<PAGE>
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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Silgan Holdings Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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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.
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[_] 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:
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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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<PAGE>
SILGAN HOLDINGS INC.
4 Landmark Square
Stamford, Connecticut 06901
(203) 975-7110
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on May 18, 1999
----------------
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the
"Meeting") of Silgan Holdings Inc., a Delaware corporation (the "Company";
where appropriate references to the "Company" shall be to Silgan Holdings Inc.
and its subsidiaries), will be held at the Sheraton Stamford Hotel, 2701
Summer Street, Stamford, Connecticut 06905 at 9:00 a.m. on Tuesday, May 18,
1999, for the following purposes:
1. To elect two directors of the Company to serve until the Company's
annual meeting of stockholders in 2002 and until their successors are
duly elected and qualified;
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 1999; and
3. To transact such other business as may properly come before the Meeting
or any adjournment or postponement thereof.
The close of business on April 2, 1999 has been fixed as the record date for
determining the stockholders of the Company entitled to notice of and to vote
at the Meeting. All holders of record of Common Stock of the Company at that
date are entitled to vote at the Meeting or any adjournment or postponement
thereof.
By Order of the Board of Directors,
/s/ Frank W. Hogan, III
Frank W. Hogan, III
Secretary
Stamford, Connecticut
April 16, 1999
Please complete, sign and mail the enclosed Proxy in the accompanying envelope
even if you intend to be present at the Meeting. Please sign the enclosed
Proxy exactly as your name appears on it. Returning the Proxy will not limit
your right to vote in person or to attend the Meeting. If you hold shares of
Common Stock of the Company in more than one name, or if your shares of Common
Stock of the Company are registered in more than one way, you may receive more
than one copy of the proxy material. If so, please sign and return each of the
Proxies that you receive so that all of your shares of Common Stock of the
Company may be voted.
The Meeting will be held to vote on the first two items listed above, tabulate
the votes cast in respect of such items and report the results of such vote.
No presentations or other business matters are planned for the Meeting.
<PAGE>
SILGAN HOLDINGS INC.
4 Landmark Square
Stamford, Connecticut 06901
(203) 975-7110
---------------
PROXY STATEMENT
---------------
Annual Meeting of Stockholders
to be held on May 18, 1999
---------------
To Stockholders of Silgan Holdings Inc.:
This Proxy Statement and the accompanying proxy card are furnished in
connection with the solicitation of proxies by the Board of Directors of
Silgan Holdings Inc. (the "Company"; where appropriate, references to the
"Company" shall be to Silgan Holdings Inc. and its subsidiaries) for use at
the annual meeting of stockholders (the "Meeting") to be held at the Sheraton
Stamford Hotel, 2701 Summer Street, Stamford, Connecticut 06905 on Tuesday,
May 18, 1999, at 9:00 a.m., and at any postponements or adjournments thereof.
This Proxy Statement and the accompanying proxy card are first being mailed to
stockholders on or about April 16, 1999.
Only holders of record of the Company's common stock, par value $.01 per
share (the "Common Stock"), as of the close of business on April 2, 1999 (the
"Record Date") will be entitled to notice of, and to vote at, the Meeting. As
of the Record Date, there were 17,688,911 shares of Common Stock issued and
outstanding, each of which is entitled to one vote. The Company has no other
class of voting securities issued and outstanding. The presence in person or
by proxy of the holders of a majority of the outstanding shares of Common
Stock will be necessary to constitute a quorum for the transaction of business
at the Meeting.
All shares of Common Stock represented by properly executed proxies will be
voted in accordance with the instructions indicated thereon unless such
proxies previously have been revoked. If any proxies do not contain voting
instructions, the shares of Common Stock represented by such proxies will be
voted FOR the election of the nominees for director listed below to serve
until the Company's annual meeting of stockholders in 2002 and until their
successors are duly elected and qualified and FOR the ratification of the
appointment of Ernst & Young LLP as the Company's independent auditors for the
fiscal year ending December 31, 1999. It is not anticipated that any matters
other than those set forth in this Proxy Statement will be brought before the
Meeting. If any other matters properly come before the Meeting, the shares of
Common Stock represented by all properly executed proxies will be voted in
accordance with the judgment of the persons named on such proxies. Shares of
Common Stock abstaining, and shares of Common Stock held in street name as to
which a broker has not voted on some matters but has voted on other matters
("Broker Shares"), will be included in determining whether a quorum exists at
the Meeting. Approval of each matter specified in the Notice of Meeting
requires the affirmative vote of a majority of shares of Common Stock present
in person or by proxy at the Meeting, assuming that a quorum exists at the
Meeting. Stockholders may not cumulate their votes. Abstentions and Broker
Shares that have not been voted with respect to a particular proposal will not
be counted in determining the total number of votes cast or in determining
whether such proposal specified in the Notice of Meeting has received the
requisite number of affirmative votes.
Any stockholder who executes and delivers a proxy may revoke it at any time
prior to its exercise at the Meeting by (1) delivering to the Secretary of the
Company a duly executed proxy bearing a later date; (2) filing a written
notice of revocation with the Secretary of the Company; or (3) appearing at
the Meeting and voting in person.
In addition to solicitations by mail, some directors, officers and employees
of the Company may solicit proxies for the Meeting personally or by telephone
without extra remuneration therefor. The Company will also provide persons,
banks, brokerage firms, custodians, nominees, fiduciaries and corporations
holding shares in their names or in the names of nominees, which in either
case are beneficially owned by others, with proxy materials for transmittal to
such beneficial owners and will reimburse such record owners for their
expenses in doing so. The costs of soliciting proxies will be borne by the
Company.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON TO
WHOM A COPY OF THIS PROXY STATEMENT HAS BEEN DELIVERED, UPON THE WRITTEN
REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-
K, INCLUDING THE FINANCIAL STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES
THERETO, THAT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 13a-1 UNDER THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1998. REQUESTS FOR SUCH COPIES SHOULD BE
DIRECTED TO SILGAN HOLDINGS INC., 4 LANDMARK SQUARE, STAMFORD, CONNECTICUT
06901 (TELEPHONE NUMBER: (203) 975-7110), ATTENTION: GENERAL COUNSEL.
<PAGE>
ELECTION OF DIRECTORS
Nominees
The Company's Board of Directors is composed of six members, divided evenly
into three classes (designated Class I, Class II and Class III). At each
annual meeting of stockholders of the Company, the term of office of one class
of directors of the Company expires, and directors nominated to the class of
directors whose term is expiring at such annual meeting will be elected for a
term of three years. The remaining directors of the Company continue in office
until their respective terms expire and until their successors are duly
elected and qualified. Accordingly, at each annual meeting of stockholders of
the Company two of the Company's six directors will be elected, and each
director of the Company will be required to stand for election once every
three years. At the Meeting, the term of office for the Company's Class II
Directors expires.
The two Class II Directors currently are D. Greg Horrigan and Michael M.
Janson. The Board of Directors has nominated each of Messrs. Horrigan and
Janson for re-election at the Meeting as Class II Directors of the Company,
each to serve until the Company's annual meeting of stockholders in 2002 and
until his successor has been duly elected and qualified.
In accordance with the terms and provisions of the Stockholders Agreement
(the "Principals Stockholders Agreement") dated as of February 14, 1997 among
R. Philip Silver, D. Greg Horrigan and The Morgan Stanley Leveraged Equity
Fund II, L.P. ("MSLEF II"), and the Stockholders Agreement dated as of
December 21, 1993 among Messrs. Silver and Horrigan, MSLEF II, Bankers Trust
New York Corporation ("BTNY") and the Company (the "Stockholders Agreement"),
the Company expects that Messrs. Silver and Horrigan and MSLEF II will vote
all of the shares of Common Stock held by them (approximately 73% of the
outstanding Common Stock) in favor of Messrs. Horrigan and Janson for re-
election as Class II Directors of the Company. For a description of the
material terms and provisions of the Principals Stockholders Agreement and the
Stockholders Agreement, see "Certain Relationships and Related Transactions--
Stockholders Agreements."
Each nominee for Class II Director of the Company has consented to be named
in this Proxy Statement and to serve on the Company's Board of Directors if
elected. If, prior to the Meeting, any nominee should become unavailable to
serve on the Company's Board of Directors for any reason, the shares of Common
Stock represented by all properly executed Proxies will be voted for such
alternate individual as shall be designated by the Board of Directors of the
Company.
Certain information regarding each nominee for Class II Director of the
Company and each Director of the Company whose term of office continues after
the Meeting is set forth below, including such individual's age (as of
December 31, 1998), principal occupation, business experience during at least
the last five years, and other directorships currently held and the year in
which such individual was first elected a director of the Company.
Nominees for election as Directors (Class II) -- term expiring 2002
D. Greg Horrigan, age 55, has been President and Co-Chief Executive Officer
of the Company since March 1994. Mr. Horrigan is one of the founders of the
Company and was formerly Chairman of the Board of the Company. Mr. Horrigan
has been a Director of the Company since its inception. Mr. Horrigan has been
Chairman of the Board of Silgan Containers Corporation, one of two wholly
owned subsidiaries of the Company through which the Company conducts
principally all of its business ("Containers"), and a Director of Silgan
Plastics Corporation, the other wholly owned subsidiary of the Company through
which the Company conducts principally all of its business ("Plastics"), since
their inception in August 1987. Mr. Horrigan was Executive Vice President and
Operating Officer of Continental Can Company from 1984 to 1987.
Michael M. Janson, age 51, has been a Director of the Company since February
1999. Mr. Janson has been with Morgan Stanley Dean Witter & Co. ("Morgan
Stanley") since 1987 and has been a Managing Director of Morgan Stanley since
1993. He has worked for Morgan Stanley Dean Witter Capital Partners, Morgan
Stanley's private equity business, since 1997. Mr. Janson is also a director
of Renaissance Media Group, L.L.C., Choice One Communications, Inc. and
American Color Graphics, Inc.
2
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR BOTH NOMINEES
FOR DIRECTOR (CLASS II) OF THE COMPANY.
Incumbent Directors (Class III) -- term expiring 2000
Thomas M. Begel, age 56, has been a Director of the Company since May 1997.
Mr. Begel has been Chairman and Chief Executive Officer of TMB Industries
since 1989 and has been Chairman, President and Chief Executive Officer of
Johnstown America Industries, Inc. since 1991. Mr. Begel was Chairman,
President and Chief Executive Officer of The Pullman Company until its
acquisition in 1988. From 1981 to 1983, Mr. Begel was Senior Vice President of
the Engineered Products Group of the Signal Companies, Inc. and Senior Vice
President of Wheelabrator-Frye, Inc.
Jeffrey C. Crowe, age 52, has been a Director of the Company since May 1997.
Mr. Crowe has been Chairman of the Board, President and Chief Executive
Officer of Landstar System, Inc. ("Landstar") since April 1991, and President
and Chief Executive Officer of Landstar System Holdings, Inc. ("LSHI") since
June 1989 and Chairman of LSHI since March 1991. Mr. Crowe has also been
President of Signature Insurance Company, a subsidiary of LSHI, since February
1997. Mr. Crowe has served as Chairman of the National Defense Transportation
Association since October 1993. From November 1989 to November 1998, Mr. Crowe
served in a number of capacities at the American Trucking Association, Inc.
("ATA"), including Director, Secretary and as a member of the ATA Executive
Committee. Mr. Crowe has served as a Director of the National Chamber
Foundation since November 1997, a Director of the U.S. Chamber of Commerce
since February 1998 and a Director of Sun Trust Bank North-Florida, N.A. since
January 1999.
Incumbent Directors (Class I) -- term expiring 2001
R. Philip Silver, age 56, has been Chairman of the Board and Co-Chief
Executive Officer of the Company since March 1994. Mr. Silver is one of the
founders of the Company and was formerly President of the Company. Mr. Silver
has been a Director of the Company since its inception. Mr. Silver has been a
Director of Containers since its inception in August 1987 and Vice President
of Containers since May 1995. Mr. Silver has been a Director of Plastics since
its inception in August 1987 and Chairman of the Board of Plastics since March
1994. Prior to founding the Company in 1987, Mr. Silver was a consultant to
the packaging industry. Mr. Silver was President of Continental Can Company
from June 1983 to August 1986.
Leigh J. Abramson, age 30, has been a Director of the Company, Containers
and Plastics since September 1996. He has been a Vice President of Morgan
Stanley since 1998. From 1994 to 1998, Mr. Abramson was an Associate of Morgan
Stanley. Mr. Abramson has been a Vice President of Morgan Stanley Leveraged
Equity Fund II, Inc., the general partner of MSLEF II ("MSLEF II, Inc."), and
of the managing general partner of the general partner of Morgan Stanley
Capital Partners III, L.P. since 1995. Mr. Abramson has been with Morgan
Stanley since 1990, first in the Corporate Finance Division and, since 1992,
in the Merchant Banking Division. Mr. Abramson is also a director of PageMart
Wireless, Inc.
Messrs. Silver and Abramson were elected as directors of the Company at the
Company's annual meeting of stockholders last year. Mr. Horrigan was elected a
director of the Company in accordance with certain provisions of the
Principals Stockholders Agreement and the Stockholders Agreement. Mr. Janson
was nominated for election as a director of the Company pursuant to certain
provisions of the Principals Stockholders Agreement and the Stockholders
Agreement to replace Robert H. Niehaus who resigned as a director of the
Company in February 1999, and was elected to the Board of Directors of the
Company by the unanimous vote of the other Directors of the Company pursuant
to certain provisions of the Company's Restated Certificate of Incorporation.
Messrs. Begel and Crowe were nominated for election as directors of the
Company pursuant to certain provisions of the Principals Stockholders
Agreement and were elected to the Board of Directors of the
3
<PAGE>
Company in accordance with certain provisions of the Company's Restated
Certificate of Incorporation. See "Certain Relationships and Related
Transactions--Stockholders Agreements."
The Board of Directors of the Company met four times and acted by written
consent ten times during 1998. Other than Mr. Abramson, no incumbent director
attended fewer than 75 percent of the aggregate of: (1) the total number of
meetings of the Board of Directors held in 1998 while he was a director and
(2) the total number of meetings held by all committees of the Board of
Directors on which he served in 1998.
The Board of Directors of the Company has three standing committees. The
principal responsibilities of each of the standing committees and the members
of such committees are set forth below.
1. Audit Committee. The Audit Committee has the responsibility of
reviewing and supervising the financial controls of the Company. The Audit
Committee's responsibilities include (i) making recommendations to the
Board of Directors with respect to its financial statements and the
appointment of independent auditors, (ii) reviewing significant audit and
accounting policies and practices of the Company, (iii) meeting with the
Company's independent public auditors concerning, among other things, the
scope of audits and reports and (iv) reviewing the performance of overall
accounting and financial controls of the Company. The Audit Committee
currently consists of Messrs. Silver, Abramson and Janson. The Audit
Committee held three meetings during 1998.
2. Compensation Committee. The Compensation Committee has the
responsibility of (i) reviewing matters relating to the compensation of all
executive officers of the Company (other than those who are compensated by
S&H Inc. (see "Certain Relationships and Related Transactions" and
"Executive Compensation")), and any executive officers of the subsidiaries
of the Company who are within the five most highly compensated executive
officers of the Company and its subsidiaries, and (ii) making
recommendations to the Board of Directors with respect to the compensation
of such executive officers. The Compensation Committee currently consists
of Messrs. Horrigan, Begel and Crowe. Messrs. Begel and Crowe are "outside
directors" within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"). The Compensation Committee held one
meeting during 1998.
3. Stock Option Committee. The Stock Option Committee administers the
Silgan Holdings Inc. 1989 Fourth Amended and Restated Stock Option Plan
(the "Stock Option Plan") and determines the officers and key employees of
the Company to whom stock options should be granted in accordance with the
Stock Option Plan. The Stock Option Committee currently consists of Messrs.
Silver, Horrigan and Abramson. The Stock Option Committee did not formally
meet during 1998 but acted by written consent three times during such
period.
The Board of Directors of the Company does not have a nominating committee.
Compensation of Directors
Directors who do not receive compensation as officers or employees of the
Company or any of its affiliates are paid an annual retainer fee of $20,000
for their service on the Board of Directors of the Company, and a fee of
$2,000 for each meeting of the Board of Directors or any committee thereof
that they attend, plus reasonable out-of-pocket expenses. Directors who
receive compensation as officers or employees of the Company or any of its
affiliates do not receive annual or meeting fees.
EXECUTIVE OFFICERS
The Board of Directors of the Company appoints the Company's executive
officers, and the executive officers of the Company's subsidiaries are
appointed by the respective Boards of Directors of such subsidiaries. Certain
information concerning the executive officers of the Company and its
subsidiaries is set forth below, including each individual's age (as of
December 31, 1998), except that information concerning Messrs. Silver and
Horrigan is set forth above under "Election of Directors." There are no family
relationships among any of the directors or executive officers of the Company.
4
<PAGE>
Executive Officers of the Company
Harley Rankin, Jr., age 59, has been Executive Vice President and Chief
Financial Officer of the Company since January 1989 and Treasurer of the
Company since January 1992. Mr. Rankin has been Vice President of Containers
and Plastics since January 1991 and May 1991, respectively, and was Treasurer
of Plastics from January 1994 to December 1994. Prior to joining the Company,
Mr. Rankin was Senior Vice President and Chief Financial Officer of Armtek
Corporation. Mr. Rankin was Vice President and Chief Financial Officer of
Continental Can Company from November 1984 to August 1986.
Frank W. Hogan, III, age 38, has been Vice President, General Counsel and
Secretary of the Company since June 1997. Mr. Hogan has also been Vice
President, General Counsel and Secretary of Containers and Plastics since June
1997. From September 1995 until June 1997, Mr. Hogan was a partner at the law
firm of Winthrop, Stimson, Putnam & Roberts. From April 1988 to September
1995, Mr. Hogan was an associate at such firm.
Glenn A. Paulson, age 55, has been Vice President-Corporate Development of
the Company since January 1996. Mr. Paulson has also been Vice President of
Containers since January 1999. From August 1995 to December 1995, Mr. Paulson
was employed by Containers to manage the transition of the Food Metal &
Specialty business of American National Can Company ("ANC"). From January 1989
to July 1995, Mr. Paulson was employed by ANC, last serving as Senior Vice
President and General Manager, Food Metal and Specialty, North America. Prior
to his employment with ANC, Mr. Paulson was President of the beverage
packaging operations of Continental Can Company.
Harold J. Rodriguez, Jr., age 43, has been Vice President, Finance of the
Company since April 1999. Prior to April 1999, Mr. Rodriguez was Vice
President of the Company since March 1994 and Controller and Assistant
Treasurer of the Company since March 1990. Prior to 1990, Mr. Rodriguez was
Assistant Controller and Assistant Treasurer of the Company since its
inception. Mr. Rodriguez has been Vice President of Containers and Plastics
since March 1994. From 1978 to 1987, Mr. Rodriguez was employed by Ernst &
Young LLP, last serving as Senior Manager specializing in taxation.
Stephen J. Sweeney, age 42, has been Vice President and Controller of the
Company since April 1999. Prior to joining the Company, Mr. Sweeney was
Controller of Parsons & Whittemore since 1990. Prior to 1990, Mr. Sweeney was
employed by Ernst & Young LLP, last serving as Senior Audit Manager.
Executive Officers of Containers
James D. Beam, age 55, has been President of Containers since July 1990.
From September 1987 to July 1990, Mr. Beam was Vice President--Marketing &
Sales of Containers. Mr. Beam was Vice President and General Manager of
Continental Can Company, Western Food Can Division, from March 1986 to
September 1987.
Gary M. Hughes, age 56, has been Executive Vice President of Containers
since January 1998. Previously, Mr. Hughes was Vice President--Sales &
Marketing of Containers since July 1990. From February 1988 to July 1990, Mr.
Hughes was Vice President, Sales and Marketing of the Beverage Division of
Continental Can Company. Prior to February 1988, Mr. Hughes was employed by
Continental Can Company in various sales positions.
Gerald T. Wojdon, age 62, has been Executive Vice President of Containers
since January 1998. Previously, Mr. Wojdon was Vice President--Operations of
Containers since September 1987. From August 1982 to August 1987, Mr. Wojdon
was General Manager of Manufacturing of the Can Division of the Carnation
Company.
Joseph A. Heaney, age 45, has been Vice President--Finance of Containers
since October 1995. From September 1990 to October 1995, Mr. Heaney was
Controller, Food Metal and Specialty Division of ANC. From August 1977 to
August 1990, Mr. Heaney was employed by ANC and American Can Company in
various divisional, regional and plant finance/accounting positions.
5
<PAGE>
Ward B. Thompson, age 50, has been Vice President--Sales & Marketing of
Containers since March 1998. Previously, Mr. Thompson was employed by Rexam
plc in various officer positions, including most recently as Vice President,
Business Development (coated films and paper sector), President (Metallising),
and Vice President, General Manager (Metallising Americas).
H. Schuyler Todd, age 58, has been Vice President, Human Resources of
Containers since April 1999. Previously, Mr. Todd was Director of Human
Resources for Containers since September 1987.
John Wilbert, age 40, has been Vice President--Operations of Containers
since January 1998. From October 1992 to January 1998, Mr. Wilbert was Area
Manager of Operations of Containers. Prior to October 1992, Mr. Wilbert was
employed by Containers in various positions.
Executive Officers of Plastics
Russell F. Gervais, age 55, has been President of Plastics since December
1992. From September 1989 to December 1992, Mr. Gervais was Vice President--
Sales & Marketing of Plastics. From March 1984 to September 1989, Mr. Gervais
was President and Chief Executive Officer of Aim Packaging, Inc.
Howard H. Cole, age 53, has been Vice President of Plastics since September
1987. From April 1986 to September 1987, Mr. Cole was Manager of Personnel of
the Monsanto Engineered Products Division of Monsanto Company.
Colleen J. Jones, age 38, has been Vice President--Finance of Plastics since
December 1994. From November 1993 to December 1994, Ms. Jones was Corporate
Controller of Plastics and from July 1989 to November 1993, she was Manager--
Finance of Plastics. From July 1982 to July 1989, Ms. Jones was an Audit
Manager for Ernst & Young LLP.
Alan H. Koblin, age 46, has been Vice President--Sales & Marketing of
Plastics since 1994. From 1992 to 1994, Mr. Koblin was Director of Sales &
Marketing of Plastics. From 1990 to 1992, Mr. Koblin was Vice President of
Churchill Industries.
Charles Minarik, age 61, has been Vice President--Operations and Commercial
Development of Plastics since May 1993. From February 1991 to August 1992, Mr.
Minarik was President of Wheaton Industries Plastics Group. Mr. Minarik was
Vice President--Marketing of Constar International, Inc. from March 1983 to
February 1991.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management Agreements
Each of the Company, Containers and Plastics has entered into an amended and
restated management services agreement dated as of February 14, 1997
(collectively, the "Management Agreements") with S&H Inc., a corporation
wholly owned by Messrs. Silver and Horrigan ("S&H"), to replace in its
entirety its then existing management services agreement with S&H. Pursuant to
the Management Agreements, S&H provides the Company, Containers and Plastics
and their respective subsidiaries with general management and administrative
services (the "Services"). The initial term of the Management Agreements
continues until June 30, 1999. Thereafter, the term of the Management
Agreements is automatically renewed for successive one-year periods unless
either party gives written notice at least 180 days prior to the end of the
then current term of its election not to renew such term. Pursuant to the
Management Agreements, the independent directors of the Company determine on
behalf of the Company and its subsidiaries whether to give such written notice
not to renew such term. In November 1998, Messrs. Begel and Crowe, the
independent directors of the Company for purposes of the Management
Agreements, determined by written resolution to continue the term of the
Management Agreements after June 30, 1999 for a one-year renewal term.
Accordingly, since neither party to the Management
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Agreements had given written notice to the other party at least 180 days prior
to June 30, 1999 of its election not to renew the term of the Management
Agreements, the term of the Management Agreements currently continues until
June 30, 2000.
The Management Agreements provide for payments to S&H (i) on a monthly
basis, of $5,000 plus an amount equal to 2.475% of consolidated earnings
before depreciation, interest and taxes of the Company ("Company EBDIT") for
such calendar month until Company EBDIT for the calendar year shall have
reached an amount set forth in the Management Agreements for such calendar
year (the "Scheduled Amount") and 1.65% of Company EBDIT for such calendar
month to the extent that Company EBDIT for the calendar year shall have
exceeded the Scheduled Amount but shall not have been greater than an amount
(the "Maximum Amount") set forth in the Management Agreements and (ii) on a
quarterly basis, of an amount equal to 2.475% of Company EBDIT for such
calendar quarter until Company EBDIT for the calendar year shall have reached
the Scheduled Amount and 1.65% of Company EBDIT for such calendar quarter to
the extent that Company EBDIT for the calendar year shall have exceeded the
Scheduled Amount but shall not have been greater than the Maximum Amount. The
Scheduled Amount was $95.5 million for the calendar year 1998 and is $101.5
million for the calendar year 1999, and the Maximum Amount was $102.964
million for the calendar year 1998 and is $105.488 million for the calendar
year 1999. For the calendar year 2000, the Scheduled Amount and the Maximum
Amount is $108.653 million, and for each calendar year thereafter the
Scheduled Amount and Maximum Amount increases by 3% from the previous year.
Additionally, the Management Agreements provide that the Company,
Containers, Plastics and their respective subsidiaries reimburse S&H on a
monthly basis for all out-of-pocket expenses paid by S&H in providing the
Services, including fees and expenses to consultants, subcontractors and other
third parties in connection with such Services. All fees and expenses paid to
S&H under each of the Management Agreements are credited against amounts owed
to S&H under the other Management Agreements. Under the terms of the
Management Agreements, the Company, Containers and Plastics have agreed,
subject to certain exceptions, to indemnify S&H and its affiliates, officers,
directors, employees, subcontractors, consultants or controlling persons
against any losses, damages, costs and expenses they may sustain arising in
connection with the Management Agreements.
The Management Agreements also provide that S&H may select a consultant,
subcontractor or agent to provide the Services. S&H has retained Morgan
Stanley to render financial advisory services to S&H. In connection with such
retention, S&H has agreed to pay Morgan Stanley a fee equal to 9.1% of the
fees paid to S&H under the Management Agreements.
The Management Agreements may be terminated (i) at the option of each of the
respective companies upon the failure or refusal of S&H to perform its
obligations under the Management Agreements, if such failure or refusal
continues unremedied for more than 60 days after written notice of its
existence shall have been given; (ii) at the option of S&H upon the failure or
refusal of any of the respective companies to perform its obligations under
the Management Agreements, if such failure or refusal continues unremedied for
more than 60 days after written notice of its existence shall have been given;
(iii) at the option of S&H or the respective companies (a) if S&H or one of
the companies is declared insolvent or bankrupt or a voluntary bankruptcy
petition is filed by any of them, (b) upon the occurrence of any of the
following events with respect to S&H or one of the companies if not cured,
dismissed or stayed within 45 days: the filing of an involuntary petition in
bankruptcy, the appointment of a trustee or receiver or the institution of a
proceeding seeking a reorganization, arrangement, liquidation or dissolution,
(c) if S&H or one of the companies voluntarily seeks a reorganization or
arrangement or makes an assignment for the benefit of creditors or (d) upon
the death or permanent disability of both of Messrs. Silver and Horrigan; (iv)
upon at least 180 days prior written notice at the option of each of the
respective companies for any reason; (v) upon at least 180 days prior written
notice at the option of S&H for any reason other than Cause or a Change of
Control (each as defined in the Management Agreements); (vi) at the option of
S&H after a Change of Control; (vii) at the option of the respective companies
in the event of criminal conduct or gross negligence by S&H in the performance
of the Services; or (viii) at the option of S&H or the respective companies
7
<PAGE>
upon the termination of any of the Management Agreements for Cause. The
Management Agreements prohibit S&H from competing with the Company during the
term thereof and, only if S&H terminates the Management Agreements pursuant to
clause (v) above, for a period of one year after such termination. The
Management Agreements provide that, in the event that they are terminated
pursuant to clause (iv) above, each of the respective companies will be
required to pay to S&H the present value of the amount of the payments that
would have been payable to S&H thereunder through the end of the then current
term thereof.
The Company believes that it is difficult to determine whether the
Management Agreements are on terms no less favorable than those available from
unaffiliated parties because of the personal nature of the services provided
thereunder and the expertise and skills of the individuals providing such
services. The Company believes that arrangements under the Management
Agreements are fair to both parties.
For the year ended December 31, 1998, S&H earned aggregate fees under the
Management Agreements, including reimbursable expenses and fees payable to
Morgan Stanley, of $5.3 million from the Company and its subsidiaries, and
Morgan Stanley earned fees of $0.5 million.
Stockholders Agreements
Messrs. Silver and Horrigan, MSLEF II, BTNY and the Company are parties to
the Stockholders Agreement, which provides for certain rights and obligations
among them and between them and the Company. In addition, Messrs. Silver and
Horrigan and MSLEF II are parties to the Principals Stockholders Agreement,
which provides for certain rights and obligations among such stockholders. The
following is a summary of the material provisions of the Stockholders
Agreement and the Principals Stockholders Agreement.
The Stockholders Agreement provides that for a period of eight years after
the Company's initial public offering of its Common Stock in February 1997
(the "IPO"), MSLEF II has the right to demand two separate registrations of
its shares of Common Stock; provided, however, that such demand right
terminates at such time as MSLEF II, together with its affiliates, owns less
than five percent of the issued and outstanding shares of Common Stock. If, at
any time or from time to time for a period of eight years after the IPO, the
Company determines to register additional shares of Common Stock (other than
in connection with certain non-underwritten offerings), the Company must offer
each of MSLEF II, BTNY and Messrs. Silver and Horrigan the opportunity to
register shares of Common Stock it holds in a "piggyback registration."
The Stockholders Agreement prohibits the transfer prior to June 30, 1999 by
MSLEF II or by Messrs. Silver or Horrigan of Common Stock without the prior
written consent of the others, except for (i) transfers made in connection
with a public offering or a Rule 144 Open Market Transaction (as defined in
the Stockholders Agreement), (ii) transfers made to an affiliate, which, in
the case of a transfer by MSLEF II, must be to an Investment Entity (defined
generally to be any person who is primarily engaged in the business of
investing in securities of other companies and not taking an active role in
the management or operations of such companies), (iii) certain transfers by
MSLEF II to an Investment Entity or, in the event of certain defaults under
the Management Agreement between S&H and the Company, to a third party, in
each case that comply with certain rights of first refusal granted to the
Group (the "Group" is defined generally to mean, collectively, Messrs. Silver
and Horrigan and their respective affiliates and certain related family
transferees and estates; with Mr. Silver and his affiliates and certain
related family transferees and estates being deemed to be collectively one
member of the Group, and Mr. Horrigan and his affiliates and certain related
family transferees and estates being deemed to be collectively another member
of the Group) set forth in the Stockholders Agreement, (iv) certain transfers
by either member of the Group to a third party that comply with certain rights
of first refusal granted to the other member of the Group and MSLEF II set
forth in the Stockholders Agreement, and (v) in the case of MSLEF II, a
distribution of all or substantially all of the shares of Common Stock then
owned by MSLEF II to the partners of MSLEF II (a "MSLEF Distribution").
Notwithstanding the foregoing, each of Messrs. Silver and Horrigan and MSLEF
II may pledge his or its shares of Common Stock to a lender or lenders
reasonably acceptable to the Company to secure a loan or loans to him or it.
In the event of any proposed foreclosure of such pledge, such shares will be
subject to certain rights of first refusal set forth in the Stockholders
Agreement.
8
<PAGE>
Concurrent with the IPO, MSLEF II and Messrs. Silver and Horrigan entered
into the Principals Stockholders Agreement. The Principals Stockholders
Agreement provides that (i) for so long as MSLEF II and its affiliates
(excluding the non-affiliated limited partners of MSLEF II who acquire shares
of Common Stock from MSLEF II in a MSLEF Distribution) hold at least one-half
of the number of shares of Common Stock held by MSLEF II immediately prior to
the IPO, each of Messrs. Silver and Horrigan will use his best efforts
(including to vote any shares of Common Stock owned or controlled by him) to
cause the nomination and election of two members of the Board of Directors of
the Company to be chosen by MSLEF II; provided, however, that each such
nominee shall be either (a) an employee of Morgan Stanley whose primary
responsibility is managing investments for MSLEF II (or a successor or related
partnership) or (b) a person reasonably acceptable to the Group not engaged in
(as a director, officer, employee, agent or consultant or as a holder of more
than five percent of the equity securities) a business competitive with that
of the Company, and (ii) from and after the time that MSLEF II and its
affiliates (excluding the non-affiliated limited partners of MSLEF II who
acquire shares of Common Stock from MSLEF II in a MSLEF Distribution) hold
less than one-half of the number of shares of Common Stock held by MSLEF II
immediately prior to the IPO and until such time that MSLEF II and its
affiliates (excluding the non-affiliated limited partners of MSLEF II who
acquire shares of Common Stock from MSLEF II in a MSLEF Distribution) hold
less than five percent (5%) of the outstanding Common Stock, each of Messrs.
Silver and Horrigan will use his best efforts (including to vote any shares of
Common Stock owned or controlled by him) to cause the nomination and election
of one member of the Board of Directors of the Company to be chosen by MSLEF
II; provided, however, that such nominee shall be (i) either an employee of
Morgan Stanley whose primary responsibility is managing investments for MSLEF
II (or a successor or related partnership) or (ii) a person reasonably
acceptable to the Group not engaged in (as a director, officer, employee,
agent or consultant or as a holder of more than five percent of the equity
securities) a business competitive with that of the Company.
In addition, the Principals Stockholders Agreement provides that (i) for so
long as the Group holds at least one-half of the number of shares of Common
Stock held by it in the aggregate at the time of the IPO, MSLEF II will use
its best efforts (including to vote any shares of Common Stock owned or
controlled by it) to cause the nomination and election of two individuals
nominated by the holders of a majority of the shares of Common Stock held by
the Group as members of the Board of Directors of the Company; provided,
however, that at least one of such nominees shall be Mr. Silver or Mr.
Horrigan and the other person, if not Mr. Silver or Mr. Horrigan, shall be a
person reasonably acceptable to MSLEF II, so long as MSLEF II and its
affiliates (excluding the non-affiliated limited partners of MSLEF II who may
acquire shares of Common Stock from MSLEF II in a MSLEF Distribution) hold at
least one-half of the number of shares of Common Stock held by MSLEF II
immediately prior to the IPO, (ii) from and after the time that the Group
holds less than one-half of the number of shares of Common Stock held by it in
the aggregate at the time of the IPO and until such time that the Group holds
less than five percent (5%) of the outstanding Common Stock, MSLEF II will use
its best efforts (including to vote any shares of Common Stock owned or
controlled by it) to cause the nomination and election of one individual
nominated by the holders of a majority of the shares of Common Stock held by
the Group as a member of the Board of Directors of the Company; provided,
however, that such nominee shall be Mr. Silver or Mr. Horrigan or, if not Mr.
Silver or Mr. Horrigan, a person reasonably acceptable to MSLEF II, so long as
MSLEF II and its affiliates (excluding the non-affiliated limited partners of
MSLEF II who acquire shares of Common Stock from MSLEF II in a MSLEF
Distribution) hold at least one-half of the number of shares of Common Stock
held by MSLEF II immediately prior to the IPO, and (iii) so long as the Group
holds at least one-half of the number of shares of Common Stock held by it in
the aggregate at the time of the IPO, the Group will have the right to
nominate for election all directors of the Company other than the directors
referred to above in this paragraph and in the preceding paragraph, and upon
such nomination by the Group such nominees will stand for election to the
Company's Board of Directors in accordance with the Company's Restated
Certificate of Incorporation, and MSLEF II will vote all shares of Common
Stock owned or controlled by it and its affiliates against any director
standing for election for the Company's Board of Directors that has not been
nominated by the Group, other than the directors referred to above in this
paragraph and in the preceding paragraph.
9
<PAGE>
The Stockholders Agreement contains certain provisions regarding the
election of members of the Board of Directors of the Company that are
substantially the same as those provisions described in clause (i) of each of
the preceding two paragraphs.
Each of the Stockholders Agreement and the Principals Stockholders Agreement
provides that MSLEF II will vote all shares of Common Stock held by it against
any unsolicited merger or sale of the Company's business or assets, if such
transaction is opposed by the holders of a majority of the shares of Common
Stock held by the Group, unless as of the applicable record date for such vote
the Group holds less than ninety percent of the number of shares of Common
Stock held by it in the aggregate at the time of the IPO.
The foregoing provisions of the Stockholders Agreement and the Principals
Stockholders Agreement could have the effect of delaying, deferring or
preventing a change of control of the Company and preventing the stockholders
from receiving a premium for their shares of Common Stock in any proposed
acquisition of the Company.
Other
Morgan Stanley Senior Funding, Inc. ("MSSF"), an affiliate of Morgan
Stanley, is a lender under the Company's U.S. bank credit agreement. In
connection therewith, MSSF receives a portion of the commitment fees paid by
the Company thereunder based on the amount of its lending commitment
thereunder. MSSF will continue to receive certain fees under such credit
agreement in the future.
In 1998, Landstar provided transportation services to the Company's
subsidiaries. The Company expects that Landstar will continue to provide
transportation services to the Company's subsidiaries in 1999. The Company
believes that these transportation services were provided on terms no less
favorable to the Company than provided generally to Landstar's customers. The
Company paid Landstar approximately $1.5 million in 1998 for such
transportation services. Mr. Jeffrey C. Crowe, a director of the Company, is
the Chairman of the Board, President and Chief Executive Officer of Landstar.
In the event that the Company enters into any future transactions with any
of its affiliates, the Company expects to enter into any such transactions on
terms no less favorable to the Company than those available from unaffiliated
parties.
10
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and long-
term compensation for services rendered in all capacities to the Company
during the fiscal years ended December 31, 1998, 1997 and 1996 of those
persons who at December 31, 1998 were (i) the Chief Executive Officer of the
Company and (ii) the other four most highly compensated executive officers of
the Company (collectively, the "Named Executive Officers"):
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
----------------------------- ----------------
Awards
----------------
Securities
Underlying Stock All Other
Name and Principal Position Year Salary(a)(b) Bonus(a)(c) Options Compensation(d)
- --------------------------- ---- ------------ ----------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
R. Philip Silver......... 1998 $2,010,000 -- -- --
(Chairman of the Board 1997 1,925,000 -- -- --
and Co-Chief Executive 1996 1,875,000 -- -- --
Officer of the
Company and Chairman of
the Board of Plastics)
D. Greg Horrigan......... 1998 $2,010,000 -- -- --
(President and Co-Chief 1997 1,925,000 -- -- --
Executive Officer 1996 1,875,000 -- -- --
of the Company and
Chairman of the Board of
Containers)
Harley Rankin, Jr........ 1998 $ 457,596 -- -- --
(Executive Vice 1997 441,216 -- -- --
President, Chief 1996 425,007 -- -- --
Financial Officer and
Treasurer of
the Company)
James D. Beam............ 1998 $ 398,100 $135,493 -- $89,558
(President of 1997 385,800 21,759 -- 65,372
Containers) 1996 372,600 112,339 -- 73,805
Gary M. Hughes........... 1998 $ 245,040 $ 83,399 -- $44,656
(Executive Vice 1997 220,500 8,291 -- 34,186
President of 1996 213,000 42,813 -- 17,280
Containers)
Gerald T. Wojdon......... 1998 $ 245,040 $ 83,399 -- $62,041
(Executive Vice 1997 220,500 8,291 -- 92,022
President of 1996 213,000 42,813 -- 17,280
Containers)
</TABLE>
- --------
(a) The compensation of Messrs. Horrigan, Silver and Rankin reflects amounts
as earned and was paid by S&H. Such persons received no direct
compensation from the Company or its subsidiaries. See "Certain
Relationships and Related Transactions--Management Agreements."
(b) The salaries of Messrs. Beam, Hughes and Wojdon were paid by Containers.
(c) Bonuses of Messrs. Beam, Hughes and Wojdon were earned by them in the year
reported in the table and paid in the following year pursuant to the
Silgan Containers Corporation Performance Incentive Plan. Under such plan,
executive officers and other key employees of Containers may be awarded
cash bonuses provided that such company achieves certain assigned
financial targets.
(d) In the case of Messrs. Beam, Hughes and Wojdon, includes (i) amounts
contributed under the Silgan Containers Corporation Supplemental Executive
Retirement Plan (the "Supplemental Plan") and used to pay premiums for
split-dollar life insurance for each of them maintained in conjunction
with the Supplemental Plan and (ii) amounts contributed by Containers
under the Silgan Containers Corporation Deferred Incentive Savings Plan
(the "Containers Savings Plan"). For 1998, Containers contributed the
following amounts: $74,838 under the Supplemental Plan and $14,720 under
the Containers Savings Plan for the benefit of Mr. Beam; $29,936 under the
Supplemental Plan and $14,720 under the Containers Savings Plan for the
benefit of Mr. Hughes; and $47,321 under the Supplemental Plan and $14,720
under the Containers Savings Plan for the benefit of Mr. Wojdon.
11
<PAGE>
The following table sets forth information concerning the exercise of stock
options by, and the value at December 31, 1998 of unexercised stock options
of, each of the Named Executive Officers:
Aggregate Option Exercises In 1998 And Option Values At December 31, 1998
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at December 31, in-the-Money Options at
Shares 1998 December 31, 1998(b)
Acquired on Value ------------------------- -------------------------
Name Exercise Realized(a) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. Philip Silver........ -- -- -- -- -- --
D. Greg Horrigan........ -- -- -- -- -- --
Harley Rankin, Jr....... 171,344 $4,764,839 82,227 20,559 $1,994,288 $498,627
James D. Beam........... 292,305 8,380,442 292,304 -- 7,539,374 --
Gary M. Hughes.......... 292,304 7,564,225 -- -- -- --
Gerald T. Wojdon........ 116,921 3,286,721 -- -- -- --
</TABLE>
- --------
(a) The value realized for Messrs. Rankin, Beam and Wojdon for shares acquired
on exercise in 1998 includes $27,000, $537,777 and $215,111, respectively,
paid to them in 1998 pursuant to their respective option agreements upon
the exercise of stock options of the Company thereunder. Such amounts were
payable in connection with stock options of the Company exercised under
the Stock Option Plan, which stock options were issued in 1989 in exchange
for stock options under a predecessor plan.
(b) The value of an unexercised option is based upon the difference between
$27.7969, the closing sales price for a share of the Common Stock on
December 31, 1998 as quoted by the Nasdaq National Market System, and the
exercise price per share of Common Stock for such option.
Pension Plans
The Company has established pension plans (the "Pension Plans") covering
substantially all of the salaried employees of Containers and Plastics,
respectively, including executive officers of such companies (the "Containers
Pension Plan" and the "Plastics Pension Plan," respectively). The Pension
Plans are defined benefit plans intended to be qualified pension plans under
Section 401(a) of the Internal Revenue Code (the "Code"), under which pension
costs are determined annually on an actuarial basis with contributions made
accordingly.
The following table illustrates the estimated annual normal retirement
benefits that are payable under the Containers Pension Plan. Such benefit
levels assume retirement at age 65, the years of service shown, continued
existence of the Containers Pension Plan without substantial change and
payment in the form of a single life annuity.
Containers Pension Plan Table
<TABLE>
<CAPTION>
Years of Service
Final Average -----------------------------------------------------------
Earnings 10 15 20 25 30 35
------------- ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 50,000 $ 7,130 $10,640 $14,260 $17,830 $21,390 $ 24,960
75,000 11,510 17,260 23,010 28,760 34,520 40,270
100,000 15,880 23,820 31,760 39,700 47,640 55,580
125,000 20,260 30,380 40,510 50,640 60,770 70,890
150,000 24,630 36,950 49,260 61,580 73,890 86,210
175,000 29,010 43,510 58,010 72,510 87,020 101,520
200,000 33,380 50,070 66,760 83,450 100,140 116,830
225,000 37,760 56,630 75,510 94,390 113,270 132,140
</TABLE>
Benefits under the Containers Pension Plan are based on the participant's
average base pay (the "Salary" column in the Summary Compensation Table) over
the final three years of employment. The amount of average base pay taken into
account for any year is limited by Section 401(a)(17) of the Code, which
imposes a cap of
12
<PAGE>
$150,000 (to be indexed for inflation) on compensation taken into account for
1994 and later years (the limit for 1993 was $235,840). Benefits under the
Containers Pension Plan are not subject to any deduction for Social Security
or other offset amounts.
As of December 31, 1998, Messrs. Beam, Hughes and Wojdon, the only Named
Executive Officers who are eligible participants under the Containers Pension
Plan, had eleven, eight and thirty-five years of credited service,
respectively, under the Containers Pension Plan. Messrs. Beam, Hughes and
Wojdon also participate in the Supplemental Plan, which is designed to make up
for benefits not payable under the Containers Pension Plan due to Code
limitations. Their benefits under the Supplemental Plan are funded through a
split-dollar life insurance policy. Income attributable to this life insurance
policy is included in the "All Other Compensation" column of the Summary
Compensation Table.
The following table illustrates the estimated annual normal retirement
benefits that are payable under the Plastics Pension Plan. Such benefit levels
assume retirement age at 65, the years of service shown, continued existence
of the Plastics Pension Plan without substantial change and payment in the
form of a single life annuity.
Plastics Pension Plan Table
<TABLE>
<CAPTION>
Years of Service
Final Average -----------------------------------------------------------
Earnings 10 15 20 25 30 35
------------- ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 50,000 $ 7,000 $10,550 $14,000 $17,500 $21,000 $ 24,500
75,000 10,500 15,750 21,000 26,250 31,500 36,750
100,000 14,000 21,000 28,000 35,000 42,000 49,000
125,000 17,500 26,250 35,000 43,750 52,500 61,250
150,000 21,000 31,500 42,000 52,500 63,000 73,950
175,000 24,500 36,750 49,000 61,250 73,950 87,075
200,000 28,000 42,000 56,000 70,200 85,200 100,200
225,000 31,500 47,250 63,000 79,575 96,450 113,325
</TABLE>
Benefits under the Plastics Pension Plan are based on the participant's
average total cash compensation (the "Salary" and "Bonus" columns in the
Summary Compensation Table) over the final 36 months of employment or over the
highest three of the final five calendar years of employment, whichever
produces the greater average compensation. In computing this average,
compensation for any year cannot exceed 125% of base pay. Compensation used in
determining benefits is also limited by Section 401(a)(17) of the Code, which
imposes the limits indicated above.
Benefits under the Plastics Pension Plan may be offset by a social security
amount (the plan provides benefits based on the greatest of three formulas,
only one of which provides for a social security offset). Each of the benefit
estimates in the above table is based on the formula that produces the
greatest benefit for individuals with the stated earnings and years of
service.
Employment Agreements
James D. Beam, President of Containers, has entered into an employment
agreement with Containers. The initial term of such employment agreement was
three years from its effective date, and the term has been, and will continue
to be, automatically extended for successive one year periods unless
terminated pursuant to the terms of such agreement. Mr. Beam's employment
agreement provides for, among other things, a minimum severance benefit equal
to his then current base salary and benefits for a period of one year
following termination if (i) Mr. Beam is terminated by Containers for any
reason other than disability or for cause as specified in such agreement, or
(ii) Mr. Beam voluntarily terminates his employment due to a demotion, all as
specified in the agreement.
13
<PAGE>
Gerald T. Wojdon, Executive Vice President of Containers, has also entered
into an employment agreement with Containers. The initial term of such
employment agreement was three years from its effective date, and the term has
been, and will continue to be, automatically extended for successive one year
periods unless terminated pursuant to the terms of such agreement. Mr.
Wojdon's employment agreement provides for, among other things, the payment of
his base salary and the continuation of his benefits thereunder for the
remainder of the then current term if (i) Mr. Wojdon is terminated by
Containers for any reason other than cause (as defined therein) or disability
or (ii) Mr. Wojdon voluntarily terminates his employment due to a substantial
modification of his duties inconsistent with his position or other
constructive termination, all as specified in the agreement.
REPORT ON EXECUTIVE COMPENSATION
General
The goals of the Company's executive compensation program are as follows:
(i) to attract and retain executives and to provide fair compensation to them
taking into account the responsibilities undertaken by them; (ii) to motivate
the Company's executives to achieve the Company's business strategy; and (iii)
to align the interests of the Company's executives and stockholders through
the granting of options under the Stock Option Plan. The principal components
of the Company's executive officer compensation program are base salary,
annual cash bonuses and stock options. The Stock Option Plan is administered
by the Stock Option Committee, as described under the heading "Stock Option
Plan" below. Certain of the Company's executive officers also receive
additional forms of compensation as described in the Summary Compensation
Table and footnote (d) thereto and under the heading "Executive Compensation--
Pension Plans."
For 1998, the Compensation Committee made recommendations to the Board of
Directors of the Company for its approval with respect to the compensation of
executive officers of the Company, other than those executive officers
compensated by S&H, and of executive officers of the Company's subsidiaries
who are Named Executive Officers, and the Board of Directors of the Company
approved such recommendations. The compensation of executive officers of the
Company's subsidiaries who are not Named Executive Officers is determined by
the Board of Directors of Containers or Plastics, as the case may be.
Compensation of Co-Chief Executive Officers and Certain Other Executive
Officers
Messrs. Silver, Horrigan, Rankin and Rodriguez receive no direct
compensation from the Company or its subsidiaries. Such persons are
compensated by S&H, which is paid by the Company for management services
provided by it to the Company pursuant to the Management Agreements. The
amounts paid by the Company to S&H under the Management Agreements are based
upon certain fixed financial formulas related to the Company's operating
results. The term of the Management Agreements currently continues through
June 30, 2000, and the Management Agreements will be automatically renewed for
successive one-year terms unless either party gives written notice at least
180 days prior to the end of the then current term of its election not to
renew. The independent directors of the Company for purposes of the Management
Agreements, who are both currently members of the Compensation Committee, will
determine on behalf of the Company and its subsidiaries whether to give such
written notice not to renew such term. See "Certain Relationships and Related
Transactions--Management Agreements."
Base Salary
Base salaries for the Company's executive officers (other than for those
compensated by S&H) are determined, in part, through general geographic market
conditions and comparisons with companies in the packaging industry and other
companies with which the Company competes for personnel. Additionally, other
factors are considered such as individual experience and performance and the
overall performance of the Company. Each executive's base salary is reviewed
on an annual basis and may be adjusted, consistent with the terms of any
applicable employment agreement, based on (i) the individual's contribution to
the Company over the preceding year; (ii) a change in the individual's
responsibilities over the preceding year; (iii) any change in median
competitive pay levels; or (iv) a general increase in the cost of living.
14
<PAGE>
Annual Cash Bonuses
If the Company, Containers or Plastics, as the case may be, achieves certain
assigned financial targets for earnings before depreciation, interest, taxes
and amortization ("EBDITA"), annual cash bonuses are paid to the executive
officers of such company. The EBDITA target levels of each of the Company,
Containers and Plastics for a given year are established at the beginning of
such year as part of the operating budget of each such company, which
operating budget is approved by such company's board of directors. The amount
of the bonus of each such executive officer is determined by a formula which
calculates such bonus based on the percentage that the actual applicable
EBDITA amount represents of the applicable EBDITA target level. In addition,
in the case of certain executive officers of Containers, a portion of their
annual cash bonuses for 1999 is payable to them if such executive officers
meet certain organizational goals as established by the board of directors of
such company at the beginning of the year. Annual cash bonuses are paid in the
beginning of the year following the year in which they are earned.
Tax Deductibility
Section 162(m) of the Code disallows a federal income tax deduction to any
publicly held corporation for compensation paid in excess of $1 million in any
taxable year to an individual who is the chief executive officer or any of the
four most highly compensated executive officers (other than the chief
executive officer) employed by such corporation (or a member of its affiliated
group) on the last day of such taxable year, but does allow a deduction for
"performance-based compensation" the material terms of which are disclosed to
and approved by stockholders. The Company believes its current compensation
programs meet the requirements to qualify for compensation to be deductible
for federal income tax purposes. In the future, it is the Company's intent to
modify, when necessary, compensation plans for the Company's executive
officers so that the Company's federal tax deduction is maximized. Because the
Company believes that the use of prudent judgment in determining pay levels is
in the best interests of the Company and its stockholders, under some
circumstances it may determine to pay amounts of compensation that may not be
fully deductible. The Company reserves the right to use prudent judgment in
establishing compensation policies to attract and retain qualified executives
to manage the Company and to reward such executives for outstanding
performance, while taking into consideration the financial impact of such
actions on the Company.
By the Compensation Committee of the
Board of Directors:
D. Greg Horrigan
Thomas M. Begel
Jeffrey C. Crowe
15
<PAGE>
Stock Option Plan
The Stock Option Committee of the Board of Directors administers the Stock
Option Plan and has the power to, among other things, choose participants and
fix the type of grant and all the terms and conditions thereof, including the
number of shares of Common Stock covered by a grant and the exercise price, in
accordance with the provisions of the Stock Option Plan. The Stock Option Plan
forms the basis of the Company's long-term incentive compensation plan. The
Stock Option Committee believes that placing a portion of compensation in the
form of stock options achieves certain objectives: it aligns the interest of
the Company's executive officers and key employees directly with those of the
Company's stockholders; it gives executive officers and key employees a
significant long-term interest in the Company's success; and it helps the
Company retain executive officers and key employees. In determining to whom
options shall be granted and the number and terms of options to grant to an
executive officer or key employee, the Stock Option Committee primarily
considers past performance and the prospective value of the options to be
granted as a performance incentive. The Stock Option Committee granted options
to four executive officers and key employees of the Company and its
subsidiaries under the Stock Option Plan in 1998 with respect to 95,000
underlying shares of Common Stock, although none of such options were granted
to any of the executive officers listed in the Summary Compensation Table.
By the Stock Option Committee of the
Board of Directors:
R. Philip Silver
D. Greg Horrigan
Leigh J. Abramson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 1998, the Compensation Committee of the Company's Board of Directors
consisted of Messrs. Horrigan, Begel and Crowe. Mr. Horrigan is the President
and Co-Chief Executive Officer of the Company. During 1998, Mr. Silver served
as Chairman and Co-Chief Executive Officer of the Company and as a member of
the Board of Directors of Johnstown America Industries, Inc. During such
period, Mr. Begel served as a Director of the Company, as a member of the
Compensation Committee of the Company's Board of Directors and as Chairman,
President and Chief Executive Officer of Johnstown America Industries, Inc.
Other than as described above, during 1998 no executive officer of the
Company served as: (i) a member of the compensation committee (or other board
committee performing equivalent functions or, in the absence of any such
committee, the entire board of directors) of another entity, one of whose
executive officers served on the Compensation Committee of the Company's Board
of Directors, or (ii) a director of another entity, one of whose executive
officers served on the Board of Directors of the Company, or (iii) a member of
the compensation committee (or other board committee performing equivalent
functions or, in the absence of any such committee, the entire board of
directors) of another entity, one of whose executive officers served on the
Board of Directors of the Company. See "Certain Relationships and Related
Transactions."
16
<PAGE>
COMPANY PERFORMANCE
The graph below compares the Company's Common Stock performance from the IPO
price with the performance of the Dow Jones Containers & Packaging Index and
the Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index"), by
valuing the changes in common stock prices from February 13, 1997 through
December 31, 1998 plus reinvested dividends. The companies included in the Dow
Jones Containers & Packaging Index are: Ball Corporation; Bemis Company, Inc.;
Crown Cork & Seal Company, Inc.; Owens-Illinois, Inc.; Sealed Air Corp.;
Sonoco Products Company; and Temple-Inland, Inc. The graph below assumes in
each case an initial investment of $100.00 on February 13, 1997 plus
reinvestment of dividends, with the investment in the Dow Jones Containers &
Packaging Index weighted on the basis of market capitalization at February 13,
1997.
Comparison Of Cumulative Total Return Among Silgan Holdings Inc., Dow Jones
Containers & Packaging Index and S&P 500 Index
[The graph appears here]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPH
<TABLE>
<CAPTION>
February 13, December 31, December 31,
1997 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Silgan Holdings Inc........ 100 163 139
Dow Jones Containers
& Packaging Index......... 100 108 94
S&P 500 Index.............. 100 126 161
</TABLE>
17
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the Record Date, certain information
with respect to the beneficial ownership by (i) each current director and each
Named Executive Officer of the Company, (ii) each person or entity who is
known by the Company to own beneficially more than 5% of the Common Stock and
(iii) by all executive officers and directors of the Company as a group.
Except as otherwise described below, each of the persons named in the table
has sole voting and investment power with respect to the securities
beneficially owned.
<TABLE>
<CAPTION>
Number of Shares of Percentage Ownership of
Common Stock Owned Common Stock (1)
------------------- -----------------------
<S> <C> <C>
R. Philip Silver(2)(3)............ 3,576,544 20.22%
D. Greg Horrigan(2)(3)............ 3,576,544 20.22%
Leigh J. Abramson(4).............. -- --
Thomas M. Begel(5)................ 2,100 *
Jeffrey C. Crowe(6)............... 2,000 *
Michael M. Janson(6).............. -- --
Harley Rankin, Jr.(7)............. 188,458 1.06%
James D. Beam(8).................. 422,023 2.35%
Gary M. Hughes.................... 135,348 *
Gerald T. Wojdon.................. 36,402 *
The Morgan Stanley Leveraged
Equity Fund II, L.P.(3)(9)....... 5,835,842 32.99%
Brookside Capital Partners Fund,
L.P.(10)......................... 1,064,550 6.02%
FMR Corp.(11)..................... 918,300 5.19%
All officers and directors as a
group(12)........................ 8,329,409 45.25%
</TABLE>
- --------
(1) An asterisk denotes beneficial ownership of 1% or less of the Common
Stock.
(2) Director of the Company, Containers and Plastics. Messrs. Silver and
Horrigan currently intend to vote their shares as a block. Each of Mr.
Silver and Mr. Horrigan has sole investment power over 3,422,345.7 shares
of Common Stock. As the sole general partner of Silver Family Limited
Partnership, Mr. Silver shares investment power with Silver Family Limited
Partnership over the 154,198.3 shares of Common Stock owned by such
partnership. As the sole general partner of Horrigan Family Limited
Partnership, Mr. Horrigan shares investment power with Horrigan Family
Limited Partnership over the 154,198.3 shares of Common Stock owned by
such partnership. In addition to the shares included in the above table,
Messrs. Silver and Horrigan share voting and investment power with S&H
over one share of Common Stock owned by S&H. The address for each of
Messrs. Silver and Horrigan is 4 Landmark Square, Stamford, Connecticut
06901.
(3) Pursuant to the Stockholders Agreement and the Principals Stockholders
Agreement, MSLEF II, Messrs. Silver and Horrigan, Silver Family Limited
Partnership and Horrigan Family Limited Partnership share voting power
with respect to (i) 5,835,842 shares of Common Stock owned by MSLEF II;
(ii) 3,422,345.7 shares of Common Stock owned by Mr. Silver; (iii)
3,422,345.7 shares of Common Stock owned by Mr. Horrigan; (iv) 154,198.3
shares of Common Stock owned by Silver Family Limited Partnership; and (v)
154,198.3 shares of Common Stock owned by Horrigan Family Limited
Partnership. In the aggregate, each of MSLEF II, Messrs. Silver and
Horrigan, Silver Family Limited Partnership and Horrigan Family Limited
Partnership share voting power with respect to 12,988,930 shares of Common
Stock. See "Certain Relationships and Related Transactions--Stockholders
Agreements." As discussed in footnote 9 below, MSLEF II, Inc. and Morgan
Stanley Dean Witter & Co. may be deemed to share voting power with respect
to any shares of Common Stock over which MSLEF II has voting power.
(4) Director of the Company, Containers and Plastics.
(5) Director of the Company. Includes 100 shares of Common Stock held of
record by Mr. Begel's son.
(6) Director of the Company.
(7) Includes 64,389 shares of Common Stock owned by Mr. Rankin and 102,786
shares of Common Stock that may be acquired by Mr. Rankin through the
exercise of vested stock options granted pursuant to the Stock
18
<PAGE>
Option Plan. In addition, as the sole general partner of Rankin Limited
Partnership, Mr. Rankin shares investment power with Rankin Limited
Partnership over 21,283 shares of Common Stock owned by such partnership.
(8) Includes 129,719 shares of Common Stock owned by Mr. Beam and 292,304
shares of Common Stock that may be acquired by Mr. Beam through the
exercise of vested stock options granted pursuant to the Stock Option
Plan.
(9) MSLEF II has sole investment power over 5,835,842 shares of Common Stock
held of record by it. By virtue of their affiliate relationships with
MSLEF II, MSLEF II, Inc., the general partner of MSLEF II, and Morgan
Stanley Dean Witter & Co., the parent company of MSLEF II, Inc., may be
deemed to have shared voting and investment power with respect to any
shares of Common Stock over which MSLEF II has voting and investment
power. The address for each of The Morgan Stanley Leveraged Equity Fund
II, L.P. and Morgan Stanley Leveraged Equity Fund II, Inc. is 1221 Avenue
of the Americas, New York, NY 10020. The address for Morgan Stanley Dean
Witter & Co. is 1585 Broadway, New York, New York 10036.
(10) Information is based solely upon the Company's review of Amendment No. 1
to Schedule 13G filed by Brookside Capital Partners Fund, L.P. with the
Securities and Exchange Commission (the "SEC") on or about February 12,
1999. The address for Brookside Capital Partners Fund, L.P. as reported
in its Amendment No. 1 to Schedule 13G is Two Copley Place, Boston,
Massachusetts 02116.
(11) Based solely upon the Company's review of Amendment No. 1 to Schedule 13G
filed with the SEC on or about February 1, 1999, the Company believes
that FMR Corp., together with (i) members of the family of Edward C.
Johnson 3d and trusts for their benefit, the predominant owners of Class
B shares of common stock of FMR Corp, representing approximately 49% of
the voting power of FMR Corp., (ii) Edward C. Johnson 3d, the Chairman
and owner of 12% of the voting stock of FMR Corp., and (iii) Abigail P.
Johnson, a director and the owner of 24.5% of the voting stock of FMR
Corp., has the sole power to vote or to direct the vote of 330,800 shares
of Common Stock and the sole power to dispose or to direct the
disposition of 918,300 shares of Common Stock. The address for FMR Corp.
as reported in its Amendment No. 1 to Schedule 13G is 82 Devonshire
Street, Boston, Massachusetts 02109.
(12) Includes 719,969 shares of Common Stock that may be acquired through the
exercise of (i) vested stock options granted pursuant to the Stock Option
Plan and (ii) stock options granted pursuant to the Stock Option Plan
that will vest within 60 days after the Record Date.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
Upon recommendation of the Audit Committee, the Board of Directors of the
Company appointed Ernst & Young LLP as the Company's independent auditors for
the fiscal year ending December 31, 1999. The Board of Directors of the
Company is requesting ratification of such appointment by the stockholders.
A representative of Ernst & Young LLP is expected to be present at the
Meeting and to be available to respond to appropriate questions from those
attending the Meeting, but is not otherwise expected to make a statement.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
persons holding more than ten percent of a registered class of the Company's
equity securities to file with the SEC initial reports of ownership, reports
of changes in ownership and annual reports of ownership of Common Stock and
other equity securities of the Company. Such directors, officers, and ten
percent stockholders are also required to furnish the Company with copies of
all such filed reports.
19
<PAGE>
Based solely upon a review of the copies of such reports furnished to the
Company and/or representations that no reports were required, the Company
believes that all of its directors, executive officers and ten percent
stockholders complied with all filing requirements under Section 16(a) of the
Exchange Act in 1998.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for stockholder
action at the Company's annual meetings consistent with the rules and
regulations adopted by the SEC. Proposals to be considered for inclusion in
the Proxy Statement for the Company's annual meeting of stockholders in 2000
must be received by the Company at its principal executive offices not later
than December 18, 1999. In accordance with the Exchange Act and the rules and
regulations promulgated thereunder, proxies solicited by the Board of
Directors of the Company will confer discretionary voting authority with
respect to any proposal raised at the Company's annual meeting of stockholders
in 2000 as to which the proponent has not notified the Company by March 2,
2000. Proposals should be directed to the attention of the General Counsel,
Silgan Holdings Inc., 4 Landmark Square, Stamford, Connecticut 06901.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors and
management of the Company have no knowledge of any other business matters that
will be presented for consideration at the Meeting other than those referred
to herein. However, persons named in the accompanying proxy card shall have
authority to vote such proxy as to any other matters that properly come before
the Meeting and as to matters incidental to the conduct of the Meeting in
accordance with their discretion.
By Order of the Board of Directors,
/s/ FRANK W. HOGAN, III
___________________________________
Frank W. Hogan, III
Secretary
Stamford, Connecticut
April 16, 1999
20
<PAGE>
FORM OF PROXY
-------------
SILGAN HOLDINGS INC.
4 Landmark Square
Stamford, CT 06901
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints R. Philip Silver and D. Greg Horrigan
as Proxies, each with the power of substitution, and hereby authorizes each of
them to represent and to vote, as designated below, all the shares of common
stock, par value $.01 per share, of Silgan Holdings Inc. (the "Company") held of
record by the undersigned on April 2, 1999 at an Annual Meeting of Stockholders
of the Company to be held on May 18, 1999 or any adjournment or postponement
thereof.
When properly executed, this proxy will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR Proposals 1 and 2.
(Continued and to be dated and signed on the reverse side.)
1. ELECTION OF DIRECTORS
FOR all nominees [_] WITHHOLD AUTHORITY to vote [_] *EXCEPTIONS [_]
listed below for all nominees listed below
Nominees (each to serve until the Company's Annual Meeting of Stockholders in
2002 and until their successors are duly elected and qualified):
D. Greg Horrigan and Michael M. Janson
(INSTRUCTION: To withhold authority to vote for any individual nominee, mark the
"Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions
- --------------------------------------------------------------------------------
<PAGE>
2. To ratify the appointment of Ernst & Young LLP as the Company's Independent
Auditors for the fiscal year ending December 31, 1999.
FOR [_] AGAINST [_] ABSTAIN [_]
3. To consider and act upon any other business as may properly come before the
meeting or any adjournment or postponement thereof.
Change of Address and or Comments Mark Here [_]
When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please
provide the full name of the corporation and
the signature of the authorized officer signing
on its behalf.
Date: , 1999
------------------------------------
-----------------------------------------------
Name (please print)
-----------------------------------------------
Name of Corporation (if applicable)
-----------------------------------------------
Signature
Votes must be indicated (x) in Black or Blue
ink.
Please mark, sign, date and return this proxy to the Company.
