<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 Under Rule 14a-12
Silgan Holdings 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] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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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 23, 2000
----------------
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 23,
2000, for the following purposes:
1. To elect two directors of the Company to serve until the Company's
annual meeting of stockholders in 2003 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, 2000; 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 7, 2000 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 21, 2000
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 23, 2000
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 23, 2000, 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 21, 2000.
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 7, 2000 (the
"Record Date") will be entitled to notice of, and to vote at, the Meeting. As
of the Record Date, there were 17,591,694 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 2003 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, 2000. 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
<PAGE>
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, 1999. 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.
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 III
Directors expires.
The two Class III Directors currently are Thomas M. Begel and Jeffrey C.
Crowe. The Board of Directors has nominated each of Messrs. Begel and Crowe
for re-election at the Meeting as Class III Directors of the Company, each to
serve until the Company's annual meeting of stockholders in 2003 and until his
successor has been duly elected and qualified. Messrs. Begel and Crowe were
nominated for re-election at the Meeting as Class III Directors of the Company
pursuant to certain provisions of the Stockholders Agreement dated as of
February 14, 1997 (the "Principals Stockholders Agreement") among R. Philip
Silver, D. Greg Horrigan and The Morgan Stanley Leveraged Equity Fund II, L.P.
("MSLEF II"). See "Certain Relationships and Related Transactions--
Stockholders Agreements."
Each nominee for Class III 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 III 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, 1999), 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.
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Nominees for election as Directors (Class III)--term expiring 2003
Thomas M. Begel, age 57, 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
Transportation Technologies Industries Inc. (formerly known as 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 53, 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.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR BOTH NOMINEES
FOR DIRECTOR (CLASS III) OF THE COMPANY.
Incumbent Directors (Class I)--term expiring 2001
R. Philip Silver, age 57, 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 Silgan Containers Corporation, one of two wholly owned
subsidiaries of the Company through which the Company conducts principally all
of its business ("Containers"), since its inception in August 1987 and Vice
President of Containers since May 1995. Mr. Silver has been 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 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 31, has been a Director of the Company since
September 1996. He has been a Principal of Morgan Stanley Dean Witter ("Morgan
Stanley") since 2000. From 1998 to 1999, Mr. Abramson was a Vice President of
Morgan Stanley, and, from 1994 to 1998, Mr. Abramson was an Associate of
Morgan Stanley. Since 1995, Mr. Abramson has been a Vice President of Morgan
Stanley Leveraged Equity Fund II, Inc. ("MSLEF II, Inc."), the general partner
of MSLEF II, and of the managing general partner of the general partner of
Morgan Stanley Capital Partners III, L.P. 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 WebLink
Wireless, Inc.
Incumbent Directors (Class II)--term expiring 2002
D. Greg Horrigan, age 56, 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 Containers and a Director of Plastics since their
inception in August 1987. Mr. Horrigan was Executive Vice President and
Operating Officer of Continental Can Company from 1984 to 1987.
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<PAGE>
Michael M. Janson, age 52, has been a Director of the Company since
February 1999. Mr. Janson has been with 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 Choice One
Communications Inc. as well as a number of privately held companies.
Messrs. Silver and Abramson were elected as Directors of the Company at the
Company's annual meeting of stockholders in 1998. Messrs. Horrigan and Janson
were elected as Directors of the Company at the Company's annual meeting of
stockholders in 1999. Messrs. Begel and Crowe were nominated for election as
Directors of the Company in 1997 pursuant to certain provisions of the
Principals Stockholders Agreement and were elected to the Board of Directors
of the Company in 1997 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 nine times during 1999. Each incumbent Director attended 75 percent or
more of the aggregate of: (1) the total number of meetings of the Board of
Directors held in 1999 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 1999.
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 1999.
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, Abramson and
Crowe. See "Compensation Committee Interlocks and Insider Participation." The
Compensation Committee held one meeting and acted by written consent once
during 1999.
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
1999 but acted by written consent five 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
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<PAGE>
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, 1999), 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.
Executive Officers of the Company
Harley Rankin, Jr., age 60, 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 39, 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 56, 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.
Stephen J. Sweeney, age 43, has been Vice President and Controller of the
Company since April 1999. Mr. Sweeney has also been Vice President of
Containers and Plastics since April 1999. From August 1990 to April 1999, Mr.
Sweeney was Controller and Chief Accounting Officer of Parsons & Whittemore,
Inc., a pulp and paper company. Prior to August 1990, Mr. Sweeney was employed
by Ernst & Young LLP, last serving as Audit Senior Manager.
Executive Officers of Containers
James D. Beam, age 56, 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 57, 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.
5
<PAGE>
Gerald T. Wojdon, age 63, 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 46, 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.
H. Schuyler Todd, age 59, has been Vice President, Human Resources of
Containers since April 1999. From September 1987 to April 1999, Mr. Todd was
Director of Human Resources for Containers. Prior to that, Mr. Todd was
employed for approximately eleven years by the Can Division of the Carnation
Company as Industrial Relations Manager.
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 56, 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.
Alan H. Koblin, age 47, has been Senior Vice President--Operations of
Plastics since January 2000. Previously, Mr. Koblin was Vice President--Sales
& Marketing of Plastics since December 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 62, has been Senior Vice President--Sales, Marketing
and Commercial Development of Plastics since January 2000. Previously, he was
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.
Donald E. Bliss, age 48, has been Vice President--Sales of Plastics since
January 2000. From November 1993 through December 1999, Mr. Bliss was National
Sales Director at Plastics. Prior to that, Mr. Bliss was employed by Graham
Packaging Company, last serving as Regional Sales Director.
Howard H. Cole, age 54, 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 39, 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.
6
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management Agreements
Each of the Company, Containers and Plastics has entered into a management
services agreement dated as of February 14, 1997 (collectively, as amended,
the "Management Agreements") with S&H Inc., a corporation wholly owned by
Messrs. Silver and Horrigan ("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 term of the Management Agreements currently continues until
June 30, 2001. 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, beginning in 2000 the Compensation Committee of the Board of
Directors of the Company (other than any member who is receiving or is
entitled to receive, or is affiliated with an entity that is receiving or
entitled to receive, any payment from the Company or S&H under or in
connection with the Management Agreements) will determine on behalf of the
Company and its subsidiaries whether to give such written notice not to renew
such term. Prior to 2000, the independent directors of the Company made such
determination on behalf of the Company and its subsidiaries, and in November
1999 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, 2000 for a one-
year renewal term until June 30, 2001.
Prior to 2000, the Management Agreements provided 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.
Pursuant to a recent amendment to the Management Agreements which, among other
things, eliminated the provision that provided for the retention of Morgan
Stanley to provide financial advisory services to S&H for the Company and its
subsidiaries in connection with the Management Agreements, beginning in 2000
the Management Agreements provide for payments to S&H of 90.909% of the
amounts under (i) and (ii) above. The Scheduled Amount was $101.5 million for
the calendar year 1999 and is $108.653 million for the calendar year 2000, and
the Maximum Amount was $105.488 million for the calendar year 1999 and is
$108.653 million for the calendar year 2000. For the calendar year 2001, the
Scheduled Amount and the Maximum Amount is $111.913 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. Prior to 2000, S&H had
retained Morgan Stanley to render financial advisory services to
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S&H in connection with the Management Agreements. In connection with such
retention, S&H paid Morgan Stanley a fee equal to 9.091% of the fees paid to
S&H under the Management Agreements. For 2000, in connection with a recent
amendment to the Management Agreements S&H has not retained Morgan Stanley to
render such financial advisory services to it. See "--Other."
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
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, 1999, S&H earned aggregate fees under the
Management Agreements, including reimbursable expenses and fees payable to
Morgan Stanley, of $5.5 million from the Company and its subsidiaries, and
Morgan Stanley earned fees of $0.5 million.
Stockholders Agreements
Messrs. Silver and Horrigan, MSLEF II, Bankers Trust New York Corporation
("BTNY") and the Company are parties to the Stockholders Agreement dated as of
December 21, 1993 (the "Stockholders Agreement"), which provides for certain
rights and obligations among 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
8
<PAGE>
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."
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 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") 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 (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) 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
9
<PAGE>
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.
The Principals Stockholders Agreement also 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 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
For 2000, the Company has retained Morgan Stanley to provide it with
financial advisory services previously provided through S&H under the
Management Agreements. For such services, the Company has agreed to pay Morgan
Stanley approximately $0.5 million.
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 1999, 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 2000. 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 $1.3 million in 1999 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, 1999, 1998 and 1997 of those
persons who at December 31, 1999 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
Name and Principal Stock All Other
Position Year Salary(a) Bonus(b) Options Compensation(c)
- ------------------ ---- ---------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
R. Philip Silver........ 1999 $2,080,000 -- -- --
(Chairman of the Board 1998 2,010,000 -- -- --
and Co-Chief 1997 1,925,000 -- -- --
Executive Officer of
the Company and
Chairman of the Board
of Plastics)
D. Greg Horrigan........ 1999 $2,080,000 -- -- --
(President and Co-Chief 1998 2,010,000 -- -- --
Executive Officer 1997 1,925,000 -- -- --
of the Company and
Chairman of the
Board of Containers)
Harley Rankin, Jr....... 1999 $ 474,168 -- -- --
(Executive Vice 1998 457,596 -- -- --
President, Chief 1997 441,216 -- -- --
Financial
Officer and Treasurer
of the Company)
James D. Beam........... 1999 $ 410,040 $108,558 -- $101,811
(President of 1998 398,100 135,493 -- 89,558
Containers) 1997 385,800 21,759 -- 65,372
Glenn A. Paulson........ 1999 $ 219,109 $198,114 -- $ 38,816
(Vice President, 1998 211,766 48,050 -- 4,800
Corporate Development 1997 206,826 7,777 -- 4,750
of the Company; Vice
President of
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) Bonuses of Messrs. Beam and Paulson were earned by them in the year
reported in the table and paid in the following year pursuant to
applicable performance incentive plans of the Company and its
subsidiaries. Under such plans, executive officers and other key
employees may be awarded cash bonuses provided that certain assigned
financial targets are achieved.
(c) In the case of Messrs. Beam and Paulson, 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 1999, Containers contributed the
following amounts: $86,547 under the Supplemental Plan and $15,264 under
the Containers Savings Plan for the benefit of Mr. Beam; and $23,552
under the Supplemental Plan and $15,264 under the Containers Savings Plan
for the benefit of Mr. Paulson.
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<PAGE>
The following table sets forth information concerning the exercise of stock
options by, and the value at December 31, 1999 of unexercised stock options
of, each of the Named Executive Officers:
Aggregate Option Exercises In 1999 And Option Values At December 31, 1999
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at in-the-Money Options at
Shares December 31, 1999 December 31, 1999(a)
Acquired on Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. Philip Silver........ -- -- -- -- -- --
D. Greg Horrigan........ -- -- -- -- -- --
Harley Rankin, Jr....... 40,000 $ 571,262 62,786 -- $ 617,284 --
James D. Beam........... 56,000 1,001,840 236,304 -- 2,687,018 --
Glenn A. Paulson........ -- -- 20,000 30,000 -0- -0-
</TABLE>
- --------
(a) The value of an unexercised option is based upon the difference between
$13.375, the closing sales price for a share of the Common Stock on
December 31, 1999 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 of 1986, as amended (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 (also taking into
account benefits payable under the Supplemental Plan as described below). 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>
$100,000 $13,260 $ 21,270 $ 29,270 $ 37,280 $ 45,290 $ 53,290
150,000 20,640 33,020 45,400 57,780 70,160 82,540
200,000 28,010 44,770 61,520 78,280 95,040 111,790
250,000 35,390 56,520 77,650 98,780 119,910 141,040
300,000 42,760 68,270 93,770 119,280 144,790 170,290
350,000 50,140 80,020 109,900 139,780 169,660 199,540
400,000 57,510 91,770 126,020 160,280 194,540 228,790
450,000 64,890 103,520 142,150 180,780 219,410 258,040
</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 $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.
12
<PAGE>
As of December 31, 1999, Messrs. Beam and Paulson, the only Named Executive
Officers who are eligible participants under the Containers Pension Plan, had
twelve and four years of credited service, respectively, under the Containers
Pension Plan. Messrs. Beam and Paulson 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 (also taking into
account benefits payable under Plastics' supplemental retirement plan as
described below). 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>
$100,000 $11,000 $16,500 $22,000 $ 27,500 $ 33,000 $ 38,500
150,000 16,500 24,750 33,000 41,250 49,500 57,750
200,000 22,000 33,000 44,000 55,000 66,000 77,000
250,000 27,500 41,250 55,000 68,750 82,500 96,250
300,000 33,000 49,500 66,000 82,500 99,000 115,500
350,000 38,500 57,750 77,000 96,250 115,500 134,750
400,000 44,000 66,000 88,000 110,000 132,000 154,000
450,000 49,500 74,250 99,000 123,750 148,500 173,250
</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 are determined based on two
methods. Under the first method, the Plastics Pension Plan provides for
benefits based on a formula without any offset for social security. Most of
Plastics' officers are eligible participants under the Plastics Pension Plan
based on this first method and the above table is based on this first method.
Under the second method, benefits under the Plastics Pension Plan are based on
one of three formulas, one of which provides for an offset for social
security. Additionally, officers of Plastics are eligible to participate in
Plastics' supplemental retirement plan, which is designed to make up for
benefits not payable under the Plastics Pension Plan due to Code limitations.
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 up to one year
following termination if (i) Mr. Beam is terminated by Containers for any
reason other than death, 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.
Glenn A. Paulson, Vice President--Corporate Development of the Company and
Vice President of Containers, is also a party to an employment agreement with
Containers. The initial term of such employment
13
<PAGE>
agreement was one year 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. Paulson's
employment agreement provides for, among other things, the payment of his base
salary and normal bonus for a period of one year following termination if Mr.
Paulson is terminated without cause, as defined in such employment 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 (c) thereto and under the heading "Executive Compensation--
Pension Plans."
For 1999, 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 and Rankin 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, 2001, 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. Beginning in 2000,
the Compensation Committee of the Board of Directors of the Company (other
than any member who is receiving or is entitled to receive, or is affiliated
with an entity that is receiving or entitled to receive, any payment from the
Company or S&H under or in connection with the Management Agreement), 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 or any of the Company's three business units, 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 the Company or such business unit, as
the case may be. The EBDITA target levels of each of the Company and its
business units for a given year are established at the beginning of such year
as part of the operating budgets of the Company and its subsidiaries, which
operating budgets are approved by the boards of directors of the Company and
its subsidiaries. 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 officers of Containers, a
portion of their annual cash bonuses for 1999 was payable to them if such
officers met certain organizational goals as established by the board of
directors of such company at the beginning of the year. For 2000, a portion of
the annual cash bonuses for officers of the Company's subsidiaries will be
payable to them if the business unit of the Company for which they work meets
certain organizational goals as established by the board of directors of the
applicable subsidiary of the Company at the beginning of the year, such as
cost management and working capital management goals. 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
Leigh J. Abramson
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 seven executive officers and key employees of the Company and its
subsidiaries under the Stock Option Plan in 1999 with respect to 115,000
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
Since December 16, 1999, the Compensation Committee of the Board of
Directors of the Company has consisted of Messrs. Horrigan, Abramson and
Crowe. Prior to December 16, 1999, 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 1999, 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 1999 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, 1999 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.; Pactiv Corporation;
Sealed Air Corp.; Smurfit Stone Container Corporation; 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, December 31,
1997 1997 1998 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Silgan Holdings Inc.. 100 163 139 67
Dow Jones Containers
& Packaging Index.. 100 107 95 90
S&P Index............ 100 126 161 195
</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)............ 3,603,244 20.48%
D. Greg Horrigan(2)(3)............ 3,603,244 20.48%
Leigh J. Abramson(4).............. -- --
Thomas M. Begel(5)................ 2,100 *
Jeffrey C. Crowe(6)............... 2,000 *
Michael M. Janson(6).............. -- --
Harley Rankin, Jr.(7)............. 168,458 *
James D. Beam(8).................. 374,523 2.11%
Glenn A. Paulson(9)............... 31,200 *
The Morgan Stanley Leveraged
Equity Fund II, L.P.(3)(10)...... 5,835,842 33.17%
Brookside Capital Partners Fund,
L.P.(11)......................... 1,135,150 6.45%
All officers and directors as a
group(12)........................ 8,162,480 44.98%
</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 3,449,045.7 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 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) 3,449,045.7
shares of Common Stock owned by Mr. Silver; (iii) 3,449,045.7 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 13,042,330 shares of Common Stock. See "Certain
Relationships and Related Transactions--Stockholders Agreements." As
discussed in footnote 10 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 84,389 shares of Common Stock owned by Mr. Rankin and 62,786
shares of Common Stock that may be acquired by Mr. Rankin through the
exercise of vested stock options granted pursuant to the Stock Option
Plan. In addition, as the sole general partner of Rankin Limited
Partnership, Mr. Rankin shares
18
<PAGE>
investment power with Rankin Limited Partnership over 21,283 shares of
Common Stock owned by such partnership.
(8) Includes 177,219 shares of Common Stock owned by Mr. Beam and 197,304
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) Includes 1,200 shares of Common Stock owned by Mr. Paulson and 30,000
shares of Common Stock that may be acquired by Mr. Paulson through the
exercise of vested stock options granted pursuant to the Stock Option
Plan.
(10) 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, New York 10020. The address for Morgan
Stanley Dean Witter & Co. is 1585 Broadway, New York, New York 10036.
(11) Information is based solely upon the Company's review of Amendment No. 2
to Schedule 13G filed by Brookside Capital Partners Fund, L.P. with the
Securities and Exchange Commission (the "SEC") on or about February 14,
2000. The address for Brookside Capital Partners Fund, L.P. as reported
in its Amendment No. 2 to Schedule 13G is Two Copley Place, Boston,
Massachusetts 02116.
(12) Includes 555,369 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, 2000. 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, 2000.
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.
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 1999.
19
<PAGE>
STOCKHOLDER PROPOSALS FOR 2001 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 2001
must be received by the Company at its principal executive offices not later
than December 23, 2000. 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 2001 as to which the proponent has not notified the Company by March 7,
2001. 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 21, 2000
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 7, 2000 at an Annual Meeting of Stockholders of the
Company to be held on May 23, 2000 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
<TABLE>
<CAPTION>
<S> <C> <C>
FOR all nominees [_] WITHHOLD AUTHORITY to vote [_] *EXCEPTIONS [_]
listed below for all nominees listed below
</TABLE>
Nominees (each to serve until the Company's Annual Meeting of Stockholders in
2003 and until their successors are duly elected and qualified):
Thomas M. Begel and Jeffrey C. Crowe
(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, 2000.
<TABLE>
<CAPTION>
<S> <C> <C>
FOR [_] AGAINST [_] ABSTAIN [_]
</TABLE>
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 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: , 2000
---------------------------------
---------------------------------------------------
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.
