<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
<TABLE>
<CAPTION>
<S> <C>
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[] Preliminary Proxy Statement [X] Definitive Proxy Statement
[] Definitive Additional Materials [ ] Soliciting Material pursuant to
Rule 14a-11(c) or Rule 14a-12
</TABLE>
REVLON, INC.
- -----------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- -----------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- -----------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- -----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
- -----------------------------------------------------------------------------
(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 Number:
- -----------------------------------------------------------------------------
(3) Filing Party:
- -----------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
REVLON, INC.
625 MADISON AVENUE
NEW YORK, NEW YORK 10022
March 10, 1997
Dear Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of
Stockholders of Revlon, Inc., which will be held at 10:00 a.m., local time,
on Tuesday, April 8, 1997, at Revlon's Research Center, 2121 Route 27,
Edison, New Jersey 08818. The matters to be acted upon at the meeting are
described in the attached Notice of Annual Meeting of Stockholders and Proxy
Statement.
While stockholders may exercise their right to vote their shares in
person, we recognize that many stockholders may not be able to attend the
Annual Meeting. Accordingly, we have enclosed a proxy which will enable you
to vote your shares on the issues to be considered at the Annual Meeting even
if you are unable to attend. If you desire to vote in accordance with
management's recommendations, you need only sign, date and return the proxy
in the enclosed postage-paid envelope to record your vote. Otherwise, please
mark the proxy to indicate your vote; date and sign the proxy; and return it
in the enclosed postage-paid envelope. In either case, you should return the
proxy as soon as conveniently possible. This will not limit your right to
vote in person or to attend the Annual Meeting.
Sincerely yours,
Jerry W. Levin
Chairman
<PAGE>
REVLON, INC.
625 MADISON AVENUE
NEW YORK, NEW YORK 10022
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
Revlon, Inc.
Notice is hereby given that the Annual Meeting of Stockholders of Revlon,
Inc., a Delaware corporation (the "Company"), will be held at 10:00 a.m.,
local time, on Tuesday, April 8, 1997, at the Company's Research Center, 2121
Route 27, Edison, New Jersey 08818, for the following purposes:
1. To elect all of the members of the Board of Directors of the Company to
serve until the next Annual Meeting and until such directors' successors are
elected and shall have qualified.
2. To ratify the selection of KPMG Peat Marwick LLP as the Company's
independent auditors for 1997.
3. To transact such other business as may properly come before the Annual
Meeting.
A proxy statement describing the matters to be considered at the Annual
Meeting is attached to this notice. Only stockholders of record at the close
of business on February 24, 1997 (the "Record Date") are entitled to notice
of, and to vote at, the Annual Meeting and at any adjournments thereof. A
list of stockholders entitled to vote at the Annual Meeting will be available
for inspection during normal business hours at the offices of the Company's
Secretary at 625 Madison Avenue, 16th Floor, New York, New York 10022 and at
the Company's Research Center, 2121 Route 27, Edison, New Jersey 08818 at
least ten days prior to the Annual Meeting and will also be available for
inspection at the Annual Meeting.
To ensure that your vote will be counted, please complete, date, sign and
return the enclosed proxy card promptly in the enclosed postage-paid
envelope, whether or not you plan to attend the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Robert K. Kretzman
Vice President and Secretary
March 10, 1997
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND
RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE. THIS WILL ENSURE
THAT YOUR SHARES ARE VOTED IN ACCORDANCE WITH YOUR WISHES.
<PAGE>
REVLON, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 8, 1997
------------------------
This proxy statement is being furnished by and on behalf of the Board of
Directors of Revlon, Inc. (the "Company") in connection with the solicitation
of proxies to be voted at the Annual Meeting of Stockholders to be held at 10
a.m., local time, on Tuesday, April 8, 1997, at the Company's Research
Center, 2121 Route 27, Edison, New Jersey 08818, and at any adjournments
thereof. This proxy statement and the enclosed proxy card are first being
sent to stockholders on or about March 10, 1997.
At the Annual Meeting, stockholders will be asked to (1) elect the
following persons as directors of the Company until the Company's next Annual
Meeting and until such directors' successors are elected and shall have
qualified: Ronald O. Perelman, Donald G. Drapkin, Meyer Feldberg, George
Fellows, William J. Fox, Howard Gittis, Vernon E. Jordan, Henry A. Kissinger,
Edward J. Landau, Jerry W. Levin, Linda Gosden Robinson, Terry Semel and
Martha Stewart, (2) ratify the selection of KPMG Peat Marwick LLP as the
Company's independent auditors for 1997 and (3) take such other action as may
properly come before the Annual Meeting or any adjournments thereof.
The principal executive offices of the Company are located at 625 Madison
Avenue, New York, New York 10022 and the telephone number is (212) 527-4000.
SOLICITATION AND VOTING OF PROXIES; REVOCATION
All proxies duly executed and received by the Company, unless such proxies
have been previously revoked, will be voted on all matters presented at the
Annual Meeting in accordance with the instructions given therein by the
person executing such proxy or, in the absence of such instructions, will be
voted FOR (1) the election to the Board of Directors of each of the thirteen
nominees identified in this Proxy Statement and (2) the ratification of the
selection of KPMG Peat Marwick LLP as the Company's independent auditors for
1997. The Company has no knowledge of any other matters to be brought before
the meeting. However, if any other matters are properly presented before the
Annual Meeting for action, in the absence of other instructions it is
intended that the persons named on the proxy card and acting thereunder will
vote in accordance with their best judgment on such matters.
The submission of a signed proxy will not affect a stockholder's right to
attend, or to vote in person at, the Annual Meeting. Stockholders who execute
a proxy may revoke it at any time before it is voted by filing a written
revocation with the Secretary of the Company at 625 Madison Avenue, 16th
Floor, New York, New York 10022 Attention: Secretary, by executing a proxy
bearing a later date or by attending the Annual Meeting and voting in person.
The accompanying form of proxy is being solicited on behalf of the Board
of Directors. Solicitation of proxies may be made by mail and also may be
made by personal interview, telephone and facsimile transmission and by
directors, officers and employees of the Company without special compensation
<PAGE>
therefor. The Company expects to reimburse banks, brokers and other persons
for their reasonable out-of-pocket expenses incurred in handling proxy
materials for beneficial owners.
RECORD DATE; VOTING RIGHTS
Only holders of record of shares of the Company's Class A common stock,
par value $.01 per share ("Class A Common Stock"), and Class B common stock,
par value $.01 per share ("Class B Common Stock" and, together with the Class
A Common Stock, the "Common Stock"), at the close of business on February 24,
1997 (the "Record Date") will be entitled to notice of and to vote at the
Annual Meeting or any adjournments thereof. On the Record Date, there were
issued and outstanding 19,875,000 shares of Class A Common Stock, each of
which is entitled to one vote, and 31,250,000 shares of Class B Common Stock,
each of which is entitled to ten votes. Of that total, 11,250,000 shares of
Class A Common Stock (or approximately 56.6% of the outstanding shares of
Class A Common Stock) and all of the shares of Class B Common Stock, which
together represent 97.4% of the combined voting power of the outstanding
shares of Common Stock, were beneficially owned through Revlon Worldwide
Corporation ("Revlon Worldwide") by MacAndrews & Forbes Holdings Inc.
("MacAndrews Holdings"), a corporation wholly owned indirectly through Mafco
Holdings Inc. ("Mafco" and, collectively with MacAndrews Holdings,
"MacAndrews & Forbes") by Ronald O. Perelman, the Chairman of the Executive
Committee of the Board of Directors of the Company. The presence in person or
by duly executed proxy of the holders of a majority in total number of votes
of the outstanding shares of Common Stock entitled to vote at the Annual
Meeting is necessary to constitute a quorum in order to transact business.
MacAndrews & Forbes has informed the Company that it will vote FOR (1) the
election to the Board of Directors of each of the thirteen nominees
identified in this Proxy Statement and (2) the ratification of the selection
of KPMG Peat Marwick LLP as the Company's independent auditors for 1997.
Accordingly, the affirmative vote of MacAndrews & Forbes is sufficient,
without the concurring vote of any other stockholder of the Company, to
approve and adopt each of the proposals to be considered at the Annual
Meeting.
ELECTION OF DIRECTORS
The Board of Directors of the Company, pursuant to the By-laws of the
Company, has fixed the number of directors at thirteen. All of the Company's
thirteen directors will be elected at the Annual Meeting to serve until the
next succeeding Annual Meeting of the Company and until their successors are
elected and shall have qualified. All of the nominees are currently members
of the Board of Directors. All nominees, if elected, are expected to serve
until the next succeeding Annual Meeting. The proxies solicited hereby will
be voted FOR the election of the nominees listed herein.
The Board of Directors has been informed that all of the nominees are
willing to serve as directors, but if any of them should decline or be unable
to act as a director, the individuals named in the proxies will vote for the
election of such other person or persons as they, in their discretion, may
choose. The Board of Directors has no reason to believe that any such
nominees will be unable or unwilling to serve.
The election to the Board of Directors of each of the thirteen nominees
identified in this Proxy Statement will require the affirmative vote of a
plurality of the votes cast by the holders of shares of Common Stock present
in person or represented by proxy at the Annual Meeting and entitled to vote.
In tabulating the vote, abstentions and broker non-votes will be disregarded
and have no effect on the outcome of the vote.
2
<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE ELECTION TO THE BOARD OF DIRECTORS OF EACH OF THE THIRTEEN NOMINEES
IDENTIFIED BELOW.
NOMINEES FOR ELECTION AS DIRECTORS
The name, age, principal occupation for the last five years, selected
biographical information and period of service as a director of the Company
of each of the nominees for election as a director are set forth below.
Information regarding the nominees is as of February 24, 1997.
MR. PERELMAN (54) has been Chairman of the Executive Committee of the
Board of the Company and of the Company's wholly owned subsidiary Revlon
Consumer Products Corporation ("Products Corporation") since November 1995,
and a Director of the Company and of Products Corporation since their
respective formations in 1992. Mr. Perelman was Chairman of the Board of the
Company and of Products Corporation from their respective formations in 1992
until November 1995. Mr. Perelman has been Chairman of the Board and Chief
Executive Officer of MacAndrews Holdings and various of its affiliates for
more than the past five years. Mr. Perelman also is Chairman of the Board of
Andrews Group Incorporated ("Andrews Group"), Consolidated Cigar Holdings
Inc. ("Cigar Holdings"), Mafco Consolidated Group Inc. ("Mafco
Consolidated"), Meridian Sports Incorporated ("Meridian"), Power Control
Technologies, Inc. ("PCT") and Toy Biz, Inc. ("Toy Biz") and Chairman of the
Executive Committee of the Board of Marvel Entertainment Group, Inc.
("Marvel"). Mr. Perelman is a Director of the following corporations which
file reports pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"): Andrews Group, California Federal Bank, a Federal Savings
Bank ("Cal Fed"), The Coleman Company, Inc. ("Coleman"), Coleman Holdings
Inc. ("Coleman Holdings"), Coleman Worldwide Corporation ("Coleman
Worldwide"), Cigar Holdings, Consolidated Cigar Corporation ("Consolidated
Cigar"), First Nationwide (Parent) Holdings Inc. ("First Nationwide Parent"),
First Nationwide Holdings Inc. ("FN Holdings"), Mafco Consolidated, Marvel,
Marvel Holdings Inc. ("Marvel Holdings"), Marvel (Parent) Holdings Inc.
("Marvel Parent"), Marvel III Holdings Inc. ("Marvel III"), Meridian, PCT,
Pneumo Abex Corporation ("Pneumo Abex"), Products Corporation, Revlon
Worldwide and Toy Biz. On December 27, 1996, Marvel Holdings, Marvel Parent,
Marvel III, Marvel and several of its subsidiaries filed voluntary petitions
for reorganization under Chapter 11 of the United States Bankruptcy Code.
MR. LEVIN (52) has been Chairman of the Board of the Company and of
Products Corporation since November 1995 and a Director of the Company and of
Products Corporation since their respective formations in 1992. Mr. Levin was
Chief Executive Officer of the Company and of Products Corporation from their
respective formations in 1992 until January 1997 and President of the Company
and of Products Corporation from their respective formations in 1992 until
November 1995. He has been the President and a Director of Revlon Holdings
Inc. ("Holdings") since 1991 and Chief Executive Officer since March 1992.
Mr. Levin has been Executive Vice President of MacAndrews Holdings since
March 1989. Mr. Levin has been Chairman and Acting Chief Executive Officer of
Coleman since February 1997. For 15 years prior to joining MacAndrews
Holdings, he held various senior executive positions with The Pillsbury
Company. Mr. Levin is a Director of the following corporations which file
reports pursuant to the Exchange Act: Coleman, Coleman Holdings, Coleman
Worldwide, Ecolab, Inc., First Bank System, Inc., Meridian, Products
Corporation and Revlon Worldwide.
3
<PAGE>
MR. FELLOWS (54) has been President and Chief Executive Officer of the
Company and of Products Corporation since January 1997. He was President and
Chief Operating Officer of the Company and Products Corporation from November
1995 until January 1997 and has been a Director of the Company since November
1995 and a Director of Products Corporation since 1994. Mr. Fellows was
Senior Executive Vice President of the Company and of Products Corporation
and President and Chief Operating Officer of the Company's Consumer Group
from February 1993 until November 1995. From 1989 through January 1993, he
was a senior executive officer of Mennen Corporation and then
Colgate-Palmolive Company, which acquired Mennen Corporation in 1992. From
1986 to 1989 he was Senior Vice President of Holdings. Prior to 1986, he was
President of Holdings' Domestic Beauty Group.
MR. FOX (40) has been Senior Executive Vice President and Chief Financial
Officer of the Company and of Products Corporation since January 1997 and was
Executive Vice President and Chief Financial Officer of the Company and of
Products Corporation from their respective formations in 1992 until January
1997. Mr. Fox was elected as a Director of the Company in November 1995 and
of Products Corporation in September 1994. He has been Executive Vice
President and Chief Financial Officer of Holdings since November 1991 and
prior to such time had been a Vice President of Holdings since 1987. He has
been Senior Vice President of MacAndrews Holdings since August 1990. He was
Vice President of MacAndrews Holdings from February 1987 to August 1990 and
was Treasurer of MacAndrews Holdings from February 1987 to September 1992.
Prior to February 1987, he was Vice President and Assistant Treasurer of
MacAndrews Holdings. Mr. Fox joined MacAndrews & Forbes Group, Incorporated
in 1983 as Assistant Controller, prior to which time he was a certified
public accountant at the international auditing firm of Coopers & Lybrand.
Mr. Fox is a Director of The Hain Food Group, Inc., which files reports
pursuant to the Exchange Act.
MR. DRAPKIN (48) has been a Director of the Company and of Products
Corporation since their respective formations in 1992 and of Holdings since
January 1992. He has been Vice Chairman of MacAndrews Holdings and various of
its affiliates since March 1987. Mr. Drapkin was a partner in the law firm of
Skadden, Arps, Slate, Meagher & Flom for more than five years prior to March
1987. Mr. Drapkin is a Director of the following corporations which file
reports pursuant to the Exchange Act: Algos Pharmaceutical Corporation,
Andrews Group, Coleman, Coleman Holdings, Coleman Worldwide, Cigar Holdings,
Consolidated Cigar, Marvel, Marvel Holdings, Marvel Parent, Marvel III,
Products Corporation, Revlon Worldwide, Toy Biz, and VIMRx Pharmaceuticals
Inc. On December 27, 1996, Marvel Holdings, Marvel Parent, Marvel III, Marvel
and several of its subsidiaries filed voluntary petitions for reorganization
under Chapter 11 of the United States Bankruptcy Code.
PROFESSOR FELDBERG (54) has been a Director of the Company since February
1997. Professor Feldberg has been the Dean of Columbia Business School for
more than the past five years. Professor Feldberg is a Director of the
following corporations which file reports pursuant to the Exchange Act:
Federated Department Stores, Inc., Paine Webber Group, Inc. (certain funds)
and KIII Communications Corporation.
MR. GITTIS (62) has been a Director of the Company and of Products
Corporation since their respective formations in 1992 and of Holdings since
1985. He has been Vice Chairman of MacAndrews Holdings and various of its
affiliates for more than five years. Mr. Gittis is a Director of the
following corporations which file reports pursuant to the Exchange Act:
Andrews Group, Cal Fed, Cigar Holdings, Consolidated Cigar, FN Holdings,
First Nationwide Parent, Mafco Consolidated, PCT, Pneumo Abex, Products
Corporation, Revlon Worldwide, Jones Apparel Group, Inc., Loral Space &
Communications Ltd. and Rutherford-Moran Oil Corporation.
4
<PAGE>
DR. KISSINGER (73) has been a Director of the Company since June 1996. Dr.
Kissinger has been Chairman of the Board and Chief Executive Officer of
Kissinger Associates, Inc., an international consulting firm, since 1982. Dr.
Kissinger is an Advisor to the Board of Directors of American Express
Company, serves as Counselor to the Chase Manhattan Bank and is a member of
its International Advisory Committee. He is Chairman of the International
Advisory Board of American International Group, Inc. and is a Director of
Continental Grain Company, Hollinger International Inc. and Freeport-McMoran,
Inc., all of which file reports pursuant to the Exchange Act.
MR. JORDAN (61) has been a Director of the Company since June 1996. Mr.
Jordan is a Senior Partner in the Washington, D.C. law firm of Akin, Gump,
Strauss, Hauer & Feld, LLP where he has practiced law since 1982. He is a
Director of the following corporations which file reports pursuant to the
Exchange Act: American Express Company, Bankers Trust Company, Bankers Trust
New York Company, Corning Incorporated, Dow Jones & Company, Inc., J.C.
Penney Company, Inc., Ryder System, Inc., Sara Lee Corporation, Union Carbide
Corporation and Xerox Corporation. He is also trustee of the Ford Foundation
and Howard University.
MR. LANDAU (67) has been a Director of the Company since June 1996. Mr.
Landau has been a Senior Partner in the New York law firm of Lowenthal,
Landau, Fischer & Bring, P.C. for more than the past five years. He has been
a Director of Products Corporation since June 1992 and was a director of
Holdings from 1989 until April 1993. Mr. Landau is a director of Offitbank
Investment Fund, Inc., which files reports pursuant to the Exchange Act.
MS. ROBINSON (44) has been a Director of the Company since June 1996. Ms.
Robinson has been Chairman and Chief Executive Officer of Robinson Lerer &
Montgomery, LLC, a strategic communications consulting firm, since May 1996.
For more than five years prior to that she was Chairman and Chief Executive
Officer of Robinson Lerer Sawyer Miller Group, or its predecessors. Ms.
Robinson is a director of VIMRx Pharmaceuticals Inc., which files reports
pursuant to the Exchange Act, and is a trustee of New York University Medical
Center.
MR. SEMEL (53) has been a Director of the Company since June 1996. Mr.
Semel has been Chairman and Co-Executive Officer of the Warner Bros. Division
of Time Warner Entertainment LP ("Warner Brothers") since March 1994 and of
Warner Music Group since November 1995. For more than ten years prior to that
he was President of Warner Brothers or its predecessor Warner Bros. Inc.
MS. STEWART (55) has been a Director of the Company since June 1996. Ms.
Stewart is the Chairman of Martha Stewart Living Omnimedia LLC. She has been
an author, founder of the magazine Martha Stewart Living, creator of a
syndicated television series, a syndicated newspaper column and a catalog
company, and a lifestyle consultant and lecturer for more than the past five
years.
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors has an Executive Committee, an Audit Committee and
a Compensation and Stock Plan Committee (the "Compensation Committee").
The Executive Committee consists of Messrs. Perelman, Gittis, Levin and,
effective February 13, 1997, Mr. Fellows. The Executive Committee may
exercise all of the powers and authority of the Board, except as otherwise
provided under the Delaware General Corporation Law ("DGCL"). The Audit
Committee, consisting of Mr. Landau, Ms. Robinson and, effective February 13,
1997, Professor Feldberg,
5
<PAGE>
makes recommendations to the Board of Directors regarding the engagement of
the Company's independent auditors, reviews the plan, scope and results of
the audit, and reviews with the auditors and management the Company's
policies and procedures with respect to internal accounting and financial
controls, changes in accounting policy and the scope of the non-audit
services which may be performed by the Company's independent auditors, among
other things. The Audit Committee also monitors policies to prohibit
unethical, questionable or illegal activities by the Company's employees. The
Compensation Committee, consisting of Messrs. Gittis, Drapkin and, effective
June 5, 1996, Mr. Semel, makes recommendations to the Board of Directors
regarding compensation and incentive arrangements (including
performance-based arrangements) for the Chief Executive Officer, other
executive officers, and officers and other key managerial employees of the
Company. The Compensation Committee also considers and recommends awards of
stock options to purchase shares of Class A Common Stock pursuant to the
Revlon, Inc. 1996 Stock Plan (the "Stock Plan") and administers the Stock
Plan.
During 1996, the Board of Directors held six meetings (including two by
unanimous written consent), and the Executive Committee acted twice by
unanimous written consent. The Audit Committee held two meetings in 1996.
During 1996, the Compensation Committee acted five times by unanimous written
consent. During 1996, all Directors attended 75% or more of the meetings of
the Board of Directors and of the Committees of which they were members.
COMPENSATION OF DIRECTORS
Directors who currently are not receiving compensation as officers or
employees of the Company or any of its affiliates are paid an annual retainer
fee of $25,000, payable in monthly installments, and a fee of $1,000 for each
meeting of the Board of Directors or any committee thereof they attend.
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected, subject to ratification by the
stockholders, KPMG Peat Marwick LLP to audit the accounts of the Company for
the fiscal year ending December 31, 1997.
KPMG Peat Marwick LLP has audited the consolidated financial statements of
the Company and its predecessors for more than the past five years.
Representatives of KPMG Peat Marwick LLP will be present at the Annual
Meeting, will have the opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions.
The ratification of the selection of KPMG Peat Marwick LLP as the
Company's independent auditors for 1997 will require the affirmative vote of
the majority of the total number of votes of outstanding shares of Common
Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote. In determining whether the proposal has received the
requisite number of affirmative votes, abstentions and broker non-votes will
be counted and will have the same effect as a vote against the proposal. THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE SELECTION OF KPMG PEAT MARWICK LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR 1997.
6
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth certain information concerning each of the
executive officers of the Company as of February 24, 1997.
<TABLE>
<CAPTION>
NAME POSITION
- ----------------------- --------------------------------------------------------------
<C> <S>
Jerry W. Levin Chairman of the Board
George Fellows President and Chief Executive Officer
William J. Fox Senior Executive Vice President and Chief Financial Officer
Carlos Colomer Executive Vice President
Ronald H. Dunbar Senior Vice President
M. Katherine Dwyer Senior Vice President
Wade H. Nichols III Senior Vice President and General Counsel
</TABLE>
The following sets forth the age, positions held with the Company and
selected biographical information for the executive officers of the Company
who are not directors. Biographical information with respect to Messrs.
Levin, Fellows and Fox is set forth above under the caption "Nominees for
Election as Directors."
MR. COLOMER (52) has been Executive Vice President of the Company and of
Products Corporation since August 1993. Prior to August 1993, he served as
President and General Manager of various of the Company's and Holdings'
international subsidiaries. Mr. Colomer joined Holdings in 1979 when Henry
Colomer, S.A., the haircare and cosmetics company that was founded by his
father, was acquired by Holdings, and has held positions of increasing
responsibility since that date.
MR. DUNBAR (59) has been Senior Vice President, Human Resources of the
Company and of Products Corporation since their respective formations in
1992. He was elected Senior Vice President, Human Resources of Holdings in
July 1991. Mr. Dunbar was Vice President and General Manager of Arnold Menn
and Associates, a career management consulting and executive outplacement
firm, from 1989 to 1991 and Executive Vice President and Chief Human
Resources Officer of Ryder System, a highway transportation firm, from 1978
to 1989. Prior to that, Mr. Dunbar served in senior executive human resources
positions at Xerox Corporation and Ford Motor Company.
MS. DWYER (47) was elected as Senior Vice President of the Company and of
Products Corporation in December 1996. Prior to that she served in various
appointed officer positions for the Company and for Products Corporation,
including President of Products Corporation's United States Cosmetics Unit
from November 1995 to December 1996 and Executive Vice President and General
Manager of Products Corporation's Mass Cosmetics Unit from June 1993 to
November 1995. From 1991 to 1993, Ms. Dwyer was Executive Vice President and
General Manager for Victoria Creations. Prior to 1991, she served in various
senior positions for Avon Products Inc., Cosmair, Inc. and The Gillette
Company.
MR. NICHOLS (54) has been Senior Vice President and General Counsel of the
Company and of Products Corporation since their respective formations in
1992. He was elected Senior Vice President and General Counsel of Holdings in
March 1992. He was Vice President and Secretary of Holdings from 1984 to 1992
and Secretary from 1981 to 1984. He joined Holdings in 1978. Mr. Nichols has
been Vice President-Law of MacAndrews Holdings since 1988.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information for the years indicated
concerning the compensation awarded to, earned by or paid to the Chief
Executive Officer of the Company and the four most highly paid executive
officers, other than the Chief Executive Officer, who served as executive
officers of the Company as of December 31, 1996 (collectively, the "Named
Executive Officers"), for services rendered in all capacities to the Company
and its subsidiaries during such periods.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION (a) AWARDS
---------------------------------------- --------------
OTHER ANNUAL SECURITIES ALL OTHER
SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) OPTIONS ($)
- --------------------------- ------ ----------- ----------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Jerry W. Levin ............ 1996 1,500,000 1,500,000 93,801 170,000 307,213
Chairman of the Board (b) 1995 1,450,000 1,450,000 42,651 0 308,002
1994 1,300,000 1,300,000 39,184 0 540,177
George Fellows ............ 1996 1,025,000 870,000 15,242 120,000 4,500
President and Chief 1995 841,667 531,700 68,559 0 4,500
Executive Officer (c) 1994 745,833 449,200 11,625 0 104,500
William J. Fox ............ 1996 750,000 598,600 50,143 50,000 56,290
Senior Executive Vice 1995 660,000 455,000 54,731 0 56,290
President and Chief 1994 601,333 329,900 59,143 0 56,290
Financial Officer (d)
Carlos Colomer ............ 1996 700,000 192,600 -- 37,000 --
Executive Vice President 1995 600,000 135,200 -- 0 --
1994 550,000 280,200 -- 0 --
M. Katherine Dwyer ........ 1996 500,000 326,100 90,029 45,000 4,500
Senior Vice President (e)
</TABLE>
- ------------
(a) The amounts shown in Annual Compensation for 1996, 1995 and 1994
reflect salary, bonus and other annual compensation awarded to, earned
by or paid to the persons listed for services rendered to the Company
and its subsidiaries. The Company has a bonus plan (the "Executive
Bonus Plan") in which executives participate (including the Chief
Executive Officer and the other Named Executive Officers). The
Executive Bonus Plan provides for payment of cash compensation upon the
achievement of predetermined individual and corporate performance goals
during the calendar year.
(b) Mr. Levin was Chief Executive Officer of the Company during 1994, 1995
and 1996. The amount shown for Mr. Levin under Other Annual
Compensation for 1996 includes $26,400 in respect of personal use of a
Company-provided automobile and payments in respect of gross ups for
taxes on imputed income arising out of personal use of a
Company-provided automobile and for taxes on imputed income arising out
of premiums paid or reimbursed by the Company in respect of life
insurance. The amount shown for Mr. Levin under All Other Compensation
for 1996 reflects $302,713 in respect of life insurance premiums and
$4,500 in respect of
8
<PAGE>
matching contributions under the Revlon Employees' Savings and
Investment Plan (the "401(k) Plan"). The amount shown for Mr. Levin
under Other Annual Compensation for 1995 reflects payments in respect
of gross ups for taxes on imputed income arising out of personal use of
a Company-provided automobile and for taxes on imputed income arising
out of premiums paid or reimbursed by the Company in respect of life
insurance. The amount shown for Mr. Levin under All Other Compensation
for 1995 reflects $303,502 in respect of life insurance premiums and
$4,500 in respect of matching contributions under the 401(k) Plan. The
amount shown for Mr. Levin under Other Annual Compensation for 1994
reflects payments in respect of gross ups for taxes on imputed income
arising out of personal use of a Company-provided automobile and for
taxes on imputed income arising out of premiums paid or reimbursed by
the Company in respect of life insurance. The amounts shown for Mr.
Levin under All Other Compensation for 1994 reflect payments in respect
of life insurance premiums and certain relocation expenses and matching
contributions under the 401(k) Plan. In connection with such
relocation, the Company purchased for face value a $525,000 purchase
money note made by the purchaser of Mr. Levin's home secured by a
mortgage on such home.
(c) Mr. Fellows became Chief Executive Officer of the Company in January
1997. The amount shown for Mr. Fellows under Other Annual Compensation
for 1996 reflects payments in respect of gross ups for taxes on imputed
income arising out of personal use of a Company-provided automobile and
for taxes on imputed income arising out of premiums paid or reimbursed
by the Company in respect of life insurance. The amount shown for Mr.
Fellows under All Other Compensation for 1996 reflects matching
contributions under the 401(k) Plan. The amount shown for Mr. Fellows
under Other Annual Compensation for 1995 includes $43,251 in respect of
membership fees and related expenses for personal use of a health and
country club and $9,458 in respect of gross ups for taxes on imputed
income arising out of personal use of a Company-provided automobile.
The amount shown for Mr. Fellows under All Other Compensation for 1995
reflects matching contributions under the 401(k) Plan. The amount shown
for Mr. Fellows under Other Annual Compensation for 1994 reflects
payments in respect of gross ups for taxes on imputed income arising
out of personal use of a Company-provided automobile. The amounts shown
for Mr. Fellows under All Other Compensation for 1994 reflect matching
contributions under the 401(k) Plan and reimbursement for long-term
compensation and other benefits under plans of his prior employer,
which Mr. Fellows forfeited by accepting employment with the Company.
(d) Mr. Fox became Senior Executive Vice President of the Company in
January 1997. The amount shown for Mr. Fox under Other Annual
Compensation for 1996 reflects payments in respect of gross ups for
taxes on imputed income arising out of personal use of a
Company-provided automobile and for taxes on imputed income arising out
of premiums paid or reimbursed by the Company in respect of life
insurance. The amount shown for Mr. Fox under All Other Compensation
for 1996 reflects $51,790 in respect of life insurance premiums and
$4,500 in respect of matching contributions under the 401(k) Plan. The
amount shown for Mr. Fox under Other Annual Compensation for 1995
reflects payments in respect of gross ups for taxes on imputed income
arising out of personal use of a Company-provided automobile and for
taxes on imputed income arising out of premiums paid or reimbursed by
the Company in respect of life insurance. The amount shown for Mr. Fox
under All Other Compensation for 1995 reflects $51,790 in respect of
life insurance premiums and $4,500 in respect of matching contributions
under the 401(k) Plan. The amount shown for Mr. Fox under Other Annual
Compensation for 1994 reflects payments in respect of gross ups for
taxes on imputed income arising out of personal use of a
Company-provided automobile and for taxes on imputed income arising out
of premiums paid or reimbursed by the Company in respect of life
insurance for Mr. Fox. The amounts shown for Mr. Fox under All Other
Compensation for 1994 reflect payments in respect of life insurance
premiums and matching contributions under the 401(k) Plan.
(e) Ms. Dwyer became an executive officer of the Company on December 17,
1996. The amount shown for Ms. Dwyer under Other Annual Compensation
for 1996 reflects $57,264 in expense reimbursements and payments in
respect of gross ups for taxes on imputed income arising out of
personal use of a Company-provided automobile. The amount shown for Ms.
Dwyer under All Other Compensation for 1996 reflects matching
contributions under the 401(k) Plan.
9
<PAGE>
OPTION GRANTS IN THE LAST FISCAL YEAR
During 1996, the following grants of stock options were made pursuant to
the Stock Plan to the executive officers named in the Summary Compensation
Table:
<TABLE>
<CAPTION>
GRANT
DATE
INDIVIDUAL GRANTS (a) VALUE (b)
----------------------------------------------------------------- -----------
PERCENT OF
TOTAL
NUMBER OF OPTIONS GRANT
SECURITIES UNDERLYING GRANTED TO EXERCISE DATE
OPTIONS EMPLOYEES IN OF BASE EXPIRATION PRESENT
NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) DATE VALUE $
- -------------------------- --------------------- -------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Jerry W. Levin ............ 170,000 17% 24.00 2/28/06 1,885,079
Chairman (c)
George Fellows ............ 120,000 12% 24.00 2/28/06 1,330,644
President and Chief
Executive Officer (c)
William J. Fox ............ 50,000 5% 24.00 2/28/06 554,435
Senior Executive Vice
President and Chief
Financial Officer (c)
Carlos Colomer ............ 37,000 4% 24.00 2/28/06 410,282
Executive Vice President
M. Katherine Dwyer ........ 45,000 5% 24.00 2/28/06 498,992
Senior Vice President (c)
</TABLE>
- ------------
(a) Prior to the consummation of the Company's initial public offering in
March 1996 (the "Offering"), the Board of Directors made initial grants
under the Stock Plan of non-qualified options having a term of 10 years
to purchase shares of Class A Common Stock at an exercise price equal
to the initial public offering price. The grants to Messrs. Levin,
Fellows, Fox and Colomer and Ms. Dwyer will not vest as to any portion
until the third anniversary of the grant date and will thereupon become
100% vested, except that upon termination of employment by the Company
other than for "cause", death or "disability" under the applicable
employment agreement, such options will vest with respect to 50% of the
shares subject thereto (if the termination is between the second and
third anniversaries of the grant).
(b) Present values were calculated using the Black-Scholes option pricing
model. The model as applied used the grant date of February 29, 1996,
and the exercise price per share specified in the table above was equal
to the fair market value per share of Common Stock on the date of
grant. The model also assumes (i) risk-free rate of return of 5.99%,
which was the rate as of the grant date for the U.S. Treasury Zero
Coupon Bond issues with a remaining term similar to the expected term
of the options, (ii) stock price volatility of 31% based upon the peer
group average, (iii) a constant dividend rate of zero percent and (iv)
that the options normally would be exercised on the final day of their
seventh year after grant. No discount from the theoretical value was
taken to reflect the waiting period, if any, prior to vesting of the
stock options, the restrictions on the transfer of the stock options
and the likelihood that the stock options will be exercised in advance
of the final day of their term.
(c) Mr. Levin served as Chief Executive Officer during 1996. Mr. Fellows
was elected Chief Executive Officer in January 1997. Mr. Fox was
elected Senior Executive Vice President in January 1997. Ms. Dwyer
became an executive officer in December 1996.
10
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following chart shows the number of stock options exercised during
1996 and the 1996 year-end value of the stock options held by the executive
officers named in the Summary Compensation Table:
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED IN-THE-
NUMBER OF SECURITIES MONEY OPTIONS
UNDERLYING UNEXERCISED AT FISCAL YEAR-END
SHARES OPTIONS AT FISCAL EXERCISABLE/
ACQUIRED VALUE YEAR-END (#) UNEXERCISABLE (a)
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE ($)
- ---------------------------- --------------- ------------ ------------------------- -------------------
<S> <C> <C> <C> <C>
Jerry W. Levin .............. 0 0 0/170,000 0/998,750
Chairman (b)
George Fellows .............. 0 0 0/120,000 0/705,000
President and
Chief Executive
Officer (b)
William J. Fox .............. 0 0 0/ 50,000 0/293,750
Senior Executive Vice
President and
Chief Financial
Officer (b)
Carlos Colomer .............. 0 0 0/ 37,000 0/217,375
Executive Vice President
M. Katherine Dwyer .......... 0 0 0/ 45,000 0/264,375
Senior Vice President (b)
</TABLE>
- ------------
(a) Amounts shown represent the market value of the underlying shares of
Class A Common Stock at year-end calculated using the December 31, 1996
New York Stock Exchange (the "NYSE") closing price per share of Class A
Common Stock of $29.875 minus the exercise price of the stock option.
The actual value, if any, an executive may realize is dependent upon
the amount by which the market price of shares of Class A Common Stock
exceeds the exercise price per share when the stock options are
exercised. The actual value realized may be greater or less than the
value shown in the table.
(b) Mr. Levin served as Chief Executive Officer during 1996. Mr. Fellows
was elected Chief Executive Officer in January 1997. Mr. Fox was
elected Senior Executive Vice President in January 1997. Ms. Dwyer
became an executive officer in December 1996.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Each of the Named Executive Officers has entered into an executive
employment agreement with the Company's wholly owned subsidiary, Products
Corporation (except in the case of Mr. Colomer, who has entered into an
Executive Employment Agreement with a subsidiary of Products Corporation),
which became effective upon consummation of the Offering, providing for their
continued employment. Effective January 1, 1997, Mr. Fellows' Employment
Agreement was amended to provide that he will serve as the President and
Chief Executive Officer of the Company at a base salary of $1,250,000 for
1997; $1,350,000 for 1998; $1,450,000 for 1999; $1,550,000 for 2000 and
$1,700,000 for 2001. At any time after January 1, 2001, the Company may
terminate the term of Mr. Fellows' agreement by 12 months prior
11
<PAGE>
notice of non-renewal. The agreements for Messrs. Levin, Fox and Colomer and
Ms. Dwyer provide for base salary of not less than $1,500,000, $1,650,000,
and $1,800,000 during 1996, 1997 and 1998 and thereafter, respectively, in
the case of Mr. Levin, and $750,000, $700,000 and $500,000 (or any greater
amount to which such base salary amounts may be increased) in the case of
Messrs. Fox and Colomer and Ms. Dwyer, respectively, and further provide that
at any time on or after the second anniversary of the effective date of the
relevant agreement, the Company may terminate the term by 12 months prior
notice of non-renewal. All of the agreements provide for participation in the
Executive Bonus Plan, continuation of life insurance and executive medical
insurance coverage in the event of permanent disability, the provision of
post-retirement life insurance coverage in the amount of two times base
salary in certain circumstances, and participation in other executive benefit
plans on a basis equivalent to senior executives of the Company generally.
The agreements with Messrs. Fellows and Colomer and Ms. Dwyer provide for
Company-paid supplemental term life insurance during employment in the amount
of three times base salary, while the agreements with Messrs. Levin and Fox
provide that, in lieu of any participation in Company-paid pre-retirement
life insurance coverage, Products Corporation will pay premiums and gross ups
for taxes thereon in respect of, in the case of Mr. Levin, whole life
insurance policies on his life in the amount of $14,100,000 under a split
dollar arrangement pursuant to which Products Corporation would be repaid the
amount of premiums it paid up to the cash surrender value of the policies
from insurance proceeds payable under the policies and, in the case of Mr.
Fox, a whole life insurance policy on his life in the amount of $5,000,000
under an arrangement providing for all insurance proceeds to be paid to the
designated beneficiary under such policy. The agreements also require that
management recommend to the Compensation Committee that Messrs. Levin,
Fellows, Fox and Colomer and Ms. Dwyer be granted options to purchase
170,000, 170,000, 50,000, 37,000, and 45,000 (in the first year and 30,000
thereafter) shares of Class A Common Stock, respectively, each year during
the term of the relevant executive employment agreement. The agreements
provide that in the event of termination of the term of the relevant
executive employment agreement by Products Corporation otherwise than for
"good reason" as defined in the Executive Severance Policy or failure of the
Compensation Committee to adopt and implement the recommendations of
management with respect to stock option grants, the executive would be
entitled to severance pursuant to the Executive Severance Policy as in effect
on January 1, 1996 (see "--Executive Severance Policy"). In addition, the
employment agreement with Mr. Fellows provides that if he remains
continuously employed by Products Corporation or its affiliates until age 60,
then upon any subsequent retirement he will be entitled to a supplemental
pension benefit in a sufficient amount so that his annual pension benefit
from all qualified and non-qualified pension plans of Products Corporation
and its affiliates (expressed as a straight life annuity) equals $500,000.
Upon any earlier retirement with Products Corporation's consent or any
earlier termination of employment by Products Corporation otherwise than for
"good reason" (as defined in the Executive Severance Policy), Mr. Fellows
will be entitled to a reduced annual payment in an amount equal to the
product of multiplying $28,540 by the number of anniversaries, as of the date
of retirement or termination, of Mr. Fellows' fifty-third birthday (but in no
event more than would have been payable to Mr. Fellows under the foregoing
provision had he retired at age 60). In each case, Products Corporation
reserves the right to treat Mr. Fellows as having deferred payment of pension
for purposes of computing such supplemental payments.
As of December 31, 1996, 1995, and 1994, Mr. Colomer had a loan
outstanding from the Company's subsidiary in Spain in the amount of 25.0
million Spanish pesetas (approximately $205,000 U.S. dollar equivalent as of
December 31, 1996) dating from 1991 pursuant to a management retention
program
12
<PAGE>
grandfathered under a 1992 change in the Spanish tax law which currently
covers certain executives of such subsidiary, including Mr. Colomer. Pursuant
to this management retention program, outstanding loans do not bear interest
but an amount equal to the one-year government bond interest rate in effect
at the beginning of the year is deducted from the executives' annual
compensation, and loans must be repaid in full upon termination of
employment. The amount deducted from Mr. Colomer's compensation was 2.15
million Spanish pesetas (approximately $16,988 U.S. dollar equivalent as of
December 31, 1996) for 1996; 2.25 million Spanish pesetas (approximately
$18,097 U.S. dollar equivalent as of December 31, 1995) for 1995 and 2.25
million Spanish pesetas (approximately $17,094 U.S. dollar equivalent as of
December 31, 1994) for 1994.
EXECUTIVE SEVERANCE POLICY
Products Corporation's Executive Severance Policy, as amended effective
January 1, 1996, provides that upon termination of employment of eligible
executive employees, including the Named Executive Officers, other than
voluntary resignation, retirement or termination by Products Corporation for
good reason, in consideration for the execution of a release and
confidentiality agreement and the Company's standard Employee Agreement as to
Confidentiality and Non-Competition (the "Non-Competition Agreement"), the
eligible executive will be entitled to receive, in lieu of severance under
any employment agreement then in effect or under Products Corporation's basic
severance plan, a number of months of severance pay in semi-monthly
installments based upon such executive's grade level and years of service
reduced by the amount of any compensation from subsequent employment,
unemployment compensation or statutory termination payments received by such
executive during the severance period, and, in certain circumstances, by the
actuarial value of enhanced pension benefits received by the executive as
well as continued participation in medical and certain other benefit plans
for the severance period (or in lieu thereof, upon commencement of subsequent
employment, a lump sum payment equal to the then present value of 50% of the
amount of base salary then remaining payable through the balance of the
severance period, not to exceed six months' base salary). Pursuant to the
Executive Severance Policy, upon meeting the conditions set forth therein,
Messrs. Levin, Fellows, Colomer and Fox and Ms. Dwyer would be entitled to
severance pay equal to two years of base salary at the rate in effect on the
date of employment termination plus continued participation in the medical
and dental plans for two years on the same terms as active employees.
13
<PAGE>
DEFINED BENEFIT PLANS
The following table shows the estimated annual retirement benefits payable
(as of December 31, 1996) at normal retirement age (65) to a person retiring
with the indicated average compensation and years of credited service, on a
straight life annuity basis, after Social Security offset, under the Revlon
Employees' Retirement Plan (the "Retirement Plan"), including amounts
attributable to the Pension Equalization Plan, each as described below:
<TABLE>
<CAPTION>
HIGHEST CONSECUTIVE ESTIMATED ANNUAL STRAIGHT LIFE BENEFITS AT RETIREMENT
FIVE-YEAR AVERAGE WITH INDICATED YEARS OF CREDITED SERVICE (a)
COMPENSATION -----------------------------------------------------------
DURING FINAL TEN YEARS 15 20 25 30 35
- ---------------------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
600,000 $152,022 $202,696 $253,370 $304,044 $304,044
700,000 178,022 237,363 296,703 356,044 356,044
800,000 204,022 272,029 340,037 408,044 408,044
900,000 230,022 306,696 383,370 460,044 460,044
1,000,000 256,022 341,363 426,703 500,000 500,000
1,100,000 282,022 376,029 470,037 500,000 500,000
1,200,000 308,022 410,696 500,000 500,000 500,000
1,300,000 334,022 445,363 500,000 500,000 500,000
1,400,000 360,022 480,029 500,000 500,000 500,000
1,500,000 386,022 500,000 500,000 500,000 500,000
2,000,000 500,000 500,000 500,000 500,000 500,000
2,500,000 500,000 500,000 500,000 500,000 500,000
</TABLE>
- ------------
(a) The normal form of benefit for the Retirement Plan and the Pension
Equalization Plan is a life annuity.
The Retirement Plan is intended to be a tax qualified defined benefit
plan. Retirement Plan benefits are a function of service and final average
compensation. The Retirement Plan is designed to provide an employee having
30 years of credited service with an annuity generally equal to 52% of final
average compensation, less 50% of estimated individual Social Security
benefits. Final average compensation is defined as average annual base salary
and bonus (but not any part of bonuses in excess of 50% of base salary)
during the five consecutive calendar years in which base salary and bonus
(but not any part of bonuses in excess of 50% of base salary) were highest
out of the last 10 years prior to retirement or earlier termination. Except
as otherwise indicated, credited service only includes all periods of
employment with the Company or a subsidiary prior to retirement. The base
salaries and bonuses of each of the Named Executive Officers are set forth in
the Summary Compensation Table under columns entitled "Salary" and "Bonus,"
respectively.
The Employee Retirement Income Security Act of 1974, as amended, places
certain maximum limitations upon the annual benefit payable under all
qualified plans of an employer to any one individual. In addition, the
Omnibus Budget Reconciliation Act of 1993 limits the annual amount of
compensation that can be considered in determining the level of benefits
under qualified plans. The Pension Equalization Plan, as amended effective
January 1, 1996, is a non-qualified benefit arrangement designed to provide
for the payment by the Company of the difference, if any, between the amount
of such maximum limitations and the annual benefit that would be payable
under the Retirement Plan but for
14
<PAGE>
such limitations, up to a combined maximum annual straight life annuity
benefit at age 65 under the Retirement Plan and the Pension Equalization Plan
of $500,000. Benefits provided under the Pension Equalization Plan are
conditioned on the participant's compliance with his or her Non-Competition
Agreement and, in any case, on the participant not competing with Products
Corporation for one year after termination of employment.
The number of years of credited service under the Retirement Plan and the
Pension Equalization Plan as of January 1, 1997 for Mr. Levin is seven years
(which includes credit for service with MacAndrews Holdings), for Mr. Fellows
is eight years (which includes credit for prior service with Holdings), for
Mr. Fox is 13 years (which includes credit for service with MacAndrews
Holdings) and for Ms. Dwyer is three years. Mr. Colomer does not participate
in the Retirement Plan or the Pension Equalization Plan. Mr. Colomer
participates in the Revlon Foreign Service Employees Pension Plan (the
"Foreign Pension Plan"). The Foreign Pension Plan is a non-qualified defined
benefit plan. The plan is designed to provide an employee with 2% of final
average salary for each year of credited service, up to a maximum of 30
years, reduced by the sum of all other Company provided retirement benefits
and social security or other government provided retirement benefits.
Credited service includes all periods of employment with the Company or a
subsidiary prior to retirement. Final average salary is defined as average
annual base salary during the five consecutive calendar years in which base
salary was highest out of the last 10 years prior to retirement. The normal
form of payment under the Foreign Pension Plan is a life annuity. Mr.
Colomer's credited service as of January 1, 1997 under the Foreign Pension
Plan is 17 years (which includes credit for service with Holdings).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee (made up of Mr. Gittis and Mr. Drapkin and from
and after June 6, 1996 Mr. Semel) determined compensation of Executive
Officers of the Company from and after the Offering.
The Company has used an airplane which was owned by a corporation of which
Messrs. Gittis, Drapkin and Levin were the sole stockholders. As of December
31, 1996, Mr. Levin no longer holds an ownership interest in the corporation
that owns the airplane. See "Certain Relationships and Related
Transactions--Other".
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is submitted by the Compensation Committee of the Company's
Board of Directors, which consists of three members. Messrs. Gittis and
Drapkin have been members of the Compensation Committee since February 22,
1996. Mr. Semel was elected to the Compensation Committee on June 6, 1996.
Pursuant to the rules promulgated under the Exchange Act, set forth below
is the report of the Compensation Committee regarding its compensation
policies for 1996 for the Company's executive officers, including the Chief
Executive Officer. The key elements of compensation used by the Company are
base salary and performance-based incentives, including annual cash bonuses
and stock options. This report discusses the Company's practices regarding
each of these elements as applied to the executive officers generally and
concludes with a separate discussion of Mr. Levin's compensation in
particular.
15
<PAGE>
The Company's executive compensation practices are designed to support its
business goals of fostering profitable growth and increasing stockholder
value. The Company seeks to align the interests of executives and
stockholders through the use of a performance-based cash bonus plan and a
stock-based compensation plan. In addition, the Company's policy is to pay
for performance; that is, the better the individual, team, business unit
and/or global performance against established goals and objectives, the
greater the compensation reward. Finally, the Company's compensation package
is designed to be competitive with the compensation practices of other
leading consumer products companies.
In addition to Company sources, the Committee retains the services of
independent compensation consultants to help it assess the competitiveness
and effectiveness of the Company's executive compensation practices in
general and for the Chief Executive Officer in particular. In 1996, the
Committee consulted with KPMG Peat Marwick LLP ("KPMG") in its review of, and
in developing modifications to, existing executive officer compensation
plans. In 1996, KPMG conducted a comprehensive review of the Company's
long-term compensation program, including the appropriateness of the
performance measures, payout levels relative to performance and the
competitiveness of the plan design features.
BASE SALARY
The Company's practice is to pay salaries that reflect the executive's
position in the Company and his or her contributions as determined by the
Compensation Committee and that are competitive with a comparison group of
other leading consumer products companies and certain other companies outside
of the consumer products field (the "Comparison Group"). While the Comparison
Group is comprised primarily of consumer products companies, companies
outside of the consumer products field are also included because the Company
believes, and the Compensation Committee concurs, that the market for
executive talent is broader than simply other consumer products companies.
The peer group used in the Performance Graph on page 16 is composed solely of
companies with which the Company competes in its primary business.
The policy is to target the salary range for executive officers at a level
which is competitive with the Comparison Group, with salaries above that
level available to exceptional performers and key contributors to the success
of the Company. The annual salaries of Messrs. Levin, Fellows, Fox and
Colomer and of Ms. Dwyer, established in their respective employment
agreements, are based upon this policy. Annual salary adjustments are based
on individual performance, assumption of new responsibilities, competitive
data from the Comparison Group and the Company's overall annual salary budget
guidelines. If an executive officer is responsible for a particular business
unit, such unit's financial results are taken into account. In the case of
Messrs. Levin and Fellows, annual salary adjustments are specified in their
respective employment agreements.
ANNUAL CASH BONUS
EXECUTIVE BONUS PLAN
The Company has a bonus plan (the "Executive Bonus Plan") in which
executives participate (including the Chief Executive Officer and the other
Named Executive Officers). The Executive Bonus Plan provides for payment of
cash compensation upon the achievement of predetermined individual and
corporate performance goals during the calendar year. Eligibility for awards
under the Executive Bonus Plan is conditioned upon the executive having
executed the Non-Competition Agreement. The awards
16
<PAGE>
granted to the Chief Executive Officer and the other Named Executive Officers
are based upon the achievement of pre-established performance goals
established by the Compensation Committee based upon operating income,
operating cash flow and, in certain cases, asset management. The maximum
award payable to any participant with respect to any bonus year is
$2,000,000.
Bonuses for executive officers for 1996 were determined by a formula based
on the financial performance of the Company as a whole in the case of Messrs.
Levin and Mr. Fox; of the Company as a whole and the business units to which
they were assigned in the case of Messrs. Fellows and Colomer and of the
business units to which she was assigned in the case of Ms. Dwyer, in each
case against specific pre-established performance goals. The Company-wide
financial performance measures were operating income and cash flow. The
business unit financial measures were operating income and asset management.
During 1996, the Company achieved its operating income and cash flow targets,
and the business units for which Mr. Fellows and Ms. Dwyer were responsible
exceeded their targets.
LONG-TERM PERFORMANCE-BASED INCENTIVES
The Company's principal compensation vehicle for encouraging long-term
growth and performance is the grant of stock options granted under the Stock
Plan.
THE 1996 STOCK PLAN
Under the Stock Plan, stock options generally are granted annually to
executive officers. Guidelines for the size of stock option awards are
developed based on factors similar to those used to determine salary and
bonus, including the executive's position in the Company and his or her
contributions as determined by the Compensation Committee and a review of the
practices of the Comparison Group. Since the Company, with the concurrence of
the Compensation Committee, views the granting of stock options as a way to
obtain competitive compensation advantage, it is the Company's policy to
target award levels so that, when taken together with salary and cash bonus,
total compensation would be competitive with the Comparison Group. Actual
grants may vary from target levels based on individual performance, business
unit performance or the assumption of increased responsibilities. In the
event of poor corporate performance, the Compensation Committee may decide
not to grant annual stock options.
In February 1996, the Compensation Committee made initial grants under the
Stock Plan of non-qualified options having a term of 10 years to purchase
shares of Class A Common Stock at an exercise price equal to the initial
public offering price ($24.00), of which options to purchase 170,000,
120,000, 50,000, 37,000 and 45,000 shares of Class A Common Stock were
granted to Messrs. Levin, Fellows, Fox and Colomer and Ms. Dwyer,
respectively. The grants to Messrs. Levin, Fellows, Fox and Colomer, Ms.
Dwyer and one other grantee do not vest as to any portion until the third
anniversary of the grant date and will thereupon become 100% vested, except
that upon termination of employment by the Company other than for "cause",
death or "disability" under the applicable employment agreement, such options
will vest with respect to 50% of the shares subject thereto (if the
termination is between the second and third anniversaries of the grant). All
other initial grants to executive officers and employees will vest 25% each
year beginning on the first anniversary of the date of grant and will become
100% vested on the fourth anniversary of the date of grant. This approach is
designed to motivate the creation of stockholder value over the long term
since the full benefit of the stock option grant cannot be realized unless
stock price appreciation occurs over a number of years.
17
<PAGE>
1996 CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee reviewed and recommended the overall
compensation of Jerry W. Levin, who is currently the Chairman and who during
1996 served as the Chief Executive Officer of the Company. In setting Mr.
Levin's 1996 base salary in his employment agreement, the Compensation
Committee considered the Company's success during Mr. Levin's tenure as Chief
Executive Officer, the successful initial public offering, his individual
performance and contributions to the continuing success and increased value
of the Company and a comparison of base salaries of other chief executive
officers in the Comparison Group.
As discussed above in the Annual Cash Bonus section, Mr. Levin's annual
bonus for 1996 is payable based upon the successful attainment of specific
performance measures established in advance by the Compensation Committee.
During 1996, the pre-established performance measures were attained.
Accordingly, Mr. Levin was awarded a cash bonus equal to the target amount
established for the year.
The stock option grant for Mr. Levin was specified in his Employment
Agreement and, as with base salary and bonus eligibility, was determined by
the Compensation Committee with reference to Mr. Levin's position in the
Company, his contribution to the Company's success, the Company's successful
initial public offering, his individual performance, his contributions to the
continuing success and increased value of the Company and the practices of
the Comparison Group. The Compensation Committee's intent was to condition a
meaningful portion of Mr. Levin's total compensation upon Company performance
and stockholder value and to serve as a means to retain Mr. Levin.
Section 162(m) of the Internal Revenue Code of 1986 (as amended) (the
"Code") generally disallows a publicly held corporation a deduction for
compensation in excess of $1 million per year paid to the chief executive
officer (the "CEO") or any of the four most highly compensated executive
officers of the Company (other than the CEO) (the "Covered Officers"). Based
upon a special transition rule contained in the Treasury regulations for
private corporations that complete an initial public offering, the Company
intends, to the fullest extent possible under such regulations, to treat
payments made to Covered Officers until the Annual Meeting of Stockholders of
the Company held in the year 2000 as not subject to the deduction limitations
of Section 162(m) of the Code. Nevertheless, the Compensation Committee will
maintain the discretion to authorize payments that do not qualify for an
exception to the deduction limitation if the Compensation Committee believes
it is necessary or appropriate under the circumstances.
In summary, the Compensation Committee believes that executive performance
significantly influences Company performance and, therefore, the Compensation
Committee's approach to executive compensation has been guided by the
principle that executives should have the potential for increased earnings
when performance objectives are exceeded, provided there is appropriate
downside risk if performance targets are not met.
Compensation and Stock Plan Committee
Howard Gittis (Chairman)
Donald Drapkin
Terry Semel
18
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
shares of Class A Common Stock with that of the S&P 500 Index, the S&P Health
Care Index, the S&P Household Products Index and the S&P Cosmetics Index. The
comparison for each of the periods presented assumes that $100 was invested
on February 29, 1996 (the date the Class A Common Stock was priced in
connection with the Company's initial public offering), in shares of Class A
Common Stock and the stocks included in the relevant index and that all
dividends are reinvested. These indexes, which reflect formulas for dividend
reinvestment and weighting of individual stocks, do not necessarily reflect
returns that could be achieved by individual investors.
[GRAPHIC OMITTED - TABLE BELOW REPRESENTS GRAPH DATA]
<TABLE>
<CAPTION>
MARCH 5, 1996 DEC. 31, 1996
--------------- ---------------
<S> <C> <C>
Revlon, Inc. Class A Common Stock $100 $124.48
S&P 500 Index ..................... 100 117.82
S&P Health Care Index ............. 100 121.38
S&P Household Products Index ..... 100 129.56
S&P Cosmetics Index ............... 100 136.60
</TABLE>
19
<PAGE>
OWNERSHIP OF COMMON STOCK
The following table sets forth as of February 24, 1996, the number of
shares of Common Stock beneficially owned, and the percent so owned, by (i)
each person known to the Company to be the beneficial owner of more than 5%
of the outstanding shares of Common Stock, (ii) each director and nominee for
director of the Company, (iii) the chief executive officer during 1996 and
each of the other Named Executive Officers during 1996 and (iv) all directors
and executive officers of the Company as a group. The number of shares owned
are those beneficially owned, as determined under the rules of the Securities
and Exchange Commission (the "SEC"), and such information is not necessarily
indicative of beneficial ownership for any other purpose. Under such rules,
beneficial ownership includes any shares of Common Stock as to which a person
has sole or shared voting power or investment power and any shares of Common
Stock which the person has the right to acquire within 60 days through the
exercise of any option, warrant or right, through conversion of any security
or pursuant to the automatic termination of a power of attorney or revocation
of a trust, discretionary account or similar arrangement.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ---------------------------------------------------------- ---------------------------- --------------------
<S> <C> <C>
Ronald O. Perelman ....................................... 11,250,000 (Class A) (1) 56.6%
35 E. 62nd St. 31,250,000 (Class B) (1) 100%
New York, NY 10021
Carlos Colomer ............................................ 0
Donald Drapkin ............................................ 12,000 (Class A) (2) *
M. Katherine Dwyer ........................................ 3,000 (Class A) *
Meyer Feldberg ............................................ 0
George Fellows ............................................ 10,000 (Class A) *
William J. Fox ............................................ 10,000 (Class A) (3) *
Howard Gittis ............................................. 15,000 (Class A) *
Vernon E. Jordan .......................................... 0
Henry A. Kissinger ........................................ 0 *
Edward J. Landau .......................................... 0
Jerry W. Levin ............................................ 26,000 (Class A) (4) *
Linda Gosden Robinson ..................................... 0 *
Terry Semel ............................................... 5,000 (Class A) (5) *
Martha Stewart ............................................ 0
Wellington Management Company, LLP ........................ 1,352,300 (Class A) (6) 6.8%
All Directors and Nominees and Executive Officers as a
Group (18 Persons) (7) ................................... 11,352,250 (Class A) 57.1%
31,250,000 (Class B) 100%
</TABLE>
- ------------
* Less than one percent
(1) Mr. Perelman through Mafco Holdings (which through Revlon Worldwide)
beneficially owns 11,250,000 shares of Class A Common Stock
(representing 56.6% of the outstanding shares of Class A Common Stock)
and all of the outstanding 31,250,000 shares of Class B Common Stock,
which together represent 83.1% of the outstanding shares of Common
Stock and has approximately 97.4% of the combined voting power of the
outstanding shares of Common Stock. All of the shares of Common Stock
owned by Revlon Worldwide are
20
<PAGE>
pledged by Revlon Worldwide to secure its obligations under certain
indebtedness, and shares of intermediate holding companies are or may
from time to time be pledged to secure obligations of Mafco Holdings or
its affiliates.
(2) All of such shares are held by trusts for Mr. Drapkin's children and
beneficial ownership is disclaimed.
(3) Includes 5,800 shares owned by Mr. Fox's wife and 4,200 shares owned
by his children as to which beneficial ownership is disclaimed.
(4) Includes 1,000 shares owned by Mr. Levin's daughter as to which
beneficial ownership is disclaimed.
(5) Includes 2,000 shares owned by Mr. Semel's children as to which
beneficial ownership is disclaimed.
(6) Based upon a Schedule 13G filed by Wellington Management Company, LLP
and provided to the Company in February 1997, Wellington Management has
shared voting power as to 912,000 shares and shared dispositive power
as to all 1,352,300 shares.
(7) Includes 16,500 shares owned by executive officers not listed in the
table as to which beneficial ownership is disclaimed for 2,350 shares.
Also includes 4,750 shares which may be acquired under options which
vest on February 28, 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Through Revlon Worldwide, MacAndrews & Forbes beneficially owns shares of
Common Stock having approximately 97.4% of the combined voting power of the
outstanding shares of Common Stock. As a result, MacAndrews & Forbes is able
to elect the entire Board of Directors of the Company and control the vote on
all matters submitted to a vote of the Company's stockholders. MacAndrews &
Forbes is wholly owned by Ronald O. Perelman, who is Chairman of the
Executive Committee of the Board and a Director of the Company.
TRANSFER AGREEMENTS
In June 1992, the Company and Products Corporation entered into an asset
transfer agreement with Holdings and certain of its wholly owned subsidiaries
(the "Asset Transfer Agreement"), and the Company and Products Corporation
entered into a real property asset transfer agreement with Holdings (the
"Real Property Transfer Agreement" and, together with the Asset Transfer
Agreement, the "Transfer Agreements"), and pursuant to such agreements on
June 24, 1992, Holdings transferred assets to Products Corporation and
Products Corporation assumed all the liabilities of Holdings, other than
certain specifically excluded assets and liabilities (the liabilities
excluded are referred to as the "Excluded Liabilities"). Holdings retained
certain small brands that historically had not been profitable ("Retained
Brands"). Holdings agreed to indemnify the Company and Products Corporation
against losses arising from the Excluded Liabilities, and the Company and
Products Corporation agreed to indemnify Holdings against losses arising from
the liabilities assumed by Products Corporation. The amounts reimbursed by
Holdings to Products Corporation for the Excluded Liabilities for 1996 was
$1.4 million.
BENEFIT PLANS ASSUMPTION AGREEMENT
Holdings, Products Corporation and the Company entered into a benefit
plans assumption agreement dated as of July 1, 1992 pursuant to which
Products Corporation assumed all rights, liabilities and obligations under
all of Holdings' benefit plans, arrangements and agreements, including
obligations under the Revlon Employees' Retirement Plan and the Revlon
Employees' Savings and Investment Plan. Products Corporation was substituted
for Holdings as sponsor of all such plans theretofore sponsored by Holdings.
21
<PAGE>
OPERATING SERVICES AGREEMENT
In June 1992, the Company, Products Corporation and Holdings entered into
an operating services agreement (as amended and restated, and as subsequently
amended, the "Operating Services Agreement") pursuant to which Products
Corporation manufactures, markets, distributes, warehouses and administers,
including the collection of accounts receivable, the Retained Brands for
Holdings. Pursuant to the Operating Services Agreement, Products Corporation
is reimbursed an amount equal to all of its and the Company's direct and
indirect costs incurred in connection with furnishing such services, net of
the amounts collected by Products Corporation with respect to the Retained
Brands, payable quarterly. The net amount reimbursed by Holdings to the
Company for such direct and indirect costs for 1996 was $5.1 million.
Holdings also pays Products Corporation a fee equal to 5% of the net sales of
the Retained Brands, payable quarterly. The fees paid by Holdings to Products
Corporation pursuant to the Operating Services Agreement for services with
respect to the Retained Brands for 1996 was approximately $.6 million.
REIMBURSEMENT AGREEMENTS
The Company, Products Corporation and MacAndrews Holdings have entered
into reimbursement agreements (the "Reimbursement Agreements") pursuant to
which (i) MacAndrews Holdings is obligated to provide certain professional
and administrative services, including employees, to the Company and its
subsidiaries, including Products Corporation, and purchase services from
third party providers, such as insurance and legal and accounting services,
on behalf of the Company and its subsidiaries, including Products
Corporation, to the extent requested by Products Corporation, and (ii)
Products Corporation is obligated to provide certain professional and
administrative services, including employees, to MacAndrews Holdings and
purchase services from third party providers, such as insurance and legal and
accounting services, on behalf of MacAndrews Holdings to the extent requested
by MacAndrews Holdings, provided that in each case the performance of such
services does not cause an unreasonable burden to MacAndrews Holdings or
Products Corporation, as the case may be. The Company reimburses MacAndrews
Holdings for the allocable costs of the services purchased for or provided to
the Company and for reasonable out-of-pocket expenses incurred in connection
with the provision of such services. MacAndrews Holdings reimburses the
Company for the allocable costs of the services purchased for or provided to
MacAndrews Holdings and for the reasonable out-of-pocket expenses incurred in
connection with the purchase or provision of such services. In addition, in
connection with certain insurance coverage provided by MacAndrews Holdings,
Products Corporation obtained letters of credit under the standby letter of
credit facility (which aggregated approximately $26.4 million as of December
31, 1996) to support certain self-funded risks of MacAndrews Holdings and its
affiliates, including the Company, associated with such insurance coverage.
The costs of such letters of credit are allocated among, and paid by, the
affiliates of MacAndrews Holdings, including the Company, which participate
in the insurance coverage to which the letters of credit relate. The Company
expects that these self-funded risks will be paid in the ordinary course and,
therefore, it is unlikely that such letters of credit will be drawn upon.
MacAndrews Holdings has agreed to indemnify the Company to the extent amounts
are drawn under any of such letters of credit with respect to claims for
which the Company is not responsible. The net amount reimbursed by MacAndrews
Holdings to the Company for the services provided under the Reimbursement
Agreements for 1996 was $2.2 million. Each of the Company and Products
Corporation, on the one hand, and MacAndrews Holdings, on the other, has
agreed to
22
<PAGE>
indemnify the other party for losses arising out of the provision of services
by it under the Reimbursement Agreements other than losses resulting from its
willful misconduct or gross negligence. The Reimbursement Agreements may be
terminated by either party on 90 days' notice. The Company does not intend to
request services under the Reimbursement Agreements unless their costs would
be at least as favorable to the Company as could be obtained from
unaffiliated third parties.
TAX SHARING AGREEMENT
The Company, for federal income tax purposes, is included in the
affiliated group of which Mafco Holdings is the common parent, and the
Company's federal taxable income and loss is included in such group's
consolidated tax return filed by Mafco Holdings. The Company also may be
included in certain state and local tax returns of Mafco Holdings or its
subsidiaries. In June 1992, Holdings, the Company and certain of its
subsidiaries, and Mafco Holdings entered into a tax sharing agreement (as
subsequently amended, the "Tax Sharing Agreement"), pursuant to which Mafco
Holdings has agreed to indemnify the Company against federal, state or local
income tax liabilities of the consolidated or combined group of which Mafco
Holdings (or a subsidiary of Mafco Holdings other than the Company or its
subsidiaries) is the common parent for taxable periods beginning on or after
January 1, 1992 during which the Company or a subsidiary of the Company is a
member of such group. Pursuant to the Tax Sharing Agreement, for all taxable
periods beginning on or after January 1, 1992, the Company will pay to
Holdings amounts equal to the taxes that the Company would otherwise have to
pay if it were to file separate federal, state or local income tax returns
(including any amounts determined to be due as a result of a redetermination
arising from an audit or otherwise of the consolidated or combined tax
liability relating to any such period which is attributable to the Company),
except that the Company will not be entitled to carry back any losses to
taxable periods ending prior to January 1, 1992. No payments are required by
the Company if and to the extent Products Corporation is prohibited under the
Credit Agreement from making cash tax sharing payments to the Company. The
Credit Agreement prohibits Products Corporation from making such cash tax
sharing payments other than in respect of state and local income taxes. Since
the payments to be made by the Company under the Tax Sharing Agreement will
be determined by the amount of taxes that the Company would otherwise have to
pay if it were to file separate federal, state or local income tax returns,
the Tax Sharing Agreement will benefit Mafco Holdings to the extent Mafco
Holdings can offset the taxable income generated by the Company against
losses and tax credits generated by Mafco Holdings and its other
subsidiaries. There were no cash payments by the Company pursuant to the Tax
Sharing Agreement for 1996.
FINANCING REIMBURSEMENT AGREEMENT
Holdings and Products Corporation entered into a financing reimbursement
agreement (the "Financing Reimbursement Agreement") in 1992 pursuant to which
Holdings agreed to reimburse Products Corporation for Holdings' allocable
portion of (i) the debt issuance cost and advisory fees related to the
capital restructuring of Holdings, and (ii) interest expense attributable to
the higher cost of funds paid by Products Corporation under the credit
agreement in effect at that time as a result of additional borrowings for the
benefit of Holdings in connection with the assumption of certain liabilities
by Products Corporation under the Asset Transfer Agreement and the repurchase
of Old Senior Subordinated Notes from affiliates. In February 1995, the
Financing Reimbursement Agreement was amended and extended to provide that
Holdings would reimburse Products Corporation for a portion of
23
<PAGE>
the debt issuance costs and advisory fees related to a former credit
agreement and 1 1/2% per annum of the average balance outstanding under the
former credit agreement and the average balance outstanding under working
capital borrowings from affiliates through June 30, 1996 and such amounts
were evidenced by a noninterest-bearing promissory note payable on June 30,
1996. In June 1996, $10.9 million in notes due to Products Corporation from
Holdings, which included $2.0 million of interest reimbursement in 1996,
under the Financing Reimbursement Agreement was offset against a $11.7
million demand note payable by Products Corporation to Holdings. The
Financing Reimbursement Agreement expired on June 30, 1996.
REGISTRATION RIGHTS AGREEMENT
Prior to the consummation of the Offering, the Company and Revlon
Worldwide, the direct parent of the Company, entered into the Registration
Rights Agreement pursuant to which Revlon Worldwide and certain transferees
of Common Stock held by Revlon Worldwide (the "Holders") have the right to
require the Company to register all or part of the Class A Common Stock owned
by such Holders and the Class A Common Stock issuable upon conversion of the
Class B Common Stock owned by such Holders under the Securities Act (a
"Demand Registration"); provided that the Company may postpone giving effect
to a Demand Registration up to a period of 30 days if the Company believes
such registration might have a material adverse effect on any plan or
proposal by the Company with respect to any financing, acquisition,
recapitalization, reorganization or other material transaction, or the
Company is in possession of material non-public information that, if publicly
disclosed, could result in a material disruption of a major corporate
development or transaction then pending or in progress or in other material
adverse consequences to the Company. In addition, the Holders have the right
to participate in registrations by the Company of its Class A Common Stock (a
"Piggyback Registration"). The Holders will pay all out-of-pocket expenses
incurred in connection with any Demand Registration. The Company will pay any
expenses incurred in connection with a Piggyback Registration, except for
underwriting discounts, commissions and expenses attributable to the shares
of Class A Common Stock sold by such Holders.
OTHER
Pursuant to a lease dated April 2, 1993 (the "Edison Lease"), Holdings
leases to Products Corporation the Edison research and development facility
for a term of up to 10 years with an annual rent of $1.4 million and certain
shared operating expenses payable by Products Corporation which, together
with the annual rent are not to exceed $2.0 million per year. Pursuant to an
assumption agreement dated February 18, 1993, Holdings agreed to assume all
costs and expenses of the ownership and operation of the Edison facility as
of January 1, 1993, other than (i) the operating expenses for which Products
Corporation is responsible under the Edison Lease and (ii) environmental
claims and compliance costs relating to matters which occurred prior to
January 1, 1993 up to an amount not to exceed $8.0 million (the amount of
such claims and costs for which Products Corporation is responsible, the
"Environmental Limit"). In addition, pursuant to such assumption agreement,
Products Corporation agreed to indemnify Holdings for environmental claims
and compliance costs relating to matters which occurred prior to January 1,
1993 up to an amount not to exceed the Environmental Limit and Holdings
agreed to indemnify Products Corporation for environmental claims and
compliance costs relating to matters which occurred prior to January 1, 1993
in excess of the Environmental Limit and all such claims and costs
24
<PAGE>
relating to matters occurring on or after January 1, 1993. Pursuant to an
occupancy agreement, during 1996 Products Corporation rented a portion of the
administration building located at the Edison facility and space for a retail
store of the Company. Products Corporation provides certain administrative
services, including accounting, for Holdings with respect to the Edison
facility pursuant to which Products Corporation pays on behalf of Holdings
costs associated with the Edison facility and is reimbursed by Holdings for
such costs, less the amount owed by Products Corporation to Holdings pursuant
to the Edison Lease and the occupancy agreement. The net amount reimbursed by
Holdings to Products Corporation for such costs with respect to the Edison
facility for 1996 was $1.1 million.
Effective January 1, 1996, Products Corporation acquired from Holdings
substantially all of the assets of the Tarlow Division in consideration for
the assumption of substantially all of the liabilities and obligations of the
Tarlow Division. Net liabilities assumed were approximately $3.4 million.
Products Corporation paid $4.1 million to Holdings, which was accounted for
as an increase in capital deficiency. A nationally recognized investment
banking firm rendered its written opinion that the terms of the purchase were
fair from a financial standpoint to Products Corporation.
During 1996, Products Corporation leased certain facilities to MacAndrews
& Forbes or its affiliates pursuant to occupancy agreements and leases
including space at Products Corporation's New York headquarters and at
Products Corporation's offices in London and Tokyo. The rent paid by
MacAndrews & Forbes or its affiliates to Products Corporation for 1996 was
$4.6 million.
Products Corporation's Credit Agreement is supported by, among other
things, guarantees from Holdings and certain of its subsidiaries. The
obligations under such guarantees are secured by, among other things, (i) the
capital stock and certain assets of certain subsidiaries of Holdings and (ii)
a mortgage on Holdings' Edison, New Jersey facility.
Products Corporation borrows funds from its affiliates from time to time
to supplement its working capital borrowings. No such borrowings were
outstanding as of December 31, 1996. The interest rates for such borrowings
are more favorable to Products Corporation than interest rates under the
Credit Agreement and, for borrowings occurring prior to the execution of the
Credit Agreement, the credit facility in effect at the time of such
borrowing. The amount of interest paid by Products Corporation for such
borrowings for 1996 was $0.5 million.
In November 1993, Products Corporation assigned to Holdings a lease for
warehouse space in New Jersey (the "N.J. Warehouse") between Products
Corporation and a trust established for the benefit of certain family members
of the Chairman of the Executive Committee. The warehouse had become vacant
as a result of divestitures and restructuring of Products Corporation. The
lease has annual lease payments of approximately $2.3 million and terminates
on June 30, 2005. In consideration for Holdings assuming all liabilities and
obligations under the lease, Products Corporation paid Holdings $7.5 million
(for which a liability was previously recorded) in three installments of $2.5
million each in January 1994, January 1995 and January 1996. A nationally
recognized investment banking firm rendered its written opinion that the
terms of the lease transfer were fair from a financial standpoint to Products
Corporation. During 1996, Products Corporation paid $0.2 million associated
with the N.J. Warehouse on behalf of Holdings and was reimbursed by Holdings
for such amount.
During 1996, the Company used an airplane which was owned by a corporation
of which Messrs. Gittis, Drapkin and Levin were the sole stockholders. In
1996, the Company paid approximately $0.2 million for the usage of the
airplane. As of December 31, 1996, Mr. Levin no longer held an ownership
interest in the corporation that owned the airplane.
25
<PAGE>
Consolidated Cigar, an affiliate of the Company, assembles lipstick cases
for Products Corporation. Products Corporation paid approximately $1.0
million for such services in 1996.
In the fourth quarter of 1996, Products Corporation and certain of its
subsidiaries purchased an inactive subsidiary from an affiliate for net cash
consideration of approximately $3.0 million in a series of transactions in
which the Company expects to realize certain tax benefits in future years.
The law firm of which Mr. Jordan is a senior partner provided legal
services to the Company and its subsidiaries during 1996 and it is
anticipated that it will provide legal services to the Company and its
subsidiaries during 1997.
The Company believes that the terms of the foregoing transactions are at
least as favorable to the Company or Products Corporation, as applicable, as
those that could be obtained from unaffiliated third parties.
ADDITIONAL INFORMATION
THE COMPANY WILL MAKE AVAILABLE A COPY OF ITS ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND ANY QUARTERLY REPORTS ON
FORM 10-Q FILED THEREAFTER, WITHOUT CHARGE, UPON WRITTEN REQUEST TO THE
SECRETARY, REVLON, INC., 625 MADISON AVENUE, NEW YORK, NEW YORK 10022. EACH
SUCH REQUEST MUST SET FORTH A GOOD FAITH REPRESENTATION THAT, AS OF THE
RECORD DATE, FEBRUARY 24, 1996, THE PERSON MAKING THE REQUEST WAS A
BENEFICIAL OWNER OF SHARES OF COMMON STOCK ENTITLED TO VOTE.
In order to ensure timely delivery of such documents prior to the Annual
Meeting, any request should be received by the Company promptly.
Stockholders who are not stockholders of record who wish to attend the
Annual Meeting should bring evidence of beneficial ownership of the Common
Stock to the Annual Meeting.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The Company's executive officers, directors and 10% stockholders are
required under the Exchange Act to file reports of ownership and changes in
ownership with the SEC and the NYSE. Copies of these reports also must be
furnished to the Company.
Based solely upon a review of copies of such reports furnished to the
Company through the date hereof, or written representations that no reports
were required, the Company believes that all filing requirements applicable
to its executive officers, directors and 10% holders were complied with
during 1996.
STOCKHOLDER PROPOSALS
Under the rules and regulations of the SEC as currently in effect, any
holder of at least one percent or $1,000 in market value of shares of Common
Stock held for at least one year who desires to have a proposal presented in
the Company's proxy material for use in connection with the Annual Meeting of
Stockholders to be held in 1998 must transmit that proposal (along with his
or her name, address, the number of shares of Common Stock that he or she
holds of record or beneficially, the dates on which the securities were
acquired and documentary support for a claim of beneficial ownership) in
writing by
26
<PAGE>
certified mail-return receipt requested to the Secretary of the Company at
Revlon, Inc., 625 Madison Avenue, New York, New York 10022. Proposals of
stockholders intended to be presented at the next Annual Meeting must be
received by the Secretary of the Company not later than November 10, 1997.
Holders of shares of Common Stock desiring to have proposals submitted for
consideration at future meetings of the stockholders should consult the
applicable rules and regulations of the SEC with respect to such proposals,
including the permissible number and length of proposals and other matters
governed by such rules and regulations.
OTHER BUSINESS
The Board of Directors is not aware of any matters other than those set
forth in this proxy statement that will be presented for action at the Annual
Meeting. If any other matters properly come before the Annual Meeting, the
persons named as proxies intend to vote the shares of Common Stock they
represent in accordance with their best judgment.
New York, New York
March 10, 1997
By Order of the Board of Directors
Robert K. Kretzman
Vice President and Secretary
27
<PAGE>
- -------------------------------------------------------------------------------
REVLON, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS APRIL 8, 1997
The undersigned hereby appoints Wade H. Nichols and Robert K. Kretzman,
as proxies, each with the full power to appoint his substitute, and hereby
authorizes them to represent and vote, as designated on the reverse side of
this card, all shares of Class A Common Stock of Revlon, Inc. (the "Company")
held of record by the undersigned at the close of business on February 24,
1997, at the Annual Meeting of Stockholders to be held on April 8, 1997 or any
adjournment thereof.
(TO BE SIGNED ON REVERSE SIDE)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
A [X] Please mark your
votes as in this
example.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
WITHHOLD Nominees: Ronald O. Perelman
AUTHORITY Jerry W. Levin
to vote for all nominees Donald G. Drapkin
FOR listed at right Meyer Feldberg FOR AGAINST ABSTAIN
1. ELECTION OF [ ] [ ] George Fellows 2. Proposal to [ ] [ ] [ ]
DIRECTORS William J. Fox ratify the selection
Howard Gittis of KPMG Peat Marwick
Vernon E. Jordan LLP to serve as the
FOR all nominees listed Henry A. Kissinger Company's independent
(except as marked to the contrary below): Edward J. Landau accountants for
Linda Gosden Robinson fiscal 1997.
Terry Semel
- ---------------------------------------------------- Martha Stewart 3. In their discretion, upon such other
business as may properly come before
the Annual Meeting or any
postponement or adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS. THIS PROXY WILL BE
VOTED AS DIRECTED. IN THE ABSENCE OF
DIRECTION, THIS PROXY WILL BE VOTED
FOR THE THIRTEEN NOMINEES FOR
ELECTION AND FOR PROPOSAL 2.
STOCKHOLDERS ARE URGED TO DATE, MARK,
SIGN AND RETURN THIS PROXY PROMPTLY
IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED WITHIN
THE UNITED STATES.
</TABLE>
SIGNATURES: _______________________________________ Date: ______________, 1997
Note: Please sign exactly as name or names appear on stock certificate
(as indicated hereon.)
<PAGE>
- -------------------------------------------------------------------------------
REVLON, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS APRIL 8, 1997
The undersigned hereby appoints Wade H. Nichols and Robert K. Kretzman,
as proxies, each with the full power to appoint his substitute, and hereby
authorizes them to represent and vote, as designated on the reverse side of
this card, all shares of Class B Common Stock of Revlon, Inc. (the "Company")
held of record by the undersigned at the close of business on February 24,
1997, at the Annual Meeting of Stockholders to be held on April 8, 1997 or any
adjournment thereof.
(TO BE SIGNED ON REVERSE SIDE)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
A [X] Please mark your
votes as in this
example.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
WITHHOLD Nominees: Ronald O. Perelman
AUTHORITY Jerry W. Levin
to vote for all nominees Donald G. Drapkin
FOR listed at right Meyer Feldberg FOR AGAINST ABSTAIN
1. ELECTION OF [ ] [ ] George Fellows 2. Proposal to [ ] [ ] [ ]
DIRECTORS William J. Fox ratify the selection
Howard Gittis of KPMG Peat Marwick
Vernon E. Jordan LLP to serve as the
FOR all nominees listed Henry A. Kissinger Company's independent
(except as marked to the contrary below): Edward J. Landau accountants for
Linda Gosden Robinson fiscal 1997.
Terry Semel
- ---------------------------------------------------- Martha Stewart 3. In their discretion, upon such other
business as may properly come before
the Annual Meeting or any
postponement or adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS. THIS PROXY WILL BE
VOTED AS DIRECTED. IN THE ABSENCE OF
DIRECTION, THIS PROXY WILL BE VOTED
FOR THE THIRTEEN NOMINEES FOR
ELECTION AND FOR PROPOSAL 2.
STOCKHOLDERS ARE URGED TO DATE, MARK,
SIGN AND RETURN THIS PROXY PROMPTLY
IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED WITHIN
THE UNITED STATES.
</TABLE>
SIGNATURES: _______________________________________ Date: ______________, 1997
Note: Please sign exactly as name or names appear on stock certificate
(as indicated hereon.)
