<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section240.14a-11(c) or Section240.14a-12
MERRILL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MERRILL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: _/
---------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
_/ Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] 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:
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NOTES:
<PAGE>
MERRILL CORPORATION
One Merrill Circle
St. Paul, Minnesota 55108
April 29, 1994
Dear Shareholder:
You are cordially invited to attend the 1994 Annual Meeting of Shareholders of
Merrill Corporation. The meeting will be held on Tuesday, May 24, 1994, at 10:00
a.m., local time, at the Bandana Banquet and Conference Centre, Bandana Square,
1021 Bandana Boulevard West, Suite 220, Energy Park, St. Paul, Minnesota. We
suggest that you read carefully the enclosed Notice of Annual Meeting and Proxy
Statement.
We hope you will be able to attend the Annual Meeting. Whether or not you plan
to attend, we urge you to complete, sign, date and return the enclosed proxy
card in the enclosed envelope in order to make certain that your shares will be
represented at the Annual Meeting.
Very truly yours,
/s/ Kenneth F. Merrill /s/ John W. Castro
Kenneth F. Merrill John W. Castro
Chairman of the Board President and Chief Executive Officer
<PAGE>
MERRILL CORPORATION [LOGO]
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 24, 1994
To the Shareholders of Merrill Corporation:
The Annual Meeting of Shareholders of Merrill Corporation will be held on
Tuesday, May 24, 1994, at 10:00 a.m. local time, at the Bandana Banquet and
Conference Centre, Bandana Square, 1021 Bandana Boulevard, Suite 220, Energy
Park, St. Paul, Minnesota, for the following purposes:
1. To elect seven directors to serve for the ensuing year and until their
successors are elected and qualified;
2. To consider and act upon a proposal to ratify the selection of Coopers &
Lybrand, certified public accountants, as independent auditors for the
Company for the fiscal year ending January 31, 1995; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Only shareholders of record at the close of business on April 1, 1994 will
be entitled to notice of and to vote at the meeting or at any adjournment
thereof.
By Order of the Board of Directors,
/S/ STEVEN J. MACHOV
STEVEN J. MACHOV
SECRETARY
<PAGE>
MERRILL CORPORATION [LOGO]
ONE MERRILL CIRCLE
ENERGY PARK
ST. PAUL, MINNESOTA 55108
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS,
MAY 24, 1994
------------------------
INTRODUCTION
The Annual Meeting of Shareholders of Merrill Corporation (the "Company")
will be held on May 24, 1994 at 10:00 a.m. local time, at the Bandana Banquet
and Conference Centre, Bandana Square, 1021 Bandana Boulevard, Suite 220, Energy
Park, St. Paul, Minnesota, or at any adjournment thereof, for the purposes set
forth in the Notice of Meeting.
A proxy card is enclosed for your use. You are solicited on behalf of the
Board of Directors to MARK, SIGN AND RETURN THE PROXY CARD IN THE ACCOMPANYING
ENVELOPE. No postage is required if mailed within the United States. The cost of
soliciting proxies, including the preparation, assembly and mailing of the
proxies and soliciting material, as well as the cost of forwarding such material
to the beneficial owners of Common Stock, will be borne by the Company.
Directors, officers and regular employees of the Company may, without
compensation other than their regular compensation, solicit proxies by
telephone, telegraph or personal conversation. The Company may reimburse
brokerage firms and others for expenses in forwarding proxy material to the
beneficial owners of Common Stock.
Any proxy given to this solicitation and received in time for the Annual
Meeting will be voted in accordance with the instructions given in such proxy.
Any shareholder giving a proxy may revoke it any time prior to its use at the
Annual Meeting by giving written notice of such revocation to the Secretary of
the Company, by filing a revoking instrument or a duly executed proxy bearing a
later date with the Secretary of the Company or by attending the Annual Meeting
and voting in person. Proxies that are signed by shareholders but that lack any
such specification will be voted in favor of the proposals set forth in the
Notice of Meeting and in favor of the election as directors of the nominees
listed in this Proxy Statement.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL OF THE
PROPOSALS SET FORTH IN THE NOTICE OF MEETING.
The Company expects that this Proxy Statement, the Proxy and Notice of
Meeting will first be mailed to shareholders on or about April 29, 1994.
1
<PAGE>
VOTING OF SHARES
The close of business on Friday, April 1, 1994 has been fixed by the Board
of Directors of the Company as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting. On April
1, 1994, the Company had outstanding 7,516,542 shares of Common Stock, $.01 par
value (the "Common Stock"), each such share entitling the holder thereof to one
vote in person or by proxy on each matter to be voted on at the Annual Meeting,
voting together as a single class. Holders of shares of Common Stock are not
entitled to cumulative voting rights.
The presence at the Annual Meeting, in person or by proxy, of the holders of
a majority of the outstanding shares of Common Stock entitled to vote at the
meeting (3,758,272 shares as of April 1, 1994) is required for a quorum for the
transaction of business. In general, shares of Common Stock represented by a
properly signed and returned proxy card will be counted as shares present and
entitled to vote at the meeting for purposes of determining a quorum, without
regard to whether the card reflects abstentions (or is left blank) or reflects a
"broker non-vote" on a matter (i.e., a card returned by a broker on behalf of
its beneficial owner customer that is not voted on a particular matter because
voting instructions have not been received and the broker has no discretionary
authority to vote).
The election of a nominee for director and the approval of each of the other
proposals described in this Proxy Statement require the approval of a majority
of the shares present and entitled to vote in person or by proxy on that matter
(and at least a majority of the minimum number of votes necessary for a quorum
to transact business at the meeting). Shares represented by a proxy card voted
as abstaining on any of the proposals will be treated as shares present and
entitled to vote that were not cast in favor of a particular matter, and thus
will be counted as votes against that matter. Shares represented by a proxy card
including any broker non-vote on a matter will be treated as shares not entitled
to vote on that matter, and thus will not be counted either for or against that
matter.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 21, 1994, certain information
with respect to all shareholders known to the Company to have been beneficial
owners of more than five percent of its Common Stock, and information with
respect to the Company's Common Stock beneficially owned by directors of the
Company, the executive officers of the Company included in the Summary
Compensation Table set forth under the caption "Executive Compensation" below
and all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF PERCENT
OF BENEFICIAL OWNER SHARES (1)(2) OF CLASS (2)
------------------------------ ------------- ------------
<S> <C> <C>
John W. Castro 1,169,080(3) 15.5%
One Merrill Circle
St. Paul, MN 55108
Kenneth F. Merrill 502,000(4) 6.7%
10 Coventry Drive
Haines City, FL 33844
Robert F. Nienhouse 408,669(5) 5.4%
205 East 4th St.
Hinsdale, IL 60521
Rick R. Atterbury 219,603(6) 2.9%
Richard G. Lareau 176,700(7) 2.3%
Paul G. Miller 42,006 *
Ronald N. Hoge 9,000(8) *
Steven J. Machov 26,316(9) *
John B. McCain 11,000(10) *
James G. Sippl 36,500(11) *
All directors and executive
officers as a group
(13 persons) 2,606,854(12) 34.0%
<FN>
- ------------------------
* less than 1%
(1) Unless otherwise noted, each person or group identified possesses sole
voting and investment power with respect to the shares shown opposite the
name of such person or group.
(2) Shares not outstanding but deemed beneficially owned by virtue of the
right of a person or member of a group to acquire them within 60 days are
treated as outstanding only when determining the amount and percent owned
by such person or group.
(3) Includes 24,000 shares not outstanding but deemed beneficially owned by
virtue of the right of Mr. Castro to acquire them within 60 days pursuant
to exercisable stock options. Also includes 5,912 shares owned
beneficially by Mr. Castro's wife and 1,500 shares owned by Mr. Castro's
children, all to which he may be deemed to share voting and investment
power, but as to which he disclaims beneficial ownership.
(4) Includes 459,451 shares held in a revocable trust for the benefit of Mr.
Merrill.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
(5) Includes 3,156 shares owned beneficially by Mr. Nienhouse's wife, as to
which he may be deemed to share voting and investment power, but as to
which he disclaims any beneficial interest.
(6) Includes 62,000 shares Mr. Atterbury has the right to acquire within 60
days upon the exercise of options.
(7) Includes 96,400 shares held in trust for the benefit of certain family
members of Mr. Merrill. Mr. Lareau is the trustee for all these trusts,
but disclaims beneficial ownership of all such shares. Also includes 5,000
shares owned beneficially by Mr. Lareau's wife, as to which he may be
deemed to share voting and investment power, but as to which shares he
disclaims beneficial ownership.
(8) Includes 4,000 shares Mr. Hoge has the right to acquire within 60 days
upon the exercise of options.
(9) Includes 17,416 shares owned beneficially by Mr. Machov's wife and 900
shares Mr. Machov's wife has the right to acquire within 60 days upon
exercise of options, all as to which he may be deemed to share voting and
investment power, but as to which he disclaims beneficial ownership. Also
includes 4,000 shares Mr. Machov has the right to acquire within 60 days
upon exercise of options.
(10) Includes 6,000 shares Mr. McCain has the right to acquire within 60 days
upon the exercise of options.
(11) Includes 36,000 shares Mr. Sippl has the right to acquire within 60 days
upon the exercise of options.
(12) Includes: (i) 459,451 shares held in a revocable trust for the benefit of
Mr. Merrill; (ii) 96,400 shares held in trust for the benefit of certain
family members of Kenneth F. Merrill for which Richard G. Lareau, a
director of the Company, is the trustee for all these trusts, but
disclaims beneficial ownership of all such shares; (iii) 32,984 shares
owned beneficially by the spouses or children of members of the group as
to which they may be deemed to share voting and investment power; and (iv)
141,800 shares not outstanding but deemed beneficially owned by virtue of
the right of members of the group or their spouses to acquire them within
60 days pursuant to exercisable stock options. All persons subject to
Section 16 of the Securities Exchange Act of 1934, as amended, filed
required reports in a timely manner disclosing transactions involving the
Company's stock.
</TABLE>
ELECTION OF DIRECTORS
NOMINATION
The Bylaws of the Company provide that the Board shall consist of at least
three members, or such other number as may be determined from time to time by
the Board of Directors. The Board of Directors has determined that there will be
seven directors of the Company for the ensuing year.
In the absence of other instructions, the proxies will be voted for each of
the following individuals, each of whom the Company's Board of Directors
proposes for election as a director of the Company. If elected, such individuals
will serve until the next Annual Meeting of Shareholders or until their
successors are duly elected and qualified. All of the nominees are members of
the present Board of Directors, and all were elected at last year's Annual
Meeting of Shareholders.
The election of each nominee requires the affirmative vote of a majority of
the shares of Common Stock represented in person or by proxy at the Annual
Meeting. The Board recommends a vote FOR the election of each of the nominees
listed below. If prior to the Annual Meeting the Board should learn that any
nominee will be unable to serve by reason of death, incapacity or other
unexpected occurrence, the proxies that would have otherwise been voted for such
nominee will be voted for a substitute nominee as selected by the Board.
Alternatively, the proxies may, at the Board's discretion,
4
<PAGE>
be voted for such fewer number of nominees as results from such death,
incapacity or other unexpected occurrence. The Board has no reason to believe
that any of the nominees will be unable to serve.
INFORMATION ABOUT NOMINEES
The following information has been furnished to the Company by the
respective nominees for director.
<TABLE>
<CAPTION>
DIRECTOR
NAMES OF NOMINEES PRINCIPAL OCCUPATION AGE SINCE
- ------------------- ------------------------------------------------------------- --- --------
<S> <C> <C> <C>
Kenneth F. Merrill Chairman of the Board of Merrill Corporation 75 1968
John W. Castro President and Chief Executive Officer of Merrill Corporation 45 1981
Richard G. Lareau Partner, Oppenheimer Wolff & Donnelly (law firm) 65 1981(1)
Paul G. Miller Chairman and Treasurer, LSC, Incorporated (hardware and 71 1985
proprietary software development and consulting firm)
Robert F. Nienhouse Private Investor 46 1986
Rick R. Atterbury Vice President -- Operations of Merrill Corporation 40 1989
Ronald N. Hoge Group President, Aerospace Equipment and Controls, 48 1991
AlliedSignal, Inc. (advanced systems and equipment
manufacturer)
<FN>
- ------------------------
(1) Mr. Lareau was also the incorporator of the Company and served as its
first director before his resignation in October 1968.
</TABLE>
OTHER INFORMATION ABOUT NOMINEES
Except as indicated below, there has been no change in principal occupations
or employment during the past five years for the nominees for election as
directors.
Mr. Lareau has been a member of the law firm of Oppenheimer Wolff & Donnelly
for over 34 years. Oppenheimer Wolff & Donnelly have provided and are expected
to continue to provide legal services to the Company. Mr. Lareau also serves as
a Director of Ceridian Corporation, Northern Technologies International
Corporation and Nash Finch Company, and as a Trustee of Mesabi Trust.
Mr. Miller is also Chairman of Supercomputer Systems, Inc. and a Director of
Baltimore Gas & Electric Company.
Mr. Nienhouse was a part-time consultant to the Company from May 1989 to
January 1993. From July 1989 to January 1993, Mr. Nienhouse managed the
Company's California operations.
Mr. Hoge was President and Chief Executive Officer of Onan Corporation from
May 1986 until January 1993.
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
Standing committees of the Board of Directors include the Audit Committee,
the Compensation Committee and the Nominating Committee.
The Audit Committee provides assistance to the Board in satisfying its
responsibilities relating to the accounting, auditing, operating and reporting
practices of the Company. The Audit Committee
5
<PAGE>
recommends to the Board the retention of independent accountants, reviews the
performance of such accountants and considers recommendations concerning
improvements in internal accounting control. The members of the Audit Committee
are Messrs. Lareau, Miller and Hoge. The Audit Committee met on three occasions
and held one telephone conference during fiscal 1994.
The Compensation Committee reviews general programs of compensation and
benefits for all employees of the Company and sets the compensation to be paid
to the Company's officers. The Compensation Committee also serves as the
disinterested committee administering the Company's Retirement Plan, Incentive
Stock Option Plan, 1987 Omnibus Stock Plan and 1993 Stock Incentive Plan. The
members of the Compensation Committee are Messrs. Merrill, Lareau and Miller.
The Compensation Committee met or took action by written consent on four
occasions during fiscal 1994.
In March 1994, the Company's Board of Directors formed a Nominating
Committee to review and make recommendations to the Board with respect to
candidates for directors of the Company, compensation of Board members,
retirement age for directors and assignment of directors to committees of the
Board. The Nominating Committee will also review and approve or deny requests by
corporate officers to serve on the boards of outside companies. The members of
the Nominating Committee are Messrs. Nienhouse, Hoge and Miller. The Nominating
Committee will consider for nomination nominees submitted by other directors and
shareholders. Shareholders who wish to recommend persons for election as
directors at the 1995 Annual Meeting of Shareholders may do so by submitting to
the Secretary of the Company in writing on or before January 15, 1995: (i) the
name and address of the person or persons to be nominated; (ii) the name and
address of the shareholder who intends to make the nomination and a
representation that the shareholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons; (iii) a description
of all arrangements or understandings between the shareholder and each nominee
and any other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by the shareholder; (iv) such
other information regarding each nominee proposed by such shareholder as would
be required to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission as then in effect; and (v) the
signed consent of each nominee to serve as a director of the Corporation if so
elected.
The Company's Board of Directors held five meetings and took action by
written consent on four occasions during fiscal 1994. All of the directors
attended at least 75% of all of the meetings of the Board of Directors and all
committees on which they served during fiscal 1994.
DIRECTORS' COMPENSATION
Directors who are employees of the Company receive no separate compensation
for their services as directors. During the fiscal year ended January 31, 1994,
directors who were not employees of the Company received a retainer of $5,000
per year ($10,000 for the Chairman of the Board), a fee of $1,000 per day for
attendance at meetings of the Board of Directors or any committee of the Board
of Directors and a fee of $1,000 per day for consulting and similar services
rendered over and above the usual services performed incident to serving as a
director. The Company also reimburses its directors for out-of-pocket expenses
in connection with attending Board and committee meetings or providing
consulting services. For the fiscal year ending January 31, 1995, non-employee
directors will receive a retainer of $10,000 per year ($15,000 for the Chairman
of the Board), and fees for attendance at Board and committee meetings will be
$1,000 per meeting, provided that attendance fees will not be paid for
participation in meetings the chair of such committee determines are brief
meetings.
6
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors administers the
Company's executive compensation program. The Compensation Committee consists of
three non-employee directors and meets two to four times a year. A more complete
description of the functions of the Compensation Committee is set forth above
under the caption "Information About the Board and its Committees."
COMPENSATION PHILOSOPHY AND OBJECTIVES. The Company's executive
compensation philosophy is to pay for performance. The executive compensation
program is intended to provide an overall level of compensation opportunity that
the Committee believes, based on its own judgment and experience, and on
periodic studies by executive compensation consultants, is competitive with
other companies within its industry group. The objectives of the Company's
executive compensation program are:
- To establish annual base salaries and incentives that will attract and
retain key executives.
- To reward executives for achievement of annual performance and financial
goals.
- To encourage executive stock ownership and appreciation of long-term
shareholder returns.
Actual compensation levels are based on annual and long-term Company and
individual performance and may be greater or less than compensation levels at
other companies.
EXECUTIVE COMPENSATION PROGRAM COMPONENTS. The Company's executive
compensation program consists of base salary, annual cash bonus incentives and
long-term ownership incentives in the form of stock options.
BASE SALARY. Base pay levels of executives are determined generally by
considering the potential impact of the individual on the Company and its
performance, the skills and experiences required by the position, the
performance of divisions or departments under the executive's control, the
achievement of defined business objectives and personal and corporate
development goals, and finally, the overall performance of the Company. Base
salaries for executives are maintained at levels that the Compensation Committee
believes, based upon its own judgment and experience, are lower than the median
for other companies of comparable size and complexity (which are not necessarily
the companies included in the performance graph included below in this proxy
statement), and the annual cash bonus incentives are designed to offer greater
potential compensation than the median in other companies.
John W. Castro, the Company's Chief Executive Officer, and Rick R.
Atterbury, the Company's Vice President -- Operations, have employment
agreements with the Company entered into in 1989 and 1987, respectively. These
agreements provide for automatic renewal from year to year. The base salaries
under these agreements have not been increased for the last four fiscal years
during which time the Company's performance has been excellent as shown below in
the Comparative Stock Performance Graph. During this same period, the base
salaries of other executives have been increased due in part to the Company's
commendable performance. Messrs. Castro's and Atterbury's employment agreements
were recently amended to increase their base salaries. See "Employment
Agreements" below.
ANNUAL CASH BONUS INCENTIVES. Annual cash incentive bonuses for Mr. Castro
and Mr. Atterbury are prescribed by a fixed formula in their employment
agreements. For all the other executives, the
7
<PAGE>
Company's Chief Executive Officer makes a recommendation to the Committee as to
the amount of each cash incentive bonus, based on his subjective evaluation,
including his perception of the individual's performance. The Committee makes a
final bonus award, taking into account the recommendation of the Chief Executive
Officer as well as using its own judgment and experience. The Committee places
greater emphasis on annual Company performance for determining cash incentive
bonuses than for determining individual base salaries. Because of the Company's
excellent performance during fiscal year 1994, most executives received larger
cash bonuses than in the prior fiscal year.
Pursuant to their employment agreements, Mr. Castro and Mr. Atterbury
receive cash bonuses equal to a percentage of the Company's pre-tax income for
each fiscal year. Thus, their overall compensation is directly related to the
Company's profit performance for each fiscal year. For fiscal 1994, Mr. Castro
and Mr. Atterbury received cash bonuses equal to 2.5% and 1.5% respectively of
the Company's pre-tax income. In the recent amendments to Messrs. Castro's and
Atterbury's employment agreements, the formulas for calculating cash incentive
bonuses were also changed. See "Employment Agreements" below.
LONG-TERM OWNERSHIP INCENTIVE. Long-term incentives are provided in the
form of stock options that are granted from time to time at or above market
value at date of grant and generally become exercisable proportionately over a
period of five to seven years. Grants of stock options are made by the
Compensation Committee in its discretion based upon the recommendation of the
Company's Chief Executive Officer and Vice President -- Human Resources, as well
as the Committee's judgment as to the executive's contribution toward Company
performance and expected contribution toward meeting the Company's long-term
strategic goals and increases in shareholder returns. The value received by the
executives from option grants depends completely on increases in the market
price of the Company's Common Stock over the option exercise price. Thus, this
component of compensation is aligned directly with increases in shareholder
value.
During fiscal year 1994, the Committee granted options to Mr. Atterbury for
the purchase of 30,000 shares of the Company's Common Stock.
Kenneth F. Merrill, Chair
Paul G. Miller
Richard G. Lareau
MEMBERS OF THE COMPENSATION COMMITTEE
8
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for each of
the last three fiscal years awarded to or earned by the Chief Executive Officer
of the Company and the four other most highly compensated executive officers of
the Company whose salary and bonus exceeded $100,000 in fiscal 1994.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION SHARES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS COMPENSATION (2)
- --------------------------------------- ---- -------- -------- ------------ -----------------
<S> <C> <C> <C> <C> <C>
John W. Castro 1994 $150,000 $573,288 -0- $ 16,998
President and Chief Executive 1993 $150,000 $369,026 60,000
Officer 1992 $150,000 $280,429 -0-
Rick R. Atterbury 1994 $100,000 $343,973 30,000 $ 16,860
Vice President -- Operations 1993 $100,000 $221,415 30,000
1992 $100,000 $168,257 -0-
John B. McCain 1994 $101,600 $ 87,800 -0- $ 12,697
Vice President -- Finance, Chief 1993 $ 95,000 $ 62,800 10,000
Financial Officer and Treasurer 1992 $ 92,917 $ 49,883 -0-
James G. Sippl 1994 $144,000 $ 36,000 -0- $ 10,658
Vice President 1993 $144,000 -0- 10,000
1992 $144,000 $ 26,000 -0-
Steven J. Machov 1994 $100,000 $ 50,000 -0- $ 8,740
Vice President, General 1993 $ 99,792 $ 21,000 -0-
Counsel and Secretary 1992 $ 87,917 $ 22,083 -0-
<FN>
- ------------------------
(1) Cash bonuses for services rendered have been included as compensation for
the year earned, even though all or part of such bonuses were actually
calculated and paid in the following year.
(2) "All Other Compensation" includes: (1) amounts to be contributed by the
Company to its defined contribution retirement plan for the following
individuals: Mr. Castro $16,508, Mr. Atterbury $16,508, Mr. McCain
$11,550, Mr. Sippl $10,080, and Mr. Machov $8,470; and (ii) premium
payments under life insurance policies on the lives of the executives at
the following incremental costs to the Company: Mr. Castro $490, Mr.
Atterbury $352, Mr. McCain $1,147, and Mr. Sippl $578. "All Other
Compensation" includes only amounts earned for the year ended January 31,
1994.
</TABLE>
OPTIONS
The following tables summarize option grants and exercises during fiscal
1994 to or by the executive officers named in the Summary Compensation Table
above, and the potential realizable value of the options held by such persons at
the end of fiscal 1994.
9
<PAGE>
OPTION GRANTS IN FISCAL 1994
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------- POTENTIAL REALIZED VALUE
NUMBER OF AT
SHARES ASSUMED ANNUAL RATES OF
UNDERLYING % OF TOTAL STOCK PRICE APPRECIATION
OPTIONS OPTIONS GRANTED EXERCISE OR FOR OPTION TERM (3)
GRANTED TO EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME (1)(2) FISCAL 1993 ($/SH) DATE 5% 10%
- ------------------------ ------------- ------------------- ---------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Rick R. Atterbury 30,000 7.5% $ 29.50 1/24/01 $ 360,300 $ 559,800
<FN>
- ------------------------
(1) These options were granted under the Company's 1993 Stock Incentive Plan
(the "1993 Plan"). Options become exercisable under the plan so long as
the executive remains in the employ of the Company or one of its
subsidiaries. To the extent not already exercisable, options under the
1993 Plan become immediately exercisable in full upon certain changes in
control of the Company and will remain exercisable during the remaining
term thereof, whether or not the executive to whom the options have been
granted remains an employee of the Company or a subsidiary. See "Change in
Control Arrangements" below for the definition of "Change in Control"
under this plan.
(2) These options were granted with an exercise price equal to the market
price on January 24, 1994, the date of grant. The options are exercisable
in installments. The options become exercisable as to 15% one year after
the date of grant and as to an additional 15% each year thereafter, with
the final installment of 10% exercisable on or after July 24, 2000.
(3) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent upon the future
performance of the Company's Common Stock and the executive's continued
employment with the Company. The amounts are not intended to forecast
possible future appreciation, if any, in the price of the Company's Common
Stock.
</TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1994 AND
VALUE OF OPTIONS AT FISCAL YEAR END 1994
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE MONEY OPTIONS
END OF FISCAL 1994 AT END OF FISCAL 1994 (3)
SHARES ACQUIRED VALUE -------------------------- --------------------------
NAME ON EXERCISE (1) REALIZED (2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ------------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John W. Castro 12,000 48,000 $ 231,900 $ 927,600
Rick R. Atterbury 20,000 $ 501,562 36,000 94,000 $ 947,250 $ 1,100,000
John B. McCain 6,000 $ 109,500 16,000 $ 383,000
James G. Sippl 28,000 $ 495,700 34,000 8,000 $ 920,750 $ 163,000
Steven J. Machov 4,000 $ 86,500 8,000 $ 220,000
<FN>
- ------------------------
(1) Under both the 1987 Omnibus Stock Plan and 1993 Plan, the exercise price
may be paid in cash or, in the Compensation Committee's discretion, by
delivery of a promissory note or previously acquired shares of the
Company's common stock valued at fair market value on the date of exercise
or pursuant to a cashless exercise procedure under which the executive
provides irrevocable instructions to a brokerage firm to sell the
purchased shares and to remit to the Company, out of the sale proceeds, an
amount equal to the exercise price plus all applicable withholding taxes.
(2) Value calculated as the market value on the date of exercise less the
option exercise price.
(3) Value calculated as the market value on January 31, 1994 ($30.875) less
the option exercise price. Options are in-the-money if the market price of
the shares exceeds the option exercise price.
</TABLE>
10
<PAGE>
COMPARATIVE STOCK PERFORMANCE
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG MERRILL CORPORATION, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE DOW JONES IND & COMM SERVICES -- GENERAL SERVICES INDEX
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
---------------------------------------
1/89 1/90 1/91 1/92 1/93 1/94
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
MERRILL CORPORATION MRLL 100 88 110 325 412 741
NASDAQ STOCK MARKET - US INAS 100 105 108 166 187 214
D J IND & COMM SRVC - GENL IICS 100 95 104 118 132 144
<FN>
* $100 invested on 1/31/88 in stock or index -- including reinvestment of
dividends. Fiscal year ending January 31.
Source: S T A R Services, Inc.
</TABLE>
EMPLOYMENT AGREEMENTS
Effective February 1, 1989, Mr. Castro entered into a one-year employment
agreement with the Company under which he serves as its President and Chief
Executive Officer, and effective February 1, 1987, Mr. Atterbury entered into a
three-year employment agreement with the Company under which he serves as its
Vice President -- Operations. Mr. Atterbury's employment agreement was first
amended effective February 1, 1990. Each employment agreement provides for an
automatic renewal from year to year for consecutive one year terms unless either
the employee or the Company gives the other party 60 days advance written notice
of termination. For services performed under their respective
11
<PAGE>
agreements, Mr. Castro received an annual base salary of $150,000 and a bonus
equal to 2.5% of all of the Company's pre-tax income, and Mr. Atterbury received
an annual base salary of $100,000 and a bonus equal to 1.5% of all of the
Company's pre-tax income. Mr. Castro and Mr. Atterbury also receive an annual
transportation allowance of $12,000 and $7,200, respectively. For a discussion
of the "change in control" provisions in these agreements, see "Change in
Control Arrangements" below.
Effective February 1, 1994 these employment agreements have been amended to
increase the base salary of each executive to $300,000 per year for Mr. Castro
and $225,000 per year for Mr. Atterbury. For fiscal 1995 and thereafter, the
amended agreements provide that the cash bonuses for Mr. Castro and Mr.
Atterbury will be based on the Company's net income per share. For each one cent
of net income per share up to the prior fiscal year's net income per share, Mr.
Castro and Mr. Atterbury will receive cash bonuses of $2,000 and $1,200,
respectively, and for each additional one cent of net income per share they will
receive additional cash bonuses of $5,000 and $3,000, respectively. Upon
termination of employment under their amended agreements, each has agreed not to
compete with the Company for 18 months if the Company elects to continue paying
his base salary during the restrictive period.
CHANGE IN CONTROL ARRANGEMENTS
Pursuant to two stock-based benefit plans of the Company and employment
agreements with two executive officers of the Company named in the Summary
Compensation Table above, benefits would be paid or existing non-vested awards
would be accelerated in connection with a change in control of the Company.
Under the Company's 1993 Stock Incentive Plan (the "1993 Plan"), in the
event a "change in control" of the Company occurs, if approved by the committee
administering the plan, (a) all outstanding options will become immediately
exercisable in full and will remain exercisable for the remainder of their
terms, regardless of whether the participant remains in the employ or service of
the Company or any subsidiary, (b) all outstanding restricted stock awards will
become immediately fully vested and nonforfeitable, and (c) all outstanding
performance units will vest and/or continue to vest in the manner determined by
the committee. In addition, the committee, without the consent of any affected
participant, may determine that some or all participants holding outstanding
options will receive cash in an amount equal to the excess of the fair market
value immediately before the effective date of such change in control over the
exercise price per share of the options.
For purposes of the 1993 Plan, a "change in control" means (i) the sale or
other transfer of substantially all of the Company's assets, (ii) a merger or
consolidation involving the Company if less than 80% of the voting stock of the
surviving company is held by persons who were shareholders of the Company
immediately before the merger or consolidation, (iii) ownership by any person or
group of 20% or more of the Company's voting stock, (iv) a change in the
composition of the Board such that individuals who constitute the Board on the
effective date of the 1993 Plan cease for any reason to constitute at least a
majority of the Board (with exceptions for individuals who are nominated or
otherwise approved by the current Board), or (v) any change of control that is
required to be reported under Section 13 or 15(d) of the Securities Exchange Act
of 1934.
Under the Company's 1987 Omnibus Stock Plan (the "1987 Plan"), upon the
occurrence of a "change in control" of the Company, all outstanding options will
become immediately exercisable in full and will remain exercisable during the
remaining term thereof, whether or not the participants to whom the options were
granted remain employees of the Company or a subsidiary, and all restrictions
12
<PAGE>
with respect to outstanding restricted stock awards will immediately lapse. The
acceleration of the exercisability of options or the vesting of restricted stock
awards under this plan may be limited, however, if the acceleration is subject
to an excise tax imposed upon "excess parachute payments." Under this plan, a
"change in control" means, absent the approval of the continuity directors of
the Company (directors as of the effective date of the 1987 Plan and additional
directors nominated by other "continuity directors"), (a) the sale or other
transfer of substantially all of the Company's assets, (b) the approval by the
Company's shareholders of a plan of liquidation, (c) a change in control that
would be required to be reported in a Current Report on Form 8-K, (d) ownership
by any person or group of 20% or more of the Company's outstanding voting stock,
or (e) the continuity directors ceasing to constitute a majority of the Board of
Directors.
Under their respective employment agreements with the Company, Messrs.
Castro and Atterbury are entitled to receive certain benefits if, following a
"change in control" of the Company, either terminates their employment
relationship for specified reasons (including by reason of a change in duties,
relocation of the Company, certain changes in benefits, failure by any successor
of the Company to assume the agreement, purported termination by the Company not
expressly authorized by the agreement or any breach of the agreement by the
Company). In such a case, the Company will make a lump sum cash payment to the
executive in an amount equal to 2.99 times the average annual compensation
received by the executive from the Company and includable in the executive's
gross income during the five most recent taxable years ending before the change
in control (less any amounts received under other plans considered to be
"parachute payments" under Section 280G of the Internal Revenue Code) and any
legal fees incurred in enforcing the agreement.
A "change in control" for purposes of these employment agreements means,
unless approved by two-thirds of the continuity directors of the Company
(directors as of the date of the employment agreement and additional directors
nominated by other "continuity directors"), (a) a merger or consolidation
involving the Company if less than 50% of the voting stock of the surviving
company is held by persons who were shareholders of the Company immediately
before the merger, (b) a change in control that would be required to be reported
in response to Schedule 14A under the Securities Exchange Act of 1934, (c)
ownership by any person or group of more than 20% of the Company's voting stock,
or (d) any person or group becoming, through or pursuant to a "tender offer" as
defined in the Securities Exchange Act of 1934, the owner of more than 10% of
the Company's voting stock.
If a "change in control" of the Company had occurred as of February 1, 1994,
Mr. Castro would have been entitled to receive a lump sum payment of
approximately $1,206,000 under his employment agreement and Mr. Atterbury would
have been entitled to receive a lump sum payment of approximately $769,700 under
his employment agreement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Company's Board of
Directors are Messrs. Merrill, Lareau and Miller, all of whom are non-employee
directors. Mr. Merrill is an officer of the Company and the Company's Chairman
of the Board. Mr. Lareau was formerly a non-employee officer of the Company as
Assistant Secretary from 1981 to 1985 and Secretary from 1985 to 1989.
13
<PAGE>
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has approved the selection of Coopers & Lybrand as
independent auditors to make an examination of the accounts of the Company for
the fiscal year ending January 31, 1995, and to perform other appropriate
accounting services. Coopers & Lybrand has acted as independent auditors of the
Company since 1984.
Although it is not required to do so, the Board of Directors wishes to
submit the selection of Coopers & Lybrand to the shareholders for ratification.
The Board recommends a vote FOR ratification of Coopers & Lybrand as independent
auditors for the fiscal year ending January 31, 1995. Unless a contrary choice
is specified, proxies solicited by the Board will be voted for the ratification
of Coopers & Lybrand. If the selection of Coopers & Lybrand is not ratified, the
Board of Directors will reconsider its selection.
The Company has requested and expects a representative of Coopers & Lybrand
to be present at the Annual Meeting, to make a statement if he or she so desires
and to respond to appropriate questions.
PROPOSALS FOR THE NEXT ANNUAL MEETING
Shareholder proposals intended to be presented in the proxy material
relating to the next Annual Meeting of Shareholders must be received by the
Company on or before December 30, 1994.
OTHER BUSINESS
The Company knows of no business that will be presented for consideration at
the Annual Meeting other than that described in this Proxy Statement. As to
other business, if any, that may properly come before the Annual Meeting, it is
intended that proxies solicited by the Board will be voted in accordance with
the judgment of the person or persons voting the proxies.
ANNUAL REPORT
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended January 31, 1994 accompanies this Notice of Annual Meeting and Proxy
Statement. The Annual Report describes the financial condition of the Company as
of January 31, 1994.
THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM
10-K (EXCLUSIVE OF EXHIBITS) FOR THE FISCAL YEAR ENDED JANUARY 31, 1994 TO EACH
PERSON WHO IS A SHAREHOLDER OF THE COMPANY AS OF APRIL 1, 1994, UPON RECEIPT
FROM ANY SUCH PERSON OF A WRITTEN REQUEST FOR SUCH AN ANNUAL REPORT ON FORM
10-K. SUCH REQUESTS SHOULD BE SENT TO: MERRILL CORPORATION, ONE MERRILL CIRCLE,
ST. PAUL, MINNESOTA 55108, ATTENTION: SECRETARY.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ STEVEN J. MACHOV
STEVEN J. MACHOV
SECRETARY
April 29, 1994
St. Paul, Minnesota
14
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
The undersigned hereby appoints John W.
Castro and Richard G. Lareau, and each of
them, as Proxies, each with the power to
appoint his substitute, and hereby authorizes
each of them to represent and to vote, as
designated below, all the shares of common
MERRILL CORPORATION stock of Merrill Corporation held of record
One Merrill Circle Proxy by the undersigned on April 1, 1994, at the
Saint Paul, MN Annual Meeting of Shareholders to be held on
55108 May 24, 1994 or any adjournment thereof.
- ------------------------------
1. ELECTION OF / / FOR all nominees / / AGAINST all nominees
DIRECTORS listed below listed below
(except as marked to
the contrary below)
(INSTRUCTION: TO VOTE AGAINST ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE
NOMINEE'S NAME.)
RICK R. ATTERBURY KENNETH F. MERRILL
JOHN W. CASTRO PAUL G. MILLER
RONALD N. HOGE ROBERT F. NIENHOUSE
RICHARD G. LAREAU
2. PROPOSAL TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND AS THE INDEPENDENT
AUDITORS OF THE COMPANY.
/ / FOR / / AGAINST / / ABSTAIN
PLEASE SIGN ON REVERSE SIDE
<PAGE>
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES NAMED IN ITEM 1 AND TO VOTE FOR THE PROPOSAL LISTED IN
ITEM 2 ON THE REVERSE.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full 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.
- --------------------------------------------------------------------------------
Dated: ______________, 1994.
____________________________
Signature
____________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
