<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:
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4) Date Filed:
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NOTES:
<PAGE>
[LOGO]
One Merrill Circle
St. Paul, Minnesota 55108
May 3, 1996
Dear Shareholder:
You are cordially invited to attend the 1996 Annual Meeting of Shareholders of
Merrill Corporation. The meeting will be held on Tuesday, May 21, 1996, 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,
[KENNETH F. MERRILL SIGNATURE] [JOHN W. CASTRO SIGNATURE]
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 21, 1996
To the Shareholders of Merrill Corporation:
The Annual Meeting of Shareholders of Merrill Corporation will be held on
Tuesday, May 21, 1996, 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 eight directors to serve for the ensuing year and until their
successors are elected and qualified;
2. To consider and act upon a proposal to adopt the Company's 1996
Non-Employee Director Plan;
3. To consider and act upon a proposal to ratify the selection of Coopers &
Lybrand L.L.P., as independent accountants for the Company for the fiscal
year ending January 31, 1997; and
4. 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, 1996 will
be entitled to notice of and to vote at the meeting or at any adjournment
thereof.
By Order of the Board of Directors,
[STEVEN J MACHOV SIGNATURE]
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 21, 1996
------------------------
INTRODUCTION
The Annual Meeting of Shareholders of Merrill Corporation (the "Company")
will be held on May 21, 1996 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 May 6, 1996.
1
<PAGE>
VOTING OF SHARES
The close of business on April 1, 1996 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, 1996, the Company had outstanding 7,863,883 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 (3,931,942 shares as of April 1, 1996) 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 12, 1996, 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 1,093,996(3) 13.8%
One Merrill Circle
St. Paul, MN 55108
Charles M. Royce 612,000(4) 7.8%
Quest Advisory Corp. and
Quest Management Company
1414 Avenue of the Americas
New York, NY 10019
Kenneth F. Merrill 488,950(5) 6.2%
10 Coventry Drive
Haines City, FL 33844
KPM Investment Management Inc. 484,050(6) 6.2%
10250 Regency Circle
Omaha, NE 68114
Robert F. Nienhouse 226,169(7) 2.9%
205 East 4th St.
Hinsdale, IL 60521
Rick R. Atterbury 225,723(8) 2.9%
Richard G. Lareau 170,400(9) 2.2%
Paul G. Miller 42,006 *
Ronald N. Hoge 13,000(10) *
James R. Campbell 3,000 *
Frederick W. Kanner 1,000 *
Steven J. Machov 34,741(11) *
James G. Sippl 16,545(12) *
Roxanne E. Iserman 830 *
All directors and executive
officers as a group (12
persons) 2,302,082(13) 28.9%
<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.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
(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 48,000 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 1,766 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) Reflects shares beneficially owned as of December 31, 1995 as filed on
Schedule 13G. Of the shares shown, 566,200 shares are beneficially owned by
Quest Advisory Corp., which possesses sole voting and investment power with
respect to these shares, and 45,800 shares are beneficially owned by Quest
Management Company, which possesses sole voting and investment power with
respect to these shares. As a result of common ownership and control, Mr.
Royce may be deemed to be the beneficial owner of all the shares shown.
(5) Includes 36,250 shares owned beneficially by Mr. Merrill's wife, all to
which he may be deemed to share voting and investment power, but as to
which he disclaims beneficial ownership.
(6) Reflects shares beneficially owned as of December 31, 1995 as filed on
Schedule 13G. As an investment adviser, KPM Management Inc. represents
numerous discretionary accounts, for which it possesses sole voting and
investment power for all of the shares.
(7) Includes 1,656 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.
(8) Includes 33,000 shares Mr. Atterbury has the right to acquire within 60
days upon the exercise of options.
(9) 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 7,000
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.
(10) Includes 8,000 shares Mr. Hoge has the right to acquire within 60 days upon
the exercise of options.
(11) Includes 17,041 shares owned beneficially by Mr. Machov's wife and 2,700
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 3,000 shares Mr. Machov has the right to acquire within 60 days
upon exercise of options.
(12) Includes 8,000 shares Mr. Sippl has the right to acquire within 60 days
upon the exercise of options.
(13) Includes: 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; (ii) 69,625 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 (iii) 99,950 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, except
James G. Sippl filed one Form 4 late involving two transactions during the
past fiscal year.
</TABLE>
4
<PAGE>
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
eight 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, except Frederick W. Kanner who was elected to serve on
the Board of Directors on January 22, 1996. Kenneth F. Merrill, Chairman, is
retiring from the Board of Directors and is not seeking reelection.
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, 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>
John W. Castro President and Chief Executive Officer of Merrill Corporation 47 1981
Richard G. Lareau Partner, Oppenheimer Wolff & Donnelly (law firm) 67 1981(1)
Paul G. Miller Chairman, Secretary and Treasurer, LSC, Incorporated 73 1985
(proprietary software and systems consulting firm)
Robert F. Nienhouse Private Investor 48 1986
Rick R. Atterbury Executive Vice President -- Operations of Merrill Corporation 42 1989
Ronald N. Hoge President, Aerospace Equipment Systems, AlliedSignal, Inc. 50 1991
(advanced systems and equipment manufacturer)
James R. Campbell Executive Vice President, Norwest Corporation (bank holding 53 1994
company)
Frederick W. Kanner Partner, Dewey Ballantine (law firm) 53 1996
<FN>
- ------------------------
(1) Mr. Lareau was also the incorporator of the Company and served as its first
director before his resignation in October 1968.
</TABLE>
5
<PAGE>
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. Castro also serves as a Director of BMC Industries, Inc.
Mr. Lareau has been a member of the law firm of Oppenheimer Wolff & Donnelly
for over 36 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 was also Chairman from 1987 to 1995, and President and Chief
Executive Officer from 1993 to 1995 of Supercomputer Systems, Inc.
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
June 1986 until August 1993.
Mr. Campbell has also served as President and Chief Executive Officer of
Norwest Bank Minnesota, N.A. since October 1984.
Mr. Kanner has been a partner in the law firm of Dewey Ballantine since
1976. He also serves as a director of National Benefit Life Insurance Company.
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 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. Miller
(Chairman), Lareau and Hoge. The Audit Committee met on 2 occasions during
fiscal 1996.
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, (Chairman), Campbell
and Lareau. The Compensation Committee met or took action by written consent on
5 occasions during fiscal 1996.
The Nominating Committee reviews and makes recommendations from time to time
to the Board with respect to candidates for directors of the Company and
compensation of Board members, and assignment of directors to committees of the
Board. The Nominating Committee also reviews, at least annually, the composition
of the Board regarding experience, expertise and special knowledge required for
effective discharge of responsibilities; Board procedures, its size, and
membership; and the structure, membership and charters of the Board's standing
and ad hoc committees. The members of
6
<PAGE>
the Nominating Committee are Messrs. Nienhouse (Chairman), Castro and Miller.
The Nominating Committee met on 2 occasions during fiscal 1996. 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 1997 Annual Meeting of Shareholders may do so by submitting to
the Secretary of the Company in writing on or before January 15, 1997: (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 4 meetings and took action by written
consent on 2 occasions during fiscal 1996. 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 1996.
DIRECTORS' COMPENSATION
Directors who are employees of the Company receive no separate compensation
for their services as directors. For fiscal 1996, non-employee directors
received a retainer of $10,000 per year ($15,000 for the Chairman of the Board),
and fees for attendance at Board and committee meetings of $1,000 per meeting,
provided that attendance fees are not paid for participation in meetings the
chair of such committee determines are brief meetings. Subject to shareholder
approval at this Annual Meeting, the Board has adopted the 1996 Non-Employee
Director Plan 1996 (the "Director Plan") that provides for automatic
non-qualified option grants to the Company's non-employee directors (the
"Options") and payment of one-half of the non-employee directors' annual cash
retainer in the form of Common Stock (the "Retainer Stock"). Currently, 200,000
shares of Common Stock are reserved for issuance under the Director Plan. In
accordance with the terms of the Director Plan, new non-employee directors of
the Company who are first elected or appointed to the Board to fill new
directorships or vacancies are automatically granted, on a one-time basis, on
the date of their election or appointment, non-qualified options to purchase
10,000 shares of Common Stock at an exercise price equal to the fair market
value of the Common Stock on the date of grant (the "Initial Election Grant").
In addition to the Initial Election Grant, commencing with the annual meeting of
shareholders of the Company that first occurs following the date that the
non-employee director is first elected or appointed to the Board, each
non-employee director who is re-elected to the Board at an annual meeting of the
Company's shareholders will be granted Options to purchase 3,000 shares of
Common Stock at such time, at an exercise price equal to the fair market value
on the date of grant. The Options become exercisable, in the case of the Initial
Election Grant, on a cumulative basis with respect to 20% of the shares on each
anniversary of the date of grant, and, in the case of Options granted in
connection with an annual meeting, in full six months following the date of
grant. Each Option expires and is no longer exercisable ten (10) years from its
date of grant. In addition to the Option grants under the Director Plan, the
non-employee directors will receive payment for one-half of their annual cash
retainer in the form of Common Stock, commencing with the Annual Meeting and
continuing on each succeeding annual
7
<PAGE>
meeting of shareholders of the Company. Each non-employee director, as of such
dates, will receive such number of shares of Common Stock as equals $6,000
divided by the average of the fair market value of one share of Common Stock for
the 10 trading days immediately preceding the date of such annual meeting, and
$6,000 in cash.
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 Executive Vice President, have employment agreements
with the Company entered into in 1989 and 1987, respectively. These agreements
provide for automatic renewal from year to year. For the fiscal year ended
January 31, 1996 Mr. Castro's base salary was $300,000 per year and Mr.
Atterbury's was $225,000 per year. The base salaries of certain other executives
were increased during the last fiscal year. Base salary increases were given to
executives where it was determined that, based on market
8
<PAGE>
study, the base salaries were not sufficiently competitive. Consistent with the
Company's executive compensation strategy, executive base salaries continue to
be below the median as compared to similar companies.
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 other executives, the 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. All executives received a smaller cash bonus than in
the prior fiscal year, due in part to the Company's performance during fiscal
year 1996 and previously mentioned base salary adjustments.
Pursuant to their employment agreements, Mr. Castro and Mr. Atterbury
receive cash bonuses based on the Company's net income per share. Thus, their
overall compensation is directly related to the Company's profit performance for
each fiscal year. 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 receive cash
bonuses of $2,000 and $1,200, respectively, and for each additional one cent of
net income per share above the prior fiscal year's net income per share, they
receive additional cash bonuses of $5,000 and $3,000, respectively. For the
fiscal year ended January 31, 1996, Messrs. Castro and Atterbury received cash
bonuses of $250,000 and $150,000, respectively, which were $18,000 and $10,000
respectively, less than they were entitled to receive pursuant to their
employment agreements. This reduction was recommended by Messrs. Castro and
Atterbury and was approved by the Compensation Committee.
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.
Kenneth F. Merrill, Chair
James R. Campbell
Richard G. Lareau
MEMBERS OF THE COMPENSATION COMMITTEE
9
<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 1996.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS COMPENSATION (2)
- ----------------------------------------------- ---- -------- -------- ------------ -----------------
<S> <C> <C> <C> <C> <C>
John W. Castro 1996 $300,000 $250,000 -0- $ 32,162
President and Chief Executive 1995 $300,000 $300,000 -0-
Officer 1994 $150,000 $573,288 -0-
Rick R. Atterbury 1996 $225,000 $150,000 -0- $ 22,625
Executive Vice President -- Operations 1995 $225,000 $180,000 -0-
1994 $100,000 $343,973 30,000
James G. Sippl 1996 $144,000 -0- -0- $ 11,170
Vice President 1995 $144,000 $ 6,000 -0-
1994 $144,000 $ 36,000 -0-
Steven J. Machov 1996 $125,000 $ 9,167 -0- $ 10,500
Vice President, General 1995 $120,834 $ 15,000 10,000
Counsel and Secretary 1994 $100,000 $ 50,000 -0-
Roxanne E. Iserman 1996 $100,000 -0- -0- $ 11,049
Vice President -- Client Services Development 1995 $100,000 10,000 -0-
1994 $100,000 20,000 -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: (i) amount of $10,500 for each named
executive officer to be contributed by the Company to its defined
contribution retirement plan; and (ii) premium payments under life
insurance policies on the lives of the executives at the following
incremental costs to the Company: Mr. Castro $614, Mr. Atterbury $417, Mr.
Sippl $670, and Ms. Iserman $549, and (iii) contributions by the Company to
its Supplemental Retirement Plan: Mr. Castro $21,048, and Mr. Atterbury
$11,708. "All Other Compensation" includes only amounts earned for the year
ended January 31, 1996.
</TABLE>
10
<PAGE>
OPTIONS
The following table summarizes option exercises during fiscal 1996 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 1996. There were no option grants during fiscal 1996 to any of the
executive officers named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1996 AND
VALUE OF OPTIONS AT FISCAL YEAR END 1996
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE MONEY OPTIONS
END OF FISCAL 1996 AT END OF FISCAL 1996 (3)
SHARES ACQUIRED VALUE -------------------------- --------------------------
NAME ON EXERCISE (1) REALIZED (2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ ------------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John W. Castro 36,000 24,000 $ 151,200 $ 100,800
Rick R. Atterbury 70,000 $ 890,313 27,000 33,000 $ 94,000 $ 63,000
James G. Sippl 29,000 $ 370,250 6,000 4,000 $ 31,500 $ 21,000
Steven J. Machov 6,000 $ 76,313 1,500 8,500 $ 0 $ 0
Roxanne E. Iserman 4,000 $ 49,740
<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, 1996 ($15.75) less the
option exercise price. Options are in-the-money if the market price of the
shares exceeds the option exercise price.
</TABLE>
11
<PAGE>
COMPARATIVE STOCK PERFORMANCE
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG MERRILL CORPORATION,
THE S&P SMALLCAP 600 INDEX
AND THE DOW JONES IND & COMM SERVICES -- GENERAL SERVICES INDEX
The following graph compares the cumulative total shareholder return of the
Company's Common Stock with a cumulative total return, assuming reinvestment of
dividends, of the Standard & Poor's 600 Index and the Dow Jones Industrial and
Commercial Services -- General Services Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MERRILL CORPORATION S & P SMALLCAP 600 DOW JONES INDUSTRIAL &
COMMERCIAL SERVICES-
GENERAL SVCS
<S> <C> <C> <C>
1/91 100 100 100
1/92 295 149 113
1/93 373 172 127
1/94 671 204 139
1/95 330 187 129
1/96 347 247 162
</TABLE>
* $100 invested on 1/31/91 in stock or index -- including reinvestment of
dividends. Fiscal year ending January 31.
Source: Research Data Group
12
<PAGE>
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, and Mr. Castro's and Mr. Atterbury's
agreements were also amended effective February 1, 1994. 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 agreements, Mr. Castro receives an annual base salary of
$300,000 and Mr. Atterbury receives an annual base salary of $225,000. Cash
bonuses for Mr. Castro and Mr. Atterbury are 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 receive cash bonuses
of $2,000 and $1,200, respectively, and for each additional one cent of net
income per share they receive additional cash bonuses of $5,000 and $3,000,
respectively. For the fiscal year ended January 31, 1996, Mr. Castro and Mr.
Atterbury each agreed to limited their respective bonuses to $250,000 and
$150,000, respectively. 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. 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, if any, 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.
13
<PAGE>
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
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, 1996,
Mr. Castro would have been entitled to receive a lump sum payment of
approximately $1,745,295 under his employment agreement and Mr. Atterbury would
have been entitled to receive a lump sum payment of approximately $1,949,288
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, Campbell and Lareau, 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.
14
<PAGE>
PROPOSAL TO ADOPT THE COMPANY'S
1996 NON-EMPLOYEE DIRECTOR PLAN
INTRODUCTION
Effective April 12, 1996, the Board adopted the 1996 Non-Employee Director
Plan (the "Director Plan") that provides for awards of nonqualified options to
purchase shares of Common Stock (the "Options") and payment of a non-employee
director's annual cash retainer in the form of Common Stock (the "Retainer
Stock")(the Options and the Retainer Stock are collectively referred to as the
"Incentive Awards") to members of the Board who are not also employees of the
Company or any of its subsidiaries ("Eligible Directors"). The purpose of the
Director Plan is to advance the interests of the Company and its shareholders by
enabling the Company to attract and retain the services of experienced and
knowledgeable non-employee directors and to increase the proprietary interests
of such non-employee directors in the Company's long-term success and progress
and their identification with the interests of the Company's shareholders.
The major features of the Director Plan are summarized below, which summary
is qualified in its entirety by reference to the actual text of the Director
Plan, a copy of which may be obtained from the Company.
SUMMARY OF THE DIRECTOR PLAN
SHARES RESERVED UNDER THE DIRECTOR PLAN. The Board has reserved a maximum
of 200,000 shares of Common Stock for issuance under the Director Plan. In the
event of any reorganization, merger, consolidation, recapitalization,
liquidation, reclassification, stock dividend, stock split, combination of
shares, rights offering, divestiture or extraordinary dividend (including a
spin-off) or any other change in the corporate structure or shares of the
Company, the committee administering the Director Plan (or, if the Company is
not the surviving corporation in any such transaction, the board of directors of
the surviving corporation) will make appropriate adjustment to the number and
kind of securities available for issuance under the Director Plan and, in order
to prevent dilution or enlargement of the rights of Eligible Directors, the
number, kind and exercise price of securities subject to outstanding Director
Plan Options.
OPTIONS. Upon such time as new Eligible Directors are first elected to the
Board to fill new directorships or to fill vacancies, the Eligible Director will
be granted, on a one-time basis, Options to purchase 10,000 shares of Common
Stock (the "Initial Election Grant"). In addition to the Initial Election Grant,
commencing with the annual meeting of shareholders of the Company that first
occurs following the date that an Eligible Director is first elected or
appointed to the Board, each Eligible Director who is re-elected to the Board at
an annual meeting of the Company's shareholders will be granted Options to
purchase 3,000 shares of Common Stock at such time.
Options under the Director Plan have an exercise price equal to 100% of the
fair market value of one share of Common Stock on the date of grant. On May 1,
1996, the last sale price of the Common Stock was $22.00 per share, as reported
on the Nasdaq National Market. The Options become exercisable, in the case of
the Initial Election Grant, on a cumulative basis with respect to 20% of the
shares on each anniversary of the date of grant, and, in the case of Options
granted in connection with an annual meeting, in full six months following the
date of grant. Payment of the exercise price can be
15
<PAGE>
made in cash (including check, bank draft or money order), by delivery of
previous owned shares that have been held at least six months, or by delivery of
a broker exercise notice. Each Option expires and is no longer exercisable ten
(10) years from its date of grant.
RETAINER STOCK. Eligible Directors will receive payment of one-half of
their annual cash retainer in the form of Common Stock, commencing with the
Annual Meeting and continuing on each succeeding annual meeting of shareholders
of the Company. Each Eligible Director, as of such dates, will receive such
number of shares of Common Stock as equals $6,000 divided by the average of the
fair market value of one share of Common Stock for the 10 trading days
immediately preceding the date of such annual meeting.
TERMINATION OF SERVICE. In the event an Eligible Director's service as a
director of the Company is terminated by reason of death or disability, all
outstanding Options then held by the Eligible Director will become immediately
exercisable in full and will remain exercisable for a period of one year
thereafter. Upon termination of an Eligible Director's service for any other
reason, all outstanding Options then held by the Eligible Director and
exercisable at the time of the termination will remain exercisable for a period
of three months thereafter (one year in the case of retirement). Notwithstanding
the foregoing, in no event will any Options remain exercisable after their
expiration.
ADMINISTRATION OF DIRECTOR PLAN. The Director Plan will be administered by
a committee consisting solely of two or more members of the Board. All questions
of interpretation of the Director Plan will be determined by the committee, with
each determination, interpretation or other action made or taken by the
committee pursuant to the provisions of the Director Plan being conclusive and
binding. However, the committee administering the Director Plan will have no
power to determine the eligibility of any person to participate in the Director
Plan, the number of shares of Common Stock to be subject to Incentive Awards, or
the timing, pricing or other terms and conditions of Incentive Awards. It is
currently intended that the Director Plan will be administered by the
Compensation Committee.
AMENDMENT, MODIFICATION AND TERMINATION OF THE DIRECTOR PLAN. The Board may
suspend or terminate the Director Plan or any portion thereof at any time, and
may amend the Director Plan from time to time in such respects as the Board may
deem advisable in order that Incentive Awards granted under the Director Plan
will conform to any change in applicable laws or regulations or in any other
respect the Board may deem to be in the best interests of the Company. However,
no amendments to the Director Plan will be effective without approval of the
shareholders of the Company if shareholder approval of the amendment is then
required pursuant to Rule 16b-3 under the Exchange Act or by the rules of the
Nasdaq National Market. Except as otherwise prohibited by Rule 16b-3 of the
Exchange Act, the Director Plan may not be amended more than once every six
months. No termination, suspension or amendment of the Director Plan may
adversely affect any outstanding Incentive Award without the consent of the
affected Eligible Director except for appropriate adjustments to the number and
kind of securities available for issuance under the Director Plan and the
number, kind and exercise price of securities subject to outstanding Incentive
Award as provided in the Director Plan.
NON-TRANSFERABILITY OF OPTIONS. No Option or interest in an Option granted
under the Director Plan may be transferred by an Eligible Director for any
reason or by any means, except by will or by the laws of descent and
distribution. An Eligible Director will, however, be entitled to designate a
16
<PAGE>
beneficiary to receive an Option upon such Eligible Director's death, and, in
the event of an Eligible Director's death, payment of any amounts due under the
Director Plan will be made to, and exercise of any Options may be made by, the
Eligible Director's legal representatives, heirs and legatees.
TERM OF THE DIRECTOR PLAN. Subject to approval by the shareholders of the
Company at the 1996 Annual Meeting, the Director Plan is effective as of May 21,
1996, and will terminate at midnight on May 21, 2001, subject to earlier
termination by the Board. No Incentive Awards may be granted after termination
of the Director Plan, but Options outstanding upon termination of the Director
Plan will continue to be exercisable in accordance with their terms.
FEDERAL INCOME TAX CONSEQUENCES
The following description of federal income tax consequences is based on
current statutes, regulations and interpretations. The description does not
include state, local or foreign income tax consequences. In addition, the
description is not intended to address specific tax consequences applicable to
an individual Eligible Director who receives Option or Retainer Stock.
OPTIONS. The Options granted under the Director Plan do not qualify as
incentive stock options within the meaning of Section 422 of the Code.
Generally, neither the Eligible Director nor the Company incurs any federal
income tax consequences as a result of the grant of an Option. Upon exercise of
an Option, the Eligible Director will recognize ordinary compensation income in
an amount equal to the difference between the fair market value of the shares
purchased, determined on the day of exercise, and the consideration paid for the
shares. At the time of a subsequent sale or disposition of any shares of Common
Stock obtained upon exercise of an Option, any gain or loss will be a capital
gain or loss. Such gain or loss will be a long-term capital gain or loss if the
sale or disposition occurs more than one year after the date of exercise and
short-term capital gain or loss if the sale or disposition occurs one year or
less after the date of exercise. In general, the Company will be entitled to a
compensation expense deduction in connection with the exercise of an Option for
any amounts includable in the taxable income of an Eligible Director as ordinary
compensation income.
RETAINER STOCK. With respect to shares issued as Retainer Stock, such
shares will be deemed to be subject to a risk of forfeiture for six months after
the date received due to the six-month holding period of Rule 16b-3 under the
Exchange Act. Accordingly, an Eligible Director may file an election under
Section 83(b) of the Code within 30 days after receipt to include as ordinary
income in the year of receipt an amount equal to the fair market value of the
shares received on the date of receipt (determined as if the shares were not
subject to any risk of forfeiture). If a Section 83(b) election is made, the
Eligible Director will not recognize any additional income when the risk of
forfeiture lapses. An Eligible Director who does not make a Section 83(b)
election within 30 days of the receipt of the Retainer Stock will recognize
ordinary income at the end of such six-month period in an amount equal to the
then fair market value of the shares freed of restrictions. The Company will
receive a corresponding tax deduction for any amounts includable in the taxable
income of a participant as ordinary income.
17
<PAGE>
PLAN BENEFITS
The following table illustrates the Options and the Retainer Stock that the
Eligible Directors of the Company as a group will receive under the Director
Plan in fiscal 1997.
PLAN BENEFITS
1996 NON-EMPLOYEE DIRECTOR PLAN
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES
UNDERLYING OF RETAINER STOCK
NAME AND POSITION OPTIONS GRANTED (1) GRANTED (1)(2)
- --------------------------------------------------------------------------- ------------------- -----------------
<S> <C> <C>
Non-Executive Director Group 18,000 1,638
</TABLE>
- ------------------------
(1) Assumes no new directors are appointed to the Board during fiscal 1997.
(2) The Retainer Stock to be granted in fiscal 1997 is valued at $22.00 per
share, the fair market value of the Common Stock on May 1, 1996, although
the actual fair market value will be based upon the average of the fair
market value for the 10 trading days immediately prior to May 21, 1996.
BOARD OF DIRECTORS RECOMMENDATIONS
The Board of Directors recommends that the shareholders vote FOR approval
and ratification of the proposal to adopt the Director Plan. The affirmative
vote of the holders of a majority of shares of Common Stock present in person or
by proxy at the Annual Meeting, and at least a majority of the minimum number of
votes necessary for a quorum to transact business at the Annual Meeting, is
necessary for approval. Unless a contrary choice is specified, proxies solicited
by the Board of Directors will be voted FOR approval of the Director Plan.
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has approved the selection of Coopers & Lybrand
L.L.P. as independent accountants to make an examination of the accounts of the
Company for the fiscal year ending January 31, 1997, and to perform other
appropriate accounting services. Coopers & Lybrand L.L.P. has acted as
independent accountants 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 L.L.P. to the shareholders for
ratification. The Board recommends a vote FOR ratification of Coopers & Lybrand
L.L.P. as independent accountants for the fiscal year ending January 31, 1997.
Unless a contrary choice is specified, proxies solicited by the Board will be
voted for the ratification of Coopers & Lybrand L.L.P. If the selection of
Coopers & Lybrand L.L.P. is not ratified, the Board of Directors will reconsider
its selection.
The Company has requested and expects a representative of Coopers & Lybrand
L.L.P. 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 January 3, 1997.
18
<PAGE>
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, 1996 accompanies this Notice of Annual Meeting and Proxy
Statement. The Annual Report describes the financial condition of the Company as
of January 31, 1996.
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, 1996 TO EACH
PERSON WHO IS A SHAREHOLDER OF THE COMPANY AS OF APRIL 1, 1996, 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
[STEVEN J. MACHOV SIGNATURE]
Steven J. Machov
SECRETARY
May 3, 1996
St. Paul, Minnesota
19
<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, 1996, at the
Saint Paul, MN Annual Meeting of Shareholders to be held on
55108 May 21, 1996, 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 FREDERICK W. KANNER
JAMES B. CAMPBELL RICHARD G. LAREAU
JOHN W. CASTRO PAUL G. MILLER
RONALD N. HOGE ROBERT F. NIENHOUSE
2. PROPOSAL TO ADOPT THE COMPANY'S 1996 NON-EMPLOYEE DIRECTOR PLAN.
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE
INDEPENDENT ACCOUNTANTS OF THE COMPANY.
/ / FOR / / AGAINST / / ABSTAIN
PLEASE SIGN ON REVERSE SIDE
<PAGE>
4. 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 PROPOSALS LISTED IN
ITEMS 2 AND 3 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: ______________, 1996.
____________________________
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.
