[SPARTECH LOGO]
SPARTECH CORPORATION
120 S. Central, Suite 1700
Clayton, Missouri 63105-1705
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 8, 2000
DEAR FELLOW SHAREHOLDER:
I cordially invite you to attend the 2000 Annual Meeting of Spartech
Shareholders to be held at 10:00 a.m. on Wednesday, March 8, 2000, at the Pierre
Laclede Center (Saint Louis Club-16th Floor) 7701 Forsyth Boulevard, Clayton,
Missouri 63105 for the following purposes:
1.To elect three Class A directors to serve three-year terms.
2.To approve the calculation method for incentive bonuses payable under the
Company's employment agreements with its Chief Executive Officer and Chief
Operating Officer.
3.To ratify the selection of Arthur Andersen LLP as independent auditors of
the Company for the 2000 fiscal year.
4.To transact such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on January 10, 2000 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.
After the formal business of the meeting is covered, I will give a brief update
on the Company's first quarter results and then discuss in more detail our
strategy for the future. This will include a review of our recently introduced
"Pyramids of Performance" initiatives, a discussion of our ongoing "Focused
Growth" & "Continuous Improvement" strategies, and a short video highlighting
these efforts.
I look forward to seeing each of you at the meeting, so please mark your
calendar for the second Wednesday in March. However, if you are unable to
attend, you can ensure that your shares are represented at the meeting by
promptly completing your proxy and returning it in the enclosed envelope.
Sincerely,
/s/ Bradley B. Buechler
Bradley B. Buechler
St. Louis, Missouri Chairman, President and
January 21, 2000 Chief Executive Officer
<PAGE>
SPARTECH CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 8, 2000
To Our Shareholders:
The enclosed proxy is solicited by the Board of Directors of Spartech
Corporation for use at the Annual Meeting of Shareholders of the Company. All
expenses for 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. Spartech 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 and 3, 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 21, 2000. Any
shareholder giving 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 Spartech's Annual Report to Shareholders for the fiscal year ended
October 30, 1999 accompanies this Proxy Statement.
OUTSTANDING SHARES AND VOTING PROCEDURES
The outstanding voting securities of the Company on January 10, 2000 consisted
of 27,359,377 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 meeting. With respect to proposals 2 and 3, a majority of the votes present
in person or represented by proxy at the Annual Meeting is required to adopt the
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 10, 2000 are
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>
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. All directors hold office
for a term of three years. The Class A directors elected at this Annual Meeting
will hold office until the Annual Meeting of Shareholders in 2003, the Class B
directors will continue in office until the Annual Meeting of Shareholders in
2001, and the Class C directors will continue in office until the Annual Meeting
of Shareholders in 2002, and, in each case, until their successors are duly
elected and qualified.
The Board of Directors has nominated David B. Mueller, a present director of the
Company, and Roy Dobson and Richard B. Scherrer to be elected Class A directors
of the Company. Vita International Limited ("Vita") and the Company's executive
officers and directors have informed the Company that they intend to cast their
votes, aggregating 12,676,915, "FOR" these Board nominees.
Listed below are the members of the Company's Board of Directors, including the
nominees for election to the Board, with certain information about each of them
including their principal occupations for the last five years:
<TABLE>
<CAPTION>
Name, Age Principal Occupation and Other Spartech
Directorships Director
Since
<S> <C> <C>
Ralph B. Andy, 55 Mr. Andy was Chairman and Chief Executive 1998
Officer of Polycom Huntsman, Inc. from
October 1977 to March 1998. His term as
director expires at the 2002 Annual
Meeting.
Bradley B. Buechler, 51 Mr. Buechler is the Chairman, President, 1984
and Chief Executive Officer of the Company.
He is a CPA, and was Corporate Controller
and Vice President-Finance of the Company
from 1981 to 1984. He became Chief
Operating Officer of the Company in 1985,
President in 1987, Chief Executive Officer
in October 1991, and Chairman in March
1999. Mr. Buechler is a member of the
National Board of Directors of the Society
of the Plastics Industry, Inc. and also
serves on several local charitable boards.
His term as director expires at the 2001
Annual Meeting.
Thomas L. Cassidy, 71 Mr. Cassidy recently retired from the Trust 1986
Company of the West after having been a
Managing Director and a senior partner of
TCW Capital since 1984. He also serves on
the board of directors of DeVlieg-Bullard,
Inc., and Reunion Industries, Inc. His
term as director expires at the 2000 Annual
Meeting, and he is not standing for re-
election.
W.R. Clerihue, 76 Mr. Clerihue was Chairman of the Board for 1990
the Company from October 1991 to March
1999. He 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
2002 Annual Meeting.
Roy Dobson, 52 Mr. Dobson joined British Vita PLC in 1973, --
and he became Managing Director of their
Industrials Group and was appointed to
their board of directors in April 1998.
Mr. Dobson is being nominated as a director
for a term expiring at the 2003 Annual
Meeting.
Name, Age Principal Occupation and Other Spartech
Directorships Director
Since
John R. Kennedy, 69 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 Industries, Inc.,
Pioneer Companies, Inc., Modis Professional
Services, Inc., and Chairman of Georgetown
University's board of directors. His term
as Director Expires at the 2001 Annual
Meeting.
David B. Mueller, 46 Mr. Mueller is the Executive Vice 1994
President, Chief Operating Officer, and
Secretary of the Company. He is a CPA, and
was previously Corporate Controller of Apex
Oil Company from 1981 to February 1988.
Mr. Mueller became Vice President & Chief
Financial Officer of the Company in March
1988 and was named Secretary in 1991. He
became Executive Vice President and Chief
Operating Officer in 1996. He currently
stands for re-election.
Calvin J. O'Connor, 47 Mr. O'Connor is a Chartered Accountant in 1998
the United Kingdom. He joined British Vita
PLC and became a member of their board of
directors in June of 1996. In November
1996 he became British Vita's Finance
Director. Prior to joining British Vita,
he was the Group Financial Controller at
Courtaulds Textiles PLC. His term as
director expires at the 2001 Annual
Meeting.
Jackson W. Robinson, 57 Mr. Robinson is President of Winslow 1993
Management Company, a division of Adams
Harkness & Hill in Boston, 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 2002 Annual
Meeting.
Richard B. Scherrer, 52 Mr. Scherrer is the Managing Partner of --
Armstrong Teasdale LLP. Prior to joining
Armstrong Teasdale, he served as Assistant
Prosecuting Attorney for St. Louis County.
Mr. Scherrer is a Fellow in the
International Society of Barristers and is
listed in America's Best Lawyers,1999-2000
Edition. He is being nominated as a
director for a term expiring at the 2003
Annual Meeting.
Alan R. Teague, 52 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, and he
is not standing for re-election.
</TABLE>
The Board of Directors recommends that shareholders vote "FOR" the Board of
Directors' slate of nominees.
<PAGE>
BOARD COMMITTEES
AND COMPENSATION
There were five meetings of the Board during fiscal 1999. Every director
attended 75% of the aggregate number of formal meetings of the Board and of the
committees on which he served, with the exception of the designees of British
Vita, who alternate their attendance at the formal meetings because of long and
costly international travel requirements, and Mr. Kennedy.
The Board has an Audit Committee, currently consisting of Messrs. Andy,
Clerihue, Kennedy, and Robinson, which formally met twice during fiscal 1999.
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, Kennedy, O'Connor, and Robinson, which formally met three times during
fiscal 1999. The Compensation Committee's function is to review all
compensation arrangements in excess of $150,000 per annum, as well as any
employment contracts, and recommended annual stock option grants.
The Board has a Nominating Committee, currently consisting of Messrs. Andy,
Clerihue, Kennedy, O'Connor, and Robinson which formally met once during fiscal
1999. 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 by
November 30, 2000 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 British Vita PLC for
services provided to the Company by its directors. Mr. Clerihue, the Company's
former Chairman of the Board, receives an additional $21,000 per annum for
service to the Company. Each non-management director, except for the British
Vita representatives, also receives $1,200 for each Board and Committee Meeting
attended.
Certain non-management directors have received options to purchase Common Stock
of the Company upon their initial election to the Board and periodically during
their terms as directors. In fiscal 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 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 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. No options were
granted in fiscal 1998 and 1999. On November 1, 1999 Messrs. Andy, Cassidy,
Clerihue, Kennedy, and Robinson were granted 10,000 options with a ten-year term
and an exercise price at the then fair market value of the Company's Common
Stock of $28.625.
<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 $150,000 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 consult independent published surveys and studies by
compensation and benefit consulting firms. Annual bonuses for these two
employees are based on the operating results of the Company. The key operating
results of the Company considered by the Committee included the fiscal 1999
earnings per share increase of 25% from 1998, a return on equity of 25%, and the
five-year compound annual return to shareholders of 39%. Their total
compensation is established at levels approximating the 75th percentile reported
for publicly-traded companies of comparable size to Spartech for these
respective positions. In connection with the renewal of employment contracts
for the Chief Executive Officer and the Chief Operating Officer in November
1999, adjustments were made to their base salaries and bonus arrangements in an
effort to better align such amounts with industry practices and the results of
the current year studies. As a result, the Chief Executive's base salary was
increased to $625,000 and the Chief Operating Officer's base salary was
increased to $425,000, while their bonus percentages were reduced to .9% and .5%
of earnings before income taxes (previously calculated on earnings before
interest and taxes).
The Compensation Committee periodically reviews the compensation levels
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. The Compensation Committee
also approves the stock options to be awarded to key employees. Stock option
awards are granted to individuals based upon the individual's performance and
economic value created by their respective operating unit.
In December 1996, the Board authorized broadly based stock ownership guidelines
for key managers of the Company (totaling over 75 today). Under the guidelines
adopted by the Board, the Company's Chief Executive Officer is expected to hold
Spartech Common Stock having an aggregate market value 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. A majority of these individuals have
met their third year targets as of December 1999.
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.
Thomas L. Cassidy W.R. Clerihue
John R. Kennedy Calvin J. O'Connor Jackson W. Robinson
<PAGE>
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 exceeded $100,000 for fiscal 1999.
<TABLE>
<CAPTION>
Annual Compensation
Name and Principal Position Fiscal Other Long-Term
Year Salary($) Bonus($) Annual Compensation
Compensa- Options
tion ($) Granted (#)
<S> <C> <C> <C> <C> <C>
Bradley B. Buechler 1999 $405,000 $877,070 $74,449 37,500
Chairman, President and 1998 $405,000 $697,280 $82,653 200,000
Chief Executive Officer 1997 $400,524 $497,010 $65,661 75,000
David B. Mueller 1999 $250,000 $526,242 $44,250 27,500
Executive Vice President, 1998 $254,807 $418,368 $49,940 150,000
Chief Operating Officer, 1997 $246,462 $298,206 $42,844 60,000
and Secretary
Daniel J. Yoder 1999 $162,500 $90,000 $18,211 7,000
Vice President Materials 1998 $156,923 $85,000 $20,010 15,000
and Technology 1997 $147,193 $70,000 $18,893 9,000
Randy C. Martin 1999 $149,423 $90,000 $18,684 7,500
Vice President Finance and 1998 $134,615 $65,000 $18,654 12,000
Chief Financial Officer 1997 $119,616 $40,000 $16,974 9,000
David G. Pocost 1999 $144,375 $85,000 $18,911 7,500
Vice President Engineering, 1998 $121,135 $60,000 $15,344 12,000
Quality and MIS 1997 $104,039 $37,500 13,480 7,500
</TABLE>
(1) The amounts disclosed in this column for fiscal year 1999 include Company
contributions to non-qualified defined contribution arrangements on behalf
of Mr. Buechler, $62,650; Mr. Mueller, $39,328; Mr. Yoder, $15,000; Mr.
Martin, $15,000, and Mr. Pocost, $15,000.
CERTAIN BUSINESS RELATIONSHIPS AND TRANSACTIONS
Mr. Andy owns 80% of RKL Associates, L.P., which entered into a consulting
agreement with the Company in connection with the Company's purchase of Polycom
Huntsman, Inc. providing for payments by the Company aggregating $750,000 over
three years. Mr. Andy also owns 50% or less of Plastimerics, Inc., which
purchased approximately $899,000 of products from the Company during fiscal
1999, and three other companies which provided approximately $1,041,000 of
warehousing, trucking, and recycling services to the Company during fiscal 1999.
The Company's management believes that these arrangements are on terms no less
favorable to the Company than those which would be obtained from unaffiliated
parties.
Mr. Scherrer is the Managing Partner of Armstrong Teasdale LLP, which the
Company retained as its principal outside law firm during fiscal 1999 and
expects to retain in fiscal 2000.
On October 1, 1999, pursuant to the approval of the non-management members of
the Board of Directors, the Company repurchased 135,000 shares of its common
stock from Mr. Buechler and 35,735 shares of its common stock from Mr. Mueller
at $29.50 per common share. The purchase price was the average of the publicly
reported high and low sale prices of the common stock on the New York Stock
Exchange over the ten trading days prior to the purchase.
<PAGE>
Option Grants
The following table summarizes option grants made during fiscal 1999 to the
executive officers named above.
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed Annual
Individual Grants Rated of Stock
Price Appreciation
For Option Term(1)
Number of %of
Securities Total
Underlying Options
Options Granted Exerci Expiration
Name Granted to se Date 5%($) 10%($)
(#) Employees Price
in
Fiscal
Year
<S> <C> <C> <C> <C> <C> <C>
Bradley B. Buechler 37,500 (2) 12.4% $18.00 10/31/08 $424,504 $948,775
David B. Mueller 27,500 (2) 9.1% $18.00 10/31/08 $311,303 $695,768
Daniel J. Yoder 5,000 (3) 1.6% $18.00 10/31/03 $24,865 $48,459
2,000 (2) .7% $18.00 10/31/08 $22,640 $50,601
Randy C. Martin 5,000 (3) 1.6% $18.00 10/31/03 $24,865 $48,459
2,500 (2) .9% $18.00 10/31/08 $28,300 $63,252
David G. Pocost 5,000 (3) 1.6% $18.00 10/31/03 $24,865 $48,459
2,500 (2) .9% $18.00 10/31/08 $28,300 $63,252
</TABLE>
(1) The rates of appreciation presented of 5% and 10% are set by the Securities
and Exchange Commission, and therefore, are not intended to forecast future
appreciation of the Company's stock price.
(2) These represent options issued under the Restricted Stock Option Plan where
neither the options nor Common Stock acquired may be sold or otherwise
disposed of for three years after the date of grant of the option. The
options were granted at market value, vest in four equal annual installments
beginning November 1, 1999 and are transferable to family members, or to
other transferees with board approval.
(3) These represent options issued under the Incentive Stock Option Plan and
were granted at market value, vest in four equal annual installments
beginning November 1, 1999 and are non-transferable.
Option Exercises and Outstanding Options
The following table summarizes all options exercised in fiscal 1999 and
unexercised options at the end of fiscal 1999 for the executive officers named
above.
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised Options "In-the-Money"
at Fiscal Year Options at Fiscal
End(2) Year End(1)
Name Shares Value Exercis Unexercis Exercis Unexercis
Acquired Realized able able able able
on ($) (1)
Exercise
(#)
<S> <C>
Bradley B. 200,000 $4,643,750 760,000(3) 37,500(5) $15,874,375 $398,438
Buechler
David B. -- -- 425,000(3) 27,500(5) $8,146,250 $292,188
Mueller
Daniel J. 22,000 $418,125 38,750(4) 7,000(5) $673,656 $74,375
Yoder
Randy C. 4,000 $60,250 24,000(4) 7,500(5) $377,625 $79,688
Martin
David G. 1,000 $16,688 24,750(4) 7,500(5) $400,969 $79,688
Pocost
(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 nor Common Stock acquired may be sold or otherwise disposed
of for three years after the date of grant of the option.
(4) A portion of the unexercised options were issued from the Restricted Stock
Option Plan (Mr. Yoder, 9,000; Mr. Martin, 6,000; and Mr. Pocost, 6,000) 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.
(5) These options vest in four equal annual installments beginning November 1,
1999.
<PAGE>
Employment Agreements
Messrs. Buechler and Mueller
On November 1, 1999, the Company entered into Amended and Restated Employment
Agreements (the "Agreements") with Messrs. Buechler and Mueller (the
"Employees"), which modified but 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, 2002, 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, 2000. 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 $625,000 for Mr. Buechler and $435,000 for Mr. Mueller, subject to periodic
review by the Board, (ii) bonuses equal to 0.9% for Mr. Buechler and 0.5% for
Mr. Mueller of the Company's annual earnings before income taxes, subject to
certain adjustments and exceptions, (iii) one-time stock option grants of
110,000 shares for Mr. Buechler and 65,000 shares for Mr. Mueller, at November
1, 1999 which are in addition to options granted under previous versions of
their employment agreements, and any other options which the Board may grant
them in the future under the Company's stock option plans, (iv) annual
contributions to a trust maintained for Messrs. Buechler and Mueller, commonly
known as a "rabbi trust," 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, and (v) a provision that the Employee may require the
Company to repurchase during any twelve-month period that this Agreement is in
effect, beginning November 1, 1999, a number of shares of Company common stock
beneficially owned by Mr. Buechler and Mr. Mueller not to exceed 15% of their
current holdings of common shares and currently-exercisable options, subject to
certain other terms and conditions, at the average of the publicly-reported high
and low sale prices of the common stock on the New York Stock Exchange over the
three trading days prior to the sale.
If the Company terminates the 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 the 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, acts, omissions done in good faith or in connection with
any tender, merger offer, or other restructuring proposal.
"Justification" for termination of the 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 Chairman
of the Board, 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 the Employee under the Agreement.
<PAGE>
Messrs. Yoder, Martin, and Pocost
The Company also entered into the following employment agreements: with Mr.
Yoder on June 30, 1998 through June 29, 2001; with Mr. Martin on January 1, 2000
through January 1, 2003; and with Mr. Pocost on January 1, 2000 through January
1, 2003. The annual base compensation under these agreements, subject to
periodic review for cost of living and/or merit and other increases, is
$162,500, $160,000 and $155,000 for Messrs. Yoder, Martin, and Pocost,
respectively. In addition, the agreements require the Company to maintain term
life insurance in the amount of $250,000 for the employees' designated
beneficiaries for the term of the agreements, all premiums thereon to be paid by
the Company. The agreements provide 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.
Line Graph Chart
Common Stock Performance Graph
10/94 10/95 10/96 10/97 10/98 10/99 CAGR*
SPARTECH STOCK PRICE $5 3/4 $6 3/8 $ 11 $15 7/8 $ 18 $28 5/8 39.3%
Assumed $100 Investment:
SPARTECH CORPORATION $100 $111 $194 $284 $326 $525 39.3%
S&P 500 $100 $123 $149 $194 $233 $289 23.6%
S&P Specialty Chemicals $100 $120 $131 $147 $130 $132 5.7%
Index
*Compound annual growth rate.
<PAGE>
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, 1999 to be the beneficial owner of more than 5% of the 27,239,936
shares of Common Stock outstanding as of that date.
Number Percentage
of of
Common Common
Shares Shares
Beneficially Beneficially
Owned(1) Owned
Directors and Executive Officers:
Calvin J. O'Connor / Alan R. Teague 12,043,257 (2) 44.2%
Bradley B. Buechler 889,966 (3) 3.2%
David B. Mueller 432,075 (4) 1.6%
Ralph B. Andy 295,261 (5) 1.1%
W.R. Clerihue 70,000 (6) *
Daniel J. Yoder 69,299 (7) *
John R. Kennedy 50,000 (8) *
Jackson W. Robinson 36,000 (9) *
David G. Pocost 33,298 (10) *
Randy C. Martin 32,009 (11) *
Thomas L. Cassidy 10,000 (12) *
All Directors and Executive
Officers as a Group (12 persons) 13,961,165 (13) 48.9%
Other Beneficial Owners
In Excess of 5% of the
Common Shares Outstanding:
Vita International Limited
Soudan Street
Middleton, Manchester
M24 2DB England 12,043,257 (2) 44.2%
FMR Corp.
Fidelity Management &
Research Company
82 Devonshire Street
Boston, MA 02109 1,679,900 (14) 6.2%
<PAGE>
Notes To Security Ownership Table:
* Denotes that the percentage of common shares beneficially owned is less than
1%.
(1) Includes shares issuable upon exercise of options as noted for the
respective owners.
(2) Messrs. O'Connor and Teague, each a director of the Company, are also
directors of Vita International Limited and O'Connor is a director of British
Vita PLC; as such, these amounts represent Common Stock owned by Vita
International Limited.
(3) Includes 769,375 shares issuable upon exercise of options presently
exercisable.
(4) Includes 294,875 shares issuable upon exercise of options presently
exercisable and 137,000 shares owned by DBM Partners, L.P. Mr. Mueller is a
general partner of DBM Partners, L.P. As such, Mr. Mueller has investment
and voting power over the shares owned by DBM Partners, L.P. Of the
294,875 shares issuable upon exercise of options presently exercisable,
28,000 are held by DBM Partners, L.P.
(5) Includes 10,000 shares issuable upon exercise of options presently
exercisable, and 285,261 shares owned by RBA Partners, L.P. Mr. Andy
is the sole shareholder of RBA Investments, Inc., a 0.1% general
partner of RBA Partners, L.P. As such, Mr. Andy, through RBA Investments,
Inc. has investment and voting power over the shares owned by RBA
Partners, L.P.
(6) Includes 40,000 shares issuable upon exercise of options presently
exercisable.
(7) Includes 40,500 shares issuable upon exercise of options presently
exercisable.
(8) Includes 45,000 shares issuable upon exercise of options presently
exercisable.
(9) Includes 25,000 shares issuable upon exercise of options presently
exercisable.
(10) Includes 26,625 shares issuable upon exercise of options presently
exercisable.
(11) Includes 22,875 shares issuable upon exercise of options presently
exercisable.
(12) Includes 10,000 shares issuable upon exercise of options presently
exercisable.
(13) Includes 1,284,250 shares issuable upon exercise of options presently
exercisable.
(14) Based on information presented as of December 31, 1999 in FMR Corp.'s
latest available Schedule 13G, FMR Corp. beneficially owned 1,679,900 shares
of Common Stock including 1,525,100 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 154,800 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 154,800 shares and sole investment power
with respect to all 1,679,900 shares.
<PAGE>
PROPOSAL 2: 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 will serve their
intended purpose and properly reward these officers for the performance results
achieved. Under the new employment agreements for these two individuals each
fiscal year the Company will provide them with an annual bonus equal to a
percentage (0.9% for Mr. Buechler and 0.5% for Mr. Mueller) of the Company's
earnings before income taxes as reported in the Company's audited financial
statements, adjusted to exclude profit or loss on extraordinary or non-recurring
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 Pre-Tax Earnings"). The calculation of Adjusted Pre-Tax Earnings 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 Pre-Tax Earnings are less than 75% of the Company's
Adjusted Pre-Tax Earnings 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.
PROPOSAL 3: 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 2000. The Board proposes that the shareholders ratify at this Annual
Meeting the appointment of Arthur Andersen LLP as independent auditors for
fiscal 2000. 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.
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own beneficially more than ten
percent of a registered class of the Company's equity securities to file with
the Securities and Exchange Commission ("SEC") and the New York Stock Exchange
initial reports of ownership and reports of changes in ownership of common stock
and other equity securities of the Company. Such officers, directors and
greater than ten percent beneficial owners are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms filed by them.
To the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations from its directors and
executive officers that no other reports were required, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were complied with on a timely basis during the fiscal year
ended October 30, 1999.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended for inclusion in the Company's proxy
statement for the 2001 Annual Meeting must be received by the Company no later
than September 23, 2000. In addition, if a shareholder fails to notify the
Company on or before December 7, 2000 of a proposal which such shareholder
intends to present at the Company's 2001 Annual Meeting other than through
inclusion of such proposal in the Company's proxy materials for the meeting,
then management proxies may use their discretionary voting authority with
respect to such proposal if it is presented at the meeting.
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 21, 2000 and Secretary
<PAGE>
PROXY CARD
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" EACH ITEM.
ITEM 1 - ELECTION OF DIRECTORS
Election of three Class A Directors to serve until the 2003 Annual Meeting.
NOMINEES: Roy Dobson, David B. Mueller, and Richard B. Scherrer
/ / 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 - Approve Incentive Bonuses
/ / FOR
/ / AGAINST
/ / ABSTAIN
ITEM 3 - Ratify Independent Auditors
/ / FOR
/ / AGAINST
/ / ABSTAIN
ITEM 3 - Transact Other Business
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:____________, 2000
_________________________
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.
YOUR VOTE IS IMPORTANT TO US. PLEASE COMPLETE, DATE AND SIGN THE ABOVE PROXY
CARD AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
(Front of Card)
SPARTECH CORPORATION PROXY
2000 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 (Saint Louis Club-16th Floor) 7701 Forsyth
Boulevard, Clayton, Missouri, 63105, on Wednesday, March 8, 2000, commencing at
10:00 a.m., CST, and at any and all adjournments thereof, and to vote all shares
of Common Stock of the Company which the undersigned is entitled 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 21, 2000.
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 3 AND IN ACCORDANCE WITH THEIR BEST JUDGMENT UPON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
(Back of Card)
</TABLE>
