please complete the proxy card and return
it in the pre-addressed envelope as soon as possible. This will
not prevent you from voting your shares in person, if you are
present.
This proxy will be also used as an admission list to the meeting.
I look forward to seeing you on July 25,1997.
Sincerely,
Frederic Remington
<PAGE>
PEERLESS TUBE COMPANY
Notice of Annual Meeting
NOTICE IS HEREBY GIVEN that the Annual Meeting of the holders of
Capital Stock, $1.33 1/3 Par Value of Peerless Tube Company, a
New Jersey Corporation, will be held at the office of the Company
at 58-76 Locust Avenue, Bloomfield, New Jersey, on Friday, July
25, 1997 at 10:00 A.M., EDT. The meeting, and/or adjournment or
adjournments thereof, is called for the following purposes:
1 . To elect a Board of eight Directors to serve until
the next annual meeting and until their successors are
elected and qualify;
2. To ratify the appointment of Goldstein Golub Kessler &
Company, P.C. as independent accountants of the Company
for 1997; and
3. To receive the reports of officers (without taking any
action thereon) and to transact such other and further
business as may properly come before the meeting or any
adjournment thereof.
These items are more fully described in the following Proxy
Statement, which is hereby made a part of this Notice.
Stockholders entitled to notice of and to vote at the annual
meeting are stockholders of record at the close of business on
May 30, 1997, as fixed by action of the Board of Directors.
All Stockholders are urged to sign and return the accompanying
proxy without delay in order that a quorum at the annual meeting
may be assured.
Each Stockholder is entitled to one (1) vote, in person or by
proxy, for each share held by such Stockholder.
By Order of the Board of Directors
Ann Gaccione, Secretary
Dated: June 13, 1997
58-76 Locust Avenue
Bloomfield, NJ 07003
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO
THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND
IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED. THE
PROMPT RETURN OF YOUR SIGNED PROXY, REGARDLESS OF THE NUMBER OF
SHARES YOU HOLD, WILL AID THE COMPANY IN REDUCING THE EXPENSE OF
ADDITIONAL PROXY SOLICITATION. THE GIVING OF SUCH PROXY DOES NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE
MEETING. A COPY OF THE CORPORATION'S 1996 ANNUAL REPORT TO THE
SECURITIES AND EXCHANGE COMMISSION IS ENCLOSED OR AVAILABLE
WITHOUT CHARGE. DIRECT YOUR REQUEST TO PEERLESS TUBE COMPANY,
58-76 LOCUST AVENUE, BLOOMFIELD, NEW JERSEY 07003, OR CALL (201)
743 -5100.
<PAGE>
PEERLESS TUBE COMPANY
PROXY STATEMENT
General Information and Annual Meeting of Stockholders, July 25,
1997.
The enclosed proxy is revocable and is solicited on behalf of the
Board of Directors of Peerless Tube Company for use at the Annual
Meeting of the Stockholders to be held on Friday, July 25, 1997
at 10:00 A.M. at 58-76 Locust Avenue, Bloomfield, New Jersey
07003. This Proxy Statement and the enclosed form of proxy are
first being sent or given to Stockholders on or about June 13,
1997.
All expenses incurred in this solicitation will be paid for by
the Company.
The Annual Report including information filed with the Company's
annual 10K report and financial statements for the year ending
December 31, 1996, are enclosed herewith.
Only Stockholders of Record at the close of business on May 30,
1997 will be entitled to vote. On the said record date there
were outstanding 2,462,973 shares of capital stock, each share of
which is entitled to one vote at the meeting. The owners of a
majority of the shares entitled to vote, present in person or
represented by proxy, will constitute a quorum for the
transaction of business at the meeting.
The shares represented by a properly signed and returned proxy
card will be voted as specified by the shareowner. If a proxy
card is signed and returned but no specification is made, such
shares will be voted FOR the election of all nominees for
director (Proposal 1), the appointment of independent accountants
(Proposal 2). A proxy may be revoked by a shareholder at any
time before it is voted by notice in writing delivered to the
Secretary of the Company, by submission of another proxy bearing
a later date or by voting in person at the Annual Meeting.
It is the policy of the Company that any proxy, ballot or other
voting material that identifies the particular vote of a
shareholder will, if requested thereon by the shareholder, be
kept confidential except in the event of a contested proxy
solicitation or as may be required by law. The Company may be
informed whether or not a particular shareholder has voted and
will have access to any comment on a proxy, ballot or other
material and to identify the commenting shareholder. Under the
Policy, the inspectors of election at any meeting will be
independent parties unaffiliated with the corporation.
Election of Board of Directors (Item 1 on Proxy Card)
A Board of eight (8) Directors is to be elected at the Annual
Meeting for a term of one year and until the election and
qualification of their successors. Each nominee has consented to
being named in the Proxy Statement and to serve if elected. If
prior to the Annual Meeting any nominee should become unavailable
to serve, the shares represented by a properly signed and
returned proxy card will be voted for the election of such person
as may be designated by the Board of Directors or the Board may
determine to leave the vacancy unfilled.
Certain information regarding each nominee and each director
continuing in office after the Annual Meeting is set forth below,
including the individual's age and principal occupation, a brief
account of business experience during the last five years,
certain other directorships currently held and the year in which
the individual was first elected a director of the Corporation.
In addition, shares of Capital Stock beneficially owned as of May
30, 1997 are disclosed based in part on information received from
the respective persons and in part from the records of the
Company.
<PAGE>
<TABLE> NOMINEES FOR ELECTION
Shares of
Board Common
Member Stock % of
Directors Age Principal Occupation Since Owned Total
- --------- --- -------------------- ------ ------- -----
<S> <C> <C> <C> <C> <C>
Brinton, S. Jervis 73 Financial Planner
and Consultant 1990 1,000 0.1%
Felzenberg, Leonard 63 Attorney at Law 1997 500 0.1%
Leo, Frank M. 79 Real Estate Developer 1990 4,000 0.2%
McDermott, Frank X. 72 Attorney at Law 1983 3,804 0.2%
Potts, Richard W. 60 President 1970 170,434 6.9%
Remington, Frederic 67 Chairman & Chief
Executive 1965 188,418 7.7%
Remington John F. 62 Midwest Sales Manager 1993 144,895 5.9%
Solomon, A. Louis 67 Consultant 1992 500 0.1%
</TABLE>
Mr. Leonard Felzenberg, Attorney at Law, was appointed to serve
on the Board at the March 18, 1997 meeting. Mr. Solomon's firm
periodically performs consulting work for the company.
* All Directors and Officers of the Company hold as a group 34.7%
of the Company's stock, including 338,098 shares beneficially, or
otherwise, held by the Remington family. See page 7 for
additional information. Hill, Thompson, Magi & Company have
holdings of 12.6% or 321,275 total shares. There are on other
holdings reported over 5% of the total shares outstanding except
for the 137,870 shares, representing 5.6%, which are held by the
Peerless Tube Pension Plan at March 18, 1997.
Business Background of Directors
S. Jervis Brinton, Jr. was elected to the Board of Directors in
1990. He is a graduate of Williams College, New York University
Graduate School of Business Administration and the College for
Financial Planning. Mr. Brinton retired in 1987 as Executive
Vice President of Midlantic National Bank and is currently
President of Brinton Eaton Associates, Inc., in Morristown, N.J.,
engaged in personal financial planning and money management. He
is Chairman of the Henry H. Kessler Foundation and the Fannie
Ripple Foundation, and Trustee of the Marcus Ward Home, and the
Morris Museum. Mr. Brinton is a member of the Executive
Committee.
Leonard J. Felzenberg was elected to the Board of Directors in
1997. Mr. Felzenberg is a graduate of the University of Chicago
and New York University School of Law. He was admitted to
practice law in New Jersey in 1955 and in New York in 1982. He
served as a trial attorney in the Internal Security Division of
the United States Department of Justice and as a Line Officer in
the United States Navy. At the present time he is a senior
partner in the firm of Felzenberg, Winter & Winkler which
maintains law offices in Livingston, New Jersey.
Frank M. Leo was elected to the Board in October, 1990. He holds
certificates in Business and Commercial Law from Rutgers
University Extension and a certificate in Accounting from
Bloomfield College. He is the recipient of an honorary degree of
Doctor of Business Administration from Bloomfield College. He is
a graduate of the U. S. Army Counter Intelligence School. He
formed the T.V. Leo & Sons, Inc., a construction firm
specializing in commercial buildings and apartment houses. Afler
serving twenty years as President of this firm, he sold his
interest and presently is in business with his son in the
development of land and construction of offices and residential
buildings. He has been on the Advisory Board of National Newark
& Essex Bank, now PNC Bank, for twenty-five years.Frank X.
McDermott was elected to the Board of Directors in 1983. He is a
graduate of Columbia College and Columbia School of Law and holds
two Master's degrees from New York University. He was admitted
to the practice of law in New York in 1949 and in New Jersey in
1962. At the present time he is a Senior Member in the firm of
Apruzzese, McDermott, Mastro & Murphy, specializing in corporate
and labor law for management, with offices in Liberty Corner, NJ.
Richard W. Potts was elected to the Board of Directors in 1970.
After earning a Bachelor of Science degree from Rensselaer
Polytechnic Institute and a Master's Degree from Newark College
of Engineering (NJIT), Mr. Potts joined the Company in 1963, has
served as the Vice President, Manufacturing since 1968, aiid was
clected Senior Vice President, Production in 1986 and President
and Chief Operating Officer in 1989. Mr. Potts is a member of
the Executive Committee of the Board.
Frederic Remington, Jr. was elected to the Board of Directors in
1965. Mr. Remington joined the Company in 1950 after attending
Temple University and New Jersey Institute of Technology,
formerly Newark College of Engineering. He was named Vice
President, Operations in 1968, Vice President, Engineering in
1977, Senior Vice President, Engineering in 1986 and Chairman of
the Board and Chief Executive Officer in 1989. Mr. Remington is
a former Chairman of the Essex County Republican Organization, a
former member of the New Jersey State Assembly and a director of
the SFM Corporation. Mr. Remington is a member of the Executive
Committee of the Board.
John F. Remington was appointed to the Board of Directors in
1993. Mr. Remington attended Newark College of Engineering and
Rutgcrs University. He has been employed at Peerless since
Septetnber 1955 and became a regional sales manager in 1967. He
is past president of the Chicago Perfumery, Soap and Extract
Association and the Aerosol Industry Development Association.
Louis A. Solomon was elected to the Board of Director's in 1992.
Mr. Solomon is the principal in a management consulting firm,
L.A. Solomon Associates. He originally was retained by the
Company in 1990 during the early phases of its business
restructuring. For over ten years, Mr. Solomon has been a
director and consultant to Kwik-Way Industries, Inc., a
manufacturer of machines and tools used in the automotive
aftermarket. He has a BS in Economics froni the University of
Pennsylvania; MS Economics, Columbia University; and occupied the
positions of Graduate Faculty and Adjunct Assistant Professor of
Economics at the graduate business schools at the University of
Bridgeport and Long Island University, respectively.
Remuneration of Officers and Directors
All directors receive an annual director's fee of $3,200 plus
$600 for each meeting attended. In addition, the outside
directors receive $500 for each committee meeting attended. An
additional $300 is paid to the chairperson of the Audit and
Executive Compensation and Stock Option Committees (two
committees).
Certain relationships and transactions
Directors, from time to time, provide legal or consulting
services. There were no such services performed or fees paid in
1996 or 1995
Meetings of the Board
The total number of regular meetings of the Board of Directors
during the last year was five (5). During or after thcse
meetings, special and committee meetings were also held. A
majority of Directors attended all the meetings of the Board and
Committees of which they were members.
Committees of the Board
The Company has an Executive Committee currently consisting of
the following members of the Board:
Frederic Remington, Jr.
Richard W. Potts
S. Jervis Brinton
The Executive Committee meets on call and has the authority to
act on most matters during the intervals between Board of
Directors' meetings. This committee did not meet formally since
the last annual meeting. No fees are paid for services of the
Executive Committee.
The Company has an Audit Committee, Executive Compensation
Conimittee and a Stock Option Committee, each of which consists
of all of the outside Directors of the Company. The Audit
Committee and the Executive Compensation Committee met once since
the last annual meeting. The Company does not have a standing
Nominating Committee.
Executive Compensation
The Company believes that shareholders should be provided
information about executive compensation that is easy to
understand and relevant, and is consistent with the newly adopted
proxy rules of the Securities and Exchange Commission. This
disclosure allows its shareholders to more effectively evaluate
the relationship between executive compensation and shareholder
value.
<PAGE>
EXECUTIVE COMPENSATION
<TABLE>
Name, Position Fiscal Salary Bonus Other
Year Annual Restricted Stock Retirement
Benefits Stock Options Benefits
(1,2)*** Awards (3,4,5) (6) (7)
<S> <C> <C> <C> <C> <C> <C> <C>
Frederic Remington, 1996 $157,000 $0 $21,000 0 0 $0
Chairman & CEO 1995 $157,000 $0 $21,000 0 0 $39,000
1994 $157,000 $0 $20,000 0 0 $0
Richard W. Potts, 1996 $157,000 $0 $20,000 0 0 $30,000
President 1995 $157,000 $0 $15,000 0 0 $0
1994 $157,000 $0 $16,000 0 0 $0
G.J. Blumenschein 1996 $ 90,000 $0 *(1)
VP, Finance and
Treasurer
Christopher C.H. 1996 $115,000 $0 **(1)
Graber 1995 $115,000 $0 **(1)
1994 $115,000 $17,500 **(1)
</TABLE>
* Assumed position March 26, 1996
** References can be found on the paragraphs that are on page
10.
*** Note: number (#) references can be found in the paragraphs
that follow on pages 6-9; certain references also
apply to the Option Grant table on page 9.
(1) The amounts indicated for other benefits represent the
incremental cost to the Company of providing life and medical
insurance, expenses associated with their use of a company car
and Board of Director fees received. If no amount is shown in a
given year, such perquisites do not exceed the lesser of $50,000
or 10% of such officers' salary and bonus. Not included in the
table above is a $12,000 non recurring prior years adjustment for
Mr. Remington.
(2) Mr. Remington and Mr. Potts both have similar five year
employment contracts which renew automatically unless notice is
given by the Company. Under these contracts, the executives
agree to serve the Company during the term of employment for cash
compensation plus any other benefits such as pension, profit
sharing, stock options, or insurance coverage, to the extent as
they may be made generally available to the executives of the
Company. The Company shall have the right to discharge the
executive during the term of the agreement for good cause and
thereupon terminate the Agreement. "Good cause" shall include
the employee neglecting, refusing, or failing to faithfully and
diligently render services to the extent and in the manner
provided. The term of the agreement shall also end immediately
upon the death of the executive and may be terminated by the
Company upon such mental or physical illness, disability, or
incapacity as renders the employee unable to perform
satisfactorily all his duties for more than 90 days during a
180-day period. The employee may terminate the agreement by
giving the Company 15 days written notice. If the Company
terminates the employees employment for other than good cause, it
shall pay the employee his normal salary from the date of
termination for a period of five years.
(3) The beneficially owned shares by Mr. Frederic Remington,
John Reniington, and Mr. Potts disclosed in the table on page 3
does not include 146,704 shares held by the children of Messrs.
Frederic Remington, Jr., John Remington, William G. Remington
(deceased) and Richard W. Potts. It also excludes 38,181 shares
owned by The William G. Remington Foundation, of which Frederic
Remington, Carol Mathis, his widow, and his daughters, Karen K.
Cummins and Lori J. Smiley, are Trustees. Carol Mathis,
sister-in-law to Frederic and John Remington, and sister-in-law
to Mr. Richard Potts beneficially owned 153,213 shares as of
March 18, 1997. The Remington family holdings including those
shares in the Foundation represent approximately 34.7% of the
shares outstanding as of March 18, 1997.
(4) Since 1990, the Company entered into several employment
agreements for additional stock options pursuant to an incentive
stock option plan which became effective June 1, 1992. The
granting of these options is at the discretion of the Board.
Effective January 1993 Mr. Remington and Mr. Potts were each
granted options to purchase 50,000 shares of common stock at
$1.65 per share, which was 110% of the market price as of the
date the options were granted. The full text of the 1992
Incentive Stock Option Plan (the "Plan") under which these
options were granted is on file with the Securities and Exchange
Commission and is incorporated by reference. Salient provisions
of the plan are as follows: In June 1992 options to purchase
110,000 shares of stock at 1.25 were granted to two individuals
no longer employed by the Company. Neither former employee
exercised their options.
Shares Reserved for Issuance.
Pursuant to the terms of the Plan, two hundred fifty thousand
(250,000) shares of the Company's Common Stock are reserved for
issuance thereunder. In the event there is any change in the
number of issued shares of the Common Stock of the Company
without new consideration to the Company (such as by stock
dividends or stock splits), the number of shares reserved for
issuance under the Plan, the number of shares subject to any
outstanding option and the option price per share of each
outstanding stock shall be appropriately adjusted. Similarly, if
the Company shall be party to a merger, consolidation,
reorganization, sale or similar occurrence, equitable aqiustment
in the options may be made.
Administration of Plan; Award of Options.
The Plan is administered by the Executive Compensation and Stock
Option Committee of the Board of Directors (the "Committee"),
which is comprised of all of the Company's outside directors are
subject to the overall authority of the Board of Directors.
Committee members do not receive any additional compensation for
administering the Plan except for their regular meeting fee
described above. Pursuant to its authority, the Committee may
grant options to purchase shares of Common Stock reserved under
the Plan to all employees of the Company.
Option Price.
The option price per Share shall be determined in each case by
the Board of Directors but shall not be less than one hundred
percent (100%) one hundred ten percent (110%) in the case of a
10% Shareholder/or more of the fair market value thereof as
determined by the Board by any reasonable method using market
quotations on the date the option is granted.
Amendments.
The Board of Directors may amend the Plan as it deems advisable.
No amendment may, without further approval of the stockholders of
the Company within twelve months before or after the date on
which such amendment was adopted, (a) increase the total number
of shares which may be made the subject of options granted under
the Plan, either in the aggregate or to any individual employee,
(b) change the manner of determining the option Price, (c)
change the criteria of determining which employees are eligible
to receive options, (d) extend the period during which options
may be granted or exercised, or (e) withdraw the administration
of the Stock Option Plan from the Board of Directors.
Vesting.
The options granted to employees under the Plan are to vest and
become exercisable at the rate of 25% per year following the
grant of such options provided that certain conditions are
satisfied. For a description of these conditions, see the
subsection below entitled "Termination of Employment."
Exercise Period
The options granted to employees under the Plan may not be
exercised more than ten (10) years after the Plan is approved by
the Company's stockholders.
Termination of Employment.
Outstanding options must be exercised during employment with the
Company or within three months after termination of employment
with the Company (other than by reason of death or permanent
disability, in which case they must be exercised within twelve
months after termination). In addition, options are exercisable
only to the extent that they are vested as of the date of
termination of employment.
Non transferability
Each option granted under the Plan is not transferable by the
holder except by will or the laws of descent and distribution of
the State wherein the holder is domiciled at the time of his
death.
Sale of the Company.
In the case of (I) a sale of all or substantially all of the
Company's assets outside the ordinary course of business; (II) an
offer to purchase at least a majority of the Company's issued and
outstanding common stock or an offer to the Company's
stockholders to tender for sale at least a majority of the
Company's issued and outstanding con-imon stock, which offer is
accepted or tender made with respect to at least a majority of
the Company's issued and outstanding shares of Common Stock;
(III) the merger or consolidation of the Company with another
corporation or entity; (IV) a public or private offering of 20%
or more of the Company's Common Stock, whether of newly or
previously issued shares; or (V) a dissolution or liquidation of
the Company, options granted or unexercised shall, in the
discretion of the Board of Directors, become fully vested and
exercisable for a period of thirty days from the date notice of
such sale or public offering is given to the optionees. Upon the
expiration of the thirty day period, the Board of Directors in
its discretion may suspend or cancel the right of any optionee to
exercise such options.
Federal Income Tax Treatment of Options.
The options to be granted under the Plan will be deemed to be
qualified within the meaning of the Internal Revenue Code. Thus,
no gain or loss will be recognized by the optionee until the
Shares acquired by option are sold, nor will the Company receive
any tax deduction with respect to the Plan.
<PAGE>
Existing options under the 1992 plan are as follows:
OPTION GRANTS
<TABLE>
Name Fiscal Options % of Exercise Expiration Potential Realizable Value
Year Granted options or Base Date at Assumed Rates of Stock
granted Price per (4 ) Appreciation for Option
Share (3) Terms (5)(6)
<S> <C> <C> <C> <C> <C> <C>
5% 10%
Frederic
Remington 1993 50,000 50% $1.65 1/12/98 $0 $0
Richard W. Potts 1993 50,000 50% $1.65 1/12/98 $0 $0
</TABLE>
Note: number (#) references can be found beginning on page 7
(5) The Peerless Tube Company also has options available to be
granted under a certain 1987 Incentive Stock Option Plan which
provides for the grant of options to purchase capital stock of
the Company. A total of 50,000 shares are available under the
Plan up to a maximum of 15,000 shares per calendar year in the
aggregate. Options may be granted to key employees of the
Peerless Tube Company by the Stock Option Conimittee of the Board
of Directors. Options are granted at 100% of the fair market
value on the date of the grant and expire ten years from the date
of the grant. There are no stock appreciation rights under the
Plan. On October 28, 1987 stock options to purchase 14,400
shares were granted at $5.75 per share. On January 27, 1988
stock options were granted to purchase 9,800 shares at $6.50 per
share. None of the current officers hold any of these options.
(6) These amounts represent certain assumed rates of
appreciation only. For the most part, the exercise price for the
options outstanding is below the projected market price of the
stock assuming stock appreciation at 5% and 10%. Gains, if any,
are reported net of the option exercise price, but before taxes
associated with exercise. Actual gains, if any, on stock option
exercises are dependent on the future performance of the Common
Stock, overall market conditions, as well as the option holders'
continued employment through the vesting period. The potential
realizable value or possible gains in the above Option Grant
table were calculated assuming a market price of the stock at
S.75, the high during the quarter ended December 31, 1994. The
market price as of December 31, 1996 was $..3750. Trades of
small blocks of stock in the last 52 weeks have ranged in the
transaction price from $.3750 to $.6600. The amounts reflected
in the tables may not necessarily be achieved.
(7) At December 31, 1996, the Company has in effect one
noncontributory defined benefit retirement plan covering
substantially all of the New Jersey employees. Pension costs are
computed on the basis of accepted actuarial methods. During
1990, the Company amended its retirement plans to provide for the
suspension of benefit accruals for future services
COMMITTEE REPORT TO SHAREHOLDERS
The report of the Executive Compensation and Stock Option
Committee shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement
into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that
Peerless Tube Company specifically incorporates this information
by reference, and shall not otherwise be deerned filed under such
Acts.
The Peerless Tube Company has long believed that a strong,
explicit link should exist between executive compensation and the
value delivered to shareholders. This belief has been adhered to
by developing pay programs which provide competitive compensation
and mirror Company performance. Any short-term and long-term
incentive compensation will be based on direct, explicit links to
Company performance and the value received by shareholders.
Compensation Philosophy
In designing its compensation programs, the Company follows its
belief that compensation should reflect the value created for
shareholders while supporting the Company's strategic goals. In
doing so, the compensation programs reflect the following themes:
* Compensation should be meaningfully related to the value
created for shareholders.
Compensation programs should support the short- and
long-term strategic goals and objectives of the Company.
Compensation programs should reflect and promote the Company's
values, and reward individuals for outstanding contributions to
the Company's success.
* Short and long-term compensation play a critical role in
attracting and retaining well qualified executives.
While compensation opportunities should be based on individual
contribution, the actual amounts earned by executives in variable
compensation programs should be dictated solely by how the
Company performs.
Pay Mix and Measurement
The Company's executive compensation is based on three
components, each of which is intended to serve the overall
compensation philosophy.
Base Salary. Base salary is targeted at the competitive median
for competitors in manufacturers of similar market size. For the
purpose of establishing these levels, the Company compares itself
to a self-selected group of manufacturing companies analyzed by
various industry groups and associations both nationally and in
the Company's local market focusing on manufacturing companies
that compete under similar conditions. This comparison group,
which is subject to occasional change as Peerless Tube Company or
its competitors change their focus, merge or are acquired, or as
new competitors emerge.
Salaries for executives are reviewed by the Committee on an
annual basis and may be increased at that time based on: 1) the
Committee's agreement that the individual's contribution to the
Company has increased; and 2) increases in median competitive pay
levels.
Except for a minor cost of living increase adjustment given to
all employees in 1994, the compensation for the Chairman and
Chief Executive Officer has not increased since Mr. Remington
became chairman in 1989. Since 1989, Mr. Remington has requested
that the Committee not even consider any adjustments until the
Company begins to improve its recent financial performance.
Accordingly, any increases of median pay levels among CEOs in the
comparison group have not been considered. Similarly, increases,
excluding cost of living adjustments, have not been given to
Messrs. Potts, and Graber. Mr. Blumenschein assumed his
position in March 1996.
Long-Term Incentives. Provided through annual or periodic grants
of stock options to the named executives and others, this
component is intended to recruit, retain and motivate executives
to improve long-term stock market performance. Grants can also
be awarded to 10% owners in lieu of increases in fixed base
compensation costs and to reinforce the relationship between
company performance and future eamings. Stock options are
granted at the prevailing market value and will only have value
if the Company's stock price increases. Generally, grants made
vest in equal amounts over four years on the one year anniversary
date of grant; executives must be employed by the Company at the
time of vesting in order to exercise the options. The Committee
determines the number of options to be granted based on the
expected value of return, the number of shares outstanding and
competitive factors. Outstanding historical performance by an
individual is additionally recognized through larger than normal
option grants.
Summary
In aggregate, none of the named executives' cash compensation for
1996 is from incentives directly tied to Company performance.
This is largely due to the fact that Messrs. Remington and Potts
already have beneficial interest in the common shares of the
Company which should be a key incentive for performance. When
the potential future value of their current beneficial and stock
option grants are included, total compensation appears strongly
and explicitly linked to shareholder value creation.
March 18, 1997
By:
PEERLESS TUBE COMPANY
EXECUTIVE COMPENSATION AND
STOCK OPTION COMMITTEE
Brinton, S. Jervis
Leo, Frank M.
McDermott, Frank X.
Solomon, A. Louis
<PAGE>
Selection of Auditors (Item 2 on proxy card)
The Stockholders are being asked to ratify the appointment of
Goldstein Golub Kessler & Company, P.C. as independent auditors
of the Company for 1997. The Company engaged the firm of
Goldstein Golub Kessler & Company, P.C. in 1994. No member of
the firm of Goldstein Golub Kessler & Company, P.C. has any
financial interest, direct or indirect, in the Company.
A member or members of the firm of Goldstein Kessler & Company,
P.C. will be present at the Annual Meeting to answer questions
that may be asked by Stockholders and will have an opportunity to
make a statement
The Board of Directors recommends that the stockholders vote for
the ratification of Goldstein Golub Kessler & Company, P.C., as
the Company's independent auditors for the year 1997.
Other Business
The management of the Company knows of no other matters which may
come before the meeting. However, if matters other than that
referred to above should properly come before the meeting it is
the intention of the persons named in the enclosed proxy to vote
such proxy in accordance with their best judgement.
Vote Required for Approval
1. Eight (8) nominees for director receiving a plurality of
votes cast at the meeting, in person or by proxy shall be
elected.
2. All other matters require for approval the favorable vote
of a majority of the shares voted at the meeting in person
or by proxy.
Inclusion of Stockholder Proposals in the Company's 1997 Proxy
Statement
If any stockholder desires to put forth a proposal to be voted on
at the 1998 Annual Meeting of Stockholders and wishes that
proposal to be included in the Company's Proxy Statement to be
delivered to stockholders in connection with such meeting, that
stockholder must cause such proposal to be received by the
Company at its principal executive office no later than December
31, 1997.
By Order of the Board of Directors
Ann Gaccione, Secretary
Dated: June 13, 1997
