<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
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 Section240.14a-12
EARL SCHEIB, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/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:
----------------------------------------------------------
</TABLE>
<PAGE>
[LOGO]
EARL SCHEIB, INC.
8737 WILSHIRE BOULEVARD
BEVERLY HILLS, CALIFORNIA 90211
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
---------------------
To the Shareholders of
EARL SCHEIB, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of EARL
SCHEIB, INC. (the "Company") will be held in the Hana Room at the Le Meridien
Hotel located at 465 S. La Cienega Boulevard, Los Angeles, California on Friday,
August 25, 2000 at 10:00 a.m., for the following purposes:
(1) To elect seven directors, each for a term of one year and until their
successors shall have been duly elected and qualified.
(2) To transact such other business as may properly come before the meeting
and any adjournments thereof.
Only shareholders of record at the close of business on July 7, 2000 are
entitled to notice of and to vote at the Annual Meeting of Shareholders or any
adjournments thereof.
Your attention is called to the Proxy Statement and accompanying Proxy Card.
You are requested, whether or not you plan to be present at the meeting, to
sign, date and return the Proxy Card in the enclosed envelope, to which no
postage need be affixed if mailed in the United States. If you attend the Annual
Meeting, you may withdraw your proxy and vote your own shares at the meeting.
A copy of the 2000 Annual Report of the Company accompanies this Notice but
is not a part of the proxy solicitation material.
By order of the Board of Directors
[SIGNATURE]
David I. Sunkin
VICE PRESIDENT & GENERAL COUNSEL,
SECRETARY
Beverly Hills, California
July 25, 2000
IF YOU PLAN TO ATTEND:
PLEASE NOTE THAT ATTENDANCE IS LIMITED TO SHAREHOLDERS ONLY. EACH
SHAREHOLDER MAY BE ASKED TO PRESENT VALID PICTURE IDENTIFICATION. SHAREHOLDERS
HOLDING STOCK IN BROKERAGE ACCOUNTS ("STREET NAME") WILL NEED TO BRING A COPY OF
A BROKERAGE STATEMENT REFLECTING STOCK OWNERSHIP AS OF THE RECORD DATE TO GAIN
ADMISSION TO THE MEETING.
Earl Scheib, Inc. is listed and traded on the American Stock Exchange
(Symbol "ESH").
<PAGE>
[LOGO]
EARL SCHEIB, INC.
8737 WILSHIRE BOULEVARD
BEVERLY HILLS, CALIFORNIA 90211
------------------------
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 25, 2000 AT 10:00 A.M.
LE MERIDIEN HOTEL
465 S. LA CIENEGA BOULEVARD
LOS ANGELES, CA.
------------------------
The accompanying proxy is solicited by the Board of Directors of Earl
Scheib, Inc. (the "Company"), to be used at the Annual Meeting of Shareholders
to be held on Friday, August 25, 2000 and any adjournments thereof (the
"Meeting"). Shares represented by valid proxies in the enclosed form will be
voted as specified if executed and received in time for the Meeting. THE PROXY
IS REVOCABLE AT ANY TIME PRIOR TO BEING VOTED BY DELIVERING WRITTEN NOTICE TO
THE SECRETARY OF THE COMPANY OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
This Notice of Annual Meeting and Proxy Statement is being mailed to
shareholders on or about July 25, 2000.
VOTING SECURITIES
Only shareholders of record at the close of business on July 7, 2000, are
entitled to notice of and to vote at the Meeting, each share having one vote. In
electing directors, shareholders may vote in favor of all nominees or withhold
their votes as to all nominees or withhold their votes as to specific nominees.
If no specific instructions are given with respect to the matters to be acted
upon, the shares represented by a signed proxy will be voted FOR the election of
all nominees. Directors will be elected by a plurality of votes cast by holders
of shares of Common Stock voting in person or by proxy at the Meeting. Approval
of any other proposals will require the affirmative vote of the holders of a
majority of shares of Common Stock voting in person or by proxy at the Meeting.
Broker non-votes will not be included in vote totals and will have no effect on
the outcome of the vote. On the record date, the Company had issued and
outstanding 4,358,682 shares of Common Stock, par value $1.00.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates the number of shares of the Company's Common
Stock beneficially owned as of June 30, 2000, by (i) all persons known to the
Company who own more than 5% thereof, (ii) all directors of the Company, and
(iii) all directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
PERCENT OF
NAME OF AMOUNT AND NATURE OUTSTANDING
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(A) SHARES
---------------- -------------------------- -----------
<S> <C> <C>
Dimensional Fund Advisors, Inc ............................ 343,000(b) 7.9%
1229 Ocean Avenue, Suite 650
Santa Monica, CA 90401
Gabelli Funds, Inc. and affiliates ........................ 1,601,193(c) 36.7%
One Corporate Center
Rye, NY 10580
Lawndale Capital Management, LLC .......................... 241,400(d) 5.5%
1 Sansome Street #3900
San Francisco, CA 94104
Christian K. Bement........................................ 311,500(e) 7.1%
Stuart D. Buchalter........................................ 629,000(f) 14.4%
Philip Wm. Colburn......................................... 174,500(g) 4%
David Eisenberg............................................ 7,500(h) *
Alexander L. Kyman......................................... 23,500(i) *
Daniel A. Seigel........................................... 125,000(j) 2.9%
Greg Helm.................................................. 2,500 *
All directors, nominees for director and executive officers %
as a group (10 persons).................................. 1,342,650 30.8
</TABLE>
------------------------
* Indicates ownership of less than 1% of the Company's Common Stock
(a) Except as noted below, each of such beneficial owners exercises sole voting
and investment power over all shares shown. Amounts include shares owned
outright plus shares which could be acquired on or before August 30, 2000.
(b) According to a Securities and Exchange Commission Schedule 13D, dated
February 11, 2000. Dimensional Fund Advisors, Inc. ("Dimensional"), an
investment advisor registered under Section 203 of the Investment Advisors
Act of 1940, furnishes investment advice to four investment companies
registered under the Investment Company Act of 1940, and serves as
investment manager to certain other investment vehicles, including
commingled group trusts, (these investment companies and investment vehicles
are the "Portfolios"). In its role as investment advisor and investment
manager, Dimensional possesses both voting and investment power over the
securities of the Company that are owned by the Portfolios. Dimensional
disclaims beneficial ownership of such securities.
(c) According to a Securities and Exchange Commission Schedule 13D, dated
June 14, 2000, Gabelli Funds, Inc. and its affiliates hold all such shares
for the benefit of their clients. Gabelli Funds, Inc. claims beneficial
ownership of all 1,601,193 shares except for 9,460 shares owned by Mario J.
Gabelli as an individual.
(d) According to a Securities and Exchange Commission Schedule 13D, dated
February 15, 2000.
(e) Includes 51,500 shares owned outright and 260,000 shares which may be
acquired upon the exercise of employee stock options which are presently
exercisable.
2
<PAGE>
(f) Includes 25,000 shares owned outright and 5,000 shares which may be acquired
upon the exercise of directors' stock options which are presently
exercisable. Mr. Buchalter is one of two successor co-executors of the
Estate of Earl A. Scheib which owns 599,000 shares over which Mr. Buchalter
shares investment and voting power but disclaims beneficial ownership of the
estate's shares.
(g) Includes 4,500 shares owned outright, 20,000 shares which may be acquired
upon the exercise of directors' stock options and 150,000 shares which may
be acquired upon the exercise of employee stock options which are presently
exercisable.
(h) Includes 2,500 shares owned outright by a trust of which Mr. Eisenberg is
one of two trustees and 5,000 shares which may be acquired upon the exercise
of directors' stock options which are presently exercisable.
(i) Includes 1,000 shares owned by a trust of which Mr. Kyman is one of two
trustees, 2,500 shares in an Individual Retirement Account and 20,000 shares
which may be acquired upon the exercise of directors' stock options which
are presently exercisable.
(j) Includes 100,000 shares owned outright and 25,000 shares which may be
acquired upon the exercise of directors' stock options which are presently
exercisable.
ELECTION OF DIRECTORS
Seven persons are to be elected to the Board of Directors, each for a term
of one year, commencing on the date of the Meeting and continuing until the
Annual Meeting of Shareholders to be held in 2001 and until their successors
have been duly elected and qualified. Of the seven nominees, Stuart D.
Buchalter, as the successor co-executor for the estate of Earl A. Scheib, and
Christian Bement may be deemed "controlling persons" of the Company.
All of the nominees are currently serving as directors of the Company. In
the event that any nominee for director would become unavailable, it is intended
that votes will be cast, pursuant to the enclosed proxy, for such substitute
nominee as may be nominated by the Board of Directors. The Board of Directors
has no present knowledge that any of the persons named will be unavailable to
serve.
INFORMATION CONCERNING DIRECTORS AND NOMINEES TO BOARD OF DIRECTORS
The following table sets forth the principal occupation or employment and
principal business of the employer, if any, of each director of the Company, as
well as his age, business experience, other directorships held by him and the
period during which he has previously served as director of the Company:
<TABLE>
<CAPTION>
NAME, AGE PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS;
AND PRESENT POSITION OTHER DIRECTORSHIPS; BUSINESS EXPERIENCE
-------------------- ------------------------------------------------------------
<S> <C>
Philip Wm. Colburn, 71 ....... A director since June 1992, Mr. Colburn was elected Chairman
Chairman of the Board of the Board of the Company effective January 1, 1999.
Mr. Colburn has more than 40 years experience in the
automotive industry. Since March 1988, Mr. Colburn has
served as the Chairman of the Board of Allen Telecom, Inc.
(NYSE), which is a manufacturer of telecommunications
products. From March 1988 to January 1992, Mr. Colburn also
served as the Chief Executive Officer of Allen Telecom, Inc.
Mr. Colburn is also a Director of Superior Industries
International, Inc. (OEM wheels and custom auto
accessories), and Transpro, Inc. (manufacturer and supplier
of automotive components and systems).
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS;
AND PRESENT POSITION OTHER DIRECTORSHIPS; BUSINESS EXPERIENCE
-------------------- ------------------------------------------------------------
<S> <C>
Christian K. Bement, 58 ...... Mr. Bement became President and Chief Executive Officer on
President and Chief January 1, 1999. Mr. Bement previously served the Company as
Executive Officer, Director its Executive Vice President and Chief Operating Officer
since February 1995 and became a director in 1997. Prior
thereto and for over 25 years, Mr. Bement served in various
senior executive positions at Thrifty Corporation, most
recently, from 1990-1994, as Executive Vice President.
Stuart D. Buchalter, 62 ...... Stuart Buchalter has served as a director of the Company
Director since 1997. Mr. Buchalter has been Of Counsel with the
California law firm of Buchalter, Nemer, Fields & Younger, a
Professional Corporation, since August 1980. He has been an
officer of East-West Capital Associates, Inc., a venture
capital investment firm, since February 1996. From
August 1980 to June 1993, he served as Chairman of the Board
of Directors and Chief Executive Officer of Standard Brands
Paint Company, a paint retailer and manufacturer.
Mr. Buchalter is a director of The Warnaco Group, Inc., an
apparel manufacturer, City National Corp., the holding
company for City National Bank, e4L, Inc., (formerly
National Media Corporation), a direct response marketer
company, and Faroudja, Inc., a video imaging enhancement
company. He is also Chairman of the Board of Trustees of
Otis College of Art and Design. Mr. Buchalter is currently
Chairman of the Company's Audit Committee. Mr. Buchalter is
the uncle of David I. Sunkin, the Company's Vice President &
General Counsel.
David Eisenberg, 64 .......... A director since June, 1999, Mr. Eisenberg is currently
Director Chief Executive Officer of Eisenberg & Associates, a retail
consulting firm. Mr. Eisenberg is also Chairman of Let's
Talk Cellular & Wireless, a retail chain of 260 stores
selling cellular and wireless products, services and
accessories. From 1998 to March 2000, Mr. Eisenberg was
Chief Executive Officer of Let's Talk Cellular & Wireless.
In May 2000, Let's Talk Cellular & Wireless filed for
reorganization under Chapter 11 of the United States
Bankruptcy Code. Mr. Eisenberg, from 1992-1998, was
Chairman, President & Chief Executive Officer of Chief Auto
Parts, Inc., a national retail auto parts chain. Prior to
that and for 38 years, Mr. Eisenberg worked for Peoples
Drug Stores, Inc., a retail chain of 500 stores, eventually
becoming President and Chief Operating Officer.
Mr. Eisenberg is currently a member of the Company's
Compensation Committee.
Alexander L. Kyman, 70 ....... A director since August 1994, Mr. Kyman from 1984 to 1992
Director was President of City National Bank (commercial bank). From
1992 through 1993, Mr. Kyman was Vice Chairman of City
National Bank. Currently, Mr. Kyman is a business and
financial consultant. Mr. Kyman is currently a member of the
Company's Audit Committee and Chairman of the Compensation
Committee.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS;
AND PRESENT POSITION OTHER DIRECTORSHIPS; BUSINESS EXPERIENCE
-------------------- ------------------------------------------------------------
<S> <C>
Gregory J. Helm, 52 .......... A director since April 2000, Mr. Helm has been, since 1994,
Director co-founder and President of Houston Helm and Company, a
nationally recognized advertising agency and graphic design
firm. Mr. Helm is currently a member of the Company's Audit
Committee and Compensation Committee.
Daniel A. Seigel, 58 ......... A director since November 1994 when Mr. Seigel was employed
Director as the Company's President and Chief Executive Officer.
Mr. Seigel is currently Chairman and Chief Executive Officer
of Hartleigh Creations, Inc. (a promotional products
company). Mr. Seigel resigned as President and Chief
Executive Officer of the Company on December 31, 1998. From
March 1993 to 1994, Mr. Seigel was President and Chief
Executive Officer of Thrifty Corporation (retail drug stores
and sporting goods).
</TABLE>
5
<PAGE>
THE BOARD OF DIRECTORS
MEETINGS, ORGANIZATIONS AND REMUNERATION
During the fiscal year ended April 30, 2000, the Board of Directors met four
(4) times. For their services on the Board during the 2000 fiscal year, all
non-employee directors were paid $18,000 as a retainer which includes
compensation for all regular meetings. Non-employee directors receive an
additional $1,000 for each special meeting, if any, attended in person. Members
of the Audit Committee, the Compensation Committee and the Nominating Committee
receive $500 for each committee meeting attended in person. Mr. Colburn is
currently paid $60,000 per year for his services and was granted an option to
purchase 250,000 shares of the Company's common stock during fiscal 1999. Each
director attended at least 75% of all Board and applicable committee meetings.
AUDIT COMMITTEE
The Audit Committee has adopted a charter pursuant to which it
(i) recommends to the Board of Directors a firm of independent certified public
accountants to conduct the annual audit of the Company's books and records;
(ii) reviews with such accounting firm the scope and results of the annual
audit; (iii) reviews the adequacy of the Company's system of internal accounting
controls with such independent accountants; (iv) reviews fees charged by the
independent accountants for professional services; and (v) reviews
pronouncements as to accounting standards for their applicability to the Company
The Company's independent public accountants are invited to attend meetings
of the Audit Committee and certain members of management may also be invited to
attend. The Audit Committee during fiscal year 2000 consisted of three
non-employee directors, Messrs. Stuart D. Buchalter, who acts as Chairman,
Alexander L. Kyman and David Eisenberg. The Committee met one (1) time during
the fiscal year ended April 30, 2000.
COMPENSATION COMMITTEE
The Compensation Committee reviews and approves all salary arrangements and
other compensation for officers of the Company. The Compensation Committee
during fiscal year 2000 consisted of three non-employee directors,
Messrs. Alexander L. Kyman, who acts as Chairman, Stuart D. Buchalter and David
Eisenberg. The Compensation Committee met three (3) times during the fiscal year
ended April 30, 2000.
COMPENSATION COMMITTEE INTERLOCK AND INSIDER PARTICIPATION
No member of the Compensation Committee was an officer or employee of the
Company or any of its subsidiaries during the year. None of the executive
officers of the Company has served on the board of directors or on the
compensation committee of any other entity, any of whose officers served either
on the Board of Directors or on the Compensation Committee of the Company.
NOMINATING COMMITTEE
The Nominating Committee, composed of Messrs. Colburn, Bement and Seigel, is
responsible for soliciting recommendations for candidates for the Board of
Directors; developing and reviewing background information for candidates; and
making recommendations to the Board regarding such candidates. The Nominating
Committee did not meet during fiscal year 2000. The Nominating Committee will
consider shareholder nominations that have been submitted in accordance with the
Company's Advance Notice Procedures as stated in the Bylaws.
6
<PAGE>
EXECUTIVE COMPENSATION
The following tables and narrative text discuss the compensation paid in the
fiscal year ended April 30 2000 ("Fiscal 2000"), and the two prior fiscal years
to the Company's Chief Executive Officer and the Company's other executive
officers whose disclosure of compensation is required pursuant to the rules of
the Securities and Exchange Commission (the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------ --------------------- ALL OTHER
NAME AND FISCAL SALARY BONUS SECURITIES UNDERLYING COMPENSATION(4)
PRINCIPAL POSITION YEAR ($) ($) OPTIONS (#) ($)
------------------ -------- -------- -------- --------------------- ---------------
<S> <C> <C> <C> <C> <C>
Christian K. Bement ................ 2000 220,000 0 3,200
President & Chief Executive 1999 190,063 0 100,000
Officer(1) 1998 170,000 24,948
Charles E. Barrantes ............... 2000 116,255 0 50,000
Vice President & Chief Financial
Officer(2)
David I. Sunkin .................... 2000 130,005 0 2,383
Vice President & General Counsel, 1999 115,920 12,000 20,000
Secretary(3) 1998 98,125 12,098
James Smith ........................ 2000 109,038 0 2,087
Vice President--Shop Operations 1999 112,052 0
1998 92,334 6,881
</TABLE>
------------------------
(1) Prior to January 1, 1999, Mr. Bement served as Executive Vice President and
Chief Operating Officer. Mr. Bement is entitled to termination benefits
under certain circumstances.
(2) Reflects 9 months of service.
(3) Mr. Sunkin is entitled to termination benefits under certain circumstances.
Mr. Sunkin is the nephew of Stuart D. Buchalter, a director of the Company.
(4) The amounts shown in this column consist of matching contributions by the
Company under the Earl Scheib, Inc. Employee Savings Plan.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to option grants to
the Company's Named Executives during Fiscal 2000 and the potential realizable
value of such option grants.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
% OF TOTAL OF STOCK PRICE
OPTIONS APPRECIATION FOR
NUMBER OF GRANTED TO EXERCISE OR OPTION TERM
SECURITIES UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME OPTIONS GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- --------------------- ------------ ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Charles E. Barrantes..... 50,000 43 4.50 8/02/09 141,501 358,592
</TABLE>
7
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth below information with respect to previously
granted options which were exercised (if any) or which remain outstanding for
the Named Executives.
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED OPTIONS VALUE OF UNEXERCISED
AT FY-END (#) IN-THE MONEY OPTIONS(1)
ON EXERCISE VALUE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Christian K. Bement.... 0 0 240,000 60,000 0 0
Charles E. Barrantes... 0 0 0 50,000 0 0
David I. Sunkin........ 0 0 38,000 12,000 0 0
James E. Smith......... 0 0 21,500 1,500 0 0
</TABLE>
------------------------
(1) Value based upon $3.75 closing price per share of Common Stock on April 28,
2000.
REPORT OF THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Report of the Compensation Committee shall not be deemed incorporated by
reference to any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent the Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
The Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee") is responsible for administering the executive
compensation plans and programs of the Company including the 1994 Performance
Employee Stock Option Plan and for making recommendations to the Board of
Directors regarding the compensation and benefits provided to the Chief
Executive Officer and the other executive officers. Each member of the
Compensation Committee during fiscal 2000, whose names are set forth below this
report, is an independent director of the Company.
COMPENSATION POLICIES
The Company's executive compensation programs are designed to:
1. Motivate executive officers to enhance the Company's performance for the
benefit of its shareholders.
2. Reward executives for superior individual contributions to the
achievement of the Company's business objectives, and
3. Align the interests of the Company's executive officers and key
employees with the interests of its shareholders through equity and
performance based compensation programs.
For Fiscal 2000, the key elements of the compensation program for executive
management were base salary, cash bonuses and stock option grants. The
Compensation Committee reevaluates executive compensation periodically to
institute compensation packages which relate in part to overall Company
performance and are similar to compensation packages awarded to similar
positions in the industry. The Compensation Committee has previously retained an
independent executive compensation consulting firm to evaluate the competitive
position and structure of the Company's executive compensation plans and
programs.
8
<PAGE>
BASE SALARY
Base salary levels generally are determined on the Compensation Committee's
assessment of prevailing levels among similarly sized and situated publicly-held
companies. The Compensation Committee also considers other factors, including
the Company's financial performance, the depth of the duties and functions of
each of the Named Executives, the individual executives performance for the
year, other benefits available to the Named Executives and the recommendations
of the Company's Chief Executive Officer. The base salary is deemed to have been
appropriate by the Compensation Committee in view of the value of stock options
granted and the prior and expected contributions of the Named Executives to the
Company's development.
ANNUAL PERFORMANCE BONUS PLAN
The Company utilizes an annual performance bonus plan entitled Management By
Objectives ("MBO"). Under the MBO, annual incentives are established for the
Named Executives, all other executives and certain key employees of the Company.
The actual award is based on Company performance and individual performance, and
may be greater or less than the target annual incentive. If the Company does not
meet a threshold level of performance, no awards may be granted with the
exception of discretionary annual bonuses discussed below. Generally, an
individual's target award is calculated by assigning various weights to
objective performance criteria such as sales increases, profit growth and
individual objectives. Payments made under this Plan are earned and made in the
fiscal year following the fiscal year in which the performance occurred. No
payments were made under this plan during Fiscal 2000 since the Company did not
achieve the required threshold.
DISCRETIONARY ANNUAL BONUSES
Discretionary bonuses may be granted by the Company to executive officers
for exceptional individual performance.
EQUITY BASED PLANS
Stock options provide executives with the opportunity to buy and maintain an
equity interest in the Company and to share in the appreciation of the value of
the Company's stock. Stock options only have value if the stock price
appreciates in value from the date the options are granted.
In 1994, the shareholders adopted, and amended in 1996, the Earl
Scheib, Inc. 1994 Performance Employee Stock Option Plan (the "1994 Performance
Plan"). The 1994 Performance Plan was adopted to better align the interests of
the Company's management and employees with those of the shareholders. Options
will be granted to key employees who have made and are expected to continue to
make valuable contributions to the Company. Options are typically granted at
fair market value or higher on the date of grant and typically vest over a three
to four year period.
In addition, the shareholders, in 1994, adopted the Earl Scheib, Inc. 1994
Board of Directors Stock Option Plan (the "1994 Directors Option Plan") to
provide an equity based incentive to the Company's non-employee directors. The
1994 Directors Option Plan provides that each independent director shall be
eligible for an initial grant of options to purchase 10,000 shares of Common
Stock at the fair market value on the date of grant and vest over a four year
period. In 1996, the shareholders approved an amendment to the 1994 Directors
Option Plan to further link the interests of the directors with those of the
shareholders by providing the directors an opportunity to receive a grant of an
additional option to purchase four times the number of shares of Company Common
Stock the director purchases on the open market (up to a maximum of an option to
purchase 10,000 shares).
9
<PAGE>
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Bement was elected President and Chief Executive Officer on January 1,
1999. Mr. Bement previously served the Company as its Executive Vice President
and Chief Operating Officer at an annual salary of $170,000. As a result of
Mr. Bement's promotion and increase in duties and responsibilities, the
Committee increased his salary to $220,000 and granted him stock options to
purchase up to an additional 100,000 shares of Common Stock. The Compensation
Committee considered compensation packages provided for similar positions in
similar industries in arriving at Mr. Bement's compensation package. All of the
options were granted at the closing price of the Common Stock on the American
Stock Exchange on the date of Mr. Bement's election and vest over a 30-month
period. Mr. Bement participates in the MBO to the same extent as the prior CEO
which allows Mr. Bement to earn up to 50% of his salary if the Company meets
certain financial performance targets.
Mr. Bement serves the Company in an "at-will" capacity pursuant to an
Employment Agreement which provides for termination benefits under certain
circumstances.
Alexander L. Kyman, Chairman
Stuart D. Buchalter
David Eisenberg
10
<PAGE>
PERFORMANCE GRAPH
The Performance Graph below compares total cumulative return on the
Company's Common Stock, the AMEX Index and the Media General Automotive Parts
and Accessories Industry Index.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EARL SCHEIB,INC. MG GROUP INDEX AMEX MARKET INDEX
<S> <C> <C> <C>
4/28/95 100.00 100.00 100.00
4/30/96 112.50 117.13 122.33
4/30/97 88.46 133.67 113.52
4/30/98 142.31 182.64 154.18
4/30/99 80.77 166.27 142.91
4/28/00 57.69 149.73 171.15
</TABLE>
SECTION 16(a) REPORTING DELINQUENCIES
Under federal securities laws and rules of the Securities and Exchange
Commission, directors and executive officers of the Company, as well as persons
holding more than 10% of the Company's outstanding shares of Common Stock, are
required to file reports showing their initial ownership of the Company's Common
Stock and any subsequent changes in that ownership with the Securities and
Exchange Commission and the American Stock Exchange by certain specified due
dates. Based solely on the Company's review of copies of such reports furnished
to the Company and written representations that no other reports were required
to be filed, during fiscal 2000, all such reports that were required were filed
on a timely basis with the exception of James E. Smith who filed a delinquent
Form 4 in the month of February, 2000 which was due by November 10, 1999.
CHANGES IN COMPANY'S CERTIFYING ACCOUNTANT
The Company, effective April 20, 1999, dismissed Deloitte & Touche, LLP,
independent auditors, as its principal independent accountant. The dismissal was
recommended by the Audit Committee of the Board of Directors.
Deloitte & Touche, LLP's report on the Company's financial statements for
fiscal years 1998 and 1997 did not contain an adverse opinion or disclaimer of
opinion, nor was the report qualified or modified as to uncertainty, audit scope
or accounting principles.
11
<PAGE>
Effective April 22, 1999, following the recommendation of the Audit
Committee, the Company engaged Arthur Andersen, LLP, independent public
accountants, as its new principal independent accountant to audit the Company's
financial statements. The Company did not consult Arthur Andersen, LLP during
the two most recent fiscal years prior to the engagement with regard to any of
the matters described in Item 304 (a) (1) and 304(a)(2) of Regulation S-K.
A representative of Arthur Andersen, LLP will be present and available at
the Meeting to answer questions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Buchalter, a director of the Company, is Of Counsel to the law firm of
Buchalter, Nemer, Fields & Younger which provided legal services to the Company
during fiscal 2000 and may do so in the future.
ADVANCE NOTICE PROCEDURES
Under the Company's bylaws, no business may be brought before an annual
meeting unless it is specified in the notice of the meeting (which includes
shareholder proposals that the Company is required to include in its proxy
statement pursuant to Rule 14a-8 under the Securities Exchange Act of 1934), or
is otherwise brought before the meeting by or at the direction of the Board or
by a shareholder entitled to vote who has delivered notice to the Company
(containing certain information specified in the bylaws), not less than 50 nor
more than 75 days prior to the meeting provided, however, that in the event that
less than 65 days' prior public disclosure of the date of the meeting is made to
shareholders, notice by a shareholder, to be timely, must be received no later
than the close of business on the 15th day following the date of public
disclosure. These requirements are separate from and in addition to the SEC's
requirements that a shareholder must meet in order to have a shareholder
proposal included in the Company's proxy statement.
SHAREHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
Shareholders interested in submitting a proposal for inclusion in the proxy
materials for the Company's annual meeting of shareholders in 2001 may do so by
following the procedures prescribed in SEC Rule 14a-8. To be eligible for
inclusion, shareholder proposals must be received by the Company's Secretary no
later than March 27, 2001.
OTHER BUSINESS
The Board of Directors is not aware of any matter which may properly be
presented for action at the Meeting other than the matters set forth herein,
but, should any other matter requiring a vote of the shareholders arise, it is
intended that the proxies in the accompanying form will be voted in respect
thereof in accordance with the best judgment of the person or persons voting the
proxies, discretionary authority to do so being included in the proxy, in the
interests of the Company.
PROXIES AND SOLICITATIONS
Proxies for the Meeting are being solicited by mail directly and through
brokerage and bank institutions. The Company will pay all expenses in connection
with the solicitation of proxies. In addition to the use of the mails, proxies
may be solicited by directors, officers and regular employees of the Company
personally, by telephone, or by telegraph. The Company does not expect to pay an
fees or compensation for the solicitation of proxies but may reimburse brokers
and other persons who hold stock in their names, or in the names of nominees,
for their expenses in sending proxy material to principals and obtaining their
proxies.
12
<PAGE>
AVAILABILITY OF FORM 10-K
The Company's Annual Report on Form 10-K for the fiscal year ended
April 30, 2000, including the financial statements and schedules thereto, as
filed with the Securities and Exchange Commission, will be furnished to
shareholders upon written request without charge. A copy may be requested by
writing to David I. Sunkin, Vice President, Earl Scheib, Inc., 8737 Wilshire
Boulevard, Beverly Hills, California 90211.
By order of the Board of Directors
[SIGNATURE]
David I. Sunkin
VICE PRESIDENT & GENERAL COUNSEL,
SECRETARY
Beverly Hills, California
July 25, 2000
13
<PAGE>
PROXY EARL SCHEIB, INC.
Solicited on behalf of the Board of Directors of EARL SCHEIB, INC. (the
"Company") for use at the Annual Meeting of Shareholders (the "Meeting") to be
held on August 25, 2000 at 10:00 A.M., at Le Meridien Hotel, 465 S. La Cienega
Boulevard, Los Angeles, California.
The undersigned hereby appoints John K. Minnihan and David I. Sunkin, or
either one of them, as proxies, with full power of substitution, to vote all
shares of Common Stock of the Company held of record by the undersigned on
July 7, 2000 at the Meeting or at any adjournments thereof, on the proposal set
forth below and in their discretion upon such other business as may properly
come before the Meeting.
The Board of Directors recommends a vote FOR all nominees listed in Proposal
1.
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS / / FOR all nominees listed below / / WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE CONTRARY BELOW) TO VOTE FOR ALL NOMINEES LISTED BELOW.
</TABLE>
Christian K. Bement Stuart D. Buchalter Philip Wm. Colburn David Eisenberg
Gregory J. Helm Alexander L. Kyman Daniel A. Seigel
(INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL WRITE THAT NOMINEE'S NAME
ON THE LINE PROVIDED BELOW)
--------------------------------------------------------------------------------
(PLEASE SIGN AND DATE ON REVERSE SIDE)
<PAGE>
(CONTINUED FROM THE FRONT SIDE OF CARD)
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting. This Proxy, when properly
executed, will be voted in the manner directed by the undersigned
shareholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED IN PROPOSAL 1. All proxies heretofore given by the
undersigned are hereby revoked. Receipt of the Proxy Statement dated
July 25, 2000 is acknowledged.
Please mark, sign, date and return this Proxy in the accompanying prepaid
envelope.
Date: ______________________, 2000
__________________________________
(Signature)
__________________________________
(Signature)
Please sign exactly as your name
appears hereon. When signing as
attorney, executor, administrator,
trustee, guardian or corporate
officer, please include full
title.
