<PAGE> 1
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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:
<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-12
</TABLE>
THE SCOTTS COMPANY
(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)(1) 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: ...........................................................
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[THE SCOTTS COMPANY LOGO]
THE SCOTTS COMPANY
PROXY STATEMENT FOR 2001 ANNUAL MEETING
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<PAGE> 3
[THE SCOTTS COMPANY LOGO]
THE SCOTTS COMPANY
41 SOUTH HIGH STREET
SUITE 3500
COLUMBUS, OHIO 43215
December 15, 2000
Dear Fellow Shareholders:
The Annual Meeting of Shareholders of The Scotts Company will be held at
10:00 a.m., local time, on Thursday, January 18, 2001, at The Westin Great
Southern Hotel, 310 South High Street, Columbus, Ohio. The enclosed Notice of
Annual Meeting of Shareholders and Proxy Statement contain detailed information
about the business to be transacted at the Annual Meeting.
The Board of Directors has nominated four directors, each for a term to
expire at the 2004 Annual Meeting. The Board of Directors recommends that you
vote FOR each of the nominees.
In addition to the election of directors, you are being asked to consider
and vote upon the following four proposals:
- the adoption of an amendment to our Amended Articles of Incorporation
to return the Class A Convertible Preferred Stock to the status of
authorized but unissued, "blank check" preferred shares;
- the adoption of amendments to our Code of Regulations to: (i) permit
appointment of shareholder proxies in any manner permitted by Ohio
law; (ii) permit shareholders to receive notice of shareholder
meetings in any manner permitted by Ohio law; and (iii) allow our
shareholder meetings to be held in any manner permitted by Ohio law;
- the adoption of a further amendment to our Code of Regulations to
clarify and separate the roles of our officers; and
- the adoption of a further amendment to our Code of Regulations to
provide for Board committees of one or more directors.
The Board of Directors recommends that you vote FOR each of these
proposals.
On behalf of the Board of Directors and management, I cordially invite you
to attend the Annual Meeting. Whether or not you plan to attend the Annual
Meeting, please record your vote on the enclosed proxy card and return it
promptly in the enclosed postage-paid envelope, or alternatively, vote your
proxy electronically via the Internet or telephonically in accordance with the
instructions on your proxy card.
Sincerely,
/s/ Charles M. Berger
CHARLES M. BERGER
Chairman and Chief Executive Officer
<PAGE> 4
[THE SCOTTS COMPANY LOGO]
THE SCOTTS COMPANY
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, JANUARY 18, 2001
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of The
Scotts Company will be held at The Westin Great Southern Hotel, 310 South High
Street, Columbus, Ohio, on Thursday, January 18, 2001, at 10:00 a.m., local
time, for the following purposes:
1. To elect four directors, each for a term of three years to expire at
the 2004 Annual Meeting;
2. To consider and act upon a proposal to adopt an amendment to our
Amended Articles of Incorporation to return the Class A Convertible
Preferred Stock to the status of authorized but unissued, "blank
check" preferred shares;
3. To consider and act upon a proposal to adopt amendments to our Code
of Regulations to: (i) permit appointment of shareholder proxies in
any manner permitted by Ohio law; (ii) permit shareholders to receive
notice of shareholder meetings in any manner permitted by Ohio law;
and (iii) allow our shareholder meetings to be held in any manner
permitted by Ohio law;
4. To consider and act upon a proposal to adopt a further amendment to
our Code of Regulations to clarify and separate the roles of our
officers;
5. To consider and act upon a proposal to adopt a further amendment to
our Code of Regulations to provide for Board committees of one or
more directors; and
6. To transact such other business as may properly come before the
Annual Meeting or any adjournment.
The close of business on November 27, 2000, has been fixed by the Board of
Directors of the Company as the record date for determining the shareholders
entitled to receive notice of, and to vote at, the Annual Meeting.
You are cordially invited to attend the Annual Meeting. Whether or not you
plan to attend the Annual Meeting, you may ensure your representation by
completing, signing, dating and promptly returning the enclosed proxy card. A
return envelope, which requires no postage if mailed in the United States, has
been provided for your use. Alternatively, you may vote your proxy
electronically via the Internet or telephonically by following the specific
instructions on your proxy card.
By Order of the Board of Directors,
/s/ G. Robert Lucas
G. ROBERT LUCAS
Executive Vice President, General
Counsel and Corporate Secretary
41 South High Street
Suite 3500
Columbus, Ohio 43215
December 15, 2000
<PAGE> 5
[THE SCOTTS COMPANY LOGO]
THE SCOTTS COMPANY
41 SOUTH HIGH STREET
SUITE 3500
COLUMBUS, OHIO 43215
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, JANUARY 18, 2001
This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of The Scotts Company of proxies for use at the
Annual Meeting of Shareholders to be held at The Westin Great Southern Hotel,
310 South High Street, Columbus, Ohio, on Thursday, January 18, 2001, at 10:00
a.m., local time, and any adjournment, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders. This Proxy Statement and
the accompanying proxy were first sent or given to shareholders on or about
December 15, 2000. Only holders of record of the Company's common shares on
November 27, 2000 (the "Record Date") will be entitled to vote at the Annual
Meeting. As of the Record Date, there were 28,126,051 common shares outstanding.
Each common share entitles the holder thereof to one vote. There is no
cumulative voting. A quorum for the Annual Meeting is a majority of the voting
shares outstanding. There are no voting securities of the Company outstanding
other than the common shares.
Common shares represented by signed proxies that are returned to the
Company will be counted toward the quorum in all matters even though they are
marked as "Abstain," "Against" or "Withhold Authority" on one or more or all
matters or they are not marked at all. Broker/dealers who hold their customers'
common shares in street name may, under the applicable rules of the exchange and
other self-regulatory organizations of which the broker/dealers are members,
sign and submit proxies for such street name common shares and may vote such
common shares on "routine" matters, which, under such rules, typically include
the election of directors, but broker/dealers may not vote such common shares on
other matters, which typically include the adoption of an amendment to the
articles of incorporation or the code of regulations, without specific
instructions from the customer who owns such common shares. Proxies signed and
submitted by broker/dealers which have not been voted on certain matters as
described in the previous sentence are referred to as "broker non-votes."
If the accompanying proxy card is properly signed and returned to the
Company prior to the Annual Meeting and is not revoked, it will be voted in
accordance with the instructions contained therein. If no instructions are
given, the persons designated as proxies in the accompanying proxy card will
vote FOR the election as directors of those persons nominated by the Board and
FOR the approval of the following four proposals:
- the adoption of an amendment to our Amended Articles of Incorporation
to return the Class A Convertible Preferred Stock to the status of
authorized but unissued, "blank check" preferred shares;
- the adoption of amendments to our Code of Regulations to: (i) permit
appointment of shareholder proxies in any manner permitted by Ohio
law; (ii) permit shareholders to receive notice of shareholder
meetings in any manner permitted by Ohio law; and (iii) allow our
shareholder meetings to be held in any manner permitted by Ohio law;
- the adoption of a further amendment to our Code of Regulations to
clarify and separate the roles of our officers; and
- the adoption of a further amendment to our Code of Regulations to
provide for Board committees of one or more directors.
<PAGE> 6
A proxy card for use at the Annual Meeting is enclosed. Alternatively,
shareholders holding common shares registered directly with the Company's
transfer agent, National City Bank, may vote electronically via the Internet or
telephonically by following the instructions on their proxy card. The deadline
for voting electronically via the Internet or telephonically is 11:59 p.m.,
local time in Columbus, Ohio, on January 17, 2001. Shareholders holding common
shares in "street name" with a broker, bank or other holder of record should
review the information provided to them by such holder of record. This
information will set forth the procedures to be followed in instructing the
holder of record how to vote the "street name" common shares and how to revoke
previously given instructions.
The Board of Directors is not currently aware of any matters other than
those referred to herein which will come before the Annual Meeting. If any other
matter should be properly presented at the Annual Meeting for action, the
persons named in the accompanying proxy will vote and act according to their
best judgments in light of the conditions then prevailing.
You may revoke your proxy at any time before it is actually voted at the
Annual Meeting by delivering written notice of revocation to the Secretary of
the Company at the address on the cover page of this Proxy Statement or by
sending in a later-dated proxy card or casting a new vote via the Internet or
telephonically. If you attend the Annual Meeting and want to vote in person, you
can request that your previously submitted proxy not be used. Attendance at the
Annual Meeting will not, in itself, constitute revocation of your proxy.
The expense of preparing, printing and mailing proxy materials to the
Company's shareholders will be borne by the Company. In addition, proxies may be
solicited personally or by telephone, mail or facsimile. Officers or employees
of the Company may assist with personal or telephone solicitation and will
receive no additional compensation therefor. The Company will also reimburse
brokerage houses and other nominees for their reasonable expenses in forwarding
proxy materials to beneficial owners of the common shares.
If a shareholder is a participant in The Scotts Company Retirement Savings
Plan (the "RSP") and common share units have been allocated to such person's
account in the RSP, the shareholder is entitled to instruct the trustee as to
how to vote the common shares represented by those units. These shareholders may
receive their proxy cards separately. If no instructions are given by a
participant to the trustee of the RSP, the trustee will not vote those common
shares.
2
<PAGE> 7
BENEFICIAL OWNERSHIP OF SECURITIES OF THE COMPANY
The following table furnishes certain information as of November 1, 2000
(except as otherwise noted), as to the common shares beneficially owned by each
of the directors of the Company, by each of the individuals named in the Summary
Compensation Table and by all directors and executive officers of the Company as
a group, and, to the Company's knowledge, by the only persons beneficially
owning more than 5% of the outstanding common shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)
-------------------------------------------------------------------------------
COMMON SHARES WHICH
CAN BE ACQUIRED
UPON EXERCISE OF
OPTIONS OR WARRANTS
COMMON SHARES COMMON SHARE EXERCISABLE PERCENT OF
NAME OF BENEFICIAL OWNER PRESENTLY HELD EQUIVALENTS(2) WITHIN 60 DAYS TOTAL CLASS(3)
------------------------ -------------- -------------- ------------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Charles M. Berger(4)...... 20,407(5) 22,191 550,000 592,598 1.99%
Arnold W. Donald.......... 0 0 0 0 (6)
Joseph P. Flannery........ 2,000 0 40,500 42,500 (6)
James Hagedorn(4)......... 10,087,041(7) 1,205 3,195,000(8) 13,283,246 42.51%
Albert E. Harris.......... 2,000(9) 715 18,000 20,715 (6)
John Kenlon............... 181,595(10) 0 183,142(11) 364,737 1.29%
Katherine Hagedorn
Littlefield............. 10,044,631(12) 0 3,000,000(13) 13,044,631 42.01%
G. Robert Lucas(4)........ 3,039(14) 455 70,000 73,494 (6)
Karen G. Mills............ 5,000 0 33,000 38,000 (6)
Jean H. Mordo(4).......... 40,000 0 185,000 225,000 (6)
Patrick J. Norton......... 5,100(15) 0 36,000 41,100 (6)
James L. Rogula(4)........ 2,092 0 60,000 62,092 (6)
John M. Sullivan.......... 1,500 0 35,000 36,500 (6)
L. Jack Van Fossen........ 1,200 715 36,500 38,415 (6)
John Walker, Ph.D......... 1,100 0 12,500 13,600 (6)
All directors and
executive officers as a
group (29 persons)...... 10,304,717(16) 25,359 4,836,257 15,166,333 46.04%
Hagedorn Partnership,
L.P..................... 10,044,631(17) 3,000,000(17) 13,044,631 42.01%
800 Port Washington
Blvd.
Port Washington, NY
11050
Perry Corp................ 1,813,432(18) 0 1,813,432(18) 6.46%
Richard C. Perry
599 Lexington Avenue
New York, NY 10022
</TABLE>
---------------
(1) Unless otherwise indicated, the beneficial owner has sole voting and
dispositive power as to all common shares reflected in the table.
(2) Includes common shares attributable to the named executive officer's
account relating to common share units under The Scotts Company Executive
Retirement Plan (the "Executive Retirement Plan"), and to the named
director's account holding common share units received in lieu of the
director's annual retainer under the Company's 1996 Stock Option Plan,
although under the terms of those plans, the named individual has no voting
or dispositive power with respect to the portion of his account attributed
to common shares of the Company. For this reason, the common share units
are not included in the computation of the "Percent of Class" figures in
the table.
(3) The percent of class is based upon the sum of (i) 28,049,151 common shares
outstanding on November 1, 2000, and (ii) the number of common shares as to
which the named person has the right to acquire beneficial ownership upon
the exercise of options or warrants exercisable within 60 days after
September 30, 2000.
3
<PAGE> 8
(4) Individual named in the Summary Compensation Table.
(5) Includes 2,207 common share units allocated to Mr. Berger's account and
held by the trustee under the RSP.
(6) Represents ownership of less than 1% of the outstanding common shares of
the Company.
(7) Mr. Hagedorn is a general partner of Hagedorn Partnership, L.P., a Delaware
limited partnership (the "Hagedorn Partnership"), and has shared voting and
dispositive power with respect to the common shares held by the Hagedorn
Partnership and those subject to the right to vote and right of first
refusal in favor of the Hagedorn Partnership. See note (17) below. He holds
33,700 common shares directly and 8,710 common share units are allocated to
his account and held by the trustee under the RSP.
(8) Mr. Hagedorn holds currently exercisable options to purchase 195,000 common
shares. As a general partner of the Hagedorn Partnership, he has shared
voting and dispositive power with respect to the warrants held by the
Hagedorn Partnership and those subject to the right to vote and right of
first refusal in favor of the Hagedorn Partnership.
(9) Includes 1,000 common shares owned by Mr. Harris' spouse.
(10) Includes 6,595 common share units allocated to Mr. Kenlon's account and
held by the trustee under the RSP.
(11) Mr. Kenlon owns warrants to purchase 6,642 common shares. Each of Mr.
Kenlon's four children beneficially owns warrants to purchase an additional
15,000 common shares, for which Mr. Kenlon disclaims beneficial ownership.
The Hagedorn Partnership has the right to vote, and a right of first
refusal with respect to, the Company's securities received by Mr. Kenlon
and his children pursuant to the Merger Agreement described below (175,000
common shares presently held by Mr. Kenlon and warrants to purchase an
aggregate of 66,642 common shares). See note (17) below. Mr. Kenlon also
holds currently exercisable options to purchase 116,500 common shares.
(12) Ms. Littlefield is a general partner of the Hagedorn Partnership and has
shared voting and dispositive power with respect to the common shares held
by the Hagedorn Partnership and those subject to the right to vote and
right of first refusal in favor of the Hagedorn Partnership. See note (17)
below.
(13) Ms. Littlefield, as a general partner of the Hagedorn Partnership, has
shared voting and dispositive power with respect to the warrants held by
the Hagedorn Partnership and those subject to the right to vote and right
of first refusal in favor of the Hagedorn Partnership.
(14) Includes 200 common shares owned by Mr. Lucas' spouse, 2,000 common shares
held in a broker retirement account on behalf of Mr. Lucas and 839 common
share units allocated to Mr. Lucas' account and held by the trustee under
the RSP.
(15) Includes 100 common shares owned by Mr. Norton's spouse.
(16) See notes (5) and (7) through (15) above and note (17) below. Also includes
common shares held by the respective spouses of executive officers of the
Company and by their children who live with them; and common share units
allocated to the accounts of executive officers and held by the trustee
under the RSP.
(17) The Hagedorn Partnership owns 9,869,631 common shares, warrants to purchase
2,933,358 common shares, and has the right to vote, and a right of first
refusal with respect to, the Company's securities received by Mr. Kenlon
and his children pursuant to the Merger Agreement described below. See note
(11) above. The general partners of the Hagedorn Partnership are Mr. James
Hagedorn, Ms. Katherine Hagedorn Littlefield, Mr. Paul Hagedorn, Mr. Peter
Hagedorn, Mr. Robert Hagedorn and Ms. Susan Hagedorn, each of whom is a
former shareholder of Stern's Miracle-Gro Products, Inc. ("Miracle-Gro
Products"). The general partners share voting and dispositive power with
respect to the securities held by the Hagedorn Partnership and those
subject to the right to vote and right of first refusal in favor of the
Hagedorn Partnership. Mr. James Hagedorn and Ms. Katherine Hagedorn
Littlefield are directors of the Company. Community Funds, Inc., a New York
not-for-profit corporation ("Community Funds"), is a limited partner of the
Hagedorn Partnership.
The Amended and Restated Agreement and Plan of Merger, dated as of May 19,
1995 (the "Merger Agreement"), among the Company, ZYX Corporation,
Miracle-Gro Products, Stern's Nurseries, Inc., Miracle-Gro Lawn Products
Limited, the Hagedorn Partnership, the general partners of the Hagedorn
4
<PAGE> 9
Partnership, Horace Hagedorn, Community Funds and John Kenlon, as amended
by the First Amendment to Amended and Restated Agreement and Plan of
Merger, dated as of October 1, 1999 (the "First Amendment"), limits the
ability of the Hagedorn Partnership, Community Funds, Horace Hagedorn and
John Kenlon (the "Miracle-Gro Shareholders") to acquire additional voting
securities of the Company. See "-- The Merger Agreement and the First
Amendment" below.
(18) Based on information contained in Amendment No. 2 to Schedule 13G, dated
February 14, 2000, as of December 31, 1999, Perry Corp., a New York
corporation, had sole voting and dispositive power with respect to
1,813,432 common shares of the Company. Perry Corp. is a private investment
firm, and Richard C. Perry is the President and sole stockholder of Perry
Corp.
THE MERGER AGREEMENT AND THE FIRST AMENDMENT
Under the terms of the First Amendment, the voting and transfer
restrictions on the Miracle-Gro Shareholders contained in the Merger Agreement
terminated as of October 1, 1999. The limitations on the ability of the
Miracle-Gro Shareholders to acquire additional voting securities of the Company
contained in the Merger Agreement also terminated as of October 1, 1999, except
for the restriction under which the Miracle-Gro Shareholders may not acquire,
directly or indirectly, beneficial ownership of Voting Stock (as that term is
defined in the Merger Agreement) representing more than 49% of the total voting
power of the outstanding Voting Stock, except pursuant to a tender offer for
100% of that total voting power, which tender offer is made at a price per share
which is not less than the market price per share on the last trading day before
the announcement of the tender offer and is conditioned upon the receipt of at
least 50% of the Voting Stock beneficially owned by shareholders of the Company
other than the Miracle-Gro Shareholders and their affiliates and associates.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
John Kenlon, a director, filed a late Form 4 reporting two sales of common
shares in November 1999. Michael P. Kelty, Ph.D., an executive officer, filed a
late Form 4 reporting one sale of common shares in November 1999. Michel J.
Farkouh, an executive officer, filed a late Form 4 reporting one purchase of
common shares in January 2000. In his Form 5 for the 2000 fiscal year, John
Walker, Ph.D., a director, reported late one purchase of common shares in
February 2000. In September 2000, Daniel C. McCafferty and Mark R. Schwartz,
each filed a late Form 3 reporting that they had been named as executive
officers in May 2000. Mr. Schwartz filed an amended Form 3 to report beneficial
ownership of non-derivative securities of the Company which were inadvertently
omitted from his original Form 3. In his Form 5 for the 2000 fiscal year, Mr.
Schwartz reported late five sales of common shares in May 2000. Nick G.
Kirkbride, an executive officer, filed a late Form 4 reporting one sale of
common shares in May 2000. In October 2000, Mr. Paul Hagedorn, Mr. Peter
Hagedorn, Mr. Robert Hagedorn and Ms. Susan Hagedorn filed late: a joint Form 3
reporting that they had become beneficial owners of more than 10% of the
Company's common shares on May 19, 1995, in their capacities as general partners
of the Hagedorn Partnership; a joint Form 4 reporting three acquisitions each of
derivative securities pursuant to capital contributions to the Hagedorn
Partnership in June 1995; a joint Form 4 reporting two transactions in August
1999 by the Hagedorn Partnership; and a joint Form 4 reporting one transaction
in October 1999 by the Hagedorn Partnership.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Pursuant to the Code of Regulations of the Company, the Board of Directors
has set the authorized number of directors at 12, divided into three classes
with regular three-year staggered terms. The election of each class of directors
is a separate election. The four Class III directors hold office for terms
expiring at the Annual Meeting, the four Class I directors hold office for terms
expiring in 2002, and the four Class II directors hold office for terms expiring
in 2003. Horace Hagedorn, a Class III director, retired from the Board of
Directors in July 2000, but remains Director Emeritus. Katherine Hagedorn
Littlefield, the daughter of Horace Hagedorn, was at the same time elected by
the Board to fill the remainder of his term.
5
<PAGE> 10
The Board of Directors proposes that the four nominees identified below be
elected to Class III for a new term to expire at the Annual Meeting of
Shareholders to be held in 2004 and until their successors are duly elected and
qualified, or until their earlier death, resignation or removal. The Board of
Directors has no reason to believe that any of the nominees will not serve if
elected, but if any of them should become unavailable or unable to serve as a
director, and if the Board designates a substitute nominee, the persons named in
the form of proxy will vote for the substitute nominee designated by the Board
of Directors.
The following information, as of December 1, 2000, with respect to the
principal occupation or employment, other affiliations and business experience
of each director during the last five years, has been furnished to the Company
by each director. Except where indicated, each director has had the same
principal occupation for the last five years.
NOMINEES STANDING FOR RE-ELECTION TO THE BOARD OF DIRECTORS
<TABLE>
<S> <C>
CLASS III -- TERMS TO EXPIRE AT THE 2004 ANNUAL MEETING
[JOSEPH P. FLANNERY Joseph P. Flannery, age 68, Director of the Company since
PHOTO] 1987 Mr. Flannery has been President, Chief Executive
Officer and Chairman of the Board of Directors of Uniroyal
Holding, Inc. since 1986. Mr. Flannery is also a director of
Ingersoll-Rand Company, Kmart Corporation, Newmont Mining
Corporation and ArvinMeritor Industries, Inc.
Committee Membership: Compensation and Organization (Chairman)
[ALBERT E. HARRIS PHOTO] Albert E. Harris, age 68, Director of the Company since 1997
Mr. Harris is co-founder and, effective July 1997, the
retired President of EDBH, Inc., a privately-held company
which develops international optical businesses. From 1988
until July 1997, he served as either Chairman or President
of that company, which established a chain of approximately
200 superoptical stores, operating under the "Vision
Express" name and located primarily in the United Kingdom.
Since 1992, Mr. Harris has also been a trustee of Fifth
Third Funds (previously named Fountain Square Funds), a
mutual fund family established by The Fifth Third Bank, and
is currently the Chairman of that group of funds. Fifth
Third Funds is registered as an investment company under the
Investment Company Act of 1940.
Committee Memberships: Nominating and Board Governance;
Compensation and Organization
[KATHERINE HAGEDORN Katherine Hagedorn Littlefield, age 45, Director of the
LITTLEFIELD PHOTO] Company since 2000 Ms. Littlefield was elected by the Board
in July 2000 to fill the vacancy created by the retirement
of Horace Hagedorn, her father, who founded Miracle-Gro
Products in 1950 and had served as a director of the Company
since 1995. Ms. Littlefield is the sister of James Hagedorn.
She is also the Chairman of the Hagedorn Partnership.
Committee Membership: None at this time
</TABLE>
6
<PAGE> 11
<TABLE>
<S> <C>
[PATRICK J. NORTON Patrick J. Norton, age 50, Director of the Company since 1998
PHOTO] Mr. Norton was named Executive Vice President and Chief
Financial Officer of the Company in May 2000, having served
as interim Chief Financial Officer since February 2000. From
1983 until February 1997, Mr. Norton was the President,
Chief Executive Officer and a director of Barefoot Inc., the
second largest lawn care company in the United States prior
to its acquisition in February 1997 by ServiceMaster. Mr.
Norton serves as an independent director for various
privately- held companies and partnerships, including
Svoboda Collins LLC, In The Swim, Inc. and Baird Capital
Partners.
Committee Membership: None at this time
DIRECTORS REMAINING IN OFFICE
CLASS I -- TERMS TO EXPIRE AT THE 2002 ANNUAL MEETING
[CHARLES M. BERGER Charles M. Berger, age 64, Chairman of the Board and Chief
PHOTO] Executive Officer of the Company since 1996
Mr. Berger was elected Chairman of the Board and Chief
Executive Officer of the Company in August 1996. From August
1996 until April 2000, he was also President of the Company.
Mr. Berger came to the Company from H.J. Heinz Company,
where, from October 1994 until August 1996, he served as
Chairman and Chief Executive Officer of Heinz India Pvt.
Ltd. (Bombay). During his 32-year career at Heinz, he also
held the positions of Chairman, President and Chief
Executive Officer of Weight Watchers International, a Heinz
affiliate; Managing Director and Chief Executive Officer of
Heinz-Italy (Milan), the largest Heinz profit center in
Europe; General Manager, Marketing, for all Heinz U.S.
grocery products; Marketing Director for Heinz U.K.
(London); and Director of Corporate Planning at Heinz World
Headquarters. He is also a former director of Miracle-Gro
Products.
Committee Membership: Finance
[JAMES HAGEDORN PHOTO] James Hagedorn, age 45, President and Chief Operating
Officer of the Company since April 2000, and Director of the
Company since 1995 Mr. Hagedorn was named President and
Chief Operating Officer of the Company in April 2000. From
December 1998 to April 2000, he was President, Scotts North
America. He was previously Executive Vice President, U.S.
Business Groups, of the Company from October 1996 to
December 1998. From May 1995 until October 1996, he served
as Senior Vice President, Consumer Gardens Group, of the
Company. He served as Executive Vice President of Scotts
Miracle-Gro Products, Inc. (now the Company's Consumer
Gardens Business Group) from May 1995 to August 2000, and
Executive Vice President of Miracle-Gro Products from 1989
until May 1995. Mr. Hagedorn is the son of Horace Hagedorn
and the brother of Katherine Hagedorn Littlefield.
Committee Memberships: Finance; Nominating and Board
Governance
</TABLE>
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<TABLE>
<S> <C>
[KAREN G. MILLS PHOTO] Karen G. Mills, age 47, Director of the Company since 1994
Since June 1999, Ms. Mills has been Managing Director and
Founder of Solera Capital, a private equity firm based in
New York. Prior to that, beginning in January 1993, she was
President of MMP Group, Inc., an advisory company serving
leveraged buy-out firms, company owners and chief executive
officers. Ms. Mills is currently a director of Arrow
Electronics, Inc., The Guardian Life Insurance Company and
Dry Bulk Shipping Inc., a privately-held company.
Committee Memberships: Finance; Nominating and Board
Governance (Chairman)
[JOHN WALKER, PH.D. PHOTO]
John Walker, Ph.D., age 60, Director of the Company since 1998
Since September 1994, Dr. Walker has been Chairman of Advent
International plc, a private equity management company based
in Boston, Massachusetts which manages over $3 billion on a
global basis.
Committee Memberships: Compensation and Organization; Finance
(Chairman)
CLASS II -- TERMS TO EXPIRE AT THE 2003 ANNUAL MEETING
[ARNOLD W. DONALD PHOTO] Arnold W. Donald, age 45, Director of the Company since 2000
Mr. Donald was elected by the Board in October 2000 to fill
the vacancy created by the retirement of Dr. James B Beard.
Since March 2000, Mr. Donald has been Chairman and Chief
Executive Officer of Merisant Company, a company that sells
health, nutritional and lifestyle products based on science
and technology. From January 1998 to March 2000, he was
Senior Vice President of Monsanto Company (n/k/a Pharmacia
Corporation), with responsibility for growth, globalization
and technology initiatives. From February 1997 to January
1998, he was Co-President, Agriculture Sector, of Monsanto.
From January 1995 to February 1997, he was President, Crop
Protection Unit, of Monsanto. He serves as a director of
Crown Cork & Seal Company, Belden, Inc. and Oil- Dri
Corporation of America. In 1998, he was appointed by
President Clinton to serve on the President's Export Council
for international trade. He is also a member of the
Executive Leadership Council.
Committee Membership: Audit
</TABLE>
8
<PAGE> 13
<TABLE>
<S> <C>
[JOHN KENLON PHOTO] John Kenlon, age 69, Director of the Company since 1995
Mr. Kenlon retired as an officer of the Company effective
December 31, 1999. He was Senior Vice President, Consumer
Gardens Group, of the Company, from May 1999 to December
1999. He was President, Consumer Gardens Group, of the
Company from December 1996 until May 1999. He was previously
President and Chief Operating Officer of Scotts Miracle-Gro
Products, Inc. (now the Company's Consumer Gardens Business
Group) from May 1995 to December 1999. Mr. Kenlon was the
President of Miracle-Gro Products from 1985 until May 1995.
Mr. Kenlon began his association with the Miracle-Gro
companies in 1960.
Committee Membership: None at this time
[JOHN M. SULLIVAN PHOTO] John M. Sullivan, age 65, Director of the Company since 1994
Mr. Sullivan is Chairman of the Board of Silver Cinemas
International, Inc., a privately-held company. He also
serves as a director of Atlas Copco N.A., a company traded
on the Stockholm Stock Exchange.
Committee Memberships: Audit; Compensation and
Organization
[L. JACK VAN FOSSEN L. Jack Van Fossen, age 63, Director of the Company since
PHOTO] 1993
Mr. Van Fossen was Chief Executive Officer and President of
Red Roof Inns, Inc., an owner and operator of motels, from
1991 until 1995. Since July 1988, Mr. Van Fossen has served
as President of Nessoff Corporation, a privately-held
investment company.
Committee Membership: Audit (Chairman)
</TABLE>
RECOMMENDATION AND VOTE
Under Ohio law and the Company's Code of Regulations, the four nominees for
election in Class III receiving the greatest number of votes will be elected.
Common shares represented by your proxy will be voted FOR the election of the
above-named nominees unless authority to vote for one or more nominees is
withheld. Common shares as to which the authority to vote is withheld will be
counted for quorum purposes but will not be counted toward the election of
directors or toward the election of the individual nominees specified on the
form of proxy.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
ABOVE-NAMED CLASS III DIRECTOR NOMINEES.
COMMITTEES AND MEETINGS OF THE BOARD
The Board of Directors held six regularly scheduled or special meetings
during the 2000 fiscal year. The Board of Directors has four standing
committees: the Audit Committee; the Compensation and Organization Committee;
the Finance Committee; and the Nominating and Board Governance Committee. Each
current member of the Board attended at least 75% of the aggregate of the total
number of meetings of the Board of Directors and of the committees on which he
or she served during the 2000 fiscal year.
Audit Committee. The Audit Committee reviews and approves the scope and
results of any outside audit of the Company and the fees therefor and makes
recommendations to the Board of Directors or management concerning auditing and
accounting matters and the selection of independent auditors. The Audit
Committee's
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responsibilities are outlined further in its written charter attached as Annex A
to this Proxy Statement. Each member of the Audit Committee qualifies as
independent under the rules of the New York Stock Exchange (the "NYSE"). The
Audit Committee met six times during the 2000 fiscal year. The Audit Committee's
report relating to our 2000 fiscal year appears on page 26.
Compensation and Organization Committee. The Compensation and Organization
Committee reviews, considers and acts upon matters concerning salary and other
compensation and benefits of all executive officers and certain other employees
of the Company. In addition, it acts upon all matters concerning, and exercises
such authority as is delegated to it under the provisions of, any benefit,
retirement or pension plan maintained by the Company. This Committee also
advises the Board regarding executive officer organizational issues and
succession plans. The Compensation and Organization Committee met five times
during the 2000 fiscal year. The Compensation and Organization Committee's
report on executive compensation appears on page 22.
Finance Committee. The Finance Committee provides oversight of the
financial plans and policies of the Company and its subsidiaries by reviewing
annual business plans; operating performance goals; investment, dividend payment
and stock repurchase programs; financial forecasts; and general corporate
financing matters. The Finance Committee met five times during the 2000 fiscal
year.
Nominating and Board Governance Committee. The Nominating and Board
Governance Committee recommends policies on the composition of the Board of
Directors and nominees for membership on the Board. This Committee has not
established a procedure for shareholders to recommend nominees to the Board for
consideration at the Annual Meeting. Rather, it conducts its own search for
available, qualified nominees. The Nominating and Board Governance Committee met
six times during the 2000 fiscal year.
COMPENSATION OF DIRECTORS
Each director of the Company who is not an employee of the Company (the
"Non-Employee Directors") receives a $30,000 annual retainer for Board and
committee meetings plus reimbursement of all reasonable travel and other
expenses of attending such meetings. Non-Employee Directors may elect to receive
all or a portion, in 25% increments, of their annual retainer in cash or in
common share units. If common share units are elected, the Non-Employee Director
receives a number of common share units determined by dividing the chosen dollar
amount, by the fair market value of the Company's common shares on the first
business day following the date of the annual meeting of shareholders. Final
distributions are made in cash or common shares upon the date that the
Non-Employee Director ceases to be a member of the Board, or upon a "Change in
Control" (as defined in the Company's 1996 Stock Option Plan), whichever is
earlier. Distributions may be made either in a lump sum or in installments over
a period of up to ten years.
Non-Employee Directors also receive an annual grant, on the first business
day following the date of each annual meeting of shareholders, of options to
purchase 5,000 common shares at an exercise price equal to the fair market value
of the common shares on the date of the grant. Non-Employee Directors who are
members of one or more Board committees receive options to purchase an
additional 500 common shares for each committee on which they serve (with
committee chairs receiving options to purchase a total of an additional 1,500
common shares for each committee they chair). Options granted to a Non-Employee
Director become exercisable six months after the date of grant and remain
exercisable until the earlier to occur of (i) the tenth anniversary of the date
of grant, or (ii) the first anniversary of the date the Non-Employee Director
ceases to be a member of the Company's Board of Directors, except that if the
Non-Employee Director ceases to be a member of the Board after (a) having been
convicted of, or pled guilty or nolo contendere to, a felony, his or her options
will be canceled on the date he or she ceases to be a director, or (b) having
retired, any outstanding options (whether or not then exercisable) may be
exercised in full at any time prior to the expiration of the term of the options
or within five years following retirement, whichever period is shorter.
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<PAGE> 15
PROPOSAL NO. 2
AMENDMENT OF OUR AMENDED ARTICLES OF INCORPORATION TO RETURN THE CLASS A
CONVERTIBLE PREFERRED STOCK TO THE STATUS OF AUTHORIZED BUT UNISSUED, "BLANK
CHECK" PREFERRED SHARES
PURPOSE OF PROPOSAL
Article FOURTH of our existing Amended Articles of Incorporation sets forth
the terms of our Class A Convertible Preferred Stock. This stock was issued in
connection with the merger transactions with the Miracle-Gro companies in 1995.
Effective as of October 1, 1999, all outstanding shares of the Class A
Convertible Preferred Stock were converted into common shares. According to
Section 8 of Article FOURTH, upon conversion, the shares of Class A Convertible
Preferred Stock returned to the status of authorized but unissued shares of
Class A Convertible Preferred Stock. Because the Class A Convertible Preferred
Stock contained rights, preferences and limitations that were specifically
negotiated in connection with the Miracle-Gro merger transactions, it provides
us with little or no flexibility or usefulness in its present form.
Rather than return the converted shares of Class A Convertible Preferred
Stock to the status of authorized but unissued shares of Class A Convertible
Preferred Stock, the Board has determined that the Amended Articles of
Incorporation should be amended to return all 195,000 shares of Class A
Convertible Preferred Stock to the status of authorized but unissued preferred
shares.
If the shareholders adopt this proposal, the 195,000 preferred shares will
be available for issuance from time to time for such purposes and consideration
as the Board may approve. No further vote of our shareholders would be required,
except as provided by Ohio law or the rules of the NYSE. The availability of
preferred shares for issuance without the delay and expense of obtaining the
approval of shareholders at a special meeting, should afford us the means of
raising additional capital. In addition, if need be, the preferred shares could
be utilized by the Board of Directors to assist the Company in defending against
any potential hostile or abusive takeover threats.
The preferred shares would be "blank check" preferred stock, and the Board,
in its sole discretion, could issue one or more series of preferred shares and
could determine the rights, preferences and limitations of each series. The
rights, preferences and limitations that the Board could determine by resolution
without further shareholder action include dividend rates, liquidation
preferences, redemption rights and conversion rights. In addition, as a result
of a recent change in Ohio law, the Board could also determine voting rights.
The Board would have sole authority to issue any preferred shares to whomever
and for whatever purposes it deems to be appropriate and in, or not opposed to,
the best interests of the Company. The Board of Directors has no present
intention of issuing any preferred shares.
The proposed amendment is not a part of a plan by the Company to adopt
other measures intended to have or having potential anti-takeover effects. The
Company's Amended Articles of Incorporation and Code of Regulations currently
include the following provisions which may be considered to have anti-takeover
effects: (a) the classification of the Board of Directors of the Company into
three classes of directors so that each director serves a three-year term, with
one class being elected each year; (b) the elimination of cumulative voting in
the election of directors; (c) the requirement of the affirmative vote of
two-thirds of the voting power of the Company as a condition to certain major
corporate transactions (e.g., adoption of certain amendments to the Company's
Amended Articles of Incorporation, approval of a merger or consolidation
involving the Company, approval of a combination or majority share acquisition
involving the issuance of shares of the Company, approval of a sale, exchange,
transfer or other disposition of all or substantially all of the Company's
assets, or approval of the dissolution of the Company); and (d) certain
procedural requirements, including provisions limiting who may call special
shareholder meetings.
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<PAGE> 16
PROPOSAL
In order to return the Class A Convertible Preferred Stock to the status of
authorized but unissued preferred shares, the rights, preferences and
limitations of which may subsequently be designated by action of the Board of
Directors without further shareholder vote, the Board of Directors of the
Company has approved, and recommends that the shareholders of the Company adopt,
an amendment to our Amended Articles of Incorporation to delete the existing
Article FOURTH in its entirety and replace it with the following:
Article FOURTH: The authorized number of shares of
the corporation shall be One Hundred Million, One Hundred
and Ninety-Five Thousand (100,195,000), consisting of One
Hundred Million (100,000,000) common shares, each without
par value, and One Hundred and Ninety-Five Thousand
(195,000) preferred shares, each without par value.
The directors of the corporation are authorized to
adopt amendments to the Amended Articles of Incorporation
in respect of any unissued preferred shares and thereby to
fix or change, to the fullest extent now or hereafter
permitted by Ohio law: the division of such shares into
series and the designation and authorized number of shares
of each series; the dividend or distribution rights;
dividend rate; liquidation rights, preferences and price;
redemption rights and price; sinking fund requirements;
voting rights; pre-emptive rights; conversion rights;
restrictions on issuance of shares; and such other rights,
preferences and limitations as shall not be inconsistent
with this Article FOURTH.
RECOMMENDATION AND VOTE
The proposed amendment to Article FOURTH of our Amended Articles of
Incorporation requires the affirmative vote of the holders of a majority of our
outstanding common shares on the Record Date. Proxies will be voted for adoption
of the amendment unless contrary instructions are set forth on your proxy.
Abstentions and broker non-votes will have the same legal effect as a vote
against the proposed amendment. If adopted by the shareholders, the proposed
amendment to Article FOURTH of the Amended Articles of Incorporation will become
effective as soon as it is filed with the Secretary of State of the State of
Ohio, which the Company expects to occur as soon as practical after the Annual
Meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF THE AMENDMENT TO
ARTICLE FOURTH OF OUR AMENDED ARTICLES OF INCORPORATION.
PROPOSAL NO. 3
Technology, and particularly the Internet or worldwide web, has
dramatically changed the way people communicate. Traditional methods of
communication involve paper delivery of documents and "physical" meeting places.
However, electronic communication is rapidly replacing or supplementing paper
document delivery, and companies now have the capability to conduct meetings and
conferences through Internet-driven technologies. The following proposals are
designed to allow us to take advantage of these new technologies in
communicating with our shareholders.
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<PAGE> 17
AMENDMENT OF OUR CODE OF REGULATIONS TO:
(i) PERMIT APPOINTMENT OF SHAREHOLDER PROXIES
IN ANY MANNER PERMITTED BY OHIO LAW;
(ii) PERMIT SHAREHOLDERS TO RECEIVE NOTICE
OF SHAREHOLDER MEETINGS IN ANY MANNER
PERMITTED BY OHIO LAW; AND
(iii) ALLOW OUR SHAREHOLDER MEETINGS
TO BE HELD IN ANY MANNER PERMITTED BY OHIO LAW
(i) AMENDMENT OF OUR CODE OF REGULATIONS TO PERMIT APPOINTMENT OF
SHAREHOLDER PROXIES IN ANY MANNER PERMITTED BY OHIO LAW.
Section 1.10 of the Company's Code of Regulations presently allows a
shareholder to vote by proxy, if the proxy appointment is in writing and signed
by the shareholder. Effective September 13, 1999, the Ohio General Corporation
Law was amended to expand the methods that a shareholder can use to appoint a
proxy. The Ohio General Corporation Law now permits a shareholder to appoint a
proxy by any verifiable communication authorized by the person appointing the
proxy. Any transmission that creates a record capable of authentication that
appears to have been transmitted by the person appointing a proxy is permitted,
and would include electronic mail and telephone, as well as traditional written
proxies. The Company's Code of Regulations currently does not expressly provide
for shareholder appointment of a proxy by electronic mail, telephone or other
electronic media. The amendment to Section 1.10 would clarify and confirm that
shareholders are expressly authorized to utilize the more modern forms of proxy
appointment now permitted by the Ohio General Corporation Law.
The Board of Directors of the Company has approved, and recommends that the
shareholders of the Company adopt, an amendment to Section 1.10 of the Code of
Regulations that would permit a shareholder to use electronic mail, telephone
and other methods to appoint a proxy. The proposed amendment would expressly
provide that a shareholder could appoint a proxy by any method authorized by
Ohio law.
The text of Section 1.10 would read as follows:
Section 1.10. Proxies. At meetings of the
shareholders, any shareholder of record entitled to vote
thereat may be represented and may vote by proxy or
proxies appointed by an instrument in writing signed by
such shareholder or appointed in any other manner
permitted by Ohio law. Any such instrument in writing or
record of any such appointment shall be filed with or
received by the secretary of the meeting before the person
holding such proxy shall be allowed to vote thereunder. No
appointment of a proxy is valid after the expiration of
eleven months after it is made unless the writing or other
communication which appoints such proxy specifies the date
on which it is to expire or the length of time it is to
continue in force.
(ii) AMENDMENT OF OUR CODE OF REGULATIONS TO PERMIT SHAREHOLDERS TO RECEIVE
NOTICE OF SHAREHOLDER MEETINGS IN ANY MANNER PERMITTED BY OHIO LAW.
Section 1.04 of the Company's Code of Regulations presently requires that
written notice of shareholders' meetings be given either by "personal delivery
or by mail". Amendments to the Ohio General Corporation Law are being considered
which would expand the methods by which a shareholder may receive notice of
meetings, to include notices via personal delivery, mail, overnight delivery
service, or any other means of communication authorized by the shareholder to
whom the notice is given. Under federal securities laws and regulations,
electronic delivery of proxy soliciting materials (including meeting notices)
may be substituted for paper delivery if a shareholder consents to the
electronic delivery. The Company's Code of Regulations currently does not
authorize a shareholder to receive notices by electronic mail or media, should
the Ohio General Corporation Law permit that form of delivery. The amendment to
Section 1.04 would allow shareholders to receive notices in any manner permitted
by Ohio law.
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<PAGE> 18
The Board of Directors of the Company has approved, and recommends that the
shareholders of the Company adopt, an amendment to Section 1.04 of the Code of
Regulations that would allow notices of meetings to shareholders to be given in
any manner permitted by Ohio law.
The text of Section 1.04 would read as follows:
Section 1.04. Notice of Meetings. (A) Written notice
stating the time, place, if any, and purposes of a meeting
of the shareholders, and any other matters related to the
conduct of the meeting required by Ohio law to be
specified, shall be given by personal delivery, by mail or
by any other means of delivery or communication permitted
by Ohio law. Any such notice shall be given not less than
seven nor more than sixty days before the date of the
meeting, (1) to every shareholder of record entitled to
notice of the meeting, (2) by or at the direction of the
chairman of the board, the president or the secretary. If
mailed or sent by a delivery service permitted by Ohio
law, the notice shall be sent to the shareholder at the
shareholder's address as it appears on the records of the
corporation. If transmitted by another means of
communications in the manner permitted by Ohio law, the
notice shall be transmitted to the address furnished by
the shareholder for such transmissions. Notice of
adjournment of a meeting need not be given if the time and
place, if any, to which it is adjourned and any other
matters related to the conduct of the adjourned meeting
required by Ohio law to be specified, shall be fixed and
announced at such meeting. In the event of a transfer of
shares after the record date for determining the
shareholders who are entitled to receive notice of a
meeting of shareholders, it shall not be necessary to give
notice to the transferee. Nothing herein contained shall
prevent the setting of a record date in the manner
provided by law, the Articles or the Regulations for the
determination of shareholders who are entitled to receive
notice of or to vote at any meeting of shareholders or for
any purpose required or permitted by law.
(B) Following receipt by the president or the
secretary of a request in writing, specifying the purpose
or purposes for which the persons properly making such
request have called a meeting of shareholders, delivered
either in person or by registered mail to such officer by
any persons entitled to call a meeting of shareholders,
such officer shall cause to be given to the shareholders
entitled to notice, notice of a meeting to be held on a
date not less than seven nor more than sixty days after
the receipt of the request, as the officer may fix. If the
notice is not given within fifteen days after the receipt
of the request by the president or the secretary, then,
and only then, the persons properly calling the meeting
may fix the time of meeting and give notice on the time of
meeting in accordance with the provisions of the
Regulations.
(iii) AMENDMENT OF OUR CODE OF REGULATIONS TO ALLOW OUR SHAREHOLDER
MEETINGS TO BE HELD IN ANY MANNER PERMITTED BY OHIO LAW.
Section 1.03 of the Company's Code of Regulations presently provides that
meetings of shareholders must be held at a specified physical "place" within or
outside of the State of Ohio. Amendments to the Ohio General Corporation Law are
being considered which would expand the methods by which shareholder meetings
may be conducted, including through communications equipment or via worldwide
web or Internet simulcasting, called "webcasting". In any case, shareholders
would have the opportunity to participate in the meeting and to vote on matters
submitted to the shareholders. Even if individual shareholders do not have
access to the Internet, locations would be identified, such as the Company's
principal business offices, where free access to the broadcast would be offered
to shareholders. The amendment to Section 1.03 would allow meetings to be held
in any manner authorized by the Board of Directors and permitted by Ohio law.
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<PAGE> 19
The Board of Directors of the Company has approved, and recommends that the
shareholders of the Company adopt, an amendment to Section 1.03 of the Code of
Regulations that would allow meetings of shareholders to be held in any manner
authorized by the Board of Directors and permitted by Ohio law.
The text of Section 1.03 would read as follows:
Section 1.03. Place of Meetings. Meetings of
shareholders may be held either within or outside the
State of Ohio. Meetings of shareholders may be held in any
manner or place determined by the Board of Directors and
permitted by Ohio law.
RECOMMENDATION AND VOTE
The proposed amendments to Sections 1.10, 1.04 and 1.03 of our Code of
Regulations require the affirmative vote of the holders of a majority of our
outstanding common shares on the Record Date. Proxies will be voted for adoption
of the amendments unless contrary instructions are set forth on your proxy.
Abstentions and broker non-votes will have the same legal effect as a vote
against the proposed amendments. If adopted by the shareholders, the proposed
amendments to the Code of Regulations will become effective immediately without
any additional action by the Company.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF THE AMENDMENTS TO
SECTIONS 1.10, 1.04 AND 1.03 OF OUR CODE OF REGULATIONS.
PROPOSAL NO. 4
AMENDMENT OF OUR CODE OF REGULATIONS
TO CLARIFY AND SEPARATE THE ROLES OF THE OFFICERS
PURPOSE OF PROPOSAL
Sections 3.03 and 3.04 of our Code of Regulations provide that the Chairman
of the Board of the Company must also be its Chief Executive Officer and that
the President of the Company must also be its Chief Operating Officer. We would
like our Board of Directors to have the flexibility to assign separate titles to
senior management of the Company, if the Company's needs would be best served by
members of management having separate areas of responsibility.
PROPOSAL
We are asking our shareholders to adopt amendments to our Code of
Regulations to create a separate office for the Chief Executive Officer and to
clarify the duties of each of the Chairman of the Board and the President.
Specifically, our Board of Directors proposes that Article THREE of our Code of
Regulations be amended to: (i) insert the words "chief executive officer,"
between the words "chairman of the board," and "a president" in Section 3.01;
(ii) delete current Sections 3.03 and 3.04 and replace them in their entirety
with the following Sections 3.03, 3.04 and 3.05; and (iii) renumber existing
Sections 3.05, 3.06 and 3.07 as Sections 3.06, 3.07 and 3.08, respectively.
The text of new Sections 3.03, 3.04 and 3.05 would read as follows:
Section 3.03. Duties of the Chairman of the
Board. The chairman of the board, if there shall be such
an officer, shall preside at all meetings of the directors
and of the shareholders. He shall perform such other
duties and exercise such other powers as the directors
shall from time to time assign to him.
Section 3.04. Duties of the Chief Executive
Officer. The chief executive officer of the corporation
shall have, subject to the control of the directors,
general supervision and management over the business of
the corporation and over its officers and employees. The
chief executive officer shall perform such other duties
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<PAGE> 20
and exercise such other powers as the directors may from
time to time assign to him.
Section 3.05. Duties of the President. The president
of the corporation shall have, subject to the control of
the directors and, if there be one, the chief executive
officer, general and active supervision and management
over the business of the corporation and over its officers
and employees. The president shall perform such other
duties and exercise such other powers as the directors may
from time to time assign to him.
RECOMMENDATION AND VOTE
The proposed amendments to Article THREE of our Code of Regulations require
the affirmative vote of the holders of a majority of our outstanding common
shares on the Record Date. Proxies will be voted for adoption of the amendments
unless contrary instructions are set forth on your proxy. Abstentions and broker
non-votes will have the same legal effect as a vote against the proposed
amendments. If adopted by the shareholders, the proposed amendments to the Code
of Regulations will become effective immediately without any additional action
by the Company.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF THE AMENDMENTS TO
ARTICLE THREE OF OUR CODE OF REGULATIONS.
PROPOSAL NO. 5
AMENDMENT OF OUR CODE OF REGULATIONS
TO PROVIDE FOR BOARD COMMITTEES
OF ONE OR MORE DIRECTORS
PURPOSE OF PROPOSAL
Section 2.10 of the Company's Code of Regulations provides that committees
of directors must consist of not less than three directors. Effective March 17,
2000, the Ohio General Corporation Law was amended to permit committees to
consist of one or more directors. The proposed amendment to Section 2.10 would
allow committees of our Board of Directors to consist of one or more directors,
subject to any other requirements as to the number of directors serving on a
committee as may be imposed by law or the rules and regulations of the
Securities and Exchange Commission (the "SEC"), the NYSE or any other regulatory
authority.
PROPOSAL
The Board of Directors of the Company has approved, and recommends that the
shareholders of the Company adopt, an amendment to Section 2.10 of the Code of
Regulations that would allow committees of directors to consist of one or more
directors.
The text of Section 2.10 would read as follows:
Section 2.10. Executive and Other Committees. The
directors may create an executive committee or any other
committee of directors, to consist of one or more
directors (subject to any other requirements as to the
number of directors serving on a committee that may be
imposed by law or the rules and regulations of the
Securities and Exchange Commission or any other regulatory
authority), and may authorize the delegation to such
executive committee or other committees, of any of the
authority of the directors, however conferred, other than
that of filling vacancies among the directors or in the
executive committee or in any other committee of the
directors.
Such executive committee or any other committee of
directors shall serve at the pleasure of the directors,
shall act only in the intervals between meetings of the
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<PAGE> 21
directors, and shall be subject to the control and
direction of the directors. Such executive committee or
other committee of directors may act by a majority of its
members at a meeting or by a writing or writings signed by
all of its members.
Any act or authorization of any act by the executive
committee or any other committee within the authority
delegated to it shall be as effective for all purposes as
the act or authorization of the directors. No notice of a
meeting of the executive committee or of any other
committee of directors shall be required. A meeting of the
executive committee or of any other committee of directors
may be called only by the chairman of the board, chief
executive officer or president or by a member of such
executive or other committee of directors. Meetings of the
executive committee or of any other committee of directors
may be held through any communications equipment if all
persons participating can hear each other and
participation in such a meeting shall constitute presence
thereat.
RECOMMENDATION AND VOTE
The proposed amendment to Section 2.10 of our Code of Regulations requires
the affirmative vote of the holders of a majority of our outstanding common
shares on the Record Date. Proxies will be voted for adoption of the amendment
unless contrary instructions are set forth on your proxy. Abstentions and broker
non-votes will have the same legal effect as a vote against the proposed
amendment. If adopted by the shareholders, the proposed amendment to the Code of
Regulations will become effective immediately without any additional action by
the Company.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF THE AMENDMENT TO
SECTION 2.10 OF OUR CODE OF REGULATIONS.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND OTHER COMPENSATION
The following table shows, for the fiscal years ended September 30, 2000,
1999 and 1998, compensation awarded or paid to, or earned by, the Company's
Chief Executive Officer and the four other most highly compensated executive
officers of the Company, listed by title.
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
FISCAL --------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(1) OPTIONS(#)(2) COMPENSATION($)
--------------------------- ------ ------------- ----------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Charles M. Berger................. 2000 $512,900 $598,015 0 $ 26,038(4)
Chairman of the Board and 1999 $512,855 $634,605 150,000 $ 12,074(4)
Chief Executive Officer(3) 1998 $461,290 $382,536 150,000 $ 28,189(5)
James Hagedorn.................... 2000 $415,542 $343,598 0 $ 38,704(4)
President and Chief 1999 $369,000 $421,254 80,000 $ 11,744(4)
Operating Officer(6) 1998 $294,667 $218,003 90,000 $ 14,679(4)
Jean H. Mordo..................... 2000 $364,000 $152,270 0 $ 27,452(4)
Former Group Executive Vice 1999 $364,000 $326,063 60,000 $ 11,741(4)
President, International(7) 1998 $312,750 $186,708 60,000 $ 29,647(8)
James L. Rogula................... 2000 $287,917 $204,349 0 $315,119(10)
Group Executive Vice President, 1999 $257,748 $204,311 0 $ 91,960(11)
North American Business
Groups(9) 1998 $235,850 $178,486 25,000 $ 14,848(4)
G. Robert Lucas................... 2000 $309,460 $235,796 1,600(12) $ 32,257(4)
Executive Vice President,
General 1999 $277,749 $255,469 15,000 $ 25,048(4)
Counsel and Corporate
Secretary(13) 1998 $242,830 $145,789 25,000 $ 24,005(4)
</TABLE>
---------------
(1) Includes compensation which may be deferred under the RSP and the Executive
Retirement Plan.
(2) These numbers represent options granted pursuant to the Company's 1996
Stock Option Plan. See the table under "-- Option Exercises in 2000 Fiscal
Year and Option Values at End of 2000 Fiscal Year" for more detailed
information on these options.
(3) Mr. Berger was named Chairman and Chief Executive Officer of the Company in
August 1996. From August 1996 until April 2000, he also served as President
of the Company.
(4) Aggregate contributions made by the Company to the RSP and the Executive
Retirement Plan.
(5) Includes a $13,281 reimbursement for taxable relocation expense, and
$14,908 of aggregate contributions made by the Company to the RSP and the
Executive Retirement Plan.
(6) Mr. Hagedorn was named President and Chief Operating Officer of the Company
in April 2000. He was President, Scotts North America, of the Company from
December 1998 to April 2000, and Executive Vice President, U.S. Business
Groups, of the Company from October 1996 to December 1998.
(7) Mr. Mordo was named Group Executive Vice President, International, of the
Company in May 1999. He was Executive Vice President and Chief Financial
Officer of the Company from January 1997 to May 1999. Mr. Mordo's
employment as an executive officer of the Company terminated effective
October 13, 2000. Pursuant to an agreement dated October 18, 2000, and in
accordance with his employment agreement which was effective May 1, 1997,
Mr. Mordo elected a discounted, lump sum payment equal to twenty-four
months of base salary and an amount equal to the greater of his target
percentage or fiscal year 2000 bonus under The Scotts Company Executive
Annual Incentive Plan (the "Executive Incentive Plan"). In addition, as
consideration for the recision of an option to purchase 35,000 common
shares that would have vested on October 20, 2000, the Company agreed to
pay Mr. Mordo, on or before January 31, 2001, an amount equal to the
difference between the exercise price for the common shares covered by the
option and the highest closing price of the common shares on the NYSE
between October 16, 2000 and January 12, 2001. Also, Mr. Mordo must
exercise any vested options that he owns by February 2, 2001, when such
options will expire.
18
<PAGE> 23
(8) Includes a $15,911 reimbursement for taxable relocation expense, and
$13,736 of aggregate contributions made by the Company to the RSP and the
Executive Retirement Plan.
(9)Mr. Rogula was named Group Executive Vice President, North American Business
Groups, of the Company in February 2000. He was previously Senior Vice
President, Consumer Ortho Business Group, from October 1998 to February
2000. Prior thereto, he had been Senior Vice President, Consumer Lawns
Group, from October 1996 to October 1998.
(10)Includes a $242,762 reimbursement for taxable relocation expense, a $28,480
tax equalization payment and a housing allowance of $18,326, each in
connection with a temporary relocation to California, and $25,551 of
aggregate contributions made by the Company to the RSP and the Executive
Retirement Plan.
(11)Includes a $28,760 reimbursement for taxable relocation expense, a $7,879
tax equalization payment and a housing allowance of $46,479, each in
connection with a temporary relocation to California, and $8,842 of
aggregate contributions made by the Company to the RSP and the Executive
Retirement Plan.
(12) This number represents cash performance units ("CPUs") granted under the
Scotts Millenium Growth Plan, which are valued initially at $100 per unit.
Cash value of CPUs can increase or decrease by the end of a three-year
performance cycle ending September 30, 2002, at which time the Company's
cumulative three-year earnings per share ("eps") performance target will be
compared to actual Company performance, to determine the performance unit
value. The payout will be: $100 per CPU, if cumulative eps is $8.27; the
maximum award, if cumulative eps is $9.04 or above; and no award, if
cumulative eps is less than $7.90. The $100 per CPU award is adjusted
downward for a range of cumulative eps between $7.90 to $8.26, and upward
for a range of cumulative eps between $8.28 to $9.03. The Scotts Millennium
Growth Plan was terminated in November 2000.
(13) Mr. Lucas was named Executive Vice President in February 1999, and General
Counsel and Corporate Secretary in May 1997. He was a Senior Vice President
of the Company from May 1997 to February 1999.
GRANTS OF OPTIONS IN 2000 FISCAL YEAR
There were no stock options granted during the 2000 fiscal year to any of
the individuals named in the Summary Compensation Table. The Company has never
granted stock appreciation rights.
OPTION EXERCISES IN 2000 FISCAL YEAR AND OPTION VALUES AT END OF 2000 FISCAL
YEAR
The following table sets forth information with respect to unexercised
options held as of the end of the 2000 fiscal year by each of the individuals
named in the Summary Compensation Table. None of those individuals exercised
options during the 2000 fiscal year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
NUMBER UNDERLYING UNEXERCISED IN-THE-MONEY
OF SECURITIES OPTIONS AT OPTIONS AT
UNDERLYING FISCAL YEAR-END(#)(1) FISCAL YEAR-END($)(2)
OPTIONS VALUE --------------------------- ---------------------------
NAME EXERCISED REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles M. Berger..... 0 -- 475,000 75,000 $4,453,125 $525,000
James Hagedorn........ 0 -- 150,000 170,000 $2,097,375 $466,875
Jean H. Mordo......... 0 -- 150,000 120,000 $1,837,500 $329,375
James L. Rogula....... 0 -- 50,000 25,000 $ 720,000 $120,625
G. Robert Lucas....... 0 -- 70,000 40,000 $ 507,500 $ 50,625
</TABLE>
---------------
(1) In the event of a "Change in Control" (as defined in the 1996 Stock Option
Plan), each optionee will be permitted, in his discretion, to surrender any
option or portion thereof in exchange for a payment in cash of an amount
equal to the excess of the highest price paid for common shares of the
Company during the preceding 30-day period or offered in conjunction with
the Change in Control transaction, over the exercise price for such option.
Notwithstanding the foregoing, if the Compensation and Organization
Committee determines that the optionee will receive a new award (or have the
options honored or assumed) in a manner which preserves its value and
eliminates the risk that the value of the award will be forfeited due to
involuntary termination, no cash payment will be made as a result of a
Change in Control. If any cash
19
<PAGE> 24
payment is to be made with respect to options granted within six months of
the date on which a Change in Control occurs, the cash payment will not
occur unless and until the cash payment may be made without subjecting the
optionee to potential liability under Section 16(b) of the Securities
Exchange Act of 1934 by reason of such cash payment. In the event of
termination of employment by reason of retirement, long-term disability or
death, the options may thereafter be exercised in full for a period of five
years, subject to the stated term of the options. The options are forfeited
if the optionee's employment is terminated for cause. In the event an
optionee's employment is terminated for any reason other than retirement,
long-term disability, death or for cause, any exercisable options held by
him at the date of termination may be exercised for a period of 90 days,
subject to the stated terms of the options.
(2) "Value of Unexercised In-the-Money Options at Fiscal Year-End" is based upon
the fair market value of the Company's common shares on September 30, 2000
($33.50) less the exercise price of in-the-money options at the end of the
2000 fiscal year.
PENSION PLANS
The Company maintains a tax-qualified, non-contributory defined benefit
pension plan (the "Pension Plan"). Eligibility for and accruals under the
Pension Plan were frozen as of December 31, 1997.
Monthly benefits under the Pension Plan upon normal retirement (age 65) are
determined under the following formula:
(a) (i) 1.5% of the individual's highest average annual compensation for
60 consecutive months during the ten-year period ending December
31, 1997; times
(ii) years of benefit service through December 31, 1997; reduced by
(b) (i) 1.25% of the individual's primary Social Security benefit (as of
December 31, 1997); times
(ii) years of benefit service through December 31, 1997.
Compensation includes all earnings plus 401(k) contributions and salary
reduction contributions for welfare benefits, but does not include earnings in
connection with foreign service, the value of a company car or separation or
other special allowances. An individual's primary Social Security benefit is
based on the Social Security Act as in effect on December 31, 1997, and assumes
constant compensation through age 65 and that the individual will not retire
earlier than age 65. No more than 40 years of benefit service are taken into
account. The Pension Plan includes additional provisions for early retirement.
Benefits under the Pension Plan are supplemented by benefits under The O.M.
Scotts & Sons Company Excess Benefit Plan (the "Excess Benefit Plan"). The
Excess Benefit Plan was established October 1, 1993 and was frozen as of
December 31, 1997. The Excess Benefit Plan provides additional benefits to
participants in the Pension Plan whose benefits are reduced by limitations
imposed under Sections 415 and 401(a)(17) of the Internal Revenue Code of 1986
(the "Internal Revenue Code"). Under the Excess Benefit Plan, executive officers
and certain key employees will receive, at the time and in the same form as
benefits are paid under the Pension Plan, additional monthly benefits in an
amount which, when added to the benefits paid to each participant under the
Pension Plan, will equal the benefit amount such participant would have earned
but for the limitations imposed by the Internal Revenue Code.
The estimated annual benefits under the Pension Plan and the Excess Benefit
Plan payable upon retirement at normal retirement age for each of the
individuals named in the Summary Compensation Table are:
<TABLE>
<CAPTION>
YEARS OF BENEFIT SERVICE TOTAL BENEFIT
------------------------ -------------
<S> <C> <C>
Charles M. Berger................... 0.333 $ 134.01
James Hagedorn...................... 9.9167 $3,368.46
Jean H. Mordo....................... N/A N/A
James L. Rogula..................... 1.9167 $ 461.93
G. Robert Lucas..................... N/A N/A
</TABLE>
20
<PAGE> 25
Associates participate in the RSP, formerly known as "The Scotts Company
Profit Sharing and Savings Plan." The RSP, as amended and restated effective as
of December 31, 1997, consolidated various defined contribution retirement plans
in effect at the Company and its domestic subsidiaries. The RSP permits 401(k)
contributions, employee after-tax contributions, Company matching contributions,
Company retirement contributions, and, between 1998 and 2002 for participants
whose benefits were frozen under the Pension Plan (and the Scotts-Sierra
Horticultural Products Company Retirement Plan for Salaried Employees), certain
transitional contributions based on age and service.
The Executive Retirement Plan is a nonqualified deferred compensation plan
for the benefit of certain officers and highly paid employees, including the
individuals named in the Summary Compensation Table. The Executive Retirement
Plan allows participants to make and have made on their behalf contributions
which could have been made under the terms of the RSP but for the limitations
imposed by the Internal Revenue Code on qualified defined compensation plans.
The Executive Retirement Plan also provides participants with the opportunity to
defer all or any part of bonus payments received pursuant to the Executive
Incentive Plan.
EMPLOYMENT AGREEMENTS, AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company entered into an employment agreement with Mr. Berger effective
as of August 7, 1998 (the "Berger Agreement"), providing for his employment as
Chairman and Chief Executive Officer of the Company until August 2001, at an
annual base salary of $500,000, plus an incentive bonus under the Executive
Incentive Plan. If Mr. Berger's employment is terminated by the Company without
"cause" (as defined in the Berger Agreement), as a result of his death or
disability, as a result of "cause" by Mr. Berger (also as defined) or as a
result of a "change of control" (also as defined), he or his beneficiary will be
entitled to have his base salary continued at the rate then in effect for two
years thereafter, and to receive incentive compensation equal to the lesser of
his target percentage under the Executive Incentive Plan then in effect or the
amount of his last actual bonus under that plan, also for the two-year period
after the date of termination. If Mr. Berger voluntarily terminates his
employment, or if his employment is terminated for any other reason (including
for "cause" by the Company), Mr. Berger is entitled to receive his base salary
through the date of termination. In connection with entering into the Berger
Agreement, Mr. Berger entered into three Stock Option Agreements with the
Company dated as of September 23, 1998, October 21, 1998 and September 24, 1999.
Mr. Berger was granted options to purchase 150,000 common shares of the Company
under the two agreements dated as of 1998, and 75,000 common shares under the
agreement dated as of 1999, totaling 225,000 common shares. The options vested
one year from the respective dates of grant. The options are exercisable at a
purchase price of $30.125 per share under the September 23, 1998 agreement,
$30.00 per share under the October 21, 1998 agreement and $35.25 per share under
the September 24, 1999 agreement. The exercise price is subject to adjustment in
the event of certain corporate changes. These options expire ten years from the
respective dates of grant.
In connection with the transactions contemplated by the Merger Agreement,
the Company entered into an employment agreement with Mr. James Hagedorn (the
"Hagedorn Agreement"). The Hagedorn Agreement has a term of three years, and is
automatically renewed for an additional year each subsequent year, unless either
party notifies the other party of his/its desire not to renew. The Hagedorn
Agreement provides for a minimum annual base salary of $200,000 for Mr. Hagedorn
and participation in the various benefit plans available to senior executive
officers of the Company. In addition, pursuant to the Hagedorn Agreement, the
Company granted to Mr. Hagedorn options to acquire 24,000 common shares. Upon
certain types of termination of employment (e.g., a termination by the Company
for any reason other than "cause" (as defined in the Hagedorn Agreement) or a
termination by Mr. Hagedorn constituting "good reason" (also as defined)), he
will become entitled to receive certain severance benefits including a payment
equal to three times the sum of his base salary then in effect plus his highest
annual bonus in any of the three preceding years. Upon termination of employment
for any other reason, Mr. Hagedorn or his beneficiary will be entitled to
receive all unpaid amounts of base salary and benefits under the executive
benefit plans in which he participated. The Hagedorn Agreement also contains
confidentiality and noncompetition provisions which prevent Mr. Hagedorn from
disclosing confidential information about the Company and from competing with
the Company during his employment therewith and for an additional three years
thereafter.
21
<PAGE> 26
The Company entered into an employment arrangement with Mr. Mordo effective
May 1, 1997, relating to his employment with the Company. If Mr. Mordo's
employment was terminated by the Company without "cause" (as defined in such
employment agreement), as a result of his death or disability or as a result of
a "change of control" (also as defined), he was entitled to have his base salary
continued at the rate then in effect for twenty-four months thereafter, and to
receive incentive compensation for the twenty-four month period after
termination, equal to the greater of his target percentage then in effect or his
last actual bonus. Mr. Mordo was also granted options to purchase 150,000 common
shares of the Company, one-third of which vested in each of March 1997, March
1998 and March 1999. Mr. Mordo's employment as an executive officer of the
Company terminated effective October 13, 2000. Pursuant to an agreement dated
October 18, 2000, and in accordance with his employment agreement, Mr. Mordo
elected a discounted, lump sum payment equal to twenty-four months of base
salary and an amount equal to the greater of his target percentage or 2000
fiscal year bonus. In addition, as consideration for the recision of an option
to purchase 35,000 common shares that would have vested on October 20, 2000, the
Company agreed to pay Mr. Mordo, on or before January 31, 2001, an amount equal
to the difference between the exercise price for the common shares covered by
the option and the highest closing price of the common shares on the NYSE
between October 16, 2000 and January 12, 2001. Also, Mr. Mordo must exercise any
vested options that he owns by February 2, 2001, when such options will expire.
The Company entered into an employment arrangement with Mr. Lucas effective
May 1, 1997, relating to his employment with the Company. If Mr. Lucas'
employment is terminated by the Company without "cause," as a result of his
death or disability or as a result of a "change of control," he or his
beneficiary will be entitled to have his base salary continued at the rate then
in effect for two years thereafter, and to receive incentive compensation for
the two-year period after termination, equal to the greater of his target
percentage then in effect or his last actual bonus. Mr. Lucas was also granted
options to purchase 70,000 common shares of the Company, one-third of which
vested in each of May 1997, May 1998 and May 1999.
REPORT OF THE COMPENSATION AND ORGANIZATION COMMITTEE ON EXECUTIVE COMPENSATION
(NOVEMBER 29, 2000)
Notwithstanding anything to the contrary set forth in the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 that might incorporate future filings, including this Proxy Statement,
in whole or in part, this Report and the graph set forth under "EXECUTIVE
COMPENSATION -- Performance Graph", shall not be incorporated by reference into
any such filings.
ROLE OF THE COMPENSATION AND ORGANIZATION COMMITTEE
The Compensation and Organization Committee (the "Compensation Committee")
is made up of four members of the Board of Directors who are neither current nor
former employees of the Company. The Compensation Committee reviews the
Company's organizational structure, succession planning and the ongoing
functions of the executive officers. It is also responsible for the Company's
executive compensation policies and programs. The Compensation Committee reviews
and recommends to the Board all compensation payments to the CEO and executive
officers of the Company and the aggregate incentive payments to the participants
in the Executive Incentive Plan.
In reaching compensation decisions, the Compensation Committee reviews
information from various sources, including proxy statement surveys and industry
surveys. The Compensation Committee has retained external legal counsel and
compensation consultants.
OBJECTIVES OF THE EXECUTIVE COMPENSATION PROGRAM
The Compensation Committee's primary objective is the establishment of
compensation programs for the Company's executive officers who are in a position
to maximize long-term shareholder value. The executive compensation program is
designed with a performance orientation, where a large portion of executive
22
<PAGE> 27
compensation is "at risk". In pursuing this objective, the Compensation
Committee believes that the Company's executive compensation program must:
- Emphasize pay for performance, motivating both long-term and
short-term performance for the benefit of the Company's shareholders;
- Place greater emphasis on variable incentive compensation versus fixed
or base pay;
- Through its incentive plans, encourage and reward decision-making that
emphasizes long-term shareholder value;
- Provide a total compensation program competitive with those companies
with which the Company competes for top management talent on a global
basis; and
- Ensure the Company's continued growth and performance by attracting,
retaining and motivating talented executives and employees necessary
to meet the Company's strategic goals.
The Compensation Committee sets compensation levels which are designed to
be competitive with a comparison group of consumer products companies of similar
size and complexity (the "Comparison Group"). This comparative data may not
include the compensation paid by all of the companies that are included in the
S&P 500 Household Index which is used for comparative purposes in the
performance graph. Base salary and annual incentive opportunities are targeted
at the median of the Comparison Group companies, while long-term incentives are
targeted at the 75th percentile. Through the use of these and other tools, the
Company has been successful in attracting executives who, as key members of the
top management team, have been instrumental in improving the performance of the
Company.
The Compensation Committee does not have a policy that requires the
Company's executive compensation programs to qualify as performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986, as
amended. The design and administration of the Company's 1996 Stock Option Plan
qualifies under Section 162(m) of the Internal Revenue Code as performance-based
compensation. In all cases, the Compensation Committee will continue to
carefully consider the net cost and value to the shareholders of its
compensation policies.
OVERVIEW OF EXECUTIVE COMPENSATION AND 2000 FISCAL YEAR COMPENSATION COMMITTEE
ACTIONS
The Company's executive compensation program consists of four principal
components:
- Base Salary
- Executive Incentive Plan
- 1996 Stock Option Plan
- Scotts Millennium Growth Plan
BASE SALARY
The base salaries of the Company's executive officers and subsequent
adjustments to base salaries are determined relative to the following factors:
(1) the strategic importance to the Company of the executive officer's job
function; (2) the individual's performance in his or her position; (3) the
individual's potential to make a significant contribution to the Company in the
future; and (4) a comparison of industry compensation practices. The
Compensation Committee believes that all of these factors are important and the
relevance of each factor varies from individual to individual.
EXECUTIVE INCENTIVE PLAN
All executive officers are eligible to participate in the Executive
Incentive Plan, which provides annual incentive compensation opportunities based
on various performance measures related to the financial performance of the
Company and the achievement of individual goals and objectives for the fiscal
year.
23
<PAGE> 28
The Compensation Committee oversees the operation of the Executive
Incentive Plan by evaluating and approving the targets and the objectives to be
met by the Company and the executive officers and the amount of bonus payable at
specified levels of attainment of those targets and objectives. At the end of
each fiscal year, the Compensation Committee determines the extent to which the
targets and objectives have been met and awards bonuses accordingly.
Bonuses for executive officers in the corporate group are based on the
Company's earnings per share (80%) as well as on individual goals (20%). Bonuses
for executive officers in the Company's business groups are generally based on
the Company's earnings per share (30%), the adjusted contribution margins of
their particular business group (50%) and individual goals (20%).
1996 STOCK OPTION PLAN
For the 2000 fiscal year, the Compensation Committee targeted long-term
incentive programs for executive officers at the 75th percentile of total
long-term incentive pay at Comparison Group companies. The Compensation
Committee uses the Black-Scholes method to calculate the long-term incentive
value of stock option grants and uses the Comparison Group companies as a
benchmark.
For the 2000 fiscal year, the Compensation Committee targeted grants in the
Stock Option Plan at a level which, when combined with the expected value of the
Scotts Millennium Growth Plan grant, achieved its desired long-term incentive
target. The Compensation Committee has on occasion further adjusted annual stock
option grants for certain recipients, based on corporate or individual
performance.
The 1996 Stock Option Plan enables the Compensation Committee to grant both
incentive stock options and non-qualified stock options, although no incentive
stock options have been granted to date. Options granted generally have a
three-year cliff vesting provision; however, this provision is sometimes
modified for grants made to associates outside of North America.
Because of a change in the timing when the Compensation Committee considers
the grant of options under the 1996 Stock Option Plan, no options were granted
in the 2000 fiscal year. However, the Compensation Committee granted options in
October 2000 to its executive officers after considering the factors described
herein. Those option grants will be shown in the proxy statement for the 2002
Annual Meeting of Shareholders. The Compensation Committee currently intends to
consider annual option grants for its executive officers in the first quarter of
each fiscal year.
SCOTTS MILLENNIUM GROWTH PLAN
During the 2000 fiscal year, all executive officers were eligible to
participate in the Scotts Millennium Growth Plan, which provides long-term
incentive compensation opportunities based on specified performance measures
related to the financial performance of the Company. For the 2000 fiscal year,
the Compensation Committee targeted grants in the Scotts Millenium Growth Plan
at the 25th percentile, so that, when combined with the expected value of a
stock option grant, the desired long-term incentive target of compensating
executive officers at the 75th percentile, was achieved. The performance target
for the first three-year cycle ending September 30, 2002 is based on cumulative
earnings per share.
The Scotts Millenium Growth Plan was terminated in November 2000.
COMPENSATION OF THE CEO
The Compensation Committee, in conjunction with the CEO, establishes the
CEO's annual goals and objectives and evaluates his performance against these
goals and objectives annually in executive session.
On September 23, 1998, the Compensation Committee approved a three-year
employment agreement for the CEO through September 2001. His base salary of
$500,000 will remain frozen for the remainder of the term of the agreement,
while his target bonus under the Executive Incentive Plan increased from 65% in
1999, to 75% in 2000, and to 85% in 2001.
24
<PAGE> 29
Consistent with the focus on performance-based compensation, Mr. Berger's
target bonus opportunity was set at 75% of his salary for the 2000 fiscal year.
In his position, 80% of Mr. Berger's target bonus is directly attributable to
corporate performance (earnings per share) with a performance modifier of 0 to
250%. With respect to the remaining 20% of the target bonus, with a performance
modifier of 0 to 200%, the Compensation Committee considered Mr. Berger's
individual accountabilities, including:
- Corporate strategic planning;
- Organizational development, with a global focus;
- Corporate growth and operational excellence;
- Capital investment optimization; and
- Investor relations.
In consideration of the Company's and Mr. Berger's performance during the 2000
fiscal year, he earned a bonus of $598,015.
SUBMITTED BY THE COMPENSATION AND ORGANIZATION COMMITTEE OF THE COMPANY:
JOSEPH P. FLANNERY, CHAIRMAN
ALBERT E. HARRIS
JOHN M. SULLIVAN
JOHN WALKER, PH.D.
25
<PAGE> 30
PERFORMANCE GRAPH
The following line graph compares the yearly percentage change in the
Company's cumulative total shareholder return (as measured by dividing (i) the
sum of (A) the cumulative amount of dividends for the measurement period,
assuming dividend reinvestment, and (B) the difference between the price of the
Company's common shares at the end and the beginning of the measurement period;
by (ii) the price of the Company's common shares at the beginning of the
measurement period) against the cumulative return of (a) Standard & Poor's 500
Consumer Household Non-Durable Products Index ("S&P 500 Household Index"); and
(b) the Russell 2000 (the "Russell 2000"); each for the period from September
30, 1995 to September 30, 2000. The comparison assumes $100 was invested on
September 30, 1995 in the Company's common shares and in each of the foregoing
indices and assumes reinvestment of dividends.
[TOTAL SHAREHOLDER RETURNS GRAPH]
<TABLE>
<CAPTION>
THE SCOTTS COMPANY S&P 500 HOUSEHOLD INDEX RUSSELL 2000
------------------ ----------------------- ------------
<S> <C> <C> <C>
9/95 100 100 100
9/96 87.01 132.25 113.13
9/97 118.64 185.36 150.68
9/98 138.42 183.15 122.02
9/99 156.5 235.69 143.43
9/00 151.41 200.58 175.01
</TABLE>
REPORT OF THE AUDIT COMMITTEE
(NOVEMBER 29, 2000)
Notwithstanding anything to the contrary set forth in the Company's
previous filings under the Securities Act of 1993 or the Securities Exchange Act
of 1934 that might incorporate future filings, including this Proxy Statement,
in whole or in part, this Report shall not be incorporated by reference into any
such filings.
ROLE OF THE AUDIT COMMITTEE, INDEPENDENT AUDITORS AND MANAGEMENT
The Audit Committee consists of three independent directors and operates
under a written charter adopted by the Board of Directors, a copy of which is
attached as Annex A to this Proxy Statement. Annually, the Audit Committee
recommends to the Board of Directors the selection of the Company's independent
auditors. PricewaterhouseCoopers LLP was selected as the Company's independent
auditors for the 2000 fiscal year.
Management is responsible for designing and maintaining the Company's
systems of internal controls and financial reporting processes. The Company's
independent auditors are responsible for performing an audit of the Company's
consolidated financial statements in accordance with generally accepted auditing
standards and issuing their report thereon. The Audit Committee's responsibility
is to provide independent, objective oversight of these processes.
26
<PAGE> 31
Pursuant to this responsibility, the Audit Committee met with management
and the independent auditors throughout the year. The Audit Committee reviewed
the audit plan and scope with the independent auditors, and discussed the
matters required by Statement on Auditing Standards No. 61 (Communication with
Audit Committees). The Audit Committee also met with the independent auditors,
without management present, to discuss the results of their audit work, their
evaluation of the Company's system of internal controls and the quality of the
Company's financial reporting.
In addition, the Audit Committee has discussed with the independent
auditors their independence from the Company and its management, including the
matters contained in written disclosures and letters from the independent
auditors required by the Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees).
MANAGEMENT'S REPRESENTATIONS AND AUDIT COMMITTEE RECOMMENDATIONS
Management has represented to the Audit Committee that the Company's
consolidated financial statements for the year ended September 30, 2000 were
prepared in accordance with generally accepted accounting principles, and the
Audit Committee reviewed and discussed the consolidated financial statements
with management and the independent auditors. Based on the Audit Committee's
discussions with management and the independent auditors and review of the
report of the independent auditors to the Audit Committee, the Audit Committee
recommended to the Board of Directors (and the Board has approved) that the
audited consolidated financial statements be included in the Company's Annual
Report on Form 10-K for the year ended September 30, 2000 to be filed with the
SEC.
SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF THE COMPANY:
L. JACK VAN FOSSEN, CHAIRMAN
ARNOLD W. DONALD (FROM OCTOBER 2000)
PATRICK J. NORTON (UNTIL FEBRUARY
2000)
JOHN M. SULLIVAN
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
James Hagedorn is the President and Treasurer and owns 83% of the shares of
Hagedorn Aviation, a company which owns the aircraft used for certain business
travel by James Hagedorn and, on occasion, the senior management of the Company.
Horace Hagedorn is the Vice President of Hagedorn Aviation and owns the
remaining 17% equity interest. The Company pays charges by Hagedorn Aviation for
flight time at the rate of $150 per hour of flight. The charges cover the cost
to operate and maintain the aircraft. During the 2000 fiscal year, the Company
paid a total of approximately $17,000 to Hagedorn Aviation for such service,
which constituted more than five percent of Hagedorn Aviation's consolidated
gross revenues for its last full fiscal year.
Paul Hagedorn, a brother of James Hagedorn and Katherine Hagedorn
Littlefield and a general partner of the Hagedorn Partnership, is employed by
the Company as a graphics design specialist. For the 2000 fiscal year, Mr.
Hagedorn received a salary of $104,117. He also received employment benefits
consistent with those offered to other associates of the Company. In the 2000
fiscal year, the Company paid aggregate rent and utility expenses of $5,924 for
an office in Atlanta, Georgia for Mr. Hagedorn.
INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed PricewaterhouseCoopers
LLP as the Company's independent auditors for the 2001 fiscal year.
PricewaterhouseCoopers LLP, a certified public accounting firm, has served as
the Company's independent auditors since 1986.
27
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A representative of PricewaterhouseCoopers LLP is expected to be present at
the Annual Meeting to respond to appropriate questions and to make such
statements as he or she may desire.
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Proposals by shareholders intended to be presented at the 2002 Annual
Meeting of Shareholders must be received by the Secretary of the Company no
later than August 17, 2001, to be included in the Company's proxy, notice of
meeting and proxy statement relating to such meeting and should be mailed to:
The Scotts Company, 41 South High Street, Suite 3500, Columbus, Ohio 43215,
Attention: Secretary. Upon receipt of a shareholder proposal, the Company will
determine whether or not to include the proposal in the proxy materials in
accordance with applicable rules and regulations promulgated by the SEC.
The SEC has promulgated rules relating to the exercise of discretionary
voting authority pursuant to proxies solicited by the Board of Directors. If a
shareholder intends to present a proposal at the 2002 Annual Meeting of
Shareholders and does not notify the Secretary of the Company of the proposal by
October 31, 2001, the proxies solicited by the Board of Directors for use at the
2002 Annual Meeting may vote on the proposal, without discussion of the proposal
in the Company's proxy statement for that Annual Meeting.
OTHER BUSINESS
The Board of Directors is aware of no other matter that will be presented
for action at the Annual Meeting. If any other matter requiring a vote of the
shareholders properly comes before the Annual Meeting, the persons authorized
under management proxies will vote and act according to their best judgments in
light of the conditions then prevailing.
ANNUAL REPORT
The Company's 2000 Annual Report to Shareholders containing audited
consolidated financial statements for the 2000 fiscal year is being mailed to
all shareholders of record with this Proxy Statement.
Sincerely,
/s/ Charles M. Berger
CHARLES M. BERGER
Chairman and Chief Executive Officer
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ANNEX A
THE SCOTTS COMPANY
AUDIT COMMITTEE CHARTER
PURPOSE
The primary purpose of the Audit Committee (the "Committee") of The Scotts
Company (the "Company") is to assist the Board of Directors (the "Board") in
fulfilling its responsibility to oversee management's conduct of the Company's
financial reporting process, including by overviewing the financial reports and
other financial information provided by the Company to any governmental or
regulatory body, the public or other users thereof, the Company's systems of
internal accounting and financial controls, the annual independent audit by the
Company's outside auditor of the Company's financial statements, and the
Company's ethics policy as established, and as the same may be modified or
supplemented from time to time, by the Company.
The Board and the Committee are in place to represent the Company's
shareholders. The Company's outside auditor is ultimately accountable to the
Board and the Committee. The Committee, subject to any action that may be taken
by the full Board, shall have the ultimate authority and responsibility to
select, evaluate and, where appropriate, replace the outside auditor.
In discharging its oversight role, the Committee may investigate any matter
brought to its attention with full access to all books, records, facilities, and
personnel, and to the outside auditor, of the Company, and the power to retain
experts for this purpose.
The Committee shall review and reassess the adequacy of this Charter on an
annual basis.
MEMBERSHIP
The Committee shall be comprised of not less than three members of the
Board, and the Committee's composition will meet the requirements of the New
York Stock Exchange regarding a qualified Audit Committee.
Accordingly, all of the members will be directors:
1. Who have no relationship to the Company that may interfere with the
exercise of their independence from management and the Company; and
2. Who are financially literate (as such qualification is interpreted by
the Board in its business judgment) or who become financially
literate within a reasonable period of time after appointment to the
Committee. In addition, at least one member of the Committee will
have accounting or related financial management expertise (as such
qualification is interpreted by the Board in its business judgment).
KEY RESPONSIBILITIES
The Committee's job is one of oversight and it recognizes that the
Company's management is responsible for preparing the Company's financial
statements and that the outside auditors are responsible for auditing those
financial statements. Additionally, the Committee recognizes that financial
management, including the internal audit staff, as well as the outside auditors,
have more time, knowledge and more detailed information on the Company than do
Committee members; consequently, in carrying out its oversight responsibilities,
the Committee is not providing any expert or special assurance as to the
Company's financial statements or any professional certification as to the
outside auditor's work. Nor is it the duty of the Committee to conduct
investigations, to resolve disagreements, if any, between management and the
independent auditor or to assure compliance with laws and regulations and the
Company's ethics policy.
A-1
<PAGE> 34
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight function. These functions are set forth
as a guide with the understanding that the Committee may diverge from this guide
as appropriate given the circumstances:
- The Committee shall review with management and the outside auditors the
audited financial statements to be included in the Company's Annual
Report on Form 10-K (or the Annual Report to Shareholders if distributed
prior to the filing of Form 10-K) and review and consider with the
outside auditors the matters required to be discussed by Statement of
Auditing Standards (SAS) No. 61, as the same may be modified or
supplemented.
- As a whole, or through the Committee chair, the Committee shall review
with the outside auditors the Company's interim financial results to be
included in the Company's quarterly reports to be filed with Securities
and Exchange Commission and the matters required to be discussed by SAS
No. 61 and SAS No. 71, as the same may be modified or supplemented. This
review will occur prior to the Company's filing of the Form 10-Q.
- The Committee shall discuss with management and the outside auditors the
quality and adequacy of the Company's internal controls.
- The Committee shall:
- request from the outside auditors annually, a formal written statement
delineating all relationships between the auditor and the Company
consistent with Independence Standards Board Standard Number 1, as the
same may be modified or supplemented;
- discuss with the outside auditors any such disclosed relationships or
services and their impact on the outside auditor's independence and
objectivity; and
- recommend that the Board take appropriate action in response to the
outside auditor's report to satisfy itself of the auditor's
independence.
A-2
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THE SCOTTS COMPANY
2001 ANNUAL MEETING OF SHAREHOLDERS
The Westin Great Southern Hotel
310 South High Street
Columbus, Ohio
(614) 228-3800
Fax (614) 228-8820
JANUARY 18, 2001 AT 10:00 A.M., LOCAL TIME
GREATER COLUMBUS MAP
Directions
TRAVELING SOUTH ON I-71 (FROM CLEVELAND/NORTHERN OHIO) -- Take I-71 South to the
Main Street exit. This exit is a cloverleaf which branches to the right. Proceed
through the light. This road will curve to the left and become Rich Street. Go
about five blocks to High Street and turn left. Go one block to Main Street. The
Hotel is on the corner of High and Main Streets. Valet parking is available in
front of the Hotel on High Street.
TRAVELING NORTH ON I-71 (FROM CINCINNATI AREA) -- Take I-71 North. Just before
reaching the downtown area, exit onto I-70 East. Take the first exit which is
the Front/High Street exit. Go straight off the exit to the second light, which
is High Street, and turn left. Just before the third light you will see the
Hotel on your right. Valet parking is available in front of the Hotel on High
Street.
TRAVELING EAST ON I-70 (FROM DAYTON/INDIANAPOLIS AREA) -- Take I-70 East to the
Front/High Street exit. Go straight off the exit to the second light, which is
High Street, and turn left. Just before the third light you will see the Hotel
on your right. Valet parking is available in front of the Hotel on High Street.
TRAVELING WEST ON I-70 (FROM PENNSYLVANIA/WEST VIRGINIA AREAS) -- Take I-70 West
to the Fourth Street exit. Stay in the middle lane. Proceed straight through the
first and second lights. At the third light turn right onto High Street. The
Hotel is on the corner of High and Main Streets. Valet parking is available in
front of the Hotel on High Street.
TRAVELING FROM PORT COLUMBUS INTERNATIONAL AIRPORT -- Take International Gateway
(the main airport road) and follow it to I-670 West. Take I-670 West to the
Third Street exit and after exiting pass eight lights to Mound Street and turn
right. Go two blocks to High Street and turn right. The Hotel is on the corner
of High and Main Streets. Valet parking is available in front of the Hotel on
High Street.
<PAGE> 36
THE SCOTTS COMPANY
C/O PROXY SERVICES
P.O. BOX 9112
FARMINGDALE, NY 11735
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions. Have your
proxy card in hand when you call. You will be prompted to enter your 12-digit
Control Number which is located below and then follow the simple instructions
the Vote Voice provides you.
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions. Have your proxy card in
hand when you access the web site. You will be prompted to enter your 12-digit
Control Number which is located below to vote your proxy.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we have provided or return to The Scotts Company, c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN SCOTTS KEEP THIS PORTION FOR YOUR RECORDS
BLUE OR BLACK INK AS FOLLOWS:
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
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THE SCOTTS COMPANY
VOTE ON DIRECTORS
1. To elect four Directors in Class III for terms to expire For Withhold For All To withhold authority to vote, mark "For
at the 2004 Annual Meeting: All All Except All Except" and write the nominee's
01) Joseph P. Flannery 03) Katherine Hagedorn Littlefield number on the line below.
02) Albert E. Harris 04) Patrick J. Norton [ ] [ ] [ ] ________________________________________
VOTE ON PROPOSALS For Against Abstain
2. To adopt an amendment to Article FOURTH of the Company's Amended Articles of Incorporation, to [ ] [ ] [ ]
return the Class A Convertible Preferred Stock to the status of authorized but unissued, "blank
check" preferred shares:
3. To adopt amendments to Sections 1.10, 1.04 and 1.03 of the Company's Code of Regulations to: [ ] [ ] [ ]
(i) permit appointment of shareholder proxies in any manner permitted by Ohio law; (ii)
permit shareholders to receive notice of shareholder meetings in any manner permitted by Ohio
law; and (iii) allow shareholder meetings to be held in any manner permitted by Ohio law:
4. To adopt amendments to Article THREE of the Company's Code of Regulations to clarify and [ ] [ ] [ ]
separate the roles of the officers:
5. To adopt an amendment to Section 2.10 of the Company's Code of Regulations to provide for Board [ ] [ ] [ ]
committees of one or more directors:
Shareholder sign name exactly as it is stenciled hereon.
Note: Please fill in, sign and return this Proxy in the enclosed envelope. When signing as Attorney, Executor, Administrator,
Trustee or Guardian, please give full title as such. If holder is a corporation, please sign the full corporate name by authorized
officer. Joint Owners should sign individually. (Please note any change of address on this Proxy).
------------------------------------------------- -------------------------------------------------
------------------------------------------------- -------------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
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</TABLE>
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THE SCOTTS COMPANY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JANUARY 18, 2001
The undersigned holder(s) of common shares of The Scotts Company (the "Company")
hereby appoints Charles M. Berger or G. Robert Lucas, the Proxies of the
undersigned, with full power of substitution, to attend the Annual Meeting of
Shareholders of the Company to be held at The Westin Great Southern Hotel, 310
South High Street, Columbus, Ohio, on Thursday, January 18, 2001 at 10:00 a.m.,
local time, and any adjournment, and to vote all of the common shares which the
undersigned is entitled to vote at such Annual Meeting or any adjournment.
WHERE A CHOICE IS INDICATED, THE COMMON SHARES REPRESENTED BY THIS PROXY WHEN
PROPERLY EXECUTED WILL BE VOTED OR NOT VOTED AS SPECIFIED. IF NO CHOICE IS
INDICATED, THE COMMON SHARES REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" THE
ELECTION OF THE NOMINEES LISTED IN PROPOSAL NO. 1 AS DIRECTORS OF THE COMPANY
AND "FOR" PROPOSAL NOS. 2 THROUGH 5. IF ANY OTHER MATTERS ARE PROPERLY BROUGHT
BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT, OR IF A NOMINEE FOR ELECTION AS A
DIRECTOR NAMED IN THE PROXY STATEMENT IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL
NOT SERVE, THE COMMON SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE
DISCRETION OF THE PROXIES ON SUCH MATTERS OR FOR SUCH SUBSTITUTE NOMINEE(S) AS
THE DIRECTORS MAY RECOMMEND.
IF COMMON SHARE UNITS ARE ALLOCATED TO THE ACCOUNT OF THE UNDERSIGNED UNDER THE
SCOTTS COMPANY RETIREMENT SAVINGS PLAN (THE "RSP"), THEN THE UNDERSIGNED HEREBY
DIRECTS THE TRUSTEE OF THE RSP TO VOTE ALL COMMON SHARES OF THE COMPANY
REPRESENTED BY THE UNITS ALLOCATED TO THE UNDERSIGNED'S ACCOUNT UNDER THE RSP IN
ACCORDANCE WITH THE INSTRUCTIONS GIVEN HEREIN, AT THE ANNUAL MEETING AND AT ANY
ADJOURNMENT, ON THE MATTERS SET FORTH ON THE REVERSE SIDE. IF NO INSTRUCTIONS
ARE GIVEN, THE PROXY WILL NOT BE VOTED BY THE TRUSTEE OF THE RSP.
The undersigned hereby acknowledges receipt of the Notice of the Annual Meeting
of Shareholders, dated December 15, 2000, the Proxy Statement furnished
therewith, and the Annual Report of the Company for the fiscal year ended
September 30, 2000. Any proxy heretofore given to vote the common shares which
the undersigned is entitled to vote at the Annual Meeting is hereby revoked.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF THE SCOTTS COMPANY
(This Proxy continues and must be signed and dated on the reverse side)
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