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
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WESTERN PUBLISHING GROUP, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A
/ / $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 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/x/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
RAB WPGI LETTERHEAD
November 17, 1995
Dear Western Publishing Group, Inc. Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to
be held at Chemical Bank, 270 Park Avenue, 11th Floor, Room C, New York, New
York on Tuesday, December 19, 1995. Information about the meeting, nominees for
Directors and the proposals to be considered is presented in the Notice of
Annual Meeting and the Proxy Statement on the following pages.
In addition to the formal items of business to be brought before the
meeting, there will be a report on our Company's operations. This will be
followed by a question and answer period.
Your participation in Western's affairs is important regardless of the
number of shares you hold. To ensure your representation, even if you cannot
attend the meeting, please sign, date and return the enclosed proxy promptly.
We look forward to seeing you on December 19th.
Sincerely,
Richard A. Bernstein
Chairman of the Board and
Chief Executive Officer
TELECOPIER (212) 888 - 5025
<PAGE>
WESTERN PUBLISHING GROUP, INC.
------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 19, 1995
------------------------------------------------------------------
The Annual Meeting of Stockholders of Western Publishing Group, Inc., a
Delaware corporation (the 'Company'), will be held at Chemical Bank, 270 Park
Avenue, 11th floor, Room C, New York, New York on Tuesday, December 19, 1995 at
9:00 a.m., local time, for the following purposes:
1. To elect five (5) members of the Board of Directors to serve until
the next Annual Meeting and until their successors have been duly elected
and qualified.
2. To consider and act upon a proposal to amend Article Fourth of the
Company's Restated Certificate of Incorporation to increase the authorized
number of shares of the Company's Common Stock from 30,000,000 shares to
40,000,000 shares.
3. To consider and act upon a proposal to amend Article Fifth of the
Company's Restated Certificate of Incorporation to change the date of
mandatory redemption of the Company's Series A Preferred Stock from March
31, 1996 to March 31, 1998.
4. To consider and act upon a proposal to adopt the 1995 Stock Option
Plan.
5. To approve and ratify the appointment of Deloitte & Touche LLP as
the Company's independent auditors for the fiscal year ending February 3,
1996.
6. To transact such other business as may properly come before the
Annual Meeting or any and all postponements or adjournments thereof.
Stockholders of record at the close of business on November 10, 1995 shall
be entitled to notice of, and to vote at, the Annual Meeting or any and all
postponements or adjournments thereof. A complete list of holders of Common
Stock entitled to vote at the Annual Meeting, arranged in alphabetical order and
showing the address of each stockholder and the number of shares registered in
the name of each stockholder, will be available at the Annual Meeting and will
be available for examination by any stockholder for any purpose germane to the
Annual Meeting during ordinary business hours for a period of ten days prior to
the Annual Meeting at the offices of Western Publishing Group, Inc., 444 Madison
Avenue, New York, New York 10022.
By Order of the Board of Directors
James A. Cohen
Secretary
November 17, 1995
New York, New York
IMPORTANT
TO ASSURE PROPER REPRESENTATION AT THE ANNUAL MEETING, ALL STOCKHOLDERS
ARE REQUESTED TO FILL IN AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY
IN THE ACCOMPANYING ENVELOPE.
<PAGE>
WESTERN PUBLISHING GROUP, INC.
444 MADISON AVENUE
NEW YORK, NEW YORK 10022
-------------------------
PROXY STATEMENT
-------------------------
ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 19, 1995
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Western Publishing Group, Inc., a Delaware corporation
('Western', the 'Corporation' or the 'Company'), of proxies to be voted at the
Annual Meeting of Stockholders (the 'Annual Meeting') to be held at Chemical
Bank, 270 Park Avenue, 11th floor, Room C, New York, New York on Tuesday,
December 19, 1995 at 9:00 a.m., local time, or any and all postponements or
adjournments thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting. This Proxy Statement, the Notice of Annual Meeting and the
accompanying proxy card are being mailed to stockholders on or about November
17, 1995. A copy of Western's Annual Report for the fiscal year ended January
28, 1995 ('Fiscal 1995') is being sent to each stockholder of record as of
November 10, 1995.
VOTING OF PROXIES
Stockholders of record at the close of business on November 10, 1995 will
be entitled to notice of and to vote the shares of Common Stock of Western, $.01
par value (the 'Common Stock'), held by them on such date at the Annual Meeting
or any and all postponements or adjournments thereof. The Common Stock is
Western's only class of outstanding voting securities, and each share of Common
Stock entitles the holder to one vote. On November 10, 1995, 21,067,274 shares
of Common Stock were outstanding and entitled to vote at the Annual Meeting. The
presence, in person or by proxy, of a majority of the shares of Common Stock
outstanding on November 10, 1995 will constitute a quorum for the Annual
Meeting.
If the accompanying proxy card is properly signed and returned to the
Company and not revoked, it will be voted in accordance with the instructions
contained therein. Unless contrary instructions are given, the persons
designated as proxy holders in the accompanying proxy card will vote to 1) elect
the five (5) nominees for the Board of Directors to serve until the next Annual
Meeting and until their successors have been duly elected and qualified, 2)
approve the proposal to amend Article Fourth of the Company's Restated
Certificate of Incorporation to increase the authorized number of shares of the
Company's Common Stock from 30,000,000 shares to 40,000,000 shares, 3) approve
the proposal to amend Article Fifth of the Company's Restated Certificate of
Incorporation to change the date of mandatory redemption of the Company's Series
A Preferred Stock from March 31, 1996 to March 31, 1998, 4) approve the adoption
of the 1995 Stock Option Plan, 5) approve and ratify the appointment of Deloitte
& Touche LLP as the Company's independent auditors for the fiscal year ending
February 3, 1996, and 6) transact such other business as may properly come
before the Annual Meeting or any and all postponements or adjournments thereof.
Management is not aware of any other matters to be presented for action at the
Annual Meeting. Each such proxy granted may be revoked by the stockholder giving
such proxy at any time before it is exercised by filing with the Secretary of
Western Publishing Group, Inc., at the address set forth above, a revoking
instrument or a duly executed proxy bearing a later date. The powers of the
proxy holders will be suspended if the person who executed a proxy attends the
Annual Meeting in person and so requests. Attendance at the Annual Meeting will
not in itself constitute revocation of the proxy.
If a stockholder has invested in the Common Stock through the Company
401(k) plan, the proxy will also serve as voting instructions for the trustee
for the 401(k) plan. The Trustee will vote unallocated shares of the Common
Stock in the 401(k) plan and allocated shares for which it has not received
timely direction in its discretion pursuant to its obligations as a fiduciary.
<PAGE>
Assuming a quorum, the five (5) nominees receiving a plurality of the votes
cast at the Annual Meeting for the election of directors will be elected as
directors. Assuming the presence of a quorum, the affirmative vote of a majority
of the shares of Common Stock present in person or by proxy at the Annual
Meeting and entitled to vote is required:
1. To approve the adoption of the 1995 Stock Option Plan;
2. To approve and ratify the appointment of Deloitte & Touche LLP as
the Company's independent auditors for the fiscal year ending February 3,
1996; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof.
Assuming the presence of a quorum, the affirmative vote of a majority of
the outstanding shares of Common Stock is required:
1. To approve the proposal to amend Article Fourth of the Company's
Restated Certificate of Incorporation to increase the authorized shares of
the Company's Common Stock from 30,000,000 shares to 40,000,000 shares; and
2. To approve the proposal to amend Article Fifth of the Company's
Restated Certificate of Incorporation to change the date of mandatory
redemption of the Company's Series A Preferred Stock from March 31, 1996 to
March 31, 1998.
With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be counted for purposes of determining
the presence or absence of a quorum on the election of directors, but will have
no other effect.
With regard to the proposed approval and ratification of the amendments to
Article Fourth and Article Fifth of the Company's Restated Certificate of
Incorporation, the adoption of the 1995 Stock Option Plan and the appointment of
Deloitte & Touche LLP, votes may be cast for or against or abstentions may be
specified. Abstentions specified on such proposals will be counted as present
for purposes of determining the presence or absence of a quorum on that
proposal. Since the proposals to amend Article Fourth and Article Fifth of the
Company's Restated Certificate of Incorporation require the approval of a
majority of the outstanding shares of Common Stock and the proposals to adopt
the 1995 Stock Option Plan and to appoint Deloitte and Touche LLP require the
approval of a majority of the outstanding shares of Common Stock, abstentions
present in person or by proxy and entitled to vote will have the same effect as
a vote against such proposals. Broker non-votes will be counted for purposes of
determining the presence or absence of a quorum, but will have no effect on the
outcome of the election of directors or the proposal to approve and ratify the
appointment of Deloitte & Touche LLP. Broker non-votes will have the same effect
as a vote against the proposals to amend Article Fourth and Article Fifth of the
Company's Restated Certificate of Incorporation.
With respect to the proposal to amend the Company's Restated Certificate of
Incorporation to change the date of mandatory redemption of the Company's Series
A Preferred Stock, the affirmative vote of the holders of at least 66 2/3% of
the Company's Series A Preferred Stock is also required to adopt the proposed
amendment. Consents from the requisite holders of the Series A Preferred Stock
have been obtained.
2
<PAGE>
STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership as of November 10, 1995 (except as set forth in notes 3 and 4) of
Western Publishing Group, Inc.'s Series A Convertible Preferred Stock and Common
Stock by each person or group known by the Company to be the beneficial owner of
more than 5% of the Common Stock:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK(1)
--------------------------------------------------
NUMBER OF SHARES
NAME AND ADDRESS OF CONVERTIBLE NUMBER OF SHARES
OF BENEFICIAL OWNER PREFERRED STOCK OF COMMON STOCK PERCENTAGE
- ---------------------------------------------------------------- ---------------- ---------------- ----------
<S> <C> <C> <C>
Richard A. Bernstein ........................................... 9,200 4,268,437(2) 20.06%
444 Madison Avenue
New York, New York 10022
The Gabelli Group, Inc. ....................................... 0 5,515,850(3) 26.18%
655 Third Avenue
New York, New York 10017
The Capital Group Companies, Inc. ............................. 0 2,157,200(4) 10.24%
333 South Hope Street
Los Angeles, California 90071
</TABLE>
- ------------------
(1) Except where otherwise indicated, all parties listed above have sole voting
and dispositive power over the shares beneficially owned by them.
(2) Includes 400,000 shares of Common Stock owned by a trust for the benefit of
Mr. Bernstein dated March 16, 1978 and 95,771 shares of Common Stock owned
by The Richard A. Bernstein Trust of 1986 ('1986 Trust') and 191,667 shares
of Common Stock issuable upon conversion of the beneficial owner's shares of
Series A Convertible Preferred Stock. Each share of Series A Convertible
Preferred Stock is convertible at any time into 20.833 shares of Common
Stock. Mr. Bernstein has no voting or investment power over the shares in
the 1986 Trust. Also includes 60,000 shares of Common Stock owned by The
Richard A. and Amelia Bernstein Foundation, Inc. as to which Mr. Bernstein
has shared voting and dispositive power, but Mr. Bernstein disclaims any
other beneficial interest in such shares and 20,000 shares of Common Stock
which may be acquired by Mr. Bernstein within 60 days upon exercise of
options granted under the Amended and Restated 1986 Employee Stock Option
Plan.
(3) The Gabelli Funds, Inc. has reported to Western Publishing Group, Inc. that
GAMCO Investors, Inc. beneficially owned, as of November 10, 1995, 4,537,350
shares of Common Stock, including sole voting power with respect to
4,071,950 shares and sole dispositive power with respect to 4,537,350
shares; The Gabelli Funds, Inc. beneficially owned, as of such date, 912,000
shares of Common Stock, including sole voting and dispositive power with
respect to 912,000 shares. Additionally, Gabelli International Limited
beneficially owned, as of such date, 45,000 shares of Common Stock,
including sole voting and dispositive power with respect to 45,000 shares;
Gabelli International Limited II beneficially owned, as of such date, 18,000
shares of Common Stock, including sole voting and dispositive power with
respect to 18,000 shares; Gabelli and Company, Inc. beneficially owned, as
of such date, 1,000 shares of Common Stock, including sole voting and
dispositive power with respect to 1,000 shares and Gabelli Associates
Limited beneficially owned, as of such date, 2,500 shares of Common Stock,
including sole voting and dispositive power with respect to 2,500 shares.
Furthermore, Mr. Gabelli is deemed to have beneficial ownership of the
securities beneficially owned by each of the foregoing persons and Gabelli
Funds, Inc. is deemed to have beneficial ownership of the securities
beneficially owned by each of the foregoing persons other than Mr. Gabelli.
Mr. Gabelli is the majority stockholder of, and controls and acts as chief
investment officer for, each of the foregoing reporting persons.
(4) The Capital Group Companies, Inc. has reported to Western Publishing Group,
Inc. that its subsidiaries, Capital Guardian Trust Company and Capital
Research and Management Company have, as of January 31, 1995, sole voting
and dispositive power with respect to 1,657,200 and 500,000 shares of Common
Stock, respectively.
3
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
A board of five (5) directors is to be elected at the Annual Meeting. The
Board of Directors proposes the election of the following five (5) nominees to
serve until the next Annual Meeting and until their successors are duly elected
and qualified:
Richard A. Bernstein Jenny Morgenthau
Richard H. Hochman Michael A. Pietrangelo
John F. Moore
All of the above listed persons are, at present, members of the Board of
Directors. Mr. Robert A. Bernhard, Samuel B. Fortenbaugh, III Esq. and Mr. Allan
S. Gordon will not stand for reelection but have decided to remain in their
present capacity until their successors are duly elected and qualified at the
Annual Meeting. The Board of Directors has no reason to believe that any of
the foregoing nominees will not serve if elected, but if any of them should
become unavailable to serve as a director or be withdrawn from nomination, and
if the Board of Directors shall designate a substitute nominee, the persons
named as proxy holders will vote for the substitute nominee.
If elected, all nominees are expected to serve until the 1996 Annual
Meeting of Stockholders and until their successors are duly elected and
qualified.
VOTE REQUIRED FOR APPROVAL
The five (5) nominees for election as directors at the Annual Meeting who
receive the greatest number of votes cast for the election of directors by the
holders of the Company's Common Stock entitled to vote at the Annual Meeting, a
quorum being present, shall become directors at the conclusion of the tabulation
of votes.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED
ABOVE.
BUSINESS EXPERIENCE OF NOMINEES FOR ELECTION AS DIRECTORS
Richard A. Bernstein
Director since: 1984
Age: 49
Mr. Bernstein is Chairman and Chief Executive Officer of Western Publishing
Group, Inc. and Chairman of Western Publishing Company, Inc., a wholly-owned
subsidiary of Western Publishing Group, Inc., and has served in such capacities
since February 1984. In November 1986, Mr. Bernstein became the Chairman,
President and Chief Executive Officer of Penn Corporation, then a newly-acquired
subsidiary of Western Publishing Group, Inc. He is President of P&E Properties,
Inc., a privately-owned commercial real estate ownership/management company, and
has served in that capacity for more than five years. Mr. Bernstein is a member
of the Regional Advisory Board of Chemical Bank, a member of the Board of
Trustees of New York University, a member of the Board of Overseers of the New
York University Stern School of Business, a Director and Vice President of the
Police Athletic League, Inc., a member of the Board of Trustees of New York
University's Hospital for Joint Diseases/Orthopaedic Institute, a member of the
Board of Trustees of The Big Apple Circus, Inc. and a member of The Economic
Club of New York.
Mr. Richard H. Hochman
Director since: 1995
Age: 50
Mr. Hochman has been Chairman of Regent Capital Partners, L.P., a private
investment company, since April 1995. From 1990 through April 1995 he was a
managing director of the Corporate Finance Department of PaineWebber
Incorporated. Mr. Hochman also serves on the Board of Directors of Cablevision
Systems Corporation and Alliance Entertainment Corporation.
4
<PAGE>
John F. Moore
Director since: 1995
Age: 58
Mr. Moore is President and Chief Executive Officer of Western Publishing
Company, Inc., serving in that capacity since May, 1995. Mr. Moore was appointed
to the Board of Directors in June 1995. From 1991 to 1995, Mr. Moore was
President and Chief Operating Officer of Penguin USA, the large book publishing
unit of Pearson Group, a London based international media company. From 1985 to
1991, Mr. Moore was President of Parker Brothers., Inc. and from 1980 to 1985,
he was President of Kenner Parker Toys Canada.
Jenny Morgenthau
Director since: 1992
Age: 50
Ms. Morgenthau is Executive Director, Chief Executive and Chief Operating
Officer of The Fresh Air Fund, serving in that capacity since 1983. Between 1977
and 1983, Ms. Morgenthau was the Director, Office of Program Planning, for the
New York City Human Resources Administration. Ms. Morgenthau is a member of the
Board of Directors of Paul Newman's Hole in the Wall Gang camp, The National
Dance Institute, The Baron de Hirsch Fund and the New York Chapter of The
American Jewish Committee.
Michael A. Pietrangelo
Director since: 1989
Age: 52
Mr. Pietrangelo is President of the Personal Care Products Group of IVAX
Corporation. From May 1990 through February 1994, he was President and Chief
Executive Officer of CLEO Inc., a subsidiary of Gibson Greetings, Inc. From July
1989 through April 1990, Mr. Pietrangelo served as President and Chief Operating
Officer of Western Publishing Group, Inc. Between 1985 and July 1989, Mr.
Pietrangelo was President of Schering-Plough's Personal Care Group. Mr.
Pietrangelo is a member of the Board of Directors of Universal Heights, Inc.,
Medicis Pharmaceutical Corporation, The American Parkinson Disease Association
and The Memphis College of Art. He is also Of Counsel to the law firm of Weirich
and Pietrangelo in Memphis, Tenn.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the beneficial
ownership as of November 10, 1995 of Series A Convertible Preferred Stock and
Common Stock by (i) each director of the Company, (ii) each executive officer
named in The Summary Compensation Table on page 11 and (iii) all directors and
executive officers as a group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK(1)
-------------------------------------------------------
NUMBER OF SHARES NUMBER OF SHARES PERCENTAGE
OF CONVERTIBLE OF OF
BENEFICIAL OWNER PREFERRED STOCK COMMON STOCK(2) COMMON STOCK(2)
- ---------------------------------------------------------- ---------------- ---------------- ---------------
<S> <C> <C> <C>
Bruce A. Bernberg......................................... 57,521(3) *
Richard A. Bernstein...................................... 9,200 4,268,437(4) 20.06%
James A. Cohen............................................ 50 45,087(5) *
Ira A. Gomberg............................................ 31,667(6) *
Steven M. Grossman........................................ 20,179(7) *
Richard H. Hochman........................................ 7,000 *
Jenny Morgenthau.......................................... 2,000 *
Michael A. Pietrangelo.................................... 5,000 *
All directors and executive officers as a group
(15 individuals)........................................ 9,250 4,706,960(8) 21.93%
</TABLE>
(Footnotes on next page)
5
<PAGE>
(Footnotes from previous page)
- ------------------
* Represents less than 1% of the Common Stock outstanding.
(1) Except where otherwise indicated, all parties listed above have sole voting
and dispositive power over the shares beneficially owned by them.
Adjustments are made to avoid double counting of shares as to which more
than one beneficial owner is listed.
(2) Includes shares of Common Stock issuable upon conversion of the beneficial
owner's shares of Series A Convertible Preferred Stock. Each share of Series
A Convertible Preferred Stock is convertible at any time into 20.833 shares
of Common Stock.
(3) Includes 35,000 shares of Common Stock which may be acquired by Mr. Bernberg
within 60 days upon exercise of options granted under the Amended and
Restated 1986 Employee Stock Option Plan.
(4) Includes 400,000 shares of Common Stock owned by a trust for the benefit of
Mr. Bernstein dated March 16, 1978 and 95,771 shares of Common Stock owned
by The Richard A. Bernstein Trust of 1986 ('1986 Trust'). Mr. Bernstein has
no voting or investment power over the shares in the 1986 Trust. Also
includes 60,000 shares of Common Stock owned by The Richard A. and Amelia
Bernstein Foundation, Inc. as to which Mr. Bernstein has shared voting and
dispositive power, but Mr. Bernstein disclaims any other beneficial interest
in such shares and 20,000 shares of Common Stock which may be acquired by
Mr. Bernstein within 60 days upon exercise of options granted under the
Amended and Restated 1986 Employee Stock Option Plan.
(5) Includes 31,667 shares of Common Stock which may be acquired by Mr. Cohen
within 60 days upon exercise of options granted under the Amended and
Restated 1986 Employee Stock Option Plan.
(6) Includes 31,667 shares of Common Stock which may be acquired by Mr. Gomberg
within 60 days upon exercise of options granted under the Amended and
Restated 1986 Employee Stock Option Plan.
(7) Includes 20,000 shares of Common Stock which may be acquired by Mr. Grossman
within 60 days upon exercise of options granted under the Amended and
Restated 1986 Employee Stock Option Plan.
(8) Includes 207,001 shares of Common Stock of the Company which may be acquired
by certain executive officers within 60 days upon exercise of options
granted under the Amended and Restated 1986 Employee Stock Option Plan.
BOARD MEETINGS AND COMMITTEES OF THE BOARD
BOARD OF DIRECTORS. During Fiscal 1995, the Board of Directors met five
times and all directors attended more than 75% of the meetings and 100% of their
respective Board Committee meetings.
AUDIT COMMITTEE. The Audit Committee met four times during Fiscal 1995.
Pursuant to Board authorization, the Committee reviews with the independent
auditors and Western's internal audit department the general scope of their
respective audit coverages. Such reviews include consideration of Western's
accounting practices, business ethics and conflicts of interest policies,
procedures and system of internal accounting controls and any significant
problems encountered. The Audit Committee, which is currently composed of
Messrs. Bernhard and Gordon, also recommends to the Board the appointment of
Western's principal independent auditors.
The Audit Committee advises the Board of its activities and may present to
the Board its recommendations and conclusions as to any matters considered by
the Audit Committee. At least annually, the Audit Committee reviews the services
performed and the fees charged by the independent auditors engaged by Western
and determines that the non-audit services rendered by the independent auditors
do not compromise their independence.
The independent auditors and Western's internal audit department have
direct access to the Audit Committee and may discuss with it any matters which
may arise in connection with audits, the maintenance of internal accounting
controls or any other matters relating to Western's financial affairs.
Furthermore, the Audit Committee may authorize the independent auditors to
investigate any matters which the Audit Committee deems appropriate and may
present its recommendations and conclusions to the Board.
EXECUTIVE COMPENSATION COMMITTEE. The Executive Compensation Committee is
composed of Messrs. Bernhard and Gordon. The Executive Compensation Committee
reviews the Company's executive compensation
6
<PAGE>
policies and practices each year and approves the compensation of senior
officers. The Committee's approval of the compensation of the chief executive
officer and other employee directors are reviewed with and approved by all of
the directors.
The report of the Executive Compensation Committee and Stock Option
Committee is set forth beginning at page 8.
NOMINATING COMMITTEE. The Board of Directors does not presently have a
nominating committee.
STOCK OPTION COMMITTEE. The Committee is composed of Messrs. Bernhard and
Gordon and Mitchell N. Baron, a partner in the law firm of Morgan, Lewis &
Bockius LLP, counsel to the Company. The Stock Option Committee administers the
Amended and Restated 1986 Employee Stock Option Plan. The Stock Option Committee
members are not eligible to receive options. Options may be granted at such
times and in such amounts as may be determined by the Stock Option Committee.
DIRECTORS REMUNERATION. Employee directors receive no additional
compensation for service on the Board of Directors or its committees. Each
non-employee director of Western receives an annual retainer fee in the amount
of $15,000 together with a fee in the amount of $500 for each meeting of the
Board of Directors attended and related out-of-pocket expenses.
Notwithstanding anything to the contrary set forth in or incorporated by
reference into any of the Company's filings under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, including this
Proxy Statement, the following report and the performance graph on page 10 shall
not be incorporated by reference into any such filings.
7
<PAGE>
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
AND STOCK OPTION COMMITTEE
The Executive Compensation Committee and Stock Option Committee
(collectively the 'Committees') apply a consistent philosophy with respect to
compensation for all executive officers of the Company. This philosophy is based
on the premise that the achievements of the Company result from the coordinated
efforts of all individuals working toward common objectives. The Company strives
to achieve those objectives through teamwork that is focused on meeting the
expectations of customers and stockholders.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to align compensation with
business objectives and performance, and to enable the Company to attract,
retain and reward executive officers who contribute to the long-term success of
the Company:
o The Company pays competitively.
The Committees are committed to having the Company provide a compensation
program that helps attract, retain and motivate individuals of
outstanding ability and that recognizes individual performance and
corporate performance relative to the performance of other major
companies of comparable size, complexity and quality.
o The Company pays for relative sustained performance.
Executive officers are rewarded based upon corporate performance or
applicable business unit performance (depending on an individual's
position) as well as individual performance. Corporate performance and
business unit performances are evaluated by measuring the achievement of
targeted profit goals. Individual performance is evaluated by reviewing
organizational and management development progress against set objectives
and the degree to which teamwork and Company values are fostered.
o The Committees and the Company believe that executive officers as well as
other employees should understand the performance evaluation process.
The process of assessing performance is as follows:
1. At the beginning of the performance cycle, the evaluating manager
sets objectives and key goals.
2. The evaluating manager gives the employee ongoing feedback on
performance.
3. At the end of the performance cycle, the evaluating manager
assesses the accomplishments of objectives/key goals.
4. The evaluating manager compares the results to the results of peers
within the Company.
5. The evaluating manager communicates the comparative results to the
employee.
6. The comparative result affects decisions on salary and incentive
compensation and, if applicable, stock options.
COMPENSATION PROGRAM
The executive compensation program includes three elements which, taken
together, constitute a flexible and balanced method of establishing total
compensation for senior management. These elements are as follows:
CASH-BASED COMPENSATION
The Executive Compensation Committee annually reviews and establishes an
overall salary structure at a competitive level with the industry, that applies
to all salaried employees including officers. Base salary levels are determined
by the individual's experience, level, scope and complexity of the position held
and the salaries being paid for similar positions at competitor companies.
Within the last year, the Company employed an independent consulting firm
(Hewitt Associates) to perform a survey to determine the competitive range of
8
<PAGE>
executive officer salaries within companies of comparable size, complexity,
business and quality. The survey data included companies involved in
Manufacturing, Manufacturing/non-durable goods, U.S. Corporate Consolidated
Industries and the Printing and Publishing Industry. The Company's Peer Group
was included in the survey data and the resulting salary ranges were consistent
with the Company's overall salary structure. The actual salary for each
executive officer was targeted towards the median salary in the range.
INCENTIVE PROGRAMS
Executive officers are rewarded based upon corporate performance or
applicable business unit performance (depending on an individual's position).
Fifty percent (50%) of an individual's performance is measured by the business
unit meeting targeted profit goals and fifty percent (50%) by an evaluation of
the individual's performance in meeting objectives and key goals. From time to
time, discretionary payments may be made in recognition of unusual
accomplishments or circumstances. In Fiscal 1995, no incentive bonuses or
discretionary payments were made.
EQUITY-BASED COMPENSATION--STOCK OPTION COMMITTEE COMPENSATION PHILOSOPHY
The stock option program was introduced in 1986 to link executive
compensation to long-term stockholder value and to focus management's attention
on Company performance over periods in excess of one year. This program also
utilizes vesting periods to encourage key employees to continue in the employ of
the Company. The Stock Option Committee generally grants stock options annually
to a broad-based group representing approximately 4% of the total employee
population. The Committee takes into account the performance of the individual
and the prior year's grant of stock options in determining the amount of stock
options to be granted. The Committee regards stock options as primarily a
long-term incentive and believes that a significant portion of executive
officers compensation should be dependent on value created for stockholders.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Committees' overall compensation philosophy applies to the Chief
Executive Officer in a manner consistent with all executive officers. In
accordance with this philosophy, an evaluation of Mr. Bernstein's individual
contributions to the businesses, level of responsibility, career experience and
personal accomplishments is reviewed by the Committees. Based on that review,
Mr. Bernstein did not receive a cash or incentive-based compensation increase in
Fiscal 1995. Mr. Bernstein's salary has remained constant since February 1,
1993, although the timing of his salary adjustment at that time resulted in
lower cash-based compensation in Fiscal 1994. However, Mr. Bernstein did receive
a stock option grant in Fiscal 1995 in conjunction with his efforts to refocus
the Company on its core competencies. The Committees believe that Mr. Bernstein
is properly compensated and that his compensation falls within the competitive
ranges identified.
LIMITATION ON DEDUCTIBILITY OF CERTAIN COMPENSATION FOR FEDERAL INCOME TAX
PURPOSES
Neither the Executive Compensation Committee nor the Stock Option Committee
has formulated any policy regarding qualifying compensation paid to the
Company's executive officers for deductibility under the limits of Section
162(m) of the Internal Revenue Code of 1986, as amended. The Omnibus Budget
Reconciliation Act of 1993 limits the deductibility of certain executive
compensation in excess of $1 million per year. The Company believes that all
cash compensation paid in Fiscal 1995 will be deductible for Federal income tax
purposes. The Company also believes that compensation derived from stock options
granted under the 1986 Employee Stock Option Plan will be deductible for Federal
income tax purposes.
EXECUTIVE COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
Robert A. Bernhard Robert A. Bernhard
Allan S. Gordon Allan S. Gordon
Mitchell N. Baron
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As of January 28, 1995, the Executive Compensation Committee and Stock
Option Committee consisted of Messrs. Bernhard and Gordon and Messrs. Bernhard,
Gordon and Baron, respectively, none of whom are former or current officers or
employees of the Company or any of its subsidiaries. No executive officer of the
Company serves as an officer, director or member of a Compensation Committee of
any entity for which any of the persons serving on the Board of Directors of the
Company or on the Executive Compensation Committee or Stock Option Committee of
the Company is an executive officer. Mr. Baron is a partner of the law firm of
Morgan, Lewis & Bockius LLP located in New York, New York, which firm is outside
counsel to the Company. From time to time, the firm has been retained by the
Company and its subsidiaries with regard to a variety of legal matters.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return on the Company's Common Stock against the cumulative total return of S &
P 500 Companies compiled by The University of Chicago Center for Research in
Security Prices and an index of Peer Group companies selected by the Company for
the five-year period ended January 27, 1995.
[CHART]
Date Company Index Market Index Peer Index
02/02/90 100.000 100.000 100.000
02/27/90 99.324 100.221 102.123
03/27/90 97.973 103.806 106.488
04/27/90 100.000 100.305 106.352
05/25/90 99.324 108.594 112.968
06/27/90 89.865 109.034 114.567
07/27/90 91.892 108.604 107.914
08/27/90 75.676 99.117 95.677
09/27/90 66.892 93.065 93.192
10/26/90 72.297 94.450 92.974
11/27/90 60.135 99.101 98.146
12/27/90 51.351 102.652 108.532
01/25/91 58.108 105.228 106.344
02/27/91 60.135 115.719 117.069
03/27/91 68.243 118.459 121.819
04/26/91 62.838 119.758 122.767
05/24/91 73.649 119.746 114.074
06/27/91 64.189 119.114 110.645
07/26/91 64.189 121.337 108.686
08/27/91 56.757 125.779 108.862
09/27/91 62.162 123.722 108.370
10/25/91 74.324 123.358 109.168
11/27/91 70.270 121.357 103.651
12/27/91 83.108 131.367 113.882
01/27/92 95.270 134.247 122.708
02/27/92 99.324 134.411 126.104
03/27/92 97.297 131.345 126.187
04/27/92 89.865 133.096 120.456
05/27/92 95.270 134.722 121.898
06/26/92 81.081 132.179 121.613
07/27/92 98.649 135.068 122.793
08/27/92 102.703 136.130 120.910
09/25/92 109.459 136.736 122.971
10/27/92 93.243 138.405 127.319
11/27/92 100.000 142.807 131.505
12/24/92 114.865 146.334 130.611
01/27/93 93.919 146.042 132.286
02/26/93 97.973 148.181 129.932
03/26/93 80.405 150.047 133.968
04/27/93 72.297 146.878 132.633
05/27/93 85.135 152.225 140.366
06/25/93 89.189 150.946 140.414
07/27/93 80.405 151.303 139.876
08/27/93 87.162 155.830 142.558
09/27/93 81.081 156.632 149.638
10/27/93 78.378 157.569 151.154
11/26/93 67.568 157.571 148.965
12/27/93 102.027 160.387 152.423
01/27/94 108.108 162.885 152.110
02/25/94 95.946 159.641 148.026
03/25/94 81.757 158.107 145.814
04/26/94 63.514 155.237 143.882
05/27/94 64.865 157.806 139.687
06/27/94 64.189 154.633 141.036
07/27/94 56.081 156.658 143.149
08/26/94 66.216 164.628 147.283
09/27/94 69.595 160.991 145.542
10/27/94 68.919 162.514 139.735
11/25/94 58.784 158.342 140.410
12/27/94 52.027 162.302 142.716
01/27/95 52.703 165.289 141.768
The Peer Group is comprised of other publishing and related companies of
comparable size, complexity and quality as selected by the Company with the
assistance of an outside consultant. The Peer Group consists of the following
companies: American City Business Journals Inc., American Greetings Corporation,
Artistic Greetings Inc., Banta Corp., Commerce Clearing House, Inc., Courier
Corporation, Daily Journal Corp. S.C., Gibson Greetings Inc., Intervisual Books
Inc., John Wiley and Sons Inc., Multimedia Incorporated, Pharmaceuticals
Marketing Services, Plenum Publishing Corporation, Price Stern Sloan Inc.,
Pulitzer Publishing Co., Scholastic Corporation, Thomas Nelson Inc., Topps
Company Inc., United Newspapers Public Ltd. Co. ADR and Waverly Incorporated.
(Source: The University of Chicago Center for Research)
The return for each of the Peer Group and the Company has been weighted
according to their respective market capitalization for the purpose of
calculating returns. The calculation assumes that $100 was invested at the close
of business at February 2, 1990 in the Company's Common Stock, the S & P 500
Index and the selected Peer Group. The total return calculated assumes the
reinvestment of dividends. The Company does not pay a dividend on its Common
Stock.
10
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information for the past three years for the
Chief Executive Officer, the other four most highly compensated executive
officers of Western, the former President and Chief Operating Officer of Western
Publishing Group, Inc. and the former President of Western Publishing Company,
Inc.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
---------------------------------
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION ------------
------------------- SECURITIES
FISCAL SALARY UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) BONUS ($) OPTIONS(#)(3) COMPENSATION($)(5)
- --------------------------- ------ ------- ---------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Richard A. Bernstein ...... 1995 540,000 30,000 12,706
Chairman and Chief 1994 529,231 15,133
Executive Officer of 1993 499,154 121,500 (2) 25,000 14,671
Western Publishing Group,
Inc.; Chairman, President
and Chief Executive Officer
of Penn Corporation
Steven M. Grossman (1) .... 1995 201,179 30,000 7,720
Executive Vice President, 1994 96,701 4,334
Treasurer and 1993 28,462 11,031 (2) 7,500
Chief Financial Officer of
Western Publishing Group,
Inc.
James A. Cohen (1) ........ 1995 196,809 25,000 10,044
Senior Vice President, 1994 141,317 9,107
Legal Affairs of 1993 104,630 30,173 (2) 5,915
Western Publishing Group,
Inc.
Ira A. Gomberg (1) ........ 1995 237,558 25,000 10,044
Vice President, Business 1994 178,605 10,649
Development and Corporate 1993 166,116 32,964 (2) 10,172
Communications of
Western Publishing Group,
Inc.
Bruce A. Bernberg ......... 1995 230,000 15,000 13,861
Senior Vice President, 1994 230,000 23,650 15,983
Finance and Administration 1993 233,158 7,500 15,766
of Western Publishing
Company, Inc.
Frank P. DiPrima .......... 1995 166,153 694,785
Former President and Chief 1994 480,099 12,471
Operating Officer 1993 461,417 100,000 (2) 12,103
of Western Publishing
Group, Inc.
George P. Oess ............ 1995 213,462 55,000 (4) 459,676
Former President of 1994 300,000 31,350 70,000 (4) 83,867
Western Publishing Company, 1993 298,462 20,000 14,671
Inc.
</TABLE>
- ------------------
(1) Salaries of Messrs. Grossman, Cohen, and Gomberg are allocated among the
Company and unaffiliated businesses based upon the services rendered to each
entity. Mr. Grossman joined the Company in July, 1992.
(2) Reflects bonus earned during Fiscal 1993, paid in Fiscal 1994.
(3) Options to acquire shares of Common Stock.
(4) In accordance with his termination agreement, Mr. Oess was granted options
to acquire 55,000 shares of Common Stock under the Amended and Restated 1986
Employee Stock Option Plan in exchange for the cancellation of options to
acquire 70,000 shares of Common Stock granted in Fiscal 1994.
(5) Includes amounts contributed by the Company as matching contributions equal
to 60% of the first 6% of earnings (to a maximum Company contribution of
$5,544) and a 3% annual Company contribution based on employee's annual
compensation (up to the Internal Revenue Service limitation of $150,000 of
compensation) to the Golden Comprehensive Security Program (the 'Program').
In calendar year 1994,
- ------------------
(Footnotes follow on next page)
11
<PAGE>
contributions to the Program with respect to Messrs. Bernstein, Grossman,
Cohen, Gomberg, Bernberg, DiPrima and Oess were $10,044, $7,720, $10,044,
$10,044, $9,914, $10,044 and $10,044, respectively. In calendar year 1993,
contributions to the Program with respect to Messrs. Bernstein, Grossman,
Cohen, Gomberg, Bernberg, DiPrima and Oess were $12,471, $4,334, $9,107,
$10,649, $12,296, $12,471 and $12,471, respectively. In calendar year 1992,
contributions to the Program with respect to Messrs. Bernstein, Cohen,
Gomberg, Bernberg, DiPrima and Oess, were $12,103, $5,915, $10,172, $12,103,
$12,103 and $12,103, respectively.
In addition, the following amounts were paid or accrued during the last three
years pursuant to the Executive Medical Reimbursement Plan and the excess
life insurance program:
In calendar year 1994, the Executive Medical Reimbursement Plan paid premiums
for Messrs. Bernstein, Bernberg and Oess of $1,800, $1,800 and $1,200,
respectively. During the same period, the Company paid excess life insurance
premiums for Messrs. Bernstein, Bernberg and Oess of $862, $1,152 and $1,800,
respectively. In calendar year 1993, the Executive Medical Reimbursement Plan
paid premiums for each of Messrs. Bernstein, Bernberg and Oess of $1,800.
During the same period, the Company paid excess life insurance premiums for
each of Messrs. Bernstein, Bernberg and Oess of $862. In calendar year 1992,
the Executive Medical Reimbursement Plan paid premiums for each of Messrs.
Bernstein, Bernberg and Oess of $1,650. During the same period, the Company
paid excess life insurance premiums for each of Messrs. Bernstein, Bernberg
and Oess of $918.
In calendar year 1994, $995 and $3,000 was paid to Messrs. Bernberg and Oess,
respectively, for financial planning assistance. In calendar year 1993,
$1,025 and $8,734 was paid to Messrs. Bernberg and Oess, respectively, for
financial planning assistance. In calendar year 1992, $1,095 was paid to Mr.
Bernberg for financial planning assistance.
In Fiscal 1994, the Company established the Western Supplemental Retirement
Plan ('WSRP') for those executive officers designated by the Board of
Directors. The plan provides for contributions, as deemed appropriate by the
Board of Directors, with payment to the executive officer upon termination
(provided such termination is not for cause). The assets of WSRP are
considered general assets of the Company until distributed to the executive
officer. In Fiscal 1995 and Fiscal 1994, a contribution of $30,000 and
$60,000, respectively, was made to the WSRP for the benefit of Mr. Oess. In
Fiscal 1995, Mr. Oess was paid these amounts, plus interest, coincident with
his retirement.
In accordance with his employment agreement, Mr. DiPrima became entitled to
severance pay equivalent to two years salary upon termination. The severance
is reduced by one-half of any earnings during the two-year period. Other
compensation includes $684,741, representing the present value of the
severance payments at May 31, 1994, the date of termination.
In accordance with his retirement agreement, Mr. Oess is entitled to
severance pay equivalent to one and one-half years salary. The severance is
reduced by one-half of any earnings during this period. Other compensation
includes $413,632, representing the present value of the severance payments
at September 23, 1994, the date of termination.
12
<PAGE>
OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------ ANNUAL
NUMBER PERCENT OF RATES OF STOCK
OF SECURITIES TOTAL OPTIONS APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM(3)
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION -------------------
NAME GRANTED(#) FISCAL YEAR $/SHARE DATE 5% 10%
- ------------------------- ------------- ------------- -------------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Bernstein..... 30,000(1) 3.4% $11.50 8/23/04 216,929 549,841
Steven M. Grossman....... 30,000(1) 3.4% $11.50 8/23/04 216,929 549,841
James A. Cohen........... 25,000(1) 2.9% $11.50 8/23/04 180,807 459,201
Ira A. Gomberg........... 25,000(1) 2.9% $11.50 8/23/04 180,807 459,201
Bruce A. Bernberg........ 15,000(1) 1.7% $11.75 6/22/04 110,843 280,897
George P. Oess........... 55,000(2) 6.3% $12.75 9/23/97 110,535 232,114
</TABLE>
- ------------------
(1) The options granted to Messrs. Bernstein, Grossman, Cohen, Gomberg and
Bernberg vest 1/3 on the date of the grant, 1/3 on the first anniversary
of the grant and 1/3 on the second anniversary of the grant.
(2) The options granted to Mr. Oess were immediately vested on the date
granted. These options, which expire three years after date of grant,
remain exercisable after his retirement.
(3) The dollar gains under these columns result from calculations assuming
5% and 10% growth rates and are not intended to forecast future price
appreciation of Common Stock of the Company. The gains reflect a future
value based upon growth at these prescribed rates. The Company is not
aware of any formula which will determine with reasonable accuracy a
present value based on future unknown or volatile factors.
13
<PAGE>
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END VALUE
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
ACQUIRED ON JANUARY 28, 1995 (#) JANUARY 28, 1995(1)
EXERCISE VALUE ---------------------------- ----------------------------
NAME (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Bernstein............ 10,000 57,500
Steven M. Grossman.............. 10,000 27,500
James A. Cohen.................. 23,333 36,667
Ira A. Gomberg.................. 23,333 36,667
Bruce A. Bernberg............... 5,000 25,000
Frank P. DiPrima................ 60,000 $108,499
George P. Oess.................. 55,000
</TABLE>
- ------------------
(1) Market value of underlying securities at January 28, 1995 ($9.75), which
is less than the exercise price of all outstanding stock options.
14
<PAGE>
CERTAIN TRANSACTIONS
In Fiscal 1995, the Company paid 49-50 Associates ('49-50'), a partnership
in which Mr. Bernstein is the Managing General Partner, rent for the premises
occupied by the Company's corporate headquarters. The rental payments totaled
$78,558. In Fiscal 1995, the Company paid P&E Properties, Inc. ('P&E
Properties'), a corporation owned by Mr. Bernstein, approximately $230,000 to
reimburse P&E Properties for the use of an airplane owned by P&E Properties. In
addition, P&E Properties was reimbursed approximately $570,000, which was due
for use of the airplane in prior years. When commercially available flights are
available to the destination, the Company reimburses P&E Properties at the rate
of the normal first class fare. When commercial flights are not available, the
Company reimburses P&E Properties at an amount equal to the hourly variable
operating costs of the airplane, times the number of hours of use. The Company
also reimburses P&E Properties for out-of-pocket expenditures made by P&E
Properties on the Company's behalf.
Salaries are paid by P&E Properties to Mr. Bernstein and certain other
officers whose services are rendered to P&E Properties. Salaries paid to such
persons were not related to services performed by P&E Properties for the
Company. None of the services provided by P&E Properties to the Company were
provided pursuant to a written agreement. The Company believes that the terms of
its transactions with P&E Properties were no less favorable than could have been
obtained from unaffiliated third parties on an arm's-length basis.
PROPOSAL 2
APPROVAL OF AMENDMENT TO INCREASE THE AUTHORIZED
NUMBER OF SHARES OF COMMON STOCK
The Company's Restated Certificate of Incorporation currently authorizes
the issuance of 30,000,000 shares of Common Stock, $0.01 par value per share. As
of November 10, 1995, 21,067,274 shares of Common Stock were outstanding, an
additional 1,830,300 shares of Common Stock were subject to options granted
under the Company's existing stock option plans, 416,042 shares were subject to
the conversion privilege of the Series A Preferred Stock and an additional
208,800 shares were held as treasury shares, leaving a balance of 6,477,584
authorized, unissued and unreserved shares of Common Stock. The Company's Board
of Directors has adopted a resolution that, subject to shareholder approval,
amends the Company's Certificate of Incorporation to increase the authorized
number of shares of Common Stock to 40,000,000.
The Board of Directors believes that the authorization of such additional
shares of Common Stock is in the best interests of the Company and its
stockholders and is appropriate in order to provide added flexibility for future
corporate purposes which may include capital and financing needs, stock
distributions and stock splits, business acquisitions, management incentive and
employee benefit plans and other general corporate purposes. The increase in the
number of authorized shares of Common Stock will permit the Board of Directors
to approve the issuance of additional shares of Common Stock if warranted
without the need for further action by stockholders to authorize such shares,
subject to present or future requirements of any stock exchange upon which the
Common Stock may be listed and applicable law. The Board of Directors believes
that the availability of such additional shares of Common Stock would enable the
Company to act promptly to take advantage of various corporate opportunities as
such opportunities arise without the delay or cost of calling a special
stockholder meeting.
The additional authorized shares of Common Stock could also conceivably be
issued to make any attempt to acquire control of the Company more difficult and
costly and thereby discourage attempts to acquire the Company. For example,
additional shares of Common Stock could be sold in private placement
transactions to purchasers who support the Board of Directors and who are
opposed to a takeover bid which the Board of Directors believes is not in the
best interests of the Company and its shareholders. Additional shares of Common
Stock could also be issued to increase the aggregate number of outstanding
shares of Common Stock, thereby diluting the interest of parties attempting to
obtain control of the Company. If an issuance of additional shares of Common
Stock is made on other than a pro rata basis to all shareholders, dilution of
ownership interest and voting power of existing shareholders may occur and,
depending on the consideration for which the shares of Common Stock were issued,
could dilute earnings per share.
15
<PAGE>
There are at present no plans or arrangements concerning the issuance of
additional shares of Common Stock, except pursuant to outstanding stock options
and employee benefit plans. If any plans or arrangements are made concerning the
issuance of any such shares, holders of the then outstanding shares of Common
Stock may or may not be given the opportunity to vote thereon, depending upon
the nature of any such transaction, the law applicable thereto, the policy of
any stock exchange upon which the shares of Common Stock may be listed at such
time and the judgment of the Board of Directors.
None of the outstanding shares of Common Stock have preemptive rights or
cumulative voting rights. The proposed amendment to the Company's Restated
Certificate of Incorporation would not change the terms and conditions of the
outstanding shares of Common Stock and the additional shares of Common Stock
proposed to be authorized when issued would be identical to the outstanding
shares of Common Stock. Each certificate representing shares of Common Stock
outstanding immediately prior to the effective date of the proposed amendment to
the Company's Certificate of Incorporation, if it is adopted by the stockholders
at the Annual Meeting, would remain outstanding and represent the same number of
shares of Common Stock as before such effective date. Additional shares of
Common Stock may be issued under authority of the Board of Directors for such
price or consideration as may be approved by the Board without further
stockholder approval unless required by the policy of any stock exchange upon
which the shares of Common Stock may be listed at such time or by applicable
law.
The following resolution will be voted on by the stockholders at the Annual
Meeting:
RESOLVED, that Article Fourth of the Restated Certificate of
Incorporation of the Company be amended by deleting the present provisions
thereof and inserting the following in lieu thereof:
'FOURTH: The Corporation shall have the authority to issue 40,100,000
shares, consisting of 40,000,000 shares of common stock, par value $0.01, and
100,000 shares of preferred stock, without par value. The Board of Directors may
authorize the issuance from time to time of preferred stock in one or more
series and with such designations, preferences, relative, participating,
optional and other special rights, and qualifications, limitations or
restrictions (which may differ with respect to each series) as the Board may fix
by resolution.'
VOTE REQUIRED FOR APPROVAL
The affirmative vote of the holders of the majority of the outstanding
shares of Common Stock is required to approve the foregoing amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF
SHARES OF COMMON STOCK OF THE COMPANY
PROPOSAL 3
APPROVAL OF AN AMENDMENT OF THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION TO CHANGE THE TERMS OF THE SERIES A PREFERRED STOCK
The Board of Directors has adopted an amendment to the Restated Certificate
of Incorporation that, subject to shareholder approval, changes the mandatory
redemption date of the Series A Preferred Stock from March 31, 1996 to March 31,
1998. A conforming change will continue the Company's ability to redeem such
shares at its option at any time.
The Board of Directors believes that the proposed amendment is in the best
interests of the Company and its shareholders because such amendment will
enhance the ability of the Company to meet its continuing obligations by
postponing its obligation to redeem the Company's outstanding Series A Preferred
Stock on March 31, 1996. By giving management of the Company the flexibility of
an additional two years in which to redeem the Series A Preferred Stock, funds
generated from operations and the receivables financing arrangement can be
utilized for on going operations, business initiatives and capital expenditures.
The Series A Preferred Stock was initially issued to 59 holders in
February, 1984, in a private placement. The Company received aggregate net
proceeds from the sale of such shares of $10,000,000. The $9,985,000 of
16
<PAGE>
Series A Preferred Stock currently outstanding is held by 86 holders and pays a
dividend of 8.5%, which began accruing on May 1, 1986, and is payable on the
first day of February, May, August and November. As of November 1, 1995,
dividends to holders of the Series A Preferred Stock aggregated $6,365,437 of
which $636,544 remains accrued. If the Series A Preferred Stock is redeemed on
the original mandatory redemption date of March 31, 1996, the Company will be
required to pay an aggregate of $10,126,454 (including accrued dividends) to
holders thereof.
The following resolution will be voted on by the stockholders at the Annual
Meeting:
RESOLVED, that Section 3 (a) of ARTICLE FIFTH of the Amended and
Restated Articles of Incorporation of the Company shall be amended in its
entirety to read as follows:
'3. Redemption. (a) Subject to the provisions of section 2(b), the
Corporation may, at its option, redeem all or any part of the Series A Preferred
Stock at any time and from time to time. The Corporation shall redeem on March
31, 1998 all Series A Preferred Stock outstanding on that date. The redemption
price per share of the Series A Preferred Stock shall be an amount equal to the
sum of $500 plus an amount equal to all accumulated and unpaid dividends per
share (including a prorated quarterly dividend from the last preceding Dividend
Payment Date to the Redemption Date (as defined in section 3(b))). If fewer than
all the outstanding shares of Series A Preferred Stock are to be redeemed, the
redemption shall be pro rata among the holders of Series A Preferred Stock and
subject to such other provisions as may be determined by the board of
directors.'
VOTE REQUIRED FOR APPROVAL
Delaware law and the Company's Restated Certificate of Incorporation
require the affirmative vote of the holders of the majority of the outstanding
shares of Common Stock to approve the foregoing amendment. In addition,
affirmative vote of the holders of two-thirds (66 2/3%) of the outstanding
shares of Series A Preferred Stock is required to approve the foregoing
amendment. Richard A. Bernstein, Chairman of the Board and Chief Executive
Officer of the Company, and certain other directors of the Company own an
aggregate of 10,832 shares of Series A Preferred Stock (54.20% of the
outstanding Series A Preferred Stock) and have consented to the proposed
amendment. Such amendment has been approved by the requisite number of
outstanding shares of Series A Preferred Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION TO CHANGE THE DATE OF MANDATORY REDEMPTION
OF THE SERIES A PREFERRED STOCK FROM MARCH 31, 1996 TO MARCH 31, 1998
PROPOSAL 4
PROPOSAL TO APPROVE THE ADOPTION OF THE
1995 STOCK OPTION PLAN
In 1986, the Company adopted, and the Company's stockholders approved, the
1986 Employee Stock Option Plan (the '1986 Plan') pursuant to which key
employees of the Company and its subsidiaries have from time to time been
granted stock options. The 1986 Plan provides that it shall terminate on
February 29, 1996. Because the Board views a stock option program as an integral
part of the Company's executive compensation program by providing incentives
that will enable the Company to attract, retain and motivate highly qualified
individuals, on July 19, 1995 the Board adopted, subject to stockholder
approval, the 1995 Stock Option Plan (the '1995 Plan') to serve as a replacement
for the 1986 Plan. Options may, however, continue to be granted pursuant to the
1986 Plan until its expiration date, and outstanding options granted under the
1986 Plan will continue to be subject to the terms thereof.
The 1995 Plan is similar to the 1986 Plan in all material respects, except
that the 1995 Plan (i) includes consultants as a class of persons eligible to
receive options, (ii) limits the number of shares that may be granted to any one
individual in any calendar year to 500,000, (iii) allows for limited
transferability of stock options in the case of family transfers, (iv) provides
that with respect to future plan amendments, stockholder approval is
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necessary only where required by applicable law, and (v) contains no expiration
date. For a description of the 1995 Plan, see 'Description of the 1995 Plan'
below.
The Stockholders are now requested to approve the adoption of the 1995
Plan. No options have been, or will be, granted pursuant to the 1995 Plan unless
such approval is obtained.
DESCRIPTION OF THE 1995 PLAN
The 1995 Plan is set forth as Appendix A to this Proxy Statement, and the
description of the 1995 Plan contained herein is qualified in its entirety by
reference to Appendix A.
The 1995 Plan provides for the issuance of options to purchase up to an
aggregate of 750,000 shares of Common Stock. The Plan provides for the granting
of options intended to qualify as incentive stock options as defined in Section
422 of the Code, and non-qualified stock options to key employees of the Company
or its subsidiaries, including officers and employee directors of the Company or
its subsidiaries who are also employees, and to consultants who perform services
for the Company or its subsidiaries. No person may receive in any one calendar
year an option to purchase more than 500,000 shares of Common Stock.
The 1995 Plan will be administered by a disinterested committee appointed
by the Board which is comprised of at least two disinterested members of the
Board (the 'Stock Option Committee'). Among other things, the Stock Option
Committee determines, subject to the provisions of the 1995 Plan, the key
employees and consultants to whom options should be granted, the nature of the
options to be granted, the number of options to be granted and the exercise
price, the vesting schedule and the term of the options and all other conditions
and terms of the options to be granted. The number of grantees may vary from
year to year. It is not possible to state in advance the exact number or
identity of the grantees or the amounts of the grants.
The exercise price of incentive stock options granted under the 1995 Plan
may not be less than the fair market value of the shares at the time the option
is granted. The exercise price of non-qualified stock options granted under the
1995 Plan may not be less than 85% of the fair market value of the shares at the
time the option is granted. An optionee may pay the option price in cash or, if
permitted by the Stock Option Committee, by delivering to the Company shares
that have a fair market value equal to the option price or a combination of cash
and shares. Shares may not be issued or transferred upon the exercise of an
option until the option price is paid in full.
Options generally become exercisable over such period as the Stock Option
Committee may prescribe, and expire no later than ten years from the date of
grant, subject to earlier termination on the optionee's termination of
employment or relationship with the Company. The Stock Option Committee may
accelerate the exercisability of any outstanding stock options, at any time or
upon the occurrence of any event. Options are not assignable or otherwise
transferable other than by will or the laws of descent and distribution, except
that the Stock Option Committee may permit transfers by an optionee to his
family members. Shares subject to options granted under the 1995 Plan that have
lapsed or terminated may again be subject to options granted under the 1995
Plan. Furthermore, the Stock Option Committee may offer to exchange new options
for existing options, with the shares subject to the existing options again
being available for grant under options.
The Board may amend or terminate the 1995 Plan at any time; provided,
however, that approval by the stockholders of the Company will be obtained if
necessary or desirable to comply with applicable law.
TAX CONSEQUENCES TO OPTIONEES
For federal tax purposes, an optionee is not subject to tax upon the grant
of an option. If the option is not an incentive stock option, the optionee will
generally recognize ordinary income at the time of exercise of the option in an
amount equal to the difference between the fair market value of the shares and
the exercise price. A subsequent sale of the shares will result in a capital
gain or loss. If the option is an incentive stock option, the optionee will
generally not recognize income until the sale of the shares. If the shares are
held for the requisite holding periods, then all gain on the sale will be
treated as long-term capital gain. If the requisite holding periods are not
satisfied (a 'disqualifying disposition'), then the portion of the gain equal to
the difference between the market value of the shares at the time of exercise
and the exercise price will generally be treated as ordinary
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income. The Company will be entitled to a tax deduction in an amount
corresponding to any ordinary income recognized by the optionee.
TAX CONSEQUENCES TO THE COMPANY
The Company will generally be entitled to a deduction for federal income
tax purposes at the same time and in the same amount as an optionee is required
to recognize ordinary income as described above. To the extent an optionee
realizes capital gains as described above, the Company will not be entitled to
any deduction for federal income tax purposes. Therefore, the Company will not
be entitled to any tax deduction in connection with incentive stock options with
respect to which there is no disqualifying disposition.
Commencing in 1994, a publicly held corporation may not, subject to limited
exceptions, deduct for federal income tax purposes certain compensation
(including compensation attributable to the exercise of stock options) paid to
certain executives in excess of $1 million in any taxable year (the '$1 million
limit'). Performance-based compensation is excepted from the $1 million limit.
Although final guidance with respect to the $1 million limit and the
performance-based exception has not yet been issued, the Company believes that
compensation attributable to options granted under the 1995 Plan at a price at
least equal to the fair market value of the underlying option shares at the date
of grant may reasonably be treated as performance-based compensation.
VOTE REQUIRED FOR APPROVAL
The proposal to adopt the 1995 Plan and approve the option grants made
thereunder requires the affirmative vote of a majority of shares present in
person or represented by proxy at the Meeting for its approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE 1995 STOCK
OPTION PLAN
PROPOSAL 5
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed Deloitte & Touche LLP
as Western's independent auditors for the fiscal year ending February 3, 1996.
Deloitte & Touche LLP has served as Western's independent auditors since its
incorporation in 1984.
Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting to respond to appropriate questions and to make such statements as they
may desire.
VOTE REQUIRED FOR APPROVAL
Approval and ratification of the appointment of Deloitte & Touche LLP as
the Company's independent auditors for the fiscal year ending January 3, 1996
('Fiscal 1996') will require the affirmative vote of at least a majority of the
shares of Common Stock represented in person or by proxy and entitled to vote at
the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL AND RATIFICATION
OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR FISCAL 1996
ALL OTHER MATTERS WHICH MAY COME
BEFORE THE ANNUAL MEETING
As of the date of this Proxy Statement, the Company knows of no business
that will be presented for consideration at the Annual Meeting other than that
which has been referred to above. As to other business, if any, that may come
before the Annual Meeting, it is intended that proxies in the enclosed form will
be voted in accordance with the judgment of the proxy holder.
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STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Any proposal of a stockholder intended to be presented at Western's 1996
Annual Meeting of Stockholders must be received by the Secretary of the Company
for inclusion by January 3, 1996 in the notice of meeting and proxy statement
relating to the 1996 Annual Meeting.
ADDITIONAL INFORMATION
The cost of soliciting proxies in the enclosed form will be borne by
Western Publishing Group, Inc. Officers and regular employees of Western may,
but without compensation other than their regular compensation, solicit proxies
by further mailing, personal conversations, or by telephone. The Company will,
upon request, reimburse brokerage firms and others for their reasonable expenses
in forwarding solicitation material to the beneficial owners of Common Stock.
By Order of the Board of Directors
James A. Cohen
Secretary
November 17, 1995
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APPENDIX A
WESTERN PUBLISHING GROUP, INC.
1995 STOCK OPTION PLAN
Section 1. Purpose
The Plan authorizes the Committee to provide to Employees and Consultants
of the Corporation and its Subsidiaries, who are in a position to contribute
materially to the long-term success of the Corporation, with options to acquire
Common Stock, par value $.01 per share, of the Corporation. The Corporation
believes that this incentive program will cause those persons to increase their
interest in the Corporation's welfare, and aid in attracting and retaining
Employees and Consultants of outstanding ability.
Section 2. Definitions
Unless the context clearly indicates otherwise, the following terms, when
used in this Plan, shall have the meanings set forth in this Section:
(a) 'Board' shall mean the Board of Directors of the Corporation.
(b) 'Cause' shall mean failure to comply with any agreements with, or
policies of, the Corporation concerning disclosure of confidential or
proprietary information or competition with, or employment by, a competitor of
the Corporation; fraud or misappropriation with respect to the business of the
Corporation or intentional material damage to the property or business of the
Corporation; wilful failure to perform reasonable duties and responsibilities
consistent with the Grantee's position; breach of fiduciary duty or wilful
material misrepresentation to the Corporation; wilful failure to act in
accordance with any specific, reasonable and lawful instructions consistent with
Grantee's position; conviction of a felony or crime involving moral turpitude;
habitual abuse of alcohol, drugs or controlled substances; or other proper cause
as determined in the sole discretion of the Committee.
(c) 'Code' shall mean the Internal Revenue Code of 1986 as it may be
amended from time to time.
(d) 'Committee' shall mean the Board, or any Committee of two or more
Directors that may be designated by the Board to administer the Plan.
(e) 'Consultant' shall mean any person who is engaged to perform services
for the Corporation or its Subsidiaries, other than as an Employee or Director.
(f) 'Control Person' shall mean any person who, as of the date of grant of
an Option, owns (within the meaning of Section 422(b)(6) of the Code) stock
possessing more than ten percent (10%) of the total combined voting power or
value of all classes of stock of the Corporation or of any parent or Subsidiary.
(g) 'Corporation' shall mean Western Publishing Group, Inc., a Delaware
corporation.
(h) 'Director' shall mean any member of the Board.
(i) 'Employee' shall mean any full-time employee of the Corporation or its
Subsidiaries (including Directors who are otherwise employed on a full-time
basis by the Corporation or its Subsidiaries).
(j) 'Exchange Act' shall mean the Securities Exchange Act of 1934 as it may
be amended from time to time.
(k) 'Fair Market Value' of stock on a given date shall be based upon: (i)
if the Stock is listed on a national securities exchange or quoted in an
interdealer quotation system, the last sales price or, if unavailable, the
average of the closing bid and asked prices per share of the Stock on such date
(or, if there was not trading or quotation in the Stock on such date, on the
next preceding date on which there was trading or quotation) as provided by one
of such organizations; or (ii) if the Stock is not listed on a national
securities exchange or quoted in an interdealer quotation system, as determined
by the Committee in good faith in its sole discretion.
(l) 'Grantee' shall mean a person granted an Option under the Plan.
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(m) 'ISO' shall mean an Option granted pursuant to the Plan to purchase
shares of the Stock and intended to qualify as an incentive stock option under
Section 422 of the Code, as now or hereafter constituted.
(n) 'NQSO' shall mean an Option granted pursuant to the Plan to purchase
shares of the Stock that is not an ISO.
(o) 'Options' shall refer collectively to ISOs and NQSOs issued under and
subject to the Plan.
(p) 'Parent' shall mean any parent corporation as defined in Section 424 of
the Code.
(q) 'Plan' shall mean this 1995 Stock Option Plan as set forth herein and
as amended from time to time.
(r) 'Stock' shall mean shares of the Common Stock of the Corporation.
(s) 'Stock Option Agreement' shall mean a written agreement between the
Corporation and the Grantee, or a certificate accepted by the Grantee,
evidencing the grant of an Option hereunder and containing such terms and
conditions, not inconsistent with the Plan, as the Committee shall approve.
(t) 'Subsidiary' shall mean any corporation with respect to which the
Corporation owns, directly or indirectly, 50% or more of the total combined
voting power of all classes of stock of such corporation.
Section 3. Shares of Stock Subject to the Plan
Subject to the provisions of Section 9, the total amount of Stock with
respect to which Options may be granted under the Plan shall not exceed 750,000.
Stock issuable under the Plan may be authorized but unissued shares or
reacquired shares of Stock. If, prior to exercise, any Options are forfeited,
lapse or terminate for any reason, the Stock covered thereby may again be
available for Option grants under the Plan.
Section 4. Administration of the Plan
The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have the authority to interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to the
Plan, to determine the terms and provisions of Stock Option Agreements
thereunder and to make all other determinations necessary or advisable for the
administration of the Plan. Any controversy or claim arising out of or related
to this Plan or the Options granted thereunder shall be determined unilaterally
by, and at the sole discretion of, the Committee. Any action of the Committee
with respect to the Plan shall be final, conclusive, and binding on all persons,
including the Corporation, subsidiaries of the Corporation, Grantees, any person
claiming any rights under the Plan from or through any Grantee, and
stockholders. The express grant of any specific power to the Committee, and the
taking of any action by the Committee, shall not be construed as limiting any
power or authority of the Committee. To the extent necessary to comply with Rule
16b-3 under the Exchange Act, determinations concerning Options granted to any
person who is subject to Section 16(b) of the Exchange Act shall be made by the
Committee, all of whose members shall be 'disinterested persons' within the
meaning of Rule 16b-3 under the Exchange Act. The Committee may delegate to
officers or managers of the Corporation or any Subsidiary the authority, subject
to such terms as the Committee shall determine, to perform administrative
functions and, with respect to persons not subject to Section 16 of the Exchange
Act, to perform such other functions as the Committee may determine, to the
extent permitted under Rule 16b-3, if applicable, and other applicable law.
Section 5. Types of Options
Options granted under the Plan may be of two types: ISOs or NQSOs. The
Committee shall have the authority and discretion to grant to an eligible
Employee either ISOs, NQSOs or both, but shall clearly designate the nature of
each Option at the time of grant in the Stock Option Agreement. Grantees who are
not Employees of the Corporation or a Subsidiary on the date an Option is
granted shall only receive NQSOs.
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Section 6. Grant of Options to Employees and Consultants
(a) Employees and Consultants of the Corporation and its Subsidiaries shall
be eligible to receive Options under the Plan.
(b) The exercise price per share of Stock subject to an Option granted to
an Employee or Consultant shall be determined by the Committee and specified in
the Stock Option Agreement, provided, however, that the exercise price of each
share subject to an Option shall be not less than (i) in the case of an NQSO,
85%, (ii) in the case of an ISO granted to other than a Control Person, 100%,
and (iii) in the case of an ISO granted to a Control Person, 110%, of the Fair
Market Value of a share of the Stock on the date such Option is granted.
(c) The term of each Option granted to an Employee or Consultant shall be
determined by the Committee and specified in a Stock Option Agreement, provided
that no Option shall be exercisable more than ten years from the date such
Option is granted, and provided further that no ISO granted to a Control Person
shall be exercisable more than five years from the date of Option grant.
(d) The Committee shall determine and designate from time to time Employees
or Consultants who are to be granted Options, and shall specify in the Stock
Option Agreement the nature of each Option granted and the number of shares of
Stock subject to each such Option, provided, however, that in any calendar year,
no Employee or Consultant may be granted an Option to purchase more than 500,000
shares of Stock (determined without regard to when such Option is exercisable),
subject to adjustment pursuant to Section 9.
(e) Notwithstanding any other provisions hereof, the aggregate Fair Market
Value (determined at the time the ISO is granted) of the Stock with respect to
which ISOs are exercisable for the first time by any Employee during any
calendar year under all plans of the Corporation and any Parent or Subsidiary
corporation shall not exceed $100,000. To the extent the limitation set forth in
the preceding sentence is exceeded, the Options with respect to such excess
shall be treated as NQSOs.
(f) The Committee shall determine whether any Option granted to an Employee
or Consultant shall become exercisable in one or more installments and specify
the installment dates in the Stock Option Agreement and, with respect to any
outstanding option, the Committee may, at any time or upon the occurrence of any
event, accelerate the exercisability of any such installment. The Committee may
also specify in the Stock Option Agreement such other provisions, not
inconsistent with the terms of this Plan, as it may deem desirable, including
such provisions as it may deem necessary to qualify any ISO under the provisions
of Section 422 of the Code.
(g) The Committee may, at any time, grant new or additional options to any
eligible Employee or Consultant who has previously received Options under this
Plan, or options under other plans, whether such prior Options or other options
are still outstanding, have been exercised previously in whole or in part, or
have been canceled. The exercise price of such new or additional Options may be
established by the Committee, subject to Section 6(b) hereof, without regard to
such previously granted Options or other options.
Section 7. Exercise of Options
(a) A Grantee shall exercise an Option by delivery of written notice to the
Corporation setting forth the number of shares with respect to which the Option
is to be exercised, together with cash, certified check, bank draft, wire
transfer, or postal or express money order payable to the order of the
Corporation for an amount equal to the Option price of such shares and any
income tax required to be withheld. The Committee may, in its sole discretion,
permit a Grantee to pay all or a portion of the exercise price by delivery of
Stock or other property (including notes or other contractual obligations of
Grantees to make payment on a deferred basis, such as through 'cashless
exercise' arrangements, to the extent permitted by applicable law), and the
methods by which Stock will be delivered or deemed to be delivered to Grantees.
(b) Except as provided pursuant to Section 8(a), no Option granted to an
Employee or Consultant shall be exercised unless at the time of such exercise
the Grantee is then an Employee or Consultant of the Corporation or a
Subsidiary.
(c) The number of shares of Stock which are issued pursuant to the exercise
of an Option shall be charged against the maximum limitation on shares set forth
in Section 3 hereof.
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Section 8. Exercise of Options upon Termination
(a) Unless otherwise determined by the Committee and specified in the Stock
Option Agreement, upon the termination of a Grantee's relationship with the
Corporation and its Subsidiaries, the period during which such Grantee may
exercise any outstanding and then exercisable installments of his Options shall
not exceed: (i) if such termination is due to death, 90 days from the date of
such termination, and (ii) in all other cases, 30 days from the date of such
termination, provided, however, that in no event shall the period extend beyond
the expiration of the Option term. Notwithstanding the foregoing, all Options
shall immediately terminate upon a termination of a Grantee's employment if the
Committee determines, in its sole discretion, that such termination is for
Cause.
(b) Unless otherwise determined by the Committee and specified in the Stock
Option Agreement, in no event shall any Option be exercisable for more than the
maximum number of shares that the Grantee was entitled to purchase at the date
of termination of the relationship with the Corporation and its Subsidiaries.
(c) The sale of any Subsidiary shall be treated as a termination of
employment with respect to any Grantee employed by such Subsidiary.
(d) Subject to the foregoing, in the event of death, Options may be
exercised by a Grantee's legal representative.
Section 9. Adjustment Upon Changes in Capitalization
In the event of any dividend or other distribution (whether in the form of
cash, Stock, or other property), recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, or
share exchange, or other similar corporate transaction or event, affects the
Stock such that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of Optionees under the Plan, then the Committee shall,
in such manner as it may deem equitable, adjust any or all of (i) the number and
kind of shares of Stock deemed to be available thereafter for grants of Options
under Section 3, (ii) the number and kind of shares of Stock that may be
delivered or deliverable in respect of outstanding Options, (iii) the number of
shares with respect to which Options may be granted to a given Grantee in the
specified period as set forth in Section 6(d), and (iv) the exercise price (or,
if deemed appropriate, the Committee may make provision for a cash payment with
respect to any outstanding Option). In addition, the Committee is authorized to
make adjustments in the terms and conditions of, and the criteria included in,
Options (including, without limitation, cash payments in exchange for an Option
or substitution of Options using stock of a successor or other entity) in
recognition of unusual or nonrecurring events (including, without limitation,
events described in the preceding sentence) affecting the Corporation or any
Subsidiary or the financial statements of the Corporation or any Subsidiary, or
in response to changes in applicable laws, regulations, or accounting
principles.
Section 10. Restrictions on Issuing Shares
The Corporation shall not be obligated to deliver Stock upon the exercise
or settlement of any Option or take other actions under the Plan until the
Corporation shall have determined that applicable federal and state laws, rules,
and regulations have been complied with and such approvals of any regulatory or
governmental agency have been obtained and contractual obligations to which the
Option may be subject have been satisfied. The Corporation, in its discretion,
may postpone the issuance or delivery of Stock under any Option until completion
of such stock exchange listing or registration or qualification of such Stock or
other required action under any federal or state law, rule, or regulation as the
Corporation may consider appropriate, and may require any Grantee to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of Stock under the Plan.
Section 11. Tax Withholding
The Corporation shall have the right to require that the Grantee make such
provision, or furnish the Corporation such authorization, necessary or desirable
so that the Corporation may satisfy its obligation, under applicable laws, to
withhold or otherwise pay for income or other taxes of the Grantee attributable
to the grant or exercise of Options granted under the Plan or the sale of Stock
issued with respect to Options. This authority
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shall include authority to withhold or receive Stock or other property and to
make cash payments in respect thereof in satisfaction of a Grantee's tax
obligations.
Section 12. Transferability
No Option shall be subject to anticipation, sale, assignment, pledge,
encumbrance, charge or transfer except by will or the laws of descent and
distribution, and an Option shall be exercisable during the Grantee's lifetime
only by the Grantee, provided, however, that the Committee may permit a Grantee
to transfer an Option to a family member or a trust created for the benefit of
family members. In the case of such a transfer, the transferee's rights and
obligations with respect to the Option shall be determined by reference to the
Grantee and the Grantee's rights and obligations with respect to the Option had
no transfer been made. Notwithstanding such transfer, the Grantee shall remain
obligated pursuant to Section 11 if required by applicable law.
Section 13. General Provisions
(a) Each Option shall be evidenced by a Stock Option Agreement. The terms
and provisions of such Stock Option Agreements may vary among Grantees and among
different Options granted to the same Grantee.
(b) The grant of an Option in any year shall not give the Grantee any right
to similar grants in future years, any right to continue such Grantee's
employment relationship with the Corporation or its Subsidiaries, or, until such
Option is exercised and share certificates are issued, any rights as a
Stockholder of the Corporation. All Grantees shall remain subject to discharge
to the same extent as if the Plan were not in effect.
(c) No Grantee, and no beneficiary or other persons claiming under or
through the Grantee shall have any right, title or interest by reason of any
Option to any particular assets of the Corporation or its Subsidiaries, or any
shares of Stock allocated or reserved for the purposes of the Plan or subject to
any Option except as set forth herein. The Corporation shall not be required to
establish any fund or make any other segregation of assets to assure the payment
of any Option.
(d) The issuance of shares of Stock to Grantees or to their legal
representatives shall be subject to any applicable taxes and other laws or
regulations of the United States or of any state having jurisdiction thereof.
Section 14. Amendment or Termination
The Board may, at any time, alter, amend, suspend, discontinue or terminate
this Plan; provided, however, that no such action shall adversely affect the
rights of Grantees to Options previously granted hereunder and, provided
further, however, that any shareholder approval necessary or desirable in order
to comply with Rule 16b-3 under the Exchange Act or with Section 422 of the Code
(or other applicable law or regulation) shall be obtained in the manner required
therein. The Committee may waive any conditions or rights under, or amend,
alter, suspend, discontinue, or terminate, any Option theretofore granted and
any Stock Option Agreement relating thereto; provided, however, that, without
the consent of an affected Grantee, no such action may materially impair the
rights of such Grantee under such Option.
Section 15. Effective Date of Plan
This Plan is effective upon its adoption by the Board, conditional upon
approval of the Corporation's stockholders. No ISO may be granted more than ten
years after such date.
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WESTERN PUBLISHING GROUP, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING DECEMBER 19, 1995
The undersigned hereby constitutes and appoints Richard A. Bernstein,
Steven M. Grossman and Ira A. Gomberg and each of them, his true and lawful
agents and proxies with full power of substitution in each, to represent the
undersigned at the Annual Meeting of Stockholders of WESTERN PUBLISHING GROUP,
INC., to be held at Chemical Bank, 270 Park Avenue, 11th Floor, Room C, New
York, N.Y. on Tuesday, December 19, 1995 at 10:00 a.m., local time, and at any
adjournment thereof, on all matters coming before said Annual Meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT
VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3, 4 AND
5.
(Continued and to be signed and dated on the reverse side.)
WESTERN PUBLISHING GROUP, INC.
P.O. BOX 11514
NEW YORK, N.Y. 10203-0514
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3, 4 AND 5.
1. Election of Directors
FOR all nominees / / WITHHOLD AUTHORITY / / *EXCEPTIONS / /
listed below to vote for all
nominees listed below.
Nominees: Richard A. Bernstein, Richard H. Hochman, John F. Moore,
Jenny Morgenthau, Michael A. Pietrangelo
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name on the space provided
below.)
*Exceptions _________________________________________________________________
2. Amendment of Restated Certificate of Incorporation to increase
authorized number of shares of Common Stock.
FOR / / AGAINST / / ABSTAIN / /
3. Amendment of Restated Certificate of Incorporation to change date of
mandatory redemption of Series A Preferred Stock.
FOR / / AGAINST / / ABSTAIN / /
4. Approval of 1995 Stock Option Plan.
FOR / / AGAINST / / ABSTAIN / /
5. Approval of independent auditors.
FOR / / AGAINST / / ABSTAIN / /
Change of Address
and/or Comments Mark Here / /
Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
Dated: ______________________________, 1995
___________________________________________
___________________________________________
Signature(s)
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
VOTES MUST BE INDICATED
(X) IN BLACK OR BLUE INK. /X/
