<PAGE>
AEP INDUSTRIES INC.
125 PHILLIPS AVENUE
SOUTH HACKENSACK, NJ 07606
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 9, 1996
February 28, 1996
TO THE HOLDERS OF COMMON STOCK OF AEP INDUSTRIES INC.:
Notice is hereby given that the Annual Meeting of Stockholders of AEP Industries
Inc. will be held at the Sheraton Hasbrouck Heights Hotel, 650 Terrace Avenue,
Hasbrouck Heights, New Jersey, on Tuesday, April 9, 1996, at 10:00 A.M. local
time for the following purposes as more fully described in the accompanying
Proxy Statement:
1. To elect two Class A directors of the Company for the ensuing three
year period (Page 1).
2. To consider and take action upon a proposal to ratify the Board of
Director's selection of Arthur Andersen LLP to serve as the Company's
independent auditors for the fiscal year ending October 31, 1996 (Page
10 ).
3. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The close of business on February 16, 1996, has been fixed by the Board of
Directors as the record date for the determination of stockholders entitled to
notice of, and to vote at, the meeting. A list of stockholders entitled to vote
at the meeting may be examined at the Company's executive office located in
South Hackensack, New Jersey, during the ten-day period preceding the meeting.
You are cordially invited to attend the meeting in person. If you do not expect
to be present, please sign and date the enclosed form of Proxy and return it by
mail in the envelope provided. No postage is required if mailed in the United
States.
By Order of the Board of Directors,
Lawrence R. Noll
Vice President - Finance and Secretary
PLEASE READ THE ATTACHED PROXY STATEMENT AND THEN PROMPTLY COMPLETE, EXECUTE AND
RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. YOU
CAN SPARE YOUR COMPANY THE EXPENSE OF FURTHER PROXY SOLICITATION BY RETURNING
YOUR PROXY CARD PROMPTLY.
<PAGE>
AEP INDUSTRIES INC.
125 PHILLIPS AVENUE
SOUTH HACKENSACK, NJ 07606
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 9, 1996
This Proxy Statement is provided in connection with the solicitation of Proxies
on behalf of the Board of Directors of AEP Industries Inc. (the "Company") for
use at the Annual Meeting of Stockholders (the "Meeting") to be held on April 9,
1996, and at any adjournment or adjournments thereof, for the purposes set forth
in the accompanying Notice of Annual Meeting of Stockholders (the "Notice"). It
will be mailed commencing on or about February 28, 1996, to the persons entitled
to receive the Notice.
Any Proxy may be revoked at any time before it is exercised by personally
appearing at the Meeting and casting a contrary vote or by giving a later dated
Proxy.
At the close of business on February 16, 1996, the record date for holders
entitled to notice and to vote at the Meeting, the Company had outstanding
4,813,165 shares of Common Stock, $.01 par value ("Common Stock"), each of which
is entitled to one vote with respect to each matter to be voted on at the
Meeting. The Company has no class or series of stock outstanding other than
Common Stock.
At February 16, 1996, Mr. J. Brendan Barba, Chairman of the Board, President and
Chief Executive Officer and Class C Director of the Company and members of his
immediate family, and David J. McFarland, Mr. Barba's uncle, together owned
approximately 38% of the outstanding Common Stock of the Company. To the
Company's knowledge, Mr. Barba and members of his family and Mr. McFarland will
vote their shares of Common Stock in favor of each of the proposals to be
presented at the Meeting.
The Company's executive office is located at 125 Phillips Avenue, South
Hackensack, New Jersey 07606.
ITEM NO. 1.
ELECTION OF DIRECTORS
Two directors, denominated as Class A Directors, are to be elected at this
Annual Meeting of Stockholders. This is in accordance with the Company's
Certificate of Incorporation, which provides for the division of the Board of
Directors into three classes with the term for the Class A Directors expiring at
the Annual Meeting of Stockholders to be held on April 9, 1996. Class B and
Class C Directors will be elected at the Annual Meetings to be held in 1997 and
1998, respectively. After the expiration of the respective terms of each class,
the stockholders will elect Directors in each such class to serve for terms of
three years.
The Company's Certificate of Incorporation provides that the Company's Board
shall consist of three classes, each class to be as nearly equal as possible to
one-third of the total number of Directors. The Company currently has six
Directors.
The nominees to be Class A Directors are Kenneth Avia and Paul E. Gelbard. Each
Class A Director will serve for three years or until a successor shall have been
chosen and qualified. It is the intention of the persons named in the
accompanying form of Proxy to vote the shares of Common Stock represented in
favor of the nominees listed in the following table, unless otherwise instructed
in such Proxy. In case a nominee is unable or declines to serve, such persons
reserve the right to vote the shares of Common Stock represented by such Proxy
for another person duly nominated by the Board of Directors in such nominee's
stead. The Board of Directors has no reason to believe that the named nominees
will be unable or will decline to serve.
The nominees are presently serving as Class A Directors of the Company. Certain
information concerning the nominees for election and the other Directors of the
Company is set forth below. Such information was furnished by them to the
Company.
<PAGE>
NOMINEES FOR ELECTION
- ---------------------
Name and Certain Shares of Common Stock Beneficially Percent
Biographical Information Owned as of January 31, 1996 (a) Of Class
- ------------------------ ----------------------------------- --------
KENNETH AVIA 80,200(b) 1.7%
(Class A Director)
age 53; Executive Vice
President of CES/NaBANCO
(a credit card servicing
company) since 1995, Senior
Vice President of CES since
1993; Divisional Vice President
of Automatic Data Processing,
Inc. from 1984 to 1993;
Directorof the Company since 1980.
PAUL E. GELBARD 2,450(c) (d)
(Class A Director)
age 65; Partner, Bachner, Tally,
Polevoy & Misher LLP (Attorneys)
since 1974; Director of
the Company since 1991.
DIRECTORS WHOSE TERM OF OFFICE
WILL CONTINUE AFTER THE MEETING
- -------------------------------
ROBERT W. CRON 36,296(e)(f)(g) (d)
(Class B Director)
age 48; Executive Vice President-
Sales and Marketing of the Company
since 1989; Vice President-Sales of
the Company from 1980 to 1989; various
sales positions with the Company prior
to that time; Director of the Company
since 1985.
PAUL M. FEENEY 39,047(h) (d)
(Class B Director)
age 53; Executive Vice President-Finance
of the Company since 1988; Vice President
and Treasurer of Witco Corporation from
1980 to 1988; Director of the Company
since 1989.
J. BRENDAN BARBA 1,241,017(i)(j)(k) 25.6%
(Class C Director)
age 55; President of the Company
since 1971; Chairman of the Board
of the Company since 1985;
Director of the Company since 1971.
LAWRENCE R. NOLL 2,787(l) (d)
(Class C Director)
age 47; Vice President-Finance and
Secretary of the Company since
1993; Controller of the Company from
1980 to 1993; Director of the Company
since 1993.
(a) Except as indicated in the following footnotes, each of the persons listed
above has sole voting and investment power with respect to all shares shown
in the table as beneficially owned by him.
(b) Includes 200 shares issuable upon the exercise of stock options exercisable
within 60 days held by Mr. Avia. See "Employee Benefit Plans - 1995 Stock
Option Plan."
(c) Includes 2,000 shares issuable upon the exercise of stock options
exercisable within 60 days held by Mr. Gelbard. See "Employee Benefit
Plans - 1985 Stock Option Plan" and "Employee Benefit Plans - 1995 Stock
Option Plan."
(d) Less than 1%.
-2-
<PAGE>
(e) Includes 2,250 shares held by Mr. Cron as trustee for his minor children.
(f) Includes 26,500 shares issuable upon the exercise of stock options
exercisable within 60 days held by Mr. Cron. See "Employee Benefit Plans -
1985 Stock Option Plan."
(g) Does not include 2,250 shares owned by Mr. Cron's wife, as to which Mr.
Cron disclaims beneficial ownership.
(h) Includes 33,250 shares issuable upon the exercise of stock options
exercisable within 60 days held by Mr. Feeney. See "Employee Benefit Plans
- 1985 Stock Option Plan."
(i) Includes 33,000 shares issuable upon the exercise of stock options
exercisable within 60 days held by Mr. Barba. See "Employee Benefits Plans
- 1985 Stock Option Plan."
(j) Does not include 80,585 shares owned or issuable upon the exercise of stock
options exercisable within 60 days held by Mr. Barba's two daughters and
their families, as to which Mr. Barba disclaims beneficial ownership.
(k) Does not include 237,500 shares owned by Mr. Barba's wife, as to which Mr.
Barba disclaims beneficial ownership.
(l) Includes 1,700 shares issuable upon the exercise of stock options
exercisable within 60 days held by Mr. Noll. See "Employee Benefit Plans -
1985 Stock Option Plan."
During the past fiscal year the Board of Directors of the Company met six times.
Each of the persons named in the table attended all of the meetings of the Board
of Directors and meetings of any committees of the Board on which such person
served which were held during the time that such person served.
The Board of Directors of the Company has a Stock Option Committee and a
Compensation Committee whose members are Messrs. Avia and Gelbard. The Stock
Option Committee administers the Company's 1985 and 1995 Stock Option Plans and
determines the persons who are eligible to receive options thereunder, the
number of shares to be subject to each option and the other terms and conditions
under which options under such Plans are granted and made exercisable. The
Stock Option Committee also administers the Company's 1985 and 1995 Stock
Purchase Plans. See "Employee Benefit Plans" below. The Compensation Committee
with Mr. Barba is authorized to review and approve remuneration arrangements for
senior management, directors and other employees and employee benefit plans in
which officers and employees are eligible to participate. The Stock Option
Committee met three times and the Compensation Committee met twice during the
fiscal year ended October 31, 1995.
The Board of Directors has an Audit Committee whose members are Messrs. Avia,
Noll and Gelbard. The Audit Committee is authorized to meet and discuss with
representatives of any firm of certified public accountants retained by the
Company the scope of the audit of such firm and question such representatives
with respect thereto, and to meet with and question employees of the Company
with respect to financial matters pertaining to the Company. The Audit
Committee met once during the fiscal year ended October 31, 1995.
The Board of Directors of the Company does not have a Nominating Committee.
The directors and executive officers of the Company other than Messrs. Avia and
Gelbard are active in the business on a day-to-day basis. Mr. Barba and Mr.
Cron are cousins. No other family relationships exist between any of the
directors and executive officers of the Company.
The Company's Certificate of Incorporation contains a provision, authorized by
Delaware law, which eliminates the personal liability of a director of the
Company to the Company or to any of its stockholders for monetary damages for a
breach of his fiduciary duty as a director, except in the case where the
director breached his duty of loyalty, failed to act in good faith, engaged in
intentional misconduct or knowingly violated a law, authorized the payment of a
dividend or approved a stock repurchase in violation of Delaware corporate law,
or obtained improper personal benefit.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the cash compensation paid
by the Company for services rendered during the fiscal year ended October 31,
1995, to the executive officers of the Company whose aggregate compensation
exceeded $100,000.
-3-
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
- --------------------------------------------------------------------------------------------------------------------------------
# of Shares
Restricted
Name and Principal Other Annual Stock # of Shares Stock All Other
Position Year Salary (1) Bonus (1) Compensation (2) Award(s) Options(3) Compensation (4)
<S> <C> <C> <C> <C> <C> <C> <C>
J. Brendan Barba 1995 $350,000 $150,000 -0- -0- 90,000 $2,310
Chairman of the Board 1994 $350,000 $100,000 -0- -0- -0- $2,310
and Chief Executive 1993 $327,200 $ 40,000 -0- -0- -0- $2,216
Officer
Robert W. Cron 1995 $168,400 $ 60,000 -0- -0- 8,500 $1,586
Executive Vice 1994 $168,400 $ 50,000 -0- -0- 7,500 $1,646
President Sales and 1993 $168,400 $ 35,000 -0- -0- -0- $1,325
Marketing
Paul M. Feeney 1995 $157,500 $ 67,500 -0- -0- 11,850 $2,310
Executive Vice 1994 $157,500 $ 55,000 -0- -0- 7,500 $2,310
President Finance 1993 $157,500 $ 35,000 -0- -0- -0- $2,248
Lawrence R. Noll 1995 $ 99,000 $ 17,500 -0- -0- 3,500 $1,059
Vice President - 1994 $ 93,600 $ 14,000 -0- -0- 5,000 $ 851
Finance 1993 $ 79,500 $ 12,000 -0- -0- -0- $ 618
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) See "Compensation Committee Report."
(2) Excludes perquisites and other benefits, unless the aggregate amount of
such compensation is more than the lesser of either $50,000 or 10 percent
of the total of annual salary and bonus reported for the named executive
officer.
(3) Stock options granted were determined by the Stock Option Committee.
(4) "All Other Compensation" represents the allocation of the Company's
contribution to the AEP Industries Inc. Employee Profit Sharing and 401(k)
Plan for each executive officer based upon the distribution formula in the
Plan.
The Company pays each of its directors a fee of $1,000 for attending
each meeting of the Board of Directors of the Company. Each director
has the option to defer payment of director's fees. Interest will
accrue on deferred director fees at the rate of 8% until paid.
-4-
<PAGE>
PERFORMANCE GRAPH
The Company's Common Stock is traded on the Nasdaq National Market System under
the symbol AEPI. The following performance graph compares the performance of
the Company's Common Stock to the S & P 500 Index and a Peer Group including The
Atlantis Group, Bemis Co., Carlisle Plastics, Inc., Liquid Box Corp., Tredegar
Industries, Inc., and Tyco Labs. The graph assumes that the value of the
investment in the Company's Common Stock and each index was $100 at the close of
trading on the last trading day preceding the first day of the fifth preceding
fiscal year in Company Common Stock, S & P 500 and the Peer Group. The
cumulative total return assumes reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG AEP INDUSTRIES, INC., THE S & P 500 INDEX AND A PEER GROUP
[GRAPH]
* $100 INVESTED ON 10/31/90 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING OCTOBER 31.
-5-
<PAGE>
EMPLOYEE BENEFIT PLANS
COMBINED PROFIT SHARING AND 401(k) PLAN. The Company maintained a combined
Profit Sharing and 401(k) Plan for its employees (other than union employees at
the Company's California plant). The Plan became effective as a profit sharing
plan on November 1, 1973, and was amended to include 401(k) Plan provisions
effective January 1, 1993. This amended Plan is qualified under the Internal
Revenue Code of 1986, as amended (the "Code"). An employee became eligible to
participate in the Plan on the January 1 or July 1 nearest the date on which the
employee completed one year of service constituting at least 1,000 hours of
service and agreed to contribute a minimum of 2% of his or her annual earnings.
The Plan was funded by a 25% matching contribution by the Company of the
employee's gross contribution which could be up to the lower of 6% of annual
gross compensation or $9,240, the maximum contribution allowed by the Code for
1995. An employee could contribute up to 15% of his or here annual gross
compensation or $9,240, the maximum contribution allowed by the Code for 1995.
The Plan was changed, effective January 1, 1996, to the combined 401(k) Savings
and Employee Stock Ownership Plan described below.
401(k) SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
The Company established an Employee Stock Ownership Plan ("ESOP"), effective
January 1, 1996, for all non-bargaining unit employees and combined it with the
Company's 401(k) Plan. The Company will make a fixed contribution of Company
Common Stock to the account of each employee participant who has completed 1,000
hours of service during the plan year and is employed on the last day of the
plan year. Each such participant will receive a contribution equal to 1% of
that participant's compensation up to a maximum annual compensation of $150,000.
In addition, the Company will match 75% of the employee's 401(k) contributions,
up to 4% of annual compensation in Company Common Stock. The Company may from
year to year make discretionary contributions to the plan.
1985 STOCK OPTION PLAN. In November 1985, the Board of Directors adopted and
the stockholders of the Company approved the Company's 1985 Stock Option Plan,
as amended, (the "Option Plan"). Under the Option Plan options to purchase up
to 772,500 shares of Common Stock may be granted to key employees of the Company
or its subsidiaries, including the directors and officers, during the period
ending October 31, 1995. This Plan expired on October 31, 1995. All shares of
Common Stock available for grant under the 1995 Stock Option Plan were granted
prior to October 31, 1995, but its provisions continue as to options issued
thereunder which are outstanding by their terms.
1995 STOCK OPTION PLAN. On April 11, 1995, the Board of Directors adopted and
the stockholders of the Company approved the Company's 1995 Stock Option Plan
("1995 Option Plan") has reserved 500,000 shares of Common Stock for the
granting of options to key employees of the Company, including directors and
officers. The 1995 Option Plan became effective January 1, 1995, and will
terminated December 31, 2004. The 1995 Option Plan provides for the grant of
incentive stock options which may be exercised over a period of ten years, the
issuance of SARS, restricted stock, and performance shares and the fixed annual
grant of nonqualified stock options to non-employee directors. The options
granted to outside directors are exercisable over ten years from date of grant
and in no event can the option price be lower than the fair market value of the
Common Stock at the date of grant. The Stock Option Committee is made up
entirely of outside directors, who administer the 1995 Option Plan and will
receive a fixed annual grant of 1,000 options. As of October 31, 1995, 498,000
options were available for grant.
-6-
<PAGE>
The following table shows as to the Chief Executive Officer and the three other
Executive Officers of the Company, information about options granted in the last
fiscal year. The Company did not grant any stock appreciation rights,
restricted stock or performance shares.
OPTIONS GRANTED IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Rights for Option Term
Individual Grants
- ------------------------------------------------------------------------------------------------------------------------------------
Options % of Total Options Granted Exercise or Base Expiration 5%($)(1) 10%($)(1)
Name Granted # to Employees in Fiscal Year Price ($/SH) Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J. Brendan Barba 63,660 23.0 $17.25 12/13/99 - -
26,340 9.5 $18.98 12/13/99 - -
Robert W. Cron 5,000 1.8 $17.25 12/13/04 - -
3,500 1.3 $22.50 10/29/05 - -
Paul M. Feeney 5,000 1.8 $17.25 12/13/04 - -
6,850 2.5 $22.50 10/29/05 - -
Lawrence R. Noll 1,000 0.4 $17.25 12/13/04 - -
2,500 0.9 $22.50 10/29/05 - -
____________________________________________________________________________________________________________________________________
</TABLE>
(1) The actual value, if any, an executive may realize will depend on the
excess of the stock price over the exercise price on the date the option is
exercised.
<TABLE>
<CAPTION>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
Number of Unexercised Options Value of Unexercised In-The-
At October 31, 1995 Money Options at
(Shares) October 31, 1995 (1)
- -----------------------------------------------------------------------------------------------------------------------------------
Shares
Acquired on
Name Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J. Brendan Barba -0- -0- 12,000 93,000 $156,720 $466,112
Robert W. Cron -0- -0- 25,500 17,500 $372,910 $ 98,250
Paul M. Feeney -0- -0- 32,250 20,850 $479,100 $ 98,250
Lawrence R. Noll 2,400 $18,408 2,100 8,700 $ 19,985 $ 40,050
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Computed based upon the difference between aggregate fair market value and
aggregate exercise price.
1985 EMPLOYEE STOCK PURCHASE PLAN. In November 1985, the Board of Directors and
the stockholders of the Company adopted the Company's 1985 Employee Stock
Purchase Plan (as amended, the "1985 Purchase Plan"). Under the 1985 Purchase
Plan 187,500 shares of Common Stock were made available for purchase by eligible
employees of the Company, including officers, through payroll deductions over
successive six-month offering periods of up to 5% of compensation for the
purpose of purchasing shares of Common Stock under the 1985 Purchase Plan
subject to the limitation per employee of 1,125 shares of Common Stock
purchasable in any six month offering period, no more than $5,000 could be
withheld from compensation for such purchase in any 12 month period and rights
granted under the 1985 Purchase Plan could not permit purchase of shares when
aggregated with rights held by such person under other such plans maintained by
the Company, to accrue at a rate which exceeds $25,000 in fair market value of
such stock (determined at the time of grant) during each calendar year in which
such rights are exercisable. Employees who have been employed by the Company
for less than two years or whose customary employment is not more than 20 hours
per week or five months per year, as well as 5% or greater stockholders of the
Company were not eligible to participate in the 1985 Purchase Plan.
The 1985 Purchase Plan was intended to qualify as an "employee stock purchase
plan" within the meaning of Section 423 of the Code. The purchase price of the
Common Stock under the 1985 Purchase Plan was 85% of the lower of the last sales
price per share of Common Stock on the Nasdaq National Market on either the
first or last day of each six month offering period.
-7-
<PAGE>
During the fiscal year ended October 31, 1995, Messrs. Feeney and Noll
participated in the 1985 Purchase Plan and purchased 352 and 137 shares,
respectively, at an average price of $14.20 per share. Also during this period
a total of 92 employees participated in the Purchase Plan and purchased an
aggregate of 9,845 shares of Common Stock at an average price of $14.18 per
share.
As of October 31, 1995, a total of 139,063 shares had been sold under the 1985
Purchase Plan to employees of the Company. The 1985 Purchase Plan expired on
December 31, 1995.
1995 EMPLOYEE STOCK PURCHASE PLAN. On April 11, 1995, the Board of Directors
and the stockholders of the Company adopted the 1995 Employee Stock Purchase
Plan ("1995 Purchase Plan"), effective July 1, 1995. Under the 1995 Purchase
Plan 300,000 shares of Common Stock are made available to eligible employees
of the Company, including officers, through payroll deductions over
successive six-month offering periods. Participating employees may authorize
the Company to withhold up to 7.5% of their compensation for the purpose of
purchasing shares of Common Stock under the 1995 Purchase Plan. Employees
who have been employed by the Company for less than one year or whose
customary employment is not more than 20 hours per week or five months per
year are not eligible to participate in the 1995 Purchase Plan.
The 1995 Purchase Plan is intended to qualify as an "employee stock purchase
plan" within the meaning of Section 423 of the Code. The purchase price of the
Common Stock under the 1995 Purchase Plan will be 85% of the lower of the last
sales price per share of Common Stock on the Nasdaq National Market on either
the first or last day of each six month offering period.
COMPENSATION COMMITTEE REPORT. The Company's Compensation Committee is composed
of Kenneth Avia, a Senior Vice President of an independent corporation and Paul
E. Gelbard, a partner with a large New York law firm. The Compensation
Committee's informal executive compensation philosophy considers a number of
factors, including competitive compensation by like-sized companies in similar
businesses and linking executive compensation to achievement of performance
goals. The Committee has access to national compensation surveys and public
compensation information for executives in manufacturing companies both larger
and smaller than the Company, including direct competitors of the Company. All
of these sources are used by the Committee in reviewing compensation. In
October, 1995, the Committee reviewed total compensation of the executive
officers listed in this Proxy Statement. The Committee determined, with
J. Brendan Barba not participating in those discussions involving himself,
that no salary increases be granted to Messrs. Barba and Cron, and that
Messrs. Feeney and Noll receive increases of $12,500 and $4,000 per annum,
respectively. Further it was decided the performance bonus program previous
in effect would continue through the 1996 fiscal year.
In recognition of the Company's superior financial results and stock performance
relative to competitive companies and to the S&P 500, as well as comparable
compensation to chief executive officers of competitive companies, the Committee
determined that Mr. Barba would receive a bonus of $150,000 for Fiscal 1995.
For Fiscal 1995, the Committee reviewed year-end bonuses for Messrs. Feeney, and
Noll based on the profitability and financial position of the Company. It was
determined that they would receive bonuses of $67,500 and $17,500, respectively.
Mr. Cron's Fiscal 1995 bonus was determined by the Committee based on the
increase in sales volume and sales dollars realized by the Company. He was
awarded a bonus of $50,000.
The Compensation Committee feels that the Company's compensation adequately
reflects its philosophy and policies and that none of the executive officers of
the Company is overcompensated.
-8-
<PAGE>
STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth information concerning the stockholders,
(including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934), who, to the knowledge of the Company, owned
beneficially more than 5% of any class of the outstanding voting securities of
the Company on January 31, 1996, each director of the Company who owned
beneficially shares of Common Stock, and all directors and executive officers of
the Company, as a group, and their respective share holdings as of such date.
Shares of Common Stock Beneficially Percent
Name and Address Owned as of January 31, 1996(a) of Class
- ---------------- ------------------------------- --------
Kenneth Avia 80,200(b) 1.7%
17 Oak Trail Road
Englewood, NJ 07632
J. Brendan Barba 1,241,017(c)(d)(e) 25.6%
125 Phillips Avenue
South Hackensack, NJ 07606
Robert W. Cron 36,296(f)(g)(h) (i)
125 Phillips Avenue
South Hackensack, NJ 07606
Paul M. Feeney 39,047(j) (i)
125 Phillips Avenue
South Hackensack, NJ 07606
Paul E. Gelbard 2,450(k) (i)
380 Madison Avenue
New York, NY 10017
Lawrence R. Noll 2,787(l) (i)
125 Phillips Avenue
South Hackensack, NJ 07606
All Directors and Executive Officers 1,401,797(m) 28.5%
as a Group (six persons)
David J. McFarland 315,337(n) 6.6%
29 Knoll Street
Tenafly, NJ 07670
EGS Partners 861,370(o) 17.9%
100 East 42nd Street
New York, NY 10017
Fidelity Management Corp. 326,989(p) 6.8%
82 Devonshire Street
Boston, MA 02109
(a) Except as indicated in the following footnotes, each of the persons listed
above has sole voting and investment power with respect to all shares shown
in the table as beneficially owned by him.
(b) Includes 200 shares issuable upon the exercise of stock options exercisable
within 60 days held by Mr. Avia. See "Employee Benefits Plans - 1995 Stock
Option Plan."
(c) Includes 33,000 shares issuable upon the exercise of stock options
exercisable within 60 days held by Mr. Barba. See "Employee Benefits Plans
- 1985 Stock Option Plan."
(d) Does not include 80,585 shares owned or issuable upon the exercise of stock
options exercisable within 60 days held by Mr. Barba's two daughters and
their families, as to which Mr. Barba disclaims beneficial ownership.
(e) Does not include 237,500 shares owned by Mr. Barba's wife, as to which Mr.
Barba disclaims beneficial ownership.
-9-
<PAGE>
(f) Includes 2,250 shares held by Mr. Cron as trustee for his minor children.
(g) Includes 26,500 shares issuable upon the exercise of stock options
exercisable within 60 days held by Mr. Cron. See "Employee Benefit Plans -
1985 Stock Option Plan."
(h) Does not include 2,250 shares owned by Mr. Cron's wife, as to which Mr.
Cron disclaims beneficial ownership.
(i) Less than 1%
(j) Includes 33,250 shares issuable upon the exercise of stock options
exercisable within 60 days held by Mr. Feeney. See "Employee Benefit Plans
- 1985 Stock Option Plan."
(k) Includes 1,550 shares issuable upon the exercise of stock options
exercisable within 60 days held by Mr. Gelbard. See "Employee Benefit
Plans - 1985 Stock Option Plan" and "Employee Benefit Plans - 1995 Stock
Option Plan."
(l) Includes 1,700 shares issuable upon the exercise of stock options
exercisable within 60 days held by Mr. Noll. See "Employee Benefit Plans -
1985 Stock Option Plan."
(m) Includes 96,650 shares issuable upon the exercise of options exercisable
within 60 days.
(n) Information as to the holdings of David J. McFarland is based upon a report
on Schedule 13G filed on February 12, 1996, with the Securities and
Exchange Commission. Such report indicates that all shares of Common Stock
were owned with sole voting and dispositive power.
(o) Information as to the holdings of EGS Partners is based upon reports on
Schedule 13D and Form 4 filed on November 9, 1995, and January 4, 1996,
respectively, with the Securities and Exchange Commission. Such reports
indicate that 93,333 shares of Common Stock were owned with sole voting and
dispositive power and 770,037 shares of Common Stock were owned with shared
voting and dispositive power.
(p) These securities are held in various investment advisory funds by Fidelity
Management Corp. Information as to such holdings is based upon a report on
Schedule 13G filed on February 14, 1996, with the Securities and Exchange
Commission. Such report indicates that 10,700 of such shares were owned
with sole dispositive power and 326,989 of such shares were owned with sole
voting power.
To the Company's knowledge, there has been no significant change in stock
ownership or control since January 31, 1996.
CERTAIN TRANSACTIONS
The Company has historically maintained business relationships with certain
affiliated entities.
Since November 1979, the Company has leased office, warehouse and manufacturing
space in Wood-Ridge, New Jersey, from Barstrom Associates ("Barstrom"), a
general partnership in which Mr. J. Brendan Barba, Chairman, President and
principal stockholder of the Company is an 80% partner. Under the terms of the
lease, the annual rental for the premises is approximately $168,000 per year for
43,000 square feet. Management believes such rental does not exceed the rental
for comparable space in the area. The lease expired in 1995 and is being
extended on a month-to-month basis pending the Company's relocation of these
operations to other facilities.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES AND EXCHANGE ACT OF 1934
To the Company's knowledge, based solely on stock ownership reports on Form 4
provided the Company, no report under Section 16(a) of the Securities and
Exchange Act of 1934 is required.
ITEM NO. 2.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
In December 1995, the Board of Directors of the Company selected Arthur Andersen
LLP to serve as independent auditors for the Company for the fiscal year ending
October 31, 1996. The Board of Directors considers Arthur Andersen LLP to be
eminently qualified.
A representative of Arthur Andersen LLP will be present at the Meeting, with an
opportunity to make a statement if such representative desires to do so, and
will be available to respond to appropriate questions.
-10-
<PAGE>
Although it is not required to do so, the Board of Directors is submitting its
selection of the Company's auditors for ratification at the Meeting, in order to
ascertain views of stockholders regarding such selection. If the selection is
not ratified, the Board of Directors will reconsider its selection.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE
SELECTION OF ARTHUR ANDERSEN LLP TO EXAMINE THE FINANCIAL STATEMENTS OF THE
COMPANY FOR THE FISCAL YEAR ENDING OCTOBER 31, 1996.
OTHER MATTERS
The Board of Directors of the Company does not know of any other matters which
may be brought before the Meeting. However, if any such other matters are
properly presented for action, it is the intention of the persons named in the
accompanying form of Proxy to vote the shares represented thereby in accordance
with their judgment on such matters.
MISCELLANEOUS
If the accompanying form of Proxy is executed and returned, the shares of Common
Stock represented thereby will be voted in accordance with the terms of Proxy,
unless the Proxy is revoked. If no directions are indicated in such Proxy, the
shares represented thereby will be voted FOR the nominees proposed by the Board
of Directors and FOR the ratification of the Board of Directors' selection of
Arthur Andersen LLP as independent auditors for the Company.
All costs relating to the solicitation of Proxies will be borne by the Company.
Proxies may be solicited by officers, directors, and regular employees of the
Company, personally, by mail, by telephone or by fax, and the Company may pay
brokers and other persons holding shares of stock in their names or those of
their nominees for their reasonable expenses in sending soliciting materials to
their principals.
It is important that Proxies be returned promptly. Stockholders who do not
expect to attend the Meeting in person are urged to mark, sign and date the
accompanying form of Proxy and mail it in the enclosed return envelope, which
requires no postage if mailed in the United States, so that their vote can be
recorded.
ANNUAL REPORT ON FORM 10-K.
A copy of the Company's Annual Report on Form 10-K, including the financial
statements and financial statement schedules for the fiscal year ended October
31, 1995, which was filed with the Securities and Exchange Commission, has been
sent without charge to stockholders to whom this Proxy Statement is mailed.
STOCKHOLDER PROPOSALS.
Stockholder proposals intended to be presented at the 1996 Annual Meeting of
Stockholders of the Company must be received by the Company by October 23, 1996,
in order to be considered for inclusion in the Company's Proxy Statement
relating to such meeting.
By Order of the Board of Directors,
Lawrence R. Noll
Vice President - Finance and Secretary
February 28, 1996
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<PAGE>
PROXY ANNUAL MEETING OF STOCKHOLDERS -- APRIL 9, 1996
COMMON STOCK
The undersigned, a stockholder of AEP INDUSTRIES Inc., does hereby appoint
Lawrence R. Noll and Paul M. Feeney, or either of them, with full power of
substitution, the undersigned's proxies, to appear and vote all shares of Common
Stock of the Company which the undersigned is entitled to vote at the Annual
Meeting of Stockholders to be held on Tuesday, April 9, 1996 at 10:00 A.M.,
local time, or at any adjournments thereof, upon such matters as may properly
come before the Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby instructs said proxies or their substitutes to vote
as specified below on each of the following matters in accordance with their
judgment on any other matters which may properly come before the Meeting.
<TABLE>
<C> <C> <C>
1. Election of FOR all the nominees listed / / WITHHOLD AUTHORITY / /
Class A (EXCEPT AS MARKED TO THE CONTRARY) TO VOTE FOR ALL THE NOMINEES LISTED
Directors BELOW
Kenneth Avia and Paul E. Gelbard
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
- -----------------------------------------------------------------------------------------
2. Ratification of appointment of Arthur Andersen LLP as the Company's independent
auditors for Fiscal 1996.
</TABLE>
FOR / / AGAINST / / ABSTAIN / /
The Board of Directors favors a vote "FOR" each item.
(CONTINUED ON REVERSE SIDE)
<PAGE>
The shares represented by this Proxy will be voted as directed. If no
direction is indicated as to either of Items 1 or 2, the shares will be voted in
favor of the Item(s) for which no direction is indicated.
IMPORTANT: BEFORE RETURNING THIS PROXY, PLEASE SIGN YOUR NAME OR NAMES ON
THE LINE(S) BELOW EXACTLY AS SHOWN THEREON. EXECUTORS, ADMINISTRATORS, TRUSTEES,
GUARDIANS OR CORPORATE OFFICERS SHOULD INDICATE THEIR FULL TITLES WHEN SIGNING.
WHERE SHARES ARE REGISTERED IN THE NAME OF JOINT TENANTS, EACH JOINT TENANT OR
TRUSTEE SHOULD SIGN.
PLEASE MARK, DATE, AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
DATED _______________________, 1996
____________________________ (L.S.)
____________________________ (L.S.)
Stockholder(s) Sign Here
