<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
OUTLOOK GROUP CORP.
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(Name of Registrant as Specified in Its Charter)
OUTLOOK GROUP CORP.
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] 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.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
[OUTLOOK GROUP LOGO]
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
ON OCTOBER 10, 1996
To the Shareholders of Outlook Group Corp.:
The annual meeting of shareholders of Outlook Group Corp. (the
"Company") will be held at the Valley Inn, 105 Walnut Street, Neenah, Wisconsin
on Thursday, October 10, 1996 at 2:00 p.m. CDT, for the following purposes:
(1) To elect two directors for three-year terms expiring in 1999;
and
(2) To transact such other business as may properly come before
the meeting or any adjournment thereof.
Shareholders of record at the close of business on August 27, 1996 are
entitled to vote at this meeting or any adjournment of the meeting.
By Order of the Board of Directors
/s/ Larry E. Driscoll
Larry E. Driscoll, Secretary
September 9, 1996
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN PERSON, PLEASE MARK,
SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ACCOMPANYING ENVELOPE.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING, WHETHER YOUR
HOLDINGS ARE LARGE OR SMALL. IF YOU DO ATTEND THE MEETING, OR FOR ANY OTHER
REASON DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT IS
VOTED.
<PAGE> 3
[OUTLOOK GROUP LOGO]
OUTLOOK GROUP CORP.
1180 AMERICAN DRIVE
NEENAH, WISCONSIN 54956
TELEPHONE (414) 722-2333
* * * * * * * * * * * * * *
GENERAL
The enclosed proxy is solicited by the Board of Directors of Outlook
Group Corp. (the "Company") for use at its annual meeting of shareholders on
October 10, 1996. All properly executed proxies will be voted at the meeting
in accordance with their terms. A proxy may be revoked at any time before it
is voted, either by written notice filed with the Secretary of the Company or
the acting secretary of the meeting or by oral notice to the presiding officer.
The presence at the meeting of a shareholder who has filed a proxy shall not of
itself constitute a revocation.
Each shareholder of record at the close of business on August 27, 1996
will be entitled to one vote for each share registered in the shareholder's
name. At that date there were 4,649,382 outstanding shares of the Company's
Common Stock, $.01 par value (the "Common Stock"), the only class of stock of
which shares are outstanding. A majority of the votes entitled to be cast on a
matter, represented in person or by proxy, constitutes a quorum for action on
that matter. Abstentions and shares which are the subject of broker non-votes
will be counted for the purpose of determining whether a quorum exists at the
meeting. Shares represented at a meeting for any purpose are counted in the
quorum for all matters to be considered at the meeting. The voted proxies will
be tabulated by the persons appointed as inspectors of election.
Directors are elected by a plurality of the votes cast by the holders
of the Company's Common Stock entitled to vote in the election at a meeting at
which a quorum is present. "Plurality" means that the individuals who receive
the highest number of votes are elected as directors in a particular class, up
to the maximum number of directors in that class to be chosen at the meeting.
Any votes attempted to be cast "against" a candidate are not given legal effect
and are not counted as votes cast in an election of directors. Therefore, any
shares which are not voted (whether by withheld authority, broker non-vote or
otherwise) have no effect in the election of directors except to the extent
that the failure to vote for any individual results in another individual
receiving a larger number of votes.
The expense of printing and mailing proxy material, including
forwarding expense to beneficial owners of stock held in the name of another,
will be borne by the Company. No solicitation other than by mail is
contemplated, except that officers or employees of the Company may solicit the
return of proxies from certain shareholders by telephone.
If you are a participant in the Employee Stock Fund of the Company's
401(k) Savings Plan (the "Savings Plan"), the shares of Company Common Stock
held in your account will be voted as designated on the blue proxy card, which
will be provided separately, relating to shares held through the Savings Plan.
Savings Plan shares not voted by employees will be voted as directed by the
persons administering the Savings Plan, as provided in the Savings Plan.
This proxy material is being mailed to shareholders commencing on or
about September 9, 1996. The Annual Report to Shareholders of the Company
covering the fiscal year ended May 31, 1996, including financial statements,
accompanies this proxy statement.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of Common Stock of the Company, as of August 27, 1996, by each
director, nominee for director and named executive officer by all directors and
executive officers of the Company as a group, and by each person known to the
Company to beneficially own more than 5% of the Company's Common Stock. Except
as otherwise indicated in the footnotes to the table, such persons have sole
voting and investment power as to the shares reported as beneficially owned.
<TABLE>
<CAPTION>
NAME AND NATURE NUMBER OF PERCENT
OF BENEFICIAL OWNERSHIP SHARES OF CLASS
----------------------- ------ --------
<S> <C> <C>
Wayne G. Beattie(1) . . . . . . . . . . . . 34,331 *
Harold J. Bergman . . . . . . . . . . . . . 1,000 *
Jeffry H. Collier . . . . . . . . . . . . . 19,479 *
James L. Dillon . . . . . . . . . . . . . . 64,499 1.4%
David L. Erdmann(1)(2) . . . . . . . . . . . 315,324 6.8%
Richard C. Fischer . . . . . . . . . . . . . 2,000 *
Roger G. Hathaway(1) . . . . . . . . . . . . 20,625 *
Pat Richter . . . . . . . . . . . . . . . . 150 *
Charles E. Thompson(3) . . . . . . . . . . . 52,168 1.1%
A. John Wiley, Jr.(1) . . . . . . . . . . . 80,118 1.7%
All directors and executive officers as
a group (12 persons)(1)(3)(4) . . . . . . 617,067 13.2%
Dimensional Fund Advisors, Inc.(5) . . . . . 236,700 5.1%
Heartland Advisors, Inc.(6) . . . . . . . . 430,000 9.2%
The TCW Group, Inc. and Robert Day(7) . . . 303,900 6.5%
</TABLE>
- -------------------
*Less than 1%.
(1) The following persons share voting and/or dispositive power with
respect to the indicated number of shares: Mr. Beattie--945; Mr.
Collier--3,720; Mr. Erdmann--25,977; Mr. Hathaway--20,625; Mr.
Wiley--1,165; all directors and executive officers as a group--52,432.
See also footnote (4).
(2) The business address of Mr. Erdmann is in care of the Company, 1180
American Drive, Neenah, Wisconsin 54956.
(3) As of August 27, 1996, 86,169 shares of Common Stock were held in the
Savings Plan. Employees have the right to designate the vote of shares
of Common Stock allocated to their accounts. Jeffry H. Collier,
Charles E. Thompson and one other Company employee are trustees of the
Savings Plan and share voting power as to the shares not voted by
participants or not allocated to participants' accounts. Savings
Plan shares are not included in the table, except those allocated to
named participants' accounts as of June 30, 1996 (the date of the last
allocation) and 4,457 shares not yet allocated which are included with
those beneficially owned by all directors and executive officers as a
group.
(4) Includes the following shares issuable under currently exercisable
stock options: all directors and executive officers as a
group--10,000. Other outstanding stock options are not exercisable
within 60 days of August 27, 1996.
(5) According to a report on Form 13F as of June 30, 1996, Dimensional
Fund Advisors ("Dimensional") held sole voting and dispositive power
as to 161,800 shares of Common Stock, and sole dispositive power as to
74,900 shares of Common Stock at June 30, 1996. Dimensional is an
investment adviser under the Investment Advisers Act of 1940, as
amended (the "Advisers Act"). The business address of Dimensional is
1299 Ocean Avenue, Santa Monica, California 90401.
(6) According to a report on Schedule 13G dated February 9, 1996 and a
report on Form 13F as of June 30, 1996, Heartland Advisors, Inc.
("Heartland") had sole voting and dispositive power as to 430,000
shares of Common Stock as of June 30, 1996. Heartland is an
investment adviser registered
-2-
<PAGE> 5
under the Advisers Act. The business address of Heartland is 790
North Milwaukee Street, Milwaukee, Wisconsin 53202.
(7) According to a report on Schedule 13G dated February 12, 1996 and a
report on Form 13F as of June 30, 1996, The TCW Group, Inc. ("TCW"),
a holding company, and Robert Day, an individual who may be deemed to
control TCW, had sole voting and dispositive power as to 303,900
shares of Common Stock as of June 30, 1996. The business address of
TCW is 865 South Figuroa Street, Los Angeles, California 90017; the
business address of Mr. Day is 200 Park Avenue, Suite 2200, New York,
New York 10166.
The above beneficial ownership information is based on information
furnished by the specified persons and is determined in accordance with Rule
13d-3, as required for purposes of this Proxy Statement. It is not necessarily
to be construed as an admission of beneficial ownership for other purposes.
ELECTION OF DIRECTORS
The Company's Articles and Bylaws provide for a Board of between seven
and eleven directors, and for classification of the Board of Directors into
three separate classes. With the retirements of Wayne Beattie and Roger
Hathaway from the Board of Directors and Board Committees effective as of the
time of the 1996 annual meeting after over 15 years of valued and valuable
service by each to the Company, the Board of Directors has determined that the
number of directors shall be eight for the ensuing year. At each annual
meeting of shareholders, a number of directors equal to the number constituting
the class whose term expires at such meeting is elected to hold office until
the third succeeding annual meeting and until their successors have been
elected. Thus, one class of directors (two of the eight directors) is
nominated for election at the 1996 annual meeting to serve for terms expiring
at the 1999 annual meeting. The remaining directors were elected by the
shareholders at the 1994 and 1995 annual meetings, respectively, for terms
expiring in 1997 and 1998, as shown in the following table.
Proxies received by management will be voted FOR the election of the
two nominees named unless otherwise specified. If any such nominee is unable
to serve (which is not anticipated), proxies may be voted for another person
designated by the Board of Directors.
<TABLE>
<CAPTION>
Principal Occupation and Director
Name and Age Business Experience Since
------------ ------------------------ ---------
<S> <C> <C>
NOMINEES (FOR TERMS EXPIRING IN 1999)
Harold J. Bergman, 60 (1)(2) President of Riverside Paper Corp. (specialty 1994
paper manufacturer and converter)
Richard C. Fischer, 57 (4) Investment banker with the firm Fischer & 1995
Associates since 1995; previously, an
investment banker with Robert W. Baird & Co.
Incorporated
CONTINUING DIRECTORS (TERMS EXPIRE IN 1997)
Jeffry H. Collier, 43 (3) President of the Graphics Group of the 1993
Company since 1996 and Executive Vice
President of the Company since 1994;
previously, Vice President
Pat Richter, 54 (2)(3)(5) Director of Athletics, University of 1995
Wisconsin Madison
</TABLE>
-3-
<PAGE> 6
<TABLE>
<CAPTION>
Principal Occupation and Director
Name and Age Business Experience Since
------------ ------------------------ ---------
<S> <C> <C>
A. John Wiley, Jr., 54 (3) President of Elipticon Wood Products, Inc. 1978
(manufacturer) since 1995; previously,
salesperson for, and officer of, the Company
CONTINUING DIRECTORS (TERMS EXPIRE IN 1998)
James L. Dillon, 52 (1)(2) Accountant practicing with the firm Dillon, 1978
Endries, Otto & Calmes LLC since 1995;
previously with the firm DiRenzo, Simonis &
Miller, Certified Public Accountants
David L. Erdmann, 53 (6) President, Chairman of the Board and Chief 1977
Executive Officer of the Company
Charles E. Thompson, 52 (3) Vice President of the Company since 1996; 1977
previously, President of Outlook Packaging,
Inc. from 1994 to 1996, Special Projects
Coordinator of the Company from 1993 to 1994
and Executive Vice President from 1990 to
1993
</TABLE>
- --------------------
(1) Member of the Audit Committee (along with Messrs. Beattie and
Hathaway), of which Mr. Dillon is chairman. This Committee, which
held one meeting during fiscal 1996, reviews the functions and
findings of the Company's independent public accountants and makes
recommendations to the Board of Directors with respect thereto.
(2) Member of the Compensation Committee, of which Mr. Hathaway was
chairman. This Committee, which held three meetings in fiscal 1996,
reviews and makes recommendations to the Board of Directors regarding
overall compensation policy and salaries, bonuses and benefits to
officers and other key employees and awards stock options under the
Company's stock option plan.
(3) Member of the Nominating Committee, of which Mr. Thompson is chairman.
This committee, which held one meeting in fiscal 1996, reviews
potential candidates for, and makes recommendations to the Board of
Directors regarding, additional members of the Board of Directors.
Persons wishing to suggest names for consideration for nomination to
the Board may forward them to the Nominating Committee, in care of the
Company.
(4) Mr. Fischer was elected by the Board in 1995 to serve as a director in
the class whose term expires in 1998; under the Company's bylaws, he
would be required to be re-elected by shareholders at the 1996 annual
meeting for the balance of the term. Because of an imbalance of the
numbers of directors in each class, Mr. Fischer has instead
volunteered to stand for election for the class whose term expires
1999.
(5) Mr. Richter is also a director of Anchor BanCorp Wisconsin Inc., a
publicly-held savings bank holding company.
(6) Mr. Erdmann is also a director of FCB Financial Corp., a publicly-held
savings bank holding company.
The Board of Directors held seven meetings during fiscal 1996. During
fiscal 1996, each director of the Company attended at least 75% of the total
number of meetings of the Board and of all committees of the Board on which
such director served (during the period that he served).
Directors' Fees. Directors who are not employees of the Company
receive a fee of $3,600 per year, $300 for each meeting of the Board of
Directors attended and $100 ($150 in the case of the committee chairman) for
each Board committee meeting attended. (Messrs. Collier, Erdmann and Thompson
are currently employees of the Company.)
-4-
<PAGE> 7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the total
compensation in fiscal year 1996 and in the two prior fiscal years of (i) the
Chief Executive Officer and (ii) the only other executive officer who received
total annual salary and bonus in excess of $100,000 during the last fiscal year
for services in all capacities to the Company and its subsidiaries.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION(1) COMPENSATION
---------------------- ------------
AWARDS
------
NAME AND PRINCIPAL FISCAL OPTIONS/SARS ALL OTHER
POSITION YEAR SALARY ($) BONUS($)(2) #(3) COMPENSATION($)(4)
- ----------------------- ------ ---------- ----------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
David L. Erdmann, 1996(5) $ 244,875 -0- 10,000 $4,050
Chairman, President 1995 247,121 -0- -0- 3,600
and CEO (6) 1994 182,692 -0- 5,000 1,300
Jeffry H. Collier 1996(5) $115,938 -0- 6,000 $2,970
Executive Vice President 1995 113,201 -0- -0- 2,695
1994 98,269 -0- 3,000 1,412
</TABLE>
- ------------------
(1) While the named individuals received perquisites or other personal
benefits in the years shown, in accordance with SEC regulations, the
value of these benefits are not shown since they did not exceed, in
the aggregate, the lesser of $50,000 or 10% of the individual's salary
and bonus in any year.
(2) Annual bonus amounts, if any, are earned and accrued during the fiscal
years indicated but paid in the following fiscal year.
(3) Represents number of shares for which options were granted under the
Company's 1990 Stock Option Plan (the "Option Plan"). The options
granted in fiscal 1994 were replaced as part of the fiscal 1996
grants. See "Option Grants in Last Fiscal Year" below. No SARs have
been granted.
(4) Reflects the Company's contributions to the executive officer's
account in the Savings Plan.
(5) There was one more bi-weekly pay period in fiscal 1996 than in fiscal
1995 and 1994.
(6) See "Compensation Committee Report on Executive Compensation" for a
description of Mr. Erdmann's employment agreement.
STOCK OPTION TABLES
OPTIONS OUTSTANDING AT YEAR END
The following table sets forth information with respect to the
executive officers named in the Summary Compensation Table concerning the
number and value of options outstanding at May 31, 1996. No options were
exercised by such executive officers in fiscal 1996.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED IN THE
UNEXERCISED OPTIONS MONEY OPTIONS
SHARES AT FY END (1) AT FY END(1)(2)
ACQUIRED ON VALUE ------------- ---------------
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE(#) EXERCISABLE/UNEXERCISABLE($)
- ------------------ ------------ -------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
David L. Erdmann -0- -0- -0-/10,000 -0-/$10,630
Jeffry H. Collier -0- -0- -0-/6,000 -0-/$6,378
</TABLE>
- ------------------
(1) No SARs have been granted.
(2) Based upon the $5.50 closing price of Company Common Stock on May 31,
1996.
-5-
<PAGE> 8
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to the
executive officers named in the Summary Compensation Table concerning the
number and potential value of options granted during fiscal 1996.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE
---------------------------------------------------------- VALUE AT ASSUMED RATES
NUMBER OF % OF TOTAL OF STOCK PRICE APPRECIATION
SECURITIES OPTIONS GRANTED EXPIR- FOR OPTION TERM (3)
UNDERLYING TO EMPLOYEES EXERCISE ATION --------------------------
NAME OPTIONS (#) IN FISCAL YEAR PRICE($/SH)(2) DATE 5%($) 10%($)
- ---- ----------- -------------- -------------- ------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
David L. Erdmann 10,000 13.7% $ 4.437 4/17/01 $12,230 $27,130
Jeffry H. Collier 6,000 8.2% 4.437 4/17/01 7,338 16,278
</TABLE>
- ----------------
(1) Options granted under the Option Plan. No SAR's have been granted.
(2) Of these options, the following numbers were originally granted on
February 16, 1994, but were repriced on April 17, 1996: Mr. Erdmann,
5,000 shares and Mr. Collier, 3,000 shares. See "Report on Option
Repricing" below.
(3) Assumes the stated rates of appreciation from the date of grant for
the five year term of the options.
REPORT ON OPTION REPRICING
TEN-YEAR OPTION REPRICINGS
The following table sets forth certain information with respect to the
"repricing" of options held by executive officers of the Company since the
Company became a reporting company.
<TABLE>
<CAPTION>
NUMBER OF MARKET PRICE
SECURITIES OF STOCK AT EXERCISE PRICE LENGTH OF
UNDERLYING TIME OF AT TIME OF ORIGINAL OPTION
OPTIONS/SARS REPRICING OR REPRICING OR NEW TERM REMAINING AT
REPRICED OR AMENDMENT AMENDMENT EXERCISE DATE OF REPRICING
NAME DATE AMENDED (#) ($) ($) PRICE ($) OR AMENDMENT
---- ---- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Jeffry H. Collier 4/17/96 3,000 $4.437 $11.375 $4.437 Ten months
David L. Erdmann 4/17/96 5,000 4.437 11.375 4.437 Ten months
Suzanne M. McAloon(1) 4/17/96 2,000 4.437 11.375 4.437 Ten months
Charles E. Thompson 4/17/96 2,000 4.437 11.375 4.437 Ten months
</TABLE>
- ------------------
(1) Ms. McAloon was a Vice President during fiscal 1996.
COMMITTEE REPORT
On April 17, 1996, Messrs. Collier, Erdmann, and Thompson and Ms.
McAloon were granted the following options with an exercise price of $4.437
under the Option Plan: Mr. Collier, 6,000 shares; Mr. Erdmann, 10,000 shares;
Ms. McAloon, 3,000 shares; and Mr. Thompson, 3,000 shares. In exchange for
such grant, each executive officer surrendered the number of options with an
exercise price of $11.375 listed above which had been granted on February 16,
1994. These actions were part of a grant of option for 77,500 shares of Common
Stock to officers and employees of the Company in connection with which
outstanding options for 38,500 shares were replaced and cancelled.
-6-
<PAGE> 9
The Committee determined to take these actions because it wished to
assure the incentive which was intended to be provided by options under the
Option Plan. It had determined to grant new options in April 1996, whether or
not existing options were withdrawn. In view of the short period remaining
under the outstanding options, and the then-current market price, the Committee
believed that the outstanding options no longer provided the incentive for
which they were intended under the Option Plan. Therefore, the Committee
determined that it would grant new options to preserve those incentives, but
would condition those new options upon termination of the old options. That
termination was to avoid yet higher potential compensation in the event of a
significant increase in the Company's stock price.
Members of Compensation Committee:
Roger G. Hathaway, Chairman James L. Dillon
Harold J. Bergman Pat Richter
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The general compensation policies of the Company and its subsidiaries
are set by the Compensation Committee of the Board of Directors. During fiscal
1995 and 1996, this Committee was composed of four independent non-employee
directors. Compensation decisions with respect to the Company's
President/Chief Executive Officer are made primarily by the Compensation
Committee; compensation decisions as to all other officers of the Company,
including its subsidiaries, are recommended by the Chief Executive Officer and
then approved by the Committee. All compensation programs, such as the Savings
Plan and the Option Plan, are either originated or approved by the Committee.
It is the policy of the Company to fairly compensate individuals for
their contributions to the Company's business, being mindful of the ability of
the Company to fund such compensation plans or programs and the need to provide
fair value to the Company's shareholders. To be effective in attracting and
retaining competent individuals, compensation packages must balance short-term
and long-term considerations, as well as provide incentives to individuals
based upon the performance of the Company and be competitive with other
companies. In recent years, the objective of fairly compensating executive
officers has been evaluated in the context of the rapid growth and
diversification of the Company. In view of these changes, the Compensation
Committee has tended to review historical performance, rather than to set
compensation on a prospective basis.
The Compensation Committee reviews numerous factors in determining the
compensation of the Chief Executive Officer. In particular, the Committee
evaluates the growth and earnings performance of the Company, the added
complexity of the Company itself resulting from diversification and addition of
new services, and other more subjective factors relating to the Chief Executive
Officer's performance deemed relevant by the Committee. In addition, the Chief
Executive Officer's financial package is structured so that, as described
below, bonuses are substantially dependent upon Company performance.
Additional incentive in the form of stock options is available.
Beginning in fiscal 1995, the Committee determined that it would be in
the Company's best interest to employ Mr. Erdmann pursuant to an employment
agreement. The agreement is for a term of three years. Under the agreement,
Mr. Erdmann received a base salary in fiscal 1995 of $250,000. (The basis for
the determination of the fiscal 1995 salary level is set forth in the following
paragraph.) The employment agreement provides for annual review by the
Committee of both salary and incentive provisions. Because of the slow growth
in sales, and reduced level of earnings, in fiscal 1995, originally no changes
in the Chief Executive Officer's salary or incentive provisions were made for
fiscal 1996. This decision reflected a consensus among Committee members, as
well as Mr. Erdmann. In reaching this decision, the Committee continued to be
mindful of the dedication, diligence and ongoing strong personal performance of
the Chief Executive Officer, as well as the continuing challenges faced by him
in implementing the Company's diversification strategy. The Committee also
considered that the Chief Executive Officer's bonus and option arrangements
(described below) provide components of compensation directly tied to two
aspects of corporate performance. In February 1996, in view
-7-
<PAGE> 10
of the Company's losses to date during fiscal 1996, Mr. Erdmann and the
Committee mutually agreed upon a reduction of Mr. Erdmann's base salary to an
annual rate of $200,000, effective immediately.
In originally determining fiscal 1995 compensation, the Committee had
noted continuation of the trend of growth in sales (fiscal 1994 sales of $112.7
million as compared to fiscal 1993 sales of $88.1 million and fiscal 1992 sales
of $64.3 million) as the Company pursued its growth and diversification goals.
Also, at that time fiscal 1995 sales were expected to grow further as
diversification continued. At the time of review, other negotiations relating
to the Company's continuing diversification were ongoing, and the Chief
Executive Officer was actively pursuing the strategy of further diversification
and reduction of reliance on the collectible card business. The Committee also
reviewed the 1994 Officer Compensation Report Executive Summary published by
Aspen Publishers for small to medium-sized publicly traded companies. That
report showed average chief executive officer compensation for non-durable
manufacturing companies of $342,000; companies with sales of $40-60 million
paid their chief executive officers an average of $289,000. With the growth,
diversity and challenges that face the Company, and the efforts demonstrated by
Mr. Erdmann in leading the Company through recent acquisitions, the Committee
believed that the agreement, and compensation which it provides, were
appropriate. The Committee also had previously considered the May 1993 Inc.
magazine compensation survey for chief executive officers. The 100 companies
surveyed had average sales of $74 million, with average chief executive officer
compensation of $268,000. (The Committee did not review compensation at the
other companies in the "peer index" referred to in the performance graph
below.)
Mr. Erdmann is also entitled to receive an annual incentive payment
provided the Company's results of operations show a profit before taxes of at
least 5% of the Company's net sales. The Committee believed that such a bonus
arrangement would provide an additional tangible incentive to the Chief
Executive Officer to maximize earnings. The amount, if any, of the incentive
payment would be discretionary, determined by the Compensation Committee in
view of its perception of the goals achieved by the Chief Executive Officer
during the year together with the conditions under which the Company operated
during the fiscal year. Since the Company did not achieve the required profit
level, Mr. Erdmann was not paid a bonus for fiscal 1996.
The employment agreement also imposes certain non-competition and
confidentiality obligations on Mr. Erdmann. In the event the employment
agreement is terminated by the Company other than for cause (as defined in the
agreement), Mr. Erdmann would be entitled to receive his salary for the 40-week
period following the termination date.
The Company has also established the Option Plan as an additional
incentive to its officers and key employees, including the Chief Executive
Officer. The Committee believes that such a plan provides participants with an
incentive, extending beyond the current fiscal year, to increase the overall
value of the Company, by providing them with a greater stake in the increasing
value of the Company's Common Stock on a longer-term basis. The Option Plan is
designed to complement the incentive provided by the annual cash bonus. The
Committee granted additional options in April 1996. The Committee determined
to grant Mr. Erdmann options for 10,000 shares, which was twice the number of
his previous grant in fiscal 1994 (no options having been granted in fiscal
1995), but conditioned the grant on the surrender of previously outstanding
options. See "Executive Compensation--Report on Option Repricing" above.
The factors considered to determine compensation of the other
executive officers in 1996 were essentially the same as those considered with
respect to the Chief Executive Officer. (In view of the Company's performance,
Mr. Collier also agreed to a salary reduction, of $15,000 per year, in February
1996.) Bonuses for other executive officers are dependent upon the level of
the Company's pre-tax earnings; the management incentive plan for those other
executive officers (the "Management Plan") provides for the payment of annual
incentives to key Company employees, including all executive officers other
than the Chief Executive Officer if the Company's unconsolidated pre-tax
earnings (after any funding for general employee incentive bonus plans is
subtracted) exceeds 5.5% of the Company's unconsolidated net sales. Because
the targets were not met in fiscal 1996, no bonuses were paid. Individual
awards to participants under the Management Plan would be recommended by the
Chief Executive Officer based upon individual and team contributions,
accomplishment of any pre-established goals and such other factors as the Chief
Executive Officer may consider appropriate. The Committee believes that the
Management Plan establishes objective criteria for determining whether
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<PAGE> 11
management bonuses are appropriate yet provides flexibility in allowing the
Chief Executive Officer to recommend particular designations of awards based
upon the factors set forth in the Management Plan. Option grants under the
Option Plan are discretionary with the Committee, and the Committee took
similar action with respect to other executive officers' options as it did with
Mr. Erdmann's. See above.
The Committee believes it is highly unlikely that the compensation of
any executive officer will exceed $1 million in any fiscal year, and therefore
has not taken any action with respect to the provisions of Section 162 of the
Internal Revenue Code which limit the deductibility of compensation to certain
executives of over $1 million in any fiscal year. However, the Committee
believes that any compensation income pursuant to the Option Plan would not be
subject to that limitation under applicable "grandfathering" provisions.
Members of the Compensation Committee:
Roger G. Hathaway, Chairman James L. Dillon
Harold J. Bergman Pat Richter
PERFORMANCE GRAPH
The following graph compares the cumulative total return on Company
Common Stock with the NASDAQ Stock Market Index for U.S. Companies and an index
of "peer" commercial printing companies created by the Company. The "peer"
index reflects the performance, weighted by period beginning market
capitalization, of the common stocks of the following companies: Graphic
Industries, Inc.; Paxar Corporation; Sealright Company, Inc.; Shorewood
Packaging Corporation; and Uniflex, Inc. These companies, together with the
Company, were originally chosen because they were identified in the 1993 Keeley
Report, a third party report of corporate development activities and strategies
in the printing industry, as publicly traded "commercial" printing companies
and whose shares currently trade on NASDAQ or a stock exchange. The Company
chose this industry group because it includes companies in two of the Company's
three most significant service lines (specialty printing and converting and
packaging). The Company is unaware of comparable companies which combine those
services with food products production and packaging.
The values on the graph show the relative performance of an investment
of $100 made on May 31, 1991, in Company Common Stock and each of the indices.
In the case of the NASDAQ and "peer" indices, the values reflect reinvestment
of dividends.
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<PAGE> 12
COMPARISON OF CUMULATIVE TOTAL RETURN FISCAL YEARS ENDED MAY 31
<TABLE>
<CAPTION>
MEASUREMENT PERIOD NASDAQ US
(FISCAL YEAR COVERED) OUTLOOK GROUP STOCKS PEER GROUP
<S> <C> <C> <C>
1991 100 100 100
1992 154 117 109
1993 102 141 116
1994 98 149 137
1995 75 177 142
1996 46 257 149
</TABLE>
<PAGE> 13
CERTAIN TRANSACTIONS
It is the policy of the Company that all material transactions between
the Company, its officers, directors or principal shareholders, or affiliates
of any of them, shall be on terms no less favorable to the Company than those
which could have been obtained if the transaction had been with unaffiliated
third parties on an arms-length basis, and such transactions will be approved
by a majority of the members of the Audit Committee of the Board of Directors,
or a majority of the directors who are independent and not financially
interested in the transaction.
Effective July 14, 1995, the Company sold certain assets of its
Outlook Publishing division to Willow Creek Press, LLC ("Willow Creek"), of
which Mr. Thompson (a director and executive officer of the Company) is a 50%
owner. The assets, which were related to businesses purchased in 1994 by the
Company for an aggregate of $313,000, and which had a book value of $765,000 at
the time of sale, were sold for an aggregate price of $1.1 million, payable
$100,000 at closing and $1.0 million in periodic payments, with interest at
1/2% over the prime rate, from October 1, 1996 through July 1, 1999. On May
31, 1996, to facilitate Willow Creek obtaining a new third party line of
credit, the $1.0 million payment obligation was replaced by a new promissory
note, also in the principal amount of $1.0 million, which provides for interest
at 1% over the prime rate, with quarterly payments (in varying amounts stated
in the note) due from February 28, 1997 through May 31, 2000; interest on
outstanding principal amounts is due monthly. Willow Creek also assumed
certain specific liabilities of the Company. In addition, the Company agreed
to provide Willow Creek a revolving line of credit of up to $750,000, or a
formula amount depending upon Willow Creek inventory, accounts receivable and
loss, whichever is greater, until July 14, 1996. The line of credit bore
interest at 1% above prime. (The revolving line of credit has been paid in
full and terminated; on June 3, 1996, the balance was $656,633.) The
borrowings are secured by Willow Creek inventory and accounts receivable.
Willow Creek also entered into a service agreement with the Company whereby the
Company would provide printing, mailing and other services for four years, with
a gross value of not less than $500,000, on specific terms to be negotiated by
the parties; in June 1996, the Company agreed to terminate the service
agreement without further obligation.
The Outlook Publishing transaction resulted from the Company's
determination that publishing did not fit within its long term strategy. The
arrangements were negotiated on an arms length basis between Willow Creek and
the Company, with Mr. Thompson not actively participating on behalf of either
party. The transaction was unanimously approved by the Company's Board of
Directors, with Mr. Thompson abstaining.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of the
Company's Common Stock, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers, directors and greater
than 10% shareholders (collectively, "insiders") are required by SEC regulation
to furnish the Company with copies of all Section 16(a) forms they file.
All publicly-held companies are required to disclose the names of any
persons who fail to make any such filing on a timely basis and the number of
delinquent filings and transactions, based solely on a review of the copies of
the Section 16(a) forms furnished to the Company, or written representations
that no such forms were required. On that basis, the Company believes that
during fiscal 1996 the Company's insiders have complied with all Section 16(a)
filing requirements applicable to them.
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<PAGE> 14
AUDITORS
During fiscal 1996, the Board of Directors, upon the recommendation of
the Audit Committee, appointed the firm of Coopers & Lybrand L.L.P. as
independent public accountants to audit the books and accounts of the Company
for fiscal 1996. Coopers & Lybrand L.L.P. has acted as the Company's
independent public accountants since fiscal 1993. The Board of Directors
expects to appoint the firm of Coopers & Lybrand L.L.P. to audit the books and
accounts of the Company for fiscal 1997. Representatives of Coopers & Lybrand
L.L.P. are expected to be present at the annual meeting to respond to
appropriate questions and to make a statement if they so desire.
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by the Company no later than
May 9, 1997 in order to be considered for inclusion in next year's annual
meeting proxy material.
OTHER MATTERS
Although the Board of Directors is not aware of any other matters
which may come before the meeting, if any such matter should be presented, the
persons named in the accompanying proxy intend to vote such proxy in accordance
with their best judgment.
By Order of the Board of Directors
/S/ Larry E. Driscoll
Larry E. Driscoll, Secretary
September 9, 1996
A COPY (WITHOUT EXHIBITS) OF THE COMPANY'S ANNUAL REPORT TO THE
SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED MAY
31, 1996, WILL BE PROVIDED WITHOUT CHARGE TO EACH RECORD OR BENEFICIAL OWNER OF
THE COMPANY'S COMMON STOCK, AS OF THE RECORD DATE FOR THE ANNUAL MEETING, UPON
THE WRITTEN REQUEST OF SUCH PERSON DIRECTED TO: CHIEF FINANCIAL OFFICER,
OUTLOOK GROUP CORP., 1180 AMERICAN DRIVE, NEENAH, WISCONSIN 54956.
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<PAGE> 15
1996 ANNUAL MEETING OF SHAREHOLDERS OF OUTLOOK GROUP CORP.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David L. Erdmann, Jeffry H. Collier
and Roger G. Hathaway, and each of them, proxies, each with full power of
substitution, to represent and to vote all shares of stock the undersigned is
entitled to vote at the Annual Meeting of Shareholders of Outlook Group Corp.
to be held at the Valley Inn, 105 Walnut Street, Neenah, Wisconsin, on
Thursday, October 10, 1996, at 2:00 p.m. CDT, and at any adjournment thereof,
hereby revoking any and all proxies heretofore given:
1. ELECTION OF DIRECTORS
<TABLE>
<S><C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to vote for all
to the contrary below) nominees listed below
</TABLE>
Harold J. Bergman and Richard C. Fischer (for terms expiring in 1999)
(INSTRUCTION: To Withhold authority to vote for any
individual nominee, print that nominee's
name on the line provided below).
_______________________________________
2. In their discretion on such other matters as may properly come before
the meeting or any adjournment thereof;
all as set out in the Notice and Proxy Statement relating to the meeting,
receipt of which are hereby acknowledged.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted FOR the persons named in Proposal 1.
______________________________
Signature of shareholder
Dated: _________________, 1996 ______________________________
Signature of shareholder
Please sign exactly as name appears
hereon. If stock is owned by more
than one person, all owners should
sign. Persons signing as executors,
administrators, administrators
trustees or in similar capacities
should so indicate. If a corporation,
please sign in full corporate name by
the president or other authorized
officer. If a partnership, please
sign in partnership name by authorized
person.
[ ] Please check box if you
plan to attend in person.
Please mark, sign, date and return the proxy card promptly using the enclosed
envelope
