SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-
12
Allou Health & Beauty Care, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 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.
(a) Title of each class of securities to which
transaction applies:
(b) Aggregate number of securities to which
transaction applies:
<PAGE>
(c) 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):
(d) Proposed Maximum aggregate value of
transaction:
(e) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
-2-<PAGE>
ALLOU HEALTH & BEAUTY CARE, INC.
50 Emjay Boulevard
Brentwood, New York 11717
________________________________________
Notice of Annual Meeting of Stockholders
September 11, 1995
________________________________________
NOTICE IS HEREBY GIVEN that the 1995 Annual Meeting of
Stockholders (the "Meeting") of ALLOU HEALTH & BEAUTY CARE, INC., a Delaware
corporation (the "Company"), will be held in the Boardroom of the American
Stock Exchange located at 86 Trinity Place, New York, New York 10006, on
Monday, September 11, 1995, 10:00 A.M., to consider and act upon the
following:
1. To elect seven (7) directors of
the Company to serve as the Board
of Directors until the next
Annual Meeting of Stockholders
and until their successors are
elected and qualified; and
2. The transaction of such other
business as may properly come
before the Meeting or any
adjournments thereof.
Only stockholders of record of the Class A Common Stock, $.001 par value, and
the Class B Common Stock, $.001 par value, of the Company at the close of
business on July 19, 1995 are entitled to receive notice of and to attend the
Meeting. At least 10 days prior to the Meeting, a complete list of the
stockholders entitled to vote will be available for inspection by any
stockholder, for any purpose germane to the Meeting, during ordinary business
hours, at 1211 Avenue of the Americas, 17th floor, New York, New York 10036.
If you do not expect to be present, you are requested to fill in, date and
sign the enclosed Proxy, which is solicited by the Board of Directors of the
Company, and to mail it promptly in the enclosed envelope. In the event you
decide to attend the Meeting in person, you may, if you desire, revoke your
Proxy and vote your shares in person.
Dated: July 24, 1995
By Order of the Board of Directors
Jack Jacobs
Secretary
IMPORTANT
The return of your signed Proxy as promptly as possible will
greatly facilitate arrangements for the Meeting. No postage is required if
the Proxy is returned in the envelope enclosed for your convenience and mailed
in the United States.
<PAGE>
ALLOU HEALTH & BEAUTY CARE, INC.
50 Emjay Boulevard
Brentwood, New York 11717
________________________________________
Proxy Statement
Annual Meeting of Stockholders
September 11, 1995
________________________________________
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Allou Health & Beauty
Care, Inc., a Delaware corporation (the "Company"), to be voted at the Annual
Meeting of Stockholders of the Company (the "Meeting") which will be held in
the Boardroom of the American Stock Exchange, 86 Trinity Place, New York, New
York 10006 on September 11, 1995 at 10:00 A.M., local time, and any
adjournment or adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders and in this Proxy
Statement.
The principal executive offices of the Company are located at 50
Emjay Boulevard, Brentwood, New York 11717. The approximate date on which
this Proxy Statement and accompanying Proxy will first be sent or given to
stockholders is July 26, 1995.
A Proxy, in the accompanying form, which is properly executed,
duly returned to the Company and not revoked will be voted in accordance with
the instructions contained therein and, in the absence of specific
instructions, will be voted in favor of the proposal and in accordance with
the judgment of the person or persons voting the proxies on any other matter
that may be brought before the Meeting. Each such Proxy granted may be
revoked at any time thereafter by writing to the Secretary of the Company
prior to the Meeting, by execution and delivery of a subsequent proxy or by
attendance and voting in person at the Meeting, except as to any matter or
matters upon which, prior to such revocation, a vote shall have been cast
pursuant to the authority conferred by such Proxy. The cost of soliciting
proxies will be borne by the Company. Following the mailing of the proxy
materials, solicitation of proxies may be made by officers and employees of
the Company, or anyone acting on their behalf, by mail, telephone, telegram or
personal interview.
VOTING SECURITIES
Stockholders of record as of the close of business on July 19,
1995 (the "Record Date") will be entitled to notice of, and to vote at, the
Meeting or any adjournments thereof. On the Record Date, there were 4,461,725
outstanding shares of Class A Common Stock, $.001 par value ("Class A Common
Stock"), and 1,200,000 outstanding shares of Class B Common Stock, $.001 par
value ("Class B Common Stock," together with the Class A Common Stock, are
hereinafter collectively referred to as, the "Common Stock"). The shares of
-2-<PAGE>
Class B Common Stock are convertible at any time into shares of Class A Common
Stock on a one-for-one basis. Each holder of Class A Common Stock is entitled
to one vote for each share held by such holder and each holder of Class B
Common Stock is entitled to five votes for each share held by such holder.
Shares of Class A Common Stock and Class B Common Stock vote as one class. By
virtue of their holdings of Class A Common Stock and Class B Common Stock, the
officers and directors of the Company will be able to pass the proposal being
submitted at the Meeting. The presence, in person or by proxy, of the holders
of a majority of the outstanding shares of Common Stock is necessary to
constitute a quorum at the Meeting.
Proxies submitted that are voted to abstain with respect to the
matter will be considered cast with respect to that matter. Proxies subject
to broker non-votes with respect to such matter will not be considered cast
with respect to that matter.
-3-<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth as of July 19, 1995 certain
information regarding the ownership of voting securities of the Company by
each stockholder known to the management of the Company to be (i) the
beneficial owner of more than 5% of the Company's outstanding Common Stock,
(ii) the directors during the last fiscal year and nominees for director of
the Company, (iii) the executive officers named in the Summary Compensation
table herein under "Executive Compensation" and (iv) all executive officers
and directors as a group. The Company believes that the beneficial owners of
the Common Stock listed below, based on information furnished by such owners,
have sole investment and voting power with respect to such shares.
Amount and Nature
Name and of Beneficial Ownership Percent of
Principal Position Class B Class A Class B Class A
Victor Jacobs 687,500(1)(2) 36,350(3)(4) 52.88% *
Chairman of the
Board and Chief
Executive Officer
Herman Jacobs 393,750(1)(2) 51,250(3) 30.29% 1.14%
President and Chief
Operating Officer
Jack Jacobs 393,750(1)(2) 51,250(3) 30.29% 1.14%
Vice President of
Purchasing and
Secretary
Ramon Montes 25,000(2) 96,000(3)(5) 2.08% 2.66%
Executive Vice
President
David Shamilzadeh --- 53,125(3)(6) --- 1.18%
Senior Vice President
of Finance and Chief
Financial Officer
Sol Naimark --- --- --- ---
Jeffrey Berg --- --- --- ---
-4-
RCM Capital Management --- 412,400(8) --- 9.24%
RCM General Corporation
RCM Limited L.P.
Four Embarcadero Center
San Francisco, CA 94111
All directors 1,500,000(2)(7) 287,975(2)(3)(4)(5)(6) 100% 6.07%
and officers as a
group (7 persons)
- - -----------------------
* Less than 1%.
(1) Includes 100,000 shares of the Company's Class B Common Stock which may
be acquired pursuant to options granted under the Company's 1992 Stock
Option Plan (the "1992 Plan").
(2) Shares of Class B Common Stock have five (5) votes per share and are
convertible at any time into shares of Class A Common Stock on a share
for share basis. Assuming exercise of all their respective options,
Messrs. Victor Jacobs, Herman Jacobs, Jack Jacobs and Ramon Montes and
all directors and officers as a group have the power to vote
approximately 31.59%, 18.34%, 18.34%, 2.09% and 63.46% of the votes
attributable to total outstanding stock of the Company, respectively.
The owners have sole voting and investment power with respect to their
respective shares.
(3) Except as otherwise stated in the notes below, only includes shares of
the Company's Class A Common Stock which may be acquired pursuant to
options granted under the Company's Amended and Restated 1989 Stock
Option Plan (the "1989 Plan") and the Company's 1991 Stock Option Plan
(the "1991 Plan").
(4) Includes 100 shares of Class A Common Stock owned by Mr. Victor Jacobs.
(5) Includes 8,000 shares of Class A Common Stock owned by Mr. Ramon Montes.
(6) Includes 2,500 shares of Class A Common Stock owned by Mr. David
Shamilzadeh.
(7) Includes 300,000 shares of the Class B Common Stock which may be
acquired pursuant to options granted under the 1992 Plan.
(8) The information contained herein with respect to these shares has been
obtained from Schedule 13G, dated February 10, 1995, filed by the
beneficial owners in a joint filing.
-5-<PAGE>
ACTION TO BE TAKEN AT THE MEETING
Proposal 1
ELECTION OF DIRECTORS
At the Meeting, seven (7) directors are to be elected to serve
until the next Annual Meeting of Stockholders and until their successors shall
be duly elected and qualified. The number of nominees was determined by the
Board of Directors pursuant to the Company's By-laws. Unless otherwise
specified, all proxies will be voted in favor of the seven nominees listed
below as directors of the Company.
All of the nominees were elected directors at the 1994 Annual
Meeting of Stockholders. The term of the current directors expires at the
Meeting.
The Board of Directors has no reason to expect that any of the
nominees will be unable to stand for election at the date of the Meeting. In
the event that a vacancy among the original nominees occurs prior to the
Meeting, the proxies will be voted for a substitute nominee or nominees named
by the Board of Directors and for the remaining nominees. Directors are
elected by a plurality of the votes cast.
The following table sets forth information about each executive
officer, director and nominee for director of the Company.
Year First
Elected or
Name Age Appointed Present Position with the Company
Victor Jacobs 62 1985 Chairman of the Board of Directors
and Chief Executive Officer
Herman Jacobs 35 1985 President, Chief Operating Officer
and Director
Ramon Montes 48 1989 Executive Vice President and Director
David Shamilzadeh 48 1990 Senior Vice President for Finance,
Chief Financial Officer and Director
Jack Jacobs 32 1991 Vice President of Purchasing,
Secretary and Director
Sol Naimark 35 1991 Director
Jeffrey Berg 52 1994 Director
-6-<PAGE>
VICTOR JACOBS has served as Chairman of the Board since December
1985. He also served as Chief Executive Officer from December 1985 to April
1990 and was reelected Chief Executive Officer in October 1994.
HERMAN JACOBS has served as President of the Company since
December 1985 and as Chief Operating Officer since February 1994.
He also served as Chief Financial Officer of the Company from December 1985
to April 1990.
RAMON MONTES joined the Company in July 1986 as Sales Manager
becoming Vice President of Operations and Sales in April 1987 and a
director in April 1988, he was elected Executive Vice President in February
1994.
DAVID SHAMILZADEH has served as the Chief Financial Officer of
the Company since April 1990 and was elected Senior Vice President for
Finance in February 1994. Prior to that time, he served as the Controller of
the Company from November 1988 to April 1990.
JACK JACOBS has served as Vice President of Purchasing since June
1986 and Secretary since January 1989.
SOL NAIMARK has been a Partner at the law firm of Naimark &
Tannenbaum for over five years.
JEFFREY BERG has served as President of Health Care Insights,
a financial and technology consulting firm, since March 1991. From
February 1990 to March 1991, Dr. Berg worked as a financial analyst for
William K. Woodruff & Co., an investment bank. From June 1987 until
January 1990 Dr. Berg served as Vice President of Research for J.C.
Bradford & Co., an investment bank. Dr. Berg has worked in research and
development for Johnson & Johnson Products, Inc. and General Foods
Corporation. Dr. Berg currently serves on the Board of Directors of
Bio-Imaging Technologies, Inc. and Biologix International Ltd.
Herman Jacobs and Jack Jacobs are brothers and sons of Victor Jacobs.
Directors who are not employed by the Company receive $1,000 for each Board
meeting attended and an additional $250 for each committee meeting attended.
-7-<PAGE>
Certain Information About the Board of Directors and Committees of the Board
The Board of Directors is responsible for the management of the
Company. During the fiscal year ended March 31, 1995, the Board of Directors
of the Company held one meeting and acted by unanimous consent on three
occasions. All of the directors attended the meeting of the Board. The Board
has established Audit, Stock Option and Compensation Committees. There is no
standing nominating committee.
The functions of the Audit Committee include the nomination of
independent auditors for appointment by the Board; meeting with the
independent auditors to review and approve the scope of their audit
engagement; meeting with the Company's financial management and the
independent auditors to review matters relating to internal account
controls, the Company's accounting practices and procedures and other matters
relating to the financial condition of the Company; and to report to the Board
periodically with respect to such matters. The Audit Committee currently
consists of Sol Naimark, Jeffrey Berg and David Shamilzadeh. The Audit
Committee held three formal meetings, attended by all committee members, and
had informal discussions from time to time during the fiscal year ended
March 31, 1995.
The function of the Stock Option Committee is to administer the
1989 Plan, 1991 Plan and 1992 Plan. The Stock Option Committee currently
consists of Sol Naimark and Jeffrey Berg. The Stock Option Committee held one
formal meeting, attended by all committee members, and met informally from
time to time during the fiscal year ended March 31, 1995.
In June 1995, the Board of Directors established a Compensation
Committee. The function of the Compensation Committee is to review and
recommend to the Board of Directors the appropriate compensation of executive
officers of the Company. The Compensation Committee currently consists of
David Shamilzadeh, Victor Jacobs, Herman Jacobs, Jack Jacobs and Jeffrey Berg.
SECTION 16(a) REPORTING
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company s directors and executive officers, and persons
who own more than ten percent of the Company s Common Stock, to file with the
Securities and Exchange Commission (the SEC ) initial reports of ownership
and reports of changes in ownership of Common Stock and other equity
securities of the Company. Officers, directors and greater than ten-percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) reports they file. To the Company s knowledge, based
solely on review of the copies of such reports furnished to the Company during
the one year period ended March 31, 1995 all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten-percent beneficial
owners were complied with, except that Victor Jacobs, Herman Jacobs, Jack
Jacobs, David Shamilzadeh and Ramon Montes, each, were inadvertently late in
filing a report covering one transaction.
-8-<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual
and long term compensation of the Company's chief executive officer and other
four (4) most highly compensated executive officers of the Company for
services in all capacities to the Company and its subsidiaries during the
Company's 1995, 1994 and 1993 fiscal years.
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards
Name and Principal Fiscal Number of
Position Year Salary Bonus Options
Victor Jacobs 1995 $150,000 -- 100,000
Chairman of Board 1994 150,000 $331,354 --
and Chief Executive 1993 118,516 $179,233 100,000
Officer
Herman Jacobs 1995 150,000 -- 100,000
President 1994 150,000 331,354 --
1993 118,516 164,233 100,000
Jack Jacobs 1995 150,000 -- 100,000
Vice President of 1994 150,000 331,354 --
Purchasing and 1993 118,516 164,233 100,000
Secretary
Ramon Montes 1995 250,385 40,000 25,000
Executive Vice 1994 225,000 60,712 --
President 1993 249,623 75,000 75,000
David Shamilzadeh 1995 220,558 -- 25,000
Senior Vice 1994 227,345 -- 50,000
President for 1993 164,000 -- 24,500
Finance and Chief
Financial Officer
-9-<PAGE>
Stock Option Plans
In January 1989, the Company adopted the 1989 Plan, which was
amended and restated in November 1989; in May 1991, the Company adopted the
1991 Plan, which was approved by stockholders in August 1991; and in July
1992, the Company adopted the 1992 Plan, which was adopted by the stockholders
in October 1992 (collectively, the "Plans"). The 1989 Plan and the 1991 Plan
currently provide for the grant of options to purchase an aggregate of 150,000
shares and 650,000 shares, respectively, of the Company's Class A Common
Stock. The 1992 Plan provides for the grant of options to key employees of
the Company to purchase an aggregate 500,000 shares of the Company's Class B
Common Stock.
The Plans are each administered by a Stock Option Committee (the
"Committee") approved by the Board of Directors of the Company. The Committee
has the authority under the Plans to determine the terms of options granted
under such Plan, including, among other things, the individuals who shall
receive options, the times when they shall receive them, whether an incentive
stock option and/or non-qualified stock option shall be granted, the number of
shares to be subject to each option and the date each option shall become
exercisable. Options granted under the Plans may be designated as "incentive
stock options", under Section 422 of the Internal Revenue Code of 1986, as
amended, or non-qualified options, which do not meet such requirements.
The Committee may set the exercise price for the options, which
must be at least 100% of the fair market value of the Common Stock on the date
of grant (or, in the case of an incentive stock option granted to an optionee
who owns stock possessing more than 10% of the voting power of the Company's
Common Stock, 110% of the fair market value of the Common Stock on the date of
grant).
The Committee may also set the period during which each option
may be exercised which shall not exceed ten (10) years from the date of grant
(or in the case of an incentive stock option granted to a stockholder who owns
stock possessing more than 10% of the voting power of the Common Stock, five
(5) years from the date of grant). The Plans also provide that each employee
who is an optionee shall agree to remain in the employ of the Company for a
term of at least one (1) year. The 1989 Plan will terminate on January 19,
1999, the 1991 Plan will terminate on May 29, 2001 and the 1992 Plan will
terminate on July 9, 2002.
Option Grants in Last Fiscal Year
The following table sets forth the details of options granted to
those individuals listed in the Summary Compensation Table who received
options during the fiscal year ended March 31, 1995.
-10-<PAGE>
Percent of Potential
Total Realizable Value
Options at Assumed Annual
Granted Rate of Stock
To Price
Number of Employees Excercise Appreciation of
Options In Fiscal Price Expiration Option
Name Granted Year Per Share of Date Term(3)
5% 10%
Victor 100,000(1) 24.07% $7.70(2) 11/24/99 $212,737 $470,093
Jacobs
Hermans 100,000(1) 24.07% 7.70(2) 11/24/99 212,737 470,093
Jacobs
Jack 100,000(1) 24.07% 7.70(2) 11/24/99 212,737 470,093
Jacobs
Ramon 25,000(4) 6.02% 7.50(5) 11/24/99 51,803 114,471
Montes
David 25,000(6) 6.02% 7.50(5) 11/24/99 51,803 114,471
Shamilzadeh
- - -----------------
(1) Options to purchase 100,000 shares were granted to each of Messrs.
Victor Jacobs, Herman Jacobs and Jack Jacobs on November 25, 1994, and
are exercisable on a cumulative basis with respect to 25,000 shares on
November 25, 1995, and an additional 25,000 shares on each of November
25, 1996, November 25, 1997 and November 25, 1998.
(2) Representing at least 110% of the fair market value of the Company's
Common Stock on the date of grant.
(3) These are hypothetical values using assumed compound growth rates
prescribed by the Securities and Exchange Commission.
(4) Options to purchase 25,000 shares were granted to Mr. Montes on November
25, 1994, and are exercisable on a cumulative basis with respect to
2,500 shares on November 25, 1995, an additional 2,500 shares on
November 25, 1996 and an additional 10,000 shares on each of November
25, 1997 and November 25, 1998.
(5) Representing at least 100% of the fair market value of the Company s
Common Stock on the date of grant.
(6) Options to purchase 25,000 shares were granted to Mr. Shamilzadeh on
November 25, 1994 and are exercisable on a cumulative basis with respect
to 6,250 shares on November 25, 1995 and an additional 6,250 shares on
each of November 25, 1996, November 25, 1997 and November 25, 1998.
-11-<PAGE>
Option Exercises in Last Fiscal Year and Fiscal Year-End Option Value
The following table contains information concerning the number and
value of options exercised during the fiscal year ended March 31, 1995 and
number and value of unexercised options at March 31, 1995 held by Messrs.
V. Jacobs, H. Jacobs, J. Jacobs, R. Montes and D. Shamilzadeh.
Value of
Number of Unexercised
Unexercised In-the-Money
Options Held Options Held
Shares at Fiscal Year-End at Fiscal Year End
Acquired Value (Exercisable/ (Exercisable/
Name on Exercise Realized Unexercisable) Unexercisable)(1)
Victor Jacobs -0- -0- 111,250/133,750 $305,156/$197,969
Herman Jacobs -0- -0- 126,250/133,750 400,781/197,969
Jack Jacobs -0- -0- 126,250/133,750 400,781/197,969
Ramon Montes 5,000 $31,250 69,250/68,750 241,344/166,407
David Shamilzadeh 3,000 16,875 44,500/92,500 153,250/81,375
__________________
(1) Fair market value of underlying securities (the closing price of the
Company's Common Stock on the American Stock Exchange) at fiscal year
end (March 31, 1995) minus the exercise price.
Long-term Incentive Plan Awards in Last Fiscal Year
There were no long-term incentive plan awards by the Company
during the fiscal year ended March 31, 1995.
Employment Agreements
The Company has entered into employment agreements with each of
Victor, Herman and Jack Jacobs for a three-year term, commencing on August 1,
1992, which provide each for annual salaries of $150,000. Such agreements
also provide for each individual to receive in each year of the Agreement, a
bonus to each of them equal to 2%, 4% and 6% of the earnings before interest
and taxes of the Company, in excess of $2,000,000, $3,000,000 and $4,000,000,
respectively, and the grant of options to each of them to purchase 100,000
shares of Class B Common Stock of the Company at an exercise price of $6.33.
The Company has entered into an employment agreement with Ramon
Montes for a three-year term commencing on August 1, 1992 which provides,
among other things, for an annual salary of $225,000 and the grant of options
to purchase 75,000 shares of Class A Common Stock of the Company at an
exercise price of $5.75.
-12-<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee, which was established
in June 1995, participate in all deliberations concerning executive
compensation. During the fiscal year ended March 31, 1995, the Board of
Directors participated in all deliberations concerning executive compensation.
As of June 1995, the Compensation Committee consisted of David Shamilzadeh,
Senior Vice President for Finance, Victor Jacobs, Chief Executive Officer,
Herman Jacobs, President, Jack Jacobs, Vice President of Purchasing, and
Jeffrey Berg. No executive officer of the Company serves as a member of the
board of directors or compensation committee of any entity which has one or
more executive officers serving as a member of the Company s Board of
Directors.
Performance Graph
The following graph compares the cumulative return to holders of
the Company's Common Stock for the five years ended March 31, 1995 with the
Standard & Poor's 500 Index and a peer group index (1) for the same period.
The comparison assumes $100 was invested on April 1, 1990 in the Company's
Common Stock and in each of the comparison groups, and assumes reinvestment of
dividends. The Company paid no dividends during the periods.
1990 1991 1992 1993 1994 1995
ALLOU ($) 100.00 109.52 280.95 352.38 342.86 338.10
S&P 500 100.00 114.41 127.05 146.39 148.55 171.68
PEER GRP. 100.00 114.69 114.99 129.63 172.32 173.63
- - ----------------
(1) The peer group selected by the Company includes the Company, Bergen
Brunswig Corporation, Bindley Western Industries, Inc., Cardinal
Distribution Inc., Choice Drug Systems, Inc., Chronimed Inc.,
Foxmeyer Corp., Krelitz Industries Inc., McKesson Corporation, Moore
Medical Corp., National Intergroup, Inc., Owens & Minor Inc. and
Systemed Inc.
-13-<PAGE>
BOARD OF DIRECTORS' REPORT CONCERNING EXECUTIVE COMPENSATION
Overview
Prior to June 1995, compensation determinations were made by the
Board of Directors, except for those decisions relating to the granting of
stock options which are made by the Stock Option Committee. The Company seeks
to provide executive compensation that will support the achievement of the
Company's financial goals while attracting and retaining talented executives
and rewarding superior performance. In performing this function, the Board of
Directors reviews executive compensation surveys and other available
information and may from time to time consult with independent compensation
consultants. In order to more appropriately address issues of executive
compensation, in June 1995 the Board of Directors established the Compensation
Committee, consisting of David Shamilzadeh, Victor Jacobs, Herman Jacobs, Jack
Jacobs and Jeffrey Berg.
The Company seeks to provide an overall level of compensation to
the Company's executives that is competitive within the Company's industry and
other companies of comparable size and complexity. Compensation in any
particular case may vary from any industry average on the basis of annual and
long-term Company performance as well as individual performance. The Board of
Directors, and, in the future, the Compensation Committee, will exercise its
discretion to set compensation where in its judgment external, internal or
individual circumstances warrant it.
In general, the Company compensates its executive officers through
a combination of base salary, annual incentive compensation in the form of
cash bonuses and long-term incentive compensation in the form of stock
options. In addition, executive officers participate in benefit plans,
including medical, dental and retirement plans, that are available generally
to the Company's employees.
The Stock Option Committee of the Board of Directors administers
the 1989 Plan, the 1991 Plan and the 1992 Plan. The duties of such committee
include the granting of stock options to executive employees of the Company.
The Stock Option Committee determines the number of shares granted to
individuals, as well as among other things, the exercise price and vesting
periods of such options. The Board of Directors has made, and the
Compensation Committee will make, recommendations to the Stock Option
Committee from time to time with respect to the grant of stock options to
executive officers, taking into account their level of responsibility,
compensation level, contribution to the Company's performance and the future
goals and the performance expected of them. However, the final determination
of the grant of options rests with the Stock Option Committee.
-14-<PAGE>
Executive Officer Compensation
During the fiscal year ended March 31, 1993, the Company entered
into employment contracts with Victor Jacobs, Herman Jacobs, Jack Jacobs and
Ramon Montes, which agreements are currently in effect and expire in August
1995. See "Employment Agreements." The base salary, bonuses, benefits and
conditions of these contracts were determined through a review of previous
employment terms for these individuals as well as a review of the recent
trends in the Company's revenues and profits. The Company believes that the
base salary levels currently in effect are competitive to salary levels in
similarly situated companies. In addition, the Board of Directors at the time
decided to link such employees compensation directly to the Company's earnings
before interest and taxes. During the fiscal year ended March 31, 1995 there
were no changes in the manner in which the Company compensated its executive
officers. The Board of Directors believes the salary, bonuses and benefits
were consistent with the terms of the employment agreements entered into in
1992. However, during the fiscal year ended March 31, 1995, Messrs. Victor
Jacobs, Herman Jacobs and Jack Jacobs waived their rights to receive such
bonuses, in the aggregate amount of $1,354,606.
Under the terms of such Employment Agreements, Victor Jacobs,
Herman Jacobs and Jack Jacobs were granted options to purchase 100,000,
100,000 and 100,000 shares of Class B Common Stock, respectively. Such
options were granted under the terms of the 1992 Stock Option Plan. Under the
terms of his Employment Agreement, Ramon Montes was granted options to
purchase 75,000 shares of Class A Common Stock under the terms of the 1991
Plan. In addition, during the fiscal year ended March 31, 1995, the Stock
Option Committee granted Victor Jacobs, Herman Jacobs, Jack Jacobs and Ramon
Montes an aggregate of 100,000, 100,000, 100,000 and 25,000 additional stock
purchase options, respectively. The Board of Directors feels that options and
other stock-based performance compensation arrangements are an effective
incentive for managers to create value for stockholders since the value of an
option bears a direct relationship to the Company's stock price.
The Board of Directors believes that linking executive
compensation to corporate performance results in a better alignment of
compensation with corporate goals and shareholder interests. As performance
goals are met or exceeded, resulting in increased value to shareholders,
executives are rewarded commensurately. The Board of Directors believes that
compensation levels during fiscal 1995 adequately reflect the Company's
compensation goals and policies.
Recent Tax Legislation
Section 162(m) of the Internal Revenue Code of 1986 (the "Code"),
enacted in August 1993 and first applicable to the Company in the fiscal year
ended March 31, 1995, precludes a public company from taking a federal income
tax deduction for annual compensation in excess of $1,000,000 paid to its
chief executive officer or any of its four other most highly compensated
executive officers. Certain "performance based compensation" is excluded from
the deduction limitation. In December 1993, the Internal Revenue Service
issued proposed regulations, which have been, and may be further revised
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before they are adopted. Any compensation resulting from the exercise of
stock options granted prior to February 1993 and, under the proposed
regulations, options granted thereafter to date, will be eligible for the
exclusion. In addition, in order to enable any compensation related to future
options to be excluded from the limit on deductibility, in accordance with the
proposed regulations, the Company amended the 1991 Plan to place a limit on
the number of shares which may be subject to options granted to any one person
in any one fiscal year. Based upon the proposed regulations and present
compensation levels, the Board of Directors believes that the limitations on
compensation deductibility under Section 162(m) of the Code will not have any
effect on the Company in the foreseeable future.
Respectfully submitted,
Victor Jacobs
Herman Jacobs
Jack Jacobs
David Shamilzadeh
Ramon Montes
Sol Naimark
Jeffrey Berg
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company purchases from and, on occasion, sells to various
entities that are controlled by the family of Mr. Victor Jacobs, the Company's
Chairman of the Board. During the fiscal year ended March 31, 1995, the
Company purchased products aggregating $1,357,687 from related parties and
sold no products to related parties. The prices that the Company charges for
products sold by the Company are comparable to prices the Company charges to
unaffiliated buyers for similar products. It has been and will continue to be
the policy of the Company that transactions between it and its directors,
principal stockholders and affiliates be on terms no less favorable to the
Company than could be obtained from unaffiliated persons.
ACCOUNTANTS
Mayer Rispler & Company served as the Company's independent
auditors for the fiscal year ended March 31, 1995, and it is expected that
Mayer Rispler & Company will act in that capacity for the fiscal year ending
March 31, 1996. A representative of Mayer Rispler & Company is expected to be
present at the Meeting with the opportunity to make a statement if he desires
to do so and to be available to respond to appropriate questions from
shareholders.
VOTING REQUIREMENTS
Directors are elected by a plurality of the votes cast at the
Meeting (Proposal 1). Abstentions and broker non-votes with respect to such
matter are not considered as votes cast with respect to that matter.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1996 Annual
Meeting must be received by the Company for inclusion in its proxy materials
by March 28, 1995.
OTHER MATTERS
Management does not intend to bring before the Meeting any matters
other than those specifically described above and knows of no matters other
than the foregoing to come before the Meeting. If any other matters or
motions properly come before the Meeting, it is the intention of the persons
named in the accompanying Proxy to vote such Proxy in accordance with their
judgment on such matters or motions, including any matters dealing with the
conduct of the Meeting.
By Order of the Board of Directors
Jack Jacobs
Secretary
July 24, 1995
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ALLOU HEALTH & BEAUTY CARE, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS - SEPTEMBER 11, 1995
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints, as proxies for the undersigned,
Victor Jacobs and Herman Jacobs and each of them, with full power of
substitution, to vote all shares of Common Stock of the undersigned in Allou
Health & Beauty Care, Inc. (the "Company") at the Annual Meeting of
Stockholders of the Company to be held at the Boardroom of the American Stock
Exchange, 86 Trinity Place, New York, New York, 10006 on September 11, 1995,
at 10:00 o'clock A.M., local time (the receipt of Notice of which meeting and
the Proxy Statement accompanying the same being hereby acknowledged by the
undersigned), or at any adjournments thereof, upon the matter described in the
Notice of Meeting and Proxy Statement and upon such other business as may
properly come before such meeting or any adjournments thereof, hereby revoking
any proxies heretofore given.
Each properly executed proxy will be voted in accordance with
the specifications made on the reverse side hereof. If no specifications are
made, the shares represented by this proxy will be voted "FOR" the listed
nominees.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
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Please mark boxes in blue or black ink.
1. Election of Directors:
(INSTRUCTION: To withhold authority for any individual nominee, strike a
line through the nominee's name in the list above)
FOR ALL NOMINEES ___ WITHHOLD AUTHORITY ___
(except as marked to to vote for all nominees
the contrary below)
(Victor Jacobs, Herman Jacobs,
Ramon Montes, David
Shamilzadeh, Jack Jacobs, Sol
Naimark, Jeffrey Berg)
2. In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before the
Meeting.
NOTE: Please sign your name or names exactly
as set forth hereon. If signed as attorney,
executor, administrator, trustee or guardian,
please indicate the capacity in which you are
acting. Proxies by corporations should be
signed by a duly authorized officer and should
bear the corporate seal.
Dated _____________________, 1995
_________________________________
Signature of Stockholder
_________________________________
Print Name(s)
Please Sign and Return the Proxy Promptly in the Enclosed Envelope.
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