<PAGE> 1
SCHEDULE 14A INFORMATION
(RULE 14a-101)
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.1a-11(c) or sec.240.1a-12
</TABLE>
BEAUTICONTROL COSMETICS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
BEAUTICONTROL COSMETICS, INC.
- --------------------------------------------------------------------------------
(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) 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 aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act 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 Schedule and the date of its filing.
(1) Amount previously paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
Notes:
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
BEAUTICONTROL COSMETICS, INC.
2121 MIDWAY ROAD
CARROLLTON, TX 75006
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 1, 1997
To the Holders of Common Stock of
BEAUTICONTROL COSMETICS, INC.:
Notice is hereby given that the 1997 Annual Meeting of Stockholders of
BeautiControl Cosmetics, Inc., a Delaware corporation (the "Company"), will be
held at the Company's executive offices, 2121 Midway Road, Carrollton, Texas, on
Tuesday, April 1, 1997 at 10:00 A.M., Dallas, Texas time, for the following
purposes:
(1) To elect three persons to serve as directors until the Annual
Meeting of Stockholders in the year 2000 or until their successors are duly
elected and qualified; and
(2) To transact any other proper business brought before the meeting
or any adjournments or postponements thereof.
The Board of Directors has fixed January 31, 1997, at the close of
business, as the record date for the determination of stockholders entitled to
notice of, and to vote at, the meeting and any adjournment or postponement
thereof. Only holders of record of the Company's Common Stock on that date are
entitled to vote on matters coming before the meeting and any adjournment or
postponement thereof. A complete list of stockholders entitled to vote at the
meeting will be maintained at the Company's offices at 2121 Midway Road,
Carrollton, Texas, for ten days prior to the meeting.
Please advise the Company's transfer agent, Harris Trust and Savings Bank,
311 West Monroe Street, 11th Floor, Chicago, Illinois 60606, of any change in
your address.
Your vote is important. Whether or not you plan to attend the meeting in
person, please mark, sign, date, and return the enclosed proxy in the envelope
provided, which requires no postage if mailed within the United States. With
regard to the election of directors, votes may be cast in favor or withheld;
votes that are withheld will be excluded entirely from the vote and will have no
effect.
A broker is entitled to vote on the election of directors if such broker
holds shares in street name for a customer who does not deliver voting
instructions. Under applicable Delaware law, a broker non-vote resulting from
the failure to deliver voting instructions to a broker will have no effect on
the outcome of the election of directors.
By Order of the Board of Directors,
/s/ M.D. TUCKER
M. DOUGLAS TUCKER
Senior Vice President -- Finance,
Secretary and Treasurer
Carrollton, Texas
February 28, 1997
<PAGE> 3
BEAUTICONTROL COSMETICS, INC.
2121 MIDWAY ROAD
CARROLLTON, TEXAS 75006
---------------------------------------------
PROXY STATEMENT
---------------------------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 1, 1997
The accompanying proxy, mailed together with this Proxy Statement to
stockholders on or about February 28, 1997, is solicited by BeautiControl
Cosmetics, Inc. (the "Company") in connection with the Annual Meeting of
Stockholders to be held on April 1, 1997. The proxy may be revoked by the
stockholder at any time prior to its exercise by executing and returning a proxy
bearing a later date, by giving written notice of revocation to the Secretary of
the Company, or by attending the meeting and voting in person.
As stated in the Notice to which this Proxy Statement is attached, at the
meeting stockholders will vote and elect three directors to the Board of
Directors to serve as directors until the Annual Meeting of Stockholders in the
year 2000 or until their successors are duly elected and qualified.
All properly executed, unrevoked proxies received before the meeting will
be voted in accordance with the directions contained therein. When no direction
has been given by a stockholder returning a proxy, the proxy will be voted FOR
the election as directors of the nominees named in this Proxy Statement.
The close of business on January 31, 1997, has been set as the record date
for determination of stockholders entitled to vote at the meeting. Holders of
the Company's Common Stock on the record date will be entitled to one vote per
share on all business at the meeting.
On the record date, there were outstanding and entitled to vote 5,855,423
shares of Common Stock. The presence, in person or by proxy, of a majority of
the outstanding shares of Common Stock entitled to vote at the meeting will
constitute a quorum.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth, as of February 7, 1997, the number and
percentage of outstanding shares of Common Stock beneficially owned by all
persons known by the Company to own more than 5% of the Company's Common Stock,
by each director of the Company, by each nominee for director, by each named
executive officer, and by all officers and directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
------------------- ------------ --------
<S> <C> <C>
Jinger L. Heath......................... 1,503,837(2) 22.8%
2121 Midway Rd.
Carrollton, Texas 75006
Richard W. Heath........................ 1,503,837(2) 22.8%
2121 Midway Rd.
Carrollton, Texas 75006
J. Robert Ward-Burns.................... 70,000(3) 1.1%
2121 Midway Rd.
Carrollton, Texas 75006
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
------------------- ------------ --------
<S> <C> <C>
Charles M. Diker........................ 341,625(4) 5.2%
One New York Plaza -- 31st Floor
New York, New York 10004
Robert S. Folsom........................ 250,500(5) 3.8%
16475 Dallas Parkway
Dallas, Texas 75248
Joseph M. Haggar, III................... 0 *
6311 Lemmon Avenue
Dallas, Texas 75209
Denise I. Lites......................... 4,500(6) *
3729 Maplewood Avenue
Dallas, Texas 75205
Clifton R. Sanders...................... 18,340(7) *
2121 Midway Rd.
Carrollton, Texas 75006
A. Starke Taylor, Jr. .................. 35,750(8) *
16800 Dallas Parkway
Dallas, Texas 75248
M. Douglas Tucker....................... 18,000(9) *
2121 Midway Rd.
Carrollton, Texas 75006
Joel T. Williams, Jr. .................. 71,750(10) 1%
P.O. Box 12150
Dallas, Texas 75225
All officers and directors as a group
(18 persons).......................... 3,926,629(11) 59.7%
</TABLE>
- ---------------
* Less than 1%
(1) Unless otherwise noted, each of the listed individuals has sole voting and
dispositive power for the shares beneficially owned.
(2) Includes options to purchase 150,000 shares of Common Stock exercisable
within 60 days.
(3) Includes options to purchase 70,000 shares of Common Stock exercisable
within 60 days.
(4) Includes options to purchase 92,000 shares of Common Stock exercisable
within 60 days. Includes 12,125 shares of Common Stock which are indirectly
owned by Mr. Diker and for which Mr. Diker shares voting and investment
power. Does not include 11,250 shares of Common Stock owned by the wife of
Mr. Diker and 15,750 shares owned by clients of Mr. Diker, for which Mr.
Diker disclaims beneficial ownership.
(5) Includes options to purchase 24,500 shares of Common Stock exercisable
within 60 days. Does not include 3,000 shares of Common Stock owned by the
wife of Mr. Folsom, for which Mr. Folsom disclaims beneficial ownership.
(6) Includes options to purchase 4,500 shares of Common Stock exercisable
within 60 days.
(7) Includes options to purchase 18,340 shares of Common Stock exercisable
within 60 days.
(8) Includes options to purchase 35,750 shares of Common Stock exercisable
within 60 days. Does not include 55,205 shares of Common Stock owned by the
wife of Mr. Taylor, for which Mr. Taylor disclaims beneficial ownership.
(9) Includes options to purchase 3,000 shares of Common Stock exercisable
within 60 days.
(10) Includes options to purchase 69,500 shares of Common Stock exercisable
within 60 days.
(11) Includes options to purchase 715,805 shares of Common Stock exercisable
within 60 days.
2
<PAGE> 5
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation divides the Board of Directors
into three classes. The term of office of one class of directors expires at this
Annual Meeting of Stockholders. A second class of directors will serve until the
1998 Annual Meeting of Stockholders, and a third class of directors will serve
until the 1999 Annual Meeting of Stockholders. Robert S. Folsom, A. Starke
Taylor, Jr. and Denise I. Lites will stand for election at this Annual Meeting
for a three-year term of office expiring at the Annual Meeting of Stockholders
in the year 2000 or until their successors are duly elected and qualified.
Proxies cannot be voted for the election of more than three persons to the
Board.
The Company is informed that Mr. Folsom, Mr. Taylor and Ms. Lites are
willing to serve as directors. However, if Mr. Folsom, Mr. Taylor or Ms. Lites
should decline or become unable to serve as a director for any reason, votes
will be cast instead for a substitute nominee designated by the Board of
Directors or, if none is so designated, will be cast according to the judgment
of the person or persons voting the proxy.
The following table sets forth certain information as to the directors of
the Company as of January 1, 1997.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES DIRECTOR
NAME AND AGE WITH THE COMPANY SINCE
------------ --------------------- --------
<S> <C> <C>
NOMINEES
Present Term Expiring in 1997
Robert S. Folsom, 69 Director 1985
A. Starke Taylor, Jr., 74 Director 1985
Denise I. Lites, 41 Director 1995
DIRECTORS CONTINUING IN OFFICE
Present Term Expiring in 1998
Jinger L. Heath, 44 Chairman of the Board of Directors 1981
Joseph M. Haggar, III, 45 Director 1996
J. Robert Ward-Burns, 52 Director, Executive Vice President and Chief
Operating Officer 1993
Present Term Expiring in 1999
Richard W. Heath, 54 Director, President, and Chief Executive
Officer 1981
Charles M. Diker, 62 Director 1987
Joel T. Williams, Jr., 76 Director 1986
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS
Jinger L. Heath is a founder of the Company and has been Chairman of the
Board of Directors of the Company since its inception in January 1981. Ms. Heath
conceived the concept of free color and image analysis supported by color-coded
cosmetics and image improvement products to be marketed through a sales force of
career-oriented women. She identifies the Company's product needs and manages
the development and quality of the Company's skin care, cosmetics and health and
beauty supplements. Ms. Heath is also Chairman of the Board of the Company's
division, BeautiControl Research Institute.
Richard W. Heath is a founder of the Company and has been President, Chief
Executive Officer, and a director of the Company since its inception in January
1981. Mr. Heath has over 29 years of experience in the direct sales industry.
Mr. Heath currently serves as a director of Haggar Clothing Co., a public
company.
3
<PAGE> 6
J. Robert Ward-Burns has been Executive Vice President, Chief Operating
Officer and a director of the Company since July 1993. Prior to joining the
Company, Mr. Ward-Burns was with Stanhome Direct Selling Group for 13 years
where he served as President from 1988 to 1993.
Robert L. Esson, 52, has been Senior Vice President Manufacturing and
Distribution of the Company since November 1995 and was Vice President
Manufacturing prior to that and since April 1994 and assumed responsibility for
the Distribution Department in August 1994. Prior to joining the Company, Mr.
Esson was with Lockwood Greene Engineers from September 1991 as a management
consultant.
Carl A. Flowers, 47, has been Vice President Sales of the Company since
July 1996. Prior to that time and since November 1991, Mr. Flowers was Vice
President of Sales Promotion. His responsibilities include sales, special
events, sales incentives, awards and recognition.
Robert S. Heath, 34, has been Senior Vice President Sales of the Company
since January 1996 and was Vice President Sales Development prior to that and
since May 1992. Prior to that time, Mr. Heath was Director of Sales Promotion
from November 1991 to May 1992, Director of Distribution from January 1990 to
November 1991, and Operations Manager from November 1988 to January 1990.
Jo-Anne C. Jaeger, 53, has been Senior Vice President Merchandising and
International Development of the Company since December 1995. Ms. Jaeger was Sr.
Vice President Marketing Strategies from January 1992 to December 1995. Ms.
Jaeger joined the Company in April 1990 as Vice President Product Marketing.
Prior to joining the Company, Ms. Jaeger was employed by Avon Products, Inc. for
15 years, most recently as Vice President Sales Planning.
J. Timmons Parker, 51, has been Vice President Sales of the Company since
July 1996. Prior to that time and since January 1995, Mr. Parker was Managing
Director Leadership Development. Mr. Parker joined the Company as Director Sales
Development in November 1992. Prior to joining the Company, Mr. Parker was Vice
President General Manager for Neiman Marcus where he worked for sixteen years.
Linda K. Pottenger, 47, has been Vice President Sales of the Company since
July 1996 and was Vice President Field and Information Services prior to that
and since December 1993. Prior to that time and since March 1992, she was Vice
President Information Technology, Strategic and Quality Planning. Prior to that
time, Ms. Pottenger was Consulting Services Manager for Hewlett-Packard from
1982 to 1992.
Clifton R. Sanders, 51, has been Senior Vice President Research and
Development of the Company since November 1991. Prior to that time and since
December 1990, Mr. Sanders was Vice President Research and Development of the
Company. He joined the Company as Managing Director Research and Development in
October 1989. Prior to joining the Company, Mr. Sanders was Vice President
Product Development at Mary Kay Cosmetics for ten years. Mr. Sanders is also
President of the Company's division, BeautiControl Research Institute.
Amelia G. Spolec, 39, has been Vice President Information Services since
July 1996. Prior to that time and since January 1995, Ms. Spolec was Managing
Director Information Services. In February 1992, Ms. Spolec joined the Company
as Director Information Services. Prior to joining the Company, Ms. Spolec was
Senior Manager with Grant Thornton LLP for seven years.
M. Douglas Tucker, 53, has been Senior Vice President Finance and Chief
Financial Officer since April 1995 and Secretary and Treasurer of the Company
since August 1995. Prior to that time and from April 1993, Mr. Tucker was a
business and financial consultant. From July 1990 to April 1993, Mr. Tucker was
Vice President-Finance at The BOC Group Americas. Prior to July 1990, Mr. Tucker
was with Tambrands, Inc. one year as International Director of Finance and with
General Foods Corporation twenty-one years in financial management.
Charles M. Diker has been a director of the Company since May 1987. Since
1986, Mr. Diker has been Chairman of the Board of Directors of Cantel Industries
Inc. Mr. Diker currently serves as a director of Chyron Corporation,
International Specialty Products, Inc. and Data Broadcasting Corporation.
Robert S. Folsom has been a director of the Company since June 1985. Mr.
Folsom is Chairman of the Board of Directors of Folsom Properties, Inc., a real
estate development firm. Mr. Folsom served as Mayor of
4
<PAGE> 7
the City of Dallas from 1976 to 1981. Mr. Folsom currently serves as a director
of DSC Communications Corporation.
Joseph M. Haggar, III, has been a director of the Company since August
1996. Mr. Haggar has been Chairman of the Board of Haggar Clothing Co., a
marketer of men's dress and casual clothing since 1994 and Chief Executive
Officer since 1990. Mr. Haggar also serves as a director of Texas Commerce Bank.
Denise I. Lites has been a director of the Company since October 1995. Ms.
Lites is President of Olympia Development LLP, a real estate development and
entertainment company. Ms. Lites serves as a director of CompUSA, the Federal
Reserve Board of Chicago, Detroit Branch, and Little Caesar Enterprises, Inc.
where Ms. Lites was Senior Executive Vice President from 1987 to 1993.
A. Starke Taylor, Jr. has been a director of the Company since June 1985.
From 1978 until 1987, Mr. Taylor was Chairman of the Board of Directors of
Graylor Investments, a private investment firm. Mr. Taylor served as Mayor of
the City of Dallas from 1983 to 1987. Mr. Taylor currently serves as President
of Taylor Investments, a private investment firm.
Joel T. Williams, Jr. has been a director of the Company since January
1986. From 1985 to 1989, Mr. Williams was an advisory director of Bright Banc
Savings Association. From 1969 to 1985, Mr. Williams was Chairman of the Board
and Chief Executive Officer of Texas Federal Savings and Loan Association.
Richard W. Heath and Jinger L. Heath are husband and wife. Robert S. Heath
is the son of Richard W. Heath. There are no other family relationships between
other directors or executive officers of the Company.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
GENERAL
The Board of Directors has established a Compensation Committee, an Audit
Committee, and a Nominating Committee. The Company's Bylaws provide that the
Compensation Committee and the Audit Committee are required to be comprised of
directors who are not employees of the Company.
The Compensation Committee, composed of Messrs. Henry H. Dickerson, Jr.,
Folsom, and Taylor, met two times during the fiscal year ended November 30,
1996. After Mr. Dickerson's death, Ms. Lites was added to the Compensation
Committee in December 1996. This committee reviews and approves salaries and
bonuses of executive officers and administers the Company's Incentive Stock
Option Plan, Non-Qualified Stock Option Plan, and Special Stock Option Plan.
The Audit Committee, composed of Ms. Lites, Messrs. Williams and Diker, met
two times during the fiscal year ended November 30, 1996. Mr. Haggar was added
to the Audit Committee upon Ms. Lites resignation from the Audit Committee in
December 1996. This committee recommends to the Board of Directors the
appointment of independent auditors, reviews the plan and scope of audits,
reviews the Company's significant accounting policies and internal controls, and
has general responsibility for related matters.
The Nominating Committee, currently composed of Messrs. Folsom and Taylor,
held no meetings in fiscal 1996, but took action by unanimous written consent
two times. This committee nominates persons for election to the Board of
Directors.
The Board of Directors held six meetings during the fiscal year ended
November 30, 1996. None of the directors attended fewer than 75% of the meetings
of the Board of Directors and its committees on which they served.
COMPENSATION OF DIRECTORS
Members of the Board of Directors who are not officers or employees of the
Company receive an annual fee of $12,000 together with $1,500 for each
directors' meeting they attend and $750 for each committee meeting they attend.
Directors are reimbursed for expenses relating to attendance at meetings.
5
<PAGE> 8
SPECIAL STOCK OPTION PLAN
The Company's Special Stock Option Plan provides for the granting of
options to purchase a maximum of 412,500 shares of Common Stock to non-employee
directors of the Company. Under the terms of the Special Plan, a non-employee
director receives an automatic grant of options for 2,500 shares of Common Stock
when such person first becomes a director of the Company. Additional options to
purchase 1,000 shares of Common Stock are automatically granted to non-employee
directors annually if the Company's net income is equal to or greater than 105%
of net income for the previous year. All grants of options under the Special
Stock Option Plan are made automatically and without any discretion on the part
of the Compensation Committee with respect to the grantee, the number of options
granted and the exercise price of the options. The Special Stock Option Plan
requires that the exercise price for each option be equal to 100% of the fair
market value of the Common Stock on the date of the grant. Each option will
expire ten years from the date of grant and no option is exercisable until one
year from the date of grant. Notwithstanding any other restriction in the
Special Stock Option Plan, options will become immediately exercisable upon a
reorganization, merger or consolidation of the Company or a change in control of
the Company.
At November 30, 1996, there were outstanding options to purchase 261,250
shares of Common Stock under the Special Stock Option Plan.
CERTAIN TRANSACTIONS
On November 20, 1995, Ms. Denise I. Lites, a member of the Board of
Directors of the Company, signed a consulting agreement with the Company to
provide consulting services for a minimum of two days per week at a rate of $200
per hour for a period of up to six months with a potential bonus to be paid at
the end of 1996 based on the Company's 1996 increase in sales over 1995 results.
Ms. Lites was paid $82,550 in 1996 for her consulting services.
On April 24, 1992, Mr. Carl A. Flowers, the Company's Vice President Sales,
borrowed $115,137 from the Company. This indebtedness was evidenced by a
promissory note and bore interest at the prime rate. The largest principal
amount outstanding on this loan during fiscal 1996 was $69,462. On January 31,
1997, this note and interest were paid in full.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued by
the Company for services rendered during the fiscal years ended November 30,
1996, 1995 and 1994 to the Company's Chief Executive Officer and the four other
most highly compensated executive officers whose total cash compensation for the
year ended November 30, 1996 exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ----------------------
------------------------------------------------ LONG-TERM
NAME AND OTHER ANNUAL OPTION INCENTIVE ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) AWARDS(#) PAYOUTS($) COMPENSATION($)
------------------ ---- --------- -------- ------------------ --------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard W. Heath 1996 365,000 272,128 60,674 0 N/A 0
President and Chief 1995 358,740 220,946 0 0 N/A
Executive Officer 1994 340,000 302,224 0 50,000 N/A
Jinger L. Heath 1996 365,000 272,128 105,036(2) 0 N/A 0
Chairman of the Board 1995 358,740 220,946 0 0 N/A
1994 340,000 302,224 0 50,000 N/A
J. Robert Ward-Burns 1996 300,000 176,003 0 25,000(3) 6,250(4)
Executive Vice President 1995 293,748 159,421 0 25,000 N/A
and Chief Operating 1994 275,000 204,331 0 0 N/A
Officer
M. Douglas Tucker 1996 182,513 35,000 0 35,000(5) N/A 3,750(6)
Senior Vice President 1995* 119,866 31,000 0 15,000 N/A
Finance and Chief
Operating Officer
Clifton R. Sanders 1996 165,000 45,000 0 25,400(7) N/A 0
Senior Vice President 1995 162,666 15,000 0 10,000 N/A
Research and Development 1994 135,333 50,000 0 0 N/A
</TABLE>
- ---------------
* Hired April 19, 1995.
(1) Exceeding the lesser of $50,000 or 10% of salary and bonus.
(2) Includes $50,000 for wardrobe for numerous video productions, stage and
television appearances.
(3) Options granted in 1995, exchanged for repriced options in January 1996.
(4) Premium for term life insurance and Company match for 401(k) plan.
(5) Includes 15,000 options granted in 1995, exchanged for repriced options in
January 1996.
(6) Company match for 401(k) plan.
(7) Options granted in previous years, exchanged for repriced options in January
1996.
7
<PAGE> 10
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock
options during fiscal 1996 to the individuals named in the Summary Compensation
Table.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
- --------------------------------------------------------------------------------------------- ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS APPRECIATION FOR A
GRANTED TO PERIOD OF TEN
EMPLOYEES YEARS($)(3)
OPTIONS IN FISCAL EXERCISE EXPIRATION --------------------
NAME GRANTED(#) YEAR PRICE($/SH) DATE 5% 10%
---- ---------- ---------- ----------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Richard W. Heath......................... N/A $ 0 $ 0
Jinger L. Heath.......................... N/A 0 0
J. Robert Ward-Burns..................... 25,000(1) 9.2 $9.25 12/27/04 145,433 368,552
M. Douglas Tucker........................ 20,000(2) 7.4 8.00 08/13/06 100,624 254,998
15,000(1) 5.5 9.25 07/07/05 87,260 221,131
Clifton R. Sanders....................... 3,750(1) 1.4 9.25 11/07/99 21,815 55,283
7,500(1) 2.8 9.25 06/13/01 43,630 110,566
4,150(1) 1.5 9.25 01/02/02 24,142 61,180
10,000(1) 3.7 9.25 12/27/04 58,173 147,421
</TABLE>
- ---------------
(1) Options were repriced on January 8, 1996.
(2) Options are exercisable at twenty percent per year beginning one year from
date of grant.
(3) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent on the future
performance of the Common Stock and overall market conditions. There can be
no assurance that the amounts reflected in this table will be achieved.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND OPTION VALUES AT FISCAL YEAR
END
The following table provides information, with respect to the named
executive officers, concerning the exercise of options during the last fiscal
year and unexercised options held as of November 30, 1996.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES YEAR-END AT FISCAL YEAR-END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard W. Heath................ N/A N/A 150,000 0 454,725 0
Jinger L. Heath................. N/A N/A 150,000 0 454,725 0
J. Robert Ward-Burns............ N/A N/A 65,000 60,000 386,595 333,780
M. Douglas Tucker............... N/A N/A 3,000 32,000 13,689 171,016
Clifton R. Sanders.............. N/A N/A 18,710 13,290 90,474 64,242
</TABLE>
- ---------------
(1) Based on the closing price of $13.813 for the Common Stock on November 30,
1996, the Company's fiscal year end.
REPRICING OF STOCK OPTIONS
As discussed in the "Compensation Committee Report On Annual Compensation,"
in January 1996 the Company exchanged certain employee stock options with an
exercise price higher than the market price at such time for new options with an
exercise price equal to the then current fair market value. This exchange
required that an employee surrender options having an exercise price greater
than $9.50 for the same number of options at the current market price. The
options retained the same vesting status and expiration dates as the options
surrendered. Certain named executive officers participated in the exchange. The
following table sets forth information regarding the repricing of options held
by the named executive officers and any other executive officer during the last
ten completed fiscal years.
8
<PAGE> 11
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
NUMBER OF OPTION TERM
SECURITIES MARKET PRICE REMAINING
UNDERLYING OF STOCK AT EXERCISE PRICE NEW AT DATE OF
OPTIONS TIME OF AT TIME OF EXERCISE REPRICING
NAME AND TITLE DATE REPRICED REPRICING REPRICING PRICE (IN YEARS)
-------------- -------- ---------- ------------ -------------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
CURRENT OFFICERS
Robert L. Esson, 01/08/96 5,000 $9.25 $12.88 $9.25 8.2
Senior Vice President -- 01/08/96 3,000 9.25 14.00 9.25 9.0
------
Manufacturing and Distribution 8,000
======
Carl A. Flowers, 01/08/96 15,000 $9.25 $14.67 $9.25 5.5
Vice President -- Sales 01/08/96 2,020 9.25 13.75 9.25 6.0
01/08/96 1,000 9.25 14.00 9.25 9.0
12/15/87* 3,600 4.75 9.00 4.75 7.8
------
21,620
======
Robert S. Heath, 01/08/96 5,000 $9.25 $12.00 $9.25 6.5
Senior Vice President -- Sales 01/08/96 1,500 9.25 13.75 9.25 8.2
01/08/96 10,000 9.25 14.00 9.25 9.0
------
16,500
======
Jo-Anne C. Jaeger, 01/08/96 22,500 $9.25 $10.50 $9.25 5.2
Senior Vice President -- 01/08/96 15,000 9.25 14.67 9.25 5.5
Merchandising and 01/08/96 4,150 9.25 13.75 9.25 6.0
International Development 01/08/96 5,000 9.25 14.00 9.25 9.0
------
46,650
======
J. Timmons Parker, 01/08/96 4,800 $9.25 $10.00 $9.25 7.8
Vice President -- Sales 01/08/96 1,000 9.25 14.00 9.25 9.0
------
5,800
======
Linda K. Pottenger, 01/08/96 5,000 $9.25 $16.25 $9.25 8.2
Vice President -- Sales 01/08/96 3,000 9.25 14.00 9.25 9.0
------
8,000
======
Clifton R. Sanders, 01/08/96 3,750 $9.25 $11.17 $9.25 3.8
Senior Vice President -- 01/08/96 7,500 9.25 14.67 9.25 5.5
Research & Development 01/08/96 4,150 9.25 13.75 9.25 6.0
01/08/96 3,500 9.25 14.00 9.25 9.0
01/08/96 6,500 9.25 14.00 9.25 9.0
------
25,400
======
Amelia G. Spolec, 01/08/96 3,000 $9.25 $17.50 $9.25 8.2
Vice President -- Information Services 01/08/96 2,500 9.25 14.00 9.25 9.0
------
5,500
======
M. Douglas Tucker, 01/08/96 15,000 $9.25 $11.00 $9.25 9.5
======
Senior Vice President -- Finance,
Secretary, Treasurer and
Chief Financial Officer
J. Robert Ward-Burns, 01/08/96 7,000 $9.25 $14.00 $9.25 9.0
Executive Vice President and 01/08/96 18,000 9.25 14.00 9.25 9.0
------
Chief Operating Officer 25,000
======
FORMER OFFICERS
Vicki S. Miller, Former 01/08/96* 4,150 $9.25 $13.75 $9.25 0.7
Senior Vice President -- Finance, 12/15/87* 12,000 4.75 8.50 4.75 9.5
Secretary, Treasurer and 12/15/87* 5,000 4.75 16.50 4.75 8.8
Chief Financial Officer 12/15/87* 8,000 4.75 9.00 4.75 7.8
------
29,150
======
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
NUMBER OF OPTION TERM
SECURITIES MARKET PRICE REMAINING
UNDERLYING OF STOCK AT EXERCISE PRICE NEW AT DATE OF
OPTIONS TIME OF AT TIME OF EXERCISE REPRICING
NAME AND TITLE DATE REPRICED REPRICING REPRICING PRICE (IN YEARS)
-------------- -------- ---------- ------------ -------------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
William Randall, Former 12/15/87* 11,000 $4.75 $ 9.00 $4.75 7.8
Vice President -- Sales 12/15/87* 7,500 4.75 12.00 4.75 8.2
12/15/87* 5,000 4.75 6.38 4.75 9.3
12/15/87* 20,000 4.75 16.50 4.75 8.8
------
43,500
======
Terry M. Rudloff, Former 12/15/87* 11,000 $4.75 $ 9.00 $4.75 7.8
Executive Vice President -- 12/15/87* 10,000 4.75 8.50 4.75 9.5
Operations 12/15/87* 5,000 4.75 16.50 4.75 8.8
------
26,000
======
</TABLE>
- ---------------
* All of these options have been exercised or cancelled.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During fiscal 1996 the Compensation Committee consisted of Messrs.
Dickerson, Folsom, and Taylor. None of the members of the Compensation Committee
has ever been an officer or employee of the Company. Mr. Heath is on the
Compensation Committee of Haggar Clothing Co. and Mr. Haggar is a director of
the Company.
REPORT OF THE COMPENSATION COMMITTEE ON ANNUAL COMPENSATION
Option Repricing. In December 1995, the Board determined that the current
market price of the Company's Common Stock was restricting the motivational
value of certain options held by its employees. In response, the Board approved
an exchange program under which employees could exchange their higher priced
options for an equal number of lower-priced options. The Board decided that the
fair market value at the close of the business day following the public release
of 1995 results would be used for repricing. On January 8, 1996, employees
exchanged options priced above $9.50 per share for an equal number of options.
Executive officers participating in this program are shown in the table entitled
"Ten-Year Option Repricings." Also shown in this table are option repricings for
any executive officer in the Company's last ten fiscal years. The last option
repricing for employees was in December 1987.
This report is submitted by the members of the Compensation Committee:
Robert S. Folsom
A. Starke Taylor, Jr.
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for overseeing all stock option plans, setting the compensation for
the Chief Executive Officer ("CEO") and the Chairman of the Board ("Chairman"),
and providing guidelines to the CEO for determining the annual compensation of
other officers.
Executive Officer Compensation Other than CEO and Chairman
The Committee believes that total compensation for the Company's officers
must be in amounts sufficient to attract, retain and motivate key employees,
while at the same time maintaining reasonable linkage between executive
compensation and Company performance.
The Committee sets guidelines for officer pay based upon industry levels.
As in prior years, 1996 base salaries were set at mid-range pay levels when
compared to similar companies in the industry, with potential
10
<PAGE> 13
additional compensation to be made through cash bonuses. In 1996, cash bonuses
for all officers other than the Chief Operating Officer, CEO and Chairman, were
based on a combination of individual performance and Company performance. Fifty
percent of the bonus amount was tied to individual performance against stated
objectives and the remaining fifty percent was dependent upon the Company
reaching stated pre-tax profit objectives. For 1996, no bonus amounts were paid
for the portion tied to Company objectives. However, bonus amounts were paid for
1996 tied to individual performance against stated objectives with some
discretionary bonuses. The annual bonus amount for the Chief Operating Officer
is set at 2% of the Company's pre-tax profits and therefore fluctuates directly
with the Company's annual earnings.
Stock options are granted to executive officers by the Committee at the
time the officers are hired and thereafter based on individual contributions.
Stock options are granted at the fair market value of the Common Stock on the
date of grant, with an exercise period ranging from five to seven years.
CEO and Chairman Compensation
The compensation for both the CEO and the Chairman is determined by the
Committee based upon a combination of base pay and cash bonus, with the total
cash compensation being strongly affected by Company performance. The base pay
for both the CEO and Chairman was set by the Committee at $365,000 in March 1995
where it remained for fiscal 1996. Annual cash bonus payments for the CEO and
the Chairman are each set at 3% of the Company's pre-tax profits for the fiscal
year. As a result, bonus payments to the CEO and the Chairman fluctuate based
upon the Company's pre-tax profits. The Committee may grant additional
discretionary cash bonuses to the CEO and the Chairman based on the Committee's
evaluation of individual performance. No additional discretionary bonuses were
granted to the CEO and the Chairman for fiscal 1996.
The Committee grants stock options to the CEO and the Chairman based upon a
subjective evaluation of many factors including performance, leadership,
motivational effect, and extraordinary contributions to the Company.
This report is submitted by the members of the Compensation Committee:
Robert S. Folsom
A. Starke Taylor, Jr.
11
<PAGE> 14
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total stockholder return for the Company's Common Stock from December 1, 1991
through November 30, 1996 with the cumulative total return for the NASDAQ Market
Index and the Peer Group(1). The comparison assumes $100 was invested in the
Company's Common Stock on December 1, 1991 and in each of the foregoing indices
and assumes reinvestment of dividends.
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
Measurement Period BeautiControl NASDAQ
(Fiscal Year Covered) Cosmetics Peer Group Market Index
<S> <C> <C> <C>
1991 100 100 100
1992 81.20 145.59 107.41
1993 91.49 129.42 127.85
1994 117.54 160.62 137.69
1995 76.40 190.90 174.57
1996 119.12 287.28 216.60
</TABLE>
- ---------------
(1) The Peer Group includes Aloette Cosmetics, Inc., Avon Products, Inc.,
Nature's Sunshine Products Inc., and Stanhome Inc. Premark International
Inc. was excluded from the Peer Group reflected in the 1996 graph because
the Company sold its Tupperware direct selling business.
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 more than 10% of the
Company's Common Stock, to file with the Securities and Exchange Commission (the
"SEC") initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Such persons are
required by SEC regulations to furnish the Company with copies of all Section
16(a) reports they file. To the Company's knowledge, based on its review of the
copies of such reports and written representations that no other reports were
required, during the fiscal year ended November 30, 1996, all Section 16(a)
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with, except for delinquent Form 3 filings by
Mr. Ronnie D. Armes, Mr. J. Timmons Parker and Ms. Amelia G. Spolec, officers of
the Company. The Company is not aware of any failure to file a required report.
AUDITORS
Representatives of Ernst & Young LLP, the Company's independent auditors
for 1996, are expected to be present at the meeting with the opportunity to make
a statement if they desire to do so and to be available to respond to
appropriate questions.
12
<PAGE> 15
On February 12, 1996, the Company dismissed Grant Thornton LLP as its
independent auditors and appointed Ernst & Young LLP as the new auditors. The
decision to dismiss Grant Thornton LLP and appoint Ernst & Young LLP was
proposed by management, recommended by the Audit Committee of the Board of
Directors, and approved by the Board of Directors.
Grant Thornton LLP's report on the financial statements for the fiscal
years ending November 30, 1995 and 1994 contained no adverse opinion or
disclaimer of opinion or was qualified or modified as to uncertainty, audit
scope or accounting principles. Further, during the fiscal years ending November
30, 1995 and 1994 and the subsequent interim period preceding the dismissal,
there were no disagreements with Grant Thornton LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.
During the two most recent fiscal years and the subsequent interim period
preceding the dismissal, there have been no "reportable events" (as defined in
Item 304 of the Securities Exchange Commission Regulation S-K) with Grant
Thornton LLP.
BOARD OF DIRECTORS'
RECOMMENDATIONS; VOTE REQUIRED
The Board of Directors unanimously recommends a vote FOR the election as
director of each of the nominees named in the proxy.
Nominees for director receiving a plurality of the votes cast will be
elected as directors.
STOCKHOLDER PROPOSALS
In order for stockholder proposals to receive consideration for inclusion
in the Company's Proxy Statement for next year, such proposals must be received
at the Company's offices at 2121 Midway, Carrollton, Texas 75006, Attention:
Secretary, by October 31, 1997.
The Company's By-Laws contain a provision which requires that a stockholder
may nominate a person for election as a director only if written notice of such
stockholder's intent to make such nomination has been given to the Secretary of
the Company not later than 60 days prior to an annual meeting. This provision
also requires that the notice set forth, among other things, a description of
all arrangements or understandings between the nominating stockholder and the
nominee pursuant to which the nomination is to be made or the nominee is to be
elected, and such notice must also contain such other information regarding the
nominee as would be required to be included in a proxy statement filed pursuant
to the proxy rules of the Securities and Exchange Commission had the nominee
been nominated by the Board of Directors of the Company. This provision is
intended to give the Company the opportunity to obtain all relevant information
regarding persons nominated for director. The Board of Directors may disqualify
any nominee who fails to provide the Company with complete and accurate
information as required by this provision. No stockholder has nominated a
candidate for election to the Board of Directors at the 1997 Annual Meeting.
SOLICITATION OF PROXIES
The Company will pay the expenses of this proxy solicitation. In addition
to solicitation by mail, some of the officers and regular employees of the
Company may solicit proxies personally or by telephone, if deemed necessary. The
Company will request brokers and other fiduciaries to forward proxy soliciting
material to the beneficial owners of shares which are held of record by the
brokers and fiduciaries, and the Company may reimburse them for reasonable
out-of-pocket expenses incurred by them in connection therewith.
13
<PAGE> 16
OTHER BUSINESS
The Board of Directors is not aware of any matter, other than the matters
described above, to be presented for action at the meeting. However, if any
other proper items of business should come before the meeting, it is the
intention of the person or persons acting under the enclosed form of proxy to
vote in accordance with their best judgment on such matters.
By Order of the Board of Directors,
/s/ M.D. TUCKER
M. DOUGLAS TUCKER
Senior Vice President -- Finance,
Secretary and Treasurer
Carrollton, Texas
February 28, 1997
14
<PAGE> 17
PROXY
BEAUTICONTROL COSMETICS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Richard W. Heath and M. Douglas
Tucker, or either of them, with full power of substitution, proxies of the
undersigned, with all the powers that the undersigned would possess if
personally present to cast all votes that the undersigned would be entitled to
vote at the Annual Meeting of Stockholders of BeautiControl Cosmetics, Inc.
(the "Company") to be held on Tuesday, April 1, 1997, at the Company's
executive offices, 2121 Midway Road, Carrollton, Texas, at 10:00 A.M., Dallas,
Texas time, and any and all adjournment or postponements thereof (the "Annual
Meeting"), including (without limiting the generality of the foregoing) to vote
and act as follows:
1) Election of Directors, Nominees:
Robert S. Folsom, A. Starke Taylor, Jr. and Denise I. Lites
Please complete, date, sign and mail this Proxy promptly in the enclosed
envelope. No postage is required for mailing in the United States.
SEE REVERSE
SIDE
<PAGE> 18
BEAUTICONTROL COSMETICS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
1. Election of Directors, Nominees: FOR WITHHELD FOR ALL
Robert S. Folsom, A. Starke Taylor, Jr. ALL ALL EXCEPT
and Denise I. Lites / / / / / /
----------------------
Nominee Exception
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting. This Proxy will be
voted at the Annual Meeting or any adjournment or postponement thereof as
specified. If no specifications are made, this Proxy will be voted FOR the
election as directors of the three nominees named to the term described in the
accompanying Proxy Statement. This Proxy hereby revokes all prior proxies given
with respect to the shares of the undersigned.
SIGNATURE(S) DATE
--------------- ---------
SIGNATURE(S) DATE
--------------- ---------
IMPORTANT: Please date this Proxy and sign exactly as your name appears to the
left. If shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give title as
such. If a corporation, please sign in full corporate name by president or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.
