SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934 (Amendment No. )
Check the appropriate box:
[x ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[ ] Definitive Information Statement
PLAYTEX PRODUCTS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant As Specified In Its Charter)
- --------------------------------------------------------------------------------
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
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<PAGE>
2
PLAYTEX PRODUCTS, INC.
300 Nyala Farms Road
Westport, Connecticut 06880
INFORMATION STATEMENT
February [ ], 1998
To Shareholders of
Playtex Products, Inc.
INTRODUCTION
GENERAL INFORMATION
This Information Statement (the "Information Statement") is being
delivered by Playtex Products, Inc., a Delaware corporation (the "Company") and
relates to an amendment to the 1994 Stock Option Plan of the Company (the "Stock
Option Plan").
This Information Statement is being mailed on or about February [ ],
1998. This Information Statement is being furnished to shareholders solely to
provide them with certain information concerning the 1994 Stock Option Plan in
accordance with the requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the regulations promulgated thereunder
including particularly Regulation 14C. The costs of this Information Statement
are being borne by the Company.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY. The Company is not asking you for a proxy as shareholders holding in
excess of a majority of the outstanding shares have taken such action by written
consent pursuant to Section 228(a) of the Delaware General Corporation Law to
cause the Stock Option Plan Amendment (defined below) to be adopted.
STOCK OPTION PLAN AMENDMENT
The Playtex 1994 Stock Option Plan for Directors and Executive and Key
Employees (the "Plan") provides that the aggregate number of shares of the
Company's $.01 par value common stock ("Shares") which may be issued upon the
exercise of Options granted under the Plan ("Options") and stock appreciation
rights granted under the Plan ("SARs") shall not exceed 3,047,785. As of January
16, 1998, the Company had issued Options and SARs with respect to 3,038,709
Shares.
For the Company to be able to continue to provide its directors,
executives and key employees with equity-based performance incentives under the
Plan, including grants of Options made to new executives who have joined the
company in connection with the Company's acquisition
<PAGE>
3
of Personal Care Holdings, Inc., it will be necessary to increase the number of
Shares available under the Plan.
The Board of Directors believes that it is in the Company's best interest
that Options and/or SARs continue to comprise a meaningful part of the
compensation for directors, officers and key employees of the Company. The Board
of Directors further believes that the proposed increase in the total number of
Shares available under the Plan will provide desirable flexibility in its
ability to properly compensate its directors, officers and key employees.
Pursuant to Section 8.2 of the Plan, the Stock Option Committee of the
Board of Directors of the Company (the "Compensation Committee") may only
increase the number of Shares available under the Plan with shareholder approval
obtained within 12 months before or after such increase. On February [ ], 1998,
the Compensation Committee approved an amendment (the "Stock Option Plan
Amendment") of the Plan to increase the number of Shares available under the
Plan to an aggregate of 5,047,785 Shares. Adoption of the Stock Option Plan
Amendment requires the affirmative vote of the holders of the majority of
outstanding Shares; however, the Company is not asking for your vote as
shareholders holding in excess of a majority of the outstanding Shares have
taken such action by written consent pursuant to Section 228(a) of the Delaware
General Corporation Law to cause the Stock Option Plan Amendment to be
adopted.1/
DESCRIPTION
The 1994 Stock Option Plan authorizes the grant to directors, executives
and other key employees of the Company of long-term incentive share awards in
the form of Options and SARs. The 1994 Stock Option Plan is administered by the
Compensation Committee, which consists of three non-employee directors of the
Company, currently Messrs. Timothy O. Fisher, Douglas D. Wheat, and Kenneth F.
Yontz. Currently, there are 9 directors and 114 officers and other key employees
eligible to receive awards under the 1994 Stock Option Plan. Options to be
granted under the 1994 Stock Option Plan may be either Incentive Stock Options
within the meaning of Section 422(b) of the Code, or Non-Qualified Stock
Options. A "Non-Qualified Stock Option" is an Option which is not an Incentive
Stock Option and which is designated a Non-Qualified Stock Option by the
Compensation Committee. SARs may only be granted in tandem with Options, and
will be subject to such terms and conditions not inconsistent with the 1994
Stock Option Plan as the Compensation Committee shall impose. The aggregate
number of Shares, after the adoption of the Stock Option Plan Amendment, of
Common Stock which may be issued upon exercise of Options and SARs may not
exceed 5,047,785 Shares, provided that the aggregate number of such Shares which
may be issued upon the exercise of Options and SARs granted to any single
Executive
- --------
1/ Note to Preliminary Information Statement: The Company will solicit such
consents following the consummation of the acquisition of Personal Care
Holdings, Inc., which is anticipated to occur prior to the end of
January, 1998. If such consents are not then obtained, this Information
Statement will not be mailed to shareholders.
<PAGE>
4
Officer may not exceed 1,000,000 Shares. Options and SARs may not be granted
under the 1994 Stock Option Plan after October 2003.
For discretionary grants, the recipients, terms, conditions, number and
type of Options (whether Incentive Stock Options or Non-Qualified Stock Options)
and/or SARs to be granted under the 1994 Stock Option Plan shall be determined
by the Compensation Committee; PROVIDED, HOWEVER, that, for such Options, the
exercise price per Share shall not be less than 100% of the fair market value
(as defined in the 1994 Stock Option Plan) of the Common Stock on the date such
Option is granted; and PROVIDED, FURTHER, that in the case of an Incentive Stock
Option, the price per Share shall not be less than 110% of the fair market value
of the Common Stock on the date such Option is granted in the case of an
individual owning (within the meaning of Section 424(d) of the Code) more than
10% of the total combined voting power of all classes of stock of the Company (a
"10% Owner"), any subsidiary of the Company or parent of the Company. In
addition, certain non-employee directors have been granted Non-Qualified Stock
Options under the 1994 Stock Option Plan pursuant to a fixed formula setting
forth the number of Options, exercise price, vesting schedule and period of
exercisability.
Except as the Compensation Committee may otherwise provide with respect
to Options granted to non-officer employees, Options under discretionary grants
may not be exercised during the first year after such Options are granted.
Subject to this and certain other conditions, such Options will be exercisable
at such times and in such installments (which may be cumulative) as the
Compensation Committee provides in the terms of each such Option; PROVIDED,
HOWEVER, that by resolution adopted after the Option is granted the Compensation
Committee may, on such terms and conditions as it may determine appropriate (and
subject to certain conditions), accelerate the time at which such Option or
portion thereof may be exercised. To the extent the aggregate fair market value
of Shares (determined at the time of grant) with respect to which Incentive
Stock Options are exercisable for the first time by an optionee during any
calendar year exceeds $100,000, such Options shall be taxed as Non-Qualified
Stock Options. The consideration for the granting of an Option is the optionee's
continued rendering of services to the Company or a subsidiary after the Option
is granted. The Compensation Committee may, in its discretion and on such terms
as it deems appropriate, require as a condition to the grant of such Options
that the optionee surrender for cancellation some or all of the unexercised
Options which have been previously granted to the optionee.
Shares purchased upon exercise of an Option shall be paid in full at the
time of exercise in cash or, if the Compensation Committee so permits, in whole
or in part in Shares valued at their fair market value on the date of exercise,
or by a promissory note on such terms and conditions as the Compensation
Committee may impose. Unless otherwise approved in writing by the Compensation
Committee, no Shares acquired upon the exercise of any Option by any director or
officer may be sold, assigned or otherwise transferred until at least six months
have elapsed from (but excluding) the date that such Option was granted, and the
Compensation Committee may impose other restrictions on the transferability of
such Shares as it deems appropriate. Options will expire after the first to
occur of: (i) the expiration of ten years from the date the Option was granted;
<PAGE>
5
(ii) with respect to Incentive Stock Options granted to an optionee who was a
10% Owner when the Incentive Stock Options were granted, five years from the
date the Incentive Stock Option was granted; (iii) except in the case of an
employee who is disabled (as defined in Section 22(e)(3) of the Code),
expiration of three months from the date of the optionee's Termination of
Employment (as defined in the 1994 Stock Option Plan), unless such optionee dies
in such three-month period; (iv) in the case of an optionee who is disabled (as
defined in Section 22(e)(3) of the Code), expiration of one year from the date
of the optionee's Termination of Employment, unless the optionee dies in such
one-year period; or (v) the expiration of one year from the date of the
optionee's death.
SARs entitle the optionee to surrender the Option in exchange for an
amount, payable in Shares or, in the discretion of the Compensation Committee,
in cash, determined by multiplying (i) the lesser of (a) the difference obtained
by subtracting the Option exercise price per Share subject to the related Option
from the fair market value of a Share on the date of exercise of the SAR and (b)
two times the Option exercise price per Share subject to the related Option, by
(ii) the number of Shares subject to the related Option with respect to which
the SAR is exercised. SARs may be exercised for cash only during prescribed
periods or pursuant to an irrevocable written election made at least six months
prior to the date of exercise.
The Compensation Committee may make equitable adjustments in the terms of
Options under discretionary grants [and maximum number of Shares available under
the 1994 Stock Option Plan], and may also provide by the terms of any such
Option that such Option cannot be exercised, upon the occurrence of certain
corporate events, including reorganizations, mergers, acquisitions, liquidation
or dissolution. The 1994 Stock Option Plan may be amended by the Compensation
Committee at any time, provided that stockholder approval is required to approve
amendments which (i) increase any limits on the maximum number of Shares which
may be issued up on the exercise of Options; (ii) materially modify the 1994
Stock Option Plan's eligibility requirements; (iii) reduce the minimum option
price requirements of the 1994 Stock Option Plan; or (iv) extend the time period
during which Options or SARs may be granted. No amendment of the 1994 Stock
Option Plan shall adversely affect any prior rights or obligations under Options
or SARs, without the consent of the optionee.
FEDERAL INCOME TAX CONSEQUENCES
Options granted under the 1994 Stock Option Plan may be either
Non-Qualified Stock Options or, if granted to employees of the Company or any of
its subsidiaries, Incentive Stock Options, as determined from time to time by
the Compensation Committee. As to Non-Qualified Stock Options, there will be no
federal income tax consequences to either the optionee or the Company on the
grant of the Option. Upon the exercise of a Non-Qualified Stock Option, the
optionee will generally recognize taxable ordinary income in an amount equal to
the difference between the Option price paid and the then fair market value of
the Shares received. The Company will generally be entitled to a tax deduction
in an amount equal to the optionee's taxable ordinary
<PAGE>
6
income. In the case of an optionee subject to Section 16(b) of the Exchange Act,
the optionee will recognize ordinary income after exercise only upon the
expiration of six months following the date of grant, unless the optionee elects
pursuant to Section 83(b) of the Code to use the exercise date for purposes of
such calculation. The Company is required to withhold taxes on the ordinary
income recognized by an optionee upon exercise of a Non-Qualified Stock Option.
Upon disposition of the Shares by the optionee, the optionee will generally
recognize gain or loss, as the case may be, equal to the difference between the
amount realized on such disposition and his basis for the Shares, which will
include the amount previously recognized by him or her as ordinary income.
If an Option granted under the 1994 Stock Option Plan is designated as an
Incentive Stock Option and thereafter continues to qualify as such, the optionee
will generally recognize no income upon grant or exercise of the Incentive Stock
Option and the Company will not be allowed a deduction for Federal income tax
purposes (which it would otherwise receive in the case of an exercise of a
Non-Qualified Stock Option). Upon a subsequent sale or other disposition of
Shares received upon exercise of an Incentive Stock Option, if such sale or
other disposition occurs at least two years after the date of grant and one year
after the transfer of Shares pursuant to the exercise of the Incentive Stock
Option, any gain or loss will be taxed to the optionee at capital gain rates. If
either of such requirements is not satisfied, gain realized upon such sale or
other disposition will generally be subject to ordinary income tax. The Company,
in turn will generally then be entitled to a deduction for Federal income tax
purposes in the amount of such ordinary income recognized by the optionee.
Whenever Incentive Stock Options are exercised, the difference between the
exercise price and the fair market value of the Shares constitutes an adjustment
in computing alternative minimum taxable income. As a result, Section 55 of the
Code may impose an "alternative minimum tax" upon the optionee exercising
Incentive Stock Options.
Finally, Section 162(m) of the Code denies a Federal income tax deduction
for certain compensation in excess of $1 million per year paid to the Chief
Executive Officer and the four other most highly paid executive officers of a
publicly traded corporation. Certain types of performance-based compensation,
including compensation based on attaining pre-established performance goals, are
excluded from this deduction limit. It is intended that compensation paid
pursuant to the 1994 Stock Option Plan will be deductible by the Company
notwithstanding the limitations of Section 162(m) of the Code by reason of the
exception for performance-based compensation.
ACCOUNTING TREATMENT
Generally, the Company's reported earnings will not be affected by the
grant of Options or SARs or the exercise of Options or SARs, since options or
SARs cannot be issued for less than 100% of the fair market value of the common
stock on the date of grant, according to the 1994 Stock Option Plan. Such
grants, however, may impact the calculation of diluted earnings per share.
<PAGE>
7
DISSENTERS' RIGHT OF APPRAISAL
The Company does not believe that the Company's Stockholders will have
dissenters' rights as a result of the Stock Option Plan Amendment.
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 January 16, 1998 by (i)
each 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.2/
- --------
2/ Note to Preliminary Information Statement: The following table sets forth
information as of January 16, 1998. As additional Shares will be issued
in connection with the consummation of the acquisition by the Company of
Personal Care Holdings, Inc., the following table will be revised prior
to mailing to reflect the actual amounts and percentages following such
acquisition.
<PAGE>
8
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF BENEFICIALLY
BENEFICIAL OWNER OWNED(1) PERCENT
- ----------------------------------------------------------------------------- ----------------------------- -----------------
<S> <C> <C>
Robert B. Haas.............................................................. 20,000,000(2) [ ]
Michael R. Gallagher........................................................ 452,334(3) *
Michael F. Goss............................................................. 150,501 *
Richard G. Powers........................................................... 16,667 --
Max R. Recone............................................................... 118,334 *
James S. Cook............................................................... 168,334 *
Thomas H. Lee............................................................... 3,336,455(4) [ ]
Kenneth F. Yontz............................................................ 5,600 *
Timothy O. Fisher........................................................... 21,663(5) *
Douglas D. Wheat............................................................ -- --
Michael R. Eisenson......................................................... --(6) --
C. Ann Merrifield........................................................... -- --
Stinson Capital Partners, L.P. et al (7).................................... 5,001,300 [ ]
909 Montgomery Street
Suite 400
San Francisco, CA 94113
Partnerships managed by Haas Wheat & Partners (2)........................... 20,000,000(2)(6) [ ]
All current directors, director nominees and Named [ ] [ ]
Executive Officers as a group (12 persons)..................................
</TABLE>
- -----------------------
* 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 as of January 16, 1998. The
Shares beneficially owned include 433,334, 122,501, 78,334, 78,334,
16,667 and 5,600 subject to currently exercisable options granted to
Messrs. Gallagher, Goss, Recone, Cook, Powers and Yontz, respectively,
and 734,770 Shares subject to currently exercisable options granted to
all current directors and Named Executive Officers as a group.
(2) Includes 8,055,555 (approximately [ %] of the outstanding Shares)
owned by HWH Capital Partners, L.P., 9,028,482 Shares (approximately [ %]
of the outstanding Shares) owned by HWH Valentine Partners, L.P., and
2,915,963 Shares (approximately [ %] of the outstanding Shares) owned
by HWH Surplus Valentine Partners, L.P. 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.
(3) Includes 9,000 Shares held by Mr. Gallagher's children. Mr. Gallagher
disclaims beneficial ownership of these Shares.
<PAGE>
9
(4) Includes 1,361,951 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 1,361,951 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.
(5) Includes 16,663 Shares held of record by Mr. Fisher's spouse and
children. Mr. Fisher disclaims beneficial ownership of these Shares.
(6) Surplus Phemus Corporation ("Phemus") is the beneficial owner of
2,915,963 Shares (approximately [ %] of the outstanding Shares) and is an
affiliate of Harvard Private Capital Group, Inc. (a corporation which
invests and manages the private equities portfolio of the Harvard
University Endowment) which is the sole limited partner of Phemus and
shares voting and dispositive power with respect to such Shares. Michael
R. Eisenson is the President and Chief Executive Officer of Harvard
Private Capital Group, Inc.
(7) On December 16, 1997, the Company received a Schedule 13D filed with the
Securities and Exchange Commission (the "Commission") in respect of
ownership of an aggregate of 5,001,300 Shares of Common Stock by a group
comprised of Stinson Capital Partners, L.P., BK Capital Partners IV,
L.P., The Carpenters Pension Trust for Southern California, United
Brotherhood of Carpenters and Joiners of America Local Unions and
Councils Pension Fund, Insurance Company Supported Organizations Pension
Plan, Richard C. Blum & Associates, L.P., Richard C. Blum & Associates,
Inc. and Richard C. Blum. Each filing person reported shared voting power
and shared dispositive power with respect to all of such Shares. The
Company has not attempted to verify independently any of the information
contained in the Schedule 13D.
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 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.
<PAGE>
10
Based 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 1997.
BOARD MEETINGS, COMMITTEES AND ATTENDANCE
The Company's Board of Directors met or acted by unanimous written
consent eight times during fiscal year 1997. 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
Committee.
The Audit Committee was comprised of Messrs. Fisher, Lee and Yontz until
May 20, 1997 and was comprised of Messrs. Fisher, Lee and Merrifield thereafter
during fiscal year 1997. As directed by the Board of Directors, the functions
of the committee include recommending independent auditors to be employed by the
Company; conferring 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
1997.
The Compensation Committee was compromised of Messrs. Fisher, Wheat and
Yontz during fiscal year 1997. 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 Compensation
Committee met or acted by unanimous written consent seven times during fiscal
year 1997. While serving on the Compensation Committee, directors do not receive
option awards (except, as to Mr. Yontz, pursuant to formula grants) under the
1994 Playtex Stock Option Plan.
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. Mr. Yontz and
Ms. Merrifield each receive 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, Mr.
<PAGE>
11
Yontz and Ms. Merrifield participate in the 1994 Playtex Stock Option Plan,
pursuant to formula grants.
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 1997,
1996 and 1995 to the Company's Chief Executive Officer and each of the four
other executive officers of the Company who were serving as executive officers
of the Company at the end of fiscal year 1997 and whose combined annual salary
and bonus exceeded $100,000 (the "Named Executive Officers").
<PAGE>
12
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
OTHER SECURITIES
ANNUAL UNDERLYING AWARDS ALL
COMPEN- OPTIONS/ OTHER
SALARY BONUS SATION SARs COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) (1) (S)(2)
--------------------------- ---- -------- ---------- ----- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Michael R. Gallagher........................ 1997 $699,615 [ ] $- --- $256,160(4)
Chief Executive Officer and Director 1996 650,000 $1,093,000(3) - 100,000 186,991(4)
1995 345,000 650,000 - 800,000 392
Michael F. Goss............................. 1997 226,539 [ ] - 30,000 47,606
Executive Vice President, Chief 1996 213,000 125,000 - - 28,928
Financial Officer and Director 1995 200,923 100,000 - 127,500 52,563(5)
Richard G. Powers........................... 1997 203,846 [ ] - 20,000 5,458
President, Personal Products Division 1996 80,769 32,500 - 50,000 -
1995 - - - - -
Max R. Recone............................... 1997 211,231 [ ] - 20,000 38,275
President, Consumer Products Division 1996 201,269 90,000 - - 39,902
1995 191,539 38,000 - 95,000 35,522
James S. Cook............................... 1997 202,077 [ ] - 15,000 36,646
Senior Vice President, Operations 1996 193,462 88,000 - - 39,758
1995 185,077 34,000 - 95,000 35,802
</TABLE>
(1) 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 1995 options, however, became
exercisable in equal installments over a four-year period, with full
vesting occurring on the fourth anniversary of the grant date.
(2) Except with respect to Mr. Gallagher in 1997 and 1996 and Mr. Goss in
1995, 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.
(3) Represents $793,000 paid pursuant to the Company's Management Incentive
Plan and $300,000 paid pursuant to Mr. Gallagher's Special Bonuses Program
established in the Memorandum of Understanding dated July 10, 1995.
(4) Represents $135,184 and $144,062 employer contribution to the Retirement
Plan and the Deferred Plan and premium paid by employer for term life
insurance, and $120,976 and $42,929 in connection with Mr. Gallagher's
relocation to Connecticut in 1996 for fiscal years 1997 and 1996,
respectively.
(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
$50,000 moving allowance in connection with Mr. Goss's relocation to
Connecticut in 1995.
<PAGE>
13
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table provides information related to Options exercised
by the Named Executive Officers during fiscal year 1997 and unexercised Options
and SARs held by the Named Executive Officers at fiscal year end.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARs AT OPTIONS/SARs AT
SHARES DECEMBER 27, DECEMBER 27,
ACQUIRED 1997 (#)(2) 1997 ($)(2)(3)
ON VALUE -------------------- --------------------
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#)(1) ($)(1) UNEXERCISABLE UNEXERCISABLE
- ---------------------------------------- ----------- ------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Michael R. Gallagher................... - - 433,334/466,666 27,083/54,166
Michael F. Goss........................ - - 122,501/72,499 227,865/64,009
Richard G. Powers...................... - - 16,667/53,333 30,208/65,416
Max R. Recone.......................... - - 78,334/51,666 71,042/40,520
James S. Cook.......................... - - 78,334/46,666 71,042/39,270
</TABLE>
(1) None of the Named Executive Officers exercised any Options during fiscal
year 1997.
(2) No SARs are outstanding.
(3) The closing price for the Company's Common Stock as reported by the New
York Stock Exchange on December 26, 1997 (the last trading day of fiscal
year 1997) was $9.8125.
<PAGE>
14
OPTION GRANTS DURING FISCAL YEAR 1997
The following table provides information related to options granted
to the Named Executive Officers during fiscal year 1997. No SARs were granted
during fiscal year 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE
OPTIONS/ VALUE AT ASSUMED
SARs EXERCISE ANNUAL RATES OF STOCK
OPTIONS/ GRANTED TO OR PRICE APPRECIATION FOR
SARs EMPLOYEES BASE OPTION TERM (1)
GRANTED IN FISCAL PRICE EXPIRATION -------------------------
Name (#)(2) YEAR ($/SH)(3) DATE 5% ($) 10% ($)
- ------------------------------ ------------- ------------ ------------- --------------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Michael R. Gallagher......... - - - - - -
Michael F. Goss.............. 30,000 5% $9.5625 September 22, 2007 $180,414 $457,204
Richard G. Powers............ 20,000 3% $9.5625 September 22, 2007 $120,276 $304,803
Max R. Recone................ 20,000 3% $9.5625 September 22, 2007 $120,276 $304,803
James S. Cook................ 15,000 2% $9.5625 September 22, 2007 $90,207 $228,602
</TABLE>
(1) The potential realizable value portion of the foregoing table 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.
(2) Options granted to persons other than non-employee directors in fiscal
year 1997 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.
<PAGE>
15
BENEFIT PLANS FOR TERMINATED EMPLOYEES
Each of the Named Executive Officers (as defined herein) is party to
an agreement with the Company with respect to termination of employment. In the
event of termination by the Company without Cause (as defined in such
agreements) which occurs prior to a Change of Control (as defined in such
agreements), Mr. Gallagher and Mr. Goss are entitled to receive two years'
salary, bonus and fringe benefits, and the other Named Executive Officers are
entitled to receive one year's salary, bonus and fringe benefits. In the event
employment is terminated within three years following a Change of Control, each
Named Executive Officer except Mr. Gallagher would receive one year's salary,
bonus and fringe benefits. Mr. Gallagher would enter into a five year
non-compete agreement following termination arising from a Change of Control for
total consideration equal to three years' salary, bonus and fringe benefits.
Mr. Goss is additionally obligated to make himself available as a consultant
to the Company for a period of six months following termination arising from a
Change of Control for total consideration equal to one year's salary, bonus and
fringe benefits. In the event of a Change of Control, each Named Executive
Officer is entitled to receive a one-time annual bonus, whether or not
employment is terminated.
ARRANGEMENTS WITH FORMER CHIEF EXECUTIVE OFFICER
The Company has retained Joel E. 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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None.
REPORT ON EXECUTIVE COMPENSATION
IN ACCORDANCE WITH THE RULES AND REGULATIONS OF THE COMMISSION, THE
FOLLOWING REPORT OF THE COMPENSATION COMMITTEE 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 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
<PAGE>
16
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 Playtex 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.
Base salaries of executive officers are reviewed annually. In
establishing base salaries during fiscal year 1997, 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 1997, 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 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) corporate performance 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 Playtex 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.
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,
<PAGE>
17
incentive bonuses and the grant of stock options with respect to 800,000 Shares
of Common Stock pursuant to the 1994 Playtex 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. The Memorandum provides for
certain payments to Mr. Gallagher in the event of termination of his employment
prior to 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. During fiscal year 1996, Mr. Gallagher
received stock options with respect to an additional 100,000 Shares of Common
Stock pursuant to the 1994 Playtex Stock Option Plan which become exercisable in
equal installments over a three-year period.
The Compensation Committee has structured Mr. Gallagher's
compensation in order to link it to his individual performance and to grant
substantial incentives to the Chief Executive Officer tied to the performance of
the Company measured with respect to sale, 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 Compensation Committee also considered the compensation
packages available to chief executives of comparable companies and the Company's
need to attract, retain and incentivize a chief executive officer of Mr.
Gallagher's caliber.
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 Playtex 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).
INCORPORATION BY REFERENCE
The following documents previously filed with the Commission by the
Company pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), are
<PAGE>
18
incorporated by reference into this Information Statement with respect to all
information required by item 13 of Reg.ss.240.14a-101 of the Exchange Act: the
Proxy Statement filed by the Company on May 20, 1997 and the Form 10-Q filed by
the Company on November 10, 1997 for the period ending September 27, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Information Statement and
prior to the 20th day following the mailing of the definitive Information
Statement shall be deemed to be incorporated by reference into this Information
Statement and to be a part hereof from the dates of filing such documents or
reports. Any statement contained herein or in a document incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Information Statement to the extent that a statement contained herein or in
any other subsequently filed document which is also incorporated or deemed to be
incorporated herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Information Statement.
THIS INFORMATION STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN
CERTAIN EXHIBITS TO DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
BY REFERENCE) ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON TO WHOM A COPY OF THIS
INFORMATION STATEMENT HAS BEEN DELIVERED UPON WRITTEN OR ORAL REQUEST, IN THE
CASE OF COMPANY DOCUMENTS, TO PLAYTEX PRODUCTS, INC., 300 NYALA FARMS ROAD,
WESTPORT, CONNECTICUT 06880, ATTENTION: SECRETARY OF THE CORPORATION, TELEPHONE
NUMBER: (203) 341-4069.
