<PAGE> 1
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:
<TABLE>
<S> <C>
/ / 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
</TABLE>
TUSCARORA INCORPORATED
- --------------------------------------------------------------------------------
(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):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / 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:
/X/ No fee required
<PAGE> 2
LOGO
800 FIFTH AVENUE
NEW BRIGHTON, PENNSYLVANIA 15066
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 18, 1996
To The Shareholders:
The Annual Meeting of Shareholders of Tuscarora Incorporated (the
"Company") will be held at the Pittsburgh Airport Marriott, Parkway West,
Coraopolis, Allegheny County, Pennsylvania on Wednesday, December 18, 1996 at
10:30 A.M., Pittsburgh time, for the purpose of considering and acting upon the
following:
(1) The election of three persons to serve as directors for a three-year
term expiring at the annual meeting of shareholders in 1999;
(2) The ratification of the appointment of Ernst & Young LLP as independent
public accountants to audit the financial statements of the Company and
its subsidiaries for the 1997 fiscal year; and
(3) Such other business as may properly come before the Annual Meeting or
any adjournment thereof.
By Order of the Board of Directors,
Harold F. Reed, Jr.,
Secretary
New Brighton, Pennsylvania
November 15, 1996
================================================================================
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY SO THAT
YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE
PRESENCE OF A QUORUM MAY BE ASSURED AT THE ANNUAL MEETING. THE GIVING OF YOUR
PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE
MEETING. PLEASE INDICATE ON THE PROXY YOU RETURN WHETHER OR NOT YOU WILL ATTEND
THE MEETING.
================================================================================
<PAGE> 3
NOVEMBER 15, 1996
TUSCARORA INCORPORATED
800 FIFTH AVENUE
NEW BRIGHTON, PENNSYLVANIA 15066
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 18, 1996
This Proxy Statement is furnished to shareholders in connection with the
solicitation by the Board of Directors of Tuscarora Incorporated (the "Company")
of proxies in the accompanying form for use at the Annual Meeting of
Shareholders of the Company to be held on December 18, 1996 and at any
adjournment thereof. If a proxy in the accompanying form is duly executed and
returned to the Company, the shares represented will be voted at the Meeting
and, where a choice is specified, will be voted in accordance with the
specification made. Any shareholder who gives a proxy has the power to revoke it
at any time before it is exercised by notice to the Secretary. A later-dated
proxy will revoke an earlier proxy, and shareholders who attend the Meeting may,
if they wish, vote in person even though they have submitted a proxy, in which
event the proxy will be deemed to have been revoked.
The Company's Articles provide that the Company has the authority to issue
20,000,000 shares of Common Stock, without par value (the "Common Stock"), and
1,000,000 shares of Preferred Stock, par value $.01 per share. Only shares of
Common Stock have been issued. As of the close of business on October 25, 1996,
6,285,817 shares of Common Stock were issued and outstanding.
Holders of record of the Common Stock as of the close of business on
October 25, 1996 have the right to receive notice of and to vote at the Annual
Meeting. These shareholders are entitled to one vote for each share held on all
matters to be considered and acted upon at the Meeting. Under the Company's
Articles, the shareholders do not have cumulative voting rights in the election
of directors.
The Annual Report to Shareholders for the fiscal year ended August 31,
1996, which includes consolidated financial statements, is enclosed with this
Proxy Statement.
BENEFICIAL OWNERSHIP OF COMMON STOCK
Under the proxy rules of the Securities and Exchange Commission (the
"SEC"), a person who directly or indirectly has or shares voting power and/or
investment power with respect to a security is considered as a beneficial owner
of the security. Voting power includes the power to vote or direct the voting of
shares, and investment power includes the power to dispose of or direct the
disposition of shares. Shares as to which voting power and/or investment power
may be acquired within 60 days are also considered as beneficially owned under
these proxy rules.
MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of shares of the Company's Common Stock as of the close of business on
October 25, 1996 by (i) each director and nominee, (ii) each person named in the
Summary Compensation Table included in this Proxy Statement and (iii) all
directors and executive officers of the Company as a group. Unless otherwise
indicated in the footnotes to the
<PAGE> 4
table, each person named has sole voting power and sole investment power with
respect to the shares included in the table.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK
--------------------------
NUMBER OF PERCENT
NAME SHARES OF CLASS
--------------------- ------ --------
<S> <C> <C>
Thomas S. Blair 136,238 2.17%
James H. Brakebill (1)(2) 37,866 .60%
David I. Cohen (3) 2,000 .03%
Abe Farkas (3)(4)(5) 283,800 4.51%
Karen L. Farkas (3) 13,000 .21%
Robert W. Kampmeinert (4)(6)(7) 13,000 .21%
Jeffrey L. Leininger none .00%
Brian C. Mullins (1)(2)(4) 48,081 .76%
David C. O'Leary (1)(2)(3)(6) 106,649 1.69%
John P. O'Leary, Jr. (1)(2)(3)(6)(8)(9) 209,793 3.32%
Harold F. Reed, Jr. (3)(4) 55,300 .88%
James I. Wallover (4) 100,000 1.59%
Thomas P. Woolaway (4) 221,779 3.52%
All directors and executive officers of the Company
as a group (12 persons) (1) 1,227,506 19.22%
</TABLE>
- ---------
(1) Includes shares covered by stock options exercisable within 60 days as
follows: James H. Brakebill, 29,750 shares; Brian C. Mullins, 30,790
shares; David C. O'Leary, 13,500 shares; and John P. O'Leary, Jr., 27,000
shares. In computing the percentage ownership for each executive officer
and all directors and executive officers as a group, the shares covered by
the stock options held by each executive officer and the group are deemed
outstanding.
(2) Includes shares credited to their accounts under the Company's Common Stock
Purchase Plan for Salaried Employees as follows: James H. Brakebill, 1,037
shares; Brian C. Mullins, 691 shares; David C. O'Leary, 564 shares; and
John P. O'Leary, Jr., 325 shares.
(3) Includes shares held jointly with their spouses, as to which voting power
and investment power are shared, as follows: David I. Cohen, 2,000 shares;
Abe Farkas, 105,500 shares; Karen L. Farkas, 500 shares; David C. O'Leary,
23,412 shares; John P. O'Leary, Jr., 10,912 shares and Harold F. Reed, Jr.,
9,000 shares.
(4) Includes shares held of record in the names of their wives as follows: Abe
Farkas, 60,000 shares; Robert W. Kampmeinert, 1,000 shares; Brian C.
Mullins, 5,400 shares; Harold F. Reed, Jr., 1,000 shares; James I.
Wallover, 40,000 shares; and Thomas P. Woolaway, 51,426 shares. Beneficial
ownership of these shares is disclaimed.
(5) Includes 97,100 shares held by the wife of Abe Farkas as trustee under
trusts for children and grandchildren. Beneficial ownership of these shares
is disclaimed.
(6) Includes shares held in custodian accounts for children as follows: Robert
W. Kampmeinert, 2,000 shares; David C. O'Leary, 6,018 shares; and John P.
O'Leary, Jr., 8,292 shares. Beneficial ownership of these shares is
disclaimed.
(7) Includes 10,000 shares held by Parker/Hunter Incorporated. Beneficial
ownership of these shares is disclaimed.
2
<PAGE> 5
(8) Includes 70,190 shares held by the trust for the individual account defined
contribution pension plans of the Company and its subsidiaries. John P.
O'Leary, Jr. is a named fiduciary with respect to this trust and has sole
power to direct the trustee as to the acquisition and disposition, and the
voting, of the Company's Common Stock held by the trust.
(9) Includes 21,300 shares held by a trust created under the Will of a former
employee of the Company as to which John P. O'Leary, Jr. shares voting
power and investment power as co-trustee with a bank. Beneficial ownership
of these shares is disclaimed.
The information in the table does not include 225,819 shares of the
Company's Common Stock held by trusts created under the Will of John P. O'Leary,
Sr., co-founder and former Chief Executive Officer of the Company. Mrs. John P.
O'Leary, Sr., John P. O'Leary, Jr., David C. O'Leary and Kerry O'Leary Zombeck
are co-trustees of these trusts and share voting power and investment power.
John P. O'Leary, Jr., David C. O'Leary and Kerry O'Leary Zombeck are the
children of Mrs. John P. O'Leary, Sr. The above table also does not include
102,854 shares and 32,089 shares of the Company's Common Stock beneficially
owned by Mrs. John P. O'Leary, Sr. and Kerry O'Leary Zombeck, respectively.
OTHER BENEFICIAL OWNERS
Information with respect to the only person known by the Company to be the
beneficial owner of more than 5% of the Company's Common Stock as of the close
of business on October 25, 1996 is as follows:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK
-----------------------
NUMBER OF PERCENT
NAME AND ADDRESS SHARES OF CLASS
-------------------- --------- --------
<S> <C> <C>
Jack Farkas
6315 Forbes Avenue
Pittsburgh, PA 15212 324,000 5.15%
</TABLE>
Jack Farkas is the brother and uncle, respectively, of Abe Farkas and Karen
L. Farkas, both of whom are directors of the Company. Jack Farkas has sole
voting power and sole investment power with respect to the shares included in
the table.
ELECTION OF DIRECTORS
Three directors will be elected at the Annual Meeting to serve until the
annual meeting of shareholders in 1999 and until their successors are elected.
The Board of Directors has nominated Thomas S. Blair, Jeffrey L. Leininger and
Thomas P. Woolaway and recommends a vote for their election. Each of the
nominees has consented to be named as a nominee. Thomas S. Blair and Thomas P.
Woolaway, are presently directors. Jeffrey L. Leininger has been nominated to
succeed James I. Wallover, whose term expires at the Annual Meeting and who has
chosen not to stand for re-election. Mr. Wallover has served as a Board member
since the Company was formed in 1962.
Unless authority to so vote is withheld, it is intended that the proxies
solicited by the Board of Directors will be voted for the election of the three
nominees. In the event that at the date of the Annual Meeting any of the
nominees should for any reason not be available for election, the proxies
solicited by the Board will be voted for the election of the other nominees and
such substitute nominees as shall be designated by the Board.
3
<PAGE> 6
The Board of Directors does not have a nominating committee. The Company's
Articles provide that nominations for the election of directors at a meeting of
shareholders may be made only by the Board, a committee of the Board or a
shareholder of record entitled to vote in the election of the directors to be
elected; provided, however, that a nomination may only be made by a shareholder
of record at a meeting of shareholders if written notice that the nomination is
to be made is received by the Secretary of the Company prior to the meeting. In
the case of an annual meeting, the written notice must be received 90 days prior
to the anniversary date of the immediately preceding annual meeting and must
contain certain information with respect to the nominee as set forth in the
Articles. Information with respect to the nominating procedure may be obtained
by a shareholder from the Secretary of the Company. No written notice that a
nomination would be made by a shareholder at the Annual Meeting was received by
the Company.
Information with respect to the nominees and the other directors whose
terms of office will continue after the Annual Meeting is set forth in the table
below. The nominees and other directors have held the positions shown for more
than five years unless otherwise indicated.
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION OR
NAME SINCE EMPLOYMENT; DIRECTORSHIPS; AGE
---- ----- ------------------------------
<S> <C> <C>
Nominees for a term expiring in 1999:
Thomas S. Blair 1962 Chairman of the Board of Blair Strip Steel
Company (manufacturer of cold-rolled strip
steel), New Castle, Pennsylvania; Age 74
Jeffrey L. Leininger -- Vice Chairman-Specialized Commercial Banking of
Mellon Bank, N.A. (national bank), Pittsburgh,
Pennsylvania, since February 1996; Executive Vice
President, Head of Middle Market Banking of
Mellon from February 1993 to February 1996;
Senior Vice President, Head of Western Region of
Middle Market Banking of Mellon prior to February
1993; Age 50
Thomas P. Woolaway 1962 Retired Chief Operating Officer of the Company;
Vice Chairman of the Board of Directors of the
Company; Age 65
Continuing directors with a term expiring in 1997:
Karen L. Farkas 1994 President and Treasurer of Heart Smart Foods Ltd.
(wholesaler/retailer of specialty foods),
Alberta, Canada; Tutor and seminar instructor in
corporate finance, investments and individual
finance at Athabasca University, Alberta, Canada;
Age 49
Robert W. Kampmeinert 1994 Chairman, President and Chief Executive Officer
of Parker/Hunter Incorporated (investment banking
firm), Pittsburgh, Pennsylvania; Director of
Tollgrade Communications; Age 53
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION OR
NAME SINCE EMPLOYMENT; DIRECTORSHIPS; AGE
---- ----- ------------------------------
<S> <C> <C>
David C. O'Leary 1985 Vice President, Sales and Manufacturing, of the
Company since April 1994; Vice President-Southern
Division of the Company prior to April 1994; Age
47
Harold F. Reed, Jr. 1969 Senior Partner of Reed, Luce, Tosh, McGregor and
Wolford (law firm), Beaver, Pennsylvania;
Secretary of the Company; Director of First
Western Bancorp; Age 69
Continuing directors with a term expiring in 1998:
David I. Cohen 1993 Partner of Titus & McConomy (law firm),
Pittsburgh, Pennsylvania, since July 1995;
Partner of Reed Smith Shaw & McClay (law firm),
Pittsburgh, Pennsylvania prior to July 1995; Age
45
Abe Farkas 1962 Retired; formerly owner of Beaver Super Market,
Beaver, Pennsylvania; Age 80
John P. O'Leary, Jr. 1974 President and Chief Executive Officer of the
Company (also Chairman of the Board of Directors
of the Company); Director of First Western
Bancorp and Matthews International Corporation;
Age 49
</TABLE>
During the 1996 fiscal year, there were seven meetings of the Board of
Directors. Average attendance at those meetings was 98.6%.
VOTE REQUIRED
Only affirmative votes are counted in the election of directors. The three
nominees for election as directors at the Annual Meeting who receive the highest
number of votes cast for the election of directors by the holders of the
Company's Common Stock present in person or voting by proxy, a quorum being
present, will be elected as directors.
COMMITTEES OF BOARD OF DIRECTORS
The Board of Directors has an Executive Committee, Compensation Committee
and Audit Committee.
The members of the Executive Committee are John P. O'Leary, Jr. (Chairman),
Thomas S. Blair, David C. O'Leary, Harold F. Reed, Jr. and Thomas P. Woolaway.
The Executive Committee may exercise all the power and authority of the Board in
the management of the affairs of the Company except for matters expressly
reserved by law for Board action. It is intended that the Executive Committee
will meet only infrequently as necessary between regular meetings of the Board.
The Executive Committee did not meet during the 1996 fiscal year.
The members of the Compensation Committee are Thomas S. Blair (Chairman),
Robert W. Kampmeinert, Harold F. Reed, Jr. and Thomas P. Woolaway. The
responsibilities of the Compensation Committee include recommending to the Board
the base salary and any bonuses of the Company's executive officers and making
other recommendations to the Board with respect to the compensation and benefits
of the executive officers. The Compensation Committee makes recommendations to
the Board with respect to the grant of stock options under the Company's 1989
Stock Incentive Plan and administers the Company's Common Stock Purchase Plan
for Salaried Employees. The Compensation Committee also makes recom-
5
<PAGE> 8
mendations to the Board with respect to director compensation and administers
the Company's Deferred Compensation Plan for Non-Employee Directors. During the
1996 fiscal year, there were two meetings of the Compensation Committee.
The members of the Audit Committee are David I. Cohen (Chairman), Abe
Farkas, Karen L. Farkas and James I. Wallover. The responsibilities of the Audit
Committee include assuring direct and open lines of communication between the
Board of Directors and the Company's accounting personnel and independent public
accountants and reviewing the annual financial statements of the Company and its
subsidiaries with the management of the Company and the independent public
accountants. The Audit Committee verifies the independence of the independent
public accountants, recommends to the Board the retention or selection of the
independent public accountants, reviews the quality and depth of staffing in the
Company's financial and accounting departments and reviews proposed changes in
accounting principles as they may materially affect the Company. During the 1996
fiscal year, there were three meetings of the Audit Committee.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company receives an annual
retainer of $5,000. Non-employee directors who serve on the Executive Committee
also receive an annual fee of $1,500 and non-employee directors who serve as
Chairmen of Board Committees also receive an annual fee of $1,000. In addition,
non-employee directors receive $1,500 for each Board meeting and $750 for each
meeting of the Compensation Committee and Audit Committee they attend.
Non-employee directors receive reimbursement for travel expenses to attend Board
and Committee meetings. Directors who are employees of the Company do not
receive compensation for serving as a director.
The Company maintains a Deferred Compensation Plan for Non-Employee
Directors which permits Directors who are not employees of the Company to defer
compensation earned for services as a director until after termination of
service. Participants may defer compensation into a bookkeeping account which
credits the participant with phantom share units of the Company's Common Stock
or into a bookkeeping account to which interest is credited. Payments are made
in cash after the participant ceases to be a director of the Company at the
election of the participant in a lump sum or in up to ten annual installments.
The Company also has a retirement plan for directors who are not current or
former employees of the Company. Under the plan, retirement benefits are paid to
any director whose service as a director has terminated and who is 60 and has
completed at least five years of service on the Board at the time of termination
of service. The retirement benefit is an amount equal to 50% of the amount paid
each year to active non-employee directors as a retainer and for attendance at
Board meetings. Payments are made at the same time as payments are made to the
active non-employee directors. The benefits commence immediately upon
termination of service and terminate upon the earliest to occur of (i)
expiration of a period of time equal to the period of time the retired director
served, (ii) the death of the retired director or (iii) the tenth anniversary of
the date on which service as a director terminated. There are no survivor
benefits payable under the plan.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the compensation paid
for services rendered in all capacities to the Company and its subsidiaries for
the last three fiscal years to those persons who were at August 31, 1996 the
Chief Executive Officer of the Company and the Company's other executive
officers:
6
<PAGE> 9
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
------------------------------------------------ AWARDS
-----------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION
POSITION YEAR ($)(1) ($)(2) ($)(3) (#)(4) ($)(5)
- ------------------------- ------ -------- -------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
John P. O'Leary, Jr. 1996 $250,000 $120,000 $ -- 10,000 $10,047
President and 1995 225,000 140,000 -- 8,000 9,936
Chief Executive Officer 1994 205,000 90,000 -- 5,000 14,651
Brian C. Mullins 1996 162,500 60,000 -- 5,000 10,032
Vice President and 1995 150,000 70,000 -- 4,000 9,853
Treasurer 1994 143,500 50,000 -- 2,500 11,318
James H. Brakebill 1996 155,000 60,000 -- 5,000 10,128
Vice President, 1995 140,000 70,000 -- 4,000 10,010
Manufacturing 1994 123,000 45,000 -- 2,500 9,801
David C. O'Leary 1996 155,000 60,000 -- 5,000 10,128
Vice President, Sales 1995 140,000 70,000 -- 4,000 10,043
and Marketing 1994 123,000 45,000 -- 2,500 9,818
</TABLE>
- ---------
(1) Represents base salary and includes the tax deferred contributions made by
the Company on behalf of the executive officers under the Company's Section
401(k) Plan.
(2) Cash bonuses are awarded to the executive officers following the end of each
fiscal year.
(3) The dollar value of perquisites and other personal benefits is required to
be disclosed under this column if the amount for any executive officer
equals or exceeds $50,000 or 10% of the total of annual salary and bonus.
The dollar value of the perquisites and other personal benefits did not
exceed the threshold amount for any of the executive officers named for any
of the fiscal years covered in the table.
(4) Represents the number of shares of the Company's Common Stock for which
stock options were granted under the Company's 1989 Stock Incentive Plan.
(5) This column includes employer contributions for the accounts of the named
executive officers under (i) the Company's individual account defined
contribution pension plan for salaried employees, (ii) the Company's
Section 401(k) Plan and (iii) the Company's Common Stock Purchase Plan for
Salaried Employees. For the 1996 fiscal year, the breakdown of the employer
contributions among the plans is as follows:
<TABLE>
<CAPTION>
COMMON
STOCK
PENSION SECTION PURCHASE
NAME PLAN 401(K) PLAN PLAN
------------------- ------- ----------- --------
<S> <C> <C> <C>
John P. O'Leary, Jr.............................. $8,250 $1,437 $360
Brian C. Mullins................................. 8,250 1,542 240
James H. Brakebill............................... 8,250 1,518 360
David C. O'Leary................................. 8,250 1,518 360
</TABLE>
7
<PAGE> 10
Option Grants. The following table sets forth as to the persons named in
the Summary Compensation Table additional information with respect to the stock
options granted during the 1996 fiscal year, including the potential realizable
value from the stock options assuming they are exercised at the end of the
option term and assuming 5% and 10% annual rates of stock price appreciation
during the option term:
OPTION GRANTS IN 1996 FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL
INDIVIDUAL GRANTS(1) RATES
-------------------------------------------------------- OF STOCK PRICE
NUMBER OF % OF TOTAL EXERCISE APPRECIATION FOR
SECURITIES OPTIONS GRANTED PRICE OPTION TERM(2)
UNDERLYING TO EMPLOYEES IN PER SHARE EXPIRATION ---------------------
NAME OPTIONS(#) 1996 FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ------------------- ---------- ---------------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
John P. O'Leary, Jr..... 10,000 10.36% $24.75 10/24/05 $155,651 $394,451
Brian C. Mullins........ 5,000 5.18% 24.75 10/24/05 77,826 197,226
James H. Brakebill...... 5,000 5.18% 24.75 10/24/05 77,826 197,226
David C. O'Leary........ 5,000 5.18% 24.75 10/24/05 77,826 197,226
</TABLE>
- ---------
(1) The stock options for the number of shares shown were granted on October 25,
1995 and became exercisable on April 25, 1996. The exercise price per share
was 100% of the fair market value of the Company's Common Stock on the date
of grant. Fair market value is the average of the high and low sales prices
of the Company's Common Stock on the date of grant on the NASDAQ National
Market System as reported in The Wall Street Journal. The exercise price
may be paid in cash, in shares of the Common Stock which have been held for
at least one year or in any combination of cash and such shares.
(2) The 5% and 10% assumed annual rates of stock price appreciation do not
reflect actual changes in the fair market value of the Company's Common
Stock since the date of grant. The information in the table is provided in
accordance with the rules of the SEC regarding the disclosure of
compensation of executive officers. The information is not intended to
forecast possible future stock price appreciation, if any.
Option Exercises and Values. The following table sets forth as to the
persons named in the Summary Compensation Table information with respect to the
number of shares of the Company's Common Stock acquired upon the exercise of
stock options during the 1996 fiscal year, the value realized from such
exercises, the number of shares covered by unexercised stock options held at
August 31, 1996 and the value of such unexercised stock options at August 31,
1996:
AGGREGATED OPTION EXERCISES IN 1996 FISCAL YEAR AND
1996 FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
VALUE 1996 FISCAL 1996 FISCAL
SHARES ACQUIRED REALIZED YEAR END YEAR END
NAME ON EXERCISE (#) ($)(1) (#)(2) ($)(3)
- ------------------- --------------- -------- ----------- --------------------
<S> <C> <C> <C> <C>
John P. O'Leary, Jr............... -- -- 35,000 $160,265
Brian C. Mullins.................. 1,000 $19,580 30,790 259,794
James H. Brakebill................ -- -- 29,750 247,977
David C. O'Leary.................. -- -- 17,500 80,133
</TABLE>
- ---------
(1) The value realized is the difference between the aggregate fair market value
of the shares acquired on exercise and the aggregate exercise price.
8
<PAGE> 11
(2) The outstanding stock options at 1996 fiscal year end include stock options
granted under the Company's 1985 Incentive Stock Option Plan as well as
stock options granted under the present plan. All the outstanding stock
options at 1996 fiscal year end were exercisable.
(3) The value of unexercised in-the-money stock options is the difference
between the aggregate fair market value of shares covered by stock options
with an exercise price less than fair market value at 1996 fiscal year end
and the aggregate exercise price of such stock options. All the outstanding
stock options at 1996 fiscal year end were in-the-money except for the
stock options granted on October 25, 1995.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For information regarding transactions involving Robert W. Kampmeinert and
Harold F. Reed, Jr., directors of the Company, see "Compensation Committee
Interlocks and Insider Participation" below.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the 1996 fiscal year, the members of the Compensation Committee were
Thomas S. Blair (Chairman), Robert W. Kampmeinert, Harold F. Reed, Jr. and
Thomas P. Woolaway.
Robert W. Kampmeinert is the Chairman, President and Chief Executive
Officer of Parker/Hunter Incorporated, an investment banking firm which rendered
professional services to the Company during the 1996 fiscal year and will render
professional services to the Company during the 1997 fiscal year.
Harold F. Reed, Jr. is a partner in the law firm of Reed, Luce, Tosh,
McGregor and Wolford which rendered professional services to the Company during
the 1996 fiscal year and will render professional services to the Company during
the 1997 fiscal year. He is also Secretary of the Company.
Thomas P. Woolaway, a co-founder of the Company, was an officer of the
Company from its formation until his retirement in 1994. He was the Chief
Operating Officer of the Company at the time of his retirement.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's compensation program for its executive officers is
administered by the Compensation Committee of the Board of Directors, all the
members of which are non-employee directors. The program is composed primarily
of cash compensation, consisting of base salary and a bonus, but also includes
non-cash compensation in the form of stock options. Since September 1994, the
Company has had four executive officers, each of whom is named in the Summary
Compensation Table included in this Proxy Statement.
Base Salary and Bonus. The base salary and bonus of each executive officer
for each fiscal year is established by the Board of Directors following a
recommendation by the Committee. Base salary for a fiscal year is generally
determined at the end of the preceding fiscal year. Bonuses for a fiscal year
are awarded after the financial results for the fiscal year have become
available.
The base salary of each executive officer depends primarily on the office
and responsibilities of the executive officer and is reviewed annually. However,
increases are affected by the Company's growth and financial performance as
well. In determining the base salary for John P. O'Leary, Jr., the Company's
Chief Executive Officer, for the 1996 fiscal year, the Committee took into
account that the Company's growth in sales and earnings for the 1995 fiscal year
were extraordinary. Net sales and net income for the 1995 fiscal year were
Company records and increased 36.0% and 57.5%, respectively, over the net sales
and net income for the 1994 fiscal year which itself had been an excellent year.
Accordingly, the Committee recommended and Mr. O'Leary received an 11.1% base
salary increase for the 1996 fiscal year as compared to a 9.8% increase for the
preceding fiscal year. Increases in base salary for the other executive officers
for the 1996 fiscal year also reflected the 1995 fiscal year financial results
and ranged from 8.3% to 10.7%.
As to bonuses, the Committee strongly believes that executive officers
should have a meaningful portion of their total compensation tied to the
profitability of the Company. Accordingly, financial results for a fiscal year
are a primary consideration in the awarding of bonuses; but other factors,
especially individual performance, have significance as well. There is no plan
requiring that bonuses be paid if certain criteria are met, there is no
established relationship between a bonus and base salary, and there is no
formula under which
9
<PAGE> 12
established weights are given to the various factors considered. In general, the
Committee compares the factors for the current year against recent prior years
and acts accordingly. Net sales and net income for the 1996 fiscal year were
also Company records, increasing 11.8% and 7.5%, respectively, over the net
sales and net income for the 1995 fiscal year. Although the Committee was
satisfied with the Company's financial results and the performance of the CEO
and the other executive officers for the 1996 fiscal year, the bonuses
recommended and paid for the 1996 fiscal year were less than for the prior
fiscal year primarily because the growth in earnings lagged behind the growth in
sales. Nonetheless, the total compensation (base salary and bonus) for each
executive officer for the 1996 fiscal year exceeded the total compensation of
the executive officer for the preceding fiscal year. The Committee deemed this
appropriate considering the increases in sales and earnings during the 1996
fiscal year.
The Committee has not recommended base salaries or bonuses based on
compensation paid by other companies although from time to time the Committee
reviews studies showing ranges of compensation for executive officers of
manufacturing companies with comparable sales.
Stock Options. Through the 1996 fiscal year, stock options have been
granted by the Committee and have been the only form of long-term compensation
received by the Company's executive officers. The Committee favors stock options
as a long-term incentive because they match the interests of the employee-
optionholder with those of the shareholders inasmuch as any value to the
employee is tied directly to stock price increases. Stock options have been
granted each October in recent years following release of the Company's
financial results for the preceding fiscal year. The number of shares covered by
each stock option grant depends on the optionee's responsibilities with the
Company, as reflected by the optionee's job classification, as well as the
Company's financial performance. John P. O'Leary, Jr., by virtue of his CEO
position, receives a stock option for a greater number of shares than the other
executive officers. In October 1995, Mr. O'Leary was granted a stock option to
purchase 10,000 shares of the Company's Common Stock while the other executive
officers were granted stock options for 5,000 shares. The number of shares
covered by the October 1995 grants to the executive officers was greater than in
prior years, reflecting the exceptional 1995 fiscal year financial results.
As a result of an amendment to the Company's stock option plan (the 1989
Stock Incentive Plan) effective August 31, 1996, all stock options granted
subsequent to that date will be granted by the Board of Directors rather than
the Committee. The Committee will, however, continue to recommend stock option
grants to the Board of Directors.
Other. The executive officers may participate in the Company's Section
401(k) Plan and Common Stock Purchase Plan for Salaried Employees and will
receive retirement benefits under the Company's individual account defined
contribution pension plan for salaried employees. The Company provides certain
perquisites and other personal benefits to certain of its employees, including
its executive officers, which in the aggregate are not significant.
Respectfully submitted,
Thomas S. Blair, Chairman
Robert W. Kampmeinert
Harold F. Reed, Jr.
Thomas P. Woolaway
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following line graph compares the cumulative total shareholder return
on the Company's Common Stock over the 1992-1996 fiscal years with the
cumulative total return of the NASDAQ Stock Market (U.S.) Index and of the Dow
Jones Containers and Packaging Industry Group over the same period. The graph
10
<PAGE> 13
assumes a $100 investment on August 31, 1991 in the Company's Common Stock and
in each of the indices and assumes the reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG THE COMPANY, THE NASDAQ
STOCK MARKET (U.S.) INDEX AND THE DOW JONES CONTAINERS AND PACKAGING INDUSTRY
GROUP
<TABLE>
<CAPTION> DOW JONES
CONTAINERS
MEASUREMENT PERIOD TUSCARORA NASDAQ STOCK AND PACKAGING
(FISCAL YEAR COVERED) INCORPORATED MARKET (U.S.) INDUSTRY GROUP
--------------------- ------------ ------------- -------------
<S> <C> <C> <C>
1991 100 100 100
1992 156 108 109
1993 123 143 99
1994 129 149 118
1995 207 201 135
1996 204 226 133
</TABLE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
On February 9, 1996, the Board of Directors appointed Ernst & Young LLP as
independent public accountants to audit the financial statements of the Company
and its subsidiaries for the 1997 fiscal year. Although the appointment of
independent public accountants is not required to be submitted to a vote of the
shareholders, the Board believes the shareholders should participate in the
selection of the independent public accountants through the ratification
process.
The Board of Directors recommends a vote For the ratification of the
appointment of Ernst & Young LLP and unless otherwise directed therein, the
proxies solicited by the Board will be voted for the ratification of the
appointment of Ernst & Young LLP. In the event the shareholders fail to ratify
the appointment, the Board will consider such vote as a direction to appoint
other independent public accountants for the 1998 fiscal year.
The Company's former independent accountants, S.R. Snodgrass, A.C., audited
the financial statements of the Company and its subsidiaries for the Company's
1996 fiscal year. The appointment of S.R. Snodgrass, A.C. to audit the financial
statements of the Company and its subsidiaries for the 1996 fiscal year was
ratified by the Company's shareholders at the Company's Annual Meeting of
Shareholders held on December 14, 1995.
The decision to change independent accountants effective with the 1997
fiscal year was recommended by the Company's management and approved by the
Audit Committee of the Board of Directors. The change from S.R. Snodgrass, A.C.
to Ernst & Young LLP results from the expansion of the Company's operations into
foreign countries. S.R. Snodgrass, A.C. does not have operations outside of the
United States. Ernst & Young LLP has been performing the required statutory
audits of the Company's United Kingdom subsidiary since its formation in 1995
and the Company's Mexican subsidiaries since their formation in 1994.
11
<PAGE> 14
The report of S.R. Snodgrass, A.C. on the financial statements of the
Company and its subsidiaries for the Company's fiscal years ended August 31,
1995 and 1996 (included in the Annual Report to Shareholders for the fiscal year
ended August 31, 1996) did not contain an adverse opinion or a disclaimer of
opinion, nor was it qualified or modified as to uncertainty, audit scope or
accounting principles. During the Company's fiscal years ended August 31, 1995
and 1996, there were no disagreements with S.R. Snodgrass, A.C. on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreement(s), if not resolved to the satisfaction
of S.R. Snodgrass, A.C., would have caused it to make a reference to the subject
matter of the disagreement(s) in connection with its report.
During the Company's fiscal years ended August 31, 1995 and 1996, S.R.
Snodgrass, A.C. did not advise the Company
(1) that the internal controls necessary for the Company to develop
reliable financial statements did not exist;
(2) that information had come to its attention that had led it to no
longer be able to rely on management's representations, or that had made it
unwilling to be associated with the financial statements prepared by
management;
(3) of the need to expand significantly the scope of its audit, or
that information had come to its attention that, if further investigated,
might (i) materially impact the fairness or reliability of either a
previously issued audit report or the underlying financial statements, or
the financial statements issued or to be issued governing the fiscal
period(s) subsequent to the date of the most recent financial statements
covered by an audit report or (ii) cause it to be unwilling to rely on
management's representations or be associated with the Company's financial
statements; or
(4) that information had come to its attention that it had concluded
materially impacts the fairness or reliability of either (i) a previously
issued audit report or the underlying financial statements or (ii) the
financial statements issued or to be issued covering the fiscal period(s)
subsequent to the date of the most recent financial statements covered by
an audit report.
During the Company's fiscal years ended August 31, 1995 and 1996, neither
the Company nor anyone on its behalf consulted Ernst & Young LLP regarding
either the application of accounting principles to a specified transaction,
either completed or proposed, or the type of audit opinion that might be
rendered on the Company's financial statements, and neither a written report nor
oral advice was provided to the Company by Ernst & Young LLP. However, as
indicated above, the Company did engage Ernst & Young LLP to perform statutory
audits of its subsidiaries in the United Kingdom and Mexico for its 1995 and
1996 fiscal years.
Representatives of both S.R. Snodgrass, A.C. and Ernst & Young LLP will be
present at the Annual Meeting. The representatives will have the opportunity to
make a statement if they choose to do so and will be available to respond to
appropriate questions.
VOTE REQUIRED
Under Pennsylvania law, the affirmative vote of a majority of the votes
cast at the Annual Meeting by the holders of the Company's Common Stock voting
in person or represented by proxy and entitled to vote, a quorum being present,
is necessary for the ratification of the appointment of Ernst & Young LLP. An
abstention from voting by a shareholder present in person or represented by
proxy and entitled to vote is not a vote cast "for" or "against" the proposal
and is therefore not counted in determining whether the required vote for
ratification has been obtained.
OTHER MATTERS
No business other than that set forth above is expected to come before the
Annual Meeting or any adjournment thereof. Should other business properly come
before the Meeting or any adjournment thereof, the proxy holders will vote upon
the same according to their discretion and best judgment.
12
<PAGE> 15
EXPENSES OF SOLICITATION
The cost of solicitation of proxies for the Annual Meeting will be paid by
the Company. In addition to the solicitation of proxies by mail, the officers
and regular employees of the Company may solicit proxies in person or by
telephone or telegraph. Brokerage houses and other nominees, custodians or
fiduciaries will forward proxy soliciting material and the Company's Annual
Report to Shareholders for the fiscal year ended August 31, 1996 to the
beneficial owners of the shares of the Company's Common Stock held of record by
them, and the Company will reimburse these record holders for their reasonable
out-of-pocket expenses incurred in so doing.
1997 SHAREHOLDER PROPOSALS
A proposal submitted by a shareholder for the regular annual meeting of
shareholders to be held in 1997 must be received by the Secretary, Tuscarora
Incorporated, 800 Fifth Avenue, New Brighton, Pennsylvania 15066 on or prior to
July 18, 1997 in order to be eligible for inclusion in the Company's Proxy
Statement for that annual meeting.
By Order of the Board of Directors,
Harold F. Reed, Jr.,
Secretary
13
<PAGE> 16
PROXY
TUSCARORA INCORPORATED
SOLICITED BY THE BOARD OF DIRECTORS
for the Annual Meeting of Shareholders
Pittsburgh Airport Marriott, Parkway West, Coraopolis,
Allegheny County, Pennsylvania
Wednesday, December 18, 1996, 10:30 A.M., Pittsburgh time
The undersigned shareholder of Tuscarora Incorporated (the"Company")
hereby appoints John P. O'Leary, Jr., Harold F. Reed, Jr. and Brian C. Mullins,
and each of them acting individually, as proxies of the undersigned to vote at
the Annual Meeting of Shareholders of the Company to be held December 18, 1996,
and at all adjournments thereof, all the shares of Common Stock of the Company
which the undersigned may be entitled to vote, on the matters set forth on the
reverse side of this proxy and, in their discretion, upon any other business
which may properly come before the Meeting.
The undersigned shareholder hereby revokes all previous proxies for the
Annual Meeting, acknowledges receipt of the Notice of Annual Meeting and Proxy
Statement, both dated November 15, 1996, and of the Annual Report to
Shareholders for the 1996 fiscal year, and hereby ratifies all that said
proxies may do by virtue hereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER. IF NO DIRECTION IS GIVEN, THE SHARES WILL BE VOTED "FOR" ITEMS 1
AND 2.
(Continued, and to be signed, on the other side)
FOLD AND DETACH HERE
<PAGE> 17
<TABLE>
<CAPTION>
Please mark
your votes as [ X ]
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2
Item 1--The election of Directors for a three year term expiring at the annual meeting of shareholders in 1999.
<S> <C> <C>
FOR Withhold Nominees: Thomas S. Blair, Jeffrey L. Leininger and Thomas P. Woolaway.
all Nominees Authority A vote FOR includes discretionary authority to vote for a substituted nominee
(except as to Vote for if any of the nominees listed becomes unable to serve or for good cause will not
indicated) all Nominees serve. (To withhold authority to vote for any individual nominee, print that
[ ] [ ] nominee's name on the line below.)
-----------------------------------------------------------------------------
Item 2--The ratification of the appointment of Ernst & Young LLP as
independent public accountants to audit the financial statements
of the Company and its subsidiaries for the 1997 fiscal year.
For Against Abstain
[ ] [ ] [ ]
Please date and sign below exactly as your name appears on
this card. If you are acting as attorney, executor,
administrator, guardian or trustee, please so indicate
with your full title when signing. Corporate holders should
sign in full corporate name by duly authorized officer.
If shares are held jointly, each shareholder named should
sign.
Dated , 1996
---------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
With respect to the Annual Meeting
I/We will attend I/We will not attend
FOLD AND DETACH HERE
PLEASE INDICATE IN THE SPACE PROVIDED ABOVE
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
YOU ARE URGED TO PROMPTLY RETURN THIS PROXY IN THE
ENCLOSED ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND
THE ANNUAL MEETING IN PERSON SO THAT YOUR SHARES MAY BE
VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT
THE PRESENCE OF A QUORUM MAY BE ASSURED AT THE MEETING.
</TABLE>
<PAGE> 18
November 15, 1996
TO: Participants in the Tuscarora Incorporated
Common Stock Purchase Plan for Salaried Employees
Dear Participant:
In accordance with Section 12 of the Tuscarora Incorporated Common Stock
Purchase Plan for Salaried Employees (the "Plan"), Mellon Bank, N.A., as record
holder of the shares of Common Stock of Tuscarora Incorporated ("Tuscarora") in
which you have a beneficial interest under the Plan, will vote your shares at
the Annual Meeting of Shareholders of Tuscarora to be held on December 18,
1996, and at any adjournment thereof, in accordance with your written
direction. Enclosed are the Notice of Annual Meeting and Proxy Statement, both
dated November 15, 1996, and the Annual Report to Shareholders for the 1996
fiscal year.
If you wish to instruct us in the voting of your shares, you may sign on the
reverse side exactly as your name appears thereon and date and return this card
in the enclosed envelope. By doing so, you are directing us to execute and file
a proxy IN THE FORM SOLICITED BY THE BOARD OF DIRECTORS OF TUSCARORA,
authorizing the proxies therein appointed to vote your shares at the Annual
Meeting on the matters set forth on the reverse side and, in their discretion,
upon any other business which may properly come before the Annual Meeting. The
Board of Directors of Tuscarora recommends a vote FOR Items 1 and 2 and your
shares will be so voted unless you otherwise indicate.
MELLON BANK, N.A.
(Continued, and to be signed, on the other side)
FOLD AND DETACH HERE
<PAGE> 19
<TABLE>
<CAPTION>
Please mark
your votes as [ X ]
indicated in
this example
Item 1--The election of Directors for a three year term expiring at the annual meeting of shareholders in 1999.
<S> <C> <C>
FOR Withhold Nominees: Thomas S. Blair, Jeffrey L. Leininger and Thomas P. Woolaway.
all Nominees Authority A vote FOR includes discretionary authority to vote for a substituted nominee
(except as to Vote for if any of the nominees listed becomes unable to serve or for good cause will not
indicated) all Nominees serve. (To withhold authority to vote for any individual nominee, print that
[ ] [ ] nominee's name on the line below.)
-----------------------------------------------------------------------------
Item 2--The ratification of the appointment of Ernst & Young LLP as
independent public accountants to audit the financial statements
of the Company and its subsidiaries for the 1997 fiscal year.
For Against Abstain
[ ] [ ] [ ]
Please date and sign below exactly as your name appears on
this card. If shares are held jointly, each shareholder
named should sign.
Dated , 1996
---------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT TO US. PLEASE COMPLETE, DATE AND
SIGN THE ABOVE PROXY CARD AND
RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
</TABLE>
