SPARTECH CORPORATION
7777 Bonhomme Avenue - Suite 1001
Clayton, Missouri 63105
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 9, 1994
TO THE SHAREHOLDERS OF
SPARTECH CORPORATION
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Spartech
Corporation will be held at the Holiday Inn, Clayton Plaza, 7730 Bonhomme
Avenue, Clayton, Missouri 63105, on the ninth day of March, 1994 at 10:00
a.m. for the following purposes:
1. To elect three Class A directors, Thomas L. Cassidy, David B. Mueller, and
Rodney H. Sellers, each to serve three year terms; constituting the Board
of Directors slate of nominees.
2. To ratify management's selection of Arthur Andersen & Co. as auditors of
the Company for the 1994 fiscal year.
3. To transact such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on January 10, 1994
as the record date for the determination of shareholders entitled to receive
notice of and to vote at the Annual Meeting and at any and all adjournments
thereof.
Enclosed is a form of Proxy. Whether or not you presently expect to attend
the meeting in person, management urges you to sign and return the Proxy,
which you may revoke at any time prior to its use. A self-addressed, postage
prepaid envelope is enclosed for your convenience in returning the signed
Proxy.
By Order of the Board of Directors
/S/David B. Mueller
David B. Mueller
St. Louis, Missouri Vice President of Finance,
January 26, 1994 Chief Financial Officer and Secretary
<PAGE>
SPARTECH CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 9, 1994
To Our Shareholders:
The enclosed Proxy is solicited by the Board of Directors of Spartech
Corporation (the "Company" or "Spartech") for use at the Annual Meeting of
Shareholders of the Company to be held at the Holiday Inn, Clayton Plaza,
7730 Bonhomme Avenue, Clayton, Missouri 63105, on the ninth day of March,
1994 at 10:00 a.m. and at any and all adjournments thereof. All expenses
incident to the preparation and mailing of the Proxy Statement and form of
Proxy are to be paid by the Company. In addition to solicitations by mail, a
number of regular employees of the Company may solicit Proxies on behalf of
the Board of Directors in person or by telephone. The Company will reimburse
banks, brokerage firms and other custodians, nominees and fiduciaries, for
reasonable costs incurred by them in transmitting Proxy materials to the
beneficial owners of the Company's stock.
The persons named in the accompanying Proxy were selected by the Board of
Directors of the Company. Two are directors of the Company and one is an
officer. They have advised the Company of their intentions, if no contrary
instructions are given, to vote the shares represented by all properly
executed and unrevoked Proxies received by them for the Board of Directors'
nominees for director and for management proposal 2, as set forth in the
Notice of the Meeting, and on any other matter which may come before the
meeting in accordance with their best judgment.
This Proxy Statement and Proxies solicited hereby are being first sent or
delivered to shareholders of the Company on or about January 28, 1994. Any
shareholder given a Proxy has the right to revoke it by notifying the
Secretary of the Company of such revocation, in writing, at any time before
its exercise. Execution of the Proxy will not in any way affect the
shareholder's right to attend the meeting and vote in person.
OUTSTANDING SHARES AND VOTING RIGHTS
The outstanding voting securities of the Company on December 16, 1993,
consisted of 7,913,235 shares of common stock, entitled to one vote per
share, and the following series of preferred stock, which carry the voting
rights indicated:
Preferred Number of Equivalent Common
Stock Preferred Shares Share Voting
Series Holder Outstanding Rights
Series L Vita International
Limited 373,500 1,721,247
Series M The TCW Group 343,200 1,572,500
Series N Home Life Insurance
Company 60,000 274,913
Accordingly, a total of 11,481,895 votes may be cast at the Annual Meeting.
As a result of their common stock and preferred stock ownership, Vita
International Limited ("Vita"); TCW Special Placements Fund I; TCW Special
Placements Fund II and TCW Capital, all California limited partnerships
(collectively "The TCW Group" or "TCW"); officers, and current directors as a
group (which also include the Vita, TCW and Winslow Management Company
shares) have voting authority over the following votes which may be cast;
although there is no requirement or understanding that Vita, TCW, officers,
or current directors as a group will vote congruently:
Group Number of Votes Percentage
Vita 3,571,247 31.1%
TCW 2,317,790 20.2%
Vita, TCW, Officers, and
Current Directors as a
Group 6,727,026 58.6%
With respect to proposal 1, a plurality of the votes present in person or
represented by Proxy at the meeting is required to elect directors. With
respect to proposal 2, a majority of the votes present in person or
represented by Proxy at the meeting is required to adopt such proposal.
Abstentions are counted in the number of shares present in person or
represented by Proxy for purposes of determining whether a proposal has been
approved, whereas broker non-votes are not counted for such purposes.
Vita, TCW, officers, and certain directors as a group, comprising 58.6% of
the votes which may be cast at the Annual Meeting, have indicated their
intentions to vote for the Board of Directors' nominees for director and for
management proposal 2. One current director, whose term as a director
expires at the 1994 Annual Meeting, holds 4,109 votes and has not indicated
his voting intentions.
Only shareholders of record at the close of business on January 10, 1994,
will be entitled to receive notice of and to vote at the Annual Meeting and
at any and all adjournments thereof. A majority of the outstanding shares of
stock entitled to vote must be represented at the meeting in person or by
Proxy to constitute a quorum.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. Classes A and B have
three directors each and Class C has two directors. All directors hold
office for a term of three years. Class A directors hold office until the
Annual Meeting of Shareholders in 1997, Class B directors hold office until
the Annual Meeting of Shareholders in 1995, and Class C directors will hold
office until the Annual Meeting of Shareholders in 1996 and, in each case,
until their successors are duly elected and qualified.
The Board of Directors proposes that Thomas L. Cassidy and Rodney H.
Sellers, present directors of the Company, and David B. Mueller be elected
Class A directors constituting the Board of Directors' slate of nominees.
Vita, TCW, officers, and certain directors as a group, comprising 6,722,917
votes, have informed the Company that they intend to cast their votes "for"
these Board nominees. One current director, whose term as a director expires
at the 1994 Annual Meeting, holds 4,109 votes and has not indicated his
voting intentions.
The members of the Company's Board of Directors, whose terms will continue
after the meeting, and the nominees for election to the Board, with certain
information about each of them, including their principal occupations for the
last five years, are listed below.
<PAGE>
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION
John F. Arning Director. Mr. Arning, age 68, has been a member of the
Board since January 1992. He is a retired partner of the
law firm Sullivan & Cromwell, having held that position
from January 1957 through his retirement on January 1,
1992. Mr. Arning also serves as a director of Box Energy
Corporation. His term as director expires at the 1995
Annual Meeting.
<PAGE>
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION
Bradley B. Buechler
President, Chief Executive and Chief Operating Officer and
Director. Mr. Buechler, age 45, has been a member of the
Board since February 1984. He is a CPA and was with
Arthur Andersen & Co. prior to joining the Company in
1981. He was Corporate Controller and Vice President,
Finance of the Company from 1981 to 1984. He became Chief
Operating Officer of the Company in 1985, the Company's
President in 1987, and Chief Executive Officer effective
October 1, 1991. Mr. Buechler is the current Chairman of
the Sheet Producers Division of the Society of Plastics
Industry. His term as director expires at the 1995 Annual
Meeting.
Thomas L. Cassidy
Director. Mr. Cassidy, age 65, has been a member of the
Board since February 1986. He has been a managing
director of The Trust Company of the West and a senior
partner of TCW Capital since 1984. Prior to 1984, he was
a managing director of The First Boston Corporation. Mr.
Cassidy serves on the Board of Directors of Federal Paper
Board Company, Inc., DeVlieg - Bullard, Inc., and Holnam,
Inc. Mr. Cassidy is currently standing for reelection.
W.R. Clerihue Chairman of the Board and Director. Mr. Clerihue, age 70,
has been a member of the Board since February 1990. He
became Chairman of the Board effective October 1, 1991.
Mr. Clerihue is currently a consultant and also a director
of Federal Paper Board Company, Inc., New York. He is
retired from Celanese Corporation with his last position
at Celanese being Executive Vice President and Chief of
Staff. His term as director expires at the 1996 Annual
Meeting.
Francis J. Eaton Director. Mr. Eaton, age 54, has been a member of the
Board since December 1989. He is a polymer technologist
and, after joining British Vita PLC in 1958, became
General Manager of the Industrial Polymer Division in
1971. He was appointed to British Vita's Board of
Directors in 1975 and became their Deputy Chief Executive
Officer effective October 1, 1991. Mr. Eaton is a council
member of both RAPRA Technology Ltd. and the British
Rubber Manufacturer's Association in the United Kingdom.
His term as director expires at the 1995 Annual Meeting.
David B. Mueller Vice President, Chief Financial Officer and Secretary.
Mr. Mueller, age 40, is a CPA and was with Arthur Andersen
& Co. from 1974 through 1981. He was Corporate Controller
of Apex Oil Company, a large independent oil company, from
1981 through 1988. He became Vice President and Chief
Financial Officer of the Company in 1988 and was named
Secretary in 1991. Mr. Mueller is being nominated to
become the Company's eighth Board Member, effective at the
time of an affirmative vote, at the 1994 Annual Meeting.
Jackson W. Robinson
Director. Mr. Robinson, age 51, is President of Winslow
Management Company, having held that position since 1983.
He is also director of Merlin International Green
Investment Trust, Jupiter European Investment Trust,
National Gardening Association, and Suffield Academy. His
term as director expires at the 1996 Annual Meeting.
Rodney H. Sellers Director. Mr. Sellers, age 47, has been a member of the
Board since December 1989. He is a Chartered Accountant
in the United Kingdom. He joined British Vita PLC in
1971, was appointed to British Vita's Board of Directors
in 1974 and on July 1, 1990, he became their Chief
Executive. Mr. Sellers is currently standing for
reelection.
<PAGE>
Of the current members and the one nominee of the Company's Board of
Directors, three were nominated by significant shareholders of the Company.
Messrs. Eaton and Sellers were nominated by Vita, and Mr. Cassidy was
nominated by the TCW Group. On April 13, 1992, the Company's Board of
Directors amended the Company's By-laws so as to require, with respect to
certain significant matters affecting the Company, the affirmative vote of at
least 50% of the members of the Board, so long as a director nominated by
each of Vita and TCW is included in such 50% vote. Prior to the April 13,
1992 By-laws amendment, such affirmative vote percentage was 85%. Matters
requiring the aforesaid 50% vote include (i) merger or consolidation of the
Company with another corporation, (ii) sale or transfer of more than 25% of
the Company's assets or recommended acceptance of any offer or proposal to
acquire or acquisition of securities of the Company or involving the
Company's assets, (iii) purchase or acquisition of substantially all of
another corporation's assets, (iv) the Company's engaging in any new
business or ceasing to engage in an existing business, (v) issuance of shares
of capital stock or any options or warrants to purchase capital stock other
than pursuant to exercise or conversion of outstanding securities of the
Company, (vi) approval of, amendments, extensions to or cancellations of
employment agreements with executives of the Company, (vii) incurrence or
renewal of indebtedness exceeding $500,000, (viii) redemption of preferred
stock or acquisitions of preferred or common stock of the Company from an
interested shareholder. Any merger, acquisition or business transaction with
Vita or TCW, or any acquisition or redemption of shares of common or
preferred stock from Vita or TCW will require a majority of directors other
than directors designated by such interested shareholder.
The Board of Directors recommends that shareholders vote FOR the Board of
Directors' slate of nominees standing for election.
MEETINGS AND COMMITTEES OF THE BOARD
AND REMUNERATION OF DIRECTORS
During fiscal 1993, the Board formally met four times. No director
attended fewer than 75% of the formal meetings of the Board and Board
Committees of which he was a member, with the exception of Messrs. Eaton and
Sellers who, because of long and costly international travel requirements,
alternate their attendance at the meetings.
The Board has an Audit Committee currently consisting of Messrs. Arning,
Clerihue, Eaton, Robinson, and Powers (whose term as a director will expire
at the 1994 Annual Meeting), which formally met twice during fiscal 1993.
The Audit Committee's function is to recommend the appointment of independent
accountants to audit the Company's financial statements and to perform other
services related to the audit; review the scope and results of the audit with
the independent accountants; review with management and the independent
accountants the Company's interim and year-end operating results; consider
the adequacy of the internal accounting and auditing procedures of the
Company; and review the non-audit services to be performed by the independent
accountants and consider the effect of such performance on the accountants'
independence.
The Board has a Compensation Committee currently consisting of Messrs.
Arning, Clerihue and Eaton which formally met twice during fiscal 1993. The
Compensation Committee's function is to review all compensation arrangements
in excess of $100,000 per annum, as well as any employment contract, and to
set the operating earnings target used in the computation of Mr. Buechler's
and Mr. Mueller's annual bonuses.
The Board does not have a Nominating Committee.
Each non-management director receives an annual fee of $24,000, plus
reimbursable expenses for meetings attended. In addition, the Company pays
an annual fee of $26,000 to British Vita PLC for services provided to the
Company by one of its directors. Mr. Clerihue, the Company's Chairman of the
Board, receives $36,000 per annum for service to the Company in lieu of his
normal annual non-management director's fee.
Certain non-management directors have received options to purchase common
stock of the Company. Terms of the options were determined at the time of
grant and the options were issued outside any of the Company's compensation
plans. Such options granted were as follows:
<PAGE>
Options Grant Expiration Exercise
Recipient Granted Date Date Price
John F. Arning 30,000 Jan. 1992 Jan. 1997 $1.625
W.R. Clerihue 30,000 Dec. 1990 Dec. 1995 $2.15
The Board of Directors terminated the Company's Employment Agreement with
Lawrence M. Powers in accordance with its provisions, and he resigned as the
Company's Chairman of the Board and Chief Executive Officer, effective
October 1, 1991. Pursuant to the severance provisions of his Employment
Agreement, otherwise expiring October 31, 1992, Mr. Powers received
severance payments totaling $1,963,727 and options to purchase 400,000 shares
of the Company's common stock at an exercise price of $1.25 per share. In
addition, the Board extended the term of all options held by Mr. Powers to
December 31, 1997 and lifted all restrictions (other than state and Federal
securities laws restrictions) on exercise or sale of the shares underlying
all such options from November 1, 1991 forward, and agreed that Mr. Powers'
option price will be reduced in the future, to the extent the prices of any
options currently held by Mr. Buechler are reduced (or made the subject of
new options at a lower price). After such issuance of the aforementioned
options, in total, Mr. Powers held options to purchase 1,871,201 shares of
the Company's common stock at an average price of $3.02 per share. During
the period October 31, 1992 through December 16, 1993, Mr. Powers sold
220,755 shares of stock he owned outright and exercised options on 140,000
additional shares of stock of which 135,891 shares were sold during the
period. As of December 16, 1993, Mr. Powers holds 4,109 shares of stock and
options to purchase 1,731,201 shares of the Company's common stock at an
average price of $3.16 per share. Mr. Powers received 10% per annum interest
from November 1, 1991 on the unpaid balance of his severance compensation.
One-third of such compensation was paid on February 15, 1992 and the
remaining two-thirds was paid on May 1, 1992.
Effective November 1, 1991, the Company entered into a consulting agreement
with Mr. Powers pursuant to which Mr. Powers will be available to consult
with the Company regarding legal, financing and such other matters as the
Board of Directors may request. Mr. Powers received $150,000 in fiscal 1992
and 1993 and will receive $150,000 in fiscal 1994 for these services under
this three year consulting agreement requiring up to one-third of his time,
regardless of usage of his time by the Company; there are no defenses,
equities or set-offs to such consulting payments, which also shall be made
regardless of views or positions taken by Mr. Powers on future transactions
as a director of the Company. In addition, pursuant to his settlement
arrangements associated with his termination, Mr. Powers received
approximately $529,000 of the Company's 1992 settlement of a lawsuit which
sought to recover damages incurred in connection with the Company's 1987
purchase of Favorite Plastics Corporation.
On June 2, 1992, Mr. Powers filed a lawsuit in the United States District
Court for the Southern District of New York against the Company, British Vita
PLC, Rodney H. Sellers, Francis J. Eaton, Bradley B. Buechler, TCW Capital,
TCW Special Placements Fund I, TCW Special Placements Fund II, Thomas L.
Cassidy, and W.R. Clerihue. In the suit, Mr. Powers claims that, by reason
of the Company's April 30, 1992 debt-to-equity restructuring (which he had
previously, on April 13, 1992, voted in favor of as a director) the Company
should adjust his existing stock options, provide for the issuance of 167,744
additional shares of common stock to him and award to him attorney's fees and
interest. Mr. Powers seeks judgment against the Company and the other
defendants: (1) in excess of $13 million plus punitive damages, (2)
requiring the Company to issue him an additional 167,744 shares of common
stock, (3) requiring an adjustment increasing his then outstanding options to
purchase the Company's common stock from 1,871,201 shares to 4,080,000
shares, and (4) for attorney's fees and interest. In June 1993, in
responding to the Company's request for summary judgment, the Court ruled the
Board of Director's decision to not adjust Mr. Powers' options was "final,
binding and conclusive" unless Mr. Powers can establish the Board was not
acting independently and that it could not have acted appropriately.
Discovery was allowed to continue in this litigation. The Company believes
Mr. Powers' litigation is without merit and intends to defend against it
vigorously.<PAGE>
MANAGEMENT REMUNERATION
The following table summarizes compensation earned or awarded to the
Company's Chief Executive Officer and all other executive officers whose
aggregate annual salary and bonuses exceeded $100,000 during fiscal 1993.
Name and Fiscal Annual Compensation Options/ All
Other
Principal Position Year Salary($) Bonus ($) Granted(#) Compensation
Bradley B. Buechler 1993 $271,949 $108,410 - $45,782(1)
President, Chief Executive 1992 $216,350 $ 86,625 300,000 $41,665
and Chief Operating Officer 1991 $200,000 $ 50,000 100,000 $ 2,612
David B. Mueller 1993 $160,807 $ 51,910 - $27,931(1)
Vice President of Finance, 1992 $130,700 $ 41,500 60,000 $23,400
Chief Financial Officer and 1991 $119,215 $ 30,000 10,000 $ 2,366
Secretary
Daniel J. Yoder 1993 $110,110 $ 35,000 5,000 $18,652(1)
Vice President Engineering 1992 $104,135 $ 30,000 - $ 1,774
and Technology 1991 $ 98,710 $ 25,000 - $ 1,438
__________________
(1) The amounts disclosed in this column for fiscal year 1993 include:
(a) Company contributions to non-qualified defined contribution
arrangements on behalf of Mr. Buechler, $43,338; and
Mr. Mueller, $25,663.
(b) Company matching contributions under the Company's 401(k) Savings
and Investment Plan on behalf of Mr. Buechler, $2,444;
Mr. Mueller, $2,268; and Mr. Yoder, $1,652.
(c) Reimbursement of moving expenses on behalf of Mr. Yoder totaling
$16,742 and payment of term life insurance premiums totaling $258.
<TABLE>
The following table summarizes option grants made during fiscal 1993 to the
executive officers named above.
<CAPTION>
Individual Grants
% of Total Potential Realizable
Options Value at Assumed
Granted to Annual Rates of Stock
Employees Price Appreciation
Options in Fiscal Exercise Expiration For Option Term
Name Granted(#) Year Price Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Bradley B. Buechler - - - - - -
David B. Mueller - - - - - -
Daniel J. Yoder 5,000 4.3% $3.00 12/10/97 $19,144 $24,158
/TABLE
<PAGE>
<TABLE>
No executive officers named above exercised any options during fiscal 1993.
The following table summarizes all unexercised options at the end of fiscal
1993 for the executive officers named above.
<CAPTION>
Number of
Unexercised Options at Value of Unexercised
Fiscal Year-End In-the-Money Options
Name (All Currently Exercisable) at Fiscal Year-End
<S> <C> <C>
Bradley B. Buechler 788,212 $475,000
David B. Mueller 96,320 $70,000
Daniel J. Yoder 7,500 $3,750
</TABLE>
Employment Agreements
Messrs. Buechler and Mueller
On July 1, 1992, the Company entered into Restated Employment Agreements
(the "Agreements") with Messrs. Buechler and Mueller (collectively
hereinafter the "Employees" and individually, an "Employee") which supersede
the Employment Agreements and Management Continuity Agreements previously in
effect with each of these Employees. The term of each Agreement commenced
July 1, 1992 and shall continue until terminated by two years' written notice
by the Company to the Employee or by one year's written notice from the
Employee to the Company, such notice not to be given by the Company or the
Employee before June 30, 1995. The Agreements provide for annual base
salaries, subject to periodic review for cost of living and/or merit and
other increases, of $250,000 for Mr. Buechler and $150,000 for Mr. Mueller,
but with: (a) a bonus based upon the Company's earnings, (b) term life
insurance of $1,250,000 for Mr. Buechler and $750,000 for Mr. Mueller and (c)
annual contributions to a pension plan in an amount equal to 15% of each
Employee's base salary.
Each Employee shall be entitled to a lump sum severance benefit equal to
two times Employee's then current base salary plus the aggregate amount of
bonus paid or earned by the Employee in the two years prior to the date of
such notice of termination, upon the occurrence of any of the following
events: (a) if the Employee is terminated by the Company for any reason other
than for "cause" as described below, or (b) if the Employee justifiably
resigns and terminates his employment with the Company, provided that such
voluntary termination occurs as permitted under Agreement as described below.
If the Employee terminates his employment for any other reason pursuant to
written notice as provided in the Agreement, he shall be entitled to a lump
sum severance benefit equal to the sum of: (a) the Employee's then current
base salary for one year, plus (b) one-half of the aggregate amount of bonus
paid or earned by the Employee in the two years prior to the date of such
written notice of termination.
A termination for Cause shall have occurred only if such Employee's
employment is terminated because he was convicted of a felony, or because of
acts or omissions (including failure to follow the lawful instructions of the
Company's Board of Directors) on such Employee's part resulting, or intended
to result in, personal gain at the expense of the Company (including its
subsidiaries) or intentional acts or omissions on such Employee's part
causing material injury in excess of $1,000,000 to the property or business
of the Company (including its subsid-iaries). Cause shall not include:(i)
bad judgment or any act or omission reasonably believed by such Employee in
good faith to have been in or not opposed to the best interest of the Company
(including its subsidiaries);or(ii) any acts or omissions by such Employee in
connection with any bid, tender or merger offer, restructuring proposals, or
any controversy or litigation relating thereto (whether involving British
Vita PLC or other persons), in which the Company may become involved, wherein
such Employee's acts or omissions are the subject of controversy with any
persons or firms involved in such matters.
If any of the following events occur during the term of the Agreements,
each Employee may voluntarily terminate and "justifiably resign" his
employment immediately upon the occurrence of such event, and be entitled to
the severance benefits described above: (a) any duties are assigned to such
Employee or restrictions are placed on such Employee which are inconsistent
with his position, duties, responsibilities and status as President and Chief
Executive Officer in the case of Mr. Buechler and Vice President of Finance
and Chief Financial Officer in the case of Mr. Mueller; or (b) such
Employee's base salary, options and bonuses under such Employee's Agreement
are not paid or delivered within seven days of such Employee's notice to the
Company that such are due, or the Company takes action which otherwise
adversely affects or materially reduces any other benefits or rights which
such Employee is entitled to under such Employee's Agreement.
Mr. Yoder
On June 30, 1992, the Company entered into an Employment Agreement (the
"Agreement") with Mr. Yoder. The term of the Agreement extends to June 30,
1995 with annual base compensation, subject to periodic review for cost of
living and/or merit and other increases, of $107,500. In addition, the
Agreement requires the Company to maintain term life insurance in the amount
of $250,000 for Mr. Yoder's designated beneficiaries for the term of the
Agreement, all premiums thereon to be paid by the Company. The Agreement
does not provide for a guaranteed minimum bonus; however, Mr. Yoder is
eligible to receive discretionary bonuses based upon his performance and the
overall results of the Company's operations.
Performance Graph
The following graph compares cumulative total Company shareholder return
for the last five years, with overall market performance as measured by the
cumulative return of the American Stock Exchange market value index and a
registrant-constructed peer group index, assuming an initial investment of
$100 at the beginning of the period and the reinvestment of all dividends.
The peer group index consists of the following companies: M.A. Hanna
Company, specialty compounds; Dexter Corporation, specialty compounds;
American Filtrona, filtration and plastic and packaging products; Gundle
Environmental Systems, polyethylene lining systems; and Portage Industries
Corporation, extruded plastic sheet. The Company believes certain management
changes implemented in October, 1991 and the restructuring completed in
April, 1992, have reversed the downward trend in share price and its
performance relative to the market.
(ADD LINE GRAPH HERE)
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
To Our Shareholders:
The Compensation Committee of the Board of Directors is responsible for
establishing compensation levels for all executive officers of the Company
and for any employee with base compensation in excess of $100,000 per annum,
and for any employee with an employment contract. Our objective is to
provide compensation that is fair and equitable to both the employee and the
Company. Consideration is given to the employee's overall responsibilities,
professional qualifications, business experience, technical expertise and
their resultant combined value to the Company's long-term performance and
growth.
In establishing compensation levels for the Chief Executive Officer and
Chief Financial Officer, we consulted an independent survey published by the
accounting firm of Ernst & Young entitled, "Midwest's Top 400 Public
Companies 1991 Executive Compensation". Base salaries, when combined with
anticipated bonuses, were established at levels approximating the average
reported for companies of comparable size to Spartech Corporation. Annual
bonuses for these two employees are based on the operating results of the
Company. The bonuses are computed using a graduated formula which is based
on the achievement of operating earnings versus a target established at the
beginning of each year by our Committee.
The Compensation Committee also reviews the stock options to be awarded to
all employees and has changed the employment contracts for the Chief
Executive Officer and Chief Financial Officer to provide for periodic reviews
and awards instead of the previous contractual annual award requirements.
Future stock option awards will be granted to these individuals based upon
performance.
The Compensation Committee periodically reviews the compensation levels we
established for each employee for whom we are responsible and approves
adjustments recommended by the Chief Executive Officer for changes in
responsibility for various executives of the Company or economic conditions.
We believe that by providing fair and equitable compensation levels, the
Company will continue to attract and maintain qualified individuals who are
dedicated to the long-term performance and growth of Spartech Corporation.
John F. Arning W.R. Clerihue Francis J. Eaton<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
<TABLE>
The following table identifies the aggregate of shares of common stock and
equivalent common share voting rights of preferred stock beneficially owned
by each director, by each executive officer, by the executive officers and
directors as a group, and by all persons known to the Company as of December
16, 1993, to be the beneficial owner of more than 5% of the 7,913,235 shares
of common stock outstanding as of that date:
<CAPTION>
Number Percentage
of of Number
Outstanding Outstanding of
Common Common Shares Percentage
Shares and Shares and Number Beneficially of Class
Equivalent Equivalent of Owned Outstanding
Voting Voting Shares Including Including
Rights of Rights of Subject to Options Options
Preferred Preferred Options and and and
Stock Stock Conversions Conversions Conversions
Title Name and Address Beneficially Beneficially of Preferred of Preferred of Preferred
of Class of Beneficial Owner Owned Owned Stock Stock Stock
<S> <C> <C> <C> <C> <C> <C>
Common Directors and
Stock and Executive Officers:
Equivalent
Voting John F. Arning
Rights of 201 East 28th Street
Preferred New York, NY 10016 10,000(1) 0.1% 30,000(2) 40,000 0.2%
Stock
Bradley B. Buechler
7777 Bonhomme Avenue
Suite 1001
Clayton, MO 63105 33,557(1) 0.3% 868,212(2) 901,769 3.6%
Thomas L. Cassidy(3)
200 Park Avenue
New York, NY 10166 2,317,790(1) 20.2% 6,289,998(4) 7,035,288(5) 28.1%
W.R. Clerihue
Suite 714 Harbour Center
555 West Hastings Street
Vancouver, B.C.
Canada V6B 4N5 -(1) - 30,000(2) 30,000 0.1%
Francis J. Eaton(6)
Soudan Street
Middleton, Manchester
M24 2DB England 3,571,247(1) 31.1% 6,884,987(4) 8,734,987(5) 34.9%
Lawrence M. Powers
47 Beech Road
Englewood, NJ 07631 4,109(1) - 1,731,201(2) 1,735,310 6.9%
Jackson W. Robinson(7)
24 Federal Street
Suite 580
Boston, MA 02110 790,100 6.9% - 790,100 3.2%
<PAGE>
Number Percentage
of of Number
Outstanding Outstanding of
Common Common Shares Percentage
Shares and Shares and Number Beneficially of Class
Equivalent Equivalent of Owned Outstanding
Voting Voting Shares Including Including
Rights of Rights of Subject to Options Options
Preferred Preferred Options and and and
Stock Stock Conversions Conversions Conversions
Title Name and Address Beneficially Beneficially of Preferred of Preferred of Preferred
of Class of Beneficial Owner Owned Owned Stock Stock Stock
Common Rodney H. Sellers(6)
Stock and Soudan Street
Equivalent Middleton, Manchester
Voting M24 2DB England 3,571,247(1) 31.1% 6,884,987(4) 8,734,987(5) 34.9%
Rights of
Preferred David B. Mueller
Stock 7777 Bonhomme Avenue
Suite 1001
Clayton, MO 63105 3(1) - 136,320(2) 136,323 0.5%
Daniel J. Yoder
7777 Bonhomme Avenue
Suite 1001
Clayton, MO 63105 220(1) - 17,500(2) 17,720 0.1%
All Directors and
Executive Officers as a
Group (10 persons) 6,727,026(1) 58.6% 15,988,218(8) 19,421,497(5) 77.7%
Other Beneficial Owners
In Excess of 5% of the Common
Shares Outstanding:
Vita International Limited(6)
Soudan Street
Middleton, Manchester
M24 2DB England 3,571,247(1) 31.1% 6,884,987(4) 8,734,987(5) 34.9%
The TCW Group(3)(9)
c/o TCW Special
Placements Fund I
200 Park Avenue
New York, NY 10166 2,317,790(1) 20.2% 6,289,998(4) 7,035,288(5) 28.1%
Froley, Revy
Investment Co., Inc.
10900 Wilshire Blvd.
Los Angeles, CA 90024 912,360(10) 7.9% - 912,360 3.6%
Winslow Management Company (7)
24 Federal Street
Suite 580
Boston, MA 02110 790,100(10) 6.9% - 790,100 3.2%
Fidelity Investments
82 Devonshire Street
Boston, MA 02109 736,000 6.4% - 736,000 2.9%
<PAGE>
<FN>
NOTES:
(1) Does not include shares issuable upon exercise of options or conversions
of preferred stock. Includes the following equivalent common share voting
rights associated with the preferred stock held by the beneficial owner
indicated: 1,572,500 voting rights in the case of the TCW Group; 1,721,247
voting rights in the case of Vita International Limited; and 3,293,747 voting
rights in the case of all current directors and executive officers as a
group.
(2) Represents common shares issuable upon exercise of options (all
presently exercisable) held by the beneficial owner indicated. Does not
include the following common shares issuable upon exchange of the Company's
9% Convertible Subordinated Debentures: 10,142 shares in the case of Mr.
Mueller.
(3) Mr. Cassidy, a director, is managing director of Trust Company of the
West and is a senior partner of TCW Capital.
(4) Represents common shares issuable upon conversion of the preferred stock
held by the beneficial owner indicated.
(5) Does not include the following equivalent common share voting rights
associated with the preferred stock held by the beneficial owner indicated:
1,572,500 voting rights in the case of the TCW Group; 1,721,247 voting rights
in the case of Vita International Limited; and 3,293,747 voting rights in the
case of all current directors and executive officers as a group.
(6) Messrs. Eaton and Sellers, each a director of the Company, are also
directors of British Vita PLC and Vita International Limited.
(7) Mr. Robinson, a director, is President of Winslow Management Company.
(8) Includes 2,813,233 common shares issuable upon exercise of options (all
presently exercisable) and 13,174,985 common shares issuable upon conversion
of preferred stock. Does not include common shares issuable upon conversion
of the Company's 9% Convertible Subordinated Debentures (See Note 2).
(9) The TCW Group is comprised of TCW Special Placements Fund I, TCW Special
Placements Fund II and TCW Capital, all California limited partnerships.
(10) Froley, Revy Investment Co., Inc. and Winslow Management Company are
deemed to be beneficial owners since they have power of investment decision
over these shares of common stock for several unrelated clients. These
shares were originally issued as part of the Company's April 30, 1992 debt-
to-equity restructuring and not with a view toward effecting a change in
control of the Company.
</TABLE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during fiscal 1993 all Section 16(a) filing
requirements were complied with. However, in fiscal 1992, each of TCW and
Vita failed to file Form 4 Reports covering a restructuring of the Company's
capitalization in which TCW converted Company notes into the Company's Series
M Preferred Stock and Vita converted Series K Preferred Stock of the Company
into Series L Preferred Stock of the Company. The Form 4 Reports have since
been filed.
<PAGE>
PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company, on the recommendation of the Audit
Committee, appointed Arthur Andersen & Co. as independent auditors of the
Company for fiscal 1994. The Board proposes that the shareholders ratify at
this meeting the appointment of Arthur Andersen & Co. as independent auditors
for fiscal 1994. Arthur Andersen & Co. has served as the Company's
independent auditors since fiscal 1986. The Company has had no disagreements
with Arthur Andersen & Co. on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures.
Arthur Andersen & Co. has advised the Company that its representatives will
be present at the Annual Meeting, where they will have the opportunity to
make a statement if they desire to do so and will be available to respond to
appropriate questions.
The Board of Directors recommends that shareholders vote FOR this proposal.
DISCRETIONARY VOTING OF PROXIES ON OTHER MATTERS
Management does not now intend to bring before the Annual Meeting any
matters other than those disclosed in the notice of the meeting and it does
not know of any business which persons other than management intend to
present at the meeting. Should any other matter requiring a vote of the
shareholders arise, the Proxies in the enclosed form confer upon the person
or persons entitled to vote the shares represented by such Proxies
discretionary authority to vote such shares in respect of any such other
matter in accordance with their best judgment.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the 1995 Annual
Meeting of the Shareholders of the Company must be received by the Company,
for inclusion in its Proxy Statement and form of Proxy relating to that
meeting, by December 31, 1994.
Shareholders are urged to sign, date and return promptly the enclosed Proxy
in the accompanying envelope, which requires no postage if mailed in the
United States. Your cooperation is appreciated.
By Order of the Board of Directors
/S/David B. Mueller
David B. Mueller
Vice President of Finance,
January 26, 1994 Chief Financial Officer and Secretary
<PAGE>
Notice of Annual Meeting
and Proxy Statement
Annual Meeting of Shareholders
March 9, 1994
Back Page Cover
