<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
APS Holding 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):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] 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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Notes:
<PAGE>
May 2, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of APS
Holding Corporation, on Tuesday, June 3, 1997, at 9:00 a.m. This year's Annual
Meeting will be held in the Amphitheatre at the Sheraton Crown Hotel, 15700
John F. Kennedy Boulevard, Houston, Texas 77032-4830.
Your Company's management looks forward to the opportunity of meeting with you
in Houston to discuss the past year's achievements and plans for the future.
Naturally, we hope you will attend the Annual Meeting at which you may choose
to vote your shares personally even if you have previously returned the enclosed
proxy. The vote of each stockholder is important. I urge you to fill in, date,
sign and return the enclosed proxy card promptly, regardless of whether you will
be able to attend the Annual Meeting. If you do attend, you will still be able
to vote your shares personally. If you are unable to attend, however, this will
ensure that your shares are represented and will avoid additional proxy
soliciting expenses for the Company.
Sincerely,
Hubbard C. Howe
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
APS HOLDING CORPORATION
15710 John F. Kennedy Boulevard, Suite 700
Houston, Texas 77032-2347
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1997
TO THE STOCKHOLDERS OF APS HOLDING CORPORATION:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders (the
"Annual Meeting") of APS Holding Corporation (the "Company") will be held in the
Amphitheatre at the Sheraton Crown Hotel, 15700 John F. Kennedy Boulevard,
Houston, Texas 77032-4830, on Tuesday, June 3, 1997, at 9:00 a.m., Houston
time, for the following purposes:
1. To elect eight directors of the Company to serve until the 1998 Annual
Meeting of Stockholders.
2. To ratify the selection of Coopers & Lybrand LLP as the Company's
independent auditors for the year ending January 31, 1998.
3. To transact such other business as may properly come before the
meeting or any adjournment(s) thereof.
Only holders of record of Class A Common Stock, par value $.01 per share, at
the close of business on April 25, 1997, are entitled to notice of, and to vote
at, the Annual Meeting. A list of stockholders of the Company as of the close
of business on April 25, 1997, will be available for inspection during normal
business hours from April 26 through June 2, 1997 at the offices of the Company,
15710 John F. Kennedy Boulevard, Suite 700, Houston, Texas 77032-2347.
You are cordially invited to attend the Annual Meeting. WHETHER OR NOT YOU
PLAN TO BE PRESENT AT THE ANNUAL MEETING, PLEASE FILL IN, DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY TO THE COMPANY. A SELF-ADDRESSED,
POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
By Order of the Board of Directors
E. Eugene Lauver
Vice President and Secretary
Dated: May 2, 1997
<PAGE>
APS HOLDING CORPORATION
15710 John F. Kennedy Boulevard, Suite 700
Houston, Texas 77032-2347
(713) 507-1100
---------------------------------
PROXY STATEMENT
---------------------------------
GENERAL INFORMATION
The enclosed proxy is solicited by and on behalf of the Board of Directors of
APS Holding Corporation (the "Company") for use in connection with the Annual
Meeting of Stockholders (the "Annual Meeting") to be held on Tuesday,
June 3, 1997, at 9:00 A.M., Houston time, in the Amphitheatre at the Sheraton
Crown Hotel, 15700 John F. Kennedy Boulevard, Houston, Texas 77032-4830, and at
any adjournment(s) thereof.
At the Annual Meeting, stockholders of the Company will consider and vote upon
the following matters:
1. Election of eight directors of the Company to serve until the 1998 Annual
Meeting of Stockholders.
2. Ratification of the selection of Coopers & Lybrand LLP as the Company's
independent auditors for the year ending January 31, 1998.
3. Transaction of such other business as may properly come before the meeting
or any adjournment(s) thereof.
The mailing address of the principal executive offices of the Company is 15710
John F. Kennedy Boulevard, Suite 700, Houston, Texas 77032-2347. This proxy
statement and the related proxy were first mailed to stockholders on or about
May 2, 1997.
The Company's annual report for the year ended January 25, 1997, including
financial statements, is being mailed herewith to all stockholders entitled to
vote at the Annual Meeting. The annual report does not constitute a part of the
proxy soliciting material.
VOTING RIGHTS AND VOTES REQUIRED
Only holders of record of Class A Common Stock, par value $.01 per share (the
"Class A Common Stock"), at the close of business on April 25, 1997, are
entitled to vote at the Annual Meeting. As of the close of business on such
date, there were outstanding 13,783,873 shares of Class A Common Stock. The
Class A Common Stock is the only class of voting securities outstanding. A
majority of the outstanding shares of Class A Common Stock must be represented
at the Annual Meeting in order to constitute a quorum for the transaction of
business. Each share of Class A Common Stock entitles the record holder thereof
to one vote on each matter to be considered at the Annual Meeting.
Directors are elected by a plurality of the votes cast. The eight nominees
receiving the highest number of votes cast by the holders of the Class A Common
Stock will be elected as directors. There will be no cumulative voting in the
election of directors.
The affirmative vote of the holders of a majority of the shares of the Class A
Common Stock represented at the Annual Meeting in person or by proxy and
entitled to vote thereat will be required to ratify the selection of the
Company's independent auditors for the year ending January 31, 1998.
<PAGE>
Under Delaware law and the Company's Restated Certificate of Incorporation and
Bylaws, abstentions and broker non-votes will have no effect on the outcome of
the election of directors assuming a quorum is present or represented by proxy
at the Annual Meeting. With respect to the ratification of the selection of
independent auditors, abstentions will have the same legal effect as a vote
against such matter and broker non-votes will have no effect on such matters. A
broker non-vote occurs if a broker or other nominee of shares does not have
discretionary authority and has not received instructions with respect to a
particular matter.
VOTING OF PROXIES
All properly completed proxies, which have not been revoked, will be voted at
the Annual Meeting in accordance with the instructions specified thereon. If no
specific instructions are specified, the shares represented by a properly
executed proxy will be voted FOR election of the nominees listed below under
"Election of Directors" and FOR ratification of the selection of independent
auditors.
REVOCATION OF PROXIES
A proxy may be revoked by a stockholder at any time prior to the voting of the
proxy (i) by execution and delivery to the Company of a revised proxy, (ii) by
written notice to the Secretary of the Company or (iii) by voting in person at
the Annual Meeting.
SOLICITATION OF PROXIES
The solicitation of proxies by the Board of Directors will be conducted
primarily by mail. In addition, officers, directors and employees of the
Company may solicit proxies personally or by telephone, telegram or other forms
of wire or facsimile communication. The Company will reimburse brokers,
custodians, nominees and fiduciaries for reasonable expenses incurred by them in
forwarding proxy material to beneficial owners of Class A Common Stock of the
Company. The cost of solicitation will be borne by the Company.
ITEM 1.
ELECTION OF DIRECTORS
At the Annual Meeting eight directors are to be elected to hold office until
the Company's 1998 Annual Meeting of Stockholders and until their respective
successors shall have been elected and qualified. It is intended that the
persons named in the enclosed proxy will vote all shares for which they shall
have received proxies FOR the election of the nominees named below unless
contrary instructions are given. Although the Board of Directors does not
anticipate that any of the nominees will be unable to serve, if such a situation
arises prior to the Annual Meeting, the persons named in the enclosed proxy will
vote for the election of such other person(s) as may be nominated by the Board
of Directors. Each of the nominees to the Board of Directors currently serves
as a director of the Company.
Directors of the Company are elected annually and hold office until the next
annual meeting of stockholders and until their successors are duly elected and
qualified. The Company's executive officers serve at the discretion of the
Board of Directors.
The following table sets forth information regarding the names, ages as of
April 25, 1997, principal occupations and other directorships in certain
companies held by them and the length of continuous service as a director of the
Company.
-2-
<PAGE>
<TABLE>
<CAPTION>
Nominees Principal Occupation and Directorships Age Director Since
-------- -------------------------------------- --- --------------
<S> <C> <C> <C>
Hubbard C. Howe Mr. Howe has been President and Chief Executive 68 1991
Officer of the Company since March 4, 1997, and has
been Chairman of the Board of the Company since
August 1992. Mr. Howe has been Chairman of the
Board and Chief Executive Officer of Remington Arms
Company, Inc. since December 1993. Mr. Howe has
served as Vice-Chairman since February 1994,
Chairman from April 1992 to February 1994, Vice
Chairman from April 1991 to April 1992, and Chief
Executive Officer from March 1989 to April 1992, of
Nu-kote International, Inc., a printing and office
supplies manufacturer. Mr. Howe is a principal and a
professional employee of Clayton, Dubilier & Rice,
Inc., a private investment company ("CD&R"), and a
general partner of Clayton & Dubilier Associates IV
Limited Partnership ("Associates"), the general partner
of the Clayton & Dubilier Private Equity Fund IV
Limited Partnership, an investment partnership
managed by CD&R ("Fund IV"). Mr. Howe is also
Vice-Chairman of Nu-kote Holding, Inc., a corporation
in which an investment partnership managed by CD&R
formerly had an investment, and a Director of
Riverwood Holding, Inc., a corporation in which an
investment partnership managed by CD&R has an
investment, and its indirect wholly-owned subsidiary,
Riverwood International Corporation.
Theodore Barry Mr. Barry has been a management consultant, 75 1992
practicing as Ballyglen Company, Inc. since 1992.
Prior to 1992 he was the founder, Chairman and
President of Theodore Barry and Associates,
International Management Consultants, and is currently
active as an advisor. He is also President and Director
of Alcorn & Cummins, Inc. He has been a general
partner in Palakiko Company, a Hawaiian Development
Company since 1992. Mr. Barry is also a director of
Nu-kote Holding, Inc.
Wiley N. Caldwell Mr. Caldwell was President of W.W. Grainger, Inc., an 70 1993
industrial supply company, from prior to 1991 to July
1992 and was a director of such company until April
1993. Mr. Caldwell is also a director of Consolidated
Papers, Inc. and Kewaunee Scientific Corp.
Michael J. Dubilier Mr. Dubilier was a professional employee of CD&R 41 1989
from prior to 1991 until 1994 and is currently a general
partner in Dubilier CRM Fund I, a private investment
partnership managed by Dubilier & Company (not
affiliated with CD&R).
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Joseph P. Flannery Since prior to 1991, Mr. Flannery has served as 65 1989
President, Chief Executive Officer and Chairman of the
Board of Uniroyal Holding, Inc., a company which is
primarily engaged in administering residual assets and
liabilities relating to its predecessor, UNIROYAL, Inc.
He was a limited partner of Associates and retains an
economic interest in Fund IV's investment in the
Company. Mr. Flannery is also a director of The Scotts
Company, a corporation in which an investment
partnership managed by CD&R formerly had an
investment, and Kmart Corporation, Newmont Mining
Corporation, Newmont Gold Company, Ingersoll-Rand
Company and Arvin Industries.
Donald J. Gogel Mr. Gogel has been a principal of CD&R from prior to 48 1989
1991 and President since 1997. Mr. Gogel is also a
professional employee of CD&R and a general partner
of Associates. Mr. Gogel is a director of Lexmark
International, Inc., and its parent Lexmark Holding,
Inc., McCarthy, Crisanti & Maffei, Inc. and its parent
MCM Group, Inc., and Alliant Foodservice, Inc. and its
parent, CDRF Holding, Inc., each of which is a
corporation in which Fund IV has invested. Mr. Gogel
is also a director of Kinko's Inc. (in which Clayton,
Dubilier & Rice Fund V Limited Partnership has
invested) and Turbochef, Inc.
H. Jack Meany Mr. Meany has been Chairman of the Board, President 74 1990
and Chief Executive Officer of Farr Company since
April 1994. Mr. Meany is a director of BWIP, Inc., a
corporation in which an investment partnership
managed by CD&R formerly had an investment.
Jerry K. Myers Mr. Myers has been Chairman of the Board of 56 1996
MEDCOR, Inc. since December 1995 and serves as a
partner of CroBern Management Partnership. Prior to
joining CroBern, Mr. Myers was President and Chief
Executive Officer of Steelcase, Inc., which he joined
prior to 1991. Mr. Myers is also a director of Autocam
Corporation and Tab Products Co.
</TABLE>
Additional information about the current directors and executive officers of
the Company, including information with respect to their ownership of Class A
Common Stock and their compensation, appears in the following sections of this
Proxy Statement.
Shares represented by the accompanying proxy card will be voted FOR the
election of the above nominees unless authority to vote for one or more nominees
is withheld. Stockholders may withhold authority to vote for the entire slate
as nominated or, by writing the name of one or more nominees in the space
provided in the proxy card, withhold the authority to vote for such nominee or
nominees. Directors must be elected by a plurality of the votes that could be
cast by the holders of the shares of Class A Common Stock who are present in
person or by proxy at the Annual Meeting. Abstentions on this proposal will be
counted for quorum purposes but not voted. Broker non-votes will have no effect
on the outcome of the election of directors. THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR ELECTION OF THE NOMINEES NAMED ABOVE.
-4-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 25, 1997
(unless otherwise noted) as to the beneficial ownership of Class A Common Stock
by (i) each person known by the Company to own beneficially five percent or more
of its outstanding Class A Common Stock, (ii) each of the nominees for director,
(iii) the Company's Chief Executive Officer for the 1997 fiscal year and each of
the Company's other four most highly compensated executive officers and (iv) all
current directors and executive officers as a group, based on 13,783,873 shares
of Class A Common Stock outstanding on such date. Such information includes all
options which will vest within 60 days of such date. Each beneficial owner has
sole voting and investment power in the respect to the listed shares unless
otherwise indicated.
<TABLE>
<CAPTION>
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership Percentage of Class
- ------------------------ -------------------- -------------------
<S> <C> <C>
The Clayton & Dubilier Private Equity Fund IV
Limited Partnership(1).................................. 4,119,298 30.0
Donald J. Gogel(2)........................................ 4,119,298(2) 30.0
Hubbard C. Howe(2)(3)..................................... 4,126,316(2)(3) 30.0
The Capital Group Companies, Inc.(4)...................... 1,086,700(4) 7.9
Massachusetts Financial Services Company(5)............... 546,300(5) 4.0
Theodore Barry............................................ 14,035 *
Wiley N. Caldwell......................................... 14,035 *
Michael J. Dubilier....................................... 15,000 *
Joseph P. Flannery........................................ -0- *
H. Jack Meany............................................. 18,385 *
Jerry K. Myers............................................ 500
Mark S. Hoffman(6)........................................ 174,635 1.3
David C. Barbeau(7)(8).................................... 44,399 *
E. Eugene Lauver(7)(8).................................... 32,599 *
Michael L. Preston(7)(8).................................. 41,051 *
Douglas G. Beckstett(6)................................... 28,048 *
All executive officers and directors as a group
(12 persons)(7)(9)...................................... 4,317,921 31.3
* Less than 1.0%
</TABLE>
______________________
(1) The address of The Clayton & Dubilier Private Equity Fund IV Limited
Partnership ("Fund IV") is 270 Greenwich Avenue, Greenwich, Connecticut
06830. Fund IV is an investment partnership, the general partner of which
is Associates. The general partners of Associates are Joseph L. Rice, III,
Alberto Cribiore, Donald J. Gogel, B. Charles Ames, William A. Barbe, Leon
J. Hendrix, Jr., Andrall E. Pearson and Hubbard C. Howe. Such general
partners share investment discretion with respect to securities held by Fund
IV, but disclaim beneficial ownership thereof. The information is based on
Amendment No. 1 to Schedule 13G of Fund IV, Associates and its general
partners dated February 28, 1995, filed with the Securities and Exchange
Commission (the "Commission").
(2) Includes 4,119,298 shares owned by Fund IV as to which Messrs. Gogel and
Howe share investment discretion but disclaim beneficial ownership.
(3) 7,018 of these shares are held by Gene S. Howe, the wife of Hubbard C. Howe.
Mr. Howe disclaims beneficial ownership of the shares held by Mrs. Howe.
(4) The address of the Capital Group Companies, Inc. ("CGC") and Capital
Guardian Trust Company ("CGTC") is 333 South Hope Street, Los Angeles,
California 90071. All of the shares are owned by investment management
companies which are subsidiaries of CGC, including CGTC, which companies
have sole dispositive power over all of the shares and sole voting power
with respect to 809,500 of the shares. Of these shares, CGTC holds sole
dispositive power over 921,900 shares and sole voting power over 744,700
shares. CGC's subsidiary investment management companies provide investment
advisory and management services for their respective clients, which include
registered investment companies and institutional accounts. Such
subsidiaries, including CGTC, own the shares as a result of their serving
-5-
<PAGE>
as investment manager of their clients accounts. The information is based
upon Schedule 13G of CGC and CGTC dated February 12, 1997, filed with the
Commission.
(5) The address of Massachusetts Financial Services Company ("MFS") is 500
Boylston Street, Boston, Massachusetts 02116. The information is based upon
a Schedule 13G of MFS dated February 12, 1996, filed with the Commission.
(6) Includes shares that the former officers have the right to purchase within
60 days pursuant to stock options as follows: Mr. Hoffman - 117,430, and Mr.
Beckstett - 16,566.
(7) Includes shares that the officers have a right to purchase within 60 days
pursuant to stock options as follows: Mr. Barbeau - 15,047, Mr. Lauver -
11,547, Mr. Preston - 14,999 and two other executive officers - 5,227.
(8) Messrs. Barbeau, Lauver and Preston borrowed a portion of the purchase price
for their shares, which are pledged to Texas Commerce Bank, N.A. as
collateral for such loans. Such loans are guaranteed by the Company and
certain of its subsidiaries.
(9) Includes shares attributed to Messrs. Gogel and Howe. See notes (2) and (3)
above. Does not include shares beneficially owned by Mr. Hoffman or Mr.
Beckstett because they resigned as officers of the Company effective
March 4, 1997 and April 15, 1997, respectively. All current executive
officers and directors as a group hold options which will have vested within
60 days after April 25, 1997, to purchase 46,820 shares of Class A Common
Stock, and which have been included in the beneficial ownership figures for
all executive officers and directors as a group. No additional options will
vest within 60 days after such date.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four regularly scheduled meetings and no special
meetings in fiscal 1997. All directors attended at least 75% of the aggregate
total number of meetings of the Board of Directors and each committee on which
such director served.
The Board of Directors currently has three standing committees.
Executive Committee. The Executive Committee, currently consisting of Messrs.
Caldwell, Gogel and Howe, met two times during fiscal 1997. It has authority to
act for the Board of Directors on most matters during intervals between Board of
Director meetings.
Compensation Committee. The Compensation Committee, currently consisting of
Messrs. Barry, Dubilier, Flannery and Howe, met one time during fiscal 1997. It
reviews and recommends to the Board of Directors the compensation of employees
of the Company, including bonuses, benefit plans and stock options. The
Compensation Committee also administers the employee benefit plans of the
Company.
Audit Committee. The Audit Committee, currently consisting of Messrs.
Caldwell, Barry and Flannery, met four times during fiscal 1997. It recommends
to the Board of Directors the appointment of the independent auditors of the
Company and reviews with the independent auditors the scope and results of the
Company's audits, the Company's accounting and internal control systems and the
services provided by the independent auditors to the Company.
Filings. Based solely upon a review of publicly filed reports pursuant to the
Exchange Act, all directors, officers and beneficial owners of ten percent of
the Company timely filed such reports during the last fiscal year except that
Mr. Barry inadvertently failed to file a Form 4 relating to two stock option
exercises. He has subsequently reported such transactions on a Form 5.
COMPENSATION OF DIRECTORS
During fiscal 1997, members of the Board of Directors who were not employees
of the Company or CD&R ("Non-Employee Directors") received $1,000 for each board
meeting attended and an annual retainer of $18,000. The chairman of the Audit
Committee and the chairman of the Compensation Committee each received an
additional $2,000 annual retainer for chairing such committees. All directors
are reimbursed for reasonable travel and lodging expenses incurred to attend
meetings.
-6-
<PAGE>
EXECUTIVE COMPENSATION
The Summary Compensation Table summarizes the compensation paid to the
Company's Chief Executive Officer and each of its four other most highly
compensated executive officers (collectively, the "Named Executives") for the
previous three fiscal years for the Company and its subsidiaries.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
FISCAL SECURITIES
YEAR UNDERLYING ALL OTHER
NAME AND ENDING SALARY BONUS OTHER ANNUAL OPTIONS COMPENSATION
PRINCIPAL POSITION JANUARY ($)(1) ($) COMPENSATION (#) ($)(2)
------------------ ------- --------- -------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Mark S. Hoffman (3) 1997 $360,000 -0- $ 11,520 2,000 $ 4,292
President & Chief Executive 1996 354,375 -0- 11,520 16,155 4,755
Officer 1995 307,500 $476,625 11,520 22,339 4,782
Michael L. Preston 1997 182,500 65,512 8,940 2,000 3,133
Senior Vice President 1996 176,375 -0- 8,940 8,340 4,691
1995 164,167 98,503 8,940 10,000 3,366
David C. Barbeau 1997 182,500 72,350 8,910 2,000 3,039
Senior Vice President 1996 176,375 3,628 8,940 8,460 3,536
1995 163,750 102,133 3,725 10,000 3,705
E. Eugene Lauver 1997 156,583 19,625 -0- 2,000 3,141
Vice President & Secretary 1996 148,475 22,800 1,490 3,460 4,726
1995 123,233 102,135 8,940 7,500 4,195
Douglas G. Beckstett 1997 143,583 18,720 -0- 2,000 2,885
Vice President 1996 137,875 20,850 -0- 3,530 4,704
1995 129,583 104,065 -0- 5,000 2,724
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes, where applicable, amounts electively deferred by each named
Executive under the APS, Inc. Partnership Plan (the "Savings Plan") and the
APS, Inc. Executive 401(k) Deferral Plan (the "Deferral Plan").
(2) Amounts listed in this column represent the Company's contributions to the
Savings Plan and the Deferral Plan (exclusive of amounts deferred at the
election of the Named Executive) on behalf of the Named Executive, and
premium for Life insurance up to $50,000.
(3) Mr. Hoffman resigned his position as President and Chief Executive Officer
effective March 4, 1997.
OPTION GRANTS
The following table contains information concerning the grant of stock options
under the Company's 1993 Stock Option Plan and the 1990 Stock Option Plan to the
Named Executives during the Company's last fiscal year.
<TABLE>
<CAPTION>
% OF TOTAL POTENTIAL REALIZABLE VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR OPTION TERM (1)
UNDERLYING EMPLOYEE IN EXERCISE -------------------------------------
OPTIONS FISCAL YEAR PRICE EXPIRATION
NAME GRANTED (#) 1996 ($/SH) DATE 0%($) 5%($) 10%($)
---- ------------- ----------- ----------- --------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Mark S. Hoffman 2,000 1.2 15.25 Mar. 11, 2006 -0- 19,181 48,609
Michael L. Preston 2,000 1.2 15.25 Mar. 11, 2006 -0- 19,181 48,609
David C. Barbeau 2,000 1.2 15.25 Mar. 11, 2006 -0- 19,181 48,609
E. Eugene Lauver 2,000 1.2 15.25 Mar. 11, 2006 -0- 19,181 48,609
Douglas G. Beckstett 2,000 1.2 15.25 Mar. 11, 2006 -0- 19,181 48,609
</TABLE>
(1) The amounts shown under these columns are the result of calculations at 0%
and at the 5% and 10% rates required by the Securities and Exchange
Commission and are not intended to forecast future appreciation of the
Company's stock price.
-7-
<PAGE>
STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth certain information concerning the value of
unexercised options held by each of the Named Executives at January 25, 1997.
None of the Named Executives exercised any stock options in fiscal year 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT JANUARY 25, 1997 OPTIONS AT JANUARY 25, 1997
(#) ($)(1)
-------------------------- --------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Mark S. Hoffman............ 117,430 394,437 28,327 (444,985)
Michael L. Preston......... 9,931 (53,826) 23,172 (244,776)
David C. Barbeau........... 9,955 (54,318) 24,037 (246,744)
E. Eugene Lauver........... 8,955 (41,818) 14,268 (125,494)
Douglas G. Beckstett....... 14,460 24,439 12,824 (107,892)
</TABLE>
(1) Value based on the closing price on the Nasdaq National Market for the
Class A Common Stock on the last business day in fiscal year 1997 ($9.00).
PENSION PLANS
The following table shows the estimated annual benefits payable to
hypothetical participants who are entitled to the maximum benefits under the
A.P.S., Inc. Employee's Retirement Plan, a tax-qualified non-contributory
defined benefit plan maintained by the Company (the "Pension Plan"), in the
compensation and years-of-service categories indicated in the table upon
retirement at normal retirement age (65 years of age) and without regard to the
maximum limitations on such benefit imposed under the Code. The amounts shown
are based upon the assumption that such benefits will be paid in the form of a
straight-life annuity.
PENSION PLAN TABLE
YEARS OF SERVICE AT OCTOBER 1, 1992
--------------------------------------
ANNUALIZED 10 20 25 30
AVERAGE YEARS OF YEARS OF YEARS OF YEARS OF
FINAL PAY SERVICE SERVICE SERVICE SERVICE
---------- -------- -------- -------- --------
$ 50,000 $ 6,356 $ 12,711 $ 15,889 $ 19,067
75,000 10,106 20,211 25,264 30,317
100,000 13,856 27,711 34,639 41,567
125,000 17,606 35,211 44,014 52,817
150,000 21,356 42,711 53,389 64,067
175,000 25,106 50,211 62,764 75,317
200,000 28,856 57,711 72,139 86,567
225,000 32,606 65,211 81,514 98,817
The Pension Plan provides retirement benefits based on an employee's years of
service and such employee's average annual earnings (subject to a maximum of
$200,000 annually, as adjusted by the Internal Revenue Service for cost of
living increases after 1989) for the 60 highest consecutive months' compensation
during the 120 months prior to retirement (and if the employee has been employed
less than five years, the average of compensation during all months employed).
Annual earnings include principally salary, overtime and certain bonus or
incentive compensation awards, excluding deferred compensation, fringe benefits
and other special pay.
-8-
<PAGE>
Effective October 1, 1992, benefits under the Pension Plan were frozen by
amendments providing that no additional credit for service or increase in
covered compensation would accrue under the Plan. Participants in the Pension
Plan became fully vested in their accrued benefit on that date.
At October 1, 1992, the credited years of service and the average annual
earnings under the Pension Plan of the Named Executives were as follows:
AVERAGE ANNUAL
YEARS OF SERVICE EARNINGS
----------------- --------------
Mark S. Hoffman................ ----- -----
Michael L. Preston............. 23 years 6 months $ 173,180
David C. Barbeau............... 2 years 4 months 151,733
E. Eugene Lauver............... 19 years 9 months 116,707
Douglas G. Beckstett........... ----- -----
SEVERANCE POLICIES
The Company has established a written severance pay policy for the benefit of
eligible salaried and hourly employees whose employment terminates as a result
of one of the reasons enumerated in the written severance policy. Eligible
employees receive severance pay based on a formula which takes into account
years of service and organizational rank of the position held by the employee at
the time of termination. The maximum amount of severance pay an employee may
receive ranges from 12 to 30 weeks' salary. An employee's salary for these
purposes includes his base pay and excludes shift premiums, overtime, bonuses or
other allowances.
TRANSACTIONS WITH MANAGEMENT AND CERTAIN STOCKHOLDERS
CD&R, of which each of Messrs. Gogel and Howe is a principal and employee, was
paid a management fee by the Company of $300,000 for the fiscal year ended in
1997, for financial advisory and management consulting services. The Company
expects to continue to pay CD&R similar fees for such services in the future.
The amount of such fees will be determined with reference to (i) the size of the
Company's revenues and profits, (ii) the type and magnitude of such advisory and
management consulting services then being provided, (iii) the fees then being
paid to CD&R by other companies for which it provides similar services and (iv)
the fees then being charged by other managers with comparable organizations for
similar services provided to companies in which investment funds managed by such
managers have invested. Although there is no specific formula for determining
the fees to be paid to CD&R for advisory and management consulting services in
the future and there is no agreement that the fee be limited to a specific
amount, all such future fees are subject to approval of the Company's Board of
Directors and are limited to $500,000 per year under the Company's bank credit
agreement.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is designed to attract and retain
key executives in order to implement a business strategy designed to maximize
stockholder value. The Compensation Committee is responsible for administering
the Company's compensation program and establishing the compensation policy for
all Company employees, including the Chief Executive Officer and the Company's
other executive officers.
The basic policy underlying the Company's compensation program for executive
officers is that their compensation should vary depending on the Company's
success in meeting its financial and strategic objectives in order to maximize
value for its stockholders. Key elements of the Company's compensation program
are the Annual Bonus Plan and the 1990 and the 1993 Stock Option Plans, in
addition to a competitive executive salary structure.
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BASE SALARY
The base salary for all employees exempt from the Fair Labor Standards Act,
which includes executives, is managed through the APS, Inc. Salary
Administration Program. Under this program, increases in base salary are
governed by salary guidelines that are reviewed and adjusted yearly by the
Committee. The guidelines are composed of three key factors: Market Parity,
Merit and Promotions. No specific weight is assigned to any of these factors.
Base salaries for executive officers are initially determined by evaluating
the executive's level of responsibility and prior experience as compared to jobs
of comparable skill and scope with companies in the same industry or with
comparable yearly revenues (the Market Parity factor). Individual merit
increases are based on the individual performance of the executive officer (the
Merit factor). An executive officer's salary is also increased in connection
with a promotion to an executive position with a greater level of responsibility
(the Promotion factor).
In reviewing the performance of each executive officer and setting new base
salary levels for fiscal year 1996, the Committee considered each individual's
contribution toward meeting the budgeted financial plan as approved by the Board
of Directors for the previous fiscal year, compliance with the Company's capital
financial plan and operating budgets and the individual's management
effectiveness. No specific relative weight is assigned to any of these factors.
ANNUAL INCENTIVE COMPENSATION
All executive officers are eligible for annual incentive compensation. The
annual incentive bonus, normally stated as a percentage of annual salary, is
generally paid in March with respect to the preceding fiscal year. The size of
the performance bonus is based upon the following factors, all of which are
relative to the specific target performance levels established for the executive
officer: (a) the executive officer's performance against individual goals; (b)
the performance of the executive officer's unit within the Company against that
unit's goals; and (c) the performance of the Company against Company goals,
including certain quantitative financial objectives such as Company earnings
targets.
STOCK OPTION PLAN
The 1993 Stock Option Plan and the 1990 Stock Option Plan provide that the
Committee may grant options ("Options") to purchase Class A Common Stock to
officers, directors and key employees of the Company or a parent or subsidiary
corporation of the Company. Unless the Committee specifies a higher or lower
exercise price, the exercise price per share for any option will be the fair
market value of a share of Class A Common Stock on the date the Option is
granted. The objectives for granting Options are to provide executives with
long-term interests and commitment to the Company and to align the executives'
interests with that of the Company's stockholders.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Hoffman had been the Chief Executive Officer and President of the Company
since August 1992. Mr. Hoffman's base salary was reviewed in January 1995 and
was increased to $360,000 effective March 1995. In recommending the base
salary, the Committee took into account relevant salary information in the
national market and the Committee's subjective evaluation of Mr. Hoffman's
overall management effectiveness and achievement of individual goals. The
Committee did not utilize any specific performance formula in determining Mr.
Hoffman's salary.
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<PAGE>
OTHER
The Compensation Committee does not currently intend to award compensation
that would result in a limitation on the deductibility of a portion of such
compensation pursuant to Section 162(m) of the Internal Revenue Code of 1986, as
amended; however, the Compensation Committee may in the future decide to
authorize compensation in excess of the limits of Section 162(m) if it
determines that such compensation is in the best interest of the Company.
COMPENSATION COMMITTEE
Theodore Barry, Chairman
Michael J. Dubilier
Joseph P. Flannery
Hubbard C. Howe
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STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The performance graph shown below compares the cumulative stockholder return
on the Company's Class A Common Stock with the cumulative total return of the
NASDAQ Composite Index and the Peer Group (as defined below) and was prepared
based upon the following assumptions:
1. $100 was invested in the Company's Class A Common Stock, the NASDAQ
Composite Index and the Peer Group on September 23, 1993 at the initial
public offering of the Company's Class A Common Stock of $15.50 per share
and the closing price of the stocks comprising the NASDAQ Composite Index
and the Peer Group, respectively, on such date. The Company's Class A
Common Stock began trading on the NASDAQ National Market System on
September 24, 1993.
2. Peer Group investment is weighted based upon the market capitalization of
each individual company within the Peer Group at the beginning of the
period.
3. Dividends are reinvested on the ex-dividend dates.
The companies that comprise the Company's Peer Group are as follows:
Autozone, Inc., Discount Auto Parts, Inc., Genuine Parts Company, Hi/Lo
Automotive, Inc., Pep Boys, Inc., Hahn Automotive, Inc., O'Reilly Automotive,
Inc., Reddi Brake Corporation and Republic Automotive, Inc.
<TABLE>
<CAPTION>
====================================================================================================================================
September 23, 1993 January 29, 1994 January 28, 1995 January 27, 1996 January 25, 1997
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<S> <C> <C> <C> <C> <C>
APS Holding Corporation $100.00 $140.32 $172.58 $103.23 $ 58.06
NASDAQ Composite index $100.00 $105.88 $100.88 $138.38 $181.30
Peer Group $100.00 $106.25 $104.93 $108.88 $103.81
====================================================================================================================================
</TABLE>
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<PAGE>
ITEM 2.
RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Audit Committee has recommended, and the Board of Directors has appointed,
the firm of Coopers & Lybrand LLP, which has served as independent auditors of
the Company since fiscal 1989, as independent auditors to audit the consolidated
financial statements of the Company for the fiscal year ending January 31, 1998.
A member of that firm is expected to be present at the Annual Meeting, will be
offered the opportunity to make a statement if so desired and will be available
to respond to appropriate questions. If the stockholders do not ratify the
appointment of Coopers & Lybrand LLP, the Board of Directors will consider the
appointment of other independent auditors. Adoption of this proposal requires
the approval by a majority of the votes that could be cast by the holders of the
shares of Class A Common Stock who are present in person or by proxy at the
Annual Meeting. Abstentions on this proposal will be counted for quorum
purposes but not voted. Broker non-votes will have no effect on the outcome of
this vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THIS APPOINTMENT.
ITEM 3.
OTHER MATTERS
The Board of Directors does not know of any other matters that are to be
presented for action at the Annual Meeting. However, if any other matters
properly come before the Annual Meeting or any adjournment(s) thereof, it is
intended that the enclosed proxy will be voted in accordance with the judgment
of the persons voting the proxy.
STOCKHOLDER PROPOSALS
Any stockholder who wishes to submit a proposal for inclusion in the proxy
material and for presentation at the Company's 1998 Annual Meeting of
Stockholders must forward such proposal to the Company's executive offices at
15710 John F. Kennedy Boulevard, Suite 700, Houston, Texas 77032-2347,
addressed to the attention of the Secretary, so that the Secretary receives it
no later than December 31, 1997.
By Order of the Board of Directors
E. Eugene Lauver
Vice President and Secretary
May 2, 1997
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<PAGE>
APS HOLDING CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
APS HOLDING CORPORATION
The undersigned hereby appoints Robert J. Aronson and E. Eugene Lauver, and
each of them, with full power of substitution, attorneys and proxies for the
undersigned to vote all of the shares of stock in APS Holding Corporation which
the undersigned is entitled to vote at the Annual Meeting of Stockholders of
such corporation to be held in Houston, Texas, on June 3, 1997, at 9:00 a.m.,
and at any adjournments(s) thereof, as hereinafter specified upon the proposals
listed on the reverse side and as more particularly described in such
corporation's Proxy Statement dated May 2, 1997, receipt of which is hereby
acknowledged, and in their discretion upon such other matters as may properly
come before the meeting.
Please mark this proxy as indicated hereon to vote on any item. If you wish to
vote in accordance with the Board of Directors' recommendations, please sign the
reverse side; no boxes need to be checked. The proxies cannot vote your shares
unless you sign and return this card.
PLEASE SIGN AND DATE THE PROXY ON THE REVERSE SIDE
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FOLD AND DETACH HERE
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
PLEASE MARK
PLEASE MARK YOUR CHOICE LIKE THIS X IN BLUE OR BLACK INK YOUR VOTES AS [X]
INDICATED IN
THIS EXAMPLE
A vote FOR the following proposals is recommended by the Board of Directors.
ITEM 1 - Election of directors
FOR all nominees WITHHOLD NOMINEES: Hubbard C. Howe, Theodore Barry, Wiley N. Caldwell,
listed to the right AUTHORITY Michael J. Dubilier, Joseph P. Flannery, Donald J. Gogel,
(except as changed to vote for all nominees H. Jack Meany, Jerry K. Myers
to the contrary) listed to the right
[ ] [ ] WITHHELD FOR: (Write that nominee's name in the space provided below.)
_______________________________________________________________________
ITEM 2 - Ratification of the selection of Coopers &
Lybrand L.L.P. as independent auditors.
FOR AGAINST ABSTAIN COMMENTS/ADDRESS CHANGE:
[ ] [ ] [ ]
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
SIGNATURE
________________________________________________
SIGNATURE
DATED ____________________________________, 1997
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON,
JOINT OWNERS SHOULD EACH SIGN. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE, OR
GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
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FOLD AND DETACH HERE
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