<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CELEBRITY, INC.
(Name of Registrant as Specified In Its Charter)
CELEBRITY, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction
applies:
---------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:(1)
---------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
5) Total fee paid:
---------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------
3) Filing Party:
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4) Date Filed:
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<PAGE> 2
CELEBRITY, INC.
4520 OLD TROUP ROAD
P. O. BOX 6666
TYLER, TEXAS 75711
November 14, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting (the "Meeting")
of Shareholders of Celebrity, Inc. (the "Company") to be held at the offices of
Star Wholesale Florist, Inc., 8223 N. Stemmons Freeway, Dallas, Texas, on
Wednesday, December 10, 1997, at 3:00 p.m. local time. The attached Notice of
Annual Meeting and Proxy Statement fully describe the formal business to be
transacted at the Meeting, which includes the election of directors of the
Company and the ratification of the selection of Price Waterhouse LLP as
independent public accountants. We have also enclosed a copy of the Company's
Annual Report for the fiscal year ended June 30, 1997.
The Company's Board of Directors believes that a favorable vote for
each person nominated to serve as a director of the Company and for ratification
of the selection of Price Waterhouse LLP as independent public accountants is in
the best interests of the Company and its shareholders and unanimously
recommends a vote "FOR" each nominee and "FOR" such ratification. Accordingly,
we urge you to review the accompanying material carefully and to return the
enclosed Proxy promptly. If you attend the Meeting, you may vote in person even
if you have previously mailed a Proxy.
Directors and officers of the Company will attend the Meeting and will
respond to questions that are appropriate for discussion at the Meeting. I hope
you will be able to attend.
Sincerely,
/s/ ROBERT H. PATTERSON, JR.
Robert H. Patterson, Jr.
Chairman of the Board
<PAGE> 3
CELEBRITY, INC.
4520 OLD TROUP ROAD
P. O. BOX 6666
TYLER, TEXAS 75711
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held December 10, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of Celebrity, Inc., a Texas corporation (the "Company" or
"Celebrity"), will be held at the offices of Star Wholesale Florist, Inc., 8223
N. Stemmons Freeway, Dallas, Texas, on Wednesday, December 10, 1997, at 3:00
p.m. local time. A Proxy and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the following purposes:
(1) To elect five members of the Board of Directors for the
term of office stated in the Proxy Statement.
(2) To consider and ratify the selection of Price Waterhouse
LLP as the Company's independent public accountants.
(3) To transact any other business that may properly come
before the Meeting and any adjournments thereof.
The close of business on October 23, 1997, has been fixed as the record
date for determining shareholders entitled to notice of and to vote at the
Meeting and any adjournments thereof. For a period of at least ten days prior to
the Meeting, a complete list of shareholders entitled to vote at the Meeting
will be open to the examination of any shareholder during ordinary business
hours at the offices of the Company at 4520 Old Troup Road, Tyler, Texas.
Information concerning the matters to be acted upon at the Meeting is
set forth in the accompanying Proxy Statement.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING IN PERSON
ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
/s/ ROBERT H. PATTERSON, JR.
Robert H. Patterson, Jr.
Chairman of the Board, President
and Chief Executive Officer
Tyler, Texas
November 14, 1997
<PAGE> 4
CELEBRITY, INC.
4520 OLD TROUP ROAD
P. O. BOX 6666
TYLER, TEXAS 75711
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 10, 1997
This Proxy Statement is being first mailed on November 14, 1997, to
shareholders of Celebrity, Inc., a Texas corporation (the "Company" or
"Celebrity"), by the Board of Directors to solicit proxies (the "Proxies") for
use at the Annual Meeting of Shareholders (the "Meeting") to be held at the
offices of Star Wholesale Florist, Inc., 8223 N. Stemmons Freeway, Dallas,
Texas, on Wednesday, December 10, 1997, at 3:00 p.m., local time, and at such
other times and places to which the Meeting may be adjourned.
The purpose of the Meeting is to consider and act upon the following:
(i) the election of five directors for the terms stated below;
(ii) the ratification of the selection of Price Waterhouse LLP
as the Company's independent public accountants; and
(iii) such other matters as may properly come before the
Meeting and any adjournments thereof.
All shares represented by valid Proxies, unless the shareholder
otherwise specifies, will be voted as follows:
(i) FOR the election of the five persons named under "Election
of Directors" as nominees for election as directors of the
Company for the terms stated below;
(ii) FOR the ratification of the selection of Price Waterhouse
LLP as the Company's independent public accountants; and
(iii) at the discretion of the proxyholders (the
"Proxyholders") with regard to any other matter that may
properly come before the Meeting and any adjournments thereof.
Any shareholder executing a Proxy retains the right to revoke it at any
time prior to exercise at the Meeting. A Proxy may be revoked by delivery of
written notice of revocation to the Secretary of the Company, by execution and
delivery of a later Proxy or by voting in person at the Meeting. Unless revoked,
all shares represented by properly executed Proxies will be voted as specified
therein.
RECORD DATE AND VOTING SECURITIES
The record date for determining the shareholders entitled to notice of
and to vote at the Meeting and any adjournments thereof was the close of
business on October 23, 1997 (the "Record Date"), at which time the Company had
issued and outstanding approximately 6,307,419 shares of Common Stock, par value
$.01 per share ("Common Stock"). The shares of Common Stock constitute the only
outstanding voting securities of the Company entitled to be voted at the
Meeting.
<PAGE> 5
QUORUM AND VOTING
The presence at the Meeting, in person or by proxy, of the holders of
one-third of the Common Stock issued and outstanding and entitled to vote
thereat is necessary to constitute a quorum to transact business. In deciding
all questions and other matters, a holder of Common Stock on the Record Date
will be entitled to cast one vote for each share of Common Stock then registered
in such holder's name.
Election of the director nominees named in Proposal No. 1, or any of
them, requires the affirmative vote of the holders of a plurality of the shares
of Common Stock present or represented at the Meeting and entitled to vote
thereon. A Proxy cannot be voted for more than five director nominees. Votes may
be cast in favor of or withheld with respect to any of the director nominees.
Votes that are withheld will be counted toward a quorum, but will be excluded
entirely from the tabulation of votes in respect of the proposal and, therefore,
will not otherwise affect the outcome of the vote on the proposal.
Approval of Proposal No. 2 requires the affirmative vote of the holders
of a majority of the shares of Common Stock present or represented at the
Meeting and entitled to vote thereon that are actually voted. Abstentions on the
proposal may be specified and will be counted toward a quorum, but will be
excluded entirely from the tabulation for the proposal. As a result, abstentions
will not otherwise affect the outcome of the vote on the proposal.
Shares referred to as "broker non-votes" (shares held by brokers or
nominees as to which they have no discretionary authority to vote on a
particular matter and have received no instructions from the beneficial owners
or persons entitled to vote thereon), if any, are counted as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum. However, for purposes of determining the outcome of any matter requiring
discretionary authority to vote, broker non-votes will be treated as not present
and not entitled to vote with respect to that matter (even though those shares
are considered present and entitled to vote for quorum purposes and may be
entitled to vote on other matters). Because brokers or nominees have
discretionary authority to vote on each of Proposal No. 1 and Proposal No. 2,
there will be no broker non-votes on such proposals.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
There are five directors to be elected for terms expiring at the
Company's Annual Meeting of Shareholders in 1998 or until their successors have
been elected and qualified. It is intended that the names of the persons
indicated in the following table will be placed in nomination and that the
Proxyholders will vote for their election. Each of the nominees has indicated
willingness to serve as a member of the Board of Directors if elected; however,
if any nominee becomes unavailable for election to the Board of Directors for
any reason not presently known or contemplated, the Proxyholders will have
discretionary authority to vote the Proxy for any nominee who is substituted for
the nominee who becomes unavailable.
The nominees are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- ---------
<S> <C> <C>
Robert H. Patterson, Jr. 46 Chairman of the Board, President
and Chief Executive Officer
Richard Yuen 53 Managing Director of Celebrity Exports
International Limited and Director
B.D. Hunter(1)(2) 67 Director
C.A. Langner(1)(2) 72 Director
Valerie Anne Mars(1)(2) 38 Director
</TABLE>
- ----------
(Footnotes on following page)
2
<PAGE> 6
(Footnotes to table on previous page)
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
Robert H. Patterson, Jr. has served as Chairman of the Board of
Celebrity since 1989 and as a director since 1974. He has served as Chief
Executive Officer since July 1995 and as President from 1978 to 1995 and from
September 1997 to the present. He served as Vice President from 1975 to 1978 and
as Secretary and Treasurer from 1974 to 1975.
Richard Yuen has served as Managing Director of Celebrity Exports
International Limited, the Company's Hong Kong subsidiary, since 1984 and as a
director of Celebrity since December 1992.
B.D. Hunter has served as a director of Celebrity since April 1993.
Mr. Hunter is the founder and Chairman of Huntco Inc., which has various
operations, including steel service centers and pressure vessel manufacturing.
Mr. Hunter is also the founder and Chairman of Huntco Enterprises Inc., which
operates nursing homes and other businesses. Mr. Hunter also serves on the
boards of directors of Service Corporation International, Cash America
International, Inc. and Mercantile Bank of St. Louis N.A.
C.A. Langner has served as a director of Celebrity since December
1992. Mr. Langner was Administrative Manager of the Producing Department of
Exxon Corporation from 1983 to 1986. Mr. Langner has been engaged in the
management of his personal investments since 1986.
Valerie Anne Mars has served as a director of Celebrity since September
1995. Ms. Mars has been the General Manager of Master Foods, Czech Republic and
Republic of Slovakia, a unit of Mars, Inc., in Prague, Czech Republic, since
August 1996. From 1994 to August 1996, Ms. Mars was a project consultant with
M&M/Mars. From 1990 to 1994, Ms. Mars was engaged in the management of her
personal investments.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR EACH
NOMINEE FOR THE BOARD OF DIRECTORS.
BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the Board
of Directors. The Board meets on a regularly scheduled basis to review
significant developments affecting the Company and to act on matters requiring
Board approval. It also holds special meetings and acts by unanimous written
consent when important matters require Board action between scheduled meetings.
The Board of Directors met three times and acted twice by unanimous written
consent during fiscal 1997. During fiscal 1997, each member of the Board
participated in at least 75% of all Board and applicable committee meetings held
during the period for which he or she was a director, except that Mr. Yuen did
not participate in one meeting.
The Board of Directors established audit and compensation committees to
devote attention to specific subjects and to assist it in the discharge of its
responsibilities. The functions of those committees, their current members and
the number of meetings held and actions taken by written consent during fiscal
1997 are described below.
Audit Committee. The Audit Committee recommends to the Board of
Directors the appointment of the firm selected to be independent public
accountants for the Company and monitors the performance of such firm; reviews
and approves the scope of the annual audit and evaluates with the independent
public accountants the Company's annual audit and annual consolidated financial
statements; reviews with management the status of internal accounting controls;
evaluates problem areas having a potential financial impact on the Company that
may be brought to its attention by management, the independent public
accountants or the Board of Directors; and evaluates annual public financial
reporting documents of the Company. Messrs. Langner (Chairman) and Hunter and
Ms. Mars are the members of the Audit Committee. The Audit Committee met three
times during fiscal 1997.
3
<PAGE> 7
Compensation Committee. The Compensation Committee approves all major
decisions with regard to executive compensation, establishes and monitors the
compensation policies of the Company and administers the Company's 1992 Stock
Option Plan (as amended to date, the "Option Plan") and 1993 Employee Stock
Purchase Plan (as amended to date, the "Purchase Plan"). The Compensation
Committee has the power to determine from time to time the individuals to whom
options will be granted, and offers to purchase stock will be made, under the
plans. Messrs. Hunter (Chairman) and Langner and Ms. Mars are the members of the
Compensation Committee. The Compensation Committee met three times and acted
once by unanimous written consent during fiscal 1997.
The Company does not have a nominating committee. The functions
customarily attributable to a nominating committee are performed by the Board of
Directors as a whole.
PRINCIPAL SHAREHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth information regarding the beneficial
ownership of Common Stock as of the Record Date by (i) each person known by the
Company to own beneficially more than 5% of the outstanding shares of Common
Stock, (ii) each director of the Company, (iii) the Company's Named Officers (as
defined under "Management Compensation -- Summary Compensation Table") and (iv)
all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and
Nature of
Name of Beneficial Beneficial Percent
Owner or Group(1) Ownership(2) of Class
------------------ ------------ --------
<S> <C> <C>
Robert H. Patterson, Jr ..................................... 3,268,958 51.7%
Richard Yuen ................................................ 135,150 2.1%
B.D. Hunter ................................................. 23,000 *
C. A. Langner ............................................... 18,000 *
Valerie Anne Mars ........................................... 11,500 *
David J. Huffman ............................................ 41,400 *
Clifford C. Condict ......................................... 84,187 1.3%
Roger D. Craft .............................................. 9,000 *
James R. Thompson(3) ........................................ 21,200 *
Directors and executive officers as a group (9 persons)(4)... 3,612,395 56.1%
--------- ------
</TABLE>
- ----------
* Less than 1%
(1) "Beneficial owner" means generally any person who, directly or
indirectly, has or shares voting power or investment power with respect
to a security. All information with respect to the beneficial ownership
of any shareholder has been furnished by such shareholder and the
Company believes that, except as otherwise indicated, each shareholder
has sole voting and investment power with respect to shares listed as
beneficially owned by such shareholder.
(2) Includes shares of Common Stock issuable upon exercise of options that
are exercisable on the Record Date or within 60 days thereafter by
Patterson, Yuen, Hunter, Langner, Mars, Huffman, Condict, Craft,
Thompson and all directors and executive officers as a group, with such
shares numbering 13,000; 26,000; 13,000; 9,000; 9,000; 21,400; 16,000;
4,000; 19,000 and 130,400 shares, respectively.
(3) Mr. Thompson resigned from all positions with the Company effective
September 8, 1997, but was a Named Officer during fiscal 1997. See
"Management Compensation -- Summary Compensation Table."
(4) Includes 8,000 shares held by C. David Gingrich, of which 3,000 shares
are issuable upon exercise of options that are exercisable on the
Record Date or within 60 days thereafter. Mr. Gingrich became an
executive officer of the Company on September 24, 1997. Does not
include 21,200 shares (of which 19,000 are issuable upon exercise of
options that are exercisable on the Record Date) held by Mr.
Thompson, who resigned from the Company prior to the Record Date.
4
<PAGE> 8
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table contains information concerning the compensation
earned by, awarded to or paid to (i) the Chief Executive Officer of the Company
during fiscal 1997 and (ii) each of the most highly compensated executive
officers of the Company at the end of fiscal 1997, other than the Chief
Executive Officer, whose total annual salary and bonus exceeded $100,000, based
on salary and bonus earned during fiscal 1997 (collectively, the "Named
Officers"), in each case for services rendered to the Company during fiscal
years 1995 through 1997.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
----------------------- ------------
SECURITIES
UNDERLYING
OPTIONS/ ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS SARS COMPENSA-
POSITION YEAR ($) ($) (#)(1) TION ($)
--------- --------- --------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Robert H. Patterson, Jr., 1997 290,000 0 55,000 6,155 (2) (3)
Chairman of the Board, 1996 290,000 0 0 203,788 (4)
President, and Chief 1995 275,000 110,000 20,000 26,605
Executive Officer
Richard Yuen, 1997 284,200 0 15,000 0
Director and Managing 1996 258,000 0 0 0
Director of Celebrity 1995 210,000 128,200 15,000 0
Exports International
Limited(5)
David J. Huffman, 1997 150,000 0 40,000 2,281 (2)
Executive Vice 1996 150,000 0 0 4,356
President and 1995 125,000 65,000 10,000 3,221
President of
Distribution Division
Clifford C. Condict, 1997 90,000 15,000 15,000 1,358 (2)
Vice President - 1996 90,000 0 0 3,063
Merchandising 1995 85,000 32,500 5,000 2,221
Roger D. Craft, 1997 90,000 15,000 15,000 1,370 (2)
Vice President - 1996 90,000 0 0 3,063
Operations 1995 85,000 32,500 5,000 2,192
James R. Thompson, 1997 100,000 0 25,000 1,510 (2)
Vice President - 1996 100,000 0 0 3,460
Finance (6) 1995 85,000 32,500 10,000 2,405
</TABLE>
(1) Options to acquire shares of Common Stock under the Option Plan.
(2) In fiscal 1997, the Company paid $4,020; $2,281; 1,358; $1,370; and
$1,510 as matching contributions for Messrs. Patterson, Huffman,
Condict, Craft and Thompson, respectively, pursuant to the Company's
tax-qualified profit sharing plan with a cash or deferred arrangement
under Section 401(k) of the Internal Revenue Code of 1986 (the
"Code").
(3) In fiscal 1997, the Company also paid $2,135 on a long-term disability
insurance policy for Mr. Patterson.
(4) In fiscal 1996, the Company discontinued certain arrangements pursuant
to which it paid the premiums on, and held ownership of, two insurance
policies on Mr. Patterson's life. The ownership of the policies, which
had an aggregate cash surrender value of $198,418, was then
transferred to Mr. Patterson, resulting in additional compensation to
Mr. Patterson equivalent to such aggregate cash
5
<PAGE> 9
surrender value.
(5) All compensation for Mr. Yuen's services is paid to Golden Pool
Limited, a British Virgin Islands company wholly owned by a trust, the
beneficiaries of which are Richard Yuen and his family.
(6) Mr. Thompson resigned from all positions with the Company effective
September 8, 1997.
6
<PAGE> 10
OPTION GRANTS DURING FISCAL 1997
The following options were granted under the Option Plan to the Named
Officers set forth below during fiscal 1997:
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for Option
Individual Grants Term (1)
------------------------------------------------------- ---------------------------
NUMBER OF % OF TOTAL
OPTIONS/ OPTIONS/ SARS
SARS GRANTED TO EXERCISE OR EXPIRATION
NAME GRANTED(2)(3) EMPLOYEES (2) BASE PRICE(4) DATE 5% 10%
------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert H. Patterson, Jr. 50,000 25.4% $ 3.1875 6/18/07 $ 100,405 $ 253,405
5,000 2.5% $ 4.00 8/04/06 $ 12,600 $ 31,800
Richard Yuen 10,000 5.0% $ 3.1875 6/18/07 $ 20,081 $ 50,681
5,000 2.5% $ 4.00 8/04/06 $ 12,600 $ 31,800
David J. Huffman 35,000 17.4% $ 3.1875 6/18/07 $ 70,284 $ 177,384
5,000 2.5% $ 4.00 8/04/06 $ 12,600 $ 31,800
Clifford C. Condict 10,000 5.0% $ 3.1875 6/18/07 $ 20,081 $ 50,681
5,000 2.5% $ 4.00 8/04/06 $ 12,600 $ 31,800
Roger D. Craft 10,000 5.0% $ 3.1875 6/18/07 $ 20,081 $ 50,681
5,000 2.5% $ 4.00 8/04/06 $ 12,600 $ 31,800
James R. Thompson(5) 20,000 10.0% $ 3.1875 6/18/07 $ 40,162 $ 101,362
5,000 2.5% $ 4.00 8/04/06 $ 12,600 $ 31,800
</TABLE>
(1) The potential realizable value portion of the foregoing table
illustrates value that might be realized upon exercise of the options
immediately prior to the expiration of their term, assuming the
specified compounded rates of appreciation of Common Stock over the
term of the options. These amounts do not take into account
provisions of certain options providing for termination of the
option following termination of employment, nontransferability or
vesting over periods of up to five years.
(2) The Company has not granted any stock appreciation rights.
(3) All options have ten-year terms. The options granted on August
5, 1996 and June 19, 1997 become exercisable with respect to 20%
of the shares covered thereby annually beginning on the first
anniversary of the date of grant. In the event of certain mergers or
reorganizations or a Change of Control (as hereinafter defined) or
threatened Change of Control of the Company, any unexercisable
portion of the options will become immediately exercisable. The term
"Change of Control" refers to the acquisition of ten percent or more
of the voting securities of the Company by any person or by persons
acting as a group within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
(unless such acquisition has been approved by a two-thirds vote of
the full Board of Directors of the Company).
(4) The option exercise price may be paid (i) in cash, (ii) in shares of
Common Stock, if permitted by the Compensation Committee, (iii) by
certified or cashier's check, (iv) by cash or certified or cashier's
check for the par value of the shares for which the option is
exercised plus a promissory note for the balance of
7
<PAGE> 11
the purchase price or (v) by delivery of a copy of irrevocable
instructions from the optionholder to a broker or dealer to sell
certain of the shares of Common Stock purchased upon exercise of the
option or to pledge them as collateral for a loan and promptly
deliver to the Company the amount of sale or loan proceeds necessary
to pay such purchase price. The exercise price is equal to the fair
market value of the Common Stock on the date of grant.
(5) The options granted to Mr. Thompson terminate on December 8, 1997.
OPTION EXERCISES DURING FISCAL 1997
AND FISCAL YEAR END OPTION VALUES
The following table provides information related to options
exercised by the Named Officers during fiscal 1997 and the number and
value of options held at fiscal year end. The Company does not have any
outstanding stock appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
FISCAL YEAR END(1) AT FISCAL YEAR END(2)
---------------------------- ----------------------------
NUMBER OF
SHARES
ACQUIRED VALUE
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert H 0 $ 0 8,000 67,000
Patterson, Jr
Richard Yuen 0 $ 0 22,000 28,000
David J. Huffman 0 $ 0 18,400 49,600
Clifford C 0 $ 0 14,000 21,000
Condict
Roger D. Craft 0 $ 0 2,000 18,000
James R. Thompson 0 $ 0 16,000 31,000
</TABLE>
(1) Value is calculated based on the difference between the option
exercise price and the closing price of the Common Stock on the
date of exercise multiplied by the number of shares to which the
exercise relates.
(2) At fiscal year end, none of the Named Officers held in-the-money
options.
8
<PAGE> 12
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are entitled to
receive an annual fee of $10,000, plus $500 for each meeting of the Board of
Directors they attend. The members of the Audit and Compensation Committees do
not receive separate compensation for their attendance at committee meetings. In
addition, pursuant to the terms of the Option Plan, nonemployee directors
automatically receive grants of nonqualified stock options to purchase 5,000
shares of Common Stock upon their initial election to the Board of Directors and
automatically receive grants of nonqualified stock options to purchase 2,000
shares of Common Stock in each year they are reelected to the Board of
Directors. The options are fully exercisable upon the date of grant at a price
equal to the closing sale price of the Common Stock reported by the Nasdaq
National Market on the date of grant. Each of Messrs. Langner and Hunter and Ms.
Mars received options to purchase 2,000 shares of Common Stock upon such
directors' reelection to the Board of Directors in December 1996. Such options
are exercisable at a price of $3.375 per share.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY
The base salary for top executive officers and annual incentive
compensation for all executive officers for fiscal 1997 were approved by the
Compensation Committee, consisting of B. D. Hunter, C. A. Langner and Valerie
Anne Mars, all of whom are nonemployee directors. The Compensation Committee
received from the Chief Executive Officer recommendations regarding base
salaries and incentive compensation for the top executive officers. The Chief
Executive Officer set the compensation for lower level executive officers.
The objectives of the Company's executive compensation program are
to:
Support the achievement of desired Company performance.
Provide competitive compensation that will attract and
retain superior talent and reward performance.
Align the executive officers' interests with those of
the shareholders by placing a portion of their pay at risk
because it is dependent upon corporate performance.
To achieve the above objectives, the Company's executive
compensation policies integrate annual base compensation with bonuses based on
overall corporate performance and individual initiatives and performance. The
measurement of corporate performance and the award of bonuses are based
primarily upon the achievement of Company performance goals that are reviewed
and approved annually by the Compensation Committee. Accordingly, in years in
which these performance goals are achieved or exceeded, executive compensation
will tend to be higher than in years in which the Company's performance is below
expectations. Annual cash compensation, together with the payment of long-term
equity-based incentive compensation through stock options, is designed to
attract and retain qualified executives and to ensure that such executives have
a continuing stake in the long-term success of the Company.
The executive compensation program is designed to provide an overall
level of compensation that is competitive with that offered by companies of
comparable size and complexity. The actual compensation levels of the Company's
executive officers may be greater or less than average compensation levels in
other companies based upon annual and long-term overall Company performance as
well as individual performance. The Compensation Committee uses its discretion,
to set executive compensation at levels warranted in its judgment by external,
internal and individual circumstances.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The Company's executive officer compensation program is comprised of
base salary, annual cash incentive compensation, long-term incentive
compensation in the form of stock options and various other benefits.
9
<PAGE> 13
Base Salary. In fiscal 1997 base salary levels for the Company's
executive officers, including the Chief Executive Officer, were competitively
set relative to comparable companies. In determining salaries, the Compensation
Committee took into account individual experience and performance and specific
issues particular to the Company.
Annual Incentive Compensation. The Company maintains incentive
compensation plans for its executive officers. These incentive compensation
plans are based on performance goals that are established each fiscal year and
are based on the Company's sales and profitability. Cash bonuses, payable after
the close of the fiscal year, are based on the extent to which these goals have
been met. The amounts of these incentive bonuses are reflected in the summary
compensation table above.
The Company's 1997 Employee Bonus Plan (the "Bonus Plan") was used
to compute bonuses payable to executive officers of the Company. The potential
bonuses were based on the consolidated per share earnings of the Company for
fiscal 1997 after accruals for income taxes, bonus plans and Company
contributions to the Company's 401(k) Plan, excluding extraordinary items
("Earnings Per Share"). Potential bonuses ranged from $10,000 to $165,000,
depending upon Earnings Per Share and the identity of the individual receiving
the bonus. Because a minimum Earnings Per Share of $.55 was required to have
been achieved for fiscal 1997 for any bonus to be distributed under the Bonus
Plan, no bonuses were earned under the Bonus Plan for fiscal 1997. However, the
Compensation Committee approved discretionary bonuses for Messrs. Condict and
Craft.
Option Plan. The Option Plan has been the Company's long-term
incentive plan for executive officers since 1992. The objectives of the Option
Plan are to align executive and shareholder long-term interests by creating a
strong and direct link between executive compensation and shareholder return,
and to enable executives to develop and maintain a significant long-term
ownership position in the Common Stock.
On August 5, 1996 and June 19, 1997, the Compensation Committee of
the Board of Directors considered stock option grants to each of the officers
of the Company. Each of those officers received stock options that were based
on his responsibilities and relative position in the Company. The stock
options granted to each officer in fiscal 1997 were granted with an exercise
price of fair market value at the date of grant. Twenty percent of the stock
options granted in fiscal 1997 vest annually commencing on the first
anniversary of the date of grant.
Purchase Plan. Executive officers are encouraged to increase their
ownership of Common Stock, thus increasing the alignment of their interests with
shareholder interests, by participating in the Purchase Plan. Up to 300,000
shares of Common Stock may be sold under the Purchase Plan, which was
established in 1993, pursuant to offers to employees selected by the
Compensation Committee from among all employees of the Company and its
wholly-owned subsidiaries. The Compensation Committee has discretion as to the
timing and duration of such offers to allow employees to purchase Common Stock
under the Purchase Plan. The price of such Common Stock is the fair market value
of the stock when the offer is made. Employees may purchase shares with a
promissory note providing for repayment through payroll deductions. No employees
purchased shares under the Purchase Plan during fiscal 1997.
401(k) Plan. The Company maintains a tax-qualified profit sharing
plan with a cash or deferred arrangement (the "401(k) Plan") under section
401(k) of the Code. All of the Company's employees, except those who are neither
citizens nor residents of the U.S., are eligible to participate in the 401(k)
Plan beginning on July 1 or January 1 following their completion of one full
year of service with the Company. Plan participants may defer up to 15% of their
compensation, subject to limits imposed by the Code, including a Code provision
that limits deferrals to an indexed amount, which was $9,500 in 1996 and 1997.
The 401(k) Plan provides that the Company, in its discretion, may make matching
contributions with respect to elective deferral contributions by plan
participants. It has been the Company's practice to contribute, as a matching
contribution, approximately $.50 per $1.00 of employee contributions, up to six
percent of each employee's compensation. In April 1997, the Board of Directors
approved an amendment allowing for a matching contribution of $1.00 per $1.00 of
employee contributions, up to three percent of each employee's compensation. The
Company's matching contribution may be made, in the Company's discretion, in
Company common stock or in cash. A participant's interest in Company matching
contribution amounts is full, vested and nonforfeitable following the completion
of six years of service by the participant. The Company's aggregate
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<PAGE> 14
matching contribution for fiscal 1997 was approximately $55,827.
Robert H. Patterson, Jr. is the trustee of the 401(k) Plan trust. Each
participant has the right to direct the investment of his or her own account
balance in the 401(k) Plan.
Benefits. The Company provided medical benefits during fiscal 1997
to its Chief Executive Officer pursuant to a medical reimbursement plan.
The Company has no policy for maintaining executive compensation
within the $1,000,000 deduction limitation of Section 162(m) of the Code because
it is very unlikely that limitation will be a factor for executives of the
Company.
This report of the Compensation Committee on executive compensation
is submitted by the current members of the Committee as noted below:
B. D. Hunter
C. A. Langner
Valerie Anne Mars
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<PAGE> 15
COMPARATIVE STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on
Common Stock with the cumulative total return on the stocks comprising the
Russell 2000 Index and the stocks comprising a peer group index consisting of
Helen of Troy Corporation, Craftmade International, Inc., Catalina Lighting,
Inc., Handleman Company and Fossil, Inc. (collectively, the "Peer Group") over
the periods indicated.
COMPARISON OF 54-MONTH CUMULATIVE TOTAL RETURN (1)
AMONG CELEBRITY, INC., THE RUSSELL 2000 INDEX AND A PEER GROUP (2)
[GRAPH]
<TABLE>
<CAPTION>
Dec. 16, June 30, June 30, June 30, June 30, June 30,
1992 1993 1994 1995 1996 1997
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Company $100 $ 58 $ 26 $ 52 $ 34 $ 24
Russell 2000 $100 $110 $115 $138 $171 $199
Peer Group $100 $106 $108 $108 $ 94 $116
</TABLE>
(1) Based upon $100 invested on December 16, 1992 (the date of the first
public trading of the Common Stock) in Common Stock and the Peer Group
or on November 30, 1992 in the Russel 2000 Index, including in each case
reinvestment of dividends.
(2) Fiscal year ending June 30.
12
<PAGE> 16
CERTAIN TRANSACTIONS
The Company leases distribution center space at 4501 Old Troup Road,
Tyler, Texas, from Robert H. Patterson, Jr. and the trust under the will of the
late father of Robert H. Patterson, Jr., R. Harold Patterson, Sr. (the
"Patterson Trust"). Mr. Patterson and the Patterson Trust each own 50% of the
property. During fiscal 1997, the Company paid $10,000 per month to lease the
property on a month-to-month basis. Management believes the terms of the lease
are no less favorable to the Company than could be obtained from an unaffiliated
third party.
The Company paid Golden Pool Limited, a British Virgin Islands
company wholly owned by a trust, the beneficiaries of which are Mr. Yuen and his
family, a fee of approximately $284,200 for management and consulting services
provided by Mr. Yuen in fiscal 1997.
Robert H. Patterson, Jr., David J. Huffman and Clifford C. Condict
each borrowed $109,800 from the Company in November 1993. The proceeds of these
loans were used to pay the fair market value of shares of Common Stock (other
than the par value of the shares, which was paid in cash by the purchasing
executive officer) purchased by the executive officers under the Purchase Plan.
The notes representing these loans are due in November 1998, and bear interest
at a rate of 5.35% per annum, compounded annually. The interest on the loans is
paid in biweekly installments by payroll deductions in an amount per week
calculated to repay the interest on the note over the term of the note.
Twenty-five percent of the net amount of any year-end bonus (after withholding
of all taxes) earned by the executive officer will be applied to reduce the
amount due on his note. Each loan is secured by the Common Stock purchased with
the proceeds of the loan. As of the Record Date, the outstanding balances of the
loans to Messrs. Patterson, Huffman and Condict were $92,324; $105,040 and
$104,624, respectively.
In September 1997, Celebrity borrowed $500,000 from RHP Management,
LLC, an entity controlled by Robert H. Patterson, Jr., President and Chief
Executive Officer of the Company. All amounts outstanding under the promissory
note are due and payable on December 9, 1997. The principal amount outstanding
accrues interest at a fluctuating rate per annum equal to the prime rate of a
specified bank plus 1.5%. The proceeds from this loan were used to pay certain
intercompany accounts payable to Celebrity Hong Kong.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), requires the Company's directors and officers, and persons
who own more than 10% of a registered class of the Company's equity securities,
to file initial reports of ownership and reports of changes in ownership with
the Securities and Exchange Commission (the "SEC"). Directors, officers and
greater than 10% beneficial owners are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file. Based solely on
its review of the copies of such forms received by it with respect to fiscal
1997, or written representations from certain reporting persons, the Company
believes that all filing requirements under Section 16(a) of the Exchange Act
applicable to its directors, officers and greater than 10% beneficial owners
have been satisfied.
PROPOSAL NO. 2
INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee and subject to
ratification by the shareholders at the Meeting, the Board of Directors of the
Company has selected Price Waterhouse LLP to audit the consolidated financial
statements of the Company and its subsidiaries for the fiscal year ending June
30, 1998. Price Waterhouse LLP has served the Company in this capacity since
1991. Representatives of Price Waterhouse LLP are expected to be present at the
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 BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
PROPOSAL TO RATIFY THE SELECTION OF PRICE WATERHOUSE LLP.
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<PAGE> 17
SHAREHOLDER PROPOSALS
Shareholders may submit proposals on matters appropriate for
shareholder action at subsequent annual meetings of the Company consistent with
Rule 14a-8 promulgated under the Exchange Act. For such proposals to be
considered for inclusion in the Proxy Statement and Proxy relating to the 1998
Annual Meeting of Shareholders, such proposals must be received by the Company
not later than July 17, 1998. Such proposals should be directed to Celebrity,
Inc., 4520 Old Troup Road, P. O. Box 6666, Tyler, Texas 75711, Attention:
Secretary.
OTHER BUSINESS
The Board of Directors knows of no matter other than those described
herein that will be presented for consideration at the Meeting. However, should
any other matters properly come before the Meeting and any adjournments thereof,
it is the intention of the persons named in the accompanying Proxy to vote in
accordance with their best judgment in the interest of the Company.
MISCELLANEOUS
All costs incurred in the solicitation of Proxies will be borne by
the Company. In addition to the solicitation by mail, officers and employees of
the Company may solicit Proxies by telephone, telegram or personally, without
additional compensation. The Company may also make arrangements with brokerage
houses and other custodians, nominees and fiduciaries for the forwarding of
solicitation materials to the beneficial owners of shares of Common Stock held
of record by such persons, and the Company may reimburse such brokerage houses
and other custodians, nominees and fiduciaries for their out-of-pocket expenses
incurred in connection therewith.
Accompanying this Proxy Statement is a copy of the Company's Annual
Report and Form 10-K for the fiscal year ended June 30, 1997.
AN ADDITIONAL COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K,
INCLUDING THE FINANCIAL STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES, BUT
NOT INCLUDING EXHIBITS, WILL BE FURNISHED AT NO CHARGE TO EACH PERSON TO WHOM A
PROXY STATEMENT IS DELIVERED UPON THE WRITTEN REQUEST OF SUCH PERSON ADDRESSED
TO CELEBRITY, INC., ATTN: ROBERT H. PATTERSON, JR., CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER, P.O. BOX 6666, TYLER, TEXAS 75711.
By Order of the Board of Directors
/s/ ROBERT H. PATTERSON, JR.
Robert H. Patterson, Jr.
Secretary
Tyler, Texas
November 14, 1997
14
<PAGE> 18
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CELEBRITY, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Robert H. Patterson, Jr. and David J.
Huffman, or either of them, with full power of substitution, as Proxies to vote,
as designated below, all shares of Common Stock of Celebrity, Inc., a Texas
corporation (the "Company"), owned by the undersigned on October 23, 1997, at
the annual meeting of shareholders to be held at 8223 N. Stemmons Freeway,
Dallas, Texas, on December 10, 1997 at 3:00 p.m., and at any adjournment
thereof, upon such business as may properly come before the meeting, including
the following:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS: [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to
(except as marked to the contrary below) vote for all nominees listed below
</TABLE>
Robert H. Patterson, Jr., B.D. Hunter, C.A. Langner, Valerie Anne Mars and
Richard Yuen
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
2. Ratification of the selection of Price Waterhouse LLP as the Company's
independent public accountants for the fiscal year ending June 30, 1998.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion, the proxies are authorized to vote upon such other
business or matters as may properly come before the meeting or any
adjournment thereof.
(Continued, and to be signed and dated, on reverse side)
- --------------------------------------------------------------------------------
<PAGE> 19
- --------------------------------------------------------------------------------
(Continued from other side)
THIS PROXY, WHEN DULY EXECUTED AND RETURNED, WILL BE VOTED AS DIRECTED BY
THE UNDERSIGNED. IF NO SPECIFIC DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF ALL NOMINEES NAMED IN PROPOSAL NO. 1, FOR THE APPROVAL OF
PROPOSAL NO. 2 AND IN THE DISCRETION OF THE PROXYHOLDERS ON ANY OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
[ ] Mark here for address change
and note below. Dated: 1997
----------------------------------,
-------------------------------------
Signature
-------------------------------------
(Signature if held jointly)
IMPORTANT: Please sign exactly as
your name appears to the left. When
signing on behalf of a corporation,
partnership, estate, trust or in
other representative capacity, please
sign name and title. If executed by a
corporation, the proxy should be
signed by a duly authorized officer.
If executed by a partnership, please
sign in the partnership name by an
authorized person. For joint
accounts, each joint owner must sign.
THIS PROXY MAY BE REVOKED PRIOR TO
THE EXERCISE OF
THE POWERS CONFERRED BY THE PROXY.
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