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 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 Material
[ ] Soliciting Material Pursuant to section 240.14a-12
Smith Corona Corporation
(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:
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:
2) Form, Schedule or Registration Statement No:
3) Filing Party:
4) Date Filed:
_________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
_________________________
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders of Smith Corona Corporation (the "Company") will be
held at One Battery Park Plaza, 34th floor, New York, New York,
10004 on November 15, 1999 at 10:00 a.m., for the following
purposes:
1. To elect two (2) directors to serve until the 2002
Annual Meeting of Stockholders and until their successors are
elected and qualified;
2. To consider and act upon a proposal to ratify the
appointment of KPMG LLP as independent certified public
accountants for the Company for the fiscal year ending June 30,
2000; and
3. To transact such other business as may properly come
before the meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on
September 16, 1999 as the record date for the determination of
stockholders entitled to notice of, and to vote at, the Annual
Meeting or any adjournments or postponements thereof.
By Order of the Board of Directors,
/s/ G. William Sisley
G. William Sisley
Secretary
September 23, 1999
Cortland, New York
WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING
IN PERSON. IF YOU DO ATTEND THE MEETING, YOU MAY THEN WITHDRAW
YOUR PROXY.
SMITH CORONA CORPORATION
842 Bennie Road
Cortland, New York 13045
(607) 753-6011
_________________________
PROXY STATEMENT
_________________________
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Smith Corona
Corporation (the "Company") for use at the Annual Meeting of
Stockholders to be held at One Battery Park Plaza, 34th floor, New
York, New York, 10004 on November 15, 1999 at 10:00 a.m. (the
"Meeting"), and at any postponements or adjournments thereof.
This Proxy Statement and the related proxy card are first being
mailed to Stockholders on or about October 1, 1999.
Only holders of record of the Company's common stock, par
value $.001 per share (the "Common Stock"), as of the close of
business on September 16, 1999 (the "Record Date") will be
entitled to notice of, and to vote at, the Meeting. As of the
Record Date, there were 3,056,406 shares of Common Stock issued
and outstanding, each of which is entitled to one vote. There is
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 Common Stock will be necessary to constitute a quorum
for the transaction of business at the Meeting.
All shares 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 represented by such
proxies will be voted (1) FOR the election of the nominees listed
below and (2) FOR the ratification of the appointment of KPMG LLP
as the Company's independent certified public accountants for the
fiscal year ending June 30, 2000 ("Fiscal 2000"). It is not
anticipated that any matters other than those set forth in the
Notice of Annual Meeting dated September 23, 1999 (the "Notice of
Meeting") will be brought before the Meeting. If any other
matters properly come before the Meeting, the shares represented
by all properly executed proxies will be voted in accordance with
the judgment of the persons named on such proxies. Shares
abstaining, and shares held in street name as to which a broker
has not voted on some matters but has voted on other matters
("Broker Non-Votes"), 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, or, in the case of the election of directors, a
plurality, of shares of Common Stock present in person or by proxy
at the Meeting entitled to vote thereon. Stockholders may not
cumulate their votes. In determining whether a proposal specified
in the Notice of Meeting has received the requisite number of
affirmative votes, abstentions and Broker Non-Votes will have the
same effect as votes against the proposal, except with respect to
the election of directors where abstentions and Broker Non-Votes
will have no effect on the outcome of the vote.
Any stockholder who executes and delivers a proxy may revoke
it at any time prior to its exercise by (1) delivering to the
Secretary of the Company a written notice of revocation prior to
the Meeting; (2) delivering to the Secretary of the Company a duly
executed proxy bearing a later date; or (3) attending the Meeting
and filing a written notice of revocation with the Secretary of
the Meeting.
In addition to solicitations by mail, some directors,
officers and employees of the Company may solicit proxies for the
Meeting personally or by telephone or telegram without extra
remuneration therefor. The Company will also provide persons,
firms, banks and corporations holding shares in their names or in
the names of nominees, which in either case are beneficially owned
by others, 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.
PROPOSAL 1.
ELECTION OF DIRECTORS
Nominees
The Board of Directors is divided into three classes serving
staggered three-year terms. The terms of office of two current
directors, Messrs. Colletti and Parts, expire at the 1999 Annual
Meeting of Stockholders. They have been nominated for reelection
through the 2002 Annual Meeting of Stockholders or until a
successor is elected and qualified.
The terms of Messrs., Bermingham and Morgan expire at the
2000 Annual Meeting of Stockholders. The terms of Messrs. Murray
and Rosett expire at the 2001 Annual Meeting of Stockholders.
Certain information is provided with respect to the members
of the Board of Directors below, including such individual's age
and principal occupation, a brief account of business experience
during at least the last five years, other directorships currently
held and the year in which the individual was first elected a
director of the Company.
John A. Bermingham
Mr. Bermingham, age 54 has served as President,
Chief Executive Officer and Director since November 4, 1998.
Prior to joining the Company, Mr. Bermingham was a Principal in
Solutions Plus, a management consulting firm from June 1997 until
November 1998. Mr. Bermingham served as the President and Chief
Executive Officer of Rolodex Corporation from March 1996 to May
1997. He served as President and Chief Executive Officer of AT&T,
Smart Card Systems and Solutions, and as Group Vice President for
AT&T's New Business Ventures group from January 1993 until January
1996. From 1982 until 1993, Mr. Bermingham held various executive
positions at Sony Corporation of America, the most recent being
President of Sony Magnetic Products Group.
Jerome A. Colletti
Mr. Colletti, age 52, has served as Partner of Colletti -
Fiss, LLC, a management consulting firm since April 30, 1999. Mr.
Colletti served as President and Chief Executive Officer of the
Alexander Group Inc., a marketing and sales management consulting
firm, from January 1985 to April 1999. Mr. Colletti has been a
director of the Company since February 28, 1997.
William J. Morgan
Mr. Morgan, age 45, has served as President and Managing
Director of Pacholder Associates, Inc. (PAI), a national financial
services firm, since 1983. Mr. Morgan serves as a director of
Kaiser Ventures, Inc., Pacholder Fund, Inc., and ICO, Inc. Mr.
Morgan has been a director of the Company since February 28, 1997.
Michael J. Murray
Mr. Murray, age 64, served as Executive Vice President of
Sales and Marketing for the Company from March 1, 1998 to December
18, 1998. Mr. Murray served as Vice President for Worldwide
Sales, Marketing and Technical Service Operations of Harris/RF
Communications Company, a manufacturer of military radios from
January 1993 to January 1995. Mr. Murray served as Regional
Business General Manager and Vice President of the Office Imaging
Division of Eastman Kodak Company until his retirement in January
1993. Mr. Murray is currently a director of Photikon Corporation.
Mr. Murray has been a director of the Company since February 28,
1997.
Peter N. Parts
Mr. Parts, age 46, was elected as Chairman of the Board of
the Company on May 23, 1998 and President and Chief Executive
Officer on July 17, 1998. He served as President and Chief
Executive Officer of the Company until November 3, 1998. He has
served as President and Chief Executive Officer of Peter Parts
Electronics, Inc., a North American sales group for electronic
manufacturers from Asia and Europe, since 1986. Mr. Parts has
been a director of the Company since February 28, 1997.
Dr. Richard N. Rosett
Dr. Rosett, age 71, has served as Professor of Economics at
the Rochester Institute of Technology College of Business since
July 1990. From July 1990 to June 1996 Dr. Rosett was the Dean of
the Rochester Institute of Technology College of Business. Dr.
Rosett has been a director of the Company since February 28, 1997.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR MR.
COLLETTI AND MR. PARTS AS DIRECTORS.
Meetings and Committees of the Board
The Board of Directors met 18 times during the period from
July 1, 1998 to June 30, 1999 ("Fiscal 1999"). All directors
attended at least 90 percent of Board (and, where applicable,
Committee) meetings held in Fiscal 1999.
The Board has two standing committees, the Audit Committee
and the Compensation and Benefits Committee. The principal
responsibilities of each of the standing committees and the
members of such committees are set forth below:
The Audit Committee met one time during Fiscal 1999. The
Audit Committee is responsible for (i) recommending to the Board
of Directors a firm of independent certified public accountants to
audit the Company's financial statements for the forthcoming
fiscal year; (ii) reviewing the scope and result of audits made by
such firm; (iii) reviewing the adequacy of internal accounting and
auditing procedures; and (iv) directing and supervising special
audit inquiries. The Audit Committee is also responsible for
approving in advance all agreements between the Company and its
affiliates. During Fiscal 1999, the Audit Committee consisted of
Messrs. Murray and Rosett and effective July 24, 1998 Mr. Morgan
replaced Mr. Parts as a member of the Audit Committee.
The Compensation and Benefits Committee met one time during
Fiscal 1999. The Compensation and Benefits Committee is
responsible for (i) reviewing and approving matters relating to
executive officers compensation; (ii) reviewing the structure of
any long-term management incentive plans and approving grants to
officers under such plans; (iii) reviewing and approving all
employment and consulting agreements between the Company and any
of its officers; and (iv) reviewing the retirement plans in which
Company officers participate. During Fiscal 1999, the
Compensation and Benefits Committee consisted of Messrs. Colletti
and Morgan and effective July 24, 1998 Mr. Parts was elected as a
member of the Compensation and Benefits Committee.
Compensation of Directors
Directors who are employees of the Company do not receive
any additional compensation for their services as directors. From
July 1, 1998, until December 31, 1998 directors were paid a fee of
$5,500 plus expenses and the Chairman of the board was paid a fee
of $11,000 plus expenses. Effective January 1, 1999, the board
adopted the Smith Corona Corporation Deferred Compensation Plan
For Outside Directors (the "Deferred Compensation Plan").
Pursuant to the provisions of the Deferred Compensation Plan, each
board member may elect to have part or all of the annual fee of
$22,000 or in the case of the Chairman of the Board $44,000
deferred. The deferred portion of the annual fee is deemed to be
invested in full or fractional shares of the Company's Common
Stock. In January 1999, the Chairman of the Board received a one-
time payment of $50,000 for extraordinary services. Committee
members who are not employees of the Company receive an attendance
fee of $500 plus expenses for each committee meeting attended.
Executive Compensation
Set forth below is information concerning compensation of
the chief executive officer and the four other most highly
compensated executive officers of the Company (collectively the
"Named Executive Officers") for the year ended June 30, 1999.
<TABLE>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C> <C> <C>
Fiscal Restricted Securities
Year Other Annual Stock Underlying All Other
Name and Principal Ending Salary Bonus Compensation Awards Options/SAR's Compensation
Position June 30, ($)(8) ($)(9) ($)(10) ($)(11) (#)(12) ($)
John A. Bermingham (1) 1999 197,692 160,000 - 216,000 - 3,667 (13)
President, Chief 1998 - - - - - -
Executive Officer 1997 - - - - - -
Peter N. Parts (2) 1999 37,179 150,000 - - - -
President, Chief 1998 - - - - - -
Executive Officer 1997 - - - - - -
W. Michael Driscoll (3) 1999 30,609 - 153 - - 250,942(13)
President, Chief 1998 260,585 - - 225,135 - 7,608
Executive Officer 1997 183,243 100,000 - 187,491 - 3,816
Martin D. Wilson (4) 1999 152,913 6,600 6,375 48,260 - 4,967(13)
Senior Vice President, 1998 105,750 23,794 - 25,747 7,095 3,886
Chief Financial 1997 101,000 54,019 - - - 3,342
Officer,Treasurer and
Assistant Secretary
J.Thomas Malatesta (5) 1999 127,149 33,267 - - - 38
Vice President-New 1998 - - - - - -
Market Development 1997 - - - - - -
Michael J. Murray (6) 1999 155,084 - 169 - - 2,035(13)
Executive Vice 1998 100,000 - - - - -
President-Sales and 1997 - - - - - -
Marketing
Michael W. Chernago (7) 1999 116,307 - 8,606 - - 138,530(13)
Vice President- 1998 135,000 - - 25,747 7,095 3,775
Operations 1997 127,083 76,661 - - - 4,763
</TABLE>
(1) Mr. Bermingham was named President, Chief Executive Officer and
Director on November 4, 1998.
(2) Mr. Parts served as President and Chief Executive Officer from
July 17, 1998 to November 3, 1998.
(3) Mr. Driscoll retired on July 17, 1998. Mr. Driscoll was named
President and Chief Executive Officer on February 28, 1997. Mr.
Driscoll was a consultant from October 14, 1996 until February
27, 1997.
(4) Mr. Wilson was named Senior Vice President, Chief Financial
Officer and Assistant Secretary on October 1, 1998 and Treasurer
on May 11, 1999.
(5) Mr. Malatesta was named Vice President-New Market Development on
August 3, 1998 and Vice President - Product Development on
August 11, 1999
(6) Mr. Murray served as Executive Vice President-Sales and
Marketing from March 1, 1998 to December 18,1998.
(7) Mr. Chernago terminated employment with the Company on March 31,
1999.
(8) Amounts shown include compensation deferred under the Company's
Retirement Savings and Investment Plan ("RSIP").
(9) Amounts shown include the bonus earned by the Named Executive
Officers under the Company's incentive compensation program in
the year ended June 30, 1997.
(10) Amounts shown with respect to Mr. Wilson, Mr. Murray, and Mr.
Chernago represent preferential earnings on Restricted Stock.
Amount shown with respect to Mr. Driscoll represents
reimbursement for payment of taxes.
(11) Restricted stock award values reflect the market price of the
Common Stock on the date of each grant. The aggregate number
and value of restricted stock holdings for each of the Named
Executive Officers, valued using the market close price as of
June 30, 1999 are as follows: Mr. Bermingham, 150,000
shares/$206,250 and Mr. Wilson, 17,547 shares/$24,127. As of
June 30, 1999 Mr.Driscoll declined his Restricted Stock awards
from 1998 and 1997.
(12) The Company does not grant Stock Appreciation Rights ("SAR's").
The Company did not have option grants in Fiscal 1999.
(13) For the year ended June 30, 1999, amounts shown include matching
contributions by the Company under the RSIP for Messrs.
Bermingham, Driscoll, Wilson, Murray, and Chernago of $3,300,
$724, $4,785, $2,000 and $3,489, respectively and term life
insurance premiums for Bermingham, Driscoll, Wilson, Malatesta,
Murray, and Chernago of $367, $218, $182, $38, $35, and $41,
respectively. Additionally, amounts shown include payments for
severance for Mr. Driscoll and Mr. Chernago of $250,000 and
$135,000, respectively.
The following table sets forth certain information about
outstanding stock options held by the Named Executive Officers
pursuant to the Employee Stock Incentive Plan. No stock options
have been exercised under the Employee Stock Incentive Plan.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE
<TABLE>
<S> <C> <C> <C> <C> <C>
Value of
Number of Securities Unexercised
Underlying Unexercised In-the-Money
Shares Options at Options at
Acquired Fiscal Year-End (1) Fiscal
On Exercise Value Realized (#) Year-End (1)
Name # $ Exercisable Unexercisable ($)
John A. Bermingham - - - - -
Peter N. Parts - - - - -
Michael Driscoll - - - - -
Martin D. Wilson - - 2,838 4,257 (2) 0
Thomas J. Malatesta - - - - -
Michael J. Murray - - - - -
Michael W. Chernago - - 2,838 4,257 (2) 0
</TABLE>
(1) The Company does not grant SARs.
(2) The options become exercisable in each case 1,419 on January
15, 2000, 1,419 on January 15, 2001 and 1,419 on January
15, 2002. All options expire January 15, 2005.
The table below illustrates the estimated annual benefits
upon retirement under the Smith Corona Corporation Salaried
Employees' Retirement Plan (the "Pension Plan") to persons in the
specified compensation and years-of-service classifications.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
Years of Service on 9/01/96 (1)
<S> <C> <C> <C> <C> <C>
Remuneration on 9/01/96 15 20 25 30 35
$125,00....... $24,380 $ 32,510 $ 40,640 $ 48,760 $ 48,760
$150,000...... $30,010 $ 40,010 $ 50,010 $ 60,010 $ 60,010
$175,000...... $30,010 $ 40,010 $ 50,010 $ 60,010 $ 60,010
$200,000...... $30,010 $ 40,010 $ 50,010 $ 60,010 $ 60,010
$225,000...... $30,010 $ 40,010 $ 50,010 $ 60,010 $ 60,010
$250,000...... $30,010 $ 40,010 $ 50,010 $ 60,010 $ 60,010
$300,000...... $30,010 $ 40,010 $ 50,010 $ 60,010 $ 60,010
$350,000...... $30,010 $ 40,010 $ 50,010 $ 60,010 $ 60,010
$400,000...... $30,010 $ 40,010 $ 50,010 $ 60,010 $ 60,010
$450,000...... $30,010 $ 40,010 $ 50,010 $ 60,010 $ 60,010
$500,000...... $30,010 $ 40,010 $ 50,010 $ 60,010 $ 60,010
</TABLE>
(1) Based on the Company's August 6, 1996 decision to
discontinue future benefit accruals as of September 1, 1996.
The amounts set forth in the table above as estimated
benefits are computed on a straight life annuity basis and
includes an offset for a percentage of Social Security benefits.
Effective on January 1, 1989, the amount of compensation taken
into account under a qualified plan is limited (the "Annual
Compensation Limitation") under Section 401(a)(17) of the Internal
Revenue Code of 1986, as amended (the "Code"), subject to a cost-
of-living adjustment announced by the Secretary of the Treasury.
The cap on pension earnings has been limited to $150,000 as of
January 1, 1994 due to the Omnibus Budget Reconciliation Act of
1993. This limit is reflected in the above chart. The above
chart does not, however, reflect any additional benefits payable
pursuant to grandfathering as a result of changes in the earnings
cap. This Annual Compensation Limitation may reduce future benefit
accruals payable to highly compensated individuals under the
Pension Plan.
As of September 1, 1996, Messrs. Bermingham, Parts,
Driscoll, Wilson, Malatesta, Murray, and Chernago had
0,0,14,3,0,0, and 24 years of credited service under the Pension
Plan, respectively, for purposes of calculating annual retirement
benefits under the Pension Plan. Summarized below are estimated
accrued benefits under the Pension Plan as of September 1, 1996
for the Named Executive Officers.
John A. Bermingham --
Peter N. Parts --
W. Michael Driscoll $24,048
Martin D. Wilson $3,588
Thomas A. Malatesta --
Michael J. Murray --
Michael W. Chernago $29,520
These benefits represent the annual benefit payable at normal
retirement age. Unlike the Pension Plan Table, these benefits
include the grandfathered portion of the benefit attributable to the
prior pay cap. Smith Corona has decided to use the transitional
method under the Omnibus Budget Reconciliation Act of 1993, which
produces the largest possible benefit under the Pension Plan.
Employment Agreements
John A. Bermingham
On November 4, 1998, the Company entered into an employment
agreement with Mr. Bermingham providing that he would serve as
President, Chief Executive Officer and Director from November 4,
1998 through November 4, 2001. The agreement provides that Mr.
Bermingham is to be paid an initial annual base salary of
$300,000. If Mr. Bermingham's employment is terminated by the
Company for reasons other than cause, or if he terminates his
employment following a Change of Control, (as defined below) he
will continue to receive his base salary at the rate then in
effect for a period of 12 months.
Martin D. Wilson
On October 1, 1998, the Company entered into an employment
agreement with Mr. Wilson providing that he would serve as Senior
Vice President and Chief Financial Officer from October 1, 1998
through October 1, 2001. The agreement provides that Mr. Wilson is
to be paid an initial annual base salary of $150,000. If Mr.
Wilson's employment is terminated by the Company for reasons other
than cause, or if he terminates his employment following a Change of
Control, (as defined below) he will continue to receive his base
salary at the rate then in effect for a period of 12 months.
W. Michael Driscoll
On October 14, 1996, the Company entered into an employment
agreement with Mr. Driscoll providing that he would serve as
President and Chief Executive Officer from February 28, 1997 through
February 28, 2000. The agreement, as amended, provides that Mr.
Driscoll is to be paid an initial annual base salary of $250,000.
If Mr. Driscoll's employment is terminated by the Company for
reasons other than cause, or if he terminates his employment
following a Change of Control (as defined below), he will continue
to receive his base salary at the rate then in effect for a period
of 12 months. Effective July 17, 1998 Mr. Driscoll's employment
with the Company terminated, and he received an amount equal to his
12-month base salary.
A "Change of Control" means (i) a stock purchase by any
"person" (as such term is used in Sections 13(d) and 14(d) (2) of
the Securities and Exchange Act of 1934, as amended) who then owns
or by virtue of such purchase becomes the beneficial owner of,
directly or indirectly, voting securities of the Company
representing 51 percent or more of the combined voting power of the
Company's then outstanding voting securities or (ii) any change in
the composition of the Company's Board in any one year which
involves a majority of such directors and which is not recommended
by the Board.
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation and Benefits Committee is responsible for
reviewing and recommending action with respect to matters relating
to executive compensation, any long-term management incentives
plans and grants to officers under such plans, all employment and
consulting agreements between the Company and any of its officers,
and the retirement plans in which officers of the Company
participate. Messrs. Colletti and Morgan were members of the
Compensation and Benefits Committee of the Board of Directors of
the Company during all of Fiscal 1999 and on July 24, 1998 Mr.
Peter Parts was elected as a member of the Compensation and
Benefits Committee. Messrs, Colletti and Morgan are not and have
not been employees of the Company. The Committee actively
participated in contract negotiations relating to the Employment
Agreements for Messrs. Bermingham and Wilson. Mr. Parts served as
the Chairman, President and Chief Executive Officer of the Company
from July 17, 1998 to November 3, 1998, but is no longer an
employee of the Company.
The Company adheres to a policy of blending several components
of executive compensation in order to attract and retain top
managers, reward executives for performance that results in profits
to the Company, and motivate management to continue to optimize
value for the Company's shareholders.
The Committee makes all decisions pertaining to the
Company's executive compensation programs which promote the
objectives detailed above. The Committee believes that the
Company's current compensation programs are linked to the
enhancement of stockholders value. During the fiscal year ended
June 30, 1999, the Company's executive compensation package
consisted of:
- base salary
- senior officer stock
- employee stock incentive plan
Base Salary. Base salaries of executive officers reflect
the Company's profitability and return on capital employed, the
individual executive's salary level compared with those of similar
executives of the Company's competitors, and the individual
executive's level of responsibility and performance. Executive
performance is measured using criteria established by the
Committee. Increases in base salary are considered annually, and
salary increases for executives, other than the Chief Executive
Officer, are proposed to the Committee by the Chief Executive
Officer.
Senior Officer Stock. The Chief Executive Officer, Chief
Financial Officer, Senior Vice President/Sales and Marketing and,
at the direction of the Chief Executive Officer, other officers of
the Company, may be granted shares of Common Stock. During Fiscal
1999, 40,189 shares were granted and 70,188 shares were forfeited.
At June 30, 1999, 70,188 shares were available for issuance.
Employee Stock Incentive Plan. The Company has an employee
stock incentive plan which provides for the issuance of shares of
Common Stock (or options to acquire such shares). During Fiscal
1999, 132,358 shares were granted and 46,259 shares were
forfeited. At June 30, 1999, 97,220 shares were available for
issuance.
On November 4, 1998, the Company entered into an employment
agreement with Mr. Bermingham providing that he would serve as
President, Chief Executive Officer and Director until November 4,
2001. Factors that the Committee considered during such
negotiations included his prior management experience, his
consumer products market knowledge, and his ability to analyze the
business challenges confronting the Company.
The Committee believes that the compensation policies
summarized above provide motivation for executives to enhance the
value of the Company for the stockholders' benefit. The Committee
will continue to monitor the effectiveness of the Company's
compensation programs to meet the Company's needs.
Compensation and Benefits Committee
Jerome A. Colletti
William J. Morgan
Peter N. Parts
Compensation Committee Interlocks and Insider Participation
Mr. Parts, Chairman, served as the President and Chief
Executive Officer of the Company from July 17, 1998 to November 3,
1998. Mr. Parts is no longer an executive officer of the Company.
No other 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 offers served on the compensation committee of the Board
of Directors of the Company; (ii) a director of another entity,
one of whose executive officers served on the compensation
committee; 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 as director
of the Company.
COMPANY PERFORMANCE
The chart below compares the performance of the Company's
Common Stock with the performance of the Russell 2000 Index and a
Peer Group Index by valuing the changes in Common Stock prices
from February 28, 1997 plus reinvested dividends and
distributions. The Securities and Exchange Commission requires
that a company create a peer group index with which to compare its
own stock performance (if a published peer group index does not
exist) by selecting a grouping of companies that includes
companies whose lines of business are similar to its own. A "Peer
Group" was created for comparison purposes by selecting several
companies which had similar market capitalization. Those
companies selected (A.T. Cross, General Binding Corporation,
Gradco Systems, Inc., and Royal Appliance Mfg. Co., Inc.) are
manufacturers and sellers of consumer durable products with like
channels of distribution and compete for the same discretionary
consumer dollars. Some of the peer group companies were selected
to parallel the Company's office supply business which makes up
38.2 percent of the Company's net sales. NU Kote Holdings Inc.
was included in the prior year peer group, but has been removed
due to stock delisting. The chart assumes $100 was invested on
February 28, 1997 in each of the Company's Common Stock, the
Russell 2000 Index and the Peer Group Index and reflects
reinvestment of dividends and distributions on a quarterly basis
and market capitalization weighting.
<comment1>
Assumes $100.00 Invested on Feb. 28, 1997.
Value at Smith Corona Peer Group Russell 2000
Common Stock Index Index
February 28, 1997 $100.00 $100.00 $100.00
June 30, 1997 78.57 104.27 110.73
June 30, 1998 78.57 118.61 128.98
June 30, 1999 17.43 76.71 129.69
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth, as of June 30, 1999, certain
information regarding beneficial ownership of Common Stock by (a)
each person known by the Company to own beneficially more than 5
percent of its outstanding Common Stock, (b) each director and
nominee for director of the Company, (c) the Named Executive
Officers and (d) all directors and executive officers as a group.
Unless otherwise indicated, each person has sole investment and
voting power with respect to the shares indicated.
Percent of
Common
Stock
Name of Beneficial Owner Number of Shares Outstanding
Pension Benefit Guaranty Corporation 830,000 (1) 27.2% (1)
1200 K Street, NW
Washington, DC 20005-4026
Peter N. Parts 17,586 (2) *
John A. Bermingham 156,650 (3) 5.1%
Jerome Colletti 0 *
William J. Morgan 830,000 (1) 27.2% (1)
Michael J. Murray 6,600 *
Dr. Richard N. Rosett 500 *
Martin D. Wilson 23,647 (3) *
Thomas A. Malatesta 500 *
W. Michael Driscoll 469 *
Michael W. Chernago 5,100 (3) *
All Directors and Executive Officers as a
Group (11 persons) 213,552 (1) 7.0% (1)
(1) The Pension Benefit Guaranty Corporation ("PBGC") is the
direct owner of the shares. Mr. Morgan is the president and
managing director of Pacholder Associates, Inc. ("PAI"), a
registered investment advisor. Pursuant to a contract dated April
13, 1994 between the PBGC and PAI, on March 7, 1997 the PBGC
assigned PAI full and complete discretion over the shares, as well
as voting control over the shares. PAI has disclaimed beneficial
ownership of the shares. All directors and executive officers as
a group excludes the 830,000 shares.
(2) The direct owner of 10,586 of the shares is Peter Parts
Electronics, Inc. of which Mr. Parts is the President and Chief
Executive Officer as well as principal stockholder. Mr. Parts has
disclaimed beneficial ownership of the shares except to the extent
of his pecuniary interest in Peter Parts Electronics, Inc.
(3) Includes shares granted pursuant to the Restricted Stock Plan
for Messrs. Bermingham, Wilson, and Chernago, of 150,000, 22,647,
and 5,100 respectively. Rights to these shares for Mr. Bermingham
shall vest on the earlier of November 4, 1999 or a Change of
Control. Rights to 5,100 of these shares for Mr. Wilson vested
March 1, 1999 and additionally, 8,774 shares shall vest on
October 1, 1999 and 8,773 shares shall vest on October 1, 2000, or
earlier upon a Change of Control. Rights to these shares for Mr.
Chernago vested on March 1, 1999.
*Less than one percent of the outstanding shares of Common Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others
There were no reportable transactions between the Company
and its directors and management.
PROPOSAL 2.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of
Directors has appointed the firm of KPMG LLP to act as independent
certified public accountants of the Company for the fiscal year
ending June 30, 2000. Services to be performed by KPMG LLP for
the Company during the fiscal year will include the examination of
the financial statements of the Company for inclusion in the
Annual Report on Form 10-K to be filed by the Company with the
Securities and Exchange Commission and consultations on matters
related to accounting, taxes and financial reporting.
Deloitte & Touche LLP served as independent certified public
accountants for the Company during the fiscal year ended June 30,
1998. Deloitte & Touche LLP was replaced as the Company's
independent certified public accountants upon completion of the
audit for the Company's consolidated financial statements for the
fiscal year ended June 30, 1998. During the fiscal year ended
June 30, 1998, there was no disagreement between the Company and
Deloitte & Touche LLP on any matter of accounting principles or
practices, financial statement disclosure or auditing scope of
procedure.
A representative of KPMG LLP is expected to be present at
the Meeting, will be afforded an opportunity to make a statement
if he or she desires to do so, and will be available to respond to
appropriate questions raised at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE RATIFICATION OF APPOINTMENT OF KPMG LLP AS INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS FOR THE COMPANY.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Thomas Malatesta, Vice President-Product Development and
Vincent Abbatiello, Vice President-Sales each filed a late Form 3
- - Initial Statement of Beneficial Ownership.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate
for stockholder action at the Company's annual meetings,
consistent with regulations adopted by the Securities and Exchange
Commission. Proposals to be considered for inclusion in the Proxy
Statement for the 2000 Annual Meeting must be received by the
Company at its principal executive offices, not later than July 7,
2000. Proposals should be directed to the attention of the
Secretary, Smith Corona Corporation, 842 Bennie Road, Cortland, NY
13045.
By Order of the Board of Directors.
/s/ G. William Sisley
G. WILLIAM SISLEY
Secretary
September 23, 1999
Cortland, New York
SMITH CORONA CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
842 Bennie Road
CORTLAND, NEW YORK 13045-0990
The undersigned hereby appoints G. William Sisley and Martin D.
Wilson, and each of them, each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote,
as designated on the reverse side, all the shares of common stock
of Smith Corona Corporation held of record by the undersigned as
of the close of business on September 16, 1999 at the annual
meeting of the Stockholders to be held on November 15, 1999, or
any adjournment thereof.
(Continued and to be signed on other side)
[Reverse Side]
This proxy when properly executed will be voted in the manner
directed herein by the undersigned Stockholder. If no direction
is made, this proxy will be voted for the nominees listed in
Proposal 1, for Proposal 2 and in the proxies' discretion with
respect to Proposal 3.
(Instructions: To withhold authority to vote for
any individual nominee,strike a line in the
nominee's name in the list below)
1. ELECTION OF DIRECTORS
FOR all nominees WITHHOLD
listed (except as AUTHORITY Jerome A. Colletti Peter N. Parts
marked to the to vote
contrary to the for all
right) nominees listed
to the right
2. PROPOSAL TO APPROVE THE 3. IN THEIR DISCRETION THE
APPOINTMENT OF KPMG LLP PROXIES ARE AUTHORIZED TO
AS THE INDEPENDENT CERTIFIED VOTE UPON SUCH OTHER
PUBLIC ACCOUNTANTS OF THE BUSINESS AS MAY PROPERLY
COMPANY COME BEFORE THE MEETING.
FOR AGAINST ABSTAIN
Please sign exactly as name
appears at left. When shares
are held by joint
tenants, both should sign.
When signing as attorney,
executor, administrator,
trustee or guardian, please
give full title as such. If a
corporation, please sign
in full corporate name by
President or the authorized
officer. If a
partnership, please sign in
partnership name by authorized
person.
DATED:________________________
_____________________________
______________________________
______________________________
Signature
______________________________
______________________________
Signature, if held jointly
PLEASE MARK INSIDE BLUE BOXES SO PLEASE MARK, SIGN, DATE AND
THAT DATA PROCESSING EQUIPMENT RETURN THE PROXY CARD PROMPTLY
WILL RECORD YOUR VOTES USING THE ENCLOSED ENVELOPE.
[comment1]
The chart referenced to in the Company Performance section of this
document has been eliminated, due to the compatibility conversion
factors in EDGAR
