United States Securities and Exchange Commission
Washington, DC 20549
Gentlemen:
Pursuant to the requirements of the Securities Act of 1934, we are
transmitting the following Preliminary Proxy Statement
Sincerely,
SPARTECH CORPORATION
/S/Randy C. Martin
Vice President Finance and
Chief Financial Officer
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
SPARTECH CORPORATION
................................................................
(Name of Registrant as Specified in Its Charter)
REGISTRANT
.................................................................
(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)(4) and 0-11.
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2) Aggregate number of securities to which transaction
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[ ] Check box if any part of the fee is offset as provided by
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SPARTECH CORPORATION
7733 Forsyth Boulevard - Suite 1450
Clayton, Missouri 63105
DEAR SHAREHOLDERS:
You are cordially invited to attend the 1998 Annual Meeting of Spartech
Shareholders to be held Wednesday, March 11, 1998, in Clayton, Missouri.
Details of the business to be conducted at the Annual Meeting are given
in the attached Notice of Annual Meeting and Proxy Statement.
Whether or not you plan to attend, you can be sure your shares are
represented at the meeting by promptly completing and returning your proxy
form in the enclosed envelope.
Sincerely,
/S/Bradley B. Buechler
Bradley B. Buechler
President
and Chief Executive Officer
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 11, 1998
TO THE SHAREHOLDERS OF
SPARTECH CORPORATION:
The Annual Meeting of Shareholders of Spartech Corporation will be held
at the Pierre Laclede Conference Center (Second Floor), 7733 Forsyth
Boulevard, Clayton, Missouri 63105, on Wednesday, March 11, 1998 at 10:00
a.m. for the following purposes:
1. To elect three Class B directors to serve three-year terms.
2. To approve an amendment of the Certificate of Incorporation of the
Company to increase the authorized number of shares of Common Stock from
35,000,000 shares to 45,000,000 shares. The additional authorized shares
would be used (i) to accommodate future exercises of outstanding stock
options, (ii) to provide flexibility for the issuance of stock options in
the
future, and (iii) for other corporate purposes, all as discussed in the
accompanying Proxy Statement.
3. To approve an amendment to the Incentive Stock Option Plan to
reserve
an additional 1,000,000 shares of the Company's Common Stock for issuance
under the plan in the future.
4. To approve an amendment to the Restricted Stock Option Plan to
continue the deduction for tax purposes of certain compensation under the
plan and permit members of the Company's Board of Directors to be eligible
for participation.
5. To vote on and approve the incentive bonuses payable under the
Company's employment agreements with its Chief Executive Officer and Chief
Operating Officer to continue the deduction of this compensation for tax
purposes.
6. To ratify the selection of Arthur Andersen LLP as independent
auditors
of the Company for the 1998 fiscal year.
7. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on January 12,
1998 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.
Whether or not you plan to attend the Annual Meeting in person, please
complete, sign, and return the proxy, which you may revoke at any time
prior
to its use. A self-addressed envelope, which requires no postage if mailed
in the United States, 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 Executive Vice President,
January 27, 1998 Chief Operating Officer
and Secretary
SPARTECH CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 11, 1998
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 Pierre Laclede Conference
Center (Second Floor), 7733 Forsyth Boulevard, Clayton, Missouri 63105, on
Wednesday, March 11, 1998 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 will 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. 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
proposals 2 through 6, as set forth in the Notice of Annual Meeting of
Shareholders, and on any other matter which may come before the meeting in
accordance with their best judgment.
This Proxy Statement and the proxy solicited hereby are being first
sent or delivered to shareholders of the Company on or about January 29,
1998. 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 Annual Meeting and vote in
person.
A copy of the Company's Annual Report to Shareholders for the fiscal
year ended November 1, 1997 accompanies this Proxy Statement.
OUTSTANDING SHARES AND VOTING PROCEDURES
The outstanding voting securities of the Company on January 12, 1998
consisted of 26,422,448 shares of Common Stock, entitled to one vote per
share.
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.
"Plurality" means the nominees who receive the largest number of votes cast
are elected as directors up to the number of directors scheduled to be
elected at the Annual Meeting. With respect to proposals 2 through 6, a
majority of the votes present in person or represented by proxy at the
Annual Meeting is required to adopt each proposal. Abstentions and broker
non-votes are counted for the purpose of determining the presence or
absence of a quorum for the transaction of business. Abstentions are
counted in the tabulations of the votes cast on proposals presented to
stockholders, and therefore have the same effect as negative votes. Broker
non-votes, however, are not counted for the purpose of determining whether
a proposal has been approved.
Only shareholders of record at the close of business on January 12,
1998 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
Annual Meeting in person or by proxy to constitute a quorum.
Page 1
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 2000, Class B directors elected at
this Annual Meeting will hold office until the Annual Meeting of
Shareholders in 2001, and Class C directors hold office until the Annual
Meeting of Shareholders in 1999, and, in each case, until their successors
are duly elected and qualified.
The Board of Directors has nominated Bradley B. Buechler and John R.
Kennedy, present directors of the Company, and Calvin J. O'Connor to be
elected Class B directors of the Company. 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"); the executive officers; and the directors have informed
the Company that they intend to cast their votes, aggregating 15,586,924 in
total, "for" these Board nominees.
The members of the Company's Board of Directors 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.
Spartech
NAME, AGE PRINCIPAL OCCUPATION AND Director
OTHER DIRECTORSHIPS Since
- ----------------------- -------------------------------------- --------
Bradley B. Buechler, 49 President and Chief Executive Officer 1984
of the Company. Mr. Buechler is a CPA
and was Corporate Controller and Vice
President-Finance of the Company from
1981 to 1984, Chief Financial Officer
from 1983 to 1987 and Chief Operating
Officer from 1985 to 1996. He became
President in 1987, and Chief Executive
Officer in 1991. Mr. Buechler
is a member of the Executive Committee of
the Sheet Producers Division of the
Society of the Plastics Industry, Inc.(SPI)
and also a member of the National Board of
Directors of the SPI. Mr. Buechler currently
stands for re-election.
Thomas L. Cassidy, 69 Mr. Cassidy has been a Managing 1986
Director of Trust Company of the West
and a senior partner of TCW Capital
since 1984. Mr. Cassidy also serves on
the Board of Directors of DeVlieg-Bullard,
Inc., Holnam Inc., and Reunion Industries,
Inc. His term as director expires at
the 2000 Annual Meeting.
W.R. Clerihue, 74 Chairman of the Company since 1991. He 1990
is retired from Celanese Corporation,
where he last served as Executive Vice
President and Chief of Staff. Mr.
Clerihue also serves on the Board of
Directors of Reunion Industries, Inc.
His term as director expires at the
1999 Annual Meeting.
Francis J. Eaton, 58 Mr. Eaton is a polymer technologist and, 1990
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 in 1991.
Mr. Eaton is President and a council
member of the British Rubber
Manufacturers' Association in the United
Kingdom. His term as director expires at
the 1998 Annual Meeting and he is being
replaced as a representative from British
Vita by the nomination of Mr. O'Connor as
noted below.
Page 2
Spartech
NAME, AGE PRINCIPAL OCCUPATION AND Director
OTHER DIRECTORSHIPS Since
- ----------------------- -------------------------------------- --------
John R. Kennedy, 67 Mr. Kennedy is retired President and 1997
Chief Executive Officer of Federal
Paper Board Company, Inc. He is also
a Director of International Paper Company;
DeVlieg-Bullard, Inc.; Chase Brass
Industries, Inc.; Holnam Inc.; and
Chairman of Georgetown University's
Board of Directors. Mr. Kennedy
currently stands for re-election.
David B. Mueller, 44 Executive Vice President, Chief Operating 1994
Officer and Secretary of the Company.
Mr. Mueller is a CPA and was Corporate
Controller of Apex Oil Company from
1981 to 1988. He became Vice President
and Chief Financial Officer of the Company
in 1988 and was named Secretary in 1991.
He became Executive Vice President and Chief
Operating Officer in 1996.
His term as director expires at the 2000
Annual Meeting.
Calvin J. O'Connor, 45 Mr. O'Connor is a Charted Accountant --
in the United Kingdom. He was appointed
to British Vita PLC's Board of Directors
in June 1996 and became their Finance
Director in November 1996. Prior to joining
British Vita he was the Group Financial
Controller at Courtaulds Textiles PLC. Mr.
O'Connor is being nominated as a director
for a term expiring at the 2001 Annual
Meeting.
Jackson W. Robinson, 55 Mr. Robinson is President of Winslow 1993
Management Company, an operating division
of Eaton Vance Management, having held
that position since 1983. He is also
a director of Jupiter International Green
Investment Trust, Jupiter-European
Investment Trust, and a Trustee of
Suffield Academy. His term as director
expires at the 1999 Annual Meeting.
Alan R. Teague, 50 Mr. Teague is a Director of Vita 1997
International and also the Secretary
of British Vita PLC. His term as
director expires at the 2000
Annual Meeting.
The Company's By-Laws require, with respect to certain significant
matters affecting the Company, the affirmative vote of at least 50% of the
members of the Board, including at least one director nominated by each of
Vita and TCW. Matters requiring such 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 the securities or assets of the Company, (iii) purchase or other
acquisition of substantially all of another corporation's assets or securities,
(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 or
extensions to, or cancellations of employment agreements with executives of the
Company, (vii) incurrence or renewal of borrowings exceeding $500,000, and
(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 the
affirmative vote of 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.
Page 3
BOARD COMMITTEES
AND COMPENSATION
There were four regular meetings of the Board and three unanimous
consents in lieu of special meetings during fiscal 1997. 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 the designees of
British Vita, who, because of long and costly international travel
requirements, alternate their attendance at the formal meetings.
The Board has an Audit Committee, currently consisting of Messrs.
Clerihue, Kennedy, and Robinson, which formally met twice during fiscal
1997. 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.
Cassidy, Clerihue, Eaton, Kennedy, and Robinson, which formally met three
times during fiscal 1997. The Compensation Committee's function is to
review all compensation arrangements in excess of $125,000 per annum, as
well as any employment contracts.
The Board has a Nominating Committee, currently consisting of Messrs.
Cassidy, Clerihue, and Robinson, which formally met twice during fiscal
1997. The Nominating Committee serves the following functions: reviews the
size and composition of the Board; reviews possible director candidates and
recommends director nominations for presentation to shareholders; and
reviews assignments of Board members to various Board committees.
Shareholders who wish to recommend a candidate for election to the Board
may submit such recommendation to the Secretary of the Company. Any
recommendation must include name, address, appropriate background, experience,
and other pertinent information on the proposed candidate and must be received
in writing between August 1 and October 1 for consideration at the next
annual meeting.
An annual fee of $27,000 is paid for the services of each non-
management director, and expenses for attendance at each meeting are
reimbursed. In addition, the Company pays an annual fee of $36,000 to
British Vita PLC for services provided to the Company by its directors.
Mr. Clerihue, the Company's Chairman of the Board, receives an additional
$21,000 per annum for service to the Company. Each non-management director
also receives $1,200 for each Board or Committee Meeting attended.
Certain non-management directors have received options to purchase
Common Stock of the Company upon membership to the Board and periodically
during their terms as directors. The options are issued outside of the
Incentive and Restricted Stock Option plans of the Company, and the terms
are determined at the time of the grant. In fiscal year 1994, Jackson W.
Robinson was granted 30,000 options with a five-year term and an exercise
price at the then fair market value of the Company's Common Stock of $5.00
per share. No options were granted in fiscal year 1995. In fiscal year
1996, W.R. Clerihue and Jackson W. Robinson were granted 10,000 and 5,000
options, respectively, with a ten-year term and an exercise price at the
then fair market value of the Company's Common Stock of $11.00 per share.
In fiscal year 1997, John R. Kennedy was granted 30,000 options with a ten-
year term and an exercise price at the then fair market value of the
Company's Common Stock of $13.375 per share and W.R. Clerihue, Jackson W.
Robinson, and John R. Kennedy were granted 20,000, 10,000, and 5,000
options, respectively, with a ten-year term and an exercise price at the
then fair market value of the Company's Common Stock of $15.875 per share.
Page 4
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
To Our Shareholders:
The Compensation Committee of the Board of Directors is responsible for
approving compensation levels for all executive officers of the Company and
for any employee with base compensation in excess of $125,000 per annum or
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 Operating Officer, we consulted an independent survey published by
the compensation and benefit consulting firm of The Hay Group, entitled
"The Hay Report" and a survey conducted by Arthur Andersen and sponsored by
the Financial Executives Institute, entitled "Executive Total Compensation
Report". 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 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 to reflect 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. The Compensation Committee also reviews the stock
options to be awarded to all employees. Future stock option awards will be
granted to individuals based upon performance.
In December 1996, the Board authorized broadly based stock ownership
guidelines for approximately 75 key managers of the Company. Under the
guidelines adopted by the Board, the Company's Chief Executive Officer is
expected to hold Company Common Stock equal to four times base pay, the
Chief Operating Officer three times base pay, and other key managers up to
two times their base pay. Participants are expected to reach their
respective goals over a four-year period. Unexercised stock options are not
counted toward achieving these targets.
Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended
(the "Code"), limits the Company's tax deduction to $1 million per year
(the "Compensation Cap") for certain compensation paid in a given year to
the Chief Executive Officer ("CEO") and the four highest compensated
executives other than the CEO named in the Proxy Statement (the "covered
executives"). The code and regulations issued under the Code exclude from
the Compensation Cap amounts based on attainment of pre-established,
objective performance goals, if certain other requirements are met. The
Committee's policy is to structure compensation programs, including stock
option and bonus plan awards, for covered executives that will be
deductible without limitation. The committee also considers it important to
retain flexibility to design compensation programs that recognize a full
range of performance criteria important to the Company's success, even
where compensation payable under such programs may not be fully deductible.
In accordance with the technical requirements of the Compensation Cap, the
Board of Directors is requesting shareholder approval of amendments to the
Company's Restricted Stock Option Plan to set forth the goals upon which
performance-based compensation may be based and certain maximum limits for
awards. These amendments, which are described beginning on page 12, and the
incentive bonus arrangements described in proposal 5, must be approved by
the Company's shareholders at the 1998 Annual Meeting in order to preserve
the Company's tax deduction for future performance-based compensation paid
under these arrangements.
Thomas L. Cassidy W.R. Clerihue
Francis J. Eaton John R. Kennedy Jackson W. Robinson
Page 5
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes compensation earned by the Company's
Chief Executive Officer and each other executive officer whose aggregate
salary and bonus exceeds $100,000 annually.
Long-
Term
Compen- All(1)
sation Other
Name and Fiscal Annual Compensation Options Compen-
Principal Position Year Salary($) Bonus($) Granted(#) sation
Bradley B. Buechler 1997 $400,524 $497,010 75,000 $65,661
President and Chief Executive 1996 $359,423 $344,920 55,000 $60,025
Officer 1995 $333,462 $254,870 50,000 $55,078
David B. Mueller 1997 $246,462 $298,206 60,000 $42,844
Executive Vice President, 1996 $223,078 $206,952 50,000 $38,625
Chief Operating Officer 1995 $201,154 $140,170 45,000 $34,642
and Secretary
Daniel J. Yoder 1997 $147,193 $70,000 9,000 $18,893
Vice President Engineering 1996 $148,077 $50,000 14,750 $17,687
and Technology 1995 $134,039 $55,000 12,000 $18,520
Randy C. Martin (2) 1997 $119,616 $40,000 9,000 $16,974
Vice President Finance and 1996 $111,346 $27,500 - $5,166
Chief Financial Officer 1995 $10,577 $5,000 10,000 -
David G. Pocost (3) 1997 $104,039 $37,500 7,500 $13,480
Vice President Quality 1996 $80,577 $24,000 5,250 $10,739
and Environmental Affairs 1995 $69,578 $17,000 3,000 $9,119
(1)The amounts disclosed in this column for fiscal year 1997 include
Company contributions to non-qualified defined contribution
arrangements on behalf of Mr. Buechler, $61,800; Mr. Mueller, $38,983; Mr.
Martin, $12,890; Mr. Yoder, $15,000, and Mr. Pocost, $10,170.
(2)Mr. Martin commenced employment with the Company on September 25, 1995.
(3)Mr. Pocost was elected as an executive officer in December 1996.
Page 6
OPTION GRANTS
The following table summarizes option grants made during fiscal 1997 to
the executive officers named above.
Individual Grants
% of Total
Options
Granted Potential Realizable
Number of to Value at Assumed
Securities Employees Annual Rates of Stock
Underlying in Price Appreciation
Options Fiscal Exercise Expiration For Option Term(1)
Name Granted(#) Year Price Date 5%($) 10%($)
Bradley B.
Buechler 75,000 (2) 14.6% $10.875 12/08/06 $512,942 $1,299,896
David B.
Mueller 60,000 (2) 11.7% $10.875 12/08/06 $410,354 $1,039,917
Daniel J.
Yoder 9,000 1.8% $10.875 12/08/01 $ 27,041 $59,754
Randy C.
Martin 9,000 1.8% $10.875 12/08/01 $ 27,041 $59,754
David G.
Pocost 7,500 1.5% $10.875 12/08/01 $ 22,534 $49,795
(1) The rates of appreciation presented of 5% and 10% are set by the
Securities and Exchange Commission, and therefore, are not intended to
forecast future appreciation of the Company's stock price.
(2) These represent options issued under the Restricted Stock Option Plan
where neither the options or Common Stock acquired may be sold or otherwise
disposed of for three years after the date of grant of the option.
OPTION EXERCISES AND OUTSTANDING OPTIONS
The following table summarizes all options exercised in fiscal 1997 and
unexercised options at the end of fiscal 1997 for the executive officers
named above.
Bradley B. Buechler 69,562 $612,780 854,500 (3) $9,712,018
David B. Mueller - - 275,000 (3) $2,727,500
Daniel J. Yoder - - 50,750 $484,968
Randy C. Martin - - 19,000 $133,750
David G. Pocost - - 16,750 $128,405
(1) The values represent the difference between the exercise price of the
options and the price of the Company's Common Stock on the date of exercise
and at fiscal year end, respectively.
(2) The Board has resolved that at no time will the total unexercised
options
to employees be in excess of 10% of the then outstanding common shares.
(3) These represent options issued under the Restricted Stock Option Plan
where neither the options or common stock acquired may be sold or otherwise
disposed of for three years after the date of grant of the option.
Page 7
EMPLOYMENT AGREEMENTS
MESSRS. BUECHLER AND MUELLER
On November 1, 1997, the Company entered into Amended and Restated
Employment Agreements (the "Agreements") with Messrs. Buechler and Mueller
(the "Employees"), which amended and continued the Employees' existing
employment agreements. Each Agreement will continue until terminated either by
the Company on three years' notice or by the Employee on one year's notice.
Notice of termination may not be given before November 1, 2000, except that if a
"Change of Control" (described below) occurs, the Employee may give notice of
termination at any time on or after November 1, 1998. For 24 months after
termination of the Agreement, the Employee may not disclose any Company trade
secrets, solicit the Company's customers, business or employees, or otherwise
compete directly with the Company.
The Agreements provide for compensation consisting of: (i) annual base
salaries of $390,000 for Mr. Buechler and $250,000 for Mr. Mueller, subject
to periodic review by the Board, (ii) bonuses equal to 1% (for Mr.
Buechler) and 0.6% (for Mr. Mueller) of the Company's annual earnings
before interest and income taxes, subject to certain adjustments and
exceptions, (iii) one-time stock options of 200,000 shares for Mr. Buechler
and 150,000 shares for Mr. Mueller, which are in addition to options
granted under previous versions of their employment agreements and any
other options which the Board may grant them under the Company's stock
option plans, and (iv) annual pension plan contributions of 15% of base
salary plus the amount of premium that would be paid for term life
insurance of $1,250,000 for Mr. Buechler and $750,000 for Mr. Mueller.
If the Company terminates an Employee's employment for any reason other
than "Cause" (defined below), or if the Employee terminates his employment
with "Justification" (defined below) or with prior notice (as discussed
above), then the Employee will receive a cash severance benefit equal to
two times his then current base salary plus the aggregate amount of the
bonuses paid or earned by the Employee in the two years before the notice
of termination is given. However, if a Change of Control has occurred
before the termination, the severance benefit becomes 2.95 times the sum of base
salary plus one-third of the aggregate amount of bonuses paid or earned by the
Employee in the three years before the notice of termination is given. In
either case, if the severance benefit and any other payments received as a
result of the termination are subject to the excise tax imposed on
excessive termination payments under the Internal Revenue Code, the Company
will pay the Employee an additional severance amount so that the Employee
will receive the same net amount he would have received if there had been
no excise tax.
The Agreements define certain terms, as follows:
A "Change of Control" takes place if any of the following occurs: (i)
the Board of Directors approves and recommends to the Company's
shareholders (A) any consolidation or merger of the Company where either
the Company is not the surviving corporation or the Company's shares are
exchanged and the shareholders do not retain the same proportionate voting
interest in the Company or its successor, (B) a sale or other transfer of
all or substantially all of the Company's assets, other than to a
subsidiary, or (C) the liquidation or dissolution of the Company; (ii) any
person acquires a majority of the Company's voting stock; (iii) the Board
of Directors approves any transaction whose purpose or likely effect is to
cause the Company's Common Stock to be held by fewer than 300 persons or
not to be listed on any national securities exchange; or (iv) there is a
change in a majority of the Company's Board of Directors within any 24
consecutive months, unless each new director was approved by a majority of
the continuing directors.
"Cause" for termination of an Employee's employment by the Company
occurs only if the Employee is convicted of a felony, or commits an act or
omission (including failure to follow lawful instructions of the Board of
Directors) resulting or intended to result in his personal gain at the
expense of the Company's property or business. However, the Employee will
not be liable merely for his bad judgment or acts or omissions done in good
faith or in connection with any tender or merger offer or other
restructuring proposal.
"Justification" for termination of an Employee's employment by the
Employee occurs only if the Company reassigns or restricts the Employee in
a way inconsistent with his position, duties, responsibilities and status
as President and Chief Executive Officer in the case of Mr. Buechler or as
Executive Vice President and Chief Operating Officer in the case of Mr.
Mueller, or fails to pay the Employee any salary, option or bonus within
seven days after the Employee notifies the Company that such amount is due,
or otherwise adversely affects or materially reduces any other benefits or
rights of Employee under the Agreement.
Page 8
MESSRS. YODER, MARTIN, AND POCOST
The Company entered into the following employment agreements: with Mr.
Yoder on June 30, 1995 through June 29, 1998; with Mr. Martin on March 31,
1997 through March 30, 1999; with Mr. Pocost on February 1, 1997 through
January 31, 1999. The annual base compensation, subject to periodic review
for cost of living and/or merit and other increases for Mr. Yoder, Martin,
and Pocost was $140,000, $120,000, and $105,000, respectively. In addition,
the Agreement requires the Company to maintain term life insurance in the
amount of $250,000 for the employee's designated beneficiaries for the term
of the Agreement, all premiums thereon to be paid by the Company. The
Agreement provides for annual bonuses based upon performance and the
overall results of the Company's operations.
COMMON STOCK 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 Standard & Poor's 500 Stock Index
and the Standard & Poor's Specialty Chemicals Index, assuming an initial
investment of $100 at the beginning of the period and the reinvestment of
all dividends.
10/92 10/93 10/94 10/95 10/96 10/97 CAGR*
SPARTECH CORPORATION $100 $150 $230 $255 $446 $653 45.5%
S&P 500 $100 $112 $113 $138 $168 $218 16.9%
S&P Specialty
Chemicals Index $100 $116 $ 99 $118 $130 $145 7.7%
* Compound annual growth rate.
Page 9
SECURITY OWNERSHIP
The table set forth below identifies the aggregate shares of Common
Stock beneficially owned by each director, by each executive officer, by
the executive officers and directors as a group, and by each person known
to the Company as of December 31, 1997, to be the beneficial owner of more
than 5% of the 26,439,948 shares of Common Stock outstanding as of that
date.
Directors and Executive Officers:
Francis J. Eaton / Alan R. Teague
Vita International Limited
Soudan Street
Middleton, Manchester
M24 2DB England 8,734,987(2) 33.0%
Thomas L. Cassidy
The TCW Group
200 Park Avenue
New York, NY 10166 4,950,767(3) 18.7%
Bradley B. Buechler 1,161,872(4) 4.2%
David B. Mueller 461,170(5) 1.7%
Daniel J. Yoder 65,380(6) *
W.R. Clerihue 60,000(7) *
Jackson W. Robinson 52,000(8) *
John R. Kennedy 40,000(9) *
Randy C. Martin 31,400(10) *
David G. Pocost 29,350(11) *
All Directors and Executive
Officers as a Group (11 persons) 15,586,926(12) 55.4%
Other Beneficial Owners
In Excess of 5% of the
Common Shares Outstanding:
FMR Corp.
Fidelity Management &
Research Company
82 Devonshire Street
Boston, MA 02109 1,411,200(13) 5.3%
Page 10
NOTES TO SECURITY OWNERSHIP TABLE:
* Denotes that the percentage of class of security beneficially owned is
less than 1%.
(1)Includes shares issuable upon exercise of options as noted for the
respective owners.
(2)Messrs. Eaton and Teague, each a director of the Company, are also
directors of British Vita PLC and Vita International Limited; as such,
these amounts represent common stock owned by Vita International Limited.
(3)The TCW Group is comprised of TCW Special Placements Fund I, TCW Special
Placements Fund II, and TCW Capital, all California limited partnerships.
Mr. Cassidy, a director, is Managing Director of Trust Company of the West
and is a senior partner of TCW Capital; as such, this amount represents the
common stock owned by TCW Group, Inc. The shares of common stock are held
beneficially by TCW Special Placements Fund I (3,918,988 shares), TCW
Special Placements Fund II (1,001,820 shares), and TCW
Capital (29,959 shares), as Investment Manager, pursuant to an investment
management agreement dated as of June 30, 1987. The TCW Group, Inc. owns
100% of the stock of TCW Asset Management Company ("TAMCO"). TAMCO is the
managing general partner of TCW Capital, a general partnership. TCW Capital
is a general partner of TCW Special Placements Fund I and TCW Special
Placements Fund II. An investment committee of TAMCO controls the
investment decisions and voting of the shares of common stock beneficially
owned by The TCW Group, Inc.; the identities of the members of such
investment committee are unknown to the Company.
(4)Includes 1,054,500 shares issuable upon exercise of options presently
exercisable.
(5)Includes 425,000 shares issuable upon exercise of options presently
exercisable.
(6)Includes 60,750 shares issuable upon exercise of options presently
exercisable.
(7)Includes 30,000 shares issuable upon exercise of options presently
exercisable.
(8)Includes 45,000 shares issuable upon exercise of options presently
exercisable.
(9)Includes 35,000 shares issuable upon exercise of options presently
exercisable.
(10)Includes 28,000 shares issuable upon exercise of options
presently exercisable.
(11)Includes 25,750 shares issuable upon exercise of options
presently exercisable.
(12)Includes 1,704,000 shares issuable upon exercise of options
presently exercisable.
(13)Based on information presented as of December 31, 1996 in FMR
Corp.'s latest available Schedule 13G, FMR Corp. beneficially owned
1,411,200 shares of Common Stock including 1,003,900 shares beneficially
owned by Fidelity Management & Research Company as a result of it serving
as investment adviser to various investment companies and other funds and
407,300 beneficially owned by Fidelity Management Trust Company as trustee
or managing agent for various private investment accounts and other funds.
FMR Corp. has sole voting power with respect to the 407,300 shares and sole
investment power with respect to the total 1,411,200 shares.
Page 11
PROPOSAL 2: TO AMEND THE CERTIFICATE OF INCORPORATION
The Company's Board of Directors has unanimously determined that the
following amendment to the Company's Certificate of Incorporation is
advisable and has unanimously voted to recommend the amendment to the
Company's shareholders for adoption. The amendment will increase the
authorized capital stock of the Company designated as Common from
35,000,000 shares to 45,000,000 shares. The proposed amendment will replace
the first paragraph of Article Fourth of the Company's Certificate of
Incorporation with the following:
FOURTH: The total number of shares of stock which the
Corporation shall have the authority to issue is Forty-Nine Million
(49,000,000), of which stock Four Million (4,000,000) shares shall
be Preferred Stock, $1.00 per share par value, (hereinafter called
"Preferred Stock"), and Forty-Five Million (45,000,000) shares
shall be Common Stock, $.75 per share par value (hereinafter called
"Common Stock").
As of January 12, 1998, there were outstanding 26,422,448 shares of
Common Stock. In addition, the Company's stock option plans provide for the
grant of options to acquire additional shares of Common Stock. As of
January 12, 1998, options to acquire an aggregate of 3,715,800 shares of
Common Stock have been granted pursuant to option plans. The additional
authorized shares that would be available for issuance if the proposed
amendment is approved may be issued for any proper corporate purpose by the
Board of Directors at any time without further Shareholder approval
(subject, however, to applicable statutes or the rules of the New York
Stock Exchange which require Stockholder approval for the issuance of
shares in certain circumstances). The Board of Directors believes it is
desirable to give the Company this flexibility in considering such matters
as stock dividends, raising additional capital, acquisitions or other
corporate purposes. The authorization of such shares will enable the
Company to act promptly and without additional delay if appropriate
circumstances arise which require the issuance of such shares. Other than
commitments under existing stock option plans, the Company has no present
agreements or commitments to issue any additional shares.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS
PROPOSAL.
PROPOSAL 3: TO APPROVE AMENDMENT TO INCENTIVE STOCK OPTION PLAN
The Board of Directors amended the Incentive Stock Option Plan (" the
Incentive Plan") effective November 1, 1997, subject to shareholder
approval, to increase the number of shares which may be made the subject of
options granted pursuant to the Incentive Plan from 1,000,000 to 2,000,000
shares. Options for all 1,000,000 shares previously authorized under the
Incentive Plan have been granted. The purposes of the Incentive Plan are to
assist the Company in attracting and retaining valuable employees, to
encourage a sense of proprietorship in those employees, and to stimulate in
those employees an active interest in the development and financial success
of the Company, by rewarding improvement in the Company's financial
performance as reflected in its stock value. The Company's Board of
Directors believes that stock options have played a critical role in recent
years in motivating Company management to build a growing, highly
competitive business while also delivering a consistently strong financial
performance record with corresponding stock price appreciation. The Board
believes that for the Company to continue to retain, motivate and attract
key personnel essential to the continued success of the Company, it is
necessary to maintain the Company's current practice of providing
meaningful option grants to key employees. The Board also believes that
providing management with this program of consistent stock option grants is
an appropriate method of aligning the interests of management with those of
its shareholders.
The full text of the Incentive Plan, as amended subject to shareholder
approval, is attached to this Proxy Statement as Exhibit A.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS
PROPOSAL.
Page 12
PROPOSAL 4: TO APPROVE AMENDMENT TO RESTRICTED STOCK OPTION PLAN
The Board of Directors amended the Restricted Stock Option Plan ("the
Restricted Plan") effective November 1, 1997, subject to shareholders
approval. The purposes of the Restricted Plan are similar to those of the
Incentive Plan. The Board believes that the Restricted Plan enhances the
Company's ability to retain or obtain key executive employees by enabling
them to acquire shares of the Company's Common Stock through options
granted under the Restricted Plan.
The Board of Directors approved two amendments to the Restricted Plan.
First, the Board amended the plan to permit the directors of the Company to
become eligible to participate. The Board believes that the purposes of the
Restricted Plan can be accomplished even more effectively by permitting the
directors of the Company to become eligible to participate in the plan.
Second, the Board amended the plan to limit the amount of options which any
one individual may receive in any one year to 5% of the number of shares of
the Company's Common Stock issued and outstanding at the beginning of such
year. The purpose of this amendment was to permit compensation paid to the
highest compensated employees of the Company to continue to be deductible
for federal income tax purposes under the restrictions imposed under
Section 162(m) of the Internal Revenue Code and related regulations.
Section 162(m) and the related regulations could limit the deductibility of
compensation paid to certain employees under the Restricted Plan. Imposing
the limitation on the number of shares which may be granted to any one
individual in any one year will permit the Company to continue to deduct
compensation paid to the highest compensated employees under the Restricted
Plan.
The full text of the Restricted Plan, as amended subject to shareholder
approval, is attached to this Proxy Statement as Exhibit B.
As part of its previously announced Common Stock repurchase program,
the Company currently intends to continue its practice of minimizing the
dilutive effect of its stock option plans through the acquisition of shares
to offset option exercises. Since December, 1995 the Company has
repurchased 800,000 shares of its Common Stock and is currently authorized
to purchase an additional 1,000,000 shares.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS
PROPOSAL.
PROPOSAL 5: TO VOTE TO APPROVE INCENTIVE BONUS ARRANGEMENTS
The Compensation Committee of the Company's Board of Directors has
approved the incentive bonus arrangements for Bradley B. Buechler, the
Company's Chief Executive Officer, and David B. Mueller, the Company's
Chief Operating Officer. The Compensation Committee believes that these
arrangements have served their intended purpose and properly reward these
officers for the performance results achieved. The arrangements for each
fiscal year of the Company provide these individuals with an annual bonus
equal to a percentage (1% for the Chief Executive Officer and .60% for the
Chief Operating Officer) of the Company's earnings before interest and
income taxes as reported in the Company's audited financial statements for
each year that their employment agreements are in effect, adjusted,
however, to exclude profit or loss on extraordinary or nonrecurring items
and unusual items (such as sale of a significant amount of assets or
securities other than in the ordinary course of business operations, one-
time employee separation costs, and significant litigation costs or
recoveries) ("Adjusted EBIT"). The calculation of Adjusted EBIT is to be
made by the Company's auditors based on generally accepted accounting
principles. No such bonuses will be paid with respect to any fiscal year in
which the Company's Adjusted EBIT is less than 66-2/3% of the Company's
Adjusted EBIT in its immediately preceding fiscal year. Should the
employment agreement terminate prior to the close of a fiscal year of the
Company, the employee will be entitled to a bonus with respect to such
fiscal year (in addition to other amounts to which he may be entitled on
termination under other provisions of his employment agreement)
equal to a proportionate amount of the bonus he would have earned for the
entire fiscal year based on the number of days he was employed .
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS
PROPOSAL.
Page 13
PROPOSAL 6: TO RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company, on the recommendation of the
Audit Committee, appointed Arthur Andersen LLP as independent auditors of
the Company for fiscal 1998. The Board proposes that the shareholders
ratify at this Annual Meeting the appointment of Arthur Andersen LLP as
independent auditors for fiscal 1998. Arthur Andersen LLP has served as
the Company's independent auditors since fiscal 1986. The Company has had
no disagreements with Arthur Andersen LLP on any matters of accounting
principles or practices, financial statement disclosure, or auditing scope
or procedures. In the event a majority of the votes cast at the meeting
are not voted in favor of the appointment, the Board will reconsider its
selection.
Arthur Andersen LLP 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 intend to bring before the Annual Meeting any
matters other than those disclosed in the Notice of Annual Meeting of
Shareholders, 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 1999 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 October 1, 1998.
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
Executive Vice President,
Chief Operating Officer
January 29, 1998 and Secretary
Page 14
Exhibit A
SPARTECH CORPORATION
INCENTIVE STOCK OPTION PLAN
This Incentive Stock Option Plan (the Plans) of Spartech Corporation
("Spartech") for Spartech and its subsidiaries and affiliated corporations
(collectively referred to as the "Company") is intended to provide
employment incentive:
(A) For the purposes of retaining in the employ of the Company persons
with superior training, experience and ability;
(B) For attracting new employees whose services are considered
unusually valuable; and
(C) To encourage a sense of proprietorship in all such persons and to
stimulate in all such persons an active interest in the development and
financial success of the Company.
The Plan is intended to provide for the issuance of options which
comply with all of the requirements of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
1. ADMINISTRATION OF PLAN. The Plan shall be administered by a
committee of the Board of Directors of Spartech comprised of two or more
members of the Board who are not employees of the Company, (the
"Committee"). No person shall be a member of the Committee if, during one
year prior to service on the Committee, such person was granted or awarded
any equity securities of the Company pursuant to this or any other plan of
the Company, except as permitted by Rule 1 6b-3(c)(2)(i) under the
Securities Exchange Act of 1934.
The Committee shall review and approve the names of all key employees
to whom options are proposed to be granted, the number of shares to be
covered by, and within the applicable limits set forth in the Plan, the
price and terms of any option to be granted hereunder. Subject to the
provisions of the Plan, the Committee shall be authorized to approve the
number of options and participants annually and to interpret the Plan, to
prescribe, amend and rescind rules and regulations, forms, notices and
agreements relating to the Plan and to make all determinations necessary or
advisable for the operation of the Plan. All ultimate powers of approval
shall be vested in the Committee as a body and the Committee shall have
absolute discretion, subject to the provisions of the Plan, with respect to
all determinations thereunder.
2. SHARES SUBJECT TO THE PLAN. The aggregate number and class of shares
which may be made the subject of options granted pursuant to the Plan for
its ten (10) years of operation is Two Million (2,000,000) shares of Common
Stock of Spartech (par value $.75 per share), subject to adjustment as
provided in Section 8 below. Such shares may be made available from
authorized and unissued shares of Common Stock of Spartech. In the event
that any option granted hereunder shall terminate prior to its exercise in
full, the shares with respect to which such option shall not have been
exercised may thereafter again be made the subject of new options granted
hereunder.
3. ELIGIBILITY FOR OPTIONS.
(A) Employees and executive officers of the Company shall be entitled
to participation in the Plan, if otherwise eligible under the terms
hereunder. Any person granted an option hereunder is hereinafter referred
to as a "Participant".
(B) The adoption by the Committee of a resolution granting an option to
an employee shall complete the necessary corporate action constituting the
grant of such option, and shall be an offer of such shares for sale to such
employee under the terms of the Plan.
(C) For options granted, the aggregate fair market value, determined as
of the date of grant of each option, of shares of Common Stock with respect
to which options are exercisable for the first time by any person during
any calendar year (under all incentive stock option plans of the Company)
shall not exceed $100,000.
A-1
4. EXERCISE PRICE.
(A) The exercise price per share of options granted under the Plan
shall not be less than 100% of the fair market value per share of the
shares subject to such option at the time the option is granted, and such
exercise price shall be determined in good faith by the Committee at the
time the option is granted.
(B) However, if any option is granted hereunder to any person who owns
stock possessing more than 10% of the total combined voting power of all
classes of stock of Spartech (or its parent, if any), or of any subsidiary,
then, notwithstanding any other provision of the Plan, such option shall
have an exercise price of at least 110% of the fair market value per share
of the shares subject to such option at the time the option is granted.
For the purposes of the foregoing restriction, a person shall be considered
as owning stock which he may purchase under any outstanding option, as well
as the stock owned directly or indirectly by or for his spouse, brothers
and sisters (whether of the whole or half blood), ancestors and lineal
descendants; and stock owned directly or indirectly by or for a
corporation, partnership, estate or trust shall be considered as being
owned proportionately by or for its shareholders, partners or
beneficiaries.
5. EXERCISE PERIOD.
(A) Subject to the provisions of Sections 7 and 8 hereof, the Committee
shall have absolute discretion in determining the rate at which any option
granted hereunder may be exercised and whether any option exercisable in
installments is to be exercisable on a cumulative or noncumulative basis.
However, no option granted hereunder shall be exercisable in whole or in
part later than the day preceding the tenth anniversary date of the grant.
(B) However, no option granted to any person who owns stock of Spartech
possessing more that 10% of the total combined voting power of all classes
of stock of Spartech (or its parent, if any, or a subsidiary) as defined in
Section 4(B) of this Plan shall be exercisable after the expiration of five
years from the date such option is granted.
(C) If the provisions of Section 422 of the Code defining stock options
which meet the requirements for benefits accorded to incentive stock
options under the Code so require (at the time of the granting of any such
option), then notwithstanding the provisions of subparagraphs (A) and (B),
no option granted under the Plan to any person shall be exercisable at a
time while there is outstanding any incentive stock option which was
granted, before the granting of such option, to such person to purchase
stock of Spartech or of any corporation which (at the time of the granting
of any such option) is a parent or subsidiary corporation of Spartech, or
of any corporation which is a predecessor of any such corporations. For
purposes of this Plan, an option shall be "outstanding" until it is
exercised in full or expires by reason of lapse of time.
6. MANNER OF EXERCISE OF OPTIONS.
(A) Unless the Committee shall otherwise determine, an option, to the
extent exercisable under this Plan, may be exercised by delivery to the
Treasurer or Controller of Spartech, at its principal office, of a written
notice, signed by the person entitled to exercise such option, specifying
the number of shares purchasable under the option which the Participant
then wishes to purchase, (i) accompanied by a certified check in the amount
of the aggregate option price for such number of shares, or alternatively,
(ii) the delivery of shares of Spartech Common Stock already owned by the
Participant having a fair market value equal to the exercise price, or
(iii) by the delivery of a combination of such shares and certified check.
(B) For purposes of Section 6(A) of this Plan, the "fair market value"
of any shares of Spartech Common Stock tendered by a Participant in
exercise or partial exercise of an option granted under the Plan shall mean
the closing bid price of a share of Spartech Common Stock in the exchange
its Common Stock is traded on the day of exercise of such Option or, if
there were no sales on such day, the lowest bid price for such stock.
(C) In no event shall stock be issued or certificates be delivered
until full payment shall have been received by Spartech, nor shall the
Participant have any right or status as a stockholder prior to such
payment.
A-2
7. EFFECT OF TERMINATION OF EMPLOYMENT, DEATH OR NORMAL RETIREMENT.
(A) If a Participant's employment with the Company terminates as a
result of permanent and total disability (as defined in Section 22(e)(3) of
the Code), or if his employment otherwise terminates for any other reason,
including death or retirement, without having fully exercised any option
granted to him, he, his executor or administrator or the legatees or
distributees of his estate, as the case may be, shall have the right, for a
period of one (1 ) year from the date his employment terminates as a result
of such disability, or for a period of three (3) months after such
termination, retirement or from the appointment and qualification of an
executor or administrator, as the case may be, but not, in any case, later
than the day preceding the tenth anniversary of the date of the grant of
such option to exercise such option with respect to all or any part of the
number of shares to which the option relates, to the extent exercisable at
the time of his disability, death, retirement, or termination of
employment, and thereafter such option, to the extent not so exercised
during such period, shall be deemed to have expired regardless of the
expiration date otherwise specified therein.
(B) For the purposes of this Plan, the transfer of an employee among
Spartech, its subsidiaries or affiliates, or a leave of absence authorized
by the Company for military service or sickness not exceeding three (3)
months, or a leave of absence in excess of three (3) months for military
service or sickness duly authorized by the Company provided the employee
has a right to reemployment either by statute or by contract, shall not be
deemed a termination of employment.
8. ADJUSTMENT OF NUMBER AND PRICE OF SHARES SUBJECT TO OPTION.
(A) If the outstanding shares of the Common Stock of Spartech are
subdivided, consolidated, increased, decreased, changed into, or exchanged
for a different number or kind of shares or securities of Spartech through
reorganization, merger, recapitalization, reclassification, capital
adjustment or otherwise, or if Spartech shall issue Common Stock as a
dividend or upon a stock split, then the number and kind of shares
available for purposes of this Plan and all shares subject to the
unexercised portion of any options theretofore granted and the option price
of such options shall be appropriately adjusted. However, any such
adjustment in outstanding options shall be made without change in the total
exercise price applicable to the unexercised portion of any outstanding
options.
(B) If, in the event of a merger or consolidation, Spartech is not the
surviving corporation, and in the event that the agreement of merger or
consolidation does not provide for the substitution of a new option for an
option granted hereunder or for the assumption of such option by the
surviving corporation, or in the event of the dissolution or liquidation of
Spartech, the holder of any such option theretofore granted and still
outstanding shall have the right immediately prior to the effective date of
such merger, consolidation, dissolution or liquidation to exercise his
option in whole or in part without regard to any installment provision that
may have been made part of the terms and conditions of such option;
provided that any conditions precedent to such exercise set forth in the
Incentive Stock Option Agreement referred to below, other than the passage
of time, have occurred. In no event, however, may an option which becomes
exercisable pursuant to this Section 8 be exercised, in whole or in part,
later than the day preceding the tenth anniversary date of the grant
thereof.
(C) Adjustments under this Section shall be made by the Committee,
whose determination as to what adjustments shall be made, and the extent
thereof, shall be final, binding and conclusive. In computing any
adjustment under this Section 8, any fractional share which might otherwise
become subject to
an option shall be eliminated.
9. NONTRANSFERABILITY OF OPTIONS; SECURITIES ACT RESTRICTIONS. Options
granted hereunder shall not be transferable except by will or pursuant to
the laws of descent and distribution and may be exercised during a
Participant's lifetime, only by him. Unless the shares to be acquired upon
exercise of any option granted hereunder may, at the time of such
acquisition, be lawfully resold in accordance with a then currently
effective registration statement under the Securities Act of 1933, the
Committee may require, as a condition to the delivery of any shares to be
purchased upon exercise of such option:
A-3
(a) That Spartech receive appropriate evidence that the optionee is
acquiring such shares for investment and not with a view to the
distribution or public offering of all or any portion thereof, or any
interest therein, and an agreement to the effect that the optionee shall
make no sale or other disposition of such shares unless and until Spartech
(i) shall have received an opinion of legal counsel satisfactory in form
and substance to it, to the effect that such sale or other disposition may
be made without registration under the then applicable provisions of the
Securities Act of 1933 or the regulations of the Securities and Exchange
Commission thereunder, or (ii) such shares shall thereafter be included in
a currently effective registration statement or post-effective amendment to
a registration statement under the Securities Act of 1933; and
(b) That the certificate or certificates issued to evidence such shares
bear an appropriate legend summarizing such restrictions on the further
sale or other disposition thereof.
10. INCENTIVE STOCK OPTION AGREEMENT. Each option granted under the
Plan shall be evidenced by an Incentive Stock Option Agreement which shall
set forth the terms and conditions of such option, including, without
limitation, such terms and conditions, if any, as shall be requisite in the
judgment of the Committee in order to comply with the provisions of the
Code defining so-called "incentive stock options". Each such Agreement
shall expressly incorporate by reference the provisions of this Plan (a
copy of which shall be attached thereto), and shall state that in the event
of any inconsistency between the provisions hereof and the provisions of
such Incentive Stock Option Agreement, the provisions of this Plan shall
govern.
11. AMENDMENT OR DISCONTINUANCE OF PLAN. The Committee may alter,
amend, suspend or discontinue the Plan at any time, provided that subject
to the provision of Section 8, no such action of the Committee may, without
appropriate shareholder action, increase the maximum number of shares
subject to the Plan, alter the class of individuals eligible for the grant
of options hereunder or change the manner of determining the exercise price
of options granted under the Plan. In addition, without the consent of the
Participant, no such action shall alter the terms of, or impair the rights
of such Participant under, any option theretofore granted to him pursuant
to the Plan, including any such rights with respect to any shares acquired
upon exercise of such option.
12. COMMENCEMENT AND TERMINATION OF PLAN; PERIOD DURING WHICH OPTIONS
MAY BE GRANTED. This Plan, as adopted by the Board of Directors on July 26,
1991 and subject to approval by the shareholders in accordance with the
applicable provisions of the Corporation Law of the State of Delaware,
shall become effective on October 1, 1991. No options shall be granted
pursuant to this Plan prior to October 1, 1991. No grant of an option shall
be made hereunder after the expiration of ten (10) years from October
1,1991.
13. EFFECT OF AMENDMENTS TO THE PLAN ON PREVIOUSLY GRANTED OPTIONS.
Prior to the termination of any option, the Committee, in its discretion,
shall have the power to amend the Stock Option Agreement relating to any
such option in order to reflect an amendment to the Plan which becomes
effective after the date of grant of any such option. Any such amendment
shall be effective only with respect to the unexercised portion of any such
option. Subject to the provisions of Section 8 of the Plan, nothing
contained in this Section 13 shall be construed to allow the Committee to
increase the number of shares purchasable pursuant to any such option, to
reduce the exercise price of any such option or to extend the exercise
period of any such option beyond the day preceding the tenth anniversary of
the date of its grant.
By Order of the Board of Directors
SPARTECH CORPORATION
Dated: July 26, 1991
A-4
Exhibit B
SPARTECH CORPORATION
RESTRICTED STOCK OPTION PLAN
1. PURPOSES OF PLAN. The purpose of the Spartech Corporation Restricted
Stock Option Plan (the "Plan") is as follows:
To further the growth, success and interests of Spartech Corporation
(the "Company") by retaining or obtaining key executive employees of the
Company and its subsidiaries and affiliates, who have been or will be given
responsibility for the administration of the affairs of the Company, by
enabling them to acquire shares of the Company's Common Stock under the
terms and conditions and in the manner contemplated by the Plan, thereby
increasing their personal commitment to the Company.
2. ADMINISTRATION OF PLAN. The Plan shall be administered by a
committee of the Board of Directors of Spartech comprised of two or more
members of the Board who are not employees of the Company, the
("Committee"). No person shall be a member of the Committee if, during one
year prior to service on the Committee, such person was granted or awarded
any equity securities of the Company pursuant to this or any other plan of
the Company, except as permitted by Rule 1 6b-3(c)(2)(i) under the
Securities Exchange Act of 1934.
The Committee shall review and approve the names of all key employees
to whom options are proposed to be granted, the number of shares to be
covered by, and within the applicable limits set forth in the Plan, the
price and terms of any option to be granted hereunder. Subject to the
provisions of the Plan, the Committee shall be authorized to approve the
number of options and participants annually and to interpret the Plan, to
prescribe, amend and rescind rules and regulations, forms, notices and
agreements relating to the Plan and to make all determinations necessary or
advisable for the operation of the Plan. All ultimate powers of approval
shall be vested in the Committee as a body and the Committee shall have
absolute discretion, subject to the provisions of the Plan, with respect to
all determinations thereunder.
3. ELIGIBLE PARTICIPANTS. Eligible for participation under the Plan
shall be (i) the members of the Company's Board of Directors, and (ii)
those employees of the Company or its subsidiaries, divisions and
affiliates who exercise key functions and responsibilities including, but
not limited to, such persons whose position in the Company or its
subsidiaries, divisions and affiliates bear the following titles:
Chairman of the Board Treasurer
Vice Chairman of the Board Secretary
President Assistant Vice President
Executive Vice President Assistant Secretary
Group Vice President Assistant Treasurer
Vice President Assistant Controller
Controller Divisional President
General Manager
The Committee shall have the responsibility, in its sole discretion, of
determining eligible participants under the plan, and with respect to
employees shall receive the recommendations of the various officers and
divisional executives of the Company with respect thereto. No
participant may be granted options in any calendar year for a number of
shares greater than 5% of the number of shares of the Company's common
stock issued and outstanding at the beginning of such year."
B-1
4. SHARES SUBJECT TO PLAN. A maximum of up to 10 percent (10%) of the
outstanding shares (excluding treasury shares) of the Common Stock, $.75
par value, of the Company shall be available for inclusion in options
issued for each fiscal year of the Company. However, the number of shares
issuable for options granted under the Plan with respect to any one fiscal
year of the Company shall not be cumulative, so that if options for the
maximum number of shares authorized for issuance under the Plan are not in
fact issued during any fiscal year, the authority for issuance of options
not so issued shall be automatically canceled. The number of outstanding
shares against which the maximum percentage figure is to be applied shall
be determined as of the applicable fiscal year end. Such shares may come
either from authorized but heretofore unissued shares or from shares
reacquired by the Company, including shares purchased in the open market.
Such number and kind of shares subject to options issued under the Plan
shall be appropriately adjusted in the event of any one or more stock
splits, spin-offs, split-ups, split-offs, reverse stock splits, or stock
dividends in excess of five percent (5%), hereafter paid or declared with
respect to such shares subject to the Plan.
5. PRICE AND TERMS OF OPTIONS.
(A) The Committee, in its absolute discretion, shall determine the
exercise price per share of options granted under the Plan, including the
discretion to issue options exercisable at prices below market for the
underlying shares at the time of grant, or option prices reflecting
impediments to future marketability placed on the shares subject to the
options, or exercisable for nominal prices, which may be payable in
services, by note or by other consideration therefor.
(B) The Committee shall have absolute discretion in determining the
rates at which any option granted hereunder shall be exercised in whole or
in part. However, no option granted hereunder shall be exercisable in whole
or in part later than the day preceding the 1 0th anniversary date of the
grant. An option exercisable under this Plan may be exercised by delivery
to the Treasurer or Controller of Spartech, at its principal office, of a
written notice, signed by the person entitled to exercise such option,
specifying the number of shares purchasable under the option, which the
participant wishes to purchase, accompanied by (i) a certified check in the
amount of the aggregate option price for such number of shares, or
alternatively, (ii) the delivery of shares of Spartech Common Stock already
owned by the participant having a fair market value equal to the exercise
price, or (iii) by the delivery of a combination of such shares and
certified check.
For purposes of this Plan, the 'fair market value" of any shares of
Spartech Common Stock tendered by a participant in exercise or partial
exercise of an option granted under the Plan shall mean the closing bid
price of a share of Spartech Common Stock in the exchange its Common Stock
is traded on the day of exercise of such option or, if there were no sales
on such day, the lowest bid price for such stock. In no event shall stock
be issued or certificates be delivered until full payment shall have been
received by Spartech, nor shall the participant have any right or status as
a stockholder prior to such payment.
6. RESTRICTIONS. Options granted hereunder, or shares issued pursuant
to the exercise of such options granted under the Plan shall be subject to
the following restrictions:
(a) Neither the options granted hereunder nor shares issued pursuant to
the exercise of such options may be sold or otherwise disposed of until a
period of at least three (3) years shall have elapsed from the date of
grant of the option.
(b) For a period of three (3) years after options are issued to an
eligible participant, the options, if unexercised, or the underlying
shares, if acquired, may, in the sole discretion of the Company, be
reacquired by the Company at the same price as paid by such participant for
the options and/or shares, as the case may be, should such participant's
employment or service with the Company be terminated for fraud,
misappropriation or similar wrongdoing to the Company. Anything in the
foregoing to the contrary notwithstanding, this restriction shall not
permit the Company to reacquire shares upon which the prohibition against
sale or other disposition has lapsed prior to termination of employment.
B-2
7. OTHER RESTRICTIONS. The Committee may, in its sole discretion,
impose such other restrictions (not to exceed three (3) years in duration
from the date of issuance of any options hereunder) on any shares issued
pursuant to this Plan as it may deem advisable, including, without
limitation, restrictions under the Securities Act of 1933, as amended, or
under the requirements of any stock exchange upon which such shares or
shares of the same class are then listed.
8. LEGEND. In order to enforce the restrictions imposed upon shares
hereunder, the Committee may cause a legend or legends to be placed on any
certificates representing shares issued pursuant to this Plan, which legend
or legends shall make appropriate reference to the restrictions imposed
hereunder.
9. RESTRICTED STOCK OPTION AGREEMENT. Each option granted under the
Plan shall be evidenced by a Restricted Stock Option Agreement which shall
set forth the terms and conditions of such option. Each such Agreement
shall expressly incorporate by reference the provisions of this Plan (a
copy of which shall be attached thereto), and shall state that in the event
of any inconsistency between the provisions hereof and the provisions of
such Restricted Stock Option Agreement, the provisions of this Plan shall
govern.
10. AMENDMENTS. This Plan may be amended at any time by the Committee;
provided no such amendment shall increase the maximum number of shares that
may be issued pursuant to this Plan without the further approval of such
shareholders (except where such increase results from an anti-dilution
adjustment as provided in Section 4 hereof). Neither the Committee nor the
shareholders, by amendment to the Plan, can affect options or shares issued
to a participant under the Plan prior to such amendment.
11. COMMENCEMENT AND TERMINATION OF PLAN; PERIOD DURING WHICH OPTIONS
MAY BE GRANTED. This Plan, as adopted by the Board of Directors on July 26,
1991 and subject to approval by the shareholders in accordance with the
applicable provisions of the Corporation Law of the State of Delaware,
shall become effective on October 1, 1991. No options shall be granted
pursuant to this Plan prior to October 1, 1991. No grant of an option shall
be made hereunder after the expiration of ten (10) years from October 1,
1991 or such earlier date as may be determined by the Committee. The
termination of this Plan, however, shall not affect any restrictions
previously imposed on shares issued pursuant to this Plan.
By Order of the Board of Directors
SPARTECH CORPORATION
Dated: July 26, 1991, as amended
November 1, 1997
B-3
Notice of Annual Meeting
and Proxy Statement
Annual Meeting of Shareholders
March 11, 1998
SPARTECH CORPORATION
7733 FORSYTH * SUITE 1450 * CLAYTON, MISSOURI 63105-1817
PROXY CARD
SPARTECH CORPORATION PROXY
1998 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints W.R. Clerihue and Bradley B. Buechler,
and each of them with power to act alone and with full power of
substitution and revocation as attorneys and proxies of the undersigned to
attend the Annual Meeting of Shareholders of Spartech Corporation ("the
Company" to be held at the Pierre Laclede Conference Center, 7733 Forsyth
Boulevard, Clayton, Missouri, 63105, on Wednesday, March 11, 1998,
commencing at 10:00 a.m., CST, and at any and all adjournments thereof, and
to vote with respect to the following matters, all as set forth in the
Notice of Annual Meeting of Shareholders and Proxy Statement, dated January
29, 1998.
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" ITEMS 1 THROUGH 6 AND IN ACCORDANCE WITH THEIR BEST
JUDGMENT UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL
MEETING.
(Back of Card)
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" EACH ITEM.
ITEM 1 - ELECTION OF DIRECTORS
Election of three Class B Directors to serve until the 2001 Annual Meeting.
NOMINEES: Bradley B. Buechler, John R. Kennedy, and Calvin J. O'Connor
[ ] FOR all the nominees listed above
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above
[ ] WITHHOLD AUTHORITY to vote for the nominee(s)that have a line
through the name above
ITEM 2 - AMENDMENT TO INCREASE AUTHORIZED SHARES OF COMMON STOCK
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
ITEM 3 - AMENDMENT TO INCENTIVE STOCK OPTION PLAN
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
ITEM 4 - AMENDMENT TO RESTRICTED STOCK OPTION PLAN
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
ITEM 5 - APPROVE INCENTIVE BONUSES
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
ITEM 6 RATIFY INDEPENDENT AUDITORS
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
ITEM 7 - The proxies are authorized to vote, in discretion, upon such
other business as properly may come before the Annual Meeting.
[ ] AUTHORITY GRANTED
[ ] AUTHORITY WITHHELD
Dated:____________, 19___
_________________________
Signature of Shareholder
_________________________
Signature if held jointly
Please sign exactly as the name appears hereon. When shares are held by
joint tenants, both should sign. When signing as an attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign full corporate name by President for other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
