<PAGE> 1
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:
[X] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted
by Rule 14a-6(e)(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
THE STROBER ORGANIZATION, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if Other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $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:
____________________________________________________________
4) Proposed maximum aggregate value of transaction:
____________________________________________________________
5) Total Fee Paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
____________________________________________________________
2) Form, Schedule or Registration Statement No.:
____________________________________________________________
3) Filing Party:
____________________________________________________________
4) Date Filed:
____________________________________________________________
<PAGE>
<PAGE>
THE STROBER ORGANIZATION, INC.
550 Hamilton Avenue
Brooklyn, New York 11232
______________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 25, 1995
______________________
The 1995 Annual Meeting of Stockholders of The Strober
Organization, Inc. (the "Company") will be held on May 25, 1995
at 10 o'clock a.m. at the offices of Sills Cummis Zuckerman Radin
Tischman Epstein & Gross, P.A., One Riverfront Plaza, Newark, New
Jersey 07102, for the following purposes:
1. To elect seven directors to serve for ensuring terms
of one to three years (one year if Proposal 2 is not approved)
and until their successors are duly elected and qualified
(Proposal 1).
2. Approve amendments to the Certificate of
Incorporation and By-laws of the Company to provide for a
staggered Board of Directors to consist of three classes, each
for a three year term (Proposal 2).
3. To approve the adoption of The Strober Organization,
Inc. 1995 Outside Director Stock Option Plan granting options for
75,000 shares of Company Common Stock to the Company's outside
independent directors (Proposal 3).
4. To ratify the appointment of KPMG Peat Marwick LLP as
independent public accountants of the Company for the fiscal year
ending December 31, 1995 (Proposal 4).
5. To transact such other business as may properly come
before the meeting, or any adjournment thereof.
The foregoing items of business are more fully described in
the Proxy Statement accompanying this Notice.
Only Stockholders of record at the close of business on
April 21, 1995 shall be entitled to notice of and to vote at the
meeting, or any adjournment thereof.
We enclose in this mailing the Notice of 1995 Annual
Meeting of Stockholders, Proxy Statement, Proxy and Annual Report
of the Company for the fiscal year ended December 31, 1994.
By Order of the Board of
Directors
David J. Polishook
Secretary
April 28, 1995
YOUR VOTE IS IMPORTANT
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE, SIGN
AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED, WHICH DOES
NOT REQUIRE POSTAGE IF MAILED IN THE UNITED STATES. GIVING YOUR PROXY WILL
NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING, BUT WILL
HELP TO ASSURE A QUORUM AND AVOID FURTHER PROXY SOLICITATION COSTS.
<PAGE>
<PAGE>
THE STROBER ORGANIZATION, INC.
550 Hamilton Avenue
Brooklyn, New York 11232
___________________
PROXY STATEMENT
___________________
This statement is furnished to the Stockholders (the
"Stockholders") of The Strober Organization, Inc. (the "Company"
or "Strober") in connection with the solicitation by the Board of
Directors of the Company (the "Board") of proxies to be used at
the Annual Meeting of Stockholders (the "Meeting") to be held on
May 25, 1995, or at any adjournment or adjournments thereof, for
the purposes set forth in the attached Notice of Meeting. Copies
of this Proxy Statement and the form of proxy are being mailed to
all Stockholders on or about April 28, 1995.
Properly executed proxies will be voted in the manner
directed by a Stockholder and, if no direction is given, will be
voted for the election of the nominees named under the caption
"Election of Directors" as directors of the Company and for
Proposals 2, 3 and 4. Any proxy may be revoked by a Stockholder
at any time prior to its exercise (such as by giving notice of
revocation in writing to the Secretary of the Company, by
delivery of a later dated proxy, or if the Stockholder attends
the Meeting, by oral notice to the Secretary of the Meeting and
by voting the shares in person). Mere attendance at the Meeting,
without giving notice of revocation of the proxy as set forth
above, will not revoke the proxy.
Only Stockholders of record at the close of business on
April 21, 1995, will be entitled to notice of and to vote at the
Meeting or any adjournment or adjournments thereof. As of April
21, 1995, there were 5,055,493 outstanding shares of the
Company's common stock ("Common Stock"), which is the only
outstanding class of voting securities of the Company. Each
outstanding share of Common Stock is entitled to one vote on each
matter to be voted upon. Directors will be elected by a
plurality of the votes cast at the Meeting. The Company's
By-laws provide that Stockholders holding a majority of the
shares of Common Stock will constitute a quorum at meetings of
stockholders.
Principal Stockholders
The following table, prepared from the records of the
Company and from information furnished to it, sets forth, as of
April 21, 1995, the name and holdings of each person (including
any "group" as defined in Section 13(d) of the Securities
Exchange Act of 1934) known by the Company to be the beneficial
owner of more than five percent of its Common Stock. Unless
otherwise indicated, the persons listed below have sole voting
and investment power with respect to all shares of Common Stock
shown as beneficially owned by them.
<PAGE>
<PAGE 2>
Name and Address of Common Stock Percent
Beneficial Owner Beneficially Owned of Class
- - ------------------- ------------------ --------
Sue Strober (1)(4) 1,015,013 20.1%
c/o The Strober Organization, Inc.
550 Hamilton Avenue
Brooklyn, New York 11232
Robert J. Gaites (2)(4) 457,135 9.0%
c/o The Strober Organization, Inc.
550 Hamilton Avenue
Brooklyn, New York 11232
John Yanuklis (3)(4) 453,255 9.0%
c/o The Strober Organization, Inc.
550 Hamilton Avenue
Brooklyn, New York 11232
John T. Guerin (4) 422,250 8.4%
14 Summit Road
Morristown, New Jersey 07960
Gordon Sandler (4) 419,486 8.3%
6468 Via Rosa
Boca Raton, Florida 33433
___________________
(1) Ms. Strober is the trustee with respect to an aggregate of
84,650 shares held in trusts for her son and daughter. Ms. Strober disclaims
beneficial ownership of such shares. Excludes 225,000 shares of Common Stock
subject to a presently exercisable warrant held by Ms. Strober at an exercise
price of $3.25 per share which expires on December 14, 1995.
(2) Excludes 25,000, 25,000 and 37,500 shares of Common Stock
subject to presently exercisable options held by Mr. Gaites at exercise prices
of $1.75, $4.75 and $3.625 per share which expire on December 31, 1996, 1997
and March 8, 2000, respectively. Includes 2,000 shares held by Mr. Gaites'
spouse as trustee for their son. Mr. Gaites disclaims beneficial ownership of
such shares.
(3) Excludes 9,000, 14,286, 22,737 and 23,503 shares of Common Stock
subject to presently exercisable options held by Mr. Yanuklis at exercise
prices of $1.125, $1.75, $4.75 and $3.625 per share of which 23,286 expire on
December 31, 1996, 22,737 expire on December 31, 1997 and 23,503 expire on
March 8, 2000, respectively.
(4) The above-named beneficial owner is a party to an agreement
providing such beneficial owner with a right of prior notice and first refusal
to purchase shares of the Company's Common Stock which any other party to the
agreement desires to sell. (See "Certain Transactions")
<PAGE>
<PAGE 3>
ELECTION OF DIRECTORS
(Proposal 1)
The By-laws of the Company provide that there shall be
not less than 3 nor more than 20 directors. The number of
directors of the Company is presently fixed by resolution of the
Board at 7. Messrs. Bernstein, Gaites and Yanuklis have served
as directors of the Company since the Company's initial public
offering in 1986; Mr. Zieky became a director in January 1988;
Messrs. Murstein and Solimine were elected as directors in July
1989 and Mr. Mangino was elected as a director in May 1992.
Under the proposed amendment to the Company's Certificate of
Incorporation, the Board of Directors would consist of three
classes of directors serving staggered terms of office with each
class to consist, as nearly as possible, of one-third of the
total number of directors constituting the entire Board of
Directors. Upon the expiration of the term of office for a class
of directors, the nominees for that class will be elected for a
three year term to serve until the election and qualification of
their successors. Unless otherwise specified, if the classified
Board amendments (see Proposal 2) are approved by the
Stockholders, each properly executed proxy received will be voted
for the election of the 7 nominees named below as directors to
serve until the Annual Meeting of Stockholders shown below or
until their respective successors shall be elected and shall
qualify. If Proposal 2 is not adopted, the term of office of
each person elected as a director will continue until the 1996
Annual Meeting of Stockholders or until their respective
successors shall be elected and shall qualify. Each of the
nominees has consented to be named as a nominee in the Proxy
Statement and to serve as a director if elected.
Should any nominee become unable or unwilling to accept a
nomination or election, the persons named in the enclosed proxy
will vote for the election of a nominee designated by the Board.
The following table, prepared from the records of the
Company and from information furnished to it, sets forth, as of
April 21, 1995, the name and position, age and biographical data
of each director of the Company.
Class I Nominee for Director (Term to Expire at 1996 Stockholder
Meeting)
Name and Biographical
Position Age Data(1)
EMIL W. SOLIMINE 50 Mr. Solimine is the Chairman
Director of the Company of the Board of Directors and
Chief Executive Officer of Emar
Group, Inc., an insurance
brokerage concern which he
started in 1971 and which has
served as insurance broker
for the Company's property and
casualty insurance since
1983. Mr. Solimine is also
a director of DiGiorgio
Corporation, an independent
wholesale food distributor.
<PAGE 4>
ELIOTT ZIEKY 43 Mr. Zieky has been with the
Senior Vice President Company since 1988, and with
and Director of the Company his cousin, Edward N. Zieky,
manages its Hartford,
Connecticut region.
He was an officer of
The General Building
Supply Company prior
to its acquisition by
the Company. He has
over 20 years of
experience in the
industry.
Class II Nominee for Director (Term to Expire at 1997 Stockholder
Meeting)
ROBERT J. GAITES 53 Mr. Gaites has been with the
Chairman of the Board, Company since 1976. He was
Chief Executive Officer Senior Vice President since
and President of the Company 1986 and CEO since June
1991. He has 28 years of
experience in the industry.
JOSEPH MANGINO, SR. 58 Mr. Mangino has been
Director of the Company the President of Metropolitan
Trucking, Inc. a privately
held trucking company since
1980. He is a regional
director of Bank of New York,
National Community Division.
Class III Nominee for Director (Term to Expire at 1998
Stockholder Meeting)
DAVID W. BERNSTEIN 69 Mr. Bernstein is an
Director of the Company attorney engaged in private
practice and served as
general counsel to the Company
from 1953 through 1990.
ALVIN MURSTEIN 60 Mr. Murstein has been
Director of the Company President and
Chairman of the
Board of Directors of
Tri-Magna Corporation,
the parent corporation of
Medallion Funding Corp.,
since 1989 and the President
and Chairman of the Board of
Directors of Medallion
Funding Corp. since 1979.
<PAGE 5>
JOHN YANUKLIS 58 Mr. Yanuklis has been with
Executive Vice President the Company since 1981 and
and Director of the Company manages Its Hudson Valley,
New York region. He was a
Senior Vice President
since 1986 and an Executive
Vice President since June
1992. He has over 30 years
of experience in the industry.
________________________
(1) The Strober Organization, Inc. was organized in connection
with the Company's initial public offering in 1986 to act as the parent of the
companies previously conducting the Strober business. References to
employment with the "Company" in the table above, where appropriate, include
positions with Strober's predecessor companies.
The Company's Board held five meetings during the fiscal
year ended December 31, 1994 and entered into two written
consents without a meeting during that time. Each director
attended all of the meetings of the Board and its committees held
during such year, except for two directors who missed one Board
meeting and one director missed one Committee meeting.
The Company established an Expansion Committee, the
function of which is to review management's progress in expanding
the Company's product lines, enhancing its existing building
supply center network and expanding that network. The Expansion
Committee held one meeting in 1994. The members of the Expansion
Committee for 1994 were Messrs. Bernstein, Gaites, Mangino
Solimine and Yanuklis.
The Company has a Compensation Committee, the function of
which is to establish, in conjunction with the Company's Board,
salaries, bonuses and other forms of compensation for senior
executives of the Company. The Compensation Committee held one
meeting in 1994. The members of the Compensation Committee for
the fiscal year ended December 31, 1994 were Messrs. Bernstein,
Gaites and Solimine.
The Company has a 1986 Stock Option Plan Committee, the
function of which is to grant stock options to key employees of
the Company and its subsidiaries under the Company's Restated 1986
Non-Qualified Stock Option Plan. The Plan Committee held one
meeting in 1994. The members of the Plan Committee for the
fiscal year ended December 31, 1994 were Messrs. Bernstein,
Murstein and Solimine.
The Company's 1993 Outside Director Stock Plan Committee
was established upon the ratification of the 1993 Outside
Director Stock Option Plan by the Stockholders at the 1993 Annual
Meeting. For the fiscal year ended December 31, 1994, Messrs.
Gaites, Yanuklis and Zieky served on this Committee and held one
meeting in 1994.
The Company has an Audit Committee, the purposes of which
are to oversee the financial reporting and disclosures of the
Company, monitor compliance with financial reporting requirements
and the Company's internal control and credit policies, review
<PAGE 6>
the role of the Company's independent accountants and pass upon
the fairness of transactions between the Company and its
affiliates, officers, directors or employees or any other related
party transactions. The Audit Committee held one meeting in
1994. The members of the Audit Committee for the fiscal year
ended December 31, 1994 were Messrs. Bernstein, Murstein, Mangino
and Solimine.
The Company has no standing Nominating Committee.
Other than Eliott Zieky and his first cousin Edward N.
Zieky, Senior Vice President of the Company, there are no other
family relationships between any executive officers or directors
of the Company.
Security Ownership of Management
The following table, prepared from the records of the
Company and from information furnished to it, sets forth, as of
April 21, 1995, the number of shares of Common Stock beneficially
owned by each director and nominee, the chief executive officer
and the four other most highly compensated executive officers
(collectively, the "Named Executive Officers") and all directors
and executive officers of the Company as a group. Unless
otherwise indicated, the persons listed below have sole voting
and investment power with respect to all shares of Common Stock
shown as beneficially owned by them.
Common Stock
Name of Beneficial Owner Beneficially Owned Percent of Class
- - ------------------------ ------------------ ----------------
Robert J. Gaites 457,135(1)(8) 9.0%
David W. Bernstein 19,100(2)(3) *
Joseph Mangino, Sr. 500(3) *
Alvin Murstein 5,000(3) *
Emil W. Solimine 8,500(3)(4) *
John Yanuklis 453,255(5)(8) 9.0%
Edward Zieky 0(6)(8) *
Eliott Zieky 0(6)(8) *
Richard Schaefer 3,120(7) *
All Officers and Directors 1,052,779 20.8%
as a group (12 persons)(9)
________________________
* Less than one percent of the outstanding shares of Common
Stock.
<PAGE>
<PAGE 7>
(1) Excludes 25,000, 25,000 and 37,500 shares of Common Stock
subject to presently exercisable options held by Mr. Gaites at exercise prices
of $1.75, $4.75 and $3.625 per share which expire on December 31, 1996, 1997
and March 8, 2000, respectively. Includes 2,000 shares held by Mr. Gaites'
spouse as trustee for their son. Mr. Gaites disclaims beneficial ownership of
such shares.
(2) Includes 100 shares owned by Mr. Bernstein's wife. Mr.
Bernstein disclaims beneficial ownership of such shares. Excludes 100,000 and
75,000 shares of Common Stock subject to a presently exercisable warrant held
by Mr. Bernstein at an exercise price of $12.00 per share which expires on
November 7, 1996; and $3.25 per share which expires on December 14, 1995,
respectively.
(3) Excludes 10,000 and 12,500 shares subject to presently
exercisable options and 18,750 shares subject to options still requiring
Stockholder ratification each held by the outside directors at an exercise
price of $1.75, $4.75 and $3.625 per share which expire on March 4, 1996,
March 9, 1997 and March 8, 2000, respectively.
(4) These shares of Common Stock are owned by Emar, Ltd., of which
Mr. Solimine is the sole shareholder.
(5) Excludes 9,000, 14,286, 22,737 and 23,503 shares of Common
Stock subject to presently exercisable options held by Mr. Yanuklis at
exercise prices of $1.125, $1.75, $4.75 and $3.625 per share, respectively.
Of these options, 23,286 expire on December 31, 1996, 22,737 expire on
December 31, 1997 and 23,503 expire on March 8, 2000.
(6) Excludes 1,684 and 10,152 shares of Common Stock subject to a
presently exercisable option held by each of Edward and Eliott Zieky at an
exercise price of $4.75 and $3.625 per share which expire on December 31,
1997 and March 8, 2000, respectively.
(7) Excludes 22,500, 51,429, 15,789 and 27,586 shares of Common
Stock subject to presently exercisable options held by Mr. Schaefer at
exercise prices of $1.125, $1.75, $4.75 and $3.625, per share, respectively.
Of these options, 73,929 expire on December 31, 1996, 15,789 expire on
December 31, 1997 and 27,586 expire on March 8, 2000.
(8) The above-named director or member of management is a party to
an agreement providing such individual with a right of prior notice and first
refusal to purchase shares of Common Stock which any other party to the
agreement desires to sell. (See "Certain Transactions")
(9) Excludes 731,078 shares of Common Stock subject to presently
exercisable options and warrants held by certain directors and executive
officers of the Company at exercise prices ranging from $12.00 to $1.125 per
share. Excludes 150 shares owned by a relative of Mr. Albert Brower. Mr.
Brower disclaims beneficial ownership of such shares.
THE BOARD RECOMMENDS A VOTE "FOR" THE
ELECTION OF THE NOMINEES FOR DIRECTOR NAMED ABOVE.
________________________________
<PAGE>
<PAGE 8>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the
annual and long-term compensation for services rendered in all
capacities to the Company by those persons who were, at December
31, 1994, the Named Executive Officers.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ----------------------
Other Annual Stock All Other
Fiscal Compensation Option Compensation
Name and Principal Position Year Salary ($) Bonus ($) ($)(1) Grants(#) ($)(3)
- - --------------------------- ------ ---------- --------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Gaites 1994 $250,000 $225,000 -- 25,000 $900
Chairman, President, 1993 $250,000 $160,000 -- 25,000 $814
Chief Executive Officer 1992 $250,000 $10,000 -- -- $764
John Yanuklis 1994 $142,000 $136,186 -- 22,737 $505
Executive Vice President, 1993 $135,000 $149,745 -- 14,286 $503
Director 1992 $125,000 $68,237 -- -- $454
Richard Schaefer 1994 $125,000 $136,619 -- 15,789 $450
Vice President 1993 $125,000 $108,950 -- 51,429 $475
1992 $112,500 $67,329 -- -- $454
Edward Zieky 1994 $115,000 $91,923 -- 1,684 $580
Senior Vice President 1993 $100,000 $25,268 $18,300(2) -- $546
1992 $100,000 -- $14,900(2) -- $553
Eliott Zieky 1994 $115,000 $91,923 -- 1,684 $580
Senior Vice President, 1993 $100,000 $25,268 $18,300(2) -- $546
Director 1992 $100,000 -- $14,900(2) -- $553
______________
(1)Amounts for "Other Annual Compensation" are not shown in the table as
none of these perquisites exceed the lesser of (i) $50,000 or (ii) 10% of
the Named Executive Officer's combined Salary and Bonus, except for
Messrs. Edward and Eliott Zieky in 1993 and 1992.
(2)Indicates a $10,200 car allowance which accounts for more than 25% of the
perquisites of Messrs. Edward and Eliott Zieky.
(3)Includes only premiums paid by the Company attributable to term life
insurance coverage for the Named Executive Officers.
</TABLE>
<PAGE>
<PAGE 9>
Option Grants Table
The following table sets forth information on grants of
stock options to the Named Executive Officers pursuant to the
Company's Restated 1986 Non-Qualified Stock Option Plan during the
fiscal year ended December 31, 1994.
<TABLE>
<CAPTION>
% of Total Potential Realizable Value at Assumed
Options Annual Rates of Stock Price
Granted to Appreciation for Option Term
Employees Exercise
Options in Fiscal Price Expiration
Name Granted(#) Year ($/Share) Date 5%($) 10%($)
- - ---- ---------- -------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Gaites 25,000 21.60% $4.75 12/31/97 $24,652 $52,119
John Yanuklis 22,737 19.65% $4.75 12/31/97 $22,421 $47,401
Richard Schaefer 15,789 13.64% $4.75 12/31/97 $15,569 $32,917
Edward Zieky 1,684 1.46% $4.75 12/31/97 $1,661 $3,511
Eliott Zieky 1,684 1.46% $4.75 12/31/97 $1,661 $3,511
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Value Table
The following table sets forth information concerning the aggregate number and value of
unexercised options to purchase Common Stock held by each of the Named Executive Officers as
December 31, 1994.
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
At FY-End(#) At FY-End ($)
Shares Acquired on Value All All
Name Exercise(#) Realized ($) Exercisable Exercisable
- - ---- ------------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Robert J. Gaites -- -- 50,000 $ 43,750
John Yanuklis -- -- 46,023 $ 46,375
Richard Schaefer -- -- 89,718 $143,437
Edward Zieky -- -- 1,684 --
Eliott Zieky -- -- 1,684 --
</TABLE>
<PAGE>
<PAGE 10>
Compensation of Directors
During 1994, members of the Board who were not employees
of the Company received an annual retainer of $12,500, plus a fee
of $1,000 for each Board and Board committee meeting attended.
Compensation Committee Interlocks and Insider Participation
The members of the Company's Compensation Committee
during the fiscal year ended December 31, 1994 were Messrs.
Bernstein, Gaites and Solimine. Mr. Gaites also served as
President and Chief Executive Officer during the fiscal year
ended December 31, 1994.
Mr. Gaites is a shareholder and general partner in
entities that lease facilities to the Company in Brooklyn, New
York; Congers, New York; Vails Gate, New York and Hampton, New
Jersey. Mr. Gaites' equity interests in these entities are 10%,
2%, 2% and 2%, respectively. The current annual rent on these
facilities is $688,800; $255,400; $71,300; and $321,200,
respectively. The lessors of such facilities have granted the
Company a right of first refusal in the event that any of the
lessors desire to sell their respective properties to a third
party. The Company believes that the leases with such affiliated
parties are on terms no less favorable to the Company than it
could obtain in arms-length negotiations with unrelated parties
for similar locations in similar geographic areas.
During 1994, the Company paid $1,218,282 in insurance
premiums for the Company's property and casualty insurance to
Emar Group, Inc., the insurance broker of which Mr. Solimine is
president. The Company believes that the insurance premiums it
pays to Emar Group, Inc. are on terms no less favorable to the
Company than it could obtain in arms-length negotiations with
unrelated parties for similar property and casualty insurance.
Employment Contracts and Termination of Employment and Change-in-
Control Arrangements
Under a stockholder agreement entered into as part of the
1986 IPO (as described hereinafter) among the Company, Messrs.
Gaites, Yanuklis, Edward Zieky and Eliott Zieky, two other
executive officers and other Company stockholders and former
officers, in the event the Company terminates without cause the
employment of a party to such stockholder agreement, the Company
is obligated to engage the terminated party as a consultant for
two years with a retainer equal to 75% of that individual's then
current base salary. During such period the consultant would be
barred from competing against the Company in its existing
markets.
The Company has an employment agreement dated January
1988 with Edward Zieky and Eliott Zieky, Named Executive
Officers, providing for a base salary of $100,000. The original
term of each of the Ziekys' employment agreements would have
expired January 15, 1991; however, in December 1990, their
employment agreements were extended to January 15, 1994 and their
base salaries were increased to $112,500. Messrs. Edward and
Eliott Zieky declined the salary increase until business
conditions in their region improved. In October 1993, the terms
of their employment agreements were again extended until
September 1, 1996. As discussed in the Board Compensation
Committee Report, Messrs. Edward and Eliott Zieky's base salaries
were increased to $115,000 effective as of January 1, 1994 and
<PAGE>
again increased by $12,000 per annum to $127,000 effective as of
January 1, 1995 which each is now fully drawing. Under their
respective employment agreements, Messrs. Edward and Eliott Zieky
are entitled to such group life insurance, pension, medical
insurance, hospitalization, disability and similar employee
benefit plans as may exist for the benefit of the executive
officers of the Company generally. The employment agreements bar
solicitation of similar business to that of the Company during
Messrs. Edward and Eliott Zieky's respective employment and for
three years thereafter. They are also barred from directly or
indirectly competing with the business of the Company in a 75
mile radius for a period of two years after ceasing to be
employed by the Company. If either Messrs. Edward or Eliott
Zieky leave the Company for a reason other than termination for
cause, at the option of the Board, they may become a consultant
to the Company for a term of two years. If either or both are
terminated without cause, the Company is obligated to engage them
as a consultant for two years for a retainer equal to 75% of
their then current base salary.
Except as set forth above, the Company has no other
termination of employment or change-in-control arrangements for
the remaining Named Executive Officers.
Board Compensation Committee Report on Executive Compensation
In order to enhance disclosure of the Company's policies
towards executive compensation, the Compensation Committee of the
Board has furnished the following report on executive
compensation.
Background
Based upon its then existing compensation policies as a
network of privately owned businesses in New York, New Jersey,
Connecticut and Pennsylvania and in contemplation of the
Company's reorganization for its initial public offering in
November 1986 (the "1986 IPO"), the Company's executive
compensation levels, plans and policies were established in
consultation with the principal underwriter for the 1986 IPO. As
part of this process, the base salary component of the Company's
compensation package for the chief executive officer and founder
of the Company, Eric D. Strober, was established at $500,000; the
base salary of the operating executive officers, with profit and
loss responsibilities at each of the Company's building supply
yards, was established at $100,000; and the base salary of
corporate executive officers, with centralized Company
responsibilities, was established at $75,000. The cash
performance bonus and performance stock option components of the
Company's compensation package were structured to award to the
chief executive officer and each of the operating executive
officers (i) a cash performance bonus based upon a formula equal
to 4.5% and 10.5%, respectively, of each applicable yard's
profits, before bonus, acquisition costs and taxes ("net
profits") requiring at least a 9% minimum net profit threshold,
and (ii) performance stock options determined pursuant to a
formula based upon a sliding scale percentage of net profits
realized by each yard as applied to the yard managers' qualified
base salary. These initial compensation levels and policies
reflected the Board's evaluation of the performance of the
Company's executive officers as compared to the executive
officers of the Company's competitors in the New York, New
Jersey, Connecticut and Pennsylvania area building materials
industry.
<PAGE 12>
In 1988, the Company acquired The General Building Supply
Company of Hartford, Connecticut and hired two of its operating
executive officers. Each operating executive officer received a
base salary of $100,000 in accordance with the then existing base
salary component of the Company's compensation package and was
entitled to an incentive cash bonus and stock options pursuant to
the then existing formulae, except that the minimum threshold net
profit was waived for 1988 through 1990.
In 1988, upon the death of Mr. Strober and the subsequent
election of Gary Kulick, President of the Company, as the
Company's chief executive officer, Mr. Kulick's base salary was
set at $250,000. The Company's cash performance bonus formula
was revised at that time to provide for the chief executive
officer and the operating executive officers to each be awarded
only 2% and 10.5%, respectively, of each applicable yard's net
profits and the minimum net profit threshold was reduced to a
sliding scale requiring a minimum of a 6% net profit.
In 1989, the base salaries of the corporate executive
officers (excluding the chief executive officer) were increased
to $100,000 to reflect management's view of the increased
importance of their roles in the Company's operations on a
consolidated basis and to give effect to increases in the cost of
living since 1986. In addition, the Company's cash performance
bonus formula was modified to provide for the chief executive
officer and the operating executive officers to each be awarded
2% and 8% respectively of each applicable yard's net profits and
the minimum net profit threshold was eliminated.
In 1990, the base salaries of the operating executive
officers were adjusted to establish a new range of base salaries
from $100,000 to $112,500 in recognition of the increases in the
cost of living since 1986. The two operating executive officers
of the Hartford, Connecticut region declined any such base salary
increase until business conditions in their region improved. The
base salary of the operating executive officer at the Edison, New
Jersey yard was reduced to $80,000 as part of an expense
reduction program instituted at that yard. In addition, the
Company's cash performance bonus formula was modified to provide
for the chief executive officer and the operating executive
officers to each be awarded 2.5% and 10%, respectively of each
applicable yard's net profits without a minimum net profit
threshold.
In 1991, the cash performance bonus formula was further
revised when Mr. Gaites was elected as chief executive officer to
provide that the operating executive officers would continue to
receive 10% of their respective yard's net profit, but the chief
executive officer's cash performance bonus, if any, would be
based upon the Compensation Committee's overall assessment of his
performance as it affected the entire Company.
In 1992, the base salary of the operating executive
officer of the two Hudson Valley, New York yards, was increased
from $112,500 to $125,000 based upon management's recommendation
and the Compensation Committee's recognition of the superior
performance of the yards managed by him. In addition, the Board
determined that his performance warranted a promotion from Senior
Vice President to Executive Vice President.
In March 1993, based upon management's recommendation and
the Compensation Committee's continued recognition of his
superior performance, the same Hudson Valley, New York operating
executive officer's 1993 base salary was increased by $10,000 to
$135,000. In addition, the 1993 base salaries of the operating
<PAGE 13>
executive officer of the Valley Stream, Long Island yard and the
Company's chief financial officer were each increased by $12,500
to $125,000. The 1993 base salaries of the operating executive
officers of the Brooklyn, New York and New Jersey yards (three
individuals in all) were increased from $100,000 to $110,000; in
each case because of the Committee's recognition of their
contributions to the Company.
In March 1994, based upon management's recommendation,
the 1994 base salary of the Hudson Valley, New York operating
executive officer was increased by $7,000 to $142,000 because of
the Compensation Committee's recognition of his continued
superior performance. The authorized 1994 base salaries of the
two operating executive officers of the Hartford, Connecticut
yards were increased by $2,500 to $115,000 as a result of
increased operating profits at these yards in 1993.
Upon consummation of the 1986 IPO, the responsibilities
of the Compensation Committee included determining cash
performance bonus and performance stock option formulae and the
initial salary levels and subsequent salary adjustments for the
chief executive officer and the operating executive officers.
For fiscal year 1992, the Compensation Committee's
responsibilities were extended to include determination of the
salary levels and salary adjustments of the corporate executive
officers. All decisions by the Compensation Committee relating
to the compensation of the Company's executive officers are
reviewed and approved by the full Board, except for decisions
about awards under the Company's Restated 1986 Non-Qualified Stock
Option Plan, which are made by the Stock Option Plan Committee.
Components of Executive Compensation
The goal of the Company's executive compensation policy
is to ensure that an appropriate relationship exists between
executive compensation and the creation of stockholder value,
while at the same time motivating and retaining key employees.
To achieve this goal, the primary components of executive
compensation for the prior year consisted of base salary, cash
performance bonus and performance stock options based upon
individual yard profitability, corporate performance and
individual initiatives and performance.
As described above, the current base salaries of the
executive officers were derived from those salaries determined
during the Company's reorganization in anticipation of the 1986
IPO. A comparison of the Company's compensation levels to those
of the Company's competitors (generally, building materials
distributors to professional contractors in the New York, New
Jersey, Connecticut and Pennsylvania region) is based on
estimates as most of the Company's competitors are privately
owned. In light of such estimations, it is the Compensation
Committee's view that the Company's levels of compensation
comprised of base salary plus cash performance bonus, if any, are
in the middle range of compensation.
Unlike many of its competitors, the Company, being a
public company, grants to its executive officers and key
employees options to purchase Company Common Stock as an
additional incentive. To the extent these options, granted in
accordance with the incentive performance formula, are exercised,
the benefit derived therefrom provides additional compensation to
such executives and key employees. The Stock Option Plan
Committee considers such additional compensation to be justified
<PAGE 14>
based upon the value of the executive officers' and key
employees' efforts on behalf of the Company and its stockholders.
Awards of cash performance bonuses and grants of
performance stock options to the operating executive officers
follow the same incentive formulae adopted by the Company at the
time of the 1986 IPO. The Compensation Committee continues to
believe that these policies, as subsequently revised, are
appropriate in the current environment.
The Stock Option Plan Committee determines grants of
performance stock options to the corporate executive officers,
other than the chief executive officer, by considering the
respective scope of accountability, strategic and operational
goals, performance requirements and contributions of each of the
corporate executive officers.
During 1994, two subsidiary officers who were not Named
Executive Officers exercised options for an aggregate of 7,704
shares at an exercise price of $3.375 all of which would have
otherwise expired in December 1994.
As the construction market in New York, New Jersey,
Connecticut and Pennsylvania stabilized during 1993 and improved
in 1994, the Company's operating and corporate executive officers
remained focused on the performance of the yards, providing
superior centralized corporate services and planned for
appropriate expansion. As a consequence, the Company continued
to improve its overall performance, reporting $.50 per share of
net income in 1994 compared to $.33 in 1993, consisting of the
second consecutive year of net income after four years of losses
since 1988 (exclusive of 1990 net income derived from recovery of
insurance proceeds from the death of its founder). During the
period ending in 1993, several of the Company's competitors in
the professional contractor building materials market in the New
York, New Jersey, Connecticut and Pennsylvania region, suffered
bankruptcies and/or closed facilities as a result of the
difficult and uncertain economic environment for residential and
commercial construction at that time.
Accordingly, in March and April 1995, the Compensation
Committee and Stock Option Plan Committee determined that the
existing incentive performance formulae remained appropriate for
the Company. The Compensation Committee applied these formulae in
awarding to operating executive officers (excluding the chief
executive officer) an aggregate cash bonus of $607,780. Based on
Management's assessment that the continued improvement in the
Hudson and Connecticut yards was in large party attributable to
its respective operating management, the Compensation Committee
increased the 1995 annual base salary of each of these individuals by
$12,000 to $154,000, $127,000 and $127,000, respectively. In
recognition of the improved central office effectiveness and added
responsibilities for planning the Company's expansion, the 1995
annual base salaries of the chief financial officer and a corporate
senior vice president were increased by $12,000 and $7,500 to $137,000
and $122,500, respectively. The Stock Option Plan Committee
applied the existing incentive performance formula in granting to
these operating executive officers and other key employees five
year options for an aggregate of 116,041 shares at $3.625 per
share (the Stock Option Plan Committee's determination of the
fair market value on the date of grant). In addition, in
recognition of their efforts on the Company's behalf, the
Company's chief financial officer and a corporate senior vice
president were granted options for 22,500 and 7,500 shares,
respectively, under the same terms as those options granted to
other operating executive officers.
<PAGE 15>
Chief Executive Officer Compensation
In March 1993, the Compensation Committee reviewed the
improving 1992 operating results of the Company which, although
still at a loss, continued to have positive cash-flow and
indicated dramatic improvement in operations from the 1991 fiscal
year. During 1992, the Company's sales increased by 16%, the
Company had restructured its long-term debt arrangements and
improved upon its already conservative credit policies. It was
the Committee's decision, based upon the base salary history of
the preceding chief executive officer as well as subjective
factors, that Mr. Gaites' 1993 base salary be set at $250,000.
As the Company was not profitable on a consolidated basis, the
Compensation Committee determined that Mr. Gaites would not
receive a cash performance bonus even though six of the nine
Company reporting yards realized net profit in 1992.
In March 1994, the Compensation Committee reviewed the
significant improvements in the Company's 1993 operating results
which revealed that the Company turned in its best performance
over the last five years as eight of the Company's reporting nine
yards realized a net profit. Compared with 1992, 1993 sales were
up by 14% or $14.2 million to $118,975,000 while SG&A expenses
increased by only 4% and bad debt reserves were reduced from 1.5%
to 1.2% of sales with the result that 1993 operating income was
up by $3.3 million compared to a 1992 loss of $78,000 and 1993
net income was up by $.48 per share to $1,650,000 or $.33 per
share compared to a net loss of $763,000 or $.15 loss per share
in 1992. Further, from January 1993 through December 1993 the
market value of the Company's outstanding common stock increased
from $1.625 per share to $4.00 per share. Consequently, the
Company's market capitalization during this period (excluding
those shares held by Mr. Gaites) increased by approximately $10.9
million. It was the Compensation Committee's decision, based
upon their subjective assessment of these improvements, that Mr.
Gaites 1994 annual base salary remain at $250,000 and that he be
awarded a cash performance bonus of $160,000.
In March 1995, the Compensation Committee considered the
continued improvement in the Company's 1994 operating results as
eight of nine of the Company's reporting yards realized a net
profit with sales up by 5% or $6.4 million to an aggregate of
$125,378,000. SG&A expenses increased by only 1% while bad debt
reserves were further reduced from 1.2% to 0.8%. Thus, 1994 net
income increased by $.17 per share to $.50 per share for a 52%
growth compared to 1993 net income of $.33 per share. Further,
the Company was able to enter into a two year relationship
lending arrangement with The Chase Manhattan Bank (N.A.)
providing significant savings over its prior collateralized loan
with its prior lender. It was the Compensation Committee's
decision based on their subjective assessment of these
improvements, that Mr. Gaites' 1995 annual base salary be
increased $25,000 to $275,000 and that he be awarded a cash
performance bonus of $225,000.
To provide additional incentive to Mr. Gaites to enhance
stockholder value beyond that provided by his then current
options and equity position in the Company, in March 1995 the
Stock Option Plan Committee granted to Mr. Gaites an immediately
exercisable five year option expiring in March 2000 for an
additional 37,500 shares at $3.625 per share (its deemed fair
market value on the date of grant) which the Committee
subjectively believed to be appropriate due to the improved
performance and profitability of the Company achieved during
1994.
<PAGE 16>
Compensation Committee Stock Option Plan Committee
David W. Bernstein David W. Bernstein
Robert J. Gaites Alvin Murstein
Emil W. Solimine Emil W. Solimine
Common Stock Performance Graph
The following line graph compares the cumulative total
stockholder return on the Common Stock during the past five
fiscal years, based on the market price of the Common Stock and
assuming reinvestment of dividends, with cumulative total return
of companies on the NASDAQ Index and a peer group index.
<PAGE>
<PAGE 17>
Comparison of Five Year Stockholder Cumulative Return
The Strober Organization, Inc., the NASDAQ Index
and the Peer Group Index (1)(2)
[GRAPH]
<TABLE>
<CAPTION>
Year Ended December 31
Company/Index Base Year 1990 1991 1992 1993 1994
- - ------------- --------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
The Strober
Organization, Inc.(3) $100 $ 29.63 $ 33.33 $ 48.15 $118.52 $103.70
Peer Group Index(4)(5) $100 $ 56.69 $ 46.70 $ 54.06 $ 57.46 $ 48.89
NASDAQ Index(4) $100 $ 81.12 $104.14 $105.16 $126.14 $132.44
</TABLE>
______________________
(1) Assumes $100 invested on December 31, 1989, the last trading day
before the beginning of the Company's fifth preceding fiscal year.
(2) Calculations are weighted according to stock market capitalization.
(3) The Company has not paid dividends during this period.
(4) Assumes dividends are reinvested.
(5) The Peer Group Index includes Hughes Supply, Inc. (Orlando, Florida
(NYSE)), Jones Plumbing Systems, Inc. (Birmingham, Alabama (AMEX)), Moore-
Handley, Inc. (Pelham, Alabama (NASDAQ)), NHD Stores, Inc. (Stoughton,
Massachusetts (NASDAQ)), Noland Co. (Newport News, Virginia (NASDAQ)),
Standard Brands Paint Corp. (Torrance, California (NYSE)) and Wolohan Lumber
Co. (Saginaw, Michigan (NASDAQ)), all of which are publicly traded. All of
the Companies included in the peer group index have the same standard industry
code ("SIC") as the Company. Further, each company has less than ten million
shares outstanding which is comparable to that of the Company.
Notwithstanding anything to the contrary set forth in the
Company's previous filings under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, that
might incorporate future filings, including this proxy statement,
in whole or in part, the foregoing report and the Performance
Graph shall not be incorporated by reference into any such
filings.
<PAGE>
<PAGE 18>
AMENDMENTS TO CERTIFICATE
OF INCORPORATION AND BY-LAWS
(Proposal 2)
General
The Company's Board of Directors has determined that certain
amendments to the Company's Certificate of Incorporation (the
"Certificate") and by-laws (the "By-laws") are advisable and by
unanimous vote has recommended them to the Company's Stockholders
for adoption. These amendments are being submitted in the form of
the proposal discussed in detail below under the caption "Classification
of the Board and Related Matters." Stockholders are urged to read
carefully the materials that follow.
The Board of Directors believes that dividing the directors
into three classes is advantageous to the Company and its
Stockholders because by providing that directors will serve three
year terms rather than one-year terms, the likelihood of
continuity and stability in the policies formulated by the Board
will be enhanced. It also believes that the staggered election
of directors will promote continuity because, at any given time,
at least two-thirds (2/3) of the directors will have at least one
year of experience as directors of the Company.
The Board has observed that certain tactics are available in
corporate takeover practice, including the accumulation of
substantial common stock positions as a prelude to an attempted
takeover or significant corporate restructuring; proxy fights;
and partial tender offers. The Board considers that such tactics
can be highly disruptive to a company and can result in
dissimilar treatment of a company's stockholders. The amendments
pertaining to a classified board and related matters will, by
providing that directors will serve three-year rather than one-
year terms and by making it more time-consuming for a third party
to gain control of the Board without its consent, ensure some
continuity and stability in the management of the business and
affairs of the Company and provide the Board with sufficient time
to review any such third party proposal and appropriate
alternatives to such a proposal. This proposal will not impede a
takeover that is approved by two-thirds (2/3) of the directors of
the Company.
The amendments being proposed are not, and are not intended to
be, part of a plan to adopt a series of amendments to the
Certificate and the By-Laws having an anti-takeover effect and
the Certificate does not presently contain any provision intended
by the Company to have, or to the knowledge of the Board of
Directors having, an anti-takeover effect. However, the
Certificate currently authorizes 20,000,000 Common Shares, par
value $.01 per share ("Common Shares") and 1,000,000 Preferred
Shares, par value $.01 per share ("Preferred Shares") of the
Company. As of December 31, 1994, there were 14,832,718 unissued
Common Shares and there were 111,789 Common Shares held in the
treasury. As of such date, there were no Preferred Shares issued
and outstanding. The Board has the power to issue unissued
Common Shares and Common Shares held in the treasury, and to
determine, subject to the provisions of the Certificate and of
Delaware law, the rights (including voting rights), preferences
and limitations of the authorized but unissued Preferred Shares.
Although the Board presently has no intention of doing so, such
authorized but unissued and treasury Common Shares could (within
the limits imposed by applicable law and the rules of the NASDAQ
National Market System on which the Company's shares are listed)
be issued to a holder who might thereby obtain sufficient voting
power to ensure that any proposal to remove directors, or to
amend or repeal any of the provisions that would be added to the
<PAGE 19>
Certificate and the By-Laws by the proposed amendments, would not
receive the 75% Stockholder vote required therefor by the
proposed amendments. Thus, if the proposed amendments are
adopted, the power of the Board to issue such stock could enable
the Board to make it more difficult to replace incumbent
directors.
The classified board amendments are not being recommended in
response to any specific effort of which the Company is aware to
obtain control of the Company, but rather are being recommended
in order to assure that all the Company's Stockholders are
treated in substantially the same manner in the event of a
possible takeover situation. The listing of the Common Shares on
the NASDAQ National Market System will not, under its current
rules and practices, be affected by the proposed amendments. The
Board has no present intention of soliciting a stockholder vote
on any other proposals relating to a possible takeover of the
Company. (See Proposal 1 of this Proxy Statement for information
regarding the nominees for election to the Board of Directors and
the class of directors in which each director will initially
serve if the proposed amendments are adopted and the shares of
the Company's voting stock beneficially owned by directors and
officers of the Company.)
Classification of the Board and Related Matters
The proposed amendments to the Certificate and the By-laws
would (1) classify the Board of Directors into three classes, as
nearly equal in number as possible, each of which, after an
interim arrangement, will serve for three years, with one class
being elected each year; (2) provide that directors may be
removed only for cause by the Board or only with the approval of
the holders of at least 75% of the voting power of the
outstanding capital stock of the Company entitled to vote
generally in the election of directors (the "Voting Stock"); (3)
provide that vacancies on the Board may be filled by a majority
of the remaining directors then in office even though less than a
quorum; (4) provide that the number of directors of the Company
may be changed only by the vote of a majority of the entire Board
or by the holders of 75% of the Voting Stock; and (5) if the
proposed amendments to the Certificate are approved by the
Stockholders, they will become effective upon the filing of a
certificate of amendment with the Secretary of State of Delaware,
which filing is expected to be made promptly following
Stockholder approval of the amendments. The proposed amendments
to the By-laws would be effective contemporaneously with the
filing of the amendments to the Certificate.
The proposed amendments are being presented to Stockholders of
the Company for their approval as a single integrated proposal.
As more fully discussed below, the Board of Directors believes
the proposed amendments, taken together, would, if adopted,
enhance the likelihood of continuity and stability in the
composition of the Company's Board of Directors and, at the same
time, effectively reduce the possibility that a third party could
effect a sudden or surprise change in majority control of the
Board of Directors without the support of the incumbent Board.
However, adoption of the proposed amendments may significantly
reduce the ability of stockholders of the Company to change the
composition of the incumbent Board of Directors and to benefit
from certain transactions which could be opposed by the incumbent
Board. Accordingly, Stockholders are urged to read carefully the
following sections of this Proxy Statement, which describe the
proposed amendments and their purposes and effects, and Exhibit A
hereto, which sets forth the full text of the proposed amendments
to the Certificate and the By-laws, before voting on the proposed
amendments.
<PAGE 20>
Description of the Proposed Amendments
The full text of the proposed amendments concerning
classification of the Board of Directors and related matters is
attached to this Proxy Statement as Exhibit A. The following
description of such proposed amendments is qualified in its
entirety by reference to Exhibit A.
Classification of the Board of Directors. Under Delaware law,
directors are elected for a term of one year and until their
successors are elected and qualified, unless the certificate of
incorporation provides for the classification of directors with
respect to the duration of time for which they hold office. The
Board has currently set the number of directors at 7. The
proposed restated Article Seventh of the Certificate and the
proposed restated Article II of the By-laws provide that the
Board shall be divided into three classes of directors, each
class to be as nearly equal in number of directors as possible.
If the proposed amendments are adopted, at the 1995 Annual
Meeting of Stockholders, the Company's directors will be divided
into three classes and two directors will be elected for a one-
year term expiring at the 1996 Annual Meeting of Stockholders,
two directors will be elected for a two-year term expiring at the
1997 Annual Meeting of Stockholders, and the remaining three
directors will be elected for a three-year term expiring at the
1998 Annual Meeting of Stockholders (in each case, until their
respective successors are duly elected and qualified). Starting
with the 1996 Annual Meeting of Stockholders, one class of
directors will be elected each year for a three-year term. For
information regarding the current nominees for election at the
1995 Annual Meeting of Stockholders and the terms for which each
of them will initially serve if the proposed amendments are
adopted, see "Election of Directors" (Proposal 1). If the
proposed amendments are not adopted, all directors elected at the
1995 Annual Meeting of Stockholders will be elected for a term
expiring at the 1996 Annual Meeting of Stockholders and until
their successors are duly elected and qualified.
The classification provision, by staggering the terms of
classes of directors, will have the effect of lengthening the
time necessary to effect a change in the composition of the Board
of Directors. At least two Stockholder meetings, instead of one,
will be required to effect a change in the majority control of
the Board, except in the event of vacancies resulting from
removal or other reason (in which case the remaining directors
are authorized to fill the vacancies so created--see "Removal of
Directors; Filling Vacancies on the Board of Directors;
Determining the Number of Directors" below). Although there has
been no problem in the past with the continuity or stability of
the Board of Directors, the Board believes that the longer time
required to elect a majority of a classified Board will help to
assure the continuity and stability of the Company's affairs and
policies in the future, since a majority of the directors at any
given time will have prior experience as directors of the
Company. It should also be noted that the classification
provision will apply to every election of directors, whether or
not a change in the Board might arguably be beneficial to the
Company and its Stockholders and whether or not a majority of the
Company's Stockholders believes that such a change might be
desirable. Thus even if a third party were to acquire a majority
of the Company's outstanding Common Stock, the proposed amendments
could increase the amount of the time required for that third party
to obtain control of the Company without the cooperation of the
Board.
Removal of Directors; Filling Vacancies on the Board of
Directors; Determining the Number of Directors. The Company's
By-laws currently provide that a majority of the Stockholders may
remove directors for cause by the affirmative vote of a majority
of the votes cast at a meeting of Stockholders by Stockholders
entitled to vote for the election of directors. Delaware law
also permits provisions in the certificate of incorporation which
require a greater vote than that otherwise required by law for
any corporate action to be authorized by stockholders. The
proposed restated Article Seventh of the Certificate and proposed
<PAGE 21>
restated Article II of the By-laws provide that a director, or
the entire Board of Directors, may be removed by the stockholders
only for cause and only if such removal is approved by the
affirmative vote of the holders of at least 75% of the Voting Stock.
With respect to the filling of vacancies on the Board, the
Company's existing By-laws provide that any vacancy, including a
vacancy created by an increase in the number of directors, may be
filled by the Board of Directors provided that in the case of an
increase in the number of directors pursuant to an amendment of
the By-laws made by the Stockholders, the Stockholders may fill
the vacancy or vacancies so created. Delaware law also expressly
provides vacancies on the Board and newly created directorships
may be filled by the affirmative vote of a majority of the votes
cast at a meeting of stockholders by stockholders entitled to
vote for the election of directors. The proposed restated
Article Seventh of the Certificate and proposed restated Article
II of the By-laws provide that newly created directorships
resulting from an increase in the authorized number of directors
and any vacancies on the Board caused by death, resignation,
retirement, disqualification, removal or other reason may be
filled by a majority of the directors then in office even though
less than a quorum (or by a sole remaining director). Under
Delaware law, any director so chosen by the Board to fill any
vacancy shall hold office only until the next succeeding annual
meeting of Stockholders and until his successor shall been duly
elected and qualified. In addition, the proposed amendments
provide that no decrease in the number of directors shall shorten
the term of any incumbent director.
The proposed amendments relating to the removal of directors
and the filling of vacancies on the Board would seek to preclude
a third party from removing incumbent directors without cause and
simultaneously gaining control of the Board by filling the
vacancies created by such removal with its own nominees. These
provisions would also reduce the power of Stockholders, even those
with a majority of the voting power, to remove incumbent
directors. Under the proposed amendments, Stockholders will have
the power to remove directors for cause with a 75% vote, and the
remaining directors, by an affirmative vote of the majority, may
elect a successor to fill the vacancies created by such removal.
With respect to the number of directors on the Board and the
manner for determining such number, Article II Section 1 of the
By-laws currently provides that the Board of Directors shall
consist of not less than 3 nor more than 20 members and that the
number of directors shall be fixed from time to time by the Board
or by the Stockholders at an annual meeting. The proposed
amendments would amend this By-law provision and would provide
that (i) the Board of Directors shall consist of not less than 3
nor more than 20 members and (ii) the exact number of directors
within the minimum and maximum limitations shall be fixed
exclusively by a resolution approved by a majority of the entire
Board of Directors. The Board has currently set the number of
directors at 7. The requirement that only a majority of the
entire Board of Directors can fix the number of directors within
the minimum and maximum limitations (together with the provision
discussed above that newly created directorships may be filled by
the Board) would seek to prevent a third party seeking majority
representation on the Board of Directors from obtaining such
representation simply by enlarging the Board and filling the new
directorships created thereby with its own nominees.
Increased Stockholder Vote for Alteration, Amendment or Repeal
of Proposed Amendments. Under Delaware law, amendments to the
Certificate require, among other things, the affirmative vote of
a majority of the votes cast at a meeting of Stockholders by the
holders of the Company's shares entitled to a vote thereon and of
a majority of the votes cast at a meeting of stockholders by the
holders of shares of each class entitled to vote thereon as a
class (provided that the Board of Directors first approves such
amendment and directs that it be submitted to a vote at a meeting
<PAGE 22>
of Stockholders). As mentioned above, Delaware law also permits
provisions in the Certificate which require a greater vote than
the vote otherwise required by law for any corporate action to be
authorized by Stockholders. With respect to such supermajority
provisions, Delaware law requires that any amendment or repeal
thereof be approved by the same vote as would be required to take
action under such provisions. The proposed restated Articles
Seventh and Twelfth of the Certificate would require the approval
of the holders of at least 75% of the Voting Stock for the
amendment or repeal of, or the adoption of any provision
inconsistent with, the proposed amendments to the Certificate.
In addition, under such proposed Articles and under proposed
Article X to the By-laws, none of the By-law amendments related
to the proposed amendments to the Certificate may be amended or
repealed, nor may any provision inconsistent therewith be
adopted, without the approval of the holders of at least 75% of
the Voting Stock.
The requirement of an increased Stockholder vote is designed
to prevent a Stockholder with a majority of the voting power of
the Corporation from avoiding the requirements of the proposed
amendments by simply repealing them. It will also have the
effect, however, of giving the holders of greater than 25% of the
Voting Stock a veto power over any changes in the proposed
amendments even if the Board of Directors or a majority of the
Stockholders favor such changes. (See page 1 of this Proxy
Statement for information concerning the ownership of Voting
Stock by officers and directors of the Corporation.)
Purposes and Effects of the Proposed Amendments
The purposes of the proposed amendments to the Certificate and
the By-laws are to help assure the continuity and stability of
the Company's business strategies and policies, and to discourage
certain types of transactions, described below, which involve an
actual or threatened change of control of the Company without
sufficient benefit to all Stockholders. They are designed to make
it more difficult and time-consuming to change majority control of
the Board of Directors and thus to reduce the vulnerability of the
Company to an unsolicited proposal for the takeover of the Company
that does not contemplate the acquisition of at least 75% of the
Voting Stock, or an unsolicited proposal for the restructuring or
sale of all or part of the Company. As more fully described below,
the Board believes that, as a general rule, such unsolicited takeover
proposals may not be in the best interests of the Company and its
Stockholders.
From time to time third parties may acquire substantial stock positions
in what they believe are undervalued public companies as a prelude to
proposing a takeover or a restructuring or sale of all or part of the
company or other similar extraordinary corporate action which
disproportionately benefits the third party. Such actions are often
undertaken by the third party without advance notice to or consultation
with management of the company. In many cases, the third party seeks
representation on the company's board of directors in order to increase
the likelihood that its proposal will be implemented by the company. If
the company resists such efforts to obtain representation on its board
pending the evaluation and negotiation of any transaction that may ultimately
be undertaken, the third party may commence a proxy contest to have its
nominees elected to the board in place of certain directors, or the entire
board. In some cases, the third party may not truly be interested in taking
over the company, but uses the threat of a proxy fight and/or a takeover bid
as a means of obtaining for itself a special benefit which might not be
available to all of the company's stockholders.
The Board of Directors of the Company believes that in such
situations the imminent threat of removal of the Company's
management would severely curtail management's ability to
<PAGE 23>
negotiate effectively with any such third party acquirors. The Board
would be deprived of the time and information necessary to evaluate
the third party proposal, to seek out and negotiate alternative proposals
and to help ensure that the best result is obtained in any transaction
that may ultimately be undertaken involving the Company.
Takeovers or changes in management of the Company which are
proposed and effected without prior consultation and negotiation
with the Company's management are not necessarily detrimental to
the Company and its Stockholders. In addition, the Board of
Directors has no knowledge of any present effort to gain control
of the Company or to organize a proxy contest. However, the
Board believes that it is prudent and in the best interest of
Stockholders generally to provide the greater assurance of
continuity of the Board's composition and policies which would
result from adoption of the proposed amendments. The Board
believes such advantages outweigh any disadvantage relating to
preserving incumbent management in office or possibly
discouraging potential third parties from making an effort to obtain
control of the Company.
The proposed amendments will make more difficult or discourage
a proxy contest or the assumption of control by a third party
acquiror of a substantial block of the Company's stock or the removal
of the incumbent Board and could thus increase the likelihood that
incumbent directors will retain their positions.
The proposed amendments concerning a classified Board and
related matters will help ensure that the Board, if confronted
with a surprise proposal from a third party which has acquired a
block of the Company's stock, will have sufficient time to review
the proposal and appropriate alternatives to the proposal and to
seek the best available result for the Stockholders.
The proposed amendments are intended to encourage persons
seeking to acquire control of the Company to initiate such an
acquisition through arm's-length negotiations with the Company's
management and Board of Directors, who would then be in a
position to negotiate a transaction which would treat all of the
Company's Stockholders in substantially the same manner.
The proposed amendments are subject to the rights of the
holders of any series of the Company's Preferred Shares then
outstanding, if any. As mentioned above, as of the date hereof,
no Preferred Shares were issued and outstanding. The proposed
amendments will not interfere with the rights of any series of
Preferred Shares that may hereafter be created and issued by the
Company.
The Certificate does not provide for cumulative voting in the
election of directors. Accordingly, subject to the special
rights of holders of any outstanding Preferred Shares discussed
above, the holders of a majority of the votes cast by holders of
the Company's shares in an election of directors can currently
elect all of the directors being elected at any annual or special
meeting of the Company's Stockholders. However, the
classification of the Board pursuant to the proposed amendments
will apply to every election of directors, whether or not a
change in ownership of the Company has occurred such that if the
holders of a majority of the voting stock of the Company desire to
change the composition of the Board, it could take two Annual Meetings
for new directors to constitute a majority of the Board.
<PAGE 24>
Existing Anti-takeover Protection
Stockholder Approval of Certain Business Combinations. The
Company is subject to the provisions of Section 203 of the
Delaware General Corporation Law ("Section 203"). Under Section
203, certain "business combinations" with "interested
stockholders" of Delaware corporations are subject to a three
year moratorium unless specified conditions are met.
Section 203 prohibits a Delaware corporation from engaging in
a "business combination' with an "interested stockholder" for
three years following the date that such person becomes an
interested stockholder. With certain exceptions, an interested
stockholder is a person or group who or which owns 15% or more of
the corporation's outstanding voting stock (including any rights
to acquire stock pursuant to an option, warrant, agreement,
arrangement or understanding, or upon the exercise of conversion
or exchange rights, and stock with respect to which the person
has voting rights only), or is an affiliate or associate of the
corporation and was the owner of 15% or more of such voting stock
at any time within the previous three years.
For purposes of Section 203, the term "business combination"
is defined broadly to include mergers with or caused by the
interested stockholder, sales or other dispositions to the
interested stockholder (except proportionately with the
corporation's other stockholders) of assets of the corporation or
a subsidiary equal to ten percent or more of the aggregate market
value of the corporation's consolidated assets or its outstanding
stock; the issuance or transfer by the corporation or a
subsidiary of stock of the corporation or such subsidiary to the
interested stockholder (except for transfers in a conversion or
exchange or a pro rata distribution or certain other
transactions, none of which increase the interested stockholder's
proportionate ownership of any class or series of the
corporation's or such subsidiary's stock); or receipt by the
interested stockholder (except proportionately as a stockholder),
directly or indirectly, of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the
corporation or a subsidiary.
The three year moratorium imposed on business combinations by
Section 203 does not apply if: (i) prior to the date on which
such stockholder becomes an interested stockholder, the board of
directors approves either the business combination or the
transaction which resulted in the person becoming an interested
stockholder; (ii) the interested stockholder owns 85% of the
corporation's voting stock upon consummation of the transaction
which made him or her an interested stockholder (excluding from
the 85% calculation shares owned by directors who are also
officers of the target corporation and shares held by employee
stock plans which do not permit employees to decide
confidentially whether to accept a tender or exchange offer); or
(iii) on or after the date such person becomes an interested
stockholder, the board approves the business combination and it
is also approved at a stockholder meeting by two thirds (2/3) the
voting stock not owned by the interested stockholder.
The Company believes that the effect of Section 203 would be to
encourage any potential third party acquiror to negotiate with the
Company's Board of Directors. Section 203 also has the effect of
limiting the ability of a potential third party acquiror to make a
two-tiered bid for the Company in which all Stockholders would not
be treated equally. The proposed amendments are not intended to
restrict or limit the application of Section 203.
<PAGE 25>
Vote Required for Adoption of Proposed Amendments
Under Delaware law, the affirmative vote of a majority of the
votes cast by the holders of the Company's shares entitled to
vote at the annual meeting is required to adopt the proposed
amendments regarding classification of the Board and related
matters.
THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE FOR THE ADOPTION OF THE PROPOSED AMENDMENTS.
___________________________
<PAGE>
<PAGE 26>
APPROVAL OF THE ADOPTION OF THE STROBER ORGANIZATION, INC.
1995 OUTSIDE DIRECTOR STOCK OPTION PLAN
(Proposal 3)
Introduction
On March 8, 1995, the Board adopted, subject to Stockholder
approval, The Strober Organization, Inc. 1995 Outside Director
Stock Option Plan (the "1995 Outside Director Plan"). The
purposes of the 1995 Outside Director Plan are to encourage
ownership in the Company by non-employee members of the Board in
order to promote long-term Stockholder value and to provide non-
employee members of the Board with an incentive to continue as
directors of the Company. No consideration is to be received by
the Company for the granting of options under the 1995 Outside
Director Plan.
As of April 7, 1995 the current market value of the Common Stock
underlying the options is $271,875 and the aggregate exercise price
of such options is the same $271,875.
The principal features of the 1995 Outside Director Plan are
summarized below. This summary is qualified by reference to the
complete text of the 1995 Outside Director Plan, which is
attached as Exhibit B.
General
The 1995 Outside Director Plan is effective, subject to
Stockholder approval, as of March 8, 1995. The 1995 Outside
Director Plan authorizes the grant of an option to purchase
18,750 shares of Common Stock to each of the four (4) non-
employee members of the Board. There are 75,000 shares of Common
Stock reserved for issuance under the Plan. The issuance of
shares pursuant to the exercise of such options would result in
a cash contribution to the Company of $271,875 and an approximate 1.2%
dilution of the percentage ownership interest in the existing
Stockholders. Management anticipates that any such dilution would
occur over a number of years. The 1995 Outside Director Plan will
terminate by its terms on March 8, 2000 unless further extended by
the Plan Committee.
Eligibility
Subject to Stockholder approval, as of March 8, 1995, each of
the existing non-employee director (the "Optionee") received on a
one-time basis an option for 18,750 shares under the 1995 Outside
Director Plan.
Options granted under the 1995 Outside Director Plan are
immediately exercisable in full at the fair market value of the
underlying Common Stock on the date of grant. Fair market value
means the closing sales price as quoted by NASDAQ on the date of
the grant which was $3.625 per share.
<PAGE 27>
Administration
The 1995 Outside Director Plan will be administered by a Plan
Committee to be composed of two or more of the employee directors
of the Board. The Committee has certain powers vested in it in
the terms of the 1995 Outside Director Plan including, without
limitation, the authority (within the limitations described
therein) to prescribe the form of the agreement embodying the
awards of options under the 1995 Outside Director Plan, to
construe the 1995 Outside Director Plan, to determine all
questions arising under the 1995 Outside Director Plan, and to
adopt and amend all rules and regulations for the administration
of the 1995 Outside Director Plan it may deem desirable. Any
decision of the majority of the Plan Committee will be final and
conclusive.
Transferability of Options
The rights of an Optionee under the 1995 Outside Director Plan
may not be assigned or transferred other than by will or the laws
of descent and distribution and may be exercised during the
Optionee's lifetime only by the Optionee.
Termination of Option
The term of the options granted under the 1995 Outside
Director Plan expires on March 8, 2000. If an Optionee's service
as a director ends for any reason, such Optionee's option will
immediately terminate.
Amendment of the 1995 Outside Director Plan
The Committee which administers the 1995 Outside Director Plan
can extend the term of the Plan and make other non-material
changes. Any material changes to the 1995 Outside Director Plan
require Stockholder approval.
Federal Income Tax Consequences
An Optionee will not be subject to federal income taxation as
a result of the grant of an option to purchase Common Stock under
the Plan. Upon exercise of the option, the Optionee will
recognize ordinary income equal to the difference (the "Spread")
between the option price and the fair market value of the Shares
on the date of exercise. The Company may claim an income tax
deduction for the amount taxable to the Optionee as ordinary
income.
THE BOARD BELIEVES THAT APPROVAL OF THE
ADOPTION OF THE 1995 OUTSIDE DIRECTOR
STOCK OPTION PLAN IS IN THE BEST
INTERESTS OF ALL STOCKHOLDERS AND
RECOMMENDS A VOTE "FOR" THE PROPOSED
PLAN.
________________________
<PAGE>
<PAGE 28>
INDEPENDENT PUBLIC ACCOUNTANTS
(Proposal 4)
The Board and the Audit Committee have approved the selection
of KPMG Peat Marwick LLP as the Company's independent public
accountants for the fiscal year ending December 31, 1995. KPMG
Peat Marwick LLP has audited the books and records of the Company
since 1986. Representatives of such firm plan to attend the
Meeting and will be available to answer appropriate questions.
Such representatives will also have an opportunity to make a
statement at the Meeting if they so desire. The Company is
asking Stockholders to ratify the selection of KPMG Peat Marwick
LLP as the Company's independent public accountants for the
fiscal year ending December 31, 1995. The affirmative vote of
the holders of a majority of the votes cast is required to ratify
the selection of such firm as the Company's independent public
accountants. In the event the Stockholders fail to ratify the
appointment, the Board will consider it as a direction to select
other public accountants. Even if the selection is ratified, the
Board in its discretion may direct the appointment of a different
independent accounting firm at any time during the year if the
Board feels that such a change would be in the best interests of
the Company and its Stockholders.
THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION
OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS OF THE COMPANY.
______________________________________
<PAGE>
<PAGE 29>
NEW PLAN BENEFITS
The following table sets forth the number of shares of Common
Stock subject to options to be granted to each of the following
under the 1986 Option Plan and the 1995 Outside Director Plan.
<TABLE>
<CAPTION>
Name and Position 1986 Option Plan(1) 1995 Outside Director
Plan(2)
- - ----------------- ------------------- ---------------------
<S> <C> <C>
Robert J. Gaites, Chairman 37,500 0
of the Board, President and
Chief Executive Officer of the
Company
John Yanuklis, Executive 23,503 0
Vice President of the
Company and President of
Strober King Building Supply
Centers, Inc.
Richard Schaefer, Vice 27,586 0
President of the Company
and Executive Vice President
of Strober Long Island
Building Material Centers,
Inc.
Edward Zieky, Senior Vice 10,152 0
President of the Company
and Senior Vice President of
The General Building Supply
Company
Eliott Zieky, Senior Vice 10,152 0
President and Director of the
Company and Senior Vice
President of The General
Building Supply Company
Executive Group 149,651 0
Non-Executive Director 0 75,000
Group
Non-Executive Employee 33,890 0
Group
____________________
(1) Reflects Grants of stock options made on March 8, 1995
(2) Employees of the Company are ineligible to participate. A copy of such
plan is included as Exhibit B.
</TABLE>
<PAGE>
<PAGE 30>
MISCELLANEOUS
Certain Transactions
Certain of the Company's building supply centers are leased
from corporations or partnerships wholly-owned by existing and
former members of management, major stockholders and their
families, including Messrs. Brower, Gaites, Guerin, Schaefer,
Yanuklis, Young, Edward N. Zieky, Eliott Zieky and Ms. Sue
Strober, as follows: 550 Hamilton Avenue, Brooklyn, New York,
(current annual rental of $688,800); 370 West Merrick Road,
Valley Stream, New York (current annual rental of $254,300); 345
West Merrick Road, Valley Stream, New York (current annual rental
of $133,700); 102 North Route 9W, Congers, New York (current
annual rental of $255,400); 125 Temple Hill Road, Vails Gate, New
York (current annual rental of $71,300); Route 175 West, Hampton,
New Jersey (current annual rental of $321,200); 363, 367, 405
Ellington Road, East Hartford, Connecticut (current annual rental
of $369,600); and 580 Tolland Street, East Hartford, Connecticut
(current annual rental $138,200). The lessors of all such
centers have granted the Company a right of first refusal in the
event any such lessor desires to sell any such premises to a
third party.
The Company believes that the leases with such affiliated
parties are on terms no less favorable to the Company than it
could obtain in arms-length negotiations with unrelated third
parties for similar locations in similar geographic areas. It is
contemplated that all future locations of the Company will either
be owned by the Company or leased from unrelated third parties.
The Company, Sue Strober, certain current executive
officers of the Company and certain former executive officers and
directors of the Company (including the estate of Eric D.
Strober) are parties to an agreement entered into in 1986 and
subsequently amended providing such parties with prior notice and
a right of first refusal to purchase shares of the Company's
Common Stock which any of the parties desires to sell.
During 1993, the Company refinanced its subordinated debt
with the former owners of The General Building Supply Company
which the Company purchased in 1988. This debt had a maturity
date of January 15, 1994 in the amount of $3,500,000. On
October 1, 1993, the subordinated noteholders exchanged
$3,500,000 of subordinated notes ("old notes") for new
subordinated notes ("new notes") in the like amount of
$3,500,000. The "new notes" are due September 1, 1996 and were
to be paid with 36 consecutive monthly payments of $97,222 plus
interest at 8% per annum. Also, on October 1, 1993, the accrued
interest on the "old notes" in the amount of $195,808 was paid
and the noteholders surrendered warrants to acquire 300,000
shares of common stock at an exercise price of $2.00 per share.
At December 31, 1994 two of the noteholders, Eliott Zieky
and Edward Zieky, were employed by the Company as senior vice
presidents. The amounts owed to Eliott Zieky and Edward Zieky at
December 31, 1994 were $283,792 and $318,500, respectively.
Edward Zieky's brother (who is also Eliott Zieky's first cousin)
is a building contractor who purchased over $200,000 of building
supplies from the Company in 1994 on terms no less favorable to
the Company that it could obtain in arms-length negotiations with
unrelated third parties.
<PAGE 31>
Stockholder Proposals
Proposals of security holders intended to be presented at
the 1996 annual meeting of Stockholders must be received by the
Company by December 29, 1995, in order to be eligible for
inclusion in the proxy statement and form of proxy of the Company
for that meeting.
Stockholders wishing to bring proposals or director
nominations before an annual meeting must comply with certain
provisions of the Company's By-laws, which require certain
information to be provided in connection with the submission of
stockholder proposals or director nominations and which set forth
certain timing requirements with respect thereto.
Cost of Solicitation
The cost of soliciting proxies will be borne by the
Company, including expenses in connection with the preparation
and mailing of this Proxy Statement and all papers which
accompany or may hereafter supplement it. The solicitation will
be made by mail. The Company will also supply brokers or persons
holding stock in their names or in the names of their nominees
with such number of proxies, proxy materials and annual reports
as they may require for mailing to beneficial owners, and will
reimburse them for their reasonable expenses in connection
therewith. To the extent necessary in order to assure sufficient
representation, officers, directors and employees of the Company
may be engaged to assist in the solicitation of proxies without
remuneration therefor by mail, telephone or personal interview.
Filings Under Section 16(a)
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in
ownership of such securities with the Securities and Exchange
Commission and the National Association of Securities Dealers,
Inc. Officers, directors and greater than ten percent beneficial
owners are required by applicable regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of the forms
furnished to the Company, or written representations from certain
reporting persons that no Forms 5 were required, the Company
believes that during the 1994 fiscal year all of its officers and
directors complied with all applicable filing requirements except
as follows. David Bernstein and Sue Strober failed to file
timely Forms 4 following the sale by Sue Strober of a warrant for
75,000 shares of Company Common Stock to Mr. Bernstein and the
sale by Sue Strober of 111,789 shares to the Company in December
1994. All such transactions were subsequently reported.
Other Matters
As of the date of this Proxy Statement, no other matter is
known which will be brought before the Meeting. However, if any
other matter properly comes before the Meeting, or any
adjournment thereof, the persons voting the proxies will vote on
these matters in accordance with their best judgment.
<PAGE 32>
Vote Required
Each Stockholder is entitled to one vote for each share of
stock registered in the Stockholder's name. Directors are
elected by a plurality of the votes cast by holders of shares
entitled to vote in the election. All other corporate action is
authorized by a majority of the votes cast. Under Delaware law
the aggregate number of votes entitled to be cast by all
Stockholders present in person or represented by proxy at the
Meeting, whether those Stockholders vote "for", "against" or
abstain from voting, will be counted for purposes of determining
the minimum number of affirmative votes required for approval of
matters to be voted on at the Meeting, and the total number of
votes cast "for" those matters will be counted for purposes of
determining whether sufficient affirmative votes have been cast.
An abstention from voting on a matter by a Stockholder present in
person or represented by proxy at the Meeting has the same legal
effect as a vote "against" the matter even though the Stockholder
or interested parties analyzing the results of the voting may
interpret such a vote differently.
UPON WRITTEN REQUEST OF A RECORD HOLDER OR BENEFICIAL OWNER
OF COMMON STOCK ENTITLED TO VOTE AT THE MEETING, THE COMPANY WILL
PROVIDE WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM 10-K
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR
ENDED DECEMBER 31, 1994. REQUESTS SHOULD BE MAILED TO:
Corporate Treasurer
The Strober Organization, Inc.
550 Hamilton Avenue
Brooklyn, New York 11232
THE STROBER ORGANIZATION, INC.
David J. Polishook
Secretary
Brooklyn, New York
April 28, 1995
<PAGE>
<PAGE 33>
EXHIBIT A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
THE STROBER ORGANIZATION, INC., a corporation organized and
existing under and by virtue of the General Corporation Law of
the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said Corporation
adopted a resolution proposing and declaring advisable the
following amendment to the Certificate of Incorporation of said
Corporation:
RESOLVED, that the Corporation's Certificate of
Incorporation be amended by superseding and restating Article
SEVENTH and by adding a new Article TWELFTH, so as to
respectively read in their entirety as set forth below:
SEVENTH: The entire Board of Directors
shall consist of not less than three (3) nor
more than twenty (20) directors. Within
these limits and subject to the rights of the
holders of any series of Preferred Stock to
elect additional directors under specified
circumstances, the number of directors of the
Corporation shall be fixed from time to time
exclusively by resolution of the Board of
Directors. The directors in office, other
than those who may be elected by the holders
of any series of Preferred Stock under
specified circumstances, shall be divided,
with respect to the time for which they
severally hold office, into three classes:
Class I, Class II and Class III. The term of
office of the Class I directors will expire
at the 1996 annual meeting of stockholders,
the term of office of the Class II directors
will expire at the 1997 annual meeting of
stockholders, and the term of office of the
Class III directors will expire at the 1998
annual meeting of stockholders following
their election, and shall hold office until
their successors have been duly elected and
qualified. At each annual meeting of
stockholders, commencing with the 1996 annual
meeting, directors elected to succeed the
directors whose terms then expire shall be
elected for a term of office to expire at the
third succeeding annual meeting of
stockholders following their election, and
shall hold office until their successors have
been duly elected and qualified; provided
however that a director may resign. If the
number of directors is not evenly divisible
into thirds, the Board shall determine which
<PAGE 34>
Class or Classes shall have one extra
director. Any additional director of any
Class elected to the Board of Directors to
fill a vacancy from an increase in such Class
shall hold office for the term that expires
as to that Class. The tenure of a Director
shall not be affected by any decrease in the
number of directors so made by the Board.
Subject to the rights of the holders of any
series of Preferred Stock, any directors or
the entire Board of Directors may be removed
from office at any time, but only (i) for
cause, or (ii) by the affirmative vote of the
holders of not less than 75% of the
outstanding stock of the Corporation entitled
to vote in the election of directors. Any
director may be removed with cause at any
time by the affirmative vote of the majority
of directors in office. The Board of
Directors is expressly authorized to make,
alter, amend and repeal the By-laws of the
Corporation. By-laws of the Corporation may
also be made, altered, amended or repealed by
the stockholders, but only by the affirmative
vote of the holders of at least 75% of the
outstanding stock of the Corporation entitled
to vote in the election of directors at a
meeting of stockholders duly held subject to
the right of the Board of Directors to amend
or repeal any By-law adopted by the
stockholders unless the By-law or any
provision thereof specifically states that it
shall not be amended or repealed by the Board
of Directors in which case such By-law shall
only be amended or repealed by the
affirmative vote of the holders of at least
75% of the outstanding stock of the
Corporation entitled to vote in the election
of directors.
TWELFTH: The Corporation reserves the right
to amend, alter, change or repeal any
provision contained in this Amended
Certificate of Incorporation in the manner
now or hereafter prescribed by law, and all
rights conferred on stockholders herein are
granted subject to this reservation.
In addition to any other requirements for
amendments to the Certificate, no amendment
to this Certificate shall amend, alter,
change or repeal any of the provisions of
Article SEVENTH or this Article TWELFTH
unless the amendment effecting such
amendment, alteration, change or repeal shall
have received the affirmative approval of
holders of shares of capital stock of the
Corporation entitled to cast at least 75% of
the outstanding stock of the Corporation
entitled to vote in the election of
directors; provided however, that this
Article TWELFTH shall not apply to, and such
75% vote shall not be required to amend,
alter, change or repeal any provisions of
this Article recommended by not less than the
two-thirds (2/3) of the Board of Directors.
<PAGE 35>
SECOND: That at the annual meeting of stockholders of said
Corporation duly held on May 25, 1995, upon notice in accordance
with Section 222 of the General Corporation Law of the State of
Delaware, the necessary number of shares as required were voted
in favor of the aforesaid amendment.
THIRD: That the aforesaid amendment was duly adopted in
accordance with the applicable provisions of Section 242 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said Corporation has caused this
Certificate to be signed by Robert J. Gaites, its Chairman of
the Board, and attested by David J. Polishook, its secretary,
this day of , 1995.
THE STROBER ORGANIZATION, INC.
By:__________________________
Robert J. Gaites
Chairman of the Board
ATTEST:
By:______________________
David J. Polishook
Secretary
<PAGE>
<PAGE>
AMENDMENT TO THE BY-LAWS
Articles II and X of the By-laws of the Company are amended
in their entirety to read as follows:
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. Number. The entire Board of
Directors shall consist of not less than three (3) nor
more than twenty (20) directors. Within these limits
and subject to the rights of the holders of any series
of Preferred Stock to elect additional directors under
specified circumstances, the number of directors of
the Corporation shall be fixed from time to time
exclusively by resolution of the Board of Directors.
The directors in office, other than those who may be
elected by the holders of any series of Preferred
Stock under specified circumstances, shall be divided,
with respect to the time for which they severally hold
office, into three classes: Class I, Class II and
Class III. The term of office of the Class I
directors will expire at the 1996 annual meeting of
stockholders, the term of office of the Class II
directors will expire at the 1997 annual meeting of
stockholders, and the term of office of the Class III
directors will expire at the 1998 annual meeting of
stockholders following their election, and shall hold
office until their successors have been duly elected
and qualified. At each annual meeting of
stockholders, commencing with the 1996 annual meeting,
directors elected to succeed the directors whose terms
then expire shall be elected for a term of office to
expire at the third succeeding annual meeting of
stockholders following their election, and shall hold
office until their successors have been duly elected
and qualified; provided however that a director may
resign. If the number of directors is not evenly
divisible into thirds, the Board shall determine which
Class or Classes shall have one extra director. Any
additional director of any Class elected to the Board
of Directors to fill a vacancy from an increase in
such Class shall hold office for the term that expires
as to that Class. The tenure of a Director shall not
be affected by any decrease in the number of directors
so made by the Board.
SECTION 2. Meetings of the Board. Meetings of
the Board of Directors shall be held at such place
within or without the State of Delaware as may from
time to time be fixed by resolution of the Board, or
as may be specified in the call of any meeting.
Regular meetings of the Board of Directors shall be
held at such times as may from time to time be fixed
by resolution of the Board. Notice need not be given
of the regular meetings of the Board held at times
fixed by resolution of the Board. Notice need not be
given of the regular meetings of the Board held at
times fixed by resolution of the Board. Special
meetings of the Board may beheld at any time upon the
call of the Chairman of the Board or any four
directors by telegraphic, cable or written notice,
duly served on or sent or mailed to each director not
<PAGE>
less than two days before such meeting. Any such
notice shall be sent by the Secretary of the Company
or such other person as may be designated by the
person or persons calling such meeting. Special
meetings of the Board of Directors may be held without
notice, if all of the directors are present or if
those not present waive notice of the meeting in
writing or by telegram or cable.
SECTION 3. Quorum. The attendance of a majority
of the members of the whole Board of Directors shall
be necessary to constitute a quorum for the
transaction of business.
SECTION 4. Vacancies. Vacancies in the Board of
Directors may be filled by a vote of a majority of the
directors in office even though less than a quorum, or
by a sole remaining director.
SECTION 5. Resignations. Any director of the
Corporation may resign at any time by giving written
notice to the Chairman of the Board, the President or
to the Secretary of the Corporation. Such resignation
shall take effect at the time specified therein, and
unless otherwise specified therein the acceptance of
such resignation shall not be necessary to make it
effective.
SECTION 6. Organization. The Board of Directors
shall have general power to direct the management of
the business and affairs of the Corporation, and may adopt
such rules and regulations as they shall deem proper,
not inconsistent with law or with these By-laws, for
the conduct of their meetings and for the management
of the business and affairs of the Company.
SECTION 7. Removal. No director may be removed
from office by the stockholders except for cause with
the affirmative vote of the holders of not less than a
majority of the total voting power of all outstanding
securities of the Corporation then entitled to vote
generally in the election of directors, voting
together as a single class.
ARTICLE X
AMENDMENT
The Board of Directors is expressly authorized to
make, alter, amend and repeal the By-laws of the
Corporation. By-laws of the Corporation may also be
made, altered, amended or repealed by the
stockholders, but only by the affirmative vote of the
holders of at least 75% of the outstanding stock of
the Corporation entitled to vote in the election of
directors at a meeting of stockholders duly held
subject to the right of the Board of Directors to
amend or repeal any By-law adopted by the stockholders
unless the By-law or any provision thereof
specifically states that it shall not be amended or
repealed by the Board of Directors in which case such
By-law shall only be amended or repealed by the
affirmative vote of the holders of at least 75% of the
<PAGE>
outstanding stock of the Corporation entitled to vote
in the election of directors. The Board of Directors
may from time to time, by vote of a majority of the
Board, adopt, amend and repeal By-laws at any regular
or special meeting, provided notice of the proposed
change is given in the notice of the meeting, and
subject to the power of the stockholders to amend and
repeal any By-laws made by the Board of Directors as
provided in this Article. No amendment or repeal of
any By-law shall invalidate any prior act of the
directors or officers of the Corporation which would have
been valid if the By-law had not been so amended or
repealed.
<PAGE>
<PAGE>
EXHIBIT B
THE STROBER ORGANIZATION, INC.
1995 OUTSIDE DIRECTOR STOCK OPTION PLAN
1. Purpose
The purpose of the Strober Organization, Inc. 1995
Outside Director stock Option Plan (the "Plan") is to provide
additional incentive to exceptional persons to serve as outside
directors on the Board of Directors (the "Board") of The Strober
Organization, Inc. (the "Company") or its subsidiaries. The
purposes of the Plan are to encourage ownership in the Company by
non-employee members of the Board in order to promote long-term
Stockholder value and to provide non-employee members of the
Board with an incentive to continue as directors of the Company.
2. Grant of Options
(a) As of March 8, 1995, each of the four (4)
nonemployee directors will be granted an option ("Option") to
purchase 18,750 shares of the Company's Common Stock, par value
$.01 per share ("Shares").
(b) The maximum number of Shares that may be issued upon
the exercise of Options shall not exceed 75,000 Shares, subject
to adjustment as provided in paragraph 8. Shares issued under
this Plan may be authorized but unissued or held in treasury. If
any outstanding Options, or any portion thereof, expire, lapse,
terminate for any reason (other than the exercise thereof) or are
exchanged or substituted, the Shares subject to the unexercised
portion of such Options may again be the subject of Options under
this Plan. In no event will any Options be granted under this
Plan after March 8, 2000.
3. Terms and Conditions of Options
Each Option will be evidenced by an agreement executed by
the Company and the recipient which will include the following
terms and conditions:
(a) Exercise Price
The exercise price of the Option was established at
$3.625, the fair market value determined on the date of grant of
the Option as the closing sales price as quoted by the National
association of Securities Dealers Automated Quotation System
("NASDAQ") on the date of the grant.
<PAGE>
(b) Term of Options
Each Option will be outstanding for a term expiring
on March 8, 2000 and will be exercisable in the manner
set forth in paragraph 3(e).
(c) Non-transferability of Options
Options will not be transferable by the optionee
other than by will or by the laws of descent and
distribution and may be exercised during the optionee's
lifetime only by the optionee.
(d) Termination of Options
If an optionee's service as a director ends for any
reason, such optionee's Option will immediately
terminate.
(e) Exercise of Options
Each Option will be fully exercisable on the date of
grant. The optionee, upon written notice to the Company,
may exercise an Option in accordance with any procedure
that the Company may establish. Any exercise of an
Option will be effected by payment of the full exercise
price, either by payment in cash, payment by delivery of
previously owned Shares or a combination of payment in
cash or delivery of Shares, and any required withholding
tax shall be paid by the optionee in full at the time an
Option is exercised.
4. Amendment or Termination
The Committee may at any time amend or terminate this
Plan, including extending the term of the Plan; provided that no
such amendment or termination shall adversely affect or impair
the rights of optionees. In addition, the Committee may accept
the surrender of outstanding options (up to the extent not
theretofore exercised) and authorize the granting of new options
in substitution therefor (to the extent not theretofore
exercised).
5. Indemnification of the Committee
In addition to such other rights or indemnification as
they may have, the members of the Committee shall be indemnified
by the Company against all costs and expenses (including legal
fees) reasonably incurred by them (or any of them) in connection
with any action, suit or proceeding to which they (or any of
them) may be a party by reason of any action taken or any failure
to act under or in connection with the Plan or any award granted
pursuant thereto and against all amounts paid by them in
settlement thereof, provided such settlement is approved by legal
counsel selected by the Company or is paid by them in
satisfaction of a judgment in any action, suit or proceeding.
Upon institution of any such action, suit or proceeding, the
person desiring indemnification will give the Company an
opportunity, at its own expense, to defend the same.
<PAGE>
6. Expenses
All expenses and costs in connection with the
administration of the Plan will be paid by the Company.
7. Adjustments
In the event of any change in the Shares by reason of a
stock dividend, recapitalization, reclassification, stock split,
combination of shares, corporate transaction, or similar event,
the number of Shares covered by an Option and the exercise price
will be adjusted to reflect such change as the Committee, in its
sole discretion, deems appropriate.
Liability of Company
The liability of the Company under this Plan and any sale
made hereunder is limited to the obligations set forth with
respect to such transfer and nothing herein contained shall be
construed to impose any liability on the Company in favor of any
optionee with respect to any loss, cost or expense which an
optionee may incur in connection with or arising out of any
transaction in connection therewith.
Notices
Any notice or other communication required or permitted
to be made or given hereunder shall be sufficiently made or given
if sent by certified mail addressed to an optionee at his address
as set forth in the regular books and records of the Company, or
its subsidiaries, and if to the Company, addressed to it at its
principal office.
Application of Funds
The proceeds received by the Company from the sale of
Shares subject to Options may be commingled with any other
corporate funds and used for any corporate purpose.
Governing Law
All questions arising with respect to the provisions of
the Plan will be determined by application of the laws of the
State of New York, except to the extent that New York law is
preempted by federal statute. The obligation of the Company to
sell and deliver Options or Shares hereunder is subject to the
approval of any governmental authority required in connection
with the authorization, issuance or sale of such Options or
Shares and compliance with all applicable laws, and may be
deferred pending such approval and compliance.
<PAGE>
<PAGE>
[FORM OF PROXY]
THE STROBER ORGANIZATION, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS MAY 25, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert J. Gaites and
David Polishook, and each or either of them, proxies of the
undersigned, with full power of substitution, in each of them, to
appear and vote all shares of common stock of The Strober
Organization, Inc., held of record by the undersigned at the
close of business on April 21, 1995; at the Annual Meeting of
Stockholders to be held on May 25, 1995 and at any adjournment or
adjournments thereof, with all powers the undersigned would
possess if present, as indicated below on all matters mentioned
in the Notice and Proxy Statement for said meeting, and at their
discretion on all other matters that may properly come before the
meeting.
<PAGE>
<PAGE>
[FORM OF PROXY]
For Withheld The Election of the following seven
1. Elections of [ ] [ ] persons as directors:
Directors Robert J. Gaites, David W. Bernstein,
Joseph Mangino, Sr., Alvin Murstein,
Emil W. Solimine, John Yanuklis and
Eliott Zieky
For, except vote withheld from the following nominee(s):
_______________________________________________________
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approve amendments to the
Certificate of Incorporation
and By-Laws.
3. Approval of adoption of the [ ] [ ] [ ]
Company's 1995 Outside
Director Stock Option Plan.
4. Ratification of the appointment [ ] [ ] [ ]
of KPMG Peat Marwick LLP as
independent auditors for the
fiscal year ending December
31, 1995.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY ;USING THE ENCLOSED
ENVELOPE.
SIGNATURE(S):_________________________________DATE:________________________
NOTE: Please date and sign exactly as your name appears on your stock
certificate. Give full title when signing as executor, administrator,
trustee, attorney, guardian or custodian for a minor. Signatures for
corporations and partnerships should be in the corporate or firm name
by a duly authorized person. If shares are held by joint tenants, both
should sign.
