<PAGE>
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
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
[X] Definitive additional materials
[_] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
STIMSONITE CORPORATION
(Name of Registrant as specified in its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i))(4) 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:
<PAGE>
LOGO
STIMSONITE CORPORATION
7542 NORTH NATCHEZ AVENUE
NILES, ILLINOIS 60714
April 15, 1997
Dear Stockholder:
We cordially invite you to attend the 1997 Annual Meeting of Stockholders to
be held on Thursday, May 22, 1997, at 8:30 a.m., Central Time, at LaSalle
National Bank, 43rd Floor, 135 South LaSalle Street, Chicago, Illinois 60603.
The following pages include a formal notice of the meeting and the proxy
statement. The proxy statement describes various matters on the agenda for the
meeting. After we conclude the formal part of the meeting, we will discuss the
Company's financial performance last year, the progress made in meeting
important strategic objectives and other items of general interest. We will be
pleased to answer any questions which you might wish to raise at the meeting.
We encourage you to attend in person. If that is not possible, please sign
and return the enclosed proxy card as soon as possible. Otherwise, your vote
cannot be counted.
Sincerely,
/s/ Robert E. Stutz
President and Chief Executive
Officer
<PAGE>
STIMSONITE CORPORATION
7542 NORTH NATCHEZ AVENUE
NILES, ILLINOIS 60714
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1997
----------------
To the Stockholders of Stimsonite Corporation (the "Company"):
Notice is hereby given that the annual meeting of stockholders of the
Company will be held at LaSalle National Bank, 135 South LaSalle Street, 43rd
Floor, Chicago, Illinois 60603, on Thursday, May 22, 1997 at 8:30 a.m.
(Central Time) for the following purposes:
1. To elect eight directors to serve during the year and until their
successors are elected;
2. To ratify the appointment of Coopers & Lybrand LLP as the Company's
independent accountants for the fiscal year ending December 31, 1997;
and
3. To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on April 11, 1997 are
entitled to receive notice of, and to vote at, the annual meeting and any
postponements or adjournments thereof. If you do not expect to attend the
meeting in person, please sign and return the accompanying proxy in the
enclosed postage prepaid envelope. If you later find that you can be present
or for any other reason desire to revoke your proxy, you can do so at any time
before the voting.
/s/ Thomas C. Ratchford
Secretary
Niles, Illinois
April 15, 1997
<PAGE>
STIMSONITE CORPORATION
----------------
PROXY STATEMENT
----------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Stimsonite Corporation, a Delaware
corporation (the "Company") from the holders of the Company's common stock,
$.01 par value (the "Common Stock"), in connection with the annual meeting of
stockholders of the Company (the "Annual Meeting") to be held at 8:30 a.m.
(Central Time) on Thursday, May 22, 1997, and all postponements or
adjournments thereof. This Notice of Annual Meeting of Stockholders and Proxy
Statement, and the accompanying proxy card, are first being mailed to
stockholders on or about April 15, 1997, for the purposes set forth in the
notice of the Annual Meeting.
GENERAL
Only stockholders of record at the close of business on April 11, 1997 (the
"Record Date") are entitled to receive notice of the Annual Meeting and to
vote the shares of Common Stock held by them on the Record Date at the Annual
Meeting or any postponements or adjournments thereof.
If the accompanying proxy card is properly signed and returned to the
Company and is not revoked, it will be voted in accordance with the
instructions contained therein. Unless contrary instructions are given, the
persons designated as proxy holders in the proxy card will vote (i) for the
election as director of all of the nominees proposed by the Board of
Directors, (ii) for ratification of the appointment of Coopers & Lybrand
L.L.P. as the Company's independent accountants for the fiscal year ending
December 31, 1997 and (iii) with regard to all other matters, as recommended
by the Company's Board of Directors or, if no such recommendation is given, in
their own discretion. Each stockholder may revoke a previously granted proxy
at any time before it is voted by filing with the Secretary of the Company a
revoking instruction or a duly executed proxy bearing a later date. The powers
of the proxy holders will also be suspended if the person executing the proxy
attends the Annual Meeting and requests to vote in person. Attendance at the
Annual Meeting will not, in itself, constitute revocation of a previously
granted proxy.
The cost of soliciting proxies in the enclosed form will be borne by the
Company. The Company will also request brokerage firms, banks, nominees,
custodians and fiduciaries to forward proxy materials to the beneficial owners
of shares of Common Stock as of the Record Date and will reimburse the cost of
forwarding the proxy materials in accordance with customary practice.
The presence at the Annual Meeting, in person or by proxy, of the holders of
a majority of the shares of Common Stock outstanding at the close of business
on the Record Date will constitute a quorum. As of that date, 8,608,427 shares
of Common Stock were outstanding. Each outstanding share entitles its holder
to cast one vote on each matter to be voted upon at the Annual Meeting. Under
Delaware law, properly executed proxies that are marked "abstain" or are held
in "street name" by brokers that are not voted on one or more particular
proposals (if otherwise voted on at least one proposal) will be counted for
purposes of determining whether a quorum has been achieved at the Annual
Meeting. Abstentions will have the same effect as a vote against the proposal
to which such abstention applies. Broker non-votes will be treated neither as
a vote for nor as a vote against any of the proposals to which such broker
non-votes apply. Proxy cards that are properly signed and returned in a timely
manner with no other marking will be voted in accordance with the
recommendation of the Company's Board of Directors. Proxies and ballots will
be received and tabulated by the Company's transfer agent.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of February 1, 1997 by (a) persons owning of
record or known to the Company to be the beneficial owner of more than five
percent of the outstanding shares of Common Stock, (b) each director, (c) each
of the Named Executive Officers (as defined under "Executive Compensation"
below) and (d) all directors and executive officers of the Company as a group.
All information with respect to beneficial ownership has been furnished by the
respective director, executive officer or stockholder, as the case may be, or
has been derived from documents filed with the Securities and Exchange
Commission. Unless otherwise indicated in a footnote, the address of each
beneficial owner of more than five percent of the Common Stock is 230 East
High Street, Charlottesville, Virginia 22902.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENTAGE
NAME OWNED (1) BENEFICIALLY OWNED
---- ------------ ------------------
<S> <C> <C>
Terrence D. Daniels (2).................. 1,534,130 17.7%
Quad-C, Inc. (3)......................... 945,580 10.9
Quad-C Partners III, L.P. (4)............ 441,000 5.1
Quad-C II, L.C. (5)...................... 441,000 5.1
Quad-C Partners II, L.P. (4)............. 24,733 *
Zayucel Limited/Laurence Z.Y. and Celia
Moh (6)................................. 1,479,681 17.1
Quaker Capital Management Corporation
(7)..................................... 445,950 5.2
Lawrence S. Eagleburger (8).............. 5,498 *
Donald H. Haider (9)..................... 4,667 *
Edward T. Harvey, Jr. (10)............... 194,775 2.2
Anthony R. Ignaczak (11)................. 1,393 *
Richard J.M. Poulson (12)................ 3,099 *
Robert E. Stutz (13)..................... 0 *
Jay R. Taylor (14)....................... 257,400 2.9
Clifford S. Deremo (15).................. 0 *
Walter B. Finley (16).................... 0 *
Charles L. Hulsey (17)................... 40,150 *
Robert M. Pricone (18)................... 37,850 *
All directors and executive officers as a
group
(14 persons) (19)....................... 2,173,212 24.6
</TABLE>
- --------
*Less than one percent.
(1) Unless otherwise indicated in these footnotes or under "Security
Ownership of Certain Beneficial Owners and Management--Quad-C", each
stockholder has sole voting and investment power with respect to the
shares of Common Stock beneficially owned. All share amounts reflect
beneficial ownership determined pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934, as amended.
(2) Includes 4,598 shares of Common Stock issuable upon the exercise of stock
options exercisable on or before May 1, 1997. Mr. Daniels is the direct
beneficial owner of 142,952 shares of Common Stock (which includes 20,456
shares of Common Stock directly owned by his minor child). Mr. Daniels is
also the sole director of Quad-C, Inc. ("Quad-C"), and, as such, may be
deemed to beneficially own the 920,847 shares of Common Stock
beneficially owned by Quad-C and the 24,733 shares of Common Stock
beneficially owned by Quad-C Partners II, L.P. ("Quad-C Partners II").
Mr. Daniels is also the managing member of Quad-C II, L.C. and, as such,
may be deemed to beneficially own the 441,000 shares of Common Stock
beneficially owned by Quad-C Partners III, L.P. ("Quad-C Partners III").
See footnotes (3) and (5) below and "Security Ownership of Certain
Beneficial Owners and Management--Quad-C." Mr. Daniels is Chairman of the
Board and a director of the Company. Mr. Daniels disclaims beneficial
ownership of the shares of Common Stock held by each of Quad-C (including
those shares held indirectly by Quad-C
2
<PAGE>
through Quad-C Partners II) and Quad-C II, L.C. (including those shares
held indirectly through Quad-C Partners III), except to the extent of Mr.
Daniels' interest in each of such entities.
(3) Includes 24,733 shares of Common Stock held by Quad-C Partners II. Quad-C
disclaims beneficial ownership of such shares held by Quad-C Partners II,
except to the extent of Quad-C's interest in such entity. See "Security
Ownership of Certain Beneficial Owners and management--Quad-C."
(4) See "Security Ownership of Certain Beneficial Owners and Management--Quad-
C."
(5) Represents shares of Common Stock held by Quad-C Partners III. Quad-C II,
L.C. disclaims beneficial ownership of these shares of Common Stock except
to the extent of its interest in such entity. See "Security Ownership of
Certain Beneficial Owners and Management--Quad-C."
(6) Includes 3,177 shares of Common Stock issuable upon the exercise of stock
options held by Laurence Z.Y. Moh and exercisable on or before February
25, 1997. Laurence Z.Y. and Celia Moh share voting and investment power
with respect to 1,476,504 shares of Common Stock, all of which are held by
Zayucel Limited. Mr. and Mrs. Moh disclaim beneficial ownership of such
shares of Common Stock. The address for Zayucel Limited is 301 Yu To Sang
Bldg., 37 Queens Road Central, Hong Kong, and the address for Laurence and
Celia Moh is 15 Bin Tong Park, Singapore 1026. Mr. Moh is a former
director of the Company. Such ownership information is based on a Form 5
(Annual Statement of Changes in Beneficial Ownership) filed for 1996 by
Laurence Z.Y. and Celia Moh and the most recently filed Schedule 13G
(filed for 1995) by Laurence Z.Y. and Celia Moh.
(7) According to its most recently filed Schedule 13G, Quaker Management
Capital Corporation shares voting and dispositive power over 387,150 of
these shares of Common Stock. Quaker Management Capital Corporation
disclaims beneficial ownership of these shares of Common Stock. Its
address is The Arrott Building, 401 Wood Street, Suite 1300, Pittsburgh,
Pennsylvania 15222-1824.
(8) Includes 5,398 shares of Common Stock issuable upon the exercise of stock
options exercisable on or before May 1, 1997. Mr. Eagleburger is a
director of the Company.
(9) Includes 800 shares of Common Stock held in an IRA account for Mr.
Haider's spouse and 2,867 shares of Common Stock issuable upon the
exercise of stock options exercisable on or before May 1, 1997. Mr. Haider
is a director of the Company.
(10) Includes 4,598 shares of Common Stock issuable upon the exercise of stock
options exercisable on or before May 1, 1997. Mr. Harvey is a director of
the Company.
(11) Mr. Ignaczak is a director of the Company.
(12) Represents shares of Common Stock issuable upon the exercise of stock
options exercisable on or before May 1, 1997. Mr. Poulson is a director of
the Company.
(13) Mr. Stutz is a director of the Company and its President and Chief
Executive Officer.
(14) Includes 87,500 shares of Common Stock issuable upon the exercise of stock
options exercisable on or before May 1, 1997. Mr. Taylor is a director of
the Company and its former President and Chief Executive Officer.
(15) Mr. Deremo is the Company's Vice President--Sales and Marketing.
(16) Mr. Finley is the Company's Vice President--Atlanta Operations.
(17) Includes 18,550 shares of Common Stock issuable upon the exercise of stock
options exercisable on or before May 1, 1997. Mr. Hulsey is the Company's
Vice President--Operations.
(18) Includes 1,750 shares of Common Stock issuable upon the exercise of stock
options exercisable on or before May 1, 1997. Mr. Pricone is the Company's
Vice President--Engineering.
(19) Includes (i) an aggregate of 154,610 shares of Common Stock issuable upon
the exercise of stock options exercisable on or before May 1, 1997 and
(ii) 800 shares of Common Stock held in an IRA account as described in
footnote (9) above. Also includes shares with respect to which beneficial
ownership is disclaimed as described in footnote (2) above and under
"Security Ownership of Certain Beneficial Owners and Management--Quad-C".
QUAD-C
Quad-C, Quad-C Partners III, Quad-C II, L.C., Quad-C Partners II and Mr.
Daniels file a Schedule 13G as a group. Quad-C is the sole general partner of
Quad-C Partners II and, as such, may deemed to beneficially own
3
<PAGE>
the shares of Common Stock held by Quad-C Partners II. Mr. Daniels is the sole
director of Quad-C and may be deemed to beneficially own shares of Common
Stock beneficially owned by Quad-C and held by Quad-C Partners II. Mr. Daniels
is also the managing member of Quad-C II, L.C., which is the sole general
partner of Quad-C Partners III. As such, Mr. Daniels and Quad-C II, L.C. may
be deemed to beneficially own shares of Common Stock held by Quad-C Partners
III. Mr. Daniels disclaims beneficial ownership of the shares of Common Stock
held by each of Quad-C (including those shares held indirectly by Quad-C
through Quad-C Partners II) and Quad-C II, L.C. (including those shares held
indirectly through Quad-C Partners III), except to the extent of Mr. Daniels'
interest in each of such entities.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors and holders of 10% or more of the outstanding
Common Stock to file an initial report of ownership (Form 3) and reports of
changes of ownership (Forms 4 and 5) of Common Stock with the Securities and
Exchange Commission. Such persons are required to furnish the Company with
copies of all Section 16(a) forms that they file. Based upon a review of these
filings and written representations from the Company's directors and executive
officers that no other reports were required, the Company notes that the
following Section 16 reports related to 1996 were delinquent: Laurence Z.Y.
and Celia Moh filed late their Form 5 reporting one exempt transaction that
occurred during 1996 and Mr. Daniels failed to report on his Form 5 one exempt
transaction that occurred during 1996; and that the following Section 16
reports related to 1995 were delinquent: Mr. Finley filed late his Form 3 and
reported on a Form 5 two transactions that should have been reported on an
earlier Form 4.
ELECTION OF DIRECTORS
The Board of Directors presently consists of eight members. All directors
hold office for a term of one year or until their successors have been
elected.
At the Annual Meeting, stockholders will elect a board consisting of eight
directors. Unless authority to do so is specifically withheld, the persons
named in the accompanying proxy will vote for the election of each of the
nominees named below. Under Delaware law, the eight nominees who receive the
most votes at the meeting will be elected as directors. All of the nominees
are currently directors of the Company.
The name, age, and current principal position(s), if any, with the Company
of each nominee for director is as follows:
<TABLE>
<CAPTION>
DIRECTOR PRESENT PRINCIPAL POSITION
NAME SINCE AGE AND OFFICES WITH THE COMPANY
- ---- -------- --- ----------------------------
<S> <C> <C> <C>
Terrence D. Daniels..... 1990 54 Chairman of the Board and Director
Lawrence S. Eagleburger. 1994 66 Director
Donald H. Haider........ 1994 55 Director
Edward T. Harvey, Jr.... 1990 49 Director
Anthony R. Ignaczak..... 1993 33 Director
Richard J.M. Poulson.... 1994 58 Director
Robert E. Stutz......... 1997 44 President, Chief Executive Officer and Director
Jay R. Taylor........... 1990 62 Director
</TABLE>
Terrence D. Daniels has served as a director and as Chairman of the Board
since 1990. Since 1990, Mr. Daniels has also been the president of Quad-C (a
structured investment firm). Prior thereto, Mr. Daniels was a vice chairman of
W.R. Grace & Co. (a manufacturer of specialty chemical products and provider
of products and services in the health care industry) with overall
responsibility for the specialty chemical, health care, natural resource and
corporate technical groups. Mr. Daniels is also a director of DSG
International Ltd., Eskimo Pie Corporation and IGI, Inc. Mr. Daniels is
expected to resign as Chairman of the Board at the meeting of the Board of
Directors scheduled to be held on May 22, 1997, and it is expected that Mr.
Haider will be elected Chairman of the Board at such meeting.
4
<PAGE>
Lawrence S. Eagleburger has served as a director since 1994. Since 1993, Mr.
Eagleburger has been senior foreign policy advisor for the law firm of Baker,
Donelson, Bearman & Caldwell. From 1992 to 1993, Mr. Eagleburger was Secretary
of State of the United States of America and from 1989 to 1992 was Deputy
Secretary of State of the United States of America. Mr. Eagleburger is also a
director of Dresser Industries Inc., Jefferson National Bank, Phillips
Petroleum Company, Universal Tobacco Corporation, Corning Incorporated,
Virginia Fiber Inc. and Comstat.
Donald H. Haider has served as a director since 1994. Since 1990, Mr. Haider
has been a professor at the Kellogg School of Northwestern University. He is
also a director of LaSalle National Bank, N.A. and Continental Waste
Industries, Inc. Mr. Haider is expected to be elected Chairman of the Board at
the meeting of the Board of Directors scheduled to be held on May 22, 1997.
Edward T. Harvey, Jr. has served as a director since 1990. Mr. Harvey has
also served as Vice President of the Company (1990 to January 1995), Treasurer
of the Company (1990 to April 1993) and as Secretary of the Company (1990 to
October 1993). Since 1990, Mr. Harvey has also been a vice president of Quad-
C. Prior to 1990, Mr. Harvey was a senior vice president of W.R. Grace & Co.
and was responsible for corporate development and acquisitions.
Anthony R. Ignaczak has served as a director since 1993. Mr. Ignaczak has
also been a vice president of Quad-C since 1993 and an employee of Quad-C
since 1992. From 1990 to 1992, Mr. Ignaczak attended Harvard Business School.
During 1990, Mr. Ignaczak was also an associate in the merchant banking group
of Merrill Lynch & Co. (a financial services company).
Richard J.M. Poulson has served as a director since 1994. Since 1995, Mr.
Poulson has been president and senior managing director of The Appian Group (a
private merchant and investment banking partnership). From 1990 through 1994,
Mr. Poulson was a general partner in the law firm of Hogan & Hartson.
Robert E. Stutz became the President and Chief Executive Officer and a
director of the Company in March 1997. From 1991 to March 1997, Mr. Stutz was
Vice President and General Manager, Automotive Controls Division, of Cherry
Electrical Products, a Division of the Cherry Corporation (a designer,
manufacturer and marketer of custom electrical, electronic and semi-conductor
components in automotive, computer and consumer and commercial markets). Prior
to 1991, Mr. Stutz was Vice President--Worldwide Sales and Marketing for
Carlingswitch, Inc. (a manufacturer of specialty switches and circuit
breakers).
Jay R. Taylor has been a director of the Company since 1990 and served as
President and Chief Executive Officer of the Company from 1990 until March
1997. Prior to 1990, Mr. Taylor was vice president and general manager of the
Stimsonite Products Division of Amerace Corporation ("Amerace") (a
manufacturer of electrical utility, battery separator and traffic safety
products), from which the Company in 1990 purchased the majority of its
assets.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION
AS A DIRECTOR OF EACH OF THE NOMINEES SET FORTH ABOVE.
COMMITTEES AND MEETINGS
The Board of Directors has standing Audit, Compensation, Environmental
Compliance and Stock Repurchase Implementation Committees. The Board of
Directors does not have a nomination committee.
Audit Committee. The Audit Committee is currently comprised of Messrs.
Eagleburger, Harvey and Poulson. The functions of the Audit Committee are to
recommend annually to the Company's Board of Directors the appointment of the
independent public accountants of the Company, discuss and review the scope
and the fees of the prospective annual audit, review the results thereof with
the Company's independent public accountants, review compliance with existing
major accounting and financial policies of the Company, review the adequacy of
the financial organization of the Company, review management's procedures and
policies
5
<PAGE>
relative to the adequacy of the Company's internal accounting controls and
compliance with federal and state laws relating to accounting practices, and
review and approve (with the concurrence of a majority of the independent
directors of the Company) transactions, if any, with affiliated parties.
Compensation Committee. The Compensation Committee is currently comprised of
Messrs. Daniels, Haider and Poulson. The functions of the Compensation
Committee are to review and approve annual salaries and bonuses for all of the
Company's executive officers and other key management employees, review,
approve and recommend to the Board of Directors the terms and conditions of
all employee benefit plans or changes thereto and administer the Company's
stock option and incentive equity plans.
Environmental Compliance Committee. The Environmental Compliance Committee
is currently comprised of Messrs. Daniels, Haider and Taylor. The function of
the committee is to provide oversight relative to the Company's compliance
with applicable environmental regulations.
Stock Repurchase Implementation Committee. The Stock Repurchase
Implementation Committee is currently comprised of Messrs. Haider, Harvey and
Taylor. The function of the committee is to provide oversight relative to
implementation of the Company's stock repurchase program approved by the Board
of Directors in October 1995.
During 1996, seven meetings of the Board of Directors were held, one meeting
of the Audit Committee was held, two meetings of the Compensation Committee
were held, no meetings of the Environmental Compliance Committee were held and
one meeting of the Stock Repurchase Implementation Committee was held. All
directors attended at least 75%, in the aggregate, of the number of meetings
of the Board of Directors and the committees of which they were members during
their periods of service as directors and committee members.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides information relating to compensation for the
fiscal years ended December 31, 1996, 1995 and 1994 for the chief executive
officer and the other four most highly compensated executive officers of the
Company (determined by reference to fiscal year 1996) (collectively, the
"Named Executive Officers"). The amounts shown include compensation for
services in all capacities provided to the Company.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------ ---------------------
NAME AND SECURITIES UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(2) OPTIONS/SARS(#)(3) COMPENSATION($)(4)(5)
- ------------------ ---- ------------ ----------- --------------------- ---------------------
<S> <C> <C> <C> <C> <C>
Jay R. Taylor (6)....... 1996 231,161 0 25,389 32,075
President and Chief 1995 218,239 0 9,545 37,760
Executive Officer 1994 205,846 145,741 0 39,468
Clifford S. Deremo (7).. 1996 121,269 0 12,778 5,607
Vice President-- 1995 88,000 27,600(9) 14,727 0
Sales and Marketing
Walter B. Finley (8).... 1996 119,261 0 12,124 7,752
Vice President-- 1995 58,404 49,072(10) 0 0
Atlanta Operations
Charles Hulsey.......... 1996 111,192 0 10,833 7,228
Vice President-- 1995 102,500 0 0 6,788
Operations 1994 97,000 44,393 0 6,935
Robert M. Pricone....... 1996 123,971 0 13,500 11,034
Vice President-- 1995 113,537 0 5,068 10,105
Engineering 1994 106,740 49,493 0 7,822
</TABLE>
6
<PAGE>
- --------
(1) 1996 had one more pay period than 1995.
(2) These amounts represent the amount of bonuses earned during the indicated
year pursuant to the Company's incentive bonus compensation plan. See
footnotes (9) and (10) below.
(3) These amounts represent the number of shares underlying stock options
granted during the indicated year. See "Stock Option/SAR Grants" for a
description of stock options granted during 1996.
(4) With the exception of Mr. Taylor (see footnote (5) below), these amounts
represent contributions to the Company's retirement plan in connection
with amounts earned during the indicated fiscal year.
(5) The amounts set forth for Mr. Taylor represent (i) $17,000 of premiums
paid during each of 1996, 1995 and 1994 on two life insurance policies on
the life of Mr. Taylor which fund, in part, the Company's obligations
under Mr. Taylor's supplemental retirement plan and (ii) contributions of
$15,075, $20,760 and $22,468 to the Company's retirement plan in
connection with amounts earned in 1996, 1995 and 1994 respectively. See
"Executive Compensation--Supplemental Executive Retirement Plan."
(6) Effective March 21, 1997, Mr. Taylor resigned as President and Chief
Executive Officer of the Company. He continues to serve as a director and
has been nominated for election as a director. See "Election of
Directors."
(7) Mr. Deremo became an executive officer of the Company in February 1995.
Accordingly, compensation amounts are not given for 1994.
(8) Mr. Finley became an executive officer of the Company in May 1995 when the
Company acquired Pave-Mark Corporation ("Pave-Mark"). Accordingly,
compensation amounts are not given for 1994 and 1995 reflects compensation
from May through December.
(9) Represents a $10,000 signing bonus and a minimum bonus for 1995 equal to
20% of his base salary earned during the year ($17,600), both of which the
Company agreed to pay Mr. Deremo in connection with his becoming an
executive officer of the Company during 1995.
(10) At the time of the Pave-Mark acquisition, a bonus plan for Pave-Mark
employees was in effect, and the Company agreed to assume such plan. Such
plan was based solely on the performance of thermoplastic products
manufactured by Pave-Mark.
STOCK OPTION/SAR GRANTS IN LAST FISCAL YEAR
The table below provides information regarding stock options granted to the
Named Executive Officers during the fiscal year ended December 31, 1996. No
SARs were granted by the Company during 1996.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARS POTENTIAL REALIZABLE VALUE
UNDERLYING GRANTED TO EXERCISE OR AT ASSUMED ANNUAL RATES
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION OF STOCK PRICE APPRECIATION
NAME GRANTED (#) FISCAL YEAR (%) (PER SHARE) ($) DATE FOR OPTIONS TERM (1)
- ---- ------------ ---------------- --------------- ---------- -------------------------------
5% 10%
------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Jay R. Taylor........... 12,389(2) 7.7 9.00 12/31/96 70,122(4) 177,704(4)
13,000(3) 8.0 9.00 02/13/06 73,581 186,468
Clifford S. Deremo...... 5,778(2) 3.6 9.00 12/31/96 32,703(4) 82,878(4)
7,000(3) 4.3 9.00 02/13/06 39,620 100,406
Walter B. Finley........ 5,624(2) 3.5 9.00 12/31/96 31,832(4) 80,669(4)
6,500(3) 4.0 9.00 02/13/06 36,790 93,234
Charles Hulsey.......... 5,833(2) 3.6 9.00 12/31/96 33,015(4) 83,667(4)
5,000(3) 3.1 9.00 02/13/06 28,300 71,718
Robert M. Pricone....... 6,500(2) 4.0 9.00 12/31/96 36,790(4) 93,234(4)
7,000(3) 4.3 9.00 02/13/06 39,620 100,406
</TABLE>
- --------
(1) Based on a ten-year option term and annual compounding, the 5% and 10%
calculations are set forth in compliance with Securities and Exchange
Commission rules. The appreciation calculations are not necessarily
indicative of future values of stock options or of the Common Stock. See
footnote (4) below.
(2) In February 1996, each executive officer was granted a performance-based
option to purchase a specified number of shares (indicated in the table).
The maximum number of shares was subject to reduction to 30%
7
<PAGE>
of the maximum number of shares if, by December 31, 1996, 90% of the
Company's targeted operating income was achieved and subject to reduction
to zero if, by December 31, 1996, less than 90% of the Company's targeted
operating income was achieved. The Company did not achieve 90% of the
targeted operating income for 1996 and, as a result, the number of shares
subject to each of these options was reduced to zero and all of the options
terminated in accordance with their terms on December 31, 1996. If at least
90% of the targeted operating income had been achieved, the options would
have vested (i) in increments of one-third on each of December 31, 1999,
2000 and 2001 if the optionee remained continuously employed by the
Company, (ii) 100% in the event of a Change in Control that occurred after
December 31, 1996, and (iii) 100% in the event of the optionee's death or
disability after December 31, 1996. The term "Change in Control" had
substantially the same meaning as such term has under the Director Plan (as
defined herein). See "--Compensation of Directors."
(3) The options will vest (i) in increments of one-third on each of December
31, 1998, 1999 and 2000 if the optionee remains continuously employed by
the Company and (ii) 100% in the event of optionee's death or disability
or a "Change in Control" (which term has substantially the same meaning as
such term has under the Director Plan). See "--Compensation of Directors."
See "--Employment Agreements" for information regarding the modification
of the vesting and termination provisions of Mr. Taylor's option.
(4) As noted in footnote (2) above, each of these options was terminated on
December 31, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES
None of the Named Executive Officers exercised stock options during 1996.
The following table sets forth information regarding the number and value of
unexercised stock options held by each of the Named Executive Officers as of
December 31, 1996. None of the Named Executive Officers held or holds SARs.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS T FISCAL
AT FISCAL YEAR END (#)(1) YEAR END ($)(2)
------------------------- ---------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ---- ------------------------- ---------------------
<S> <C> <C>
Jay R. Taylor................... 87,500/13,000 410,813/0
Clifford S. Deremo.............. 0/17,000 0/0
Walter B. Finley................ 0/6,500 0/0
Charles Hulsey.................. 18,550/5,000 87,092/0
Robert M. Pricone............... 1,750/7,000 8,216/0
</TABLE>
- --------
(1) Numbers do not include the number of shares subject to certain
performance-based options granted during 1996 because such options
terminated on December 31, 1996. See "Executive Compensation--Stock
Option/SAR Grants in Last Fiscal Year."
(2) Value is calculated by multiplying the number of shares of Common Stock
underlying the stock option by the difference between the closing price of
a share of Common Stock on December 31, 1996 as reported by The Nasdaq
Stock Market ("Nasdaq") ($6.125 per share) and the exercise price of the
stock option by the number of shares of Common Stock underlying the stock
option.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Mr. Taylor retired in March 1997 at age 62. In connection with the
acquisition of substantially all of the assets of the Company from Amerace in
1990, the Company assumed Amerace's obligations to Mr. Taylor under a
Supplemental Executive Retirement Plan (the "SERP") intended to provide
retirement benefits supplementing those provided under other plans. Subject to
certain exceptions, upon retirement, Mr. Taylor is entitled to receive in each
of the 15 years following his retirement $111,300, reduced by certain other
retirement benefits received by him, including the primary Social Security
benefit and retirement benefits from certain other benefits plans. The SERP
also provides for payment of death benefits and long-term disability benefits.
To provide a source of funding for the Company's obligations under the SERP,
the Company maintains two whole life insurance policies on Mr. Taylor's life.
The Company is the owner of and beneficiary under each insurance policy.
8
<PAGE>
COMPENSATION OF DIRECTORS
The Company's directors who are not currently receiving compensation as
officers or employees of the Company are paid an annual retainer fee of
$20,000 and a fee of $750 for attending each meeting of the Board of Directors
and each meeting of any committee held on a day when the entire Board of
Directors does not meet. Directors are also reimbursed for expenses incurred
in connection with their attendance at Board of Directors and committee
meetings.
Initial Options. Under the Amended and Restated Stock Option Plan for Non-
Employee Directors (the "Director Plan"), each person who first becomes a non-
employee director receives an option to purchase 2,000 shares of Common Stock
at an exercise price per share equal to the fair market value of a share of
Common Stock on such date. The options described in the preceding sentence are
hereinafter referred to as "Initial Options". Initial Options become
exercisable to the extent of 20% of the shares covered thereby after the
optionee has continuously served as a director through the next annual
stockholders' meeting immediately following such grant date, and to the extent
of an additional 20% of the shares covered thereby after the optionee has
continuously served as a director through the next four successive annual
stockholders' meetings. Notwithstanding the foregoing, if an optionee dies or
becomes disabled, all Initial Options held by such optionee become immediately
exercisable in full to the extent the Initial Options would have been
exercisable had the optionee remained a director through the date of the
Company's next annual stockholders' meeting. To the extent exercisable, each
Initial Option is exercisable in whole or in part.
Elective Options. The Director Plan also permits each non-employee director
to make an election to receive all or any portion of his annual retainer for
the current year in the form of a stock option (a "One-Year Elective Option")
or to receive all or any portion of his annual retainer for the current year
and the next four successive years in the form of a stock option (a "Five-Year
Elective Option", and together with One-Year Elective Options, "Elective
Options"). An individual who becomes a director more than six months after any
annual stockholders' meeting is not entitled to make an election to receive
Elective Options for any portion of the retainer payable with respect to the
year in which he becomes a director. An election (i) must specify whether the
election is for a One-Year Elective Option or a Five-Year Elective Option and
the percentage of the retainer to be paid in the form of an Elective Option,
(ii) must be delivered to the Company by the last day of the month during
which the director is elected to the Board and (iii) is irrevocable. The grant
of Elective Options is made automatically on the first business day occurring
six months after the date the election is due. If a non-employee director
ceases to be a director after the date the election is due and prior to the
date Elective Options are granted, the Elective Option to such individual is
not granted and any retainer is paid in cash.
The option price per share of each Elective Option is equal to 20% of the
market value of a share of Common Stock on the date of grant. The total number
of shares subject to an Elective Option equals the number determined by
dividing the amount of the retainer to be received in Elective Options by the
difference between the market value per share of the Common Stock on the date
of grant and the option price per share of the Elective Option. No adjustment
is made to an Elective Option to reflect a director's cessation of service as
a director or an increase in the amount of the annual retainer paid by the
Company to directors. Any such increase is paid in cash.
Each One-Year Elective Option becomes exercisable to the extent of 100% of
the shares covered thereby after the optionee has continuously served as a
director through the date of the next annual stockholders' meeting immediately
following the date such optionee is elected a director and makes an election
to receive such option. Each Five-Year Elective Option becomes exercisable to
the extent of 20% of the shares covered thereby after the optionee has
continuously served as a director through the date of the next annual
stockholders' meeting immediately following the date such optionee is elected
a director and makes an election to receive such option and to the extent of
an additional 20% of the shares covered thereby after the optionee has
continuously served as a director through the date of the next four successive
annual stockholders' meetings. Notwithstanding the foregoing, if an optionee
dies or becomes disabled, all Elective Options held by such optionee become
immediately exercisable in full to the extent such Elective Options would have
been exercisable had the optionee
9
<PAGE>
remained a director through the date of the Company's next annual
stockholders' meeting. To the extent exercisable, each Elective Option is
exercisable in whole or in part.
Annual Options. Under the Director Plan, each non-employee director elected
at an annual stockholders' meeting automatically receives an option to
purchase 1,500 shares of Common Stock at an exercise price per share equal to
the market value of a share of Common Stock on such date ("Annual Options).
Annual Options become exercisable to the extent of 20% of the shares covered
thereby after the optionee has continuously served as a director through the
next annual stockholders' meeting immediately following such grant date, and
to the extent of an additional 20% of the shares covered thereby after the
optionee has continually served as a director through the next four successive
annual stockholders' meetings. To the extent exercisable, each Annual Option
is exercisable in whole or in part.
Change in Control. Upon a Change in Control, each Initial Option, Elective
Option and Annual Option (each, an "Option Right") that would become
exercisable through the Company's next annual stockholders' meeting following
a Change in Control becomes immediately exercisable in full. If any event or
series of events constituting a Change in Control is abandoned, the effect
thereof will be null and the exercisability of Option Rights will be governed
by the provisions of the Director Plan described above. The Director Plan
defines a Change in Control as the occurrence of any of the following events:
(i) execution by the Company of an agreement for the merger, consolidation or
reorganization into or with another corporation or other legal person, unless
as a result of such transaction not less than a majority of the combined
voting power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders of
securities entitled to vote generally in the election of directors of the
Company ("Voting Stock") immediately prior to such transaction; (ii) execution
by the Company of an agreement for the sale or other transfer of all or
substantially all of its assets to another corporation or legal person, unless
as a result of such transaction not less than a majority of the combined
voting power of the then-outstanding securities of such corporation or legal
person immediately after such transaction is held in the aggregate by the
holders of Voting Stock of the Company immediately prior to such transaction;
(iii) a report is filed on Schedule 13D or Schedule 14D-1 disclosing that any
person other than Mr. Daniels or an affiliate of Mr. Daniels has or intends to
become the beneficial owner of a majority or more of the combined voting power
of the then-outstanding Voting Stock; (iv) during any period of two
consecutive years, individuals who at the beginning of any such period
constitute the Directors of the Company cease for any reason to constitute at
least a majority thereof (each Director first elected or first nominated for
election by a vote of at least two-thirds of the Directors then in office who
were Directors of the Company at the beginning of any such period being deemed
to have been a Director of the Company at the beginning of such period); or
(v) the Company adopts a plan for the liquidation or dissolution of the
Company other than pursuant to a merger, consolidation or reorganization which
would not constitute a Change in Control, as described in clause (i) above.
EMPLOYMENT AGREEMENTS
Pursuant to an employment agreement between the Company and Mr. Stutz, Mr.
Stutz has agreed to serve as President and Chief Executive Officer of the
Company until March 22, 1999 (which term will automatically be extended for
additional one-year periods unless previously terminated) at a minimum base
salary of $225,000 or such greater amount as determined by the Board of
Directors (the "Regular Base Salary") plus an annual bonus payable in
accordance with the Company's incentive compensation plan. Mr. Stutz's bonus
with respect to 1997 performance will not be less than $100,000. The agreement
also provides for the grant of stock options described in the following
paragraph. Mr. Stutz's employment agreement provides that if (i) the Company
terminates Mr. Stutz's employment, except for a termination for cause or a
termination resulting from Mr. Stutz's resignation, retirement, death or
disability or (ii) Mr. Stutz resigns following a substantial breach of his
employment agreement by the Company (a "Termination Event"), Mr. Stutz is
entitled to receive certain termination benefits, which include (i) his
Regular Base Salary until the later of the first anniversary of termination or
the last day of the term of the employment agreement, (ii) an amount equal to
the annual bonus, if any, paid on account of the most recently concluded
fiscal year, until the earlier to occur of the first anniversary
10
<PAGE>
of termination or the last day of the term of the employment agreement, and
(iii) continuation of his then-current level of life and health benefits and
certain outplacement benefits. Under the terms of Mr. Stutz's employment
agreement and subject to certain exceptions, Mr. Stutz may not engage in a
business competitive with the Company while he is employed by the Company and
for a period of two years thereafter, unless the Company fails to perform its
obligations with respect to payment of any post-termination amount to which
Mr. Stutz is entitled.
The employment agreement between the Company and Mr. Stutz also provides
that Mr. Stutz is entitled to receive stock options to purchase up to 400,000
aggregate shares of Common Stock. Effective March 22, 1997, Mr. Stutz received
an option to purchase 100,000 shares of Common Stock at an exercise price of
$6.00. This stock option will vest to the extent of (i) 33%, 33% and 34% of
the shares covered thereby on March 22, 1998, 1999 and 2000 if Mr. Stutz
remains continuously employed through such dates, and (ii) 100% on the date of
a Termination Event. On the first date on which the Common Stock closes at or
above $7.50 for the 30th consecutive trading day, Mr. Stutz will receive a
stock option to purchase 100,000 shares of Common Stock, with an exercise
price of $7.50, that will vest to the extent of 33%, 33% and 34% of the shares
covered thereby on the second, third and fourth anniversaries, respectively,
of the date of grant if Mr. Stutz remains continuously employed through such
dates. On the first date on which the Common Stock closes at or above $9.00
for the 30th consecutive trading day, Mr. Stutz will receive a stock option to
purchase 100,000 shares of Common Stock, with an exercise price of $9.00, that
will vest to the extent of 33%, 33% and 34% of the shares covered thereby on
the third, fourth and fifth anniversaries, respectively, of the date of grant
if Mr. Stutz remains continuously employed through such dates. On the first
date on which the Common Stock closes at or above $11.00 for the 30th
consecutive trading day, Mr. Stutz will receive a stock option to purchase
100,000 shares of Common Stock, with an exercise price of $11.00, that will
vest to the extent of 33%, 33% and 34% of the shares covered thereby on the
third, fourth and fifth anniversaries, respectively, of the date of grant if
Mr. Stutz remains continuously employed through such dates. All stock options
contemplated by the employment agreement will vest fully (if previously
granted) if Mr. Stutz dies or becomes disabled or if a Change in Control
(defined substantially the same as in the Director Plan) occurs. All stock
options will terminate on the tenth anniversary of the date of grant unless
terminated earlier as provided therein.
The Company and Mr. Taylor are parties to a consulting agreement (the
"Consulting Agreement") pursuant to which Mr. Taylor has agreed to provide the
Company with consulting and advisory services and to resign as the President
and Chief Executive Officer of the Company and terminate his then-existing
employment agreement. The Consulting Agreement is for a two-year term
beginning on March 22, 1997 (the date on which Mr. Stutz became President and
Chief Executive Officer of the Company). The term of the Consulting Agreement
is automatically renewed for one-year periods unless previously terminated.
The Company has agreed to pay Mr. Taylor annual consulting fees equal to the
difference between $222,600 less (i) any amounts actually paid to Mr. Taylor
under the SERP, (ii) any amounts actually paid to Mr. Taylor under the
Company's pension plan and (iii) any directors' retainer fees paid to Mr.
Taylor as a member of the Board of Directors. Mr. Taylor is also entitled to
participate in group health, disability, vision and dental benefit plans
provided by the Company to the same extent as are afforded to executive
employees of the Company. In addition, certain of Mr. Taylor's outstanding
options to purchase Common Stock have been amended to provide in general for
continued vesting through March 22, 1999 so long as Mr. Taylor provides
consulting services during such period and to postpone until May 1999 the
termination of the options. The Consulting Agreement provides that if Mr.
Taylor's consulting and advisory obligations under the Consulting Agreement
are terminated for any reason prior to March 22, 1999, other than a
termination resulting from Mr. Taylor's resignation, Mr. Taylor is entitled to
receive certain termination benefits. In the event Mr. Taylor is entitled to
receive termination benefits under the Consulting Agreement, he is entitled to
receive, at a minimum, his annual consulting fee and certain other payments
and benefits through March 22, 1999. Under the terms of the Consulting
Agreement and subject to certain exceptions, Mr. Taylor may not engage in
business activities competitive with the Company while he is providing
consulting and advisory services to the Company under the Consulting Agreement
and for a period of 12 months after the Company ceases to make timely payments
and provide certain benefits to which Mr. Taylor is entitled under the
Consulting Agreement.
11
<PAGE>
The Company and Messrs. Hulsey and Pricone are each parties to employment
agreements (the "Employment Agreements"). Pursuant to the Employment
Agreements, Messrs. Hulsey and Pricone have each agreed to serve as an
executive officer of the Company until August 23, 1997, at a minimum base
salary or such greater amount as determined by the Board of Directors. The
term of each Employment Agreement is automatically renewed for six-month
periods unless previously terminated. The Employment Agreements each provide
that (i) if the Company terminates the employee's employment prior to the end
of the employment term, except for a termination for cause or a termination
resulting from the employee's resignation, death or disability, or (ii) if the
employee resigns following a substantial breach of the Employment Agreement by
the Company, the employee is entitled to receive an amount not to exceed 50%
of his most recent salary and bonus. In addition, he is entitled to continue
to participate in the Company's life and health plans until the earlier of the
last date of the benefits period set forth in such Agreement or the date upon
which he accepts other employment. Under the terms of such Agreements and
subject to certain exceptions, Messrs. Hulsey and Pricone may not engage in a
business competitive with the Company while employed by the Company and for a
period of 18 months thereafter. As of January 1, 1997, the Company's minimum
base salary obligations for Messrs. Hulsey and Pricone were $109,000 and
$123,000, respectively.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, Messrs. Daniels, Haider and Poulson served as members of the
Compensation Committee. Mr. Daniels is Chairman of the Board of the Company.
Mr. Daniels is also the majority stockholder, sole director and president of
Quad-C and determines the compensation to be paid to all officers of Quad-C,
including Messrs. Harvey and Ignaczak.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") was
comprised of Messrs. Daniels, Haider and Poulson during 1996. The Board of
Directors has delegated to the Committee the authority to determine the
compensation of the Company's executive officers and other key management
employees.
The Committee's primary objective is to ensure that the Company's
compensation policies attract, motivate and retain qualified managers in a
manner consistent with maximization of stockholder value. The Company's
compensation is structured philosophically on a "pay for performance"
foundation and thus recognizes the desirability of compensation directed
specifically to motivate and reward executive managers for achieving both
short and long-term performance objectives. Compensation is comprised of three
major components: base salary, incentive bonus and stock options.
Base Salary
Base salaries are determined in the context of an individual's
responsibilities and competitive benchmarking. Base salaries are reviewed
annually on employment anniversary dates and adjusted on the basis of
individual performance and competitive considerations. In making base salary
adjustments, the Committee considers an individual's performance, especially
the effective discharge of assigned responsibilities and the leadership and
motivation provided to subordinates.
During 1996, base salaries for executive officers were increased an average
of 7%. The dollar amounts contained in the table under "Executive
Compensation--Summary Compensation Table" reflect a larger percentage increase
from 1995 to 1996 because the timing of annual base salary adjustments does
not correspond to the Company's fiscal year. In making salary decisions for
1996, the Committee considered the effects of inflation and certain subjective
criteria, including the Committee's evaluation of each executive officer's
performance of his duties since the officer's last evaluation.
12
<PAGE>
Incentive Bonus Compensation
In 1996, the Company offered an annual incentive bonus compensation plan to
executive officers. Participants under the plan were entitled to an annual
incentive bonus based upon (i) the relationship of actual earnings before
interest, taxes and amortization ("Adjusted Earnings") to budgeted Adjusted
Earnings for the 1996 fiscal year and (ii) the individual's attainment of
personal objectives established at the beginning of the year. Under the 1996
incentive compensation plan, each executive officer was assigned a "target"
bonus which, depending on the participant, was a fixed percentage of base
salary (35% for all executive officers other than Messrs. Deremo and Taylor,
both of whom were at 50%). Eighty-five percent of each participant's bonus was
to be determined with reference to the Adjusted Earnings component. The
remaining 15% of the bonus was to be determined with reference to personal
goal attainment. Personal goals generally specified attainment of particular
objectives or completion of certain projects which exceeded the routine
management responsibilities for the participant. The actual bonus payout could
be more or less than the target bonus depending on whether the Company's
Adjusted Earnings were more or less than budgeted Adjusted Earnings and on
whether the participant's personal objectives were achieved.
Each participant was entitled to receive 85% of the target bonus if the
Company achieved 100% of budgeted Adjusted Earnings. No bonus was payable with
respect to Adjusted Earnings unless it exceeded 85% of the budgeted amount. No
bonus was payable with respect to personal goals unless Adjusted Earnings
exceeded 70% of the budgeted amount. If the Company's Adjusted Earnings
exceeded the budgeted amount, 10% of such excess would be placed in a pool
that would be distributed to the participating executive officers pro-rata by
base salaries. The maximum level on which a bonus could be paid was 115% of
the established Adjusted Earnings goal.
The Committee believes that the relatively heavy weight assigned to
attainment of Adjusted Earnings was appropriate in light of the priority of
maximizing stockholder value and the desirability of emphasizing teamwork in
the management of the Company. In 1996, the Company's Adjusted Earnings were
below 70% of budgeted Adjusted Earnings. Therefore, no bonus payments were
made under the incentive bonus compensation plan for 1996.
Stock Option Grants
The Committee seeks to ensure that the executive officers of the Company
focus attention on long-term objectives, including maximization of value for
stockholders. The Committee believes that stock options are an appropriate
compensation tool to motivate and reward executive managers for long-term
performance. The Committee believes that the Common Stock price is an
appropriate index of long-term value creation by the management group.
Stock options are generally granted to each individual who becomes an
executive officer. These stock options have generally been granted pursuant to
various stock option plans maintained by the Company.
On February 13, 1996, the Committee granted to each executive officer a
performance-based stock option with the intention of motivating short-term and
long-term performance. Each executive officer received an option to purchase,
at fair market value as of February 13, 1996 ($9.00), the number of shares
(the "Option Shares") derived by dividing 50% of the executive officer's base
salary as of January 1, 1996 by the option price of $9.00 (the "Maximum
Shares"). See "Executive Compensation--Stock Option/SAR Grants." In order to
motivate short-term performance, the Option Shares would have been reduced to
30% of the Maximum Shares if 90% of a specific operating income goal for the
Company (the "Goal") was achieved as of December 31, 1996 and to zero if less
than 90% of the Goal was achieved as of the same date. To motivate long-term
performance, the options would become exercisable to the extent of one-third
of the Option Shares on December 31 in each of 1999, 2000 and 2001 if the
executive remained continuously employed by the Company through such dates.
Due to various factors, the Company did not achieve 90% of the Goal as of
December 31, 1996. As a result, the Option Shares were reduced to zero and the
performance-based stock options terminated in accordance with their terms.
13
<PAGE>
From time to time, the Committee grants stock options to key employees as an
incentive for long-term performance. On February 13, 1996, the Committee
granted an aggregate of 48,500 such options to the Company's executive
officers. The individuals received options to purchase a specified number of
shares at $9.00 per share (which was the fair market value of such shares on
the date of grant). The options vest in three equal annual installments
beginning December 31, 1998, provided the optionee is continuously employed by
the Company through the respective vesting date.
In 1993, changes were made to the federal corporate income tax law that
limit the ability of public companies to deduct compensation in excess of $1
million paid annually to each of the chief executive officer and the other
four most highly compensated executive officers. It is the Committee's policy
to seek to qualify executive compensation for deductibility where practicable
and to the extent that such policy is consistent with the Company's overall
objectives in attracting, motivating and retaining its executives. The Company
believes that, based upon current compensation levels, compensation paid in
1996 is fully deductible.
Compensation of Chief Executive Officer
Mr. Taylor's salary compensation as reported under "Executive Compensation--
Summary Compensation Table" for 1996 was $231,161, which was $12,922 or 5.6%
higher than the corresponding amount reported for 1995 due to a salary
increase granted in August 1995 that was reflected for a full year in 1996 and
due to one more pay period in 1996. In August 1996, the Committee did not
increase Mr. Taylor's base salary. In making such determination, the Committee
considered, among other things, the Company's performance in the preceding
twelve-month period compared to budgeted performance.
Mr. Taylor participated in the annual incentive bonus compensation plan and
his target bonus was 50% of his base salary. Consistent with the approach
described above regarding incentive bonuses for other executive officers, Mr.
Taylor did not receive a bonus payment for 1996. Mr. Taylor received a
performance-based stock option for 12,389 shares of Common Stock. For the
reasons described above, such performance-based stock option terminated on
December 31, 1996. In 1996 Mr. Taylor also received a stock option for 13,000
shares of Common Stock (determined by subjective allocation of a maximum pool
of options).
Mr. Taylor also receives supplementary retirement benefits which are not
made available to any other executive officer. The Company assumed these
obligation in 1990 in connection with the purchase of its business from
Amerace. See "Executive Compensation--Supplemental Executive Retirement Plan."
COMPENSATION COMMITTEE MEMBERS
Terrence D. Daniels
Donald H. Haider
Richard J.M. Poulson
14
<PAGE>
PERFORMANCE GRAPH
The following graph compares the percentage change in the Company's
cumulative return on its Common Stock with that of the Nasdaq-USA Index and
that of the Nasdaq-Non Financial Index at December 15, 1993 (the first day the
Common Stock was listed on Nasdaq), December 31, 1993, December 31, 1994,
December 31, 1995 and December 31, 1996. The graph assumes a $100 investment
and reinvestment of dividends.
[Graph reflecting the plot points set forth below]
<TABLE>
<CAPTION>
12/15/93 12/31/93 12/31/94 12/31/95 12/31/96
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Stimsonite Corporation...... $100.00 $119.44 $120.83 $105.56 $68.06
Nasdaq-USA.................. 100.00 103.10 100.81 142.61 175.42
Nasdaq-Non Financial........ 100.00 103.36 99.10 136.52 165.87
</TABLE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Company has appointed Coopers & Lybrand LLP ("Coopers & Lybrand") as the
Company's independent accountants for the fiscal year ending December 31,
1997. Coopers & Lybrand has served as the Company's independent accountants
since 1991. Services provided to the Company and its subsidiaries by Coopers &
Lybrand with respect to the 1996 fiscal year included consultations on various
tax and information services matters. Representatives of Coopers & Lybrand are
expected to be present at the Annual Meeting to respond to appropriate
questions and to make such statements as they may desire.
In the event stockholders do not ratify the appointment of Coopers & Lybrand
as the Company's independent accountants for 1997, such appointment will be
reconsidered by the Audit Committee and the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF COOPERS & LYBRAND LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR 1997.
15
<PAGE>
OTHER MATTERS
As of the date of this proxy statement, the Company knows of no business
that will be presented for consideration at the Annual Meeting other than the
items referred to above. Proxies in the enclosed form will be voted in respect
of any other business that is properly brought before the Annual Meeting in
accordance with the recommendation of the Board of Directors or, if no such
recommendation is given, in the discretion of the person or persons voting the
proxies.
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Any proposal of a stockholder intended to be presented at the Company's 1998
annual meeting of stockholders must be received by the Secretary of the
Company by December 17, 1997, for inclusion in the Company's proxy, notice of
meeting and proxy statement relating to the 1998 annual meeting.
By order of the Board of Directors,
/s/ Thomas C. Ratchford
Secretary
April 15, 1997
16
<PAGE>
Appendix A
PROXY
STIMSONITE CORPORATION
7542 NORTH NATCHEZ AVENUE
NILES, ILLINOIS 60714
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned acknowledges receipt of the accompanying Notice of Annual
Meeting of Stockholders and Proxy Statement and hereby appoints Robert E.
Stutz, Edward T. Harvey, Jr. and Thomas C. Ratchford, and each of them,
attorneys and proxies, with full power of substitution and resubstitution, to
vote all shares of the common stock of STIMSONITE CORPORATION (the "Company")
held of record by the undersigned at the close of business on April 11, 1997,
at the annual meeting of stockholders of the Company to be held at LaSalle
National Bank, 135 South LaSalle Street, 43rd Floor, Chicago, Illinois, on
Thursday, May 22, 1997, and at any adjournment thereof, as follows:
1. ELECTION OF DIRECTORS
[_] WITH AUTHORITY TO VOTE FOR [_] WITHHOLD
ALL NOMINEES LISTED BELOW AUTHORITY to
(except as marked to the vote for all
contrary below) nominees
Terrence D. Daniels listed
Anthony R. Ignaczak
Lawrence S. Eagleburger
Richard J.M. Poulson
Donald H. Haider Robert E. Stutz
Edward T. Harvey, Jr.
Jay R. Taylor
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S)
WRITE THAT NOMINEE'S NAME(S) IN THE SPACE PROVIDED BELOW.)
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2. Ratification of the appointment of Coopers & Lybrand LLP as the Company's
independent accountants for the fiscal year ending December 31, 1997.
[_] FOR[_] AGAINST[_] ABSTAIN
3. As recommended by the Board of Directors, or in the absence of such
recommendation in their discretion, to vote upon such other business as
may properly come before said meeting or any adjournment thereof.
All of the foregoing is as set forth in the Notice of Annual Meeting of
Stockholders and Proxy Statement relating to the meeting.
IF THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED HEREBY WILL BE
VOTED IN THE MANNER DIRECTED AND, IN THE ABSENCE OF DIRECTION AS TO THE MANNER
OF VOTING, WILL BE VOTED FOR THE ELECTION AS DIRECTOR OF EACH OF THE NOMINEES
LISTED AND FOR THE RATIFICATION OF THE APPOINTMENT OF INDEPENDENT PUBLIC
ACCOUNTANTS.
Please date this proxy and sign ex-
actly as name(s) appear below and
return the signed proxy in the en-
closed envelope. When shares are
held by joint tenants, both should
sign. When signing as attorney, ex-
ecutor, administrator, trustee or
guardian, please give full title as
such. If a corporation, please sign
in full corporate name by president
or other authorized officer. If a
partnership, please sign in part-
nership name by authorized person.
Dated: ______________________ , 1997
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Signature
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Signature if held jointly
PLEASE DO NOT FOLD
