SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to 240.14a-11(c) or 240.14a-12
PLAYTEX PRODUCTS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2), or Item
22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[PLAYTEX LOGO]
PLAYTEX PRODUCTS, INC.
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300 Nyala Farms Road, Wesport, Connecticut 06880
April 8, 1996
TO OUR STOCKHOLDERS:
On behalf of the Board of Directors and management of Playtex Products,
Inc., I cordially invite you to the Annual Meeting of Stockholders to be held on
Wednesday, May 22, 1996, at 11:00 a.m. at Chase Manhattan Bank, N.A., 270 Park
Avenue, New York, New York.
At the Annual Meeting, stockholders will be asked to elect the Board of
Directors, approve the selection of the Corporation's independent auditors and
approve a Management Incentive Plan, all of which are fully described in the
accompanying Notice of Annual Meeting and Proxy Statement.
It is important that your stock be represented at the meeting regardless of
the number of shares you hold. You are encouraged to specify your voting
preferences by so marking and dating the enclosed proxy card. However, if you
wish to vote in accordance with the directors' recommendations, all you need do
is sign and date the card.
Please complete and return the proxy card in the enclosed envelope whether
or not you plan to attend the meeting. If you do attend and wish to vote in
person, you may revoke your proxy at that time.
If your shares are not registered in your own name and you would like to
attend the meeting, please ask the broker, trust, bank or other nominee which
holds the shares to provide you with evidence of your share ownership, which
will enable you to gain admission to the meeting.
Sincerely,
/s/ Michael R. Gallagher
------------------------------------
MICHAEL R. GALLAGHER
Chief Executive Officer and Director
<PAGE>
PLAYTEX PRODUCTS, INC.
300 NYALA FARMS ROAD
WESTPORT, CONNECTICUT 06880
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1996
The Annual Meeting of Stockholders of Playtex Products, Inc. (the "Company")
will be held at Chase Manhattan Bank, N.A., 270 Park Avenue, New York, New York,
on Wednesday, May 22, 1996 at 11:00 a.m. local time, for the following purposes:
ITEM 1. To elect a Board of Directors for the ensuing year;
ITEM 2. To approve the Management Incentive Plan for Key Employees;
ITEM 3. To ratify the selection of the firm of KPMG Peat Marwick LLP as
the Company's independent auditors for fiscal year 1996; and
ITEM 4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has set the close of business on April 3, 1996 as the
record date for determining stockholders entitled to notice of and to vote at
the meeting or any adjournment thereof.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors
/s/ Paul E. Yestrumskas
-------------------------------
Paul E. Yestrumskas
Vice President, General Counsel
and Secretary
April 8, 1996
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE SIGNED, DATED AND
PROMPTLY RETURNED IN THE ENCLOSED ENVELOPE, SO THAT YOUR
SHARES WILL BE REPRESENTED WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING.
<PAGE>
PLAYTEX PRODUCTS, INC.
300 NYALA FARMS ROAD
WESTPORT, CONNECTICUT 06880
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is being furnished to stockholders of Playtex Products,
Inc. (the "Company") in connection with the solicitation by the Board of
Directors of the Company of proxies for use at the Annual Meeting of
Stockholders of the Company to be held at Chase Manhattan Bank, N.A., 270 Park
Avenue, New York, New York, on Thursday, May 22, 1996 at 11:00 a.m. local time,
and at any adjournments thereof (the "Annual Meeting"). This Proxy Statement
and the accompanying proxy card are being mailed beginning on or about April 10,
1996 to stockholders of the Company on April 3, 1996, the record date for the
Annual Meeting. The Company's Annual Report to Stockholders for the fiscal year
ended December 30, 1995 will be delivered prior to or concurrently with mailing
of the proxy material.
Stockholders of the Company are cordially invited to attend the Annual
Meeting. Whether or not you expect to attend, it is important that you complete
the enclosed proxy card, and sign, date and return it as promptly as possible in
the envelope enclosed for that purpose. You have the right to revoke your proxy
at any time prior to its use by filing a written notice of revocation with the
Secretary of the Company prior to the convening of the Annual Meeting, or by
presenting another proxy card with a later date. If you attend the Annual
Meeting and desire to vote in person, you may request that your previously
submitted proxy card not be used.
The cost of soliciting proxies and the cost of the Annual Meeting will be
borne by the Company. In addition to the solicitation of proxies by mail,
proxies may be solicited by personal interview, telephone and similar means by
directors, officers or employees of the Company, none of whom will be specially
compensated for such activities. The Company also intends to request that
brokers, banks and other nominees solicit proxies from their principals and will
pay such brokers, banks and other nominees certain expenses incurred by them for
such activities.
VOTING RIGHTS
As of April 3, 1996, the record date for determination of stockholders
entitled to notice of and to vote at the Annual Meeting (the "Record Date"), the
outstanding stock of the Company entitled to receive notice of and to vote at
the Annual Meeting consisted of 50,879,701 shares of the Company's common stock,
par value $.01 per share (the "Common Stock"). Each share of Common Stock is
entitled to one vote on each matter that is voted on at the Annual Meeting.
QUORUM; REQUIRED VOTE; VOTING PROCEDURES
A majority of the outstanding shares of Common Stock must be represented in
person or by proxy at the Annual Meeting in order for a quorum to be present.
Pursuant to applicable Delaware law, shares represented by proxies that reflect
abstentions or "broker non-votes" (i.e., shares held by a broker or nominee
which are represented at the meeting, but with respect to which such broker or
nominee is not empowered to vote on a particular item) will be counted as shares
that are present and entitled to vote for purposes of determining a quorum.
Directors will be elected by a favorable vote of a plurality of the shares of
Common Stock present and entitled to vote, in person or by proxy, at the Annual
Meeting. Abstentions and broker non-votes as to the election of directors will
not affect the election of the candidates receiving the plurality of votes. Each
other item to come before the Annual Meeting requires the approval of a majority
of the shares of Common Stock present in person or represented by proxy at the
Annual Meeting and entitled to vote on such item. Abstentions as to any such
item will have the same effect as votes against such item; however, broker
non-votes will be treated as not entitled to vote
<PAGE>
for purposes of determining the vote required for approval of such item and will
not have any effect on the outcome of the matter.
Unless contrary instructions are indicated on the proxy card, all shares of
Common Stock represented by valid proxies will be voted FOR the four items
listed on the proxy card and described below, and will be voted in the
discretion of the proxies in respect of such other business, if any, as may
properly be brought before the Annual Meeting. As of the date hereof, the Board
of Directors knows of no other business that will be presented for consideration
at the Annual Meeting other than those matters referred to herein. If you give
specific voting instructions by marking the boxes on the proxy card, your shares
of Common Stock will be voted in accordance with such instructions.
ELECTION OF DIRECTORS
Pursuant to the By-Laws of the Company, the Board of Directors has fixed at
nine the number of directors to be elected at the Annual Meeting. Directors are
elected annually by the stockholders and hold office until successors are
elected and qualified or until death, resignation or removal.
Each of the nominees set forth below, except Mr. Fisher, is currently a
director of the Company. Each nominee has agreed to serve as a director, if
elected, and the Company believes that each nominee will be available to serve.
If any nominee is unavailable to serve as a director, the shares may be voted
for the election of a substitute nominee as management of the Company may
propose.
Assuming the presence of a quorum, the election of directors requires the
favorable vote of a plurality of the shares of Common Stock present and entitled
to vote, in person or by proxy, at the Annual Meeting. Under applicable Delaware
law, abstentions and broker non-votes as to election of directors will be
counted as present for determining a quorum but will not affect the election of
candidates receiving a plurality of the votes.
If a stockholder wishes to withhold authority to vote for any nominee, such
stockholder can do so by following the directions set forth on the form of proxy
solicited by the Board of Directors or on the ballot distributed at the Annual
Meeting if such stockholder wishes to vote in person.
INFORMATION REGARDING NOMINEES
The names and ages of the nominees, their principal occupations or
employment (including their position with the Company, if applicable) during the
past five years and other data regarding them is set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Robert B. Haas......................... 48 Chairman and Director
Michael R. Gallagher................... 50 Chief Executive Officer and Director
Michael F. Goss........................ 36 Executive Vice President, Chief Financial
Officer and Director
Joel E. Smilow......................... 62 Director
Thomas H. Lee.......................... 52 Director
Kenneth F. Yontz....................... 51 Director
Timothy O. Fisher...................... 46 Director Nominee
Douglas D. Wheat....................... 45 Director
Nancy S. Amer.......................... 35 Director
</TABLE>
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Robert B. Haas has been Chairman and a Director of the Company since June
1995. Mr. Haas has been actively involved in private investments since 1989,
specializing in leveraged buyouts. He currently serves as Chairman of the Board
and Chief Executive Officer of Haas Wheat & Partners Incorporated ("Haas Wheat &
Partners") (January 1995-present); Chairman of the Board and Chief Executive
Officer of Haas Wheat Advisory Partners Incorporated (1992-present) and Chairman
of the Board of Haas & Partners Incorporated (1989-present) (each of which is a
private investment firm specializing in leveraged acquisitions). Mr. Haas serves
as a director of Specialty Foods Acquisition Corporation, Specialty Foods
Corporation and Sybron International Corporation.
Michael R. Gallagher has been the Chief Executive Officer and a Director of
the Company since July 1995. Prior to joining the Company, Mr. Gallagher was
Chief Executive Officer of North America for Reckitt & Colman PLC (1994-1995).
Mr. Gallagher was President and Executive Officer of Eastman Kodak's subsidiary
L&F Products from 1988 until the subsidiary was sold to Reckitt & Colman PLC in
1994. Mr. Gallagher was President of the Lehn & Fink Consumer Products Division
at Sterling Drug from 1984 until the Division was sold to Eastman Kodak in 1988.
Michael F. Goss has been Executive Vice President and Chief Financial
Officer of the Company since December 1994. He has served as a Director of the
Company since September 1995. From 1992 to 1994, Mr. Goss was Treasurer and Vice
President--Corporate Development of Oak Industries, Inc. ("Oak"). From 1990 to
1992, he was Director of Financial Planning for Oak.
Joel E. Smilow resigned as Chairman in June 1995 and as Chief Executive
Officer of the Company on July 10, 1995, having held these positions with the
Company and its predecessors since 1969.
Thomas H. Lee has been a director of the Company since December 1988. Since
1982, Mr. Lee has been President of the Thomas H. Lee Company, a firm engaged in
investment activities. He is currently a director of Autotote Corporation
(manufacturer of gaming industry control equipment), Finlay Enterprises, Inc.
and Finlay Fine Jewelry Corporation (operator of leased fine jewelry
departments), First Security Services Corporation (provider of security
services), General Nutrition Companies, Inc. and General Nutrition Incorporated
(retailer of vitamins, supplements and other health related products), Gillett
Holdings, Inc. (operator of resorts and lean beef slaughtering and packing
facilities), Health-o-meter, Inc. (manufacturer of consumer, medical and office
scales), Miller Import Corporation (importer of giftware) and Sondik Supply
Company (distributor of plumbing supplies). Mr. Lee is also a general partner of
the ML-Lee Acquisition Fund, L.P., ML-Lee Acquisition Fund II, L.P. and ML-Lee
Acquisition Fund (Retirement Accounts) II, L.P. (collectively, the "ML-Lee
Acquisition Funds"). Mr. Lee is Chairman of Thomas H. Lee Advisors I, L.P. and
general partner of Thomas H. Lee Advisors II, L.P., the investment advisors to
the ML-Lee Acquisition Funds. He is the general partner of the THL Equity
Advisors Limited Partnership, the general partner of and investment advisor to
Thomas H. Lee Equity Partners, L.P.
Kenneth F. Yontz has been a Director of the Company since June 1995. Mr.
Yontz has been Chairman of the Board, President and Chief Executive Officer of
Sybron International Corporation (a manufacturer of dental and laboratory
products) since 1987. He previously served as Executive Vice President of the
Allen-Bradley Company. He is a director of The Thompson-Minwax Company and Berg
Electronics, Inc.
Timothy O. Fisher has been a Vice President (since 1986) and Director (since
April 1993) of The Hillman Company (diversified investments and operations) and
is a director of the Exide Corporation (automotives) as well as several private
companies.
Douglas D. Wheat has been a Director of the Company since June 1995. Mr.
Wheat has been President of Haas Wheat & Partners (January 1995-present);
President of Haas Wheat Advisory Partners Incorporated (1992-present) (each of
which is a private investment firm specializing in leveraged acquisitions);
Co-Chairman of Grauer & Wheat, Inc. (a private investment firm) (1989-
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1992) and Senior Vice President of Donaldson, Lufkin & Jenrette Securities
Corporation (1985-1989). Mr. Wheat serves as a director of Specialty Foods
Acquisition Corporation and Specialty Foods Corporation.
Nancy S. Amer has been a Director of the Company since June 1995. Ms. Amer
has been Managing Director of Harvard Private Capital Group, Inc., a subsidiary
of Harvard Management Company, Inc., Boston, Massachusetts, since 1990. Prior to
joining Harvard in 1990, Ms. Amer was a senior consultant with the Boston
Consulting Group, Inc. She is a director of Cambridge NeuroScience, Inc. and
Procept, Inc.
There are no family relationships among any of the foregoing persons.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 22, 1996 by (i) each
director and each nominee for director of the Company, (ii) the Named Executive
Officers (as defined in and set forth under "Executive Compensation--Summary
Compensation Table" below), (iii) each person believed by the Company to own
beneficially more than five percent of the outstanding Common Stock, and (iv)
all directors and Named Executive Officers as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) PERCENT
------------------------ --------------------- -------
<S> <C> <C>
Robert B. Haas................................................. 20,000,000(2) 39.3
Michael R. Gallagher........................................... 19,000(3) *
Michael F. Goss................................................ 45,000 *
Max R. Recone.................................................. 58,333 *
James S. Cook.................................................. 125,665 *
Joel E. Smilow................................................. 677,958(4) 1.3
Thomas H. Lee.................................................. 3,643,673(5) 7.2
Kenneth F. Yontz............................................... 0 --
Thomas Herskovits.............................................. 5,000 *
Timothy O. Fisher.............................................. 11,500(6) *
Douglas D. Wheat............................................... 0 --
Nancy S. Amer.................................................. 0 --
Partnerships managed by Haas Wheat & Partners(2)............... 20,000,000(2)(7) 39.3
All current directors, director nominees and Named Executive
Officers as a group (12 persons)............................... 24,586,129 48.3
</TABLE>
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* Indicates less than one percent.
(1) Includes shares that may be acquired upon the exercise of stock options
granted by the Company that are exercisable within 60 days of the Record
Date. The shares beneficially owned include 25,000, 18,333 and 18,333 shares
subject to currently exercisable options granted to Messrs. Goss, Recone and
Cook, respectively, and 61,666 shares subject to currently exercisable
options granted to all current directors and Named Executive Officers as a
group.
(2) Includes 8,055,555 (approximately 15.8% of the outstanding shares) owned by
HWH Capital Partners, L.P., 9,028,482 shares (approximately 17.7% of the
outstanding shares) owned by HWH Valentine Partners, L.P., and 2,915,963
shares (approximately 5.7% of the outstanding shares) owned by HWH Surplus
Valentine Partners, L.P. ("Surplus"). The address of each of the foregoing
partnerships is c/o Haas Wheat & Partners Incorporated, 300 Crescent Court,
Suite 1700, Dallas, Texas 75201. The sole general partner of each of such
partnerships is a limited partnership, and the sole general partner of each
of such limited partnerships is a corporation controlled by Mr. Haas. By
virtue of his control of such corporations, Mr. Haas has sole voting and
dispositive power over 17,084,037 shares and shared voting and dispositive
power over 2,915,963 shares.
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(3) Includes 9,000 shares held by Mr. Gallagher's children. Mr. Gallagher
disclaims beneficial ownership of these shares.
(4) Includes 500,000 shares held of record by the Joel E. Smilow Charitable
Remainder Unitrust dated March 1, 1996. Mr. Smilow's spouse is the trustee
of such trust. Mr. Smilow disclaims beneficial ownership of the shares held
by such trust.
(5) Includes 1,669,169 shares held of record by the 1989 Thomas H. Lee Nominee
Trust dated September 29, 1989, 1,406,204 shares held of record by the
ML-Lee Acquisition Fund, L.P., 343,726 shares held of record by the ML-Lee
Acquisition Fund II, L.P. and 183,560 shares held of record by the ML-Lee
Acquisition Fund II (Retirement Accounts), L.P. Mr. Lee disclaims beneficial
ownership of the shares held by the three ML-Lee Acquisition Funds. Certain
of the 1,669,169 shares held of record by the 1989 Thomas H. Lee Nominee
Trust are subject to options to purchase granted by such trust to certain
employees and consultants of the Thomas H. Lee Company. Also included are
20,507 shares held by the Stephen Zachary Lee 1988 Irrevocable Trust and
20,507 shares held by the Robert Schiff Lee 1988 Irrevocable Trust. Mr. Lee
also disclaims beneficial ownership of the shares held by such trusts.
(6) Includes 7,500 shares held by Mr. Fisher's wife, Audrey H. Fisher. Mr.
Fisher disclaims beneficial ownership of these shares.
(7) Of these shares, 2,915,963 shares (approximately 5.7% of the outstanding
shares) are owned by Surplus. Phemus Corporation, an affiliate of Harvard
Private Capital Group, Inc. (a corporation which invests and manages the
private equities portfolio of the Harvard University Endowment) is the sole
limited partner of Surplus and shares voting and dispositive power with
respect to such shares.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers, directors and
persons who own more than ten percent of a registered class of the Company's
equity securities ("Reporting Persons") to file reports of ownership and changes
in ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission
(the "Commission") and the New York Stock Exchange, Inc. (the "NYSE"). These
Reporting Persons are required by Commission regulation to furnish the Company
with copies of all Forms 3, 4 and 5 they file with the Commission and the NYSE.
Based solely on the Company's review of the copies of the forms it has
received and written representations from certain Reporting Persons, the Company
believes that all of its Reporting Persons complied with all filing requirements
applicable to them with respect to transactions during fiscal year 1995.
BOARD MEETINGS, COMMITTEES AND ATTENDANCE
The Company's Board of Directors met or acted by unanimous written consent
eight times during fiscal year 1995. Each Director attended or participated in
at least 75% of the total number of Board of Directors meetings or actions and
meetings or actions of Board of Directors committees on which the Director
served during the time he served on the Board of Directors of such committee.
The Board of Directors has an Audit Committee and a Compensation and Stock
Option Committee.
Prior to the consummation of the Haas Wheat Transaction (as described below)
on June 6, 1995, the Audit Committee was comprised of Messrs. Mark McCarville
and Craig Weatherup. On June 6, 1995, the stockholders of the Company at the
1995 Annual Meeting elected a new Board of Directors to take office upon
consummation of the Haas Wheat Transaction. Upon such consummation on June 6,
1995, such new Board of Directors took office, and since such time the Audit
Committee has been comprised of Messrs. Lee, Yontz and Herskovits. As directed
by the Board of Directors, the functions of the committee include recommending
independent auditors to be employed by the Company; conferring
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<PAGE>
with the auditors regarding their audit of the Company; reviewing the fees of
such auditors and other terms of their engagement; considering the adequacy of
internal financial controls and the results of fiscal policies and financial
management of the Company; meeting with the Company's internal auditors;
reviewing with auditors the results of their examination; and recommending
changes in financial policies or procedures as suggested by the auditors. The
Audit Committee met twice during fiscal year 1995.
Prior to the consummation of the Haas Wheat Transaction, the Compensation
and Stock Option Committee (the "Compensation Committee") was comprised of
Messrs. John Lee and Walter Forbes. Since the consummation of the Haas Wheat
Transaction on June 6, 1995, the Compensation Committee has been comprised of
Messrs. Haas, Wheat, Herskovits and Yontz. The functions of the Compensation
Committee are to review new or modified programs in the areas of executive
salary and incentive compensation (including the Management Incentive Plan),
deferred compensation and stock plans; to review direct and indirect
compensation matters; to review management's compensation actions with respect
to executive officers and other key personnel; and to administer the Playtex
1994 Stock Option Plan for Directors and Executive and Key Employees (the "1994
Playtex Stock Option Plan"). The Compensation Committee met or acted by
unanimous written consent three times during fiscal year 1995. While serving on
the Compensation Committee, directors do not receive option awards (except, as
to Messrs. Herskovits and Yontz, pursuant to formula grants) under the 1994
Playtex Stock Option Plan.
Pursuant to the Company's By-Laws, a Purchaser Nominating Committee
(comprised of Messrs. Haas and Wheat and Ms. Amer) and a Non-Purchaser
Nominating Committee (comprised of Messrs. Gallagher, Goss, Smilow and Lee)
nominate candidates for election to the Company's Board of Directors in
accordance with the procedures set forth therein. Of the nominees for director
set forth above, Messrs. Haas, Wheat, Yontz and Fisher and Ms. Amer were
nominated by the Purchaser Nominating Committee and Messrs. Gallagher, Goss,
Smilow and Lee were nominated by the Non-Purchaser Nominating Committee. See
"Stockholder Nominations and Proposals." Neither Nominating Committee met during
fiscal year 1995.
DIRECTORS COMPENSATION
Directors who are officers or former officers of the Company and those
affiliated with any shareholders owning more than 5% of the Common Stock of the
Company do not receive any fees for their services as Directors. Each other
non-employee director receives an annual retainer of $10,000, fees of $2,500 for
each board meeting attended in person or by telephone and $1,000 for each
committee meeting attended in person or by telephone, plus reimbursement of
reasonable out-of-pocket expenses. In addition, non-employee directors of the
Company (other than Messrs. Haas, Wheat, Smilow and Lee) participate in the 1994
Playtex Stock Option Plan.
CERTAIN TRANSACTIONS
The Company's businesses are unrelated to the businesses of Playtex Apparel,
Inc. ("Apparel"), a wholly owned subsidiary of Sara Lee Corporation ("Sara
Lee"). Sara Lee acquired all of the capital stock of Apparel from Playtex
Apparel Partners, L.P. (the "Apparel Partnership") in November 1991 in exchange
for Sara Lee common stock. The indirect recipients of such Sara Lee common stock
were the equity holders of the Apparel Partnership, including Joel E. Smilow.
The Apparel Partnership holds all of the Company's 15 1/2% Junior Subordinated
Notes due December 15, 2003. Playtex Investment Corp., a wholly-owned subsidiary
of the Company, holds a 15% debenture of the Apparel Partnership due on December
15, 2003. Such amounts are reflected as "Due to related party" and "Due from
related party," respectively, in the consolidated financial statements of the
Company.
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<PAGE>
The Company has agreed to indemnify the Apparel Partnership and Apparel with
respect to product liability (including any toxic shock syndrome liability)
related to the Company's businesses and certain tax matters related to the
Apparel business prior to December 28, 1988, and Apparel has agreed to assume
one-half of any costs and expenses that may be incurred by the Company in
connection with its prior use of the Kent County Landfill Site, Houston,
Delaware.
On June 6, 1995, following the receipt of stockholder approval at the
Company's 1995 Annual Meeting of Stockholders (the "1995 Annual Meeting"), the
Company consummated the sale of 20 million shares of Common Stock at a price of
$9.00 per share to HWH Capital Partners, L.P., HWH Valentine Partners, L.P., and
HWH Surplus Valentine Partners, L.P. (collectively, the "Haas Wheat
Partnerships"), each a Delaware limited partnership managed by Haas Wheat &
Partners, pursuant to a Stock Purchase Agreement, dated as of March 17, 1995
(the "Stock Purchase Agreement"), between the Company and the Haas Wheat
Partnerships (the "Haas Wheat Transaction"). The Haas Wheat Partnerships' shares
constitute approximately 40% of the Company's outstanding Common Stock. At the
1995 Annual Meeting, designees of the Haas Wheat Partnerships were elected by
the Company's stockholders as a majority of the Company's Board of Directors.
Pursuant to the Stock Purchase Agreement, the Haas Wheat Partnerships have
agreed that, for up to ten years from March 1995, so long as such partnerships
own at least 25% of the outstanding voting securities of the Company, unless any
of certain events have occurred (including in the event that nominees of the
Purchaser Nominating Committee were to cease to constitute a majority of the
Board of Directors), such partnerships will vote all of their voting securities
of the Company for a Board of Directors that will consist at all times of a
simple majority of nominees selected by the Purchaser Nominating Committee and
the remainder of nominees selected by the Non-Purchaser Nominating Committee.
See "Security Ownership of Certain Beneficial Owners and Management--Board
Meetings, Committees and Attendance." In connection with the Haas Wheat
Transaction, the Company paid a facility fee of $3.55 million to Haas Wheat &
Partners and reimbursed the Haas Wheat Partnerships for their expenses related
to the Haas Wheat Transaction in the amount of approximately $2.1 million.
Pursuant to the Stock Purchase Agreement, (i) no ongoing management fees or
advisory fees will be paid to the Haas Wheat Partnerships or any of their
affiliates until after June 6, 2000, other than for services rendered to the
Company in connection with specific transactions and approved in advance by a
majority of the Disinterested Directors (as defined) on the Board of Directors,
and (ii) until June 6, 2000, no director nominated by the Purchaser Nominating
Committee or officer of the Company who is a stockholder, officer, director or
employee of Haas Wheat & Partners will be paid any fees for services rendered,
including any salary, consulting fees, or outside directors fees.
In December 1992, the Company acquired a 22% common equity interest (17.5%
on a fully diluted basis) in Banana Boat Holding Corporation ("BBH") for $5
million and an option to acquire the remaining common equity of BBH under
certain circumstances at a formula price. BBH was controlled by Thomas H. Lee
Equity Partners, L.P. and certain other employees and affiliates of the Thomas
H. Lee Company. Concurrent with its acquisition of the equity interest in BBH,
Playtex entered into a distribution agreement with Sun Pharmaceuticals Corp.
("Sun"), a wholly owned subsidiary of BBH, pursuant to which Playtex became the
exclusive distributor of Banana Boat products in all areas that Sun was able to
repurchase distribution rights from its then current distributors. On October
31, 1995, the Company and BBH Acquisition, Inc., a Delaware corporation and
wholly owned subsidiary of Playtex, acquired all issued and outstanding common
shares of BBH not previously owned by Playtex (the "BBH Acquisition"). The net
consideration expended for the BBH Acquisition included cash of approximately
$40.4 million, the retirement of $27.1 million of BBH's long-term debt, the
assumption of the outstanding balance on BBH's working capital facility and the
payment of accrued interest and transaction fees of approximately $4.3 million.
The BBH Acquisition was financed with approximately $34.3 million of existing
cash balances and advances under the Company's bank credit facilities of $37.5
million. Concurrent with the BBH Acquisition, the distribution agreement was
terminated. In March 1996, BBH was merged with and into Sun, with Sun being the
surviving corporation.
7
<PAGE>
The Company believes that the terms of all the arrangements with the Apparel
Partnership, Apparel, the Haas Wheat Partnerships, BBH and Sun were and are fair
to the Company and comparable to those which could be obtained from unrelated
third parties.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash compensation paid by the Company and
its subsidiaries for services in all capacities during fiscal years 1995, 1994
and 1993 to the Company's current Chief Executive Officer and former Chief
Executive Officer and each of the three other executive officers of the Company
during fiscal year 1995 who were serving as executive officers of the Company at
the end of fiscal year 1995 and whose combined annual salary and bonus exceeded
$100,000 (the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------ ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
COMPEN- OPTIONS/ COMPEN-
SALARY BONUS SATION SARS SATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#)(2) ($)(3)
--------------------------- ---- -------- -------- ------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Michael R. Gallagher......................... 1995 $345,000 $650,000 -- -- 800,000 $ 392
Chief Executive Officer and 1994 -- -- -- -- --
Director (1) 1993 -- -- -- --
Joel E. Smilow............................... 1995 261,538 -- -- -- -- 257,354(4)
Director, Former Chairman of the Board 1994 500,000 400,000 -- -- 139,908
and Chief Executive Officer (1) 1993 500,000 500,000 -- 96,405
Michael F. Goss.............................. 1995 200,923 100,000 -- -- 127,500 52,563(5)
Executive Vice President, Chief 1994 15,384 -- -- 37,500 --
Financial Officer and Director 1993 -- -- -- --
Max R. Recone................................ 1995 191,539 38,000 -- -- 95,000 35,522
President, Consumer Products Division 1994 179,231 71,692 -- 15,000 35,875
1993 169,231 84,616 -- 34,873
James S. Cook................................ 1995 185,077 34,000 -- -- 95,000 35,802
Senior Vice President, Operations 1994 175,846 77,372 -- 15,000 36,458
1993 166,462 91,544 -- 28,168
</TABLE>
- ------------
(1) In connection with the Haas Wheat Transaction, Mr. Smilow resigned as Chief
Executive Officer of the Company on July 10, 1995, at which time Mr.
Gallagher was appointed Chief Executive Officer.
(2) Options are exercisable starting 12 months after the grant date, with
one-third of the shares covered thereby becoming exercisable at that time
and an additional one-third of the options becoming exercisable on each
successive anniversary date, with full vesting occurring on the third
anniversary date. Mr. Gallagher's options, however, became exercisable in
equal installments over a four year period, with full vesting occurring on
the fourth anniversary of the grant date.
(3) Except with respect to Messrs. Smilow and Goss, represents employer
contribution to the Playtex Products Profit-Sharing Retirement Plan (the
"Retirement Plan") and Deferred Benefit Equalization Plan (the "Deferred
Plan") and premiums paid by employer for term life insurance.
(4) Represents $123,836 employer contribution to the Retirement Plan and the
Deferred Plan and premiums paid by employer for term life insurance, and
$133,518 in consulting payments paid or accrued to Mr. Smilow and
office-related expenses paid on behalf of Mr. Smilow pursuant to his
consulting agreement with the Company upon his retirement as Chairman and
Chief Executive Officer. See "Arrangements with Former Executive Officers."
(5) Represents $2,563 employer contribution to the Retirement Plan and the
Deferred Plan and premium paid by employer for term life insurance, and a
$50,000 moving allowance in connection with Mr. Goss's relocation to
Connecticut in early 1995.
8
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table provides information related to stock options exercised
by the Named Executive Officers during fiscal year 1995 and unexercised stock
options and stock appreciation rights ("SARs") held by the Named Executive
Officers at fiscal year end.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
DECEMBER 30, DECEMBER 30, 1995
1995(#)(2) ($)(2)(3)
--------------- --------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#)(1) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE
---- ----------------- -------------- --------------- --------------------
<S> <C> <C> <C> <C>
Michael R. Gallagher........... -- -- 0/800,000 0/0
Joel E. Smilow................. N/A N/A N/A N/A
Michael F. Goss................ -- -- 12,500/152,500 9,375/18,875
Max R. Recone.................. -- -- 5,000/105,000 0/0
James S. Cook.................. -- -- 5,000/105,000 0/0
</TABLE>
- ------------
N/A--Not applicable, as the Named Executive Officer has no stock options or
SARs.
(1) None of the Named Executive Officers exercised any stock options during
fiscal year 1995.
(2) No SARs are outstanding.
(3) The closing price for the Company's Common Stock as reported by the NYSE on
December 29, 1995 (the last trading day of fiscal year 1995) was $7.50.
OPTION GRANTS DURING FISCAL YEAR 1995
The following table provides information related to options granted to the
Named Executive Officers during fiscal year 1995. No SARs were granted during
fiscal year 1995.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(1)
-------------------------------------------------------------- ------------------------
% OF TOTAL
OPTIONS/SARS
OPTIONS/SARS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#)(2) FISCAL YEAR ($/SH)(3) DATE 5% ($) 10% ($)
---- ------------ ------------ ----------- ------------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Michael R. 800,000(4) 38% $ 9.875 June 21, 2005 $4,968,268 $12,590,565
Gallagher...........
Joel E. Smilow...... -- -- -- -- -- --
Michael F. Goss..... 37,500 2% 7.875 January 26, 2005 185,720 470,652
40,000 2% 10 September 19, 2005 251,558 637,497
50,000 2% 7.875 December 12, 2005 247,627 627,536
Max R. Recone....... 25,000 1% 7.875 January 26, 2005 123,814 313,768
40,000 2% 10 September 19, 2005 251,558 637,497
30,000 1% 7.875 December 12, 2005 148,576 376,522
James S. Cook....... 25,000 1% 7.875 January 26, 2005 123,814 313,768
40,000 2% 10 September 19, 2005 251,558 637,497
30,000 1% 7.875 December 12, 2005 148,576 376,522
</TABLE>
- ------------
(1) The potential realizable value portion of the foregoing able illustrates
value that might be realized upon the exercise of the options immediately
prior to the expiration of their term, assuming the specified compounded
rates of appreciation on the Company's Common Stock over the term of the
options. Assumed rates of appreciation are not necessarily indicative of
future stock performance.
9
<PAGE>
(2) Except as provided in note (4) below, options granted to persons other than
non-employee directors in fiscal year 1995 under the 1994 Playtex Stock
Option Plan are exercisable starting 12 months after the grant date, with
one-third of the shares covered thereby becoming exercisable at that time
and an additional one-third of the options becoming exercisable on each
successive anniversary date, with full vesting occurring on the third
anniversary date.
(3) The exercise price was equal to the fair market value of the Common Stock on
the date of grant. The option exercise price and tax withholding obligations
related to exercise may be paid in cash, by delivery of already owned
shares, by offset of the underlying shares, or in any other form of valid
consideration or a combination of any of the foregoing, as determined by the
Compensation Committee in its discretion.
(4) The options granted to Mr. Gallagher are exercisable starting 12 months
after the grant date, with one-quarter of the shares covered thereby
becoming exercisable at that time and an additional one-quarter of the
options becoming exercisable on each successive anniversary date, with full
vesting occurring on the fourth anniversary date.
1994 PLAYTEX STOCK OPTION PLAN
The 1994 Playtex Stock Option Plan, which has been approved by the Company's
stockholders, authorizes the grant to directors, executives and other key
employees of the Company of long-term incentive share awards in the form of
options ("Options") to purchase Common Stock and SARs. The 1994 Playtex Stock
Option Plan is administered by the Compensation Committee. The aggregate number
of shares of Common Stock which may be issued upon exercise of Options and SARs
may not exceed 3,047,785 shares (subject to further adjustments for stock
dividends and stock splits); provided that the aggregate number of such shares
which may be issued upon the exercise of Options and SARs granted to any single
director or Executive Officer (as defined in the 1994 Playtex Stock Option Plan)
may not exceed 1,000,000. Options and SARs may not be granted under the 1994
Playtex Stock Option Plan after October 2003. As of the Record Date, the number
of remaining shares available for issuance under the 1994 Playtex Stock Option
Plan was 806,985, which amount gives effect to grants made during fiscal year
1995 and the first quarter of fiscal year 1996.
ARRANGEMENTS WITH FORMER EXECUTIVE OFFICERS
The Company has retained Mr. Smilow, its former Chairman and Chief Executive
Officer, as a consultant for a five-year period commencing July 10, 1995 (the
"Consulting Period") at an annual fee of $250,000. The consulting agreement does
not require Mr. Smilow to devote any minimum amount of time to the performance
of consulting services. During the Consulting Period, the Company will provide
Mr. Smilow with an office and secretarial assistance. Mr. Smilow is also
entitled to reimbursement of certain expenses incurred in connection with his
consulting services, and is entitled to benefits under the Company's medical and
dental plan for the duration of the Consulting Period, subject to his payment of
any contributory amounts payable for the coverage selected by him. Under the
agreement, Mr. Smilow may not directly or indirectly carry on any business in
competition with the Company for the duration of the Consulting Period.
Furthermore, Mr. Smilow agrees not to disclose, make use of, or make accessible
any confidential information which he obtained from the Company during the
Consulting Period and for a five year period thereafter.
Upon the consummation of the Haas Wheat Transaction in June 1995, Hercules
P. Sotos, the Company's Vice Chairman, retired as an executive officer of the
Company and the Company entered into a consulting arrangement with Mr. Sotos for
the balance of fiscal year 1995. During fiscal year 1995, Mr. Sotos received
salary payments totaling $118,462 from the Company for the period that he served
as an executive officer, and also received $161,538 pursuant to the consulting
arrangement, together with contributions to the Retirement Plan and Deferred
Plan and premiums for term life insurance totaling $66,007, and benefits under
the Company's medical and dental plans. Mr. Sotos did not receive a bonus for
fiscal year 1995.
10
<PAGE>
Calvin J. Gauss, the Company's President, resigned as an executive officer
of the Company effective September 22, 1995. During fiscal year 1995, Mr. Gauss
received salary payments totaling $182,692, and also received $74,808 pursuant
to his severance arrangements with the Company, together with contributions to
the Retirement Plan and Deferred Plan and premiums for term life insurance
totaling $49,853, and benefits under the Company's medical and dental plans. Mr.
Gauss did not receive a bonus for fiscal year 1995. Mr. Gauss's severance
arrangement requires the Company to pay him certain continued severance payments
for a specified period, unless he secures other employment, together with
benefits under the Company's medical and dental plans.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Haas and Wheat have served on the Compensation Committee of the
Board of Directors since June 6, 1995. In connection with the Haas Wheat
Transaction, Haas Wheat & Partners, a corporation controlled by Mr. Haas,
received a facility fee from the Company of $3.55 million, and the Haas Wheat
Partnerships, limited partnerships managed by Haas Wheat & Partners, were
reimbursed by the Company for their expenses related to the Haas Wheat
Transaction in the amount of approximately $2.1 million.
REPORT ON EXECUTIVE COMPENSATION
In accordance with the rules and regulations of the Commission, the
following report of the Compensation Committee and the performance graph
immediately thereafter shall not be deemed to be "soliciting material" or to be
"filed" with the Commission or subject to Regulations 14A or 14C of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or to the
liabilities of Section 18 of the Exchange Act and shall not be deemed
incorporated by reference into any filing under the Securities Act of 1933, as
amended, or the Exchange Act, notwithstanding any general incorporation by
reference of this Proxy Statement into any other filed document.
The foundation of the Company's compensation policies is the view that the
Company's success is attributable to the efforts of its employees, including its
executive officers. The Company structures executive compensation in a manner
designed to provide competitive levels of compensation and to assist the Company
in attracting and retaining qualified executives. The Company endorses the
position that stock ownership by management is beneficial in aligning
management's and stockholders' interests in the Company. The compensation paid
to the Company's executive officers consists primarily of base salary, cash
bonuses under the Management Incentive Plan, and grants of Options pursuant to
the 1994 Stock Option Plan. In addition, the Company provides all executive
officers with term life insurance and contributions to the Retirement Plan and
the Deferred Plan.
During fiscal year 1995, the membership of the Compensation Committee
changed upon election of the Board of Directors to take office at the closing of
the Haas Wheat Transaction. This report discusses the standards and policies as
set and applied by the Compensation Committee as constituted after that time.
Base salaries of executive officers are reviewed annually. In establishing
base salaries during fiscal year 1995, the Compensation Committee made
subjective determinations that were not subject to specific criteria. The
Compensation Committee considered such variables as the executive officer's
relative responsibilities, expertise, past year's compensation, and past year's
performance. The Compensation Committee also considered the compensation levels
of other comparable consumer products executives.
As in effect during fiscal year 1995, the Company's Management Incentive
Plan required a minimum level of annual corporate operating profit to be
achieved before any cash bonuses were payable to executive officers pursuant to
the plan. Amounts payable under the plan were calculated
11
<PAGE>
based upon the following factors: (i) annual base salary; (ii) employee's
targeted percentage (a percentage of base salary that increases for higher
positions within the Company, thereby placing a greater percentage of
compensation at risk for those with greater responsibility); and (iii) a
corporate performance factor based on a comparison of corporate results to
profitability objectives established at the beginning of the year.
The Company did not satisfy the minimum level of annual corporate operating
profit required for payments to be made to executive officers under the
Management Incentive Plan for fiscal year 1995. Nonetheless, in recognition of
the substantial contributions made by many of the Company's executive officers
during fiscal year 1995, particularly in view of the Haas Wheat Transaction and
the transitions in management that occurred in connection with that transaction,
the Compensation Committee determined to grant special cash awards to certain
executive officers. Bonuses paid to Messrs. Gallagher and Goss were in
accordance with arrangements entered into by the Company with each at the time
he commenced employment with the Company.
Beginning in fiscal year 1996, the Compensation Committee has revised the
corporate performance factor in order to consider corporate results with respect
to net sales, operating profit and cash flow (each as defined in the Management
Incentive Plan) measured against objectives established at the beginning of the
year, and (other than with respect to the Chief Executive Officer) to include an
individual performance factor based on measured accomplishment of goal-oriented
projects to be weighted equally with each other component of the corporate
performance factor.
The option incentive component of the total compensation package is intended
to retain and motivate executives to improve long-term stock market performance
and to increase value for all stockholders. The Compensation Committee generally
grants Options under the 1994 Stock Option Plan with an exercise price equal to
the market price at the date of the grant and, as a result, the Options will
have value only if the Company's stock price increases from the time of the
award. Grants are made to executive officers based on salary, responsibility,
and performance of the individual officer. Grants generally become exercisable
over the succeeding three years, although in the case of the Company's new Chief
Executive Officer, a four-year exercisability period was imposed.
Mr. Gallagher was named Chief Executive Officer of the Company effective
July 10, 1995. The Company entered into a Memorandum of Understanding, dated as
of June 21, 1995 (the "Memorandum"), with Mr. Gallagher, providing for his
employment as the Company's Chief Executive Officer for a five-year period,
unless earlier terminated or extended in accordance with the Memorandum or by
agreement of the parties. The Memorandum, which was approved by the Compensation
Committee, provides for a base salary at the rate of $650,000 per annum through
December 31, 1996, subject to upward adjustment thereafter at the discretion of
the Committee, incentive bonuses and the grant of stock options with respect to
800,000 shares of Common Stock pursuant to the 1994 Stock Option Plan to become
exercisable in equal installments over a four-year period. The incentive bonuses
available to Mr. Gallagher under the Memorandum are (i) an Incentive Bonus
pursuant to the formulas set forth in the Company's Management Incentive Plan,
(ii) Special Bonuses as of the last day of calendar year 1995, 1996 and 1997 in
the amounts of $650,000, $300,000 and $300,000, respectively, and (iii) Special
Price-Based Incentive Compensation consisting of certain cash payments in the
event the Company's Common Stock reaches certain trading price levels for at
least 30 consecutive days prior to June 30, 2000. See "Approval of Management
Incentive Plan." The Memorandum provides for certain payments to Mr. Gallagher
in the event of termination of his employment prior to the June 30, 2000,
including, if his employment is terminated by the Company without "cause" (as
defined) or due to Mr. Gallagher's death or disability, continued payment of his
base salary for 12 months, payment of any Incentive Bonus otherwise due in the
year of termination on a prorated basis, and a cash payment equal to 75% of any
unpaid Special Bonuses in respect of calendar years 1995, 1996 and 1997.
12
<PAGE>
The Compensation Committee negotiated and approved the Memorandum in order
to link Mr. Gallagher's compensation to his individual performance and to grant
substantial incentives to the new Chief Executive Officer tied to the
performance of the Company measured with respect to sales, profitability and
cash flow and to the long-term growth of the Company as measured by increases in
the value of its Common Stock. The Committee also considered the compensation
packages available to chief executives of comparable companies and the Company's
need to attract, retain and incentivize a new chief executive officer of Mr.
Gallagher's caliber. Mr. Gallagher's compensation in fiscal year 1995 was paid
in accordance with the Memorandum.
The Compensation Committee has considered the potential future effects on
the Company's executive compensation program of Section 162(m) of the Internal
Revenue Code. Section 162(m) limits the deductibility by public companies of
certain executive compensation in excess of certain amounts per executive per
year, but excludes from the calculation of such limit certain elements of
compensation, including performance-based compensation, provided that certain
requirements are met. The 1994 Stock Option Plan has been designed and
administered to qualify awards made thereunder as performance-based compensation
excepted from such limitation on the deductibility of executive compensation.
The Company has also attempted to structure other elements of its executive
compensation program, including the Management Incentive Plan or portions
thereof, to qualify as performance-based compensation for purposes of Section
162(m).
March 22, 1996
The Compensation Committee
Robert B. Haas, Chairman
Douglas D. Wheat
Thomas Herskovits
Kenneth F. Yontz
13
<PAGE>
PERFORMANCE GRAPH
The following graph compares total stockholder returns for the Company to
the Standard & Poor's Stock 400 Index ("S&P 400") and a weighted composite index
of certain peer companies (the "Peer Index") selected by the Company, on a
quarterly basis for the period commencing on January 26, 1994 (the date of the
Company's initial public offering) through December 30, 1995 (the "Performance
Period"). The comparison assumes $100.00 was invested on January 26, 1994 in the
Company's Common Stock and in each of the foregoing indices and assumes
reinvestment of dividends, if any. The total return for the Company's Common
Stock decreased by 42.3% during the Performance Period as compared with a
decrease in total return during the same period for the Peer Index of 1.0% and
an increase in total return during the same period for the S&P 400 of 31.1%. The
comparisons in the graph below are set forth in response to Commission
disclosure requirements, and therefore are not intended to forecast or be
indicative of future performance of the Company's Common Stock.
[GRAPH]
Playtex Peer
Products, Inc. S & P 400 Index
-------------- --------- -----
1/26/94 .................. 100.0 100.0 100.0
End of Q1 '94 ............ 77.9 94.8 90.3
End of Q2 '94 ............ 64.4 93.9 87.6
End of Q3 '94 ............ 68.3 99.7 82.1
End of Q4 '94 ............ 54.8 99.6 80.0
End of Q1 '95 ............ 61.5 108.5 85.3
End of Q2 '95 ............ 75.0 118.1 85.1
End of Q3 '95 ............ 66.3 124.8 89.4
End of Q4 '95 ............ 57.7 131.1 99.0
The Peer Index is comprised of the following: Tambrands Inc., Maybelline,
Inc., Carter-Wallace, Inc., Alberto-Culver Company, Church & Dwight Co., Inc.,
and Paragon Trade Brands Inc. The returns for each issuer within the Peer Index
have been weighted according to such issuer's respective stock market
capitalization at the beginning of the period presented. The Company selected
the issuers that comprise the Peer Index on the basis that each had comparable
lines of business and/or comparable stock market capitalization to the Company.
APPROVAL OF MANAGEMENT INCENTIVE PLAN
In January 1996, the Compensation Committee of the Board of Directors
approved, subject to stockholder approval as described herein, the Management
Incentive Plan for Key Employees (the "MIP") for management and other key
executive employees, including each of the Named Executive Officers, pursuant to
which eligible employees may receive a cash bonus each fiscal year (the "Annual
Bonus") based on the Company's annual performance and the individual
participant's performance
14
<PAGE>
during such fiscal year. In addition, under the MIP, the Chief Executive Officer
("CEO") is eligible to receive a maximum of $4 million in cash payments if the
closing price of the Company's Common Stock equals or exceeds certain specified
prices for 30 consecutive trading day periods at any time prior to June 30, 2000
(the "Stock Price Bonus"). The basic elements of the Annual Bonus awards
represent aspects of management performance that have been in place as a
determinant of total compensation for key management employees for a number of
years. The purpose of the MIP is to recognize and reward individual performance
that contributes to the overall profitability and growth of the Company and to
provide eligible employees with incentives to maximize the success of the
Company. For all participants other than the CEO, the MIP will be administered
by the Corporate Human Resources Department, subject to the control and
supervision of the CEO. Administration of the MIP with respect to the CEO will
be the responsibility of the Compensation Committee. Except with respect to the
CEO's Annual Bonus and the Stock Price Bonus, the Company, acting through the
Board of Directors or CEO, may amend or terminate the MIP at any time and may at
any time rescind any employee's participation in the MIP.
The Compensation Committee has discretion to select MIP participants from
among salaried employees of the Company at and above certain pay grade levels
(approximately 83 employees as of March 31, 1996). For purposes of determining
Annual Bonus, each participant is assigned a target bonus percentage that ranges
from 10% to 100% of the participant's base salary, based on the participant's
grade level. Subject to the CEO's discretion to set the amount of any Annual
Bonus (other than his or her own), Annual Bonuses under the MIP will be
calculated as a percentage of the applicable target bonus, based, for
participants other than the CEO, on an equally weighted index of four factors:
the Company's attainment of specified performance goals with respect to net
sales, profit and cash flow and the individual's attainment of specified
performance goals. For the CEO, the net sales and profit goals are weighted 25%
each and the cash flow target is weighted 50%. The CEO's Annual Bonus for each
fiscal year may be up to 150% of his or her base salary for such year, but in no
event greater than $1.5 million per year. Performance targets for the CEO are
specified by the Compensation Committee each year; performance goals for all
other participants are determined by the CEO each year, who retains discretion
to amend such Company and individual performance goals. Each MIP participant may
elect to defer payment of all or a portion of his or her Annual Bonus, if any,
to a date selected by such participant, together with interest on the amount
deferred compounded each quarter at the prime rate as in effect each quarter at
Chemical Bank.
In that (i) the Annual Bonuses are subject to the Company's and the
individual participant's future performance results which are not known at
present, (ii) individual performance goals may include subjective factors, (iii)
the CEO retains the discretion to determine the amount of Annual Bonus for
participants other than the CEO, and (iv) the Stock Price Bonus depends on the
future price of the Company's Common Stock, amounts to be paid under the MIP are
not determinable (other than the maximum payments to the CEO) and amounts that
would have been paid during 1995 if such plan had then been in place are
similarly not determinable.
Approval of the MIP will require affirmative vote of the holders of a
majority of the Company's outstanding Common Stock present in person or
represented by proxy at the Annual Meeting and duly entitled to vote on this
matter. Abstentions as to this matter will have the same effect as votes against
the matter; however, broker non-votes will be treated as not entitled to vote
for purposes of determining the vote required for approval of this matter and
will not have any effect on the outcome of this matter.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE
MANAGEMENT INCENTIVE PLAN FOR KEY EMPLOYEES.
15
<PAGE>
RATIFICATION OF SELECTION OF AUDITORS
The auditing firm of KPMG Peat Marwick LLP has examined the financial
statements of the Company since 1986. The Board of Directors wishes to utilize
its services for the Company and its subsidiaries for the fiscal year ending
December 28, 1996. A resolution will be presented to the meeting to ratify the
appointment of that firm by the Board of Directors as independent accountants to
examine the financial statements of the Company and its subsidiaries for the
fiscal year ending December 28, 1996, and to perform other appropriate
accounting services. Representatives of that firm will be present at the
meeting, will have the opportunity to make a statement if they desire to do so,
and will be available to respond to appropriate questions by stockholders.
If the stockholders do not ratify the selection of KPMG Peat Marwick LLP by
the affirmative vote of a majority of the number of votes entitled to be cast by
the Common Stock represented at the Annual Meeting, the selection of independent
accountants will be reconsidered by the Board of Directors. Under applicable
Delaware law, in determining whether this item has received the requisite number
of affirmative votes, abstentions will have the same effect as votes against
this item; however, broker non-votes will be treated as not entitled to vote for
purposes of determining approval of this item and will not have any effect on
the outcome of the matter.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION OF
THE APPOINTMENT OF KPMG PEAT MARWICK LLP.
OTHER MATTERS
The Board of Directors and management of the Company know of no other
matters to be brought before the Annual Meeting. If other matters should arise
at the Annual Meeting, shares represented by proxies will be voted at the
discretion of the proxy holder.
16
<PAGE>
STOCKHOLDER NOMINATIONS AND PROPOSALS
Any stockholder who intends to present a proposal (other than with respect
to the election of directors) at the 1997 annual meeting of stockholders and who
wishes such proposal to be included in the Proxy Statement for that meeting must
submit such proposal in writing to the Secretary of the Company, at the address
of the Company set forth on the first page of this Proxy Statement, and such
proposal must be received on or before December 11, 1996, or, if the 1997 annual
meeting is changed by more than thirty (30) calendar days from May 22, such
proposal must be received a reasonable time before the solicitation is made.
In addition, any stockholder who intends to nominate any person for election
as a director at the 1997 annual meeting must make such nominations by written
notice given by or on behalf of a stockholder of record (the "Notice of
Nomination"). The Notice of Nomination must be delivered personally to, or
mailed to, and received at the principal executive office of the corporation,
addressed to the attention of the Secretary, no later than ten (10) days after
the first date of public disclosure by the Company of the date of the annual
meeting or special meeting of stockholders; provided, however, that such Notice
of Nomination shall not be required to be given more than sixty (60) days prior
to an annual or special meeting of stockholders. Public disclosure shall be
deemed to be first made when disclosure of such date of the annual meeting or
special meeting of stockholders is first made in a press release reported by the
Dow Jones News Services, Associated Press or comparable national news service,
or in a document publicly filed by the corporation with the Commission pursuant
to Sections 13, 14 or 15(d) of the Exchange Act or any successor thereto. Such
Notice of Nomination shall set forth (i) the name and address of the person
proposing to make nominations, (ii) the class and number of shares of capital
stock held of record, held beneficially and represented by proxy held by such
person as of the record date for the meeting and as of the date of such Notice
of Nomination, (iii) all information regarding each stockholder nominee that
would be required to be set forth in a definitive proxy statement filed with the
Commission pursuant to Section 14 of the Exchange Act, or any successor thereto,
and the written consent of each such stockholder nominee to serve if elected,
and (iv) all other information that would be required to be filed with the
Commission if the person proposing such nominations were a participant in a
solicitation subject to Section 14 of the Exchange Act or any successor thereto.
The chairman of the meeting shall, if the facts warrant, determine and declare
to the meeting that any proposed nomination of a stockholder nominee was not
made in accordance with the foregoing procedures and, if he should so determine,
he shall so declare to the meeting and the defective nomination shall be
disregarded.
By Order of the Board of Directors
/s/ Paul E. Yestrumskas
----------------------------------
Paul E. Yestrumskas
Vice President, General Counsel
and Secretary
April 8, 1996
17
<PAGE>
Playtex Products, Inc.
300 Nyala Farms Road, WestPort, CT 06880
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned stockholder of Playtex Products, Inc. hereby constitutes
and appoints Michael R. Gallagher, and Michael F. Goss, and each of them,
the true and lawful attorneys, agents and proxies of the undersigned, each
with full power of substitution, to vote at the meeting, (or if only one
shall be present and acting at the meeting then that one) all of the shares
of stock of the corporation that the undersigned would be entitled, if
personally present, to vote at the annual meeting of stockholders of the
corporation to be held on May 22, 1996 and at any adjournments thereof.
FOLD AND DETACH HERE
<PAGE>
1. Election of directors to serve until the election and qualification of his
or her successor.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR all nominees WITHHOLD INSTRUCTION: To withhold authority to vote for any individual nominee
listed to the right AUTHORITY strike a line through the nominee's name in the list below.
(except as marked to the to vote for all nominees
contrary) listed to the right R. Haas M. Gallagher M. Goss J. Smillow T. Lee
[ ] [ ] K. Yontz T. Fisher D. Wheat N. Amer
2. Proposal to approve the Management Incentive Plan 3. The ratification of the appointment 4. In their discretion, the Proxies
for Key Employees. of KPMG Peat Marwick LLP as are authorized to vote upon such
independent auditors for the fiscal other business as may properly
year 1996. come before the meeting.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Receipt is acknowledged of
[ ] [ ] [ ] [ ] [ ] [ ] notice and proxy statement for
the foregoing meeting and of
annual report to stockholders
for the fiscal year ended
December 30, 1995.
Please sign exactly as name
appears below. When shares are
held by joint tenants, both
should sign. When signing as
attorney, executor
administrator, trustee or
guardian, please give full title
as such. If a corporation,
please sign in full corporate
name by president or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
--------------------------------
Signature
--------------------------------
Signature if held jointly
Dated , 1996
---------------------
Please mark, sign, date and
return the proxy card promptly
using the enclosed envelope.
FOLD AND DETACH HERE
</TABLE>
