<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /x/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/x/ Definitive proxy statement
/x/ Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Shorewood Packaging Corporation
________________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
Shorewood Packaging Corporation
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/x/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
________________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
/ / 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, schedules or registration statement no.:
(3) Filing party:
(4) Date filed:
__________________________________
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
SHOREWOOD PACKAGING CORPORATION
277 PARK AVENUE
NEW YORK, NEW YORK 10172
____________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 19, 1995
____________________
TO THE STOCKHOLDERS OF SHOREWOOD PACKAGING CORPORATION
NOTICE is hereby given that the Annual Meeting (the "Meeting") of
Stockholders of SHOREWOOD PACKAGING CORPORATION (the "Company"), a Delaware
corporation, will be held at The Friars Club, 57 East 55th Street, Second
Floor, New York, New York, on October 19, 1995 at 9:30 A.M. for the following
purposes:
1. To elect three directors comprising the Class III Directors to
serve until the 1998 Annual Meeting of Stockholders.
2. To consider and vote upon the adoption of the Company's 1995
Performance Bonus Plan.
3. To ratify the selection of Deloitte & Touche LLP as the
independent auditors of the Company for the fiscal year ending
April 27, 1996.
4. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
All of the above matters are more fully described in the accompanying
Proxy Statement.
The Board of Directors has fixed the close of business on August 31,
1995 as the date for the determination of stockholders entitled to notice of,
and to vote at, the Meeting. A list of stockholders entitled to vote at the
Meeting will be open to examination by stockholders during ordinary business
hours for a period of ten (10) days prior to the Meeting at the executive
offices of the Company, 277 Park Avenue, New York, New York 10172.
By order of the Board of Directors,
Joan Matheis
Secretary
New York, New York
September 15, 1995
--------------------------------------------------------------------------------
IMPORTANT
================================================================================
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE DATE AND SIGN
THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENVELOPE PROVIDED. IF YOU
ATTEND THE MEETING, YOU MAY REVOKE THE PROXY AND VOTE YOUR SHARES IN PERSON.
--------------------------------------------------------------------------------
<PAGE> 3
SHOREWOOD PACKAGING CORPORATION
277 PARK AVENUE
NEW YORK, NEW YORK 10172
____________________
ANNUAL MEETING OF STOCKHOLDERS
____________________
PROXY STATEMENT
APPROXIMATE DATE OF MAILING: SEPTEMBER 15, 1995
The enclosed Proxy is solicited on behalf of the Board of Directors
(the "Board" or the "Board of Directors") of Shorewood Packaging Corporation
(the "Company") for use at the Annual Meeting of Stockholders to be held at the
time and place set forth in the foregoing notice and at any adjournment thereof
(the "Meeting"). Proxies in the accompanying form, which are properly executed
and duly returned to the Company and not revoked prior to exercise, will be
voted in accordance with the instructions contained therein. If a Proxy is
executed and returned without instructions as to how it is to be voted, such
Proxy will be voted in favor of all proposals contained in this Proxy
Statement. Each Proxy granted pursuant to this solicitation is revocable and
may be revoked at any time prior to its exercise provided written notice of
revocation is received by the Secretary of the Company prior to the Meeting. A
Stockholder who attends the Meeting in person may, if he wishes, vote by ballot
at the Meeting, thereby canceling any Proxy previously given by such
Stockholder in connection with the Meeting. Only stockholders of record (the
"Stockholders") of the Company's common stock, $.01 par value per share (the
"Common Stock"), at the close of business on August 31, 1995 are entitled to
notice of, and to vote at, the Meeting.
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Meeting, present in person or
represented by proxy, shall constitute a quorum at the Meeting. Any
stockholder present in person or by proxy who abstains from voting on any
particular matter described herein will be counted for purposes of determining
a quorum. For purposes of voting on the matters described herein, the
affirmative vote of (i) a plurality of the shares of Common Stock present or
represented at the Meeting is required to elect management's three nominees as
directors, (ii) a majority of the shares of Common Stock present or represented
at the Meeting is required to ratify the selection by the Board of Directors of
Deloitte & Touche LLP as independent auditors of the Company for the fiscal
year ending April 27, 1996, and (iii) a majority of the shares of Common Stock
present or represented at the Meeting is required to approve the adoption of
the Company's 1995 Performance Bonus Plan. The aggregate number of votes cast
by all stockholders present in person or by proxy will be used to determine
whether a motion will carry. Accordingly, an abstention from voting on a
matter by a stockholder present in person or by proxy at the Meeting will have
no effect on the item on which the stockholder abstains from voting. In
addition, although broker "non-votes" will be counted for purposes of
determining a quorum, they will have no effect on the vote on matters at the
Meeting.
<PAGE> 4
PRINCIPAL STOCKHOLDERS
The outstanding voting stock of the Company as of July 26, 1995
consisted of 19,371,183 shares of Common Stock, with each share entitled to
one vote. Beneficial ownership has been determined for purposes herein in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), under which a person is deemed to be the beneficial owner
of securities if such person has or shares voting power or investment power in
respect of such securities or has the right to acquire beneficial ownership
within 60 days. So far as is known to the Company, the following were the only
beneficial owners of more than 5% of the outstanding Common Stock of the
Company on such date:
<TABLE>
<CAPTION>
Name and Address Amount of Shares Percent
of Beneficial Owner Beneficially Owned of Class
------------------- ------------------ --------
<S> <C> <C>
Paul B. Shore(1)(2) . . . . . . . . . . 2,750,515 14.16%
c/o Shorewood Packaging
Corporation
277 Park Avenue
New York, NY 10172
Marc P. Shore(2)(3) . . . . . . . . . . . 1,212,978 6.24%
c/o Shorewood Packaging
Corporation
277 Park Avenue
New York, NY 10172
Ariel Capital Management, Inc.(4) 3,277,626 16.92%
307 North Michigan Avenue
Chicago, Illinois 60601
</TABLE>
_______________________________________
(1) Includes: (i) 5,000 shares owned by Ellin Shore directly and 15 shares
owned by Ellin Shore as custodian for a minor grandchild; and (ii)
60,000 shares which could be acquired on or within 60 days of July 26,
1995 upon the exercise of stock options granted under the Company's
incentive and stock option plans (collectively, the "Incentive Plans").
(See "Executive Compensation - Aggregated Option Exercises and Fiscal
Year-End Option Values.") Ellin Shore is the wife of Paul B. Shore.
(2) Includes 264,600 shares owned by Ellin Shore and either Marc P. Shore or
Andrew Shore, as Trustees, under three Trust Agreements, each dated as
of January 15, 1972, for the benefit of Marc P. Shore and two other
children of Paul B. Shore, as to all of which shares Paul B. Shore and
Marc P. Shore (except with respect to 88,200 shares held by the trust of
which Marc P. Shore is the beneficiary) disclaim beneficial ownership.
(3) Includes: (i) 71,177 shares which could be acquired on or within 60 days
of July 26, 1995 upon the exercise of stock options granted under the
Incentive Plans (see "Executive Compensation - Aggregated Option
Exercises and Fiscal Year-End Option Values"); and (ii) 34,201 shares of
restricted stock awarded pursuant to the Company's long term incentive
program, all of which are subject to forfeiture. For information on the
restricted stock, see "Executive Compensation - Summary Compensation
Table - Footnote (2)".
- 2 -
<PAGE> 5
(4) Represents shares held by investment advisory clients of Ariel Capital
Management, Inc. This information is based solely upon the contents of
filings under Section 13 of the Exchange Act made by Ariel Capital
Management, Inc.
EXECUTIVE OFFICERS
The executive officers of the Company are identified in the table
below. Each executive officer of the Company serves at the pleasure of the
Board of Directors.
<TABLE>
<CAPTION>
YEAR
BECAME AN
EXECUTIVE
NAME AGE OFFICER POSITIONS
---------------------- --- --------- --------------------------------------------------------
<S> <C> <C> <C>
Paul B. Shore 74 1966 Chairman of the Board and Chief Executive Officer
Marc P. Shore 41 1976 Vice Chairman of the Board and President
Floyd S. Glinert 66 1968 Executive Vice President-Marketing and Director
Howard M. Liebman 53 1994 Executive Vice President and Chief Financial Officer
Charles Kreussling 66 1966 Executive Vice President-Manufacturing
Kenneth M. Rosenblum 52 1988 Senior Vice President-Sales
William H. Hogan 36 1995 Corporate Controller
</TABLE>
ELECTION OF DIRECTORS
At the Meeting, three directors comprising the Class III Directors are
to be elected for three-year terms expiring in 1998 and until their successors
are elected and qualified. The Board of Directors has designated the
individuals named below as nominees. Proxies received from Stockholders will
be voted, unless authority to so vote is withheld, for the election of the
nominees identified in the following table. Authority to vote for any or all
of the nominees may be withheld in the manner indicated on the enclosed Proxy.
If for any reason any of the nominees becomes unavailable for election, the
Proxies solicited will be voted for such other nominees as are selected by the
Board of Directors. The Board of Directors has no reason to believe that any
of the nominees is not available or will not serve if elected. Set forth in
the following table is certain information with respect to (i) each nominee
nominated to serve as a Class III Director for a term to expire in 1998 and
(ii) the Class I Directors and the Class II Directors whose terms expire in
1996 and 1997, respectively. Each nominee described is presently a director of
the Company. Each of the Class I Directors and the Class II Directors was
elected by the stockholders of the Company at the 1993 and 1994 Annual Meetings
of Stockholders, respectively.
- 3 -
<PAGE> 6
YEAR FIRST
BECAME
NAME AGE A DIRECTOR
---- --- ----------
NOMINEES
CLASS III: NEW TERM TO EXPIRE IN 1998
Paul B. Shore 74 1966
Marc P. Shore 41 1976
Seymour Leslie 72 1985
DIRECTORS CONTINUING IN OFFICE
CLASS I: TERM TO EXPIRE IN 1996
Melvin L. Braun 73 1987
Floyd S. Glinert 66 1968
CLASS II: TERM TO EXPIRE IN 1997
R. Timothy O'Donnell 40 1991
Kevin J. Bannon 43 1992
William P. Weidner 50 1993
The Board of Directors recommends a vote FOR each of the nominees for election
as Class III DIRECTORS.
- 4 -
<PAGE> 7
BIOGRAPHICAL INFORMATION
Certain information about the executive officers and directors of the
Company is set forth below. This information has been furnished to the Company
by the individuals named.
Paul B. Shore, the founder of the Company, has served as Chairman of
the Board and Chief Executive Officer since the Company's formation in 1966 and
was President of the Company until October 1991. Mr. Shore's printing and
packaging career spans more than forty years. Mr. Shore has been responsible
for the design, invention, development and implementation of several products
manufactured and processes utilized by the Company.
Marc P. Shore, President of the Company since October 1991, has been
employed by the Company in various capacities since 1976. He is primarily
responsible for the Company's daily operations. In that capacity, he also
maintains contact with major customers of the Company. In addition, Mr. Shore
is responsible for coordinating the implementation of all of the Company's
manufacturing and sales activities. Marc P. Shore is Paul B. Shore's son.
Howard M. Liebman joined the Company as Executive Vice-President and
Chief Financial Officer in June, 1994. Mr. Liebman is a Certified Public
Accountant. Prior to joining the Company, Mr. Liebman had been an audit
partner for more than twenty years at the accounting firm of Deloitte & Touche
LLP, where he was actively involved in the Shorewood account.
Floyd S. Glinert has been employed by the Company since 1968. Mr.
Glinert is responsible for the Company's overall marketing management including
advertising, sales promotion and public relations. In addition, he is
responsible for the development and planning of new packaging opportunities.
Melvin L. Braun was a partner of Touche Ross & Co. (now known as
Deloitte & Touche LLP), New York, New York, and predecessor firms from 1950
until he retired on September 1, 1987. Mr. Braun now acts as an independent
consultant and serves as a director of Conair Corp.
R. Timothy O'Donnell is the President of Jefferson Capital Group, Ltd.,
an investment banking firm located in Richmond, Virginia. He has served in
that capacity since August 1989. Mr. O'Donnell also serves on the boards of
directors of LIVE Entertainment, Inc., All American Communications and Cinergi
Pictures, Inc.
Kevin J. Bannon is an Executive Vice President and Chief Investment
Officer, The Bank of New York, New York, New York. From April 1979 to the
present date, Mr. Bannon has held various management positions with The Bank of
New York. He is a Chartered Financial Analyst.
Seymour Leslie has served as Chairman of the Leslie Group, Inc., an
investment company, from March 1978 to the present date and as Co-Chairman of
Leslie/Linton Entertainment, Inc., an investment and consulting firm, from
March 1990 until the present date. Both companies are located in New York, New
York. Mr. Leslie is also a director of Gametek, Inc., K-Tel International Inc.
and Allied Digital Technologies, Inc.
- 5 -
<PAGE> 8
William P. Weidner is the President and Chief Operating Officer of
Pratt Hotel Corporation which operates and develops casino and resort
properties worldwide. He has served in that capacity since 1985. He has also
served as the President of Hollywood Casino-Aurora, Inc., an operator of
riverboat casinos, since 1992. Mr. Weidner serves on the boards of directors
of Hollywood Casino Corporation and Pratt Hotel Corporation.
Charles Kreussling has been employed by the Company since its inception
in 1966 and has been an Executive Vice President of the Company since 1979.
Mr. Kreussling is responsible for the Company's overall manufacturing and plant
administration. From 1967 until 1979, he was the Plant Manager of the
Company's Farmingdale, New York facility. Prior to joining the Company, he was
employed in various capacities in the printing and paperboard packaging
industry.
Kenneth M. Rosenblum joined the Company in 1969 as an account executive
for the music industry. From 1970 until 1993, Mr. Rosenblum served as Vice
President-Sales of the Company. In 1993, he was promoted to Senior Vice
President Sales-Home Entertainment. In that capacity, he is responsible for
all of the Company's sales to video, music and computer software accounts.
William H. Hogan joined the Company as Corporate Controller in June
1995. Mr. Hogan, a Certified Public Accountant, was senior manager with the
accounting firm of Grant Thornton, LLP, from 1994 to 1995. From 1981 until
1994, Mr. Hogan was employed by the accounting firm of Deloitte & Touche LLP.
He was senior manager with Deloitte & Touche LLP from 1989 until 1994. Mr.
Hogan was actively involved in servicing the Company since 1982.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an Executive Committee which is composed of Messrs.
Paul and Marc Shore, Seymour Leslie and Melvin L. Braun. The Executive
Committee has the responsibility, between meetings of the Board, to take all
actions with respect to the management of the Company's business that require
action by the Board, except for certain specified matters that by law must be
approved by the entire Board. The Executive Committee also coordinates and
implements financial and other policies and reviews the status of all
operational activities.
In addition, the Company has an Audit Committee which is composed of
Messrs. Seymour Leslie, Melvin L. Braun and R. Timothy O'Donnell, each of whom
is not an officer or employee of the Company or its subsidiaries. The Audit
Committee has the responsibility of recommending the Company's outside
auditors, reviewing the scope and results of audits, and examining procedures
for ensuring compliance with the Company's policies on conflicts of interest.
The Company has a Compensation and Stock Option Committee (the
"Committee" or the "Compensation Committee") which is composed of Messrs.
William P. Weidner, Kevin J. Bannon and R. Timothy O'Donnell. None of the
aforementioned persons is or ever was an officer or employee of the Company or
its subsidiaries. The Compensation Committee works closely with the Board in
establishing and implementing the Company's compensation policies and
practices. See "Report of Compensation Committee." Additionally, it
administers the discretionary portions
- 6 -
<PAGE> 9
of the Company's Incentive Plans under which employees of the Company are
eligible to receive stock options, restricted stock and other benefits. The
members of the Committee are not eligible to participate in the programs which
they administer. However, they are eligible to participate in a
non-discretionary plan for non-employee directors (the "Director Plan")
contained in the Company's 1993 Incentive Program (the "1993 Program"). The
Director Plan is administered by a separate committee of the Board (consisting
of non-eligible directors) and provides for the automatic grant of stock
options (the "Director Options") to non-employee directors pursuant to
prescribed terms. See "Executive Compensation - Compensation of Directors".
The Company does not have a nominating committee.
MEETINGS OF THE BOARD
During the fiscal year ended April 29, 1995 ("fiscal year 1995"), the
Board of Directors held four meetings, the Audit Committee held one meeting and
the Compensation Committee held four meetings. Each of the directors attended
all of the meetings of the Board and the committees of which he was a member
held during the period in which he served on the Board or such committee. In
addition, during fiscal year 1995, the Board acted once by unanimous written
consent, the Executive Committee acted twice by unanimous written consent and
the Compensation Committee acted twice by unanimous written consent. The
Company's directors discharge their responsibilities throughout the year, not
only at Board of Directors' and committee meetings, but through personal
meetings and other communications, including telephone contacts, with the
Chairman and others regarding matters of interest and concern to the Company.
EQUITY SECURITIES BENEFICIALLY OWNED BY THE DIRECTORS AND NAMED EXECUTIVE
OFFICERS
According to information furnished to the Company as of July 26, 1995,
the directors of the Company, the Company's "named executive officers" (the
"Named Executive Officers") within the meaning of Item 402(a)(3) of Regulation
S-K of the Securities Act of 1933, as amended (the "Act"), and all directors
and executive officers as a group, beneficially owned shares of Common Stock of
the Company as set forth below. Beneficial ownership has been determined for
purposes herein in accordance with Rule 13d-3 of the Exchange Act under which a
person is deemed to be the beneficial owner of securities if such person has or
shares voting power or investment power in respect of such securities or has
the right to acquire beneficial ownership within 60 days.
- 7 -
<PAGE> 10
<TABLE>
<CAPTION>
Name Amount of Shares Percent
of Beneficial Owner Beneficially Owned of Class
------------------- ------------------ --------
<S> <C> <C>
Directors
---------
Paul B. Shore (1)(2) . . . . . . . . . . . . 2,750,515 14.16%
Marc P. Shore(2)(3) . . . . . . . . . . . . . 1,212,978 6.24%
Charles Kreussling(4) . . . . . . . . . . . . 246,325 1.27%
Floyd S. Glinert(5) . . . . . . . . . . . . . 209,450 1.08%
Seymour Leslie(6) . . . . . . . . . . . . . . 193,674 1%
R. Timothy O'Donnell(8) . . . . . . . . . . . 111,746 (7)
Howard M. Liebman(9) . . . . . . . . . . . . 35,259 (7)
William Weidner(10) . . . . . . . . . . . . . 19,000 (7)
Melvin L. Braun(11) . . . . . . . . . . . . . 18,456 (7)
Kevin J. Bannon(10) . . . . . . . . . . . . . 7,500 (7)
All directors and executive officers as a
group (12 persons)(12)(13)(14) . . . . . . . 4,623,409 23.55%
</TABLE>
________________________________________
(1) Includes: (i) 5,000 shares owned by Ellin Shore directly and 15 shares
owned by Ellin Shore as custodian for a minor grandchild; and (ii)
60,000 shares which could be acquired on or within 60 days of July 26,
1995 upon the exercise of stock options granted under the Company's
Incentive Plans. (See "Executive Compensation - Aggregated Option
Exercises and Fiscal Year-end Option Values"). Ellin Shore is the wife
of Paul B. Shore.
(2) Includes 264,600 shares owned by Ellin Shore and either Marc P. Shore
or Andrew Shore, as Trustees, under three Trust Agreements, each dated
as of January 15, 1972, for the benefit of Marc P. Shore and two other
children of Paul B. Shore, as to all of which shares Paul B. Shore and
Marc P. Shore (except with respect to 88,200 shares held by the trust
of which Marc P. Shore is the beneficiary) disclaim beneficial
ownership.
(3) Includes: (i) 71,177 shares which could be acquired on or within 60
days after July 26, 1995 upon the exercise of stock options granted
under the Incentive Plans (see "Executive Compensation - Aggregated
Option Exercises and Fiscal Year-End Option Values"); and (ii) 34,201
shares of restricted stock awarded under the Company's long term
incentive program, all of which are subject to forfeiture (see
"Executive Compensation - Summary Compensation Table - Footnote (2)").
(4) Includes: (i) 60,000 shares owned by Charles Kreussling's wife; and
(ii) 22,500 shares which could be acquired on or within 60 days after
July 26, 1995 upon the exercise of stock options granted under the
Incentive Plans. (See "Executive Compensation - Aggregated Option
Exercises and Fiscal Year-End Option Values").
- 8 -
<PAGE> 11
(5) Includes: (i) 26,250 shares which could be acquired on or within 60
days after July 26, 1995 upon the exercise of stock options granted
under the Company's Incentive Plans (see "Executive Compensation -
Aggregated Option Exercises and Fiscal Year-End Option Values"); and
(ii) 3,000 shares owned by Floyd S. Glinert's wife, as to all of which
shares Floyd S. Glinert disclaims beneficial ownership.
(6) Includes: (i) 175,818 shares held by the Leslie Group, Inc., of which
Seymour Leslie is Chairman of the Board and a principal stockholder;
and (ii) 17,856 shares which could be acquired upon the exercise of
Director Options granted under the Incentive Plans.
(7) Less than 1%.
(8) Includes: (i) 300 shares owned by Mr. O'Donnell's wife as custodian for
their two minor children; (ii)14,821 shares subject to stock options
issued to Jefferson Capital Group, Ltd. (of which Mr. O'Donnell is the
President and a principal shareholder); and (iii) 6,000 shares which
could be acquired on or within 60 days after July 26, 1995 upon the
exercise of Director Options granted under the Incentive Plans.
(9) Includes: (i) 14,456 shares which could be acquired on or within 60
days after July 26, 1995 upon the exercise of stock options granted
under the Incentive Plans (see "Executive Compensation - Aggregated
Option Exercises and Fiscal Year-End Option Values"); and (ii) 18,803
shares of restricted stock awarded under the Company's long-term
incentive program, all of which are subject to forfeiture. (see
"Executive Compensation - Summary Compensation Table-Footnote (2)").
(10) Includes 1,000 shares which could be acquired on or within 60 days
after July 26, 1995 upon the exercise of Director Options granted under
the 1993 Program. (See "Executive Compensation- Compensation of
Directors").
(11) Includes 8,928 shares which could be acquired on or within 60 days of
July 26, 1995 upon the exercise of Director Options granted under the
Company's Incentive Plans.
(12) The total number of directors and executive officers of the Company
includes two executive officers who were not included as Named
Executive Officers for the fiscal year ended April 29, 1995.
(13) While the shares described in footnote (2) are attributed to each of
Mr. Paul B. Shore and Mr. Marc P. Shore for purposes of calculating the
amount of shares beneficially owned by them individually, such shares
are included only once in calculating the total amount of shares
beneficially owned by all directors and executive officers as a group.
(14) Includes 257,239 shares subject to stock options which could be
acquired on or within 60 days of July 26, 1995 and 59,909 shares of
restricted stock awarded pursuant to the Company's long term incentive
program, all of which are subject to forfeiture.
- 9 -
<PAGE> 12
EXECUTIVE COMPENSATION
The following summary compensation table sets forth certain information
concerning the compensation of the Named Executive Officers for each of the
three fiscal years during the period ended April 29, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM ALL
ANNUAL COMPENSATION OTHER
COMPENSATION (1) AWARDS COMPENSATION(5)
--------------------- ---------------------------- ---------------
Options to
Restricted Purchase
Salary Bonus Stock Awards Shares(3)
Name and Principal Position Year ($) ($) ($)(2) (#) ($)
--------------------------- ---------- ---------- ------- ------------ ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Paul B. Shore Fiscal 1995 574,600 -- -- -- 1,500
Chairman of the Board and Fiscal 1994 574,600 -- -- -- 2,358
Chief Executive Officer Fiscal 1993 574,600 -- -- -- 4,577
----------------------------------------------------------------------------------------
Marc P. Shore Fiscal 1995 500,000 225,000 607,068 29,708 9,078
Vice Chairman of the Fiscal 1994 399,816 200,000 -- 75,000 5,088
Board and President Fiscal 1993 339,664 -- -- -- 8,633
----------------------------------------------------------------------------------------
Floyd S. Glinert Fiscal 1995 299,988 -- -- -- 17,990
Executive Vice President - Fiscal 1994 299,988 -- -- -- 15,932
Marketing and Director Fiscal 1993 290,179 -- -- -- 18,114
----------------------------------------------------------------------------------------
Charles Kreussling Fiscal 1995 200,000 70,000 -- -- 17,889
Executive Vice President - Fiscal 1994 200,000 50,000 -- -- 15,318
Manufacturing Fiscal 1993 193,469 -- -- -- 17,021
----------------------------------------------------------------------------------------
Howard M. Liebman(4) Fiscal 1995 249,616 78,000 333,753 57,824 22,484(6)
Executive Vice President
and Chief Financial Officer
----------------------------------------------------------------------------------------
</TABLE>
--------------------------------------
(1) The aggregate amount of perquisites and other personal benefits for each of
the Named Executive Officers did not equal or exceed the lesser of either
$50,000 or 10% of the total of such individual's base salary and bonus, as
reported herein for the applicable fiscal years, and is not reflected in
the table.
(2) In July 1995, the Compensation Committee awarded shares of restricted stock
(the "Restricted Shares") to certain key employees and executives pursuant
to the Company's Long Term Incentive Program. The values reported in this
column were calculated by multiplying the closing market price of the
Common Stock as reported on NASDAQ on the date of grant by the respective
number of Restricted Shares granted, without any adjustment for forfeiture
or termination contingencies. The Restricted Shares are subject to a three
year performance vesting requirement or, alternatively, an eight year
employment vesting requirement. If the grantee's employment terminates
prior to vesting, the Restricted Shares
- 10 -
<PAGE> 13
awarded to him or her are forfeited. During the vesting period, the
recipient may not dispose of, but may vote, the Shares and is entitled to
receive any dividends paid on the Shares.
The number and value of the aggregate Restricted Share holdings of each
Named Executive Officer as of April 29, 1995 are set forth below. Values
were calculated by multiplying the closing price of the Common Stock as
reported on NASDAQ on April 28, 1995 (the last trading day in the fiscal
year) by the respective number of Shares.
<TABLE>
<CAPTION>
Named Executive Officer Shares (#) Value ($)
----------------------- ---------- ---------
<S> <C> <C>
Marc P. Shore 34,201 538,666
Howard M. Liebman 18,803 296,147
</TABLE>
(3) Stock options are granted under the terms and provisions of the Company's
Incentive Plans. For a description of the stock options awarded in fiscal
year 1995, see "Option Grants in Last Fiscal Year".
(4) Mr. Liebman joined the Company on June 3, 1994.
(5) Amounts reported under this column include the dollar value of the
following:
<TABLE>
<CAPTION>
Value of Life- Contributions to
Insurance 401(k) Employee Contributions to
Premiums Savings Plan Profit-Sharing Plan
Name Year ($) ($) ($)
---------- ------------ ------------- ---------------- -------------------
<S> <C> <C> <C> <C>
Paul B. Shore Fiscal 1995 -- -- 1,500
Fiscal 1994 -- -- 2,358
Fiscal 1993 -- -- 4,577
----------------------------------------------------------------------------
Marc P. Shore Fiscal 1995 700 6,878 1,500
Fiscal 1994 645 2,085 2,358
Fiscal 1993 595 3,461 4,577
----------------------------------------------------------------------------
Floyd S. Glinert Fiscal 1995 10,538 5,952 1,500
Fiscal 1994 10,538 3,036 2,358
Fiscal 1993 10,538 2,999 4,577
----------------------------------------------------------------------------
Charles Kreussling Fiscal 1995 11,417 4,972 1,500
Fiscal 1994 11,013 2,136 2,169
Fiscal 1993 10,937 1,969 4,115
----------------------------------------------------------------------------
Howard M. Liebman Fiscal 1995 8,981 -- --
----------------------------------------------------------------------------
</TABLE>
(6) Includes $13,503 earned in fiscal 1995 by a Trust established by the
Company for Mr. Liebman's benefit, pursuant to which income earned on the
trust principal is accumulated for payment to Mr. Liebman upon his
retirement from the Company. For a description of the Trust, see
"Employment Agreement with Named Executive Officer".
- 11 -
<PAGE> 14
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides certain summary information concerning
individual grants of stock options made to Named Executive Officers during the
fiscal year ended April 29, 1995 under the Company's Incentive Plans. Except
as set forth in the table below, during fiscal year 1995, the Company did not
grant any stock options under the Company's Incentive Plans to any of the Named
Executive Officers.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Rates of
Stock Price
Appreciation
INDIVIDUAL GRANTS for Option Term(2)
======================================================================================================================
Number of Percent of Total
shares Options Granted to
underlying Employees in Fiscal Exercise
Grant(1) Year Price Expiration 5% 10%
Name (#) (%) ($) Date ($) ($)
---------- ---------- ------------------- -------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Marc P. Shore 29,708 12.1% 17.75 7/11/99 145,688 321,932
Howard M. Liebman 17,824 7.2% 17.75 7/11/99 87,409 193,151
40,000 16.2% 17.50 6/3/99 193,397 427,357
</TABLE>
------------------------------------
(1) The stock options reported above were awarded pursuant to the 1993
Program at exercise prices equal to the fair market value of the Common
Stock on the date of grant. They are exercisable over five years from
the date of grant with installments of 25% of the total number of
underlying shares becoming exercisable on each of the four anniversaries
of the date of grant. Payment for options exercised may be in cash or
shares of Common Stock, the fair market value of which is determined in
accordance with the terms of the 1993 Program. The options are subject
to early termination in the event of death or termination of employment
for any reason.
(2) Amounts represent hypothetical gains that could be achieved from the
exercise of the respective stock options and the subsequent sale of the
Common Stock underlying such options if the options were exercised at the
end of the option terms. The gains are based upon assumed rates of stock
price appreciation of 5% and 10% compounded annually from the date the
respective options were granted. The rates of appreciation are mandated
by the rules of the Exchange Act and do not represent the Company's
estimate or projection of the future Common Stock price.
- 12 -
<PAGE> 15
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table provides certain summary information concerning stock
option exercises during the fiscal year 1995 by the Named Executive Officers
and the value of unexercised stock options held by the Named Executive Officers
as of April 29, 1995.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Number of Unexercised "In the Money"
Shares Options at Fiscal Options at Fiscal
Acquired Value Year End(1) Year End(2)
Name on Exercise Realized (#) ($)
----------- ----------- -------- ---------------------------- ----------------------------
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Paul B. Shore -- -- 45,000 15,000 320,625 106,875
Marc P. Shore 30,000 263,438 33,750 100,958 240,750 507,563
Floyd S. Glinert -- -- 22,500 7,500 161,719 53,906
Charles Kreussling -- -- 18,750 6,250 134,531 44,844
Howard M. Liebman -- -- -0- 57,824 -0- (3)
</TABLE>
----------------------------------------
(1) Represents the aggregate number of stock options held as of April 29,
1995 which could and could not be exercised on that date pursuant to
the terms of the stock option agreements related thereto and the
Incentive Plans.
(2) Values were calculated by multiplying the closing market price of the
Common Stock, as reported on NASDAQ on April 28, 1995 (the last trading
day of the fiscal year), by the respective number of shares and
subtracting the exercise price per share, without any adjustment for
any termination or vesting contingencies.
(3) None of Howard M. Liebman's unexercised options were "in the money" at
fiscal year end.
- 13 -
<PAGE> 16
EMPLOYMENT AGREEMENT WITH NAMED EXECUTIVE OFFICER
On June 3, 1994, Mr. Howard M. Liebman joined the Company as Executive
Vice President and Chief Financial Officer. The Company and Mr. Liebman have
entered into a five year employment agreement (the "Employment Agreement")
pursuant to which Mr. Liebman receives an annual base salary of $275,000 plus
a guaranteed bonus of $35,000. These amounts are subject to periodic increases
at the discretion of the Board. The Employment Agreement provides that, upon a
change in control of the Company, as defined in the agreement, Mr. Liebman will
be entitled to receive a lump sum payment equal to approximately three times
his annual compensation. The Company has also established a Trust for Mr.
Liebman's benefit, pursuant to which income earned on the trust principal fund
of $300,000 is accumulated for payment to Mr. Liebman upon his retirement from
the Company, with the principal fund then being returned to the Company. The
Trust earned $13,503 in fiscal year 1995.
COMPENSATION OF DIRECTORS
Each director who is not an officer or an employee of the Company (an
"Outside Director") is entitled to receive a director's fee of $8,000 per annum
plus $2,000 for attendance at each meeting of the Board of Directors and $1,000
for attendance at each meeting of a committee of the Board of Directors. All
directors of the Company are also reimbursed for expenses. Under the 1993
Program, each Outside Director automatically receives, as of January 2 (or if
January 2 is not a business day, as of the next succeeding business day) of
each year, a Director Option to purchase at an option price equal to the fair
market value of the Company's Common Stock on the date of grant a number of
shares determined pursuant to a prescribed formula. Director Options vest in
equal annual installments of 20% commencing on the first anniversary of the
grant date and become exercisable in full immediately upon the death of the
grantee or retirement from the Board by reason of disability or upon a change
of control of the Company (as defined in the 1993 Program). Director Options
have a term of ten years, subject to early termination in the event the grantee
retires or is removed from the Board. The 1993 Program permits awards of
options of up to 100,000 shares in the aggregate to all Outside Directors
(subject to certain anti-dilution provisions). During fiscal year 1995, each
Outside Director received an option to purchase 4,000 shares of Common Stock
pursuant to the 1993 Program.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION - CERTAIN
TRANSACTIONS
The Compensation Committee consists of Messrs. William P. Weidner,
Kevin J. Bannon and R. Timothy O'Donnell. No member of the Company's
Compensation Committee is a current or former officer or employee of the
Company. There are no compensation committee interlocks between the Company
and any other entities involving any of the executive officers or directors of
such other entities.
Jefferson Capital Group, Ltd, an investment banking firm of which R.
Timothy O'Donnell is the President and a principal shareholder, serves as an
investment advisor to the Company on various matters.
- 14 -
<PAGE> 17
The Bank of New York, of which Kevin J. Bannon is an Executive Vice
President, is a participant in the Company's lending syndicate. The aggregate
amount of the Company's credit facilities outstanding as at the end of fiscal
year 1995 was $10,042,040. The Bank of New York also acts as the Company's
transfer agent.
Prior to joining the Company on June 3, 1994, Howard M. Liebman was an
audit partner at Deloitte & Touche LLP, the Company's independent auditors.
SECTION 16(A) REPORTING UNDER THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than ten percent of the Common
Stock of the Company to file reports of ownership and changes in ownership with
the Securities and Exchange Commission and the exchange on which the Common
Stock is listed for trading. Executive officers, directors and more than ten
percent stockholders are required by regulations promulgated under the Exchange
Act to furnish the Company with copies of all Section 16(a) reports filed.
Based solely on the Company's review of copies of the Section 16(a) reports
filed for the fiscal year ended April 29, 1995, the Company believes that all
reporting requirements applicable to its executive officers, directors, and
more than ten percent stockholders were complied with for the fiscal year ended
April 29, 1995 and for prior fiscal years, except that Howard M. Liebman,
Executive Vice President and Chief Financial Officer, inadvertently failed to
timely file a Form 3 upon joining the Company in June 1994.
- 15 -
<PAGE> 18
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change
in the Company's cumulative shareholder return on the Common Stock for the last
five years with the cumulative total return during the same period of the
Russell 2000 Index, the peer group index contained in the Company's 1994 Proxy
Statement (the "1994 Peer Group") and a new peer group selected by the
Compensation Committee for inclusion in this and future Proxy Statements (the
"1995 Peer Group"). The 1994 Peer Group consists of: American Filtrona
Corporation, Bemis Company, Inc., Clarcor, Inc., Engraph, Inc., Graphic
Industries, Inc., Kerr Group, Inc., Liqui-Box Corporation, Mediq Incorporated,
Paxar Corporation, Sealright Company, Inc., The West Company, Incorporated, and
Gibraltar Packaging Group. Engraph, Inc. is included in the 1994 Peer Group
through the date of its acquisition by Sonoco Products Inc. on or about October
21, 1993. The Committee has chosen the following 1995 Peer Group: Donnelly
Corporation, Sonoco Products, Inc., Federal Paper Board Company, Gibraltar
Packaging Group, Graphic Industries, Union Camp Corporation, and Westvaco
Corporation.
In fiscal year 1995, the Compensation Committee, with the assistance of
outside compensation consultants, adopted the 1995 Peer Group as a measure of
performance under its Long Term Incentive Plan and other executive
compensation programs. See "Report of Compensation Committee." The Committee
selected the 1995 Peer Group rather than the 1994 Peer Group because it
consists of a more focused industry group of the Company's competitors. The
Company now desires to establish a uniform measure of performance for the
Performance Graph and its various executive compensation programs. For that
reason, it has elected to replace the 1994 Peer Group with the 1995 Peer Group
for purposes of the Performance Graph. The rules of the Exchange Act require
that if an index is selected for inclusion in the Performance Graph which is
different from the index used in the immediately preceding fiscal year, the
issuer's total return must be compared with both the newly selected index and
the index used in the immediately preceding year. Accordingly, the following
graph also includes a composite index consisting of the 1994 Peer Group.
The Company has a 52-53 week fiscal year ending on the Saturday closest
to April 30th of each fiscal year. Accordingly, for purposes of the line
graph, the Company has selected as the "measurement period" the period
beginning on April 30, 1990 and ending on April 30, 1995.
Cumulative total returns are calculated assuming that $100 was invested
on April 30, 1990 in each of the Common Stock, the Russell 2000 Index, the 1994
Peer Group and the 1995 Peer Group, and that all dividends were reinvested.
- 16 -
<PAGE> 19
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG SHOREWOOD PACKAGING CORPORATION,
RUSSELL 2000 INDEX AND SELECTED PEER GROUPS
<TABLE>
COMPANY/INDEX 1990 1991 1992 1993 1994 1995
------------- ---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Shorewood 100 83.72 75.50 92.79 141.63 153.84
Peer Group 1 100 109.83 135.75 139.49 148.18 174.47
Peer Group 2 100 125.00 154.43 146.54 141.00 178.62
Russell 2000 100 112.45 129.50 149.64 171.76 184.17
</TABLE>
- 17 -
<PAGE> 20
REPORT OF COMPENSATION COMMITTEE
OVERALL POLICY
The Company's executive compensation program is designed to be closely
linked to corporate performance and the total return to stockholders over the
long-term. To that end, the Company has developed an overall compensation
strategy and specific compensation plans which tie executive compensation to
the Company's success in meeting specified objectives and to appreciation in
the Company's stock price. The overall objectives are to attract and retain
the best possible executive talent, motivate key executives to achieve the
goals inherent in the Company's business strategy, link executive and
stockholder interests through participation in the Company's Long Term
Incentive Plan (the "LTIP") and provide a compensation package that recognizes
individual contributions as well as overall business results.
Each year the Compensation Committee conducts a review of the Company's
executive compensation program. The review includes a comparison of the
Company's executive compensation, corporate performance, stock price
appreciation and total return to stockholders with a peer group of public
corporations that represent the Company's direct competitors for executive
talent. The annual compensation reviews permit an ongoing evaluation of the
link between the Company's performance and its executive compensation in the
context of the compensation programs of other companies. The peer group
presently utilized by the Compensation Committee is the 1995 Peer Group. See
"Stock Performance Graph." The 1995 Peer Group was selected by the
Compensation Committee in fiscal year 1995, with the assistance of external
professional compensation consultants, because it more accurately reflects the
specific industry focus of the Company than other peer groups previously used
by the Committee. The 1995 Peer Group is applied by the Committee in the
context of annual compensation reviews and serves as the performance measure
for the LTIP as well as the Performance Graph included in this and future proxy
statements.
The Compensation Committee approves the compensation of executive
officers of the Company, including the individuals whose compensation is
detailed in this Proxy Statement. In reviewing the individual performance of
the executive officers of the Company whose compensation is detailed in this
Proxy Statement (other than Paul B. Shore, the Chairman of the Board and Chief
Executive Officer of the Company), the Compensation Committee takes into
account the views of Mr. Paul B. Shore.
The key elements of the Company's executive compensation during the
last fiscal year consisted of base salary, an annual bonus and grants of stock
options and performance vesting restricted stock under the LTIP. The
Compensation Committee's policies with respect to each of these elements,
including the bases for the compensation awarded to Mr. Shore, are discussed
below. In addition, while the elements of compensation described below are
considered separately, the Compensation Committee takes into account the full
compensation package afforded by the Company to each individual.
- 18 -
<PAGE> 21
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION PLANS
It is the policy of the Compensation Committee to have the executive
compensation plans of the Company treated as fully tax deductible under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code")
whenever, in the judgment of the Committee, to do so would be consistent with
the business objectives of those plans. All compensation paid during fiscal
year 1995 was, in fact, fully tax deductible. The Compensation Committee,
however, reserves the right to grant future compensation awards in such amounts
as it may deem appropriate in the exercise of its business judgment,
notwithstanding whether those awards are fully tax deductible.
BASE SALARIES AND ANNUAL BONUSES
Base salaries and annual bonuses for executive officers are determined
by evaluating the responsibilities of the position held and the experience of
the individual, and by reference to the competitive marketplace for executive
talent, including a comparison of base salaries for comparable positions at
other companies in the 1995 Peer Group. Annual salary adjustments and bonuses,
if any, are determined by evaluating the performance of the Company and of each
executive officer, and by taking into account new responsibilities. The
Compensation Committee, where appropriate, also considers non-financial
performance measures. These include increases in market share, manufacturing
efficiency gains, improvements in product quality and improvements in relations
with customers, suppliers and employees. These factors are afforded varying
levels of significance by the Committee depending upon the circumstances. All
final determinations are subjective.
The Committee recommended and the Board approved the introduction of a
performance based bonus program for the President and COO, with effect from
fiscal year 1996. Shareholders will be asked to approve the plan elsewhere in
this Proxy Statement. For a description of the plan, see "1995 Performance
Bonus Plan".
With respect to the base salary granted to Paul B. Shore in fiscal year
1995, the Compensation Committee took into account a comparison of base
salaries of chief executive officers of the 1995 Peer Group, the Company's
results of operations in fiscal year 1995, the performance of the Company's
Common Stock and the assessment by the Compensation Committee of Mr. Shore's
individual performance. The Compensation Committee also took into account the
longevity of Mr. Shore's service with the Company and the belief that Mr. Shore
is an excellent representative of the Company to the public by virtue of his
stature in the community and the industry. Mr. Shore was granted a base salary
of $574,600 for fiscal year 1995, the same as his base salary for fiscal year
1994. As has been his practice, Mr. Shore declined to be considered for a
bonus in fiscal year 1995.
LONG TERM INCENTIVE PLANS
Pursuant to the 1993 Incentive Program, approved by the Stockholders in
1993, the Committee adopted the LTIP which allows various types of awards keyed
to corporate performance, including stock options (focus on absolute growth in
shareholder value) and Restricted Shares (focus on relative growth in
shareholder value) subject to performance-
- 19 -
<PAGE> 22
based contingencies, which are made available in amounts which the Committee
determines to be competitive based on the competitive market analyses described
above.
STOCK OPTIONS
Under the LTIP and the Company's other Incentive Plans, stock options
are periodically granted to the Company's employees, including executive
officers. The Compensation Committee sets guidelines for the size of the stock
option awards based on similar factors, including competitive compensation
data, as are used to determine base salaries and bonuses, if any. In the event
of poor corporate performance, the Compensation Committee can elect not to
award stock options. Final determinations are typically subjective.
Stock options are designed to align the interests of executives with
those of the stockholders. Stock options are granted with an exercise price
equal to the market price of the Common Stock on the date of grant and
generally vest in increments over a period of four or five years. This
approach is designed to incentivize the creation of stockholder value over the
long term since the full benefit of the compensation package cannot be realized
by the option recipients unless stock price appreciation occurs over a number
of years.
For fiscal year 1995, Mr. Paul Shore was not awarded any stock options.
PERFORMANCE BASED RESTRICTED STOCK
Under the LTIP, awards of Restricted Shares are made preceding a
three-year performance period. The Committee together with the Company's Chief
Executive Officer determine the size of the awards based on the same
competitive compensation data as are used to determine base salaries and
bonuses. Final determinations are typically subjective. At the end of the
three-year performance period, some or all of the shares may vest dependent
upon the Company's relative shareholder growth compared to that of the 1995
Peer Group over the same period. The 1995 Peer Group consists of the same
companies that make up the new peer group for the performance graph. See
"Stock Performance Graph." Shares that do not vest, due to relative
shareholder performance, will vest at the end of eight years assuming continued
employment. Initial grants of Restricted Shares were made during fiscal year
1995 and the first performance based vesting opportunity will arise in 1998.
For fiscal year 1995, Mr. Paul Shore was not awarded any restricted
shares.
Compensation Committee
KEVIN J. BANNON
R. TIMOTHY O'DONNELL
WILLIAM WEIDNER
- 20 -
<PAGE> 23
1995 PERFORMANCE BONUS PLAN
The Compensation Committee has recommended and the Board of Directors
has adopted a performance bonus plan for Mr. Marc P. Shore, the Company's
Vice-Chairman of the Board and President, known as the 1995 Performance Bonus
Plan (the "1995 Bonus Plan"), in recognition of Mr. Shore's pivotal role in
providing strategic and organizational leadership to the Company. The Board
believes that an annual bonus plan is an important vehicle to measure the
yearly performance of Mr. Shore and to reward him for the actual results
achieved during the year. Subject to Stockholder approval of the 1995 Bonus
Plan, Mr. Marc P. Shore will be the only individual eligible to participate in
the 1995 Bonus Plan.
The 1995 Bonus Plan is designed to comply with the exception for
qualified performance-based compensation under Section 162(m) of the Code,
which, but for this exception, limits the tax deductibility of compensation
paid to officers named in this Proxy Statement in excess of $1 million per
year. Under the 1995 Bonus Plan, for each of the five fiscal years of the
Company commencing with fiscal year 1996 (each an "Award Year"), Mr. Shore will
be entitled to a graduated bonus (the "Performance Bonus") based upon a
comparison of the Company's earnings from operations plus depreciation and
amortization (the "Performance Measure") in that Award Year with the
immediately preceding fiscal year. Bonuses are payable only if pre-established
thresholds are met. The size of the Performance Bonus is tied to the level of
the Company's performance, as measured by the Performance Measure, with the
larger bonuses available only in the case of truly superior results. The
maximum Performance Bonus payable in respect of any Award Year under the 1995
Bonus Plan is $2,000,000. The Performance Bonus will be prorated in respect of
any Award Year in which Mr. Shore's employment by the Company is terminated for
any reason but for cause.
The 1995 Bonus Plan will be administered by the Committee, which is
composed entirely of Outside Directors. The Committee must certify that
performance thresholds have been satisfied before any payments may be made
under the 1995 Bonus Plan. The Committee may make adjustments in the
performance thresholds to account for extraordinary results in the Company's
operations in a particular Award Year or for other reasons it may deem
equitable, so long as such actions do not jeopardize the tax-deductibility of
the compensation awarded under the 1995 Bonus Plan pursuant to Section 162(m)
of the Code.
The 1995 Bonus Plan shall be effective as of May 1, 1995, subject to
Stockholder approval at the Meeting. No payments may be made under the 1995
Bonus Plan until its material terms, all of which are described in this
Section, have been approved by the Stockholders. All payments under the 1995
Bonus Plan will be made in cash. The grant of a Performance Bonus will result
in ordinary income for Marc P. Shore and all applicable tax liabilities
(Federal, state, local, Social Security and Medicare).
As a result of the Company's outstanding results in fiscal year 1995,
Marc P. Shore would have earned the maximum $2,000,000 Performance Bonus if the
1995 Performance Bonus Plan had been in effect in fiscal year 1995. However,
because the award and size of Performance Bonuses under the 1995 Bonus Plan are
measured by the prior year's operating
- 21 -
<PAGE> 24
results, the Company's success in fiscal year 1995 will have the effect of
establishing high performance thresholds for fiscal year 1996 and all
subsequent Award Years.
Notwithstanding any provision in the 1995 Bonus Plan to the contrary,
the 1995 Bonus Plan may only be operated in a manner that would allow all
awards under the 1995 Bonus Plan to be deductible by the Company under Section
162(m) of the Code.
At the Meeting, the Stockholders will be asked to approve the 1995
Bonus Plan.
The Board of Directors recommends a vote FOR approval of the 1995 Bonus
Plan.
- 22 -
<PAGE> 25
INDEPENDENT AUDITORS
Deloitte & Touche LLP, certified public accountants, have been
appointed by the Board of Directors, upon recommendation of the Audit Committee
of the Board of Directors, as independent auditors for the Company to examine
and report on its financial statements for the fiscal year ending April 27,
1996, which appointment is being submitted to the Stockholders for ratification
at the Meeting. Representatives of Deloitte & Touche LLP are expected to be
present at the Meeting, with the opportunity to make a statement if they desire
to do so, and to be available to respond to appropriate questions. The
appointment of the independent auditors will be ratified if it receives the
affirmative vote of the holders of a majority of shares of the Common Stock of
the Company present at the Meeting, in person or by proxy. Submission of the
appointment of the auditors to the Stockholders for ratification will not limit
the authority of the Board of Directors to appoint another accounting firm to
serve as independent auditors if the present auditors resign or their
engagement is otherwise terminated.
The Board of Directors recommends a vote FOR the appointment of
Deloitte & Touche LLP as independent auditors.
STOCKHOLDERS' PROPOSALS
Any proposal by a Stockholder of the Company intended to be presented
at the 1996 Annual Meeting of Stockholders must be received by the Company at
its principal executive office not later than April 30, 1996 for inclusion in
the Company's proxy statement and form of proxy relating to that meeting. Any
such proposal must also comply with the other requirements of the proxy
solicitation rules of the Securities and Exchange Commission.
ANNUAL REPORT
Concurrently with the mailing of these Proxy Materials, the Company is
mailing a copy of its Annual Report to Stockholders for the fiscal year ended
April 29, 1995. Such Annual Report is not to be regarded as proxy solicitation
material.
UPON WRITTEN REQUEST BY A STOCKHOLDER ENTITLED TO VOTE AT THE 1995
ANNUAL MEETING, THE COMPANY WILL FURNISH THAT PERSON WITHOUT CHARGE WITH A COPY
OF THE FORM 10-K ANNUAL REPORT FOR 1995 WHICH IS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO.
If the person requesting the report was not a Stockholder of Record on August
31, 1995, the request must contain a good faith representation that the person
making the request was a beneficial owner of the Common Stock of the Company at
the close of business on such date. Requests should be addressed to Shorewood
Packaging Corporation, Investor Relations Department, 277 Park Avenue, New
York, New York 10172.
OTHER BUSINESS
Management does not know of any other matters to be brought before the
Meeting except those set forth in the notice thereof. If other business is
properly presented for
- 23 -
<PAGE> 26
consideration at the Meeting, it is intended that the Proxies will be voted by
the persons named therein in accordance with their judgment on such matters.
SOLICITATION AND EXPENSES OF SOLICITATION
Officers and employees of the Company may solicit proxies. Proxies may
be solicited by personal interview, mail, telegraph and telephone. No
compensation will be paid by the Company to any person in connection with the
solicitation of proxies. Brokers, bankers and other nominees will be
reimbursed for out-of-pocket and other reasonable clerical expenses incurred in
obtaining instructions from beneficial owners of the Company's stock. The cost
of preparing this Proxy Statement and all other costs in connection with
solicitation of proxies for the Annual Meeting of Stockholders are being borne
by the Company.
Even if you plan to attend the Meeting in person, please sign, date and
return the enclosed Proxy promptly. If you attend the Meeting, your Proxy will
be voided at your request and you can vote in person. A postage-paid
return-addressed envelope is enclosed for your convenience. Your cooperation
in giving this matter your immediate attention and in returning your proxies
will be appreciated.
By order of the Board of Directors,
JOAN MATHEIS,
Secretary
September 15, 1995
- 24 -
<PAGE> 27
SHOREWOOD PACKAGING CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 19, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints PAUL B. SHORE and JOAN MATHEIS or
either of them, each with full power of substitution, proxies of the
undersigned to vote all shares of Common Stock, par value $.01 per share, of
Shorewood Packaging Corporation (the "Company") which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the Company to be
held on the 19th day of October 1995 at 9:30 a.m. at The Friars Club, 57 East
55th Street, Second Floor, New York, New York, and at all adjournments
thereof, as fully and with the same force and effect as the undersigned might
or could do if personally present thereat. Said proxies are instructed to vote
as follows.
THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS INDICATED, IT WILL BE VOTED FOR ALL OF THE ABOVE PROPOSALS.
SHOREWOOD PACKAGING CORPORATION
P.O. BOX 11344
NEW YORK, N.Y. 10203-0344
<PAGE> 28
1. The election of all nominees for directors listed below.
<TABLE>
<S> <C> <C>
FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed below / / for all nominees listed below / / / /
</TABLE>
Nominees: Paul B. SHore, Marc P. Shore and Seymour Leslie
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions
-------------------------------------------------------------------
2. The approval of the Company's 1995 Performance Bonus Plan.
FOR / / AGAINST / / ABSTAIN / /
3. The ratification of the selection of Deloitte & Touche as the independent
auditors of the Company for the fiscal year ending April 27, 1996.
FOR / / AGAINST / / ABSTAIN / /
4. In accordance with their best judgment with respect to any other business
that may properly come before the meeting.
Change of address and or Comments, mark here. / /
(PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. PROXIES SHOULD BE DATED WHEN
SIGNED. WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING
AS ATTORNEY, AS EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL
TITLE AS SUCH. ONLY AUTHORIZED OFFICERS SHOULD SIGN FOR A CORPORATION. IF
SHARES ARE REGISTERED IN MORE THAN ONE NAME, EACH JOINT OWNER SHOULD SIGN.)
Dated: , 1995
------------------------------------------
------------------------------------------------
(Signature)
------------------------------------------------
(Signature if held jointly)
Votes must be indicated (X) in Black or Blue Ink. / /
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE> 29
CONFIDENTIAL TREATMENT REQUESTED
SHOREWOOD PACKAGING CORPORATION
1995 PERFORMANCE BONUS PLAN
The 1995 Performance Bonus Plan (the "Plan") of Shorewood
Packaging Corporation (the "Company") authorizes the grant of annual
performance bonuses (each, a "Performance Bonus") to Marc P. Shore, the
Company's President and Vice Chairman of the Board (the "Executive"), upon the
attainment of certain performance objectives set forth below. The Plan is
administered by the Compensation and Stock Option Committee (the "Committee").
1. DEFINITIONS. Certain defined terms in the Plan shall
have the meanings ascribed to them below:
(a) "Award Year" means each fiscal year of the
Company during the five year period beginning on May 1, 1995.
(b) "Earnings from Operations" shall mean, with
respect to any fiscal year of the Company, the Company's consolidated earnings
from operations plus depreciation and amortization, determined in accordance
with the Company's audited financial statements for that fiscal year. For
purposes of computing Earnings from Operations, (i) if during any Award Year the
Company or any of its subsidiaries acquires, directly or indirectly, any
material business, the Company's Earnings from Operations in the immediately
preceding fiscal year and that portion of such Award Year preceding the date of
the acquisition shall be adjusted to include therein the earnings from
operations plus depreciation and amortization of the acquired business during
the applicable periods; and (ii) if during any Award Year the Company or any of
its subsidiaries disposes or divests itself, directly or indirectly, of any
material business, the Company's Earnings from Operations in the immediately
preceding fiscal year
__________________________________
*Portions of this document have been omitted pursuant to an application for
Confidential Treatment. Such omissions have been filed separately with the
Securities and Exchange Commission together with such application for
Confidential Treatment.
<PAGE> 30
and that portion of such Award Year preceding the date of the disposition shall
be adjusted to exclude therefrom the earnings from operations plus depreciation
and amortization of the divested business during the applicable periods.
(c) "First Tier Bonus" shall mean, with respect to any
Award Year of the Company, an amount determined in accordance with the following
formula:*
(d) "Second Tier Bonus" shall mean, with respect to
FSany Award Year of the Company, an amount determined in accordance with the
following formula:*
2. PERFORMANCE BONUS. With respect to each Award Year
in which the Company's Earnings from Operations*
Executive shall be entitled to a Performance Bonus in an amount equal
to the sum of*
The Performance Bonus payable to Executive in respect of any Award Year shall
in no event exceed $2,000,000. No Performance Bonus shall be payable in
respect of any Award Year in which the Company's Earnings from Operations*
The determination of the amount of the Performance Bonus (the "Bonus
Determination") payable to Executive
__________________________________
*Portions of this document have been omitted pursuant to an application for
Confidential Treatment. Such omissions have been filed separately with the
Securities and Exchange Commission together with such application for
Confidential Treatment.
<PAGE> 31
in respect of any Award Year covered by the Plan shall be made by the
Compensation Committee based upon the audited financial statements of the
Company with respect to such Award Year. The Bonus Determination shall be made
by the Compensation Committee at its first regularly scheduled meeting after
the audited financial statements of the Company are available to the Board of
Directors. The Performance Bonus so determined shall be payable to Executive
in a single lump sum no later than fifteen days after the Bonus Determination
is made. The Bonus Determination shall be final, conclusive and binding for
all purposes.
3. PARTIAL YEARS. Executive's Performance Bonus shall
be reduced proportionately in respect of any fiscal year in which Executive is
not employed by the Company for the entire fiscal year, except that no
Performance Bonus shall be payable to Executive in respect of any fiscal year
in which his employment by the Company is terminated for cause. The provisions
hereof notwithstanding, the termination of Executive's employment by the
Company for any reason shall not affect the Performance Bonus otherwise payable
to him under the Plan in respect of any fiscal year preceding the fiscal year
in which such termination occurs. The Executive shall not be entitled to
receive any Performance Bonus in respect of any period after he ceases being
employed by the Company for any reason.
4. ADMINISTRATION. (a) The Plan shall be administered
and interpreted by the Compensation Committee; provided, however, that,
notwithstanding any other provision of the Plan that might appear to provide to
the contrary, the Plan shall be operated in such manner that awards paid
pursuant to the Plan shall be fully tax-deductible by the Company pursuant to
the exception for qualified performance-based compensation provided for under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
All determinations of the Compensation Committee in respect of the
interpretation and administration of the Plan shall be final, conclusive and
binding for all purposes. In making any such determinations, the Committee
shall be entitled to rely on opinions, reports or statements of officers or
employees of the Company and of counsel, public accountants and other
professional experts and persons. The Committee may adopt such rules as it may
deem appropriate regarding the withholding of taxes on payments to the
Executive.
(b) The Plan shall be governed by the laws of the
State of New York and applicable Federal law.
5. EFFECTIVE DATE; APPLICATION. The Plan shall become
effective as of May 1, 1995, subject to approval by the Company's stockholders
entitled to vote thereon. The Plan shall apply to each fiscal year of the
Company during the five year period beginning on the effective date of the
Plan.
<PAGE> 32
6. ADJUSTMENTS. In order to assure the incentive
features of the Plan and to avoid distortion in the operation of the Plan, the
Committee may make adjustments in the performance criteria in respect of any
Award Year whether before or after the end of such Award Year to compensate for
or reflect any extraordinary changes which may have occurred during the Award
Year or the immediately preceding fiscal year which alter the basis upon which
performance levels were determined or to comply with government regulations.
Such changes include the following: extraordinary operating results,
accounting changes, and the impact of material events that have been publicly
disclosed. Notwithstanding anything to the contrary, the Committee shall not
make any adjustment which would increase the award to the Executive if such
adjustment would render any amount payable to Executive nondeductible under
Section 162(m) of the Code.
7. NO RIGHT TO EMPLOYMENT. The Plan shall not confer
upon the Executive any right to continue in the employ of the Company or affect
in any way the right of the Company to terminate Executive's employment at any
time.
8. CERTIFICATION BY COMMITTEE. The Committee must
certify that performance thresholds have been satisfied before any payments may
be made under the Plan.
