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 Definitive Proxy Statement
Sincerely,
SPARTECH CORPORATION
/S/Randy C. Martin
Vice President Finance and
Chief Financial Officer
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] 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.
1) Title of each class of securities to which transaction
applies:
..................................................................
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
4) Proposed maximum value of transaction:
5) Total fee paid:
[ ] Check box if any part of the fee is offset as provided by
Exchange Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
SPARTECH CORPORATION
7733 Forsyth Boulevard - Suite 1450
Clayton, Missouri 63105
DEAR FELLOW SHAREHOLDER:
I cordially invite you to attend the 1998 Annual Meeting of Spartech
Shareholders to be held at 10:00 a.m. on Wednesday, March 11, 1998, at the
Pierre Laclede Conference Center (Second Floor), 7733 Forsyth Boulevard in
Clayton, Missouri. Details of the business to be conducted at the meeting are
given in the attached Notice of Annual Meeting and Proxy Statement.
After the formal business of the meeting is covered, I will be giving a
brief update on the Company's first quarter results and then discuss in more
detail our strategy for future growth. This will include a review of several
of our new Alloy Plastics and a short video on our "Four Cornerstones for
Growth" concept.
I look forward to seeing each of you at the meeting, so please mark your
calendar for the second Wednesday in March. However, if for some reason you
can not attend, you can ensure that your shares are represented at the
meeting by promptly completing your proxy form and returning it in the
enclosed envelope.
Sincerely,
/S/ Bradley B. Buechler
Bradley B. Buechler
President and Chief
Executive Officer
<PAGE>
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
Executive Vice President,
Chief Operating Officer,
and Secretary
<PAGE>
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 this 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 Annual 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 Annual 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>
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 15,643,299 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
DIRECTOR
NAME, AGE PRINCIPAL OCCUPATION AND 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 Director 1994
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 is 1990
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 Vita International by the
nomination of Mr. O'Connor as noted below.
<PAGE>
SPARTECH
DIRECTOR
NAME, AGE PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS SINCE
- ------------------------- ------------------------------------------ -------
John R. Kennedy, 67 Mr. Kennedy is retired President and Chief 1997
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>
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
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 by the Nominating
Committee for 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 Vita 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. In November 1997, 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>
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 and for any employee
with base compensation in excess of $125,000 per annum or 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 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>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<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 $100,000 annually.
<CAPTION>
Long
Term
Compen- All
sation Other<F1>
Name and Fiscal Annual Compensation Options Compen-
Principal Position Year Salary($) Bonus($) Granted(#) sation
<S> <C> <C> <C> <C> <C>
Bradley B. Buechler 1997 $400,524 $497,010 75,000 $65,661
President and Chief 1996 $359,423 $344,920 55,000 $60,025
Executive Officer 1995 $333,462 $254,870 50,000 $55,078
David B. Mueller 1997 $246,462 $298,206 60,000 $42,844
Executive Vice 1996 $223,078 $206,952 50,000 $38,625
President, Chief 1995 $201,154 $140,170 45,000 $34,642
Operating Officer and
Secretary
Daniel J. Yoder 1997 $147,193 $70,000 9,000 $18,893
Vice President 1996 $148,077 $50,000 14,750 $17,687
Engineering 1995 $134,039 $55,000 12,000 $18,520
and Technology
Randy C. Martin<F2> 1997 $119,616 $40,000 9,000 $16,974
Vice President 1996 $111,346 $27,500 -- $5,166
Chief Financial 1995 $10,577 $ 5,000 10,000 --
Officer
David G. Pocost<F3> 1997 $104,039 $37,500 7,500 $13,480
Vice President Quality 1996 $80,577 $24,000 5,250 $10,739
and Environmental 1995 $69,578 $17,000 3,000 $9,119
Affairs
<FN>
<F1> 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.
Yoder, $15,000; Mr. Martin, $12,890; and Mr. Pocost, $10,170.
<F2> Mr. Martin commenced employment with the Company on September 25, 1995.
<F3> Mr. Pocost was elected as an executive officer in December 1996.
</FN>
</TABLE>
<PAGE>
<TABLE>
OPTION GRANTS
The following table summarizes option grants made during fiscal 1997 to
the executive officers named above.
<CAPTION>
Options Potential Realizable
Granted Value at
to Assumed Annual
Securities Employees Rates of Stock
Underlying in Expir- Price Appreciation
Options Fiscal Exercise ation for Option Term<F1>
Name Granted(#) Year Price Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Bradley B. Buechler 75,000<F2> 14.6% $10.875 12/08/06 $512,942 $1,299,896
David B. Mueller 60,000<F2> 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 $49,795
<FN>
<F1> The rates of appreciation presented of 5% and 10% are set by the
Securities and Exchange Commission, and therefore, are not intended to
forecast future appreciation of the Company's stock price.
<F2> These represent options issued under the Restricted Stock Option Plan
where neither the options nor Common Stock acquired may be sold or otherwise
disposed of for three years after the date of grant of the option.
</FN>
</TABLE>
<TABLE>
OPTION EXERCISES AND OUTSTANDING OPTIONS
The following table summarizes all options exercised in fiscal 1997 and
unexercised options at the end of fiscal 1997 for the executive officers
named above.
<CAPTION>
Number of Value of
Unexercised Unexercised
Options at "In-the-Money"
Shares Fiscal Year Options
Acquired On Value End<F2> (All at Fiscal
Name Exercise(#) Realized($)<F1> Exercisable) Year End<F1>
<S> <C> <C> <C> <C>
Bradley B. Buechler 69,562 $612,780 854,500<F3> $9,712,018
David B. Mueller -- -- 275,000<F3> $2,727,500
Daniel J. Yoder -- -- 50,750 $ 484,968
Randy C. Martin -- -- 19,000 $ 133,750
David G. Pocost -- -- 16,750 $ 128,405
<FN>
<F1> 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.
<F2> 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.
<F3> 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.
</FN>
<PAGE>
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>
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 Messrs. 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 each 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.
</TABLE>
<TABLE>
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.
FISCAL YEAR ENDED
<CAPTION>
10/92 10/93 10/94 10/95 10/96 10/97 CAGR*
<S> <C> <C> <C> <C> <C> <C> <C>
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 $100 $116 $ 99 $118 $130 $145 7.7%
* Compound annual growth rate.
</TABLE>
<PAGE>
<TABLE>
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.
<CAPTION>
Number Percentage
of of
Common Common
Shares Shares
Beneficially Beneficially
Owned<F1> Owned
Directors and Executive Officers:
<S> <C> <C>
Francis J. Eaton / Alan R. Teague
Vita International Limited
Soudan Street
Middleton, Manchester
M24 2DB England 8,791,360<F2> 33.3%
Thomas L. Cassidy
The TCW Group
200 Park Avenue
New York, NY 10166 4,950,767<F3> 18.7%
Bradley B. Buechler 1,161,872<F4> 4.2%
David B. Mueller 461,170<F5> 1.7%
Daniel J. Yoder 65,380<F6> *
W.R. Clerihue 60,000<F7> *
Jackson W. Robinson 52,000<F8> *
John R. Kennedy 40,000<F9> *
Randy C. Martin 31,400<F10> *
David G. Pocost 29,350<F11> *
All Directors and Executive
Officers as a Group (11 persons) 15,643,299<F12> 55.6%
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<F13> 5.3%
<PAGE>
<FN>
NOTES TO SECURITY OWNERSHIP TABLE:
* Denotes that the percentage of class of security beneficially owned is
less than 1%.
<F1>Includes shares issuable upon exercise of options as noted for the
respective owners.
<F2>Messrs. Eaton and Teague, each a director of the Company, are also directors
of Vita International Limited and Mr. Eaton is a
director of British Vita PLC; as such, these amounts represent Common Stock
owned by Vita International Limited.
<F3>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.
<F4>Includes 1,054,500 shares issuable upon exercise of options presently
exercisable.
<F5>Includes 425,000 shares issuable upon exercise of options presently
exercisable.
<F6>Includes 60,750 shares issuable upon exercise of options presently
exercisable.
<F7>Includes 30,000 shares issuable upon exercise of options presently
exercisable.
<F8>Includes 45,000 shares issuable upon exercise of options presently
exercisable.
<F9>Includes 35,000 shares issuable upon exercise of options presently
exercisable.
<F10>Includes 28,000 shares issuable upon exercise of options
presently exercisable.
<F11>Includes 25,750 shares issuable upon exercise of options
presently exercisable.
<F12>Includes 1,704,000 shares issuable upon exercise of options
presently exercisable.
<F13>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.
</FN>
</TABLE>
<PAGE>
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 26,422,448 shares of Common Stock
outstanding. 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
shareholder 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 Company's 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>
PROPOSAL 4: TO APPROVE AMENDMENT TO RESTRICTED STOCK OPTION PLAN
The Board of Directors amended the Company's Restricted Stock Option Plan
("the Restricted Plan") effective November 1, 1997, subject to shareholder
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 0.6% 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>
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 Annual 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>
Exhibit A
SPARTECH CORPORATION
INCENTIVE STOCK OPTION PLAN
This Incentive Stock Option Plan (the Plan) 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
<PAGE>
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
<PAGE>
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
<PAGE>
(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, as amended
November 1, 1997
A-4
<PAGE>
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 Secretary
Vice Chairman of the Board Assistant Vice President
President Assistant Secretary
Executive Vice President Assistant Treasurer
Group Vice President Assistant Controller
Vice President Divisional President
Controller General Manager
Treasurer
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
<PAGE>
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
<PAGE>
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
<PAGE>
Notice of Annual Meeting
and Proxy Statement
Annual Meeting of Shareholders
March 11, 1998
SPARTECH CORPORATION (Registration Mark)
7733 FORSYTH * SUITE 1450 * CLAYTON, MISSOURI 63105-1817
<PAGE>
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 (Second Floor), 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 only 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 their 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 or other authorized
officer. If a partnership, please sign in partnership name by authorized
person.
