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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED JANUARY 25, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
__________________
COMMISSION FILE NUMBER 1-10259
WABAN INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 33-0109661
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
One Mercer Road 01760
Natick, Massachusetts (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
Registrant's telephone number, including area code: (508) 651-6500
__________________
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Common Stock, par value $.01 New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
6 1/2% Convertible Subordinated New York Stock Exchange
Debentures due July 1, 2002
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No. [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant on March 29, 1997 was $937,274,000.
There were 32,824,431 shares of the Registrant's Common Stock, $.01 par
value, outstanding as of March 29, 1997.
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<PAGE>
Part III of the Annual Report on Form 10-K of Waban Inc. (the "Company")
for the fiscal year ended January 25, 1997, as filed with the Securities and
Exchange Commission (the "Commission") on April 18, 1997, is hereby amended and
restated in its entirety as follows:
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
DIRECTORS OF THE COMPANY
Set forth below is certain information regarding all of the persons
currently serving as directors of the Company and the one additional person
expected to be nominated for election as a director at the Company's 1997 Annual
Meeting of Stockholders.
CURRENT DIRECTORS--TERMS EXPIRING 1997
Stanley H. Feldberg, 72, has been a director of the Company since February
1989. He was President of Zayre Corp. from 1956 to 1978. He is also an
independent general partner of ML-Lee Acquisition Funds I and II. Mr. Feldberg
is a member of the Executive Compensation Committee of the Company. Mr.
Feldberg will not be standing for re-election at the 1997 Annual Meeting of
Stockholders and will not continue to serve as a director after the 1997 Annual
Meeting.
Kerry L. Hamilton, 46, has been a director of the Company since September
1994. Ms. Hamilton is Vice President, Marketing for Marshalls. Prior to
joining Marshalls in April 1996, Ms. Hamilton was Vice Chairman of Pamet River
Partners, a marketing consulting firm, for two years. Prior to joining Pamet
River Partners, Ms. Hamilton spent 17 years at Ingalls, Quinn & Johnson in
various capacities, during which time she was a member of the Board of
Directors, a member of the Agency Executive Committee and Senior Vice President,
Director of Media Services. Ms. Hamilton is a member of the Audit Committee of
the Company.
Arthur F. Loewy, 68, has been a director of the Company since February
1989. He is a director of The TJX Companies, Inc. and was Chief Financial
Officer and Executive Vice President--Finance of Zayre Corp. from 1982 to 1989.
Mr. Loewy is Chairman of the Audit Committee, Chairman of the Finance Committee
and a member of the Executive Committee of the Company.
CURRENT DIRECTORS--TERMS EXPIRING 1998
S. James Coppersmith, 64, has been a director of the Company since December
1993. He was President and General Manager of WCVB-TV, a Boston television
station, from 1990 to 1994. From 1982 to 1990 he was Vice President and General
Manager of WCVB-TV. Mr. Coppersmith is a director of Kushner-Locke Company,
Chyron Corporation, All-Comm Media Corporation, Sun America Asset Management
Corporation and Uno Restaurant Corporation, Chairman of the Board of Trustees of
Emerson College and a member of the Board of Governors of the Boston Stock
Exchange. Mr. Coppersmith is a member of the Executive Compensation Committee
of the Company.
Thomas J. Shields, 50, has been a director of the Company since June 1992.
He is President of Shields & Company, Inc., an investment banking firm. Mr.
Shields is also a director of Seaboard Corporation and Versar, Inc. Mr. Shields
is Chairman of the Executive Compensation Committee and a member of the
Executive Committee of the Company.
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Herbert J. Zarkin, 58, has been a director, President and Chief Executive
Officer of the Company since May 1993 and was President of the Company's BJ's
Wholesale Club Division from May 1990 to May 1993. From April 1989 to May 1993
he was Executive Vice President of the Company. Mr. Zarkin is a member of the
Executive Committee and the Finance Committee of the Company.
CURRENT DIRECTORS--TERMS EXPIRING 1999
Allyn L. Levy, 69, has been a director of the Company since October 1993.
He has been a private investor since 1988. From 1974 until 1986, he was
founder, Chairman of the Board and Chief Executive Officer of Patriot Bank
Corporation, a commercial bank holding company. He is a director of CV Reit,
Inc. Mr. Levy is a member of the Audit Committee of the Company.
Lorne R. Waxlax, 63, has been a director of the Company since January 1990
and Chairman of the Board of the Company since June 1996. He was an Executive
Vice President of The Gillette Company from 1985 to 1993. Mr. Waxlax is also a
director of Quaker State Corporation, The Iams Company, Hon Industries, Inc. and
Clean Harbors, Inc. Mr. Waxlax is Chairman of the Executive Committee and a
member of the Finance Committee of the Company.
NOMINEE FOR ELECTION AS DIRECTOR
Edward J. Weisberger, 55, has been Senior Vice President and Chief
Financial Officer of the Company since September 1994. From 1989 to 1994 he was
Vice President--Finance of the Company.
EXECUTIVE OFFICERS OF THE COMPANY
The information required by this Item with respect to executive officers is
set forth under the heading "Executive Officers of the Registrant" in Part I of
this Form 10-K and is incorporated herein by reference.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the Commission and the
New York Stock Exchange initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater-than-ten-percent stockholders are required by Commission
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based on a review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, during fiscal 1996 all Section 16(a) filing requirements applicable to
its officers, directors and greater-than-ten-percent beneficial owners were
complied with, except that Mr. Feldberg filed three months late a Form 4
relating to the sale of 10,000 shares of Common Stock of the Company by trusts
of which he and his wife are beneficiaries.
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ITEM 11: EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the annual
and long-term compensation paid for fiscal 1994, 1995 and 1996 to (i) the
Company's Chief Executive Officer and (ii) the Company's four other most highly
compensated executive officers during fiscal 1996 who were serving as executive
officers of the Company on January 25, 1997 (the "Named Executive Officers"):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------ -----------------------
AWARDS(3) PAYOUTS
---------- ----------
OTHER
ANNUAL SECURITIES ALL OTHER
COMPEN- UNDERLYING LTIP COMPEN-
NAME AND PRINCIPAL POSITION YEAR(1) SALARY BONUS SATION(2) OPTIONS(4) PAYOUTS(5) SATION(6)
- --------------------------- -------- -------- -------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Herbert J. Zarkin.......... 1996 $605,962 $199,361 $ 25,633 250,000 $360,640 $ 34,792
President and Chief 1995 570,000 171,285 24,112 100,000 -- 33,000
Executive Officer 1994 552,692 442,154 23,380 100,000 -- 31,969
Allan P. Sherman........... 1996 451,346 -- 238,170 20,000 83,190 27,019
Executive Vice President 1995 435,000 40,000 241,786 50,000 -- 26,250
and President, HomeBase 1994 422,885 189,420 219,829 65,000 -- 101,114
Division.
John J. Nugent............. 1996 382,693 253,450 16,189 20,000 303,278 23,635
Executive Vice President 1995 350,000 134,967 14,806 50,000 -- 22,000
and President, BJ's 1994 332,692 188,038 14,074 65,000 -- 21,135
Wholesale Club Division
Edward J. Weisberger....... 1996 238,077 46,996 10,071 70,000 180,320 16,404
Senior Vice President and 1995 225,000 40,567 9,518 40,000 -- 15,750
Chief Financial Officer 1994 197,847 86,777 8,369 40,000 -- 14,392
Sarah M. Gallivan.......... 1996 154,904 20,385 5,687 6,000 72,128 12,245
Vice President, General 1995 144,808 17,406 5,316 -- -- 11,740
Counsel 1994 131,885 43,074 4,842 10,000 -- 10,849
</TABLE>
(1) Refers to fiscal year ended in January of the following year.
(2) Includes for Mr. Sherman $130,344, $135,204 and $137,240 in fiscal 1996,
fiscal 1995 and fiscal 1994, respectively, for loan forgiveness and the
value of the interest-free component of a housing loan from the
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Company pursuant to the terms of his employment contract, and $80,671,
$80,797 and $60,374 in fiscal 1996, fiscal 1995 and fiscal 1994,
respectively, for reimbursement of tax liabilities related to that loan and
certain items under "All Other Compensation." Includes for all other Named
Executive Officers the reimbursement for tax liabilities related to the
Company's contributions under the Waban Inc. Executive Retirement Plan
("WERP") and excludes perquisites having an aggregate value of the lesser
of $50,000 or 10% of salary plus bonus.
(3) No restricted stock awards were granted to the Named Executive Officers in
the last three fiscal years. The following table presents the aggregate
restricted stock holdings of the Named Executive Officers as of January 25,
1997 and the value of such holdings based on the fair market value of the
Company's Common Stock on January 25, 1997 ($27.25):
<TABLE>
<CAPTION>
RESTRICTED STOCK
HOLDINGS AT 1/25/97
-------------------
SHARES VALUE
------ --------
<S> <C> <C>
Herbert J. Zarkin 1,706 $ 46,489
Allan P. Sherman 5,312 144,752
John J. Nugent 1,440 39,240
Edward J. Weisberger 847 23,081
Sarah M. Gallivan 484 13,189
</TABLE>
In the event of a change of control (as defined), each Named Executive
Officer's restricted stock would become unrestricted. Holders of restricted
stock are entitled to the same dividends as those paid to holders of
unrestricted shares.
(4) Reflects the grant of options to purchase Common Stock. The Company has
never granted stock appreciation rights.
(5) Payouts for fiscal 1996 represent 50% of the Waban Inc. Growth Incentive
Plan ("WGIP") award earned by the Named Executive Officer for the three-
year performance period ended January 25, 1997. The remaining 50% of the
award is payable in April 1998, contingent on employment continuing through
March 31, 1998.
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(6) For fiscal 1996, represents the Company's contributions under its 401(k)
Savings Plan and WERP as presented below:
<TABLE>
<CAPTION>
1996 COMPANY
CONTRIBUTIONS
---------------------
401(k)
SAVINGS
PLAN WERP
-------- -----
<S> <C> <C>
Herbert J. Zarkin................ $4,494 $30,298
Allan P. Sherman................. 4,500 22,519
John J. Nugent................... 4,500 19,135
Edward J. Weisberger............. 4,500 11,904
Sarah M. Gallivan................ 4,500 7,745
</TABLE>
STOCK OPTION GRANTS
The following table sets forth the stock option grants made by the Company
to each of the Named Executive Officers during fiscal 1996:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------ VALUE AT ASSUMED
ANNUAL RATES
NUMBER OF PERCENT OF OF STOCK PRICE APPRECIATION FOR
SECURITIES TOTAL OPTIONS OPTION TERM (1)
UNDERLYING GRANTED TO EXERCISE OR -------------------------------
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED FISCAL YEAR PER SHARE (2) DATE 0%(3) 5% 10%
- -------------- ---------- ------------- ---------- ---------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Herbert J. Zarkin 40,000 5.1% $24.750 4/11/06 $0 $ 622,606 $1,577,805
210,000 27.0% 22.875 9/19/06 0 3,021,053 7,655,940
Allan P. Sherman 20,000 2.6% 24.750 4/11/06 0 311,303 788,903
John J. Nugent 20,000 2.6% 24.750 4/11/06 0 311,303 788,903
Edward J. Weisberger 20,000 2.6% 24.750 4/11/06 0 311,303 788,903
50,000 6.4% 22.875 9/19/06 0 719,298 1,822,843
Sarah M. Gallivan 6,000 0.8% 24.750 4/11/06 0 93,391 236,671
- -------------------
</TABLE>
(1) The dollar amounts in these columns are the result of calculations at 0%
and the arbitrary appreciation rates of 5% and 10% set by the Commission
and are not intended to forecast possible future stock price appreciation,
if any.
(2) All options granted in fiscal 1996 were granted with an exercise price
equal to the closing price of the Common Stock on the New York Stock
Exchange on the date of grant. These options expire ten years from the
date of grant. Options granted on April 11, 1996 vest in equal annual
installments over four years; options granted on September 19, 1996 vest in
equal annual installments over three years. All options vest upon a change
of control (as defined).
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(3) No gain to the optionees is possible without an appreciation in stock
price, which will benefit all stockholders commensurately. A zero percent
stock price appreciation will result in zero gain for the optionee.
AGGREGATED OPTION EXERCISES AND VALUATION
The following table sets forth, on an aggregated basis, the exercise of
stock options during fiscal 1996 by each of the Named Executive Officers and the
fiscal year-end value of unexercised options held by such officers:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
NUMBER OF UNEXERCISED OPTIONS AT FISCAL YEAR-END OPTIONS AT FISCAL YEAR-END (2)
SHARES ACQUIRED VALUE -------------------------------------- ----------------------------------
NAME ON EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------- --------------- ------------ ---------------- ------------------ -------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Herbert J. Zarkin -- $ -- 265,000 335,000 $2,950,313 $1,949,688
Allan P. Sherman 19,000 215,688 108,250 67,750 1,140,844 546,594
John J. Nugent -- -- 122,250 67,750 1,349,000 544,250
Edward J. Weisberger 500 6,688 72,000 95,500 754,250 508,563
Sarah M. Gallivan -- -- 11,750 12,750 107,406 82,406
</TABLE>
______________
(1) Based on the difference between the option exercise price and the fair
market value of the Company's Common Stock on the date of exercise.
(2) Based on the fair market value of the Company's Common Stock on January 25,
1997 ($27.25 per share), less the option exercise price.
LONG-TERM INCENTIVE AWARDS
The following table sets forth information related to long-term incentive
awards granted to the Named Executive Officers during fiscal 1996 pursuant to
the WGIP:
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF
SHARES, PERFORMANCE OR ESTIMATED FUTURE PAYOUTS UNDER
UNITS OR OTHER PERIOD NON-STOCK PRICE-BASED PLANS
OTHER UNTIL MATURATION ------------------------------------------
NAME RIGHTS OR PAYOUT THRESHOLD TARGET MAXIMUM
- ----------------- -------- ---------------- --------- --------- ----------------
<S> <C> <C> <C> <C> <C>
Herbert J. Zarkin 20 Units FYE 1/97 - 1/99 $468,000 $ 0 $1,710,000
Allan P. Sherman 15 Units FYE 1/97 - 1/99 194,400 0 1,305,000
John J. Nugent 15 Units FYE 1/97 - 1/99 273,000 371,220 1,050,000
Edward J. Weisberger 10 Units FYE 1/97 - 1/99 234,000 0 675,000
Sarah M. Gallivan 6 Units FYE 1/97 - 1/99 140,400 0 450,000
</TABLE>
Employees in high-level management positions in the Company, as selected by
the Executive Compensation Committee, were awarded units under the WGIP during
fiscal 1996. Each unit has a value in
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dollars equal to a designated percentage of improvement in net income (for
corporate executives) or divisional pre-tax income (for divisional executives)
during the three-year fiscal period ending January 30, 1999 over base period
income, as defined, for fiscal 1995. No payment will be made unless cumulative
net or pre-tax income, as applicable, is at least equal to 10% compounded growth
over the base period amount. The "threshold" amounts in the table above would be
earned upon achievement of 10% compounded growth in earnings. No participant may
receive a cash award in excess of 300% of the participant's annualized base
salary as of the beginning of the award period. This limit is reflected in the
"maximum" amount column of the table above. The WGIP does not specify a target
payout amount. Accordingly, pursuant to Commission rules, the target payout
level in the table above assumes in each case that fiscal 1996's income level
will be achieved in each of the three fiscal years during the award period. This
assumption would result in no payout for each of the Named Executive Officers
(other than Mr. Nugent) because cumulative net or pre-tax income would be less
than 10% compounded growth over the base period amount. The dollar amounts in
the table are not intended to forecast future payments, if any, under WGIP.
One-half of the cash award earned under the WGIP for the three-year award
period ending January 30, 1999 will be paid in April 1999 to participants
employed through January 30, 1999. The remaining one-half of the award will be
paid in April 2000, contingent upon employment continuing through March 31,
2000.
DIRECTOR COMPENSATION
Directors who are not employees of the Company are paid an annual retainer
of $20,000 and fees of $1,250 for each Board meeting attended, $750 for each
Committee meeting attended and $750 for certain telephone meetings. In addition,
the Chairman of the Board is paid an additional retainer of $100,000 per annum
and the Chairman of the Audit Committee and the Chairman of the Executive
Compensation Committee are each paid $2,500 per annum for their services as
such. All directors are reimbursed for out-of-pocket expenses incurred in
attending such meetings. Directors may participate in the Company's General
Deferred Compensation Plan.
The stockholders approved the 1995 Director Stock Option Plan (the
"Director Plan") at the Company's 1995 annual meeting of stockholders and each
non-employee director of the Company was granted on June 13, 1995 an option to
purchase 3,000 shares of the Company's Common Stock. On the date of each annual
meeting, each continuing non-employee director is granted an option to acquire
an additional 1,500 shares of the Company's Common Stock, and each non-employee
director newly elected or elected subsequent to the then most recent annual
meeting receives an option to purchase 3,000 shares of the Company's Common
Stock. The option exercise price for each of these options is the fair market
value of a share of the Company's Common Stock on the date of grant. Each option
is nontransferable except upon death, expires ten years after the date of grant
and becomes exercisable in three equal annual installments beginning
approximately one year after the date of grant. If the director dies or
otherwise ceases to be a director prior to the date the option becomes
exercisable, the option will immediately expire. Any vested options will remain
exercisable for a period of one year following cessation of service as a
director of the Company. All unexercised options will become exercisable in full
beginning 20 days prior to the consummation of a merger or consolidation (as
described in the Director Plan), acquisition, reorganization or liquidation and,
to the extent not exercised, shall terminate immediately after the consummation
of such merger, consolidation, acquisition, reorganization or liquidation.
EMPLOYMENT AGREEMENTS
Under the Company's employment agreement with Mr. Zarkin, Mr. Zarkin
receives a minimum annual base salary of $625,000 and participates in specified
incentive and other benefit plans. The Company is entitled to terminate Mr.
Zarkin's employment at any time with or without cause (as defined). If his
employment terminates by reason of death, disability, incapacity or termination
by the Company other than for cause, or if a change of control occurs, Mr.
Zarkin is entitled to payment of certain cash compensation
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amounts and continuation of base salary and certain benefits for a period of 24
months after termination at the rate in effect upon termination. The continuing
base salary payments are subject to reduction after 12 months for compensation
earned by Mr. Zarkin from other employment, and the continuing benefits are
subject to reduction at any time for comparable benefits received by Mr. Zarkin
from other employment.
Under the Company's employment agreement with Mr. Sherman, Mr. Sherman
receives a minimum annual base salary of $460,000 and participates in specified
incentive and other benefit plans. In addition, in connection with his election
as President of the HomeBase Division in 1993, the Company agreed to extend to
him an interest-free loan of $700,000 for the purchase of a residence in
California and to forgive the loan over seven years in equal installments,
$100,000 of which was forgiven in each of fiscal 1994, 1995 and 1996. The
Company also agreed to make certain tax "gross-up" payments to Mr. Sherman. The
Company is entitled to terminate Mr. Sherman's employment at any time with or
without cause (as defined). If Mr. Sherman's employment terminates by reason of
death, disability or termination by the Company other than for cause, the
Company is required to pay certain cash compensation amounts, to continue
payment of Mr. Sherman's base salary and certain benefits for 52 weeks after
termination at the rate in effect upon termination, and to extend the term of
Mr. Sherman's relocation loan, including the provisions for debt forgiveness.
The continuing base salary payments are subject to reduction after three months
for compensation earned by Mr. Sherman from other employment, and the continuing
benefits are subject to reduction at any time for comparable benefits received
by Mr. Sherman from other employment.
The Company has an employment agreement with each of Messrs. Nugent and
Weisberger and Ms. Gallivan under which they receive minimum annual base
salaries of $400,000, $245,000 and $157,500, respectively, and participate in
specified incentive and other benefit plans. If employment terminates by reason
of death, disability, incapacity or termination by the Company other than for
cause, each such executive is entitled to payment of certain cash compensation
amounts and to certain benefits and continuation of base salary for 12 months
after termination at the rate in effect upon termination. The continuing base
salary payments are subject to reduction after three months for compensation
earned by the executive from other employment, and the continuing benefits are
subject to reduction at any time for comparable benefits received by the
executive from other employment.
In the event of a change of control followed by termination of employment
as described below under "Change of Control Severance Benefits," each of the
Named Executive Officers would be entitled to the termination benefits described
thereunder, to the extent such benefits would exceed the benefits otherwise
described above.
CHANGE OF CONTROL SEVERANCE BENEFITS
The Company provides change of control severance benefits to each of the
Named Executive Officers under individual agreements. Under the agreements, in
general, upon a change of control (as defined) of the Company, the executive
would be entitled to lump-sum payment of the Management Incentive Plan ("MIP")
target award for the year in which the change of control occurs. If, during the
24-month period following a change of control, the Company were to terminate the
executive's employment other than for cause (as defined) or the executive were
to terminate employment for reasons specified in the agreement, or if employment
were to terminate by reason of death, disability or incapacity, the
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executive would be entitled to receive an amount equal to two times the
executive's annual base salary. For up to two years following termination the
Company would also be obligated to provide specified benefits, including
continued health, medical and life insurance benefits. The foregoing benefits
would be payable whether or not they gave rise to a federal excise tax on so-
called "excess parachute payments" or were non-deductible, except to the extent
a reduction in amounts paid would increase the executive's after-tax benefits.
The Company would also be obligated to pay all legal fees and expenses
reasonably incurred by the executive in seeking enforcement of contractual
rights following a change of control. In addition, upon involuntary termination
within 24 months following a change of control, any agreement by the executive
not to compete with the Company following termination of the executive's
employment would cease to be effective.
INDEMNIFICATION AGREEMENTS
The Company has entered into indemnification agreements with each of its
directors and executive officers indemnifying them against expenses,
settlements, judgments and fines incurred in connection with any threatened,
pending or completed action, suit, arbitration or proceeding, where the
individual's involvement is by reason of the fact that he or she is or was a
director or officer of the Company or served at the Company's request as a
director of another organization (except that indemnification is not provided
against judgments and fines in a derivative suit unless permitted by Delaware
law). An individual may not be indemnified if he or she is found not to have
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the Company, except to the extent Delaware
law permits broader contractual indemnification. The indemnification agreements
provide procedures, presumptions and remedies designed to substantially
strengthen the indemnity rights beyond those provided by the Company's
Certificate of Incorporation and by Delaware law.
BOARD AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In fiscal 1996, decisions concerning compensation of the Company's
executive officers were made by the Executive Compensation Committee. Until
June 11, 1996, the Executive Compensation Committee consisted of Messrs. Waxlax,
Coppersmith and Feldberg. Effective upon his election as Chairman of the Board
of Directors on June 11, 1996, Mr. Waxlax ceased to serve on the Executive
Compensation Committee and was replaced by Mr. Shields.
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ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as to the beneficial ownership
of the Company's Common Stock as of March 31, 1997 (unless otherwise indicated)
by (i) each person or entity known to the Company to beneficially own more than
5% of the outstanding shares of the Company's Common Stock, (ii) each director
or nominee for director of the Company, (iii) each of the Named Executive
Officers and (iv) all current directors and executive officers of the Company,
as a group.
<TABLE>
<CAPTION> PERCENT OF
OUTSTANDING SHARES
SHARES OF COMMON OF COMMON STOCK
STOCK BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) OWNED(1)
- -------------------------------------------- ------------------ ------------------
<S> <C> <C>
The Prudential Insurance Company of America 2,983,308(2) 9.09%
751 Broad Street
Newark, New Jersey 01102
Franklin Resources, Inc. et al.............. 2,516,800(3) 7.67%
777 Mariners Island Blvd.
P.O. Box 7777
San Mateo, CA 94404
David J. Greene and Company................. 2,428,555(4) 7.40%
599 Lexington Avenue
New York, New York 10022
Morgan Stanley Group Inc.................... 1,811,495(5) 5.52%
1585 Broadway
New York, NY 10036
S. James Coppersmith........................ 3,000 *
Stanley H. Feldberg(6)...................... 16,218 *
Kerry L. Hamilton........................... 1,200 *
Allyn L. Levy............................... 6,000 *
Arthur F. Loewy(6).......................... 9,632 *
Thomas J. Shields........................... 1,500 *
Lorne R. Waxlax............................. 8,000 *
Herbert J. Zarkin........................... 413,932 1.25%
Sarah M. Gallivan........................... 20,896 *
John J. Nugent.............................. 163,316 *
Allan P. Sherman............................ 153,750 *
Edward J. Weisberger........................ 103,917 *
All Directors and Executive Officers of
the Company as a Group (12 persons).... 901,361 2.69%
- ---------------------------
</TABLE>
* Indicates less than 1%
(1) Includes the following shares of Common Stock that may be acquired upon
exercise of outstanding stock options which were exercisable on March 31,
1997 or within 60 days thereafter: Mr. Coppersmith, 1,000 shares; Mr.
Feldberg, 1,000 shares; Ms. Hamilton, 1,000 shares; Mr. Levy, 1,000 shares;
Mr. Loewy, 1,000 shares; Mr.
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Shields, 1,000 shares; Mr. Waxlax, 1,000 shares; Mr. Zarkin, 301,250
shares; Ms. Gallivan, 16,000 shares; Mr. Nugent, 142,750 shares; Mr.
Sherman, 128,750 shares; Mr. Weisberger, 82,500 shares; all Directors and
Executive Officers of the Company as a group, 678,250 shares.
(2) As of March 31, 1997 based on information provided to the Company by The
Prudential Insurance Company of America ("Prudential"). Prudential
reported that it has sole power to vote 144,200 shares and shared power to
vote 2,783,734 shares and has sole dispositive power with respect to
193,800 and shared dispositive power with respect to 2,783,734 shares.
Includes 5,818 shares issuable upon conversion of the Company's 6.5%
Convertible Subordinated Debentures.
(3) As of March 31, 1997 based on information provided to the Company by
Franklin Resources, Inc., et al. Franklin Mutual Advisors, Inc. reported
that (i) it has sole power to vote or to direct the voting of 2,280,800
shares and Templeton Investment Counsel, Inc. has sole power to vote or
direct the voting of 236,000 shares; and (ii) it has sole dispositive power
with respect to 2,280,800 shares and Templeton Investment Counsel, Inc. has
sole dispositive power with respect to 236,000 shares.
(4) Information is as of December 31, 1996 and is based on a Schedule 13G filed
with the Commission by David J. Greene and Company, a registered broker-
dealer and investment adviser. David J. Greene and Company reported that
it has sole power to vote 152,400 shares and shared power to vote 1,546,500
shares and has sole dispositive power with respect to 152,400 shares and
shared dispositive power with respect to 2,428,555 shares.
(5) Information is as of December 31, 1996 and is based on a Schedule 13G filed
with the SEC by Morgan Stanley Group Inc. ("Morgan Stanley"). Morgan
Stanley reported that it has shared voting power with respect to 1,708,895
shares and shared dispositive power with respect to 1,811,495 shares.
(6) Includes the following shares beneficially owned by the following persons
as trustees or custodians of which beneficial interest is disclaimed unless
otherwise indicated: Mr. Feldberg (8,366 shares). Excludes the following
shares beneficially owned by or held in trust by or for the benefit of the
respective spouses of the following persons and any shares held in a trust
for which the following persons are income beneficiaries, as to which the
following persons disclaim beneficial ownership: Mr. Feldberg (84 shares);
Mr. Loewy (413 shares).
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
WABAN INC.
/s/ EDWARD J. WEISBERGER
-------------------------------------------------
Edward J. Weisberger
Senior Vice President and Chief Financial Officer
Dated: May 23, 1997
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