<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
HOME PRODUCTS INTERNATIONAL, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] 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> 2
HOME PRODUCTS INTERNATIONAL, INC.
4501 WEST 47TH STREET
CHICAGO, ILLINOIS 60632
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 1997
To the Stockholders of Home Products International, Inc.
The Annual Meeting of Stockholders of Home Products International, Inc. a
Delaware corporation (the "Company"), will be held on Wednesday, May 21, 1997 at
10:30 a.m., local time, at The Standard Club, 320 South Plymouth Court, Chicago,
IL 60604 for the following purposes, as more fully described in the accompanying
Proxy Statement.
1. To elect six (6) directors to serve until the next annual meeting of
stockholders or until their successors are elected and qualified.
2. To approve an amendment to the 1994 Stock Option Plan to increase the
maximum aggregate number of shares of Common Stock as to which options
may be granted from 450,000 to 1,050,000.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record of the Company's Common Stock at the close of
business on March 26, 1997, the record date fixed by the Board of Directors, are
entitled to notice of, and to vote at, the meeting, also as more fully described
in the Proxy Statement.
All stockholders are cordially invited to attend the meeting. Those who
cannot attend are urged to sign, date and otherwise complete the enclosed proxy
and return it promptly in the envelope provided. Any stockholder giving a proxy
has the right to revoke it at any time before it is voted.
For the Board of Directors,
James R. Tennant
James R. Tennant
Chairman of the Board
Chicago, Illinois
April 4, 1997
<PAGE> 3
HOME PRODUCTS INTERNATIONAL, INC.
4501 WEST 47TH STREET
CHICAGO, ILLINOIS 60632
------------------
PROXY STATEMENT
------------------
APPROXIMATE DATE PROXY MATERIAL
FIRST SENT TO STOCKHOLDERS:
APRIL 9, 1997
------------------
The following information is provided in connection with the solicitation
of proxies for the Annual Meeting of Stockholders of Home Products
International, Inc., a Delaware corporation (the "Company"), to be held on
Wednesday, May 21, 1997, and any adjournments thereof (the "Meeting"), for the
purposes stated in the attached Notice of Annual Meeting of Stockholders.
GENERAL INFORMATION
SOLICITATION OF PROXIES
A form of proxy is being furnished herewith by the Company to each
stockholder and, in each case, such proxy is solicited on behalf of the Board of
Directors of the Company for use at the Meeting. The entire cost of soliciting
these proxies will be borne by the Company. Solicitation will be made by mail,
and may also be made by telephone or facsimile by directors, officers and
regular employees of the Company, but these persons will not be separately
compensated for such solicitation services. The Company will reimburse brokerage
houses and other nominees for their expenses in forwarding proxy solicitation
material to beneficial owners of the Company's Common Stock.
AUTHORITY CONFERRED BY PROXIES
The shares represented by proxies duly executed and returned by
stockholders and received by the Company before the Meeting will be voted as
directed in the proxies. In the absence of specific direction, the shares
represented by proxies will be voted; (1) FOR the election of all nominee
directors specified herein; and (2) FOR the approval of the amendment to the
1994 Stock Option Plan. As to the other matters, if any, to be voted upon at the
Meeting, the persons designated as proxies in the accompanying form of proxy
will take such action as they, in their discretion, may deem advisable. The
persons named as proxies were selected by the Board of Directors and one is a
director and executive officer of the Company and the other is an executive
officer of the Company.
REVOCABILITY OF PROXIES
Execution of the enclosed proxy will not affect your right as a stockholder
to attend the Meeting and to vote in person. Any stockholder giving a proxy has
the right to revoke it at any time by: (i) a later dated proxy, duly executed
and delivered or presented at the Meeting; (ii) a written revocation sent to and
received by the Secretary of the Company prior to the Meeting; or (iii)
attendance at the Meeting and voting in person.
VOTING SECURITIES AND RECORD DATE
The Company's voting securities consist of one class of Common Stock, par
value $0.01 per share (the "Common Stock"), and one class of Preferred Stock,
par value $0.01 per share (the "Preferred Stock"). The Company had 4,322,922
outstanding shares of Common Stock and no shares of Preferred Stock outstanding
as of the close of business on March 26, 1997 (the "Record Date"). Only
stockholders of record on the books of the Company at the close of business on
the Record Date will be entitled to vote at the Meeting. Each share
<PAGE> 4
of Common Stock is entitled to one vote. Representation at the Meeting by the
holders of one-third of the shares of Common Stock outstanding on the Record
Date, either in person or by proxy, will constitute a quorum.
Votes for and against, abstentions and "broker non-votes" will each be
counted as present for purposes of determining the presence of a quorum. To
determine whether a specific proposal has received sufficient votes to be
passed, for shares deemed present, an abstention and a broker non-vote will have
the same effect as a vote "against" the proposal. The affirmative vote by a
majority of the shares present (whether in person or by proxy) will be required
to approve the amendment to the 1994 Stock Option Plan. For the election of
directors, the six nominees who receive the most votes will be elected.
SECURITY OWNERSHIP OF PRINCIPAL HOLDERS AND MANAGEMENT
The following table sets forth information as of March 26, 1997, with
respect to the beneficial ownership of the Company's outstanding shares of
Common Stock by each stockholder known by the Company to be the beneficial owner
of more than 5% of its Common Stock, each director, each executive officer named
in the Summary Compensation Table and all the directors and executive officers
of the Company as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------- ------------------ --------
<S> <C> <C>
Estate of Norma L. Ragir(1)................................. 772,846 17.9%
200 North LaSalle Street
Suite 2100
Chicago, Illinois 60606
Estate of Meyer J. Ragir(1)................................. 716,155 16.7%
200 North LaSalle Street
Suite 2100
Chicago, Illinois 60606
Marshall Ragir(2)........................................... 67,093 1.6%
Jeffrey C. Rubenstein (3)(4)................................ 25,550 *
Joel D. Spungin............................................. 7,500 *
Daniel B. Shure............................................. 6,400 *
Charles R. Campbell......................................... 6,000 *
Lowell L. Ruffer(5)......................................... 0 *
Leonard Tocci............................................... 379,200 8.8%
4501 West 47th Street
Chicago, Illinois 60632
James R. Tennant(6)......................................... 197,486 4.6%
James E. Winslow............................................ 8,477 *
Peter L. Graves............................................. 3,566 *
Jeffrey R. Dolan............................................ 3,003 *
Michael J. Ricard(7)........................................ 2,265 *
All Directors and Executive Officers as a Group (15
persons)(8)............................................... 2,195,567 50.8%
</TABLE>
- -------------------------
* Less than 1%.
(1) Mr. Jeffrey C. Rubenstein, a director of the Company, is the executor of the
estates of Meyer J. Ragir and Norma L. Ragir.
(2) Includes 66,993 shares of Common Stock beneficially owned by the Meyer J.
Ragir Family Irrevocable Trust -- Marshall Ragir Separate Trust with respect
to which Mr. Ragir, in his capacity as a co-trustee, exercises shared voting
and investment power. Does not include 157,624 shares of Common Stock
beneficially owned by the MJR/NLR Gift Trust -- Marshall Ragir Separate
Trust with respect to which Mr. Ragir does not exercise sole or shared
voting or investment power.
(3) Mr. Rubenstein is the executor of the estate of Meyer J. Ragir and the
estate of Norma L. Ragir and in such capacity exercises voting and
investment power with respect to the shares of Common Stock beneficially
owned by these estates. Mr. Rubenstein is co-trustee of the MJR/NLR Gift
Trust -- Judith Ragir Separate Trust (157,623 shares), the MJR/NLR Gift
Trust -- Robert Ragir Separate Trust (145,123 shares) and the MJR/NLR Gift
Trust -- Marshall Ragir Separate Trust (157,624 shares) and, in such
capacities, exercises shared voting and investment power with respect to the
shares of Common Stock beneficially owned by such trusts. Mr. Rubenstein is
also co-trustee of the Meyer J. Ragir Family Irrevocable Trust -- Judith
Ragir Separate Trust (66,994 shares) and the Meyer J. Ragir Family
Irrevocable Trust -- Marshall Ragir Separate Trust (66,993 shares) and, in
such capacities, exercises shared voting and investment power with respect
to the shares of Common Stock beneficially owned by such trusts. Mr.
Rubenstein in his various capacities exercises either sole or shared voting
and investment power to
2
<PAGE> 5
2,083,358 shares of Common Stock or 48% of the outstanding shares of stock
as of March 26, 1997. Mr. Rubenstein disclaims beneficial ownership of these
shares of Common Stock.
(4) Includes 5,050 shares beneficially owned by Mr. Rubenstein's adult children,
as to which 5,050 shares Mr. Rubenstein disclaims beneficial ownership.
(5) Mr. Lowell L. Ruffer is a co-trustee of the MJR/NLR Gift Trust -- Judith
Ragir Separate Trust (157,623 shares), the MJR/NLR Gift Trust -- Robert
Ragir Separate Trust (145,123 shares) and the MJR/NLR Gift Trust -- Marshall
Ragir Separate Trust (157,624 shares) and, in such capacities, exercises
shared voting and investment power with respect to the shares of Common
Stock owned by such trusts. Mr. Ruffer in his various capacities, exercises
shared voting and investment power with respect to 460,370 shares of Common
Stock or 11% of the outstanding shares of stock as of March 26, 1997. Mr.
Ruffer disclaims beneficial ownership of these shares of Common Stock.
(6) Includes 188,150 shares of Common Stock subject to stock options exercisable
within 60 days of March 26, 1997.
(7) Includes 1,117 shares of Common Stock subject to stock options exercisable
within 60 days of March 26, 1997.
(8) Includes 189,267 shares of Common Stock subject to stock options exercisable
within 60 days of March 26, 1997.
3
<PAGE> 6
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The By-Laws of the Company currently provide that the Board of Directors
shall consist of at least five directors to be elected at the annual meeting of
stockholders to hold office until the next annual meeting or until their
successors are elected and qualified. The proxies solicited by and on behalf of
the Board of Directors will be voted FOR the election of the six nominees listed
below, unless authority to do so is withheld as provided in the proxy. All
nominees are currently members of the Company's Board of Directors. The proxies
cannot be voted for a greater number of persons than the number of nominees
named. If for any reason one or more of the nominees should be unable to serve
or refuse to serve as a director (an event which is not anticipated), the
persons named as proxies will vote for another candidate or candidates nominated
by the Board of Directors, and discretionary authority to cast such votes is
included in the proxy. The nominees receiving the highest number of votes of
shares of Common Stock, up to the number of directors to be elected, shall be
elected.
NOMINEES
The Board of Directors has nominated for election the following
individuals, all of whom are currently directors:
Charles R. Campbell, age 57, has been a Director of the Company since
September, 1994. Since 1996, Mr. Campbell has been a management consultant with
the Everest Group. From 1995 to 1996, Mr. Campbell was President of C. R.
Campbell & Associates, a management consulting firm. From 1985 to 1995 Mr.
Campbell was Senior Vice President, Chief Financial and Administrative Officer
of Federal Signal Corporation, a diversified manufacturer of capital goods. From
1982 to 1985, he was Vice President and Chief Financial Officer of the Masonite
Corporation, a manufacturer of building products. Mr. Campbell is a member of
the Compensation Committee and Audit Committee.
Marshall Ragir, age 52, has been a Director of the Company since July,
1995. Since 1991, Mr. Ragir has been President and Chief Executive Officer of
Know Business Inc., a venture capital and investment company. From 1982 until
1991, Mr. Ragir was a screen writer and film producer for various Hollywood film
companies as well as independent film producers. Mr. Ragir is a member of the
Compensation Committee. Mr. Ragir is a director of several charitable
foundations and non-profit agencies.
Jeffrey C. Rubenstein, age 55, has been a Director of the Company since
September, 1986. Since 1991, Mr. Rubenstein has been a partner in the law firm
of Much Shelist Freed Denenberg Ament Bell & Rubenstein, P.C., an Illinois
professional corporation which is counsel to the Company. From January, 1989
until June, 1991, Mr. Rubenstein was of counsel to the law firm of Sachnoff &
Weaver, Ltd., an Illinois professional corporation and of which he was a
principal until July, 1988. From March, 1988 until January, 1989, Mr. Rubenstein
was President of Medical Management of America, Inc. a management services
company for health care providers. Mr. Rubenstein is a member of the Company's
Audit Committee. Mr. Rubenstein is a Director of Miller Building Systems, Inc.,
Vita Food Products, Inc. and a number of privately held firms.
Daniel B. Shure, age 39, has been a director of the Company since December,
1994. Since 1988, Mr. Shure has been President and Chief Executive Officer of
Strombecker Corporation, an international toy manufacturer and distributor. From
1987 to 1988, he was Vice President of Giftco, Inc., a wholesaler and
distributor of non-durable products. From 1986 to 1987, Mr. Shure was Executive
Vice President of North American Bear Company, a toy manufacturer. Mr. Shure is
a member of the Compensation Committee. Mr. Shure is also a director of a number
of privately held firms.
Joel D. Spungin, age 59, has been a director of the Company since
September, 1996. Since 1995, Mr. Spungin has been Managing Partner of DMS
Enterprises, L. P., a consulting and management advisory partnership. Since
1994, he has been Chairman Emeritus of United Stationers, Inc. From 1981 to
1995, Mr. Spungin was employed by United Stationers, Inc., in various capacities
with his final position being
4
<PAGE> 7
Chairman of the Board and Chief Executive Officer. Mr. Spungin is a Director of
United Stationers, Inc., AAR Corporation and a privately held firm.
James R. Tennant, age 44, joined the Company as Chairman of the Board and
Chief Executive Officer in April, 1994. Mr. Tennant was elected a Director of
the Company in December, 1992 and was a member of the Company's Compensation
Committee until April, 1994. From 1982 to 1994, Mr. Tennant was President of
Foote, Cone & Belding/Direct, an international advertising firm. From 1979 to
1982, Mr. Tennant was employed by Young & Rubicam, an advertising agency, his
final position being Senior Vice President.
COMMITTEES AND ATTENDANCE
The Board of Directors met six times during the fifty-two weeks ended
December 28, 1996. All of the directors attended at least 75% of the meetings of
the Board of Directors and the committees on which they serve. The Audit
Committee, comprised of directors Charles R. Campbell and Jeffrey C. Rubenstein
met three times during this period. The Audit Committee oversees the activities
of the Company's independent auditors. The Compensation Committee, comprised of
directors Charles R. Campbell, Marshall Ragir and Daniel B. Shure, met three
times during this period. This Committee reviews and makes recommendations to
the Board of Directors with regard to the salaries, incentive compensation and
related benefits of corporate officers and other employees. The Company does not
have a nominating committee.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company are not separately compensated
for serving on the Board of Directors. Non-employee directors are paid an annual
retainer of $2,500. In addition, they receive a fee of $1,750 for each Board of
Directors meeting attended. Non-employee directors who are members of board
committees also receive $500 for each committee meeting attended. During 1996,
one non-employee director was granted an option to purchase 5,000 shares of
Common Stock at an exercise price of $4.625 per share, the fair market value as
defined in the 1994 Stock Option Plan, on the date of grant.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
ELECTION OF THE NOMINEES SET FORTH HEREIN.
PROPOSAL NO. 2
APPROVAL OF THE AMENDMENT TO THE 1994 STOCK OPTION PLAN
The Board of Directors recommends to the stockholders the approval of the
proposed amendment to the 1994 Stock Option Plan (the "1994 Plan") to provide
for an increase in the aggregate number of shares of Common Stock which may be
issued pursuant to stock options granted thereunder by 600,000 shares. The 1994
Stock Option Plan currently provides that up to 450,000 shares granted
thereunder of Common Stock may be issued pursuant to options granted thereunder.
After giving effect to the proposed amendment to the 1994 Stock Option Plan, the
maximum aggregate number of shares of Common Stock which may be issued pursuant
to options granted, under the 1994 Plan will be 1,050,000 shares. Management
believes that this amendment will further promote the Company's goals of
enhancing the long-term profitability and stockholder value of the Company by
offering stock-based incentives to employees and non-employees who are key to
the growth and success of the Company.
The maximum number of shares and the number of shares issuable upon
exercise of an option are subject to adjustment in the event of stock splits,
dividends, recapitalization and other similar changes affecting the Company's
Common Stock. Options under the 1994 Plan may be granted only to employees,
directors, consultants and independent contractors of the Company and its
subsidiaries. The 1994 Plan is administered by the Board of Directors. The Board
of Directors has complete discretion to select the optionees, the exercise price
and payment terms and to establish the terms and conditions of each option,
subject to the provisions of the 1994 Plan and applicable laws and regulations.
The Board of Directors also has the authority to interpret the 1994 Plan.
Options granted under the 1994 Plan may be "incentive stock options" ("Qualified
Incentive
5
<PAGE> 8
Option") as defined in Section 422A of the Internal Revenue Code of 1986 ("the
Code") or non-qualified stock options depending upon the terms established by
the Board of Directors at the time of grant. The exercise price of the options
granted under the 1994 Plan is determined by the Board of Directors at the time
of grant, but in the case of Qualified Incentive Options, the exercise price may
not be less than 100% of fair market value at the time of grant (110% if the
optionee owns more than 10% of the Company's Common Stock). Qualified Incentive
Options may not be granted for a term greater than 10 years (5 years if the
optionee owns more than 10% of the Company's Common Stock). The term of
non-qualified stock options may be set by the Board of Directors. Options
granted under the 1994 Plan are not transferable and may be exercised only by
the respective grantees during their lifetimes or by their heirs, executors or
administrators in the event of death. Under the 1994 Plan, shares subject to
canceled or terminated options are reserved for subsequently granted options.
The Board of Directors may amend the 1994 Plan at any time. However, any
amendment that increases the number of shares for which options may be granted,
changes the designation of employees eligible to receive options, causes
Qualified Incentive Options to no longer qualify an "incentive stock options"
under the Code, or otherwise requires approval of stockholders pursuant to Rule
16b-3 of the Securities Exchange Act of 1934 (the "1934 Act") will be subject to
such stockholder approval. The Board of Directors may terminate the 1994 Plan at
any time.
FEDERAL INCOME TAX TREATMENT OF OPTIONS
Under present federal income tax law, a participant receiving a
non-qualified stock option under the 1994 Plan does not recognize taxable income
on the date of grant of the option. However, the participant must generally
recognize ordinary income when a non-qualified stock option is exercised in the
amount of the difference between the option exercise price and the fair market
value of the Common Stock on the date of exercise. The Company will recognize no
tax deduction upon the grant of an option under the 1994 Plan. However, when a
participant exercises a non-qualified stock option, the Company will generally
recognize a tax deduction in the amount of the difference between the option
exercise price and the fair market value of the Common Stock on the date of
exercise. Upon sale of the shares, any amount received in excess of the market
value of the shares at the time of exercise of the option will generally be
treated as long-term or short-term capital gain, depending on the holding period
of the shares but for which the Company will not be entitled to tax deduction.
A participant who is granted a Qualified Incentive Option would not
recognize taxable income either on the date of grant or on the date of its
timely exercise, although the exercise of a Qualified Incentive Option would be
an item of tax preference income potentially subject to the alternative minimum
tax. Upon disposition of the Common Stock acquired upon exercise of Qualified
Incentive Option, capital gain or loss would be recognized in an amount equal to
the difference between the sales price and the option exercise price, provided
the participant has not disposed of the Common Stock within two years of the
date of grant of the option and within one year from the date of exercise of the
option. When a participant exercises a Qualified Incentive Option, the Company
would not generally recognize a tax deduction. If the participant disposes of
stock acquired through exercise of such an option before meeting the required
holding periods, the participant will generally recognize ordinary income in the
year of disposition in an amount equal to the difference between the option
exercise price and the lesser of (i) the fair market value of the Common Stock
on the date of exercise or (ii) the sale price of the stock. In such instance,
the Company would recognize a deduction equal to the amount of ordinary income
recognized by the participant.
The number of shares of Common Stock which the executive officers of the
Company would have been granted options to purchase under the 1994 Plan in the
future and the dollar value of such options cannot currently be determined. The
number of shares of Common Stock which the executive officers of the Company
were granted an option to purchase under the 1994 Plan in the 1996 fiscal year
and the exercise price of such option are disclosed in the "Option Grants in
Last Fiscal Year" table under "Compensation of Executive Officers" herein. If
the options granted to such executive officers were fully vested and immediately
exercisable, each share subject to the option would have had an average dollar
value of $3.46 based on the
6
<PAGE> 9
average of the high and low "sales" price of shares of the Common Stock as
reported on The NASDAQ National Market on December 28, 1996 of $8.438.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
APPROVAL OF THE AMENDMENT TO THE 1994 STOCK OPTION PLAN.
COMPLIANCE WITH SECTION 16 (A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the 1934 Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the SEC initial reports
of ownership and reports of changes in ownership of common stock and other
equity securities of the Company. Executive officers, directors, and greater
than ten-percent shareholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely upon review of the copies of such
reports furnished to the Company or written representations that no other
reports were required. The Company believes that during the 1996 fiscal year,
all Section 16(a) filing requirements applicable to its executive officers,
directors and greater than ten-percent beneficial owners were complied with.
7
<PAGE> 10
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation awarded to the chief
executive officer and each of the other four most highly compensated executive
officers of the Company (the "Named Executive Officers"). Mr. Tennant became
Chairman and Chief Executive Officer of the Company in April, 1994. Mr. Winslow
became an executive officer of the Company in November, 1994. Mr. Dolan became
an executive officer of the Company in August, 1995. The compensation paid to
Mr. Dolan in 1995 and to Mr. Graves, Mr. Ricard, and Mr. Winslow in 1994 is not
required to be disclosed in this table.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARD
----------------------- ------------
SECURITIES ALL OTHER
UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS # ($)(1)
--------------------------- ---- ---------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
James R. Tennant...................... 1996 $250,000 -0- 200,000 $13,161
Chairman of the Board and Chief 1995 250,000 $100,000 350,000(2) 4,243
Executive Officer of Home Products 1994 175,769 -0- 350,000 -0-
and Chief Executive Officer of
Selfix, Inc.
James E. Winslow...................... 1996 173,262 -0- 25,000 10,576
Executive Vice President, Chief 1995 170,000 118,000(3) 60,000(2) 4,141
Financial Officer and Secretary of
Home Products and Executive Vice
President of Selfix, Inc.
Jeffrey R. Dolan...................... 1996 131,292 -0- -0- 3,443
Senior Vice President -- Sales and
Marketing of Selfix, Inc.
Peter L. Graves....................... 1996 102,865 -0- 6,000 8,298
Vice President -- Product Marketing 1995 102,865 34,254 10,000(4) 7,141
of Selfix, Inc.
Michael J. Ricard..................... 1996 104,120 -0- -0- 6,375
Vice President -- General Manager 1995 100,732 32,786 20,000 6,570
of Shutters, Inc.
</TABLE>
- -------------------------
(1) Reflects amounts contributed by the Company to the Company's Profit Sharing
and Savings Plan and Trust (including a 401(k) Plan).
(2) Reflects replacement options granted in fiscal 1995 to these Named Executive
Officers. See "Ten-Year Option Repricings" table. No other options were
granted to these Named Executive Officers in fiscal 1995.
(3) Includes a $50,000 payout pursuant to Mr. Winslow's continued employment by
the Company.
(4) Reflects replacement options granted in fiscal 1995 to this Named Executive
Officer to replace cancelled options that were also granted in fiscal 1995.
See "Ten-Year Option Repricing" table.
8
<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides information on option exercises in fiscal 1996
by the Named Executive Officers and the value of such officers' unexercised
options at December 28, 1996.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN THE
SHARES OPTIONS AT DECEMBER 28, MONEY OPTIONS AT
ACQUIRED 1996(1) DECEMBER 28, 1996(2)
ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James R. Tennant............... -0- $-0- 5,000 550,000 $10,625 $1,318,750
James E. Winslow............... -0- -0- -0- 85,100 -0- 192,313
Jeffrey R. Dolan............... -0- -0- -0- 30,100 -0- 49,138
Peter L. Graves................ -0- -0- 1,629 16,100 6,840 40,689
Michael J. Ricard.............. -0- -0- 1,117 20,100 2,779 32,938
</TABLE>
- -------------------------
(1) Future exercisability is subject to vesting and the optionee remaining
employed by the Company.
(2) Value is calculated by subtracting the exercise price from the assumed fair
market value of the securities underlying the option at fiscal year-end and
multiplying the result by the number of in-the-money options held. There is
no guarantee that if and when these options are exercised they will have
this value. Fair market value was calculated based on the last reported sale
price per share of the Common Stock as reported on The NASDAQ National
Market on December 28, 1996 ($8.625).
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in fiscal 1996 to
the Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENTAGE OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -----------------------
GRANTED(1) FISCAL YEAR(3) ($/SHARE) DATE 5% 10%
---------- -------------- --------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
James R. Tennant.............. 200,000(4) 80.3% $ 5.00 12-31-99 $70,803 $231,175
James E. Winslow.............. 10,000 4.0% 4.625 02-08-06 29,086 73,711
15,000 6.0% 5.00 11-07-06 86,871 182,753
Peter L. Graves............... 6,000 2.4% 4.625 02-08-06 17,452 44,226
Jeffrey R. Dolan.............. -- -- -- -- -- --
Michael J. Ricard............. -- -- -- -- -- --
</TABLE>
- -------------------------
(1) All options (with the exception of options granted to Mr. Tennant) have a
ten year term and become exerciseable in equal annual increments over a 3
year vesting period beginning 3 years from the date of grant.
(2) Potential realizable value is based on an assumption that the stock price of
the Common Stock appreciates at the annual rate shown (compounded annually)
from the date of grant until the end of the option term. These numbers are
based on the requirements of the Commission and do not reflect the Company's
estimate of future stock price performance.
(3) The Company granted options representing 248,900 shares in 1996.
(4) The options become exerciseable in equal annual increments over a 3 year
vesting period beginning January 1, 1997.
9
<PAGE> 12
TEN-YEAR OPTION REPRICINGS
During 1995, the Company's Board of Directors cancelled options to purchase
460,000 shares of Common Stock held by various members of senior management at
exercise prices ranging from $7.50 to $12.00 per share and issued replacement
options to purchase the same number of shares of Common Stock at prices ranging
from $6.00 to $8.00 per share which exceeded the fair market value, as defined
in the 1994 Stock Option Plan, on the date of grant. The options were cancelled
and repriced to provide a more realistic and attainable incentive based on the
market price of the Common Stock ($4.25) on the date of grant.
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF ORIGINAL
NUMBER OF SECURITIES MARKET PRICE OF EXERCISE PRICE OPTION TERM
UNDERLYING OPTIONS STOCK AT TIME AT TIME OF NEW REMAINING AT DATE
REPRICED OR OF REPRICING OR REPRICING OR EXERCISE OF REPRICING OR
DATE AMENDED(1) AMENDMENT AMENDMENT PRICE AMENDMENT
---- -------------------- --------------- -------------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
James R. Tennant..... 5/95 100,000 $4.25 $ 7.50 $6.00 49 mos.
5/95 175,000 4.25 10.00 7.00 49 mos.
5/95 75,000 4.25 12.00 8.00 49 mos.
James E. Winslow..... 5/95 20,000 4.25 7.50 6.00 114 mos.
5/95 20,000 4.25 10.00 7.00 114 mos.
5/95 20,000 4.25 12.00 8.00 114 mos.
Peter L. Graves...... 5/95 3,334 4.25 7.50 6.00 117 mos.
5/95 3,333 4.25 10.00 7.00 117 mos.
5/95 3,333 4.25 12.00 8.00 117 mos.
</TABLE>
- -------------------------
(1) Does not include options to purchase 40,000 shares of Common Stock that were
cancelled and replaced in May 1995 and subsequently cancelled.
EMPLOYMENT AGREEMENTS
James R. Tennant is employed as Chairman of the Board and Chief Executive
Officer pursuant to an employment agreement which commenced January 1, 1997 and
expires December 31, 1999. The employment agreement provides for an annual base
salary of $275,000. Mr. Tennant is also entitled to receive a discretionary
bonus, based on the Company's financial performance. Mr. Tennant's agreement
also includes provisions for severance. In addition, Mr. Tennant is entitled, at
his option, to receive a $1,000,000 payment from the Company or to exercise all
his stock options as if all stock options were vested if a change in control of
the Company ownership, as defined in the employment agreement, occurs at a
common stock price greater than or equal to $5.50 per share. Mr. Tennant was
also granted 350,000 replacement options at prices ranging from $6.00 to $8.00
and 200,000 options at a price of $5.00 per share which expire December 31,
1999. The employment agreement provides that the expiration date of these
options can be extended until April 30, 2005 if the trading price of the
Company's Common Stock exceeds $10.00 per share for the entire month of
December, 1999.
COMPENSATION COMMITTEE REPORT
The Compensation Committee ("Committee") determines and administers the
compensation of the Company's executive officers.
COMPENSATION PHILOSOPHY
At the direction of the Board of Directors and pursuant to the charter of
the Committee, the Committee endeavors to ensure that the compensation programs
for executive officers of the Company are effective in attracting and retaining
key executives responsible for the success of the Company and are administered
in an appropriate fashion in the long-term interests of the Company. The
Committee actions related to the
10
<PAGE> 13
compensation of the chief executive officer of the Company are submitted to the
full Board of Directors for ratification.
The Committee believes that the Company's overall financial performance
should be an important factor in the total compensation of the Company's
executive officers. At the executive officer level, the Committee has a policy
that a significant portion of the total compensation should consist of variable,
performance-based components, such as stock awards and bonuses, which can
increase or decrease to reflect changes in corporate and individual
performances. These incentive compensation programs are intended to reinforce
management's commitment to enhancement of profitability and shareholder value.
The Committee takes into account various qualitative and quantitative
indicators of the Company and individual performance in determining the level
and composition of compensation for the chief executive officer and other
executive officers. While the Committee considers such Company performance
measures as net income, earnings per share, return on average stockholders'
equity and return on average total assets, the Committee does not apply any
specific quantitative formula in making compensation decisions. The Committee
also appreciates the importance of achievements that may be difficult to
quantify, and accordingly recognizes qualitative factors, such as successful
supervision of major corporate projects, demonstrated leadership ability and
contributions to industry.
Where possible, the Committee will attempt to evaluate the total
compensation of the Company's chief executive officer and other executive
officers in light of information regarding the compensation practices and
corporate financial performance of a peer group consisting of competitive
companies of similar asset size. From time to time, the Committee also receives
assessments and advice regarding the Company's compensation practices from
independent compensation consultants.
BASE SALARY/ANNUAL BONUS/STOCK OPTIONS
Base salaries for the chief executive officer and other executive officers
are established at levels considered appropriate in light of the duties and
scope of responsibilities of each officer's position. Salaries are reviewed
periodically and adjusted as warranted to reflect sustained individual officer
performance. The Committee focuses primarily on total annual compensation,
including incentive awards, rather than base salary alone, as the appropriate
measure of executive officer performance and contribution. The Company has not
determined the performance bonus to be paid to Mr. Tennant in 1997 based on the
Company's 1996 pre-tax results pursuant to the terms of his Employment
Agreement. Performance bonuses to other executive officers of the Company are
expected to be paid in 1997 based on the 1996 results. Such performance bonus
has not yet been determined.
In approving grants and awards under the Option Plan, the Committee
considers various quantitative and qualitative factors. The number of options
previously awarded to and held by executive officers is reviewed but is only one
factor in determining the size of current option grants.
11
<PAGE> 14
CHIEF EXECUTIVE OFFICER COMPENSATION
Compensation of the Chief Executive Officer for the 1996 fiscal year was
determined pursuant to the terms of Mr. Tennant's employment agreement. Pursuant
to this employment agreement, Mr. Tennant was also granted options to purchase
200,000 shares of Common Stock at a price of $5.00 per share in 1996.
The Committee also approved the compensation of the Company's other
executive officers for 1996, following the principles and procedures outlined in
this report.
Compensation Committee
Charles R. Campbell
Daniel B. Shure
Marshall Ragir
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the 1934 Act that might
incorporate future filings, including this Proxy Statement, in whole or in part,
the preceding report and the Performance Graph included in "Company Stock
Performance" shall not be incorporated by reference into any such filings.
12
<PAGE> 15
COMPANY STOCK PERFORMANCE
The following graph compares the cumulative total return on the Company's
Common Stock with the cumulative total return on the NASDAQ Market Index and a
selected industry index (SIC code 3089 -- Plastics Products N.E.C.). The graph
is for a period of five years and assumes $100 was invested on January 1, 1992.
Cumulative total return assumes that dividends, if any, were reinvested. The
cumulative total return set forth in the graph is not necessarily indicative of
future returns.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD HOME BROAD BROAD
(FISCAL YEAR COVERED) PRODUCTS INDUSTRY MARKET
INT'L. INDEX
<S> <C> <C> <C>
1991 100 100 100
1992 60.47 98.15 100.98
1993 132.56 124.86 121.13
1994 83.72 122.7 127.17
1995 104.65 148.74 164.96
1996 153.49 191.56 204.98
</TABLE>
ASSUMES $100 INVESTED ON JAN. 1, 1992
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1996
<TABLE>
<CAPTION>
1/1/92 12/26/92 12/25/93 12/31/94 12/30/95 12/28/96
------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Home Products................................ $100.00 $ 60.47 $132.56 $ 83.72 $104.65 $153.49
SIC Code Index............................... 100.00 98.15 124.86 122.70 148.74 191.56
NASDAQ Market Index.......................... 100.00 100.98 121.13 127.17 164.96 204.98
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases its principal office and manufacturing and distribution
facility in Chicago, Illinois from the three separate MJR/NLR Gift Trusts (--
Judith Ragir Separate Trust, -- Robert Ragir Separate Trust and -- Marshall
Ragir Separate Trust). Marshall Ragir is a director of the Company and is the
brother of Judith Ragir and Robert Ragir. The Company made aggregate payments to
the MJR/NLR Gift Trusts under the lease of $467,139 during the 1996 fiscal year
and $491,417 during the 1995 fiscal year. Rent payments are subject to
adjustment every three years to reflect increases in the Consumer Price Index.
The lease expires in July, 2010. The Company believes that the rent paid to the
MJR/NLR Gift Trusts under the lease represents fair market value and that the
other terms and conditions are commercially reasonable.
The Company's Selfix subsidiary leases a building in Scarborough, Ontario
that was formerly the home of its Canadian packaging and distribution facility
from the Ragir Children's Building Trust, (the "Building Trust"), the
beneficiaries of which are Marshall Ragir, Judith Ragir and Robert Ragir. The
Company made lease payments to the Building Trust of approximately $111,917
during the fifty-two weeks ended December 28, 1996. Lease payments are subject
to adjustment every five years to reflect increases in the
13
<PAGE> 16
Consumer Price Index. The lease was scheduled to expire in October, 1999.
However, the Company has reached an agreement to terminate the lease as of March
31, 1997. The cost to terminate the lease will not have a significant effect on
the Company's 1997 financial results.
The Company entered into three exclusive patent licensing agreements with
Meyer J. Ragir, two in 1971 and one in 1981, relating to patented manufacturing
processes used to produce wood insert molded products and the patented design of
certain suction lock and shower organizer products, which in each case was
developed by Mr. Ragir. The licensing agreements also cover any improvements
which Mr. Ragir developed with respect to such patents. The licensing agreements
provide for payment of royalties based upon unit sales of licensed products
subject to annual minimum royalties in the aggregate amount of $8,500. Pursuant
to the licensing agreements, the Company accrued approximately $47,208 for the
fifty-two weeks ended December 28, 1996 payable to Mr. Ragir's estate (the
"Estate"). The Estate beneficially owns more than 5% of the Company's Common
Stock. Pursuant to the licensing agreement the Company paid $75,385 to the
Estate for the 1995 fiscal year.
In 1996, Tamor purchased raw materials and packaging from vendors whose
ownership was, or related, to officers of the Company. Such transactions were as
follows: (i) raw materials totaling $1.9 million were purchased from a vendor
which is owned by the brother of Leonard and Richard Tocci; and (ii) packaging
totaling $1.9 million was purchased from a vendor which is 50% owned by Richard
Tocci's father-in-law. Management believes the transactions were conducted on an
arm's length basis at competitive prices.
Mr. Jeffrey C. Rubenstein, a director of the Company, is a partner with the
law firm of Much Shelist Freed Denenberg Ament Bell & Rubenstein P.C. which is
the Company's general counsel.
Except as described above, the Company is not a party to any other material
transactions of the type required to be described herein.
INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed Arthur Andersen LLP,
independent public accountants, as independent auditors to examine the annual
consolidated financial statements of the Company and its subsidiary companies
for 1997. Arthur Andersen LLP served as the Company's independent auditors in
1996. A representative of Arthur Andersen LLP will be present at the meeting to
make a statement, if such representative so desires, and to respond to
stockholders' questions.
The Company dismissed Grant Thornton LLP, its independent certified public
accountants for the 1995 fiscal year effective April 12, 1996. In connection
with the audits of the Company's annual consolidated financial statements for
the 1995 fiscal year (the "1995 Audit") and during the interim period prior to
the dismissal, there were no disagreements with the former accountants on any
matter or accounting principle or practice, financial statement disclosure, or
auditing scope or procedure. The former accountant's report included in the 1995
Audit was unqualified. The Company engaged Arthur Andersen LLP as its new
independent public accountants effective with the dismissal of its former
accountants. During the Company's 1995 fiscal year and during the interim period
prior to engagement, there were no consultations with Arthur Andersen LLP with
regard to either the application of accounting principles as to any specific
transaction, either completed or proposed; the type of audit opinion that would
be rendered on the Company's financial statements; or any matter of
disagreements with the former accountants. The Company's Board of Directors
approved the Audit Committee's recommendation to change accountants.
ANNUAL REPORT
A copy of the Company's Annual Report to Stockholders has previously been
sent to the Company's stockholders or accompanies this Proxy Statement. The
Company's Annual Report on Form 10-K for the fifty-two weeks ended December 28,
1996, as filed with the Securities and Exchange Commission, is available without
charge to any stockholder upon written request to James E. Winslow, Investor
Relations, Home Products International, Inc., 4501 West 47th Street, Chicago,
Illinois 60632. Copies of exhibits filed with the
14
<PAGE> 17
Form 10-K will be furnished, if requested, upon payment of the Company's
reasonable expenses in furnishing those materials.
STOCKHOLDER PROPOSALS
Stockholder proposals submitted for evaluation as to inclusion in the proxy
materials for the Company's 1998 annual meeting of stockholders must be received
by the Company not later than January 31, 1998, at the Company's principal
executive offices at 4501 West 47th Street, Chicago, Illinois 60632.
OTHER MATTERS
Management is not aware of any other matters to be presented for action at
the Meeting. If any other matters are properly brought before the Meeting, it is
the intention of the persons named as proxies in the accompanying form of proxy
to vote the shares represented thereby in accordance with their best judgment.
For the Board of Directors,
James R. Tennant
James R. Tennant
Chairman of the Board
Chicago, Illinois
April 4, 1997
15
<PAGE> 18
PROXY
HOME PRODUCTS INTERNATIONAL, INC.
4501 WEST 47TH STREET
CHICAGO, ILLINOIS 60632
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James R. Tennant and James E. Winslow as
Proxies, (jointly and severally), each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote, as designated
on the reverse side, all the shares of Common Stock of Home Products
International, Inc. held of record by the undersigned on March 26, 1997 at the
Annual Meeting of Stockholders to be held on May 21, 1997 or any adjournment
thereof.
In their discretion the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THE
SHARES WILL BE VOTED "FOR" ALL NOMINEES FOR DIRECTOR AND "FOR" APPOVAL OF THE
AMENDMENT TO THE 1994 STOCK OPTION PLAN.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and the related proxy statement.
(Continued on the reverse side)
-FOLD AND DETACH HERE-
<TABLE>
<CAPTION>
<S> <C>
1. ELECTION OF DIRECTORS. (Instructions: To withhold authority to vote for any individual nominee, strike a line
through a nominee's name in the list below.)
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(except as marked to to vote for
the contrary) all nominees
listed Charles R. Campbell, Marshall Ragir, Jeffrey C. Rubenstein, Daniel B. Shure, Joel D.
Spungin, James R. Tennant.
2. Approval of amendment to the 1994 3. In their discretion, the Proxies are authorized to vote upon such
Stock Option Plan other business as may properly come before the meeting.
FOR AGAINST ABSTAIN
Date:______________________________________,1997
________________________________________________
Signature
________________________________________________
Signature (if held jointly)
Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as
such. If a corporation, please sign in full
corporate name by President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
- -----------------------------------------------------------------------------------------------------------------------------------
-FOLD AND DETACH HERE-
</TABLE>
