<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
Total Containment, Inc.
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(Name of Registrant as Specified In Its Charter)
Total Containment, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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March 24, 1999
Dear Shareholder:
Total Containment, Inc.'s Annual Meeting of Shareholders will be held on
Friday, April 16, 1999, at 2:00 p.m., Eastern Time. The Annual Meeting will be
held at the Courtyard by Marriott - Philadelphia Airport Courtyard, located at
8900 Bartram Avenue, Philadelphia, Pennsylvania 19153.
The matters to be acted on at the Annual Meeting are: (a) the election of two
Class II directors, and (b) the ratification of the appointment by the Board of
Directors of TCI of Grant Thornton LLP as its independent auditors for 1999.
These matters are described in the enclosed Notice of Annual Meeting of
Shareholders and Proxy Statement.
Thank you for your interest in TCI. I look forward to seeing you at the Annual
Meeting.
Sincerely,
/s/ Pierre Desjardins
Pierre Desjardins,
Chairman of the Board
PLEASE SIGN AND DATE YOUR PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE AS
SOON AS POSSIBLE.
1
<PAGE>
422 Business Center
A130 North Drive
P.O. Box 939
Oaks, Pennsylvania 19456
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 16, 1999
To the Shareholders of Total Containment, Inc.:
Notice is hereby given that the Annual Meeting (the "Annual Meeting") of the
holders of common stock, $0.01 par value (the "Common Stock"), of Total
Containment, Inc. (the "Company") will be held at the Courtyard by Marriott -
Philadelphia Airport Courtyard located at 8900 Bartram Avenue, Philadelphia,
Pennsylvania 19153 on Friday, April 16, 1999, at 2:00 p.m., Eastern Time:
1. To elect two Class II directors to hold office until the 2002 Annual
Meeting of Shareholders and until their successors shall have been elected and
qualified (Matter No. 1);
2. To ratify the appointment by the Company's Board of Directors of Grant
Thornton LLP as the Company's independent auditors for the fiscal year ending
December 31, 1999 (Matter No. 2); and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
Holders of record of issued and outstanding shares of Common Stock at the
close of business on February 26, 1999, are entitled to notice of, and to vote
at, the Annual Meeting. Such shareholders may vote in person or by proxy. The
stock transfer books of the Company will not be closed.
The Board of Directors of the Company cordially invites you to attend the
Annual Meeting. Whether or not you are personally present, your shares should be
represented at the Annual Meeting. Accordingly, please sign and return your
proxy in the enclosed envelope.
By Order of the Board of Directors,
Richard H. Gross, Secretary
Dated: Oaks, Pennsylvania
March 24, 1999
SHAREHOLDERS ARE URGED TO SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY IN
THE ACCOMPANYING ENVELOPE. THE PROXY IS REVOCABLE AT ANY TIME BY A WRITTEN
INSTRUMENT, INCLUDING A LATER DATED PROXY, SIGNED IN THE SAME MANNER AS THE
PROXY AND RECEIVED BY THE SECRETARY OF THE COMPANY AT OR BEFORE THE ANNUAL
MEETING. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY, IF YOU WISH, REVOKE YOUR
PROXY BY VOTING IN PERSON.
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TOTAL CONTAINMENT, INC.
422 Business Center
A130 North Drive
P.O. Box 939
Oaks, Pennsylvania 19456
PROXY STATEMENT
FOR ANNUAL MEETING
GENERAL
INTRODUCTION
Total Containment, Inc. (the "Company") is a Pennsylvania business corporation
headquartered at 422 Business Center, A130 North Drive, Oaks, Pennsylvania
19456.
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of the Company to be used at the Annual
Meeting (the "Annual Meeting") of holders of Common Stock, $0.01 par value (the
"Common Stock"), of the Company to be held at the Courtyard by Marriott -
Philadelphia Airport Courtyard located at 8900 Bartram Avenue, Philadelphia,
Pennsylvania 19153, at 2:00 p.m., Eastern Time, on Friday, April 16, 1999, and
at any adjournment or adjournments thereof. The approximate date upon which this
Proxy Statement and the accompanying proxy were first sent, given or otherwise
made available to shareholders was March 24, 1999. In addition to the use of the
mails, proxies may be solicited by personal interview and telephone by
directors, officers and employees of the Company and its subsidiaries. The
Company will pay all costs of soliciting proxies.
VOTING SECURITIES
Holders of record of the Common Stock at the close of business on February 26,
1999 (the "Record Date") are entitled to notice of, and to vote at, the Annual
Meeting.
At the Annual Meeting, each shareholder is entitled to one vote for each share
of the Common Stock registered in the shareholder's name as of the Record Date.
On the Record Date, there were 4,652,600 shares of the Common Stock outstanding
and, accordingly, holders of the Common Stock are entitled to cast a total of
4,652,600 votes at the Annual Meeting. Holders of the Common Stock are not
entitled to cumulate votes for the election of directors.
Of the 4,652,600 shares of Common Stock outstanding, 2,649,000 shares,
representing 56.94% of the issued and outstanding shares of Common Stock, are
indirectly, beneficially owned by Mr. Marcel Dutil, director of the Company.
Mr. Dutil has informed the Board that he intends to cause all of the 2,649,000
shares of Common Stock of the Company to be voted "FOR" the election of the
nominees of the Board of Directors of the Company ("Matter No. 1") and "FOR" the
ratification of the appointment of Grant Thornton LLP as the Company's
independent auditors for 1999 ("Matter No. 2").
If the enclosed form of proxy is appropriately marked, signed and returned in
time to be voted at the Annual Meeting, the shares represented by the proxy will
be voted in accordance with the instructions marked thereon. Signed proxies not
marked to the contrary will be voted "FOR" Matter No. 1 and "FOR" Matter No. 2.
Signed proxies will be voted "FOR" or "AGAINST" each other matter which properly
comes before the Annual Meeting or any adjournment or adjournments thereof, at
the discretion of the persons named as proxyholders as provided in the rules of
the Securities and Exchange Commission, including with respect to any matter of
which the Company did not receive notice by February 8, 1999.
3
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With respect to the election of directors (Matter No. 1), each shareholder may
cast such holder's votes "FOR" all the nominees or may "WITHHOLD AUTHORITY" to
vote for all or for any individual nominee. Votes which are withheld will not be
counted for purposes of the election of directors or for the purpose of
establishing a quorum.
With respect to the ratification of the appointment of auditors (Matter No.
2), each shareholder may cast all of such holder's votes "FOR" or "AGAINST" such
proposal, or may "ABSTAIN" from voting. Abstentions will be counted as present
for purposes of determining the existence of a quorum. However, because the
ratification of auditors requires the affirmative vote of a majority of shares
present, in person or by proxy, and entitled to vote, abstentions will have the
effect of a negative vote.
Under applicable Pennsylvania law, broker non-votes will be counted as present
for purposes of determining whether a quorum exists at the Annual Meeting, but a
broker non-vote with respect to Matters No. 1 or 2 will not be counted as
present for purposes of such Matters and, as a result, will have no effect on
the outcome of such Matters.
RIGHT OF REVOCATION
Any shareholder giving a proxy has the power to revoke it by a written
instrument, including a later dated proxy, signed in the same manner as the
proxy and received by the Secretary of the Company prior to its exercise. Any
shareholder attending the Annual Meeting may also revoke his proxy by voting in
person at the Annual Meeting.
QUORUM
Under the Company's Bylaws, holders of a majority of the shares entitled to
vote at the Annual Meeting must be present, in person or by proxy, to constitute
a quorum for the transaction of business at the Annual Meeting. Marcel Dutil, a
director of the Company, has informed the Board that the 2,649,000 shares of
Common Stock he indirectly, beneficially owns will be present, in person or by
proxy, at the Annual Meeting so that a quorum will be present.
PRINCIPAL SHAREHOLDERS
The following table sets forth information, as of the Record Date, as to
beneficial owners, either directly or indirectly, of 5% or more of the
outstanding shares of the Common Stock.
<TABLE>
<CAPTION>
Amount and Nature Percent
Name and Address of of Beneficial of
Beneficial Owner Ownership Class
- ------------------- --------- -----
<S> <C> <C>
Marcel Dutil(1)............................................................ 2,649,000(2)(3) 56.94%
270 Chemin du Tremblay
Boucherville, Quebec
J43 5X9
</TABLE>
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(1) Marcel Dutil is a director of the Company.
(2) These shares are indirectly, beneficially owned by Mr. Dutil. Mr. Dutil
possesses sole voting and investment power with respect to these shares.
(3) Information in the table is based upon information filed by Mr. Dutil with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, and representations made by Mr. Dutil to the Company.
Because Mr. Dutil beneficially owns a majority of the outstanding shares of
Common Stock, Mr. Dutil will be able to elect the nominees of the Board of
Directors as Class II directors, and ratify the appointment of Grant Thornton
LLP regardless of how other shareholders of the Company may vote at the Annual
Meeting.
4
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MATTER NO. 1
ELECTION OF DIRECTORS
GENERAL
The Company's Board of Directors consists of seven members and is divided into
three classes: Class I Directors, whose term expires in 2001; Class III
Directors whose term expires in 2000; and Class II directors , whose term
expires in 1999 at the Annual Meeting and, if and when elected at the Annual
Meeting, whose term will expire in 2002. The directors in each Class serve
terms of three years each and until their successors are elected and qualified.
The Board of Directors has fixed the number of directors in Class II at three
and has unanimously nominated Mr. Pierre Desjardins, Mr. Marcel Dutil, and Mr.
Bernard Gouin for election as Class II directors. Mr. Pierre Desjardins, Mr.
Marcel Dutil, and Mr. Bernard Gouin are presently directors of the Company.
The three nominees who receive the highest number of votes at the Annual
Meeting will be elected as Class II directors. Shares represented by properly
executed proxies will be voted for the three Class II nominees listed below
unless otherwise specified on a shareholder's proxy card. Any shareholder who
wishes to withhold authority from the proxyholders to vote for the election of
directors, or to withhold authority to vote for any individual nominee, may do
so by marking the proxy to that effect. Shareholders cannot cumulate votes for
the election of directors. No proxy may be voted for a greater number of
persons than the number of nominees named.
Each of the nominees has consented to being named in this Proxy Statement and
to serve if elected. If any of the nominees become unable to accept the
nomination or election, the proxyholders may exercise their voting power in
favor of such other person or persons as the Board of Directors may recommend.
The Company, however, has no present reason to believe that any nominee listed
below will be unable to serve as a director, if elected.
NOMINEES FOR ELECTION AS DIRECTOR AND CONTINUING DIRECTORS
The following tables set forth, as to each of the nominees for election as
Class II directors and as to each of the continuing Class I and Class III
directors, his or her age and the period during which he or she has served as a
director of the Company.
<TABLE>
<CAPTION>
Director
Name Age Since
- ---- --- -----
<S> <C> <C>
NOMINEES FOR ELECTION IN 1999 AS CLASS II
DIRECTORS TO SERVE UNTIL 2002
Pierre Desjardins............................................................ 57 1996
Marcel Dutil................................................................. 56 1990
Bernard Gouin................................................................ 46 1996
CONTINUING CLASS III DIRECTORS TO SERVE UNTIL 2000
Jean-Claude Arpin............................................................ 52 1994
Marc Guindon................................................................. 55 1990
CONTINUING CLASS I DIRECTORS TO SERVE UNTIL 2001
Paul Gobeil.................................................................. 56 1994
Nycol Pageau-Goyette......................................................... 54 1994
</TABLE>
The principal occupation and business experience during the last five years of
each nominee for election as a director of the Company and of each continuing
director of the Company is as follows:
5
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Jean-Claude Arpin. Since 1988, Mr. Arpin has been a Vice President of Royal
Bank Capital Corporation, a wholly-owned subsidiary of the Royal Bank of Canada.
Mr. Arpin serves as a director of Coscient Group and Consolidated Envirowaste
Industries, Inc., each of which is a publicly owned Canadian company.
Pierre Desjardins. Since September 1996, Mr. Desjardins has served as
President and Chief Executive Officer of the Company, and since April 1997,
Chairman of the Board of the Company. From 1990 to 1994, he was President and
Chief Executive Officer of Domtar, Inc., a publicly owned Canadian pulp and
paper corporation. He is currently a director of Discreet Logic, a publicly
owned Canadian company that develops, assembles, markets and supports systems
for creating, editing and compositing imagery and special effects for film and
video. He is also a director of The Canam Manac Group, Inc., a publicly owned
Canadian industrial corporation engaged in the manufacture of construction steel
components and trailers in Canada, the United States, France and Mexico. He is
also a director of Uni-Select Inc., a publicly owned, Canadian company engaged
in the distribution of parts and systems for motor vehicles.
Marcel Dutil. Since 1973, Mr. Dutil has been Chairman of the Board and Chief
Executive Officer of The Canam Manac Group, Inc. Mr. Dutil serves as a director
of The National Bank of Canada, Quebec Tel Group, Inc. Pharmacies Jean Coutu,
Donohue Inc. and Vauquelin Mines Ltd., each of which is a publicly owned
company.
Paul Gobeil. Since October 1990, Mr. Gobeil has served as Vice Chairman of the
Board of Directors of Metro-Richelieu, Inc., a publicly owned Canadian food
corporation. From December 1989 through September 1993, Mr. Gobeil served as
Chairman of the Board of Royal Trust Company, a trust corporation. He also
served as Chairman of the Board of Domtar Inc, a publicly owned Canadian pulp
and paper corporation, from April 1993 through October 1994. Mr. Gobeil is
currently a director of The Canam Manac Group, Inc., Alimentation CoucheTard
Inc., a food corporation, Mines Vauquelin Ltee, a mining company, DiagnoCure
Inc., a biotechnology company, and the National Bank of Canada, all of which are
publicly owned Canadian corporations.
Bernard Gouin. Since February 1997, Mr. Gouin has been Chief Financial Officer
of The Canam Manac Group, Inc. for which Mr. Gouin served as Chief Financial
Officer from 1991 to 1992. From 1994 to early 1997, he was President of Belgo
Corporation, a distributor of electricity-saving products and a provider of
financial management services. From 1992 to 1994, he served as Executive Vice
President of Canam Steel Corporation, a manufacturer of construction steel
components and the American subsidiary of The Canam Manac Group, Inc.
Nycol Pageau-Goyette. Since 1977, Ms. Pageau-Goyette has served as President
and Chief Executive Officer of Pageau-Goyette Associates, a management company.
She is also Chairperson of the Board and Chief Executive Officer of Aeroport de
Montreal (the local airport authority of Montreal, Canada).
Marc Guindon. Mr. Guindon was co-founder of the Company and formerly served as
Chairman of the Board from 1990 to 1996, and currently as a director of the
Company since 1990, and as Chief Executive Officer from May 1993 to September
1996. From 1985 to 1991, Mr. Guindon served as President and Chief Executive
Officer of a privately-held Canadian corporation which, until February 13, 1996,
held a majority of the Common Stock of the Company.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information concerning the number of shares of
Common Stock held as of the Record Date by each nominee for director, each
present director, each executive officer named in the compensation table set
forth elsewhere herein, and all directors and executive officers as a group.
6
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<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership
--------------------------------------------------------------------
Total Sole Voting Shared Voting Percent
Beneficial or Dispositive or Dispositive of
Name of Beneficial Owner Ownership Power Power Class(1)
- ------------------------ --------------- -------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Jean-Claude Arpin.................................... 5,000 5,000 -- --
Pierre Desjardins(2)(3).............................. 221,000 220,000 1,000(4) 4.60%
Marcel Dutil(2)(5)................................... 2,649,000 2,649,000 -- 56.94%
Nycol Pageau-Goyette................................. 200 200 -- --
Paul Gobeil.......................................... 7,000 7,000 -- --
Bernard Gouin(2)..................................... -- -- -- --
Marc Guindon......................................... -- -- -- --
Other Named Executive Officers
- ------------------------------
Jeffrey Boehmer(6)................................... 54,000 54,000 -- 1.1%
Richard DiMaggio(7).................................. 20,000 20,000 -- --
Homer A. Holden(8)................................... 68,000 68,000 -- 1.4%
John Wright Jr.(9)................................... 36,000 36,000 -- --
All directors and named executive officers
as a group (11 persons)............................. 3,060,200 3,059,200 1,000 61.69%
</TABLE>
- ---------------------
(1) Unless otherwise indicated, amount owned does not exceed 1% of the total
number of shares of Common Stock outstanding as of the Record Date.
(2) Indicates a nominee for election as a Class II director at the Annual
Meeting.
(3) Includes 150,000 shares which may be acquired by Mr. Desjardins upon
exercise of options granted in September 1996 in connection with his
employment which are presently exercisable. Does not include 75,000 shares
subject to options granted in September 1996 in connection with his
employment which are not exercisable within 60 days after the Record Date.
(4) Includes 1,000 shares of Common Stock owned by Mr. Desjardins' spouse with
respect to which Mr. Desjardins disclaims beneficial ownership.
(5) Includes 2,649,000 shares of Common Stock indirectly, beneficially owned by
Marcel Dutil. Mr. Dutil possesses sole voting and investment control with
respect to such shares.
(6) Includes 54,000 shares which may be acquired by Mr. Boehmer upon the
exercise of options granted under the Company's 1994 Stock Compensation
Plan (the "1994 Plan") which are vested and presently exercisable or
exercisable within 60 days after the Record Date. Does not include 16,000
shares which may be acquired by Mr. Boehmer in the future in connection
with options granted under the 1994 Plan which are not vested and are not
exercisable within 60 days after the Record Date.
(7) Includes 20,000 shares which may be acquired by Mr. DiMaggio upon the
exercise of options granted under the Company's 1994 Plan which are vested
and presently exercisable or exercisable within 60 days after the Record
Date. Does not include 30,000 shares which may be acquired by Mr. DiMaggio
in the future in connection with options granted under the 1994 Plan which
are not vested and are not exercisable within 60 days after the Record
Date.
(8) Includes 68,000 shares which may be acquired by Mr. Holden upon the
exercise of options granted under the Company's 1994 Plan which are vested
and presently exercisable or exercisable within 60 days after the Record
Date. Does not include 12,000 shares which may be acquired by Mr. Holden in
the future in connection with options granted under the 1994 Plan which are
not vested and are not exercisable within 60 days after the Record Date.
(9) Includes 16,000 shares which may be acquired by Mr. Wright upon the
exercise of options granted under the Company's 1994 Plan which are vested
and presently exercisable or exercisable within 60 days after the Record
Date. Does not include 34,000 shares which may be acquired by Mr. Wright in
the future in connection with options granted under the 1994 Plan which are
not vested and are not exercisable within 60 days after the Record Date.
7
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COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has a standing Audit Committee and
Compensation Committee. The entire Board of Directors of the Company assumes the
role of a nominating committee. Pursuant to the Company's Bylaws, the Board of
Directors is authorized to create such other permanent or temporary committees
as it deems necessary. The Chief Executive Officer of the Company is an ex-
officio member of all committees of the Board of Directors.
The Audit Committee serves as the principal liaison among the Board of
Directors, the Company's independent accountants and the Company's internal
staff in connection with the Company's audit function. In addition, the Audit
Committee makes recommendations to the Board of Directors concerning the
selection of independent accountants to audit the books and accounts of the
Company and the performance of nonaudit services. The present members of the
Audit Committee are Messrs. Desjardins, Gobeil, Gouin, and Guindon. The Audit
Committee met five times during 1998.
The Compensation Committee makes recommendations to the Board of Directors
with respect to compensation of members of the Company's executive staff. The
members of the Compensation Committee are Messrs. Arpin, Dutil, Gobeil and
Desjardins. The Compensation Committee met twice during 1998.
BOARD MEETINGS
During 1998, the Board of Directors held seven regular meetings. All members
of the Board attended each of the regular meetings, and one member attended all
but one of the aggregate number of meetings of committees of which he or she is
a member.
COMPENSATION PAID TO DIRECTORS
Directors of the Company who are not executive officers of the Company are
paid a quarterly retainer of $2,500 plus $500 per Board meeting attended. In
addition, outside directors receive $250 for each regular committee meeting they
attend.
The Company maintains a directors' and officers' liability insurance policy
with National Union Fire Insurance Company of Pittsburgh, Pennsylvania. The
policy covers all directors, officers and employees of the Company and its
subsidiaries for liability, loss, damage and expense which they may incur in
their capacities as such (subject to certain exclusions and exceptions), at a
premium cost to the Company, as of the date of the Annual Meeting, of
approximately $100,000 per year.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
ROLE OF THE COMPENSATION COMMITTEE
The role of the Compensation Committee of the Board of Directors of the
Company is to establish the compensation philosophy of the Company and monitor
compensation plans and amounts for conformity with the philosophy.
The Compensation Committee's role includes establishing company-wide
compensation and benefits plans, reviewing and adopting the Chief Executive
Officer's (the "CEO") recommendations for compensation for executive and other
senior officers, and reviewing and determining the compensation for the CEO.
The Compensation Committee generally meets once a year. All actions of the
Compensation Committee are reported to the full Board of Directors for
ratification. The CEO is a member of the Compensation Committee but does not
vote on any matters impacting the CEO's compensation or employment status.
8
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EXECUTIVE COMPENSATION PHILOSOPHY
The Company's executive officer compensation program is predicated on a pay
for performance philosophy, and as such, a substantial part of the executives'
compensation is performance based. Within this framework, the total compensation
program must enable the Company to attract, retain, motivate, and reward
executive officers who are critical to the success of the Company.
Total compensation for executive officers at the Company is a mixture of non-
variable elements such as salary and benefits and variable elements such as
short-term and long-term incentives. Total compensation can vary from year to
year given the Company's considerable emphasis on the incentive compensation
programs. Therefore, total compensation for executive officers at the Company is
contingent on incentive plans which are themselves tied to the Company's
financial performance.
The Revenue Reconciliation Act of 1993 imposes a limit of $1,000,000 on annual
compensation to certain executives or the corporation loses the ability to
deduct compensation in excess of such amount, subject to certain exceptions. The
Compensation Committee did not specifically design the Company's compensation
program for 1998 to meet the requirements of the Act because the Compensation
Committee does not believe that compensation payable to any executive officer
during 1998 will result in any loss of deduction to the Company.
SPECIFIC EXECUTIVE COMPENSATION PROGRAMS
In connection with setting executive compensation, the Compensation Committee
reviews (a) the compensation paid to the executive in the preceding year against
the executive officer's performance as outlined by the CEO and the President of
the Company, (b) the results of operations of the Company for the year against
the projected results of operations of the Company for the period, and (c) any
other factor which the Committee deems relevant, in any applicable year, in
assessing the performance of an executive (the "Compensation Criteria").
The components of total compensation at the Company include salary, short-term
and long-term incentives, benefits and perquisites. Set forth below is a
discussion each of these components.
SALARY
Salary serves as the foundation for the Company's total compensation program.
Salaries have been established for all positions including executive officers.
Salaries are based on competitive pay practices and on the Company's assessment
of the importance of the position. Certain executive officers have entered into
employment agreements with the Company which provide for the payment of a pre-
established base salary that is subject to an annual review by the entire Board
for the purpose of considering possible increases in such salaries. See
"Employment Contracts, Termination of Employment and Change-in-Control
Arrangements" herein. Salary adjustments for all positions are considered at the
beginning of each calendar year and are based on the Compensation Criteria.
INCENTIVE PLANS
The Company awards cash bonuses to its executive officers as its short-term
incentive plan. The cash bonus plan for executive officers is designed to reward
the accomplishment of specific annual financial objectives. Awards, in the form
of cash compensation, are made to plan participants based upon the Company's
pre-tax income and discretionary objectives. Under the cash bonus plan, each
executive officer is entitled to receive a cash bonus in an amount ranging from
zero to 18.75% of base salary and could be as high as 37.5% for exceptional
results if the Company earned a pre-determined target amount of pre-tax income
(the "Target Income") for the year ended December 31, 1998 as well as zero to
12.5% of base salary earned by meeting certain discretionary objectives. In
addition, executive officers are entitled to receive an aggregate cash bonus in
an amount equal to 15% of pre-tax income in excess of the Target Income.
9
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The Company uses a stock compensation plan as its long-term incentive plan.
The purpose of this plan is to motivate and reward long-term performance defined
as the creation of shareholder value and the achievement of consistent, long-
term return on equity goals.
The stock option plan relates a significant portion of executive compensation
to increases in shareholder value. The plan promotes increased ownership of
Common Stock by executives, as well as providing significant compensation when
shares are sold at a price in excess of the exercise price.
All grants under the option plan are made at fair market value as of the date
of grant. The number of options granted to each executive officer is based on
the Compensation Criteria and on the potential long-term value of any options
granted and the total number of options to be granted in any year as a
percentage of total shares outstanding.
BENEFITS AND PERQUISITES
The Company's executives participate in the same benefit program as applies to
all employees of the Company. There are no additional insurance programs or
welfare benefits for executives. Any perquisites for executives are business
related and are intended to allow the executive to operate in as efficient a
manner as possible.
SUMMARY
The Compensation Committee believes that the Company's overall executive
compensation program has performed well in attracting, retaining and rewarding
executives.
COMPENSATION COMMITTEE
Jean-Claude Arpin, Marcel Dutil, Pierre
Desjardins, Paul Gobeil
10
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EXECUTIVE COMPENSATION
The following table sets forth information for the years ended December 31,
1998, 1997 and 1996, concerning compensation for services in all capacities
awarded to, earned by or paid to (i) the chief executive officer, and (ii) the
other executive officers of the Company who earned more than $100,000 during
1998 (collectively, the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation ---------
------------------------------------------------ Compensation
Awards
------
Securities All
Underlying Other
Name and Principal Salary Bonus Options/ Compensation
Position Year ($) ($)(1) SARs(2) ($)
- -------------------------------- ----------- --------------- -------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Pierre Desjardins............... 1998 $300,000 $180,000 -- N/A
. Chairman of the Board, 1997 300,000 N/A -- N/A
President,and Chief Executive 1996 100,000 N/A 225,000 N/A
Officer
Jeffrey Boehmer................. 1998 $101,667 $ 44,688 -- N/A
. Vice President--Operations 1997 100,000 N/A -- N/A
1996 95,000 N/A -- N/A
Richard DiMaggio................ 1998 $135,000 $ 33,345 -- N/A
. Vice President 1997 120,000 N/A -- N/A
1996 120,000 N/A 50,000 N/A
Homer N. Holden................. 1998 $113,000 $ 47,686 -- N/A
. Vice President--Research 1997 113,000 5,510 -- N/A
and Product Development 1996 110,000 0 30,000 N/A
John Wright Jr.................. 1998 $117,500 $ 55,900 20,000 N/A
. Vice President--Marketing 1997 59,583 3,440 30,000 N/A
and Engineering 1996 N/A N/A N/A N/A
</TABLE>
- ---------------
"N/A" indicates that the item is not applicable because no compensation of the
category required to be disclosed in the column was received.
(1) Amounts listed as bonus were accrued in the year listed but were not paid
until the subsequent year.
(2) Indicates number of shares for which options were granted under the
Company's stock compensation plans during the applicable periods.
11
<PAGE>
The following table sets forth information concerning grants of stock options
for the fiscal year ended December 31, 1998 to the Named Executive Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------
Number of % of Total
Securities Options/ Potential Realizable
Underlying SARs Value at Assumed
Options/ Granted to Exercise Annual Rates of Price
SARs Employees or Base Appreciation foR Option
Granted(1) in Fiscal Price (2) Expiration Term
---------------------------
(#) Year ($/Sh) Date 5% ($)(3) 10% ($)(3)
---------- ---------- -------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Pierre Desjardins................ 0 N/A N/A N/A N/A N/A
Jeffrey Boehmer.................. 0 N/A N/A N/A N/A N/A
Richard DiMaggio................. 0 N/A N/A N/A N/A N/A
Homer N. Holden.................. 0 N/A N/A N/A N/A N/A
John Wright Jr................... 20,000 22.73% $4.75 4/17/08 $59,745 $151,406
</TABLE>
- ------------------------
(1) All amounts represent incentive stock options. No SARs or SARs granted in
tandem with options were granted during 1998. Options have a term of ten
years from the date of grant. Options vest at the rate of 20% per year for
five consecutive years beginning one year from the date of grant. Options
are not exercisable following an optionee's voluntary termination of
employment other than by reason of retirement or disability
(2) In the case of each option grant, the exercise price per share is equal to
the fair market value on the date the option was granted. The exercise
price may be paid in cash, in shares of Common Stock valued at fair market
value on the date of exercise or pursuant to a cashless exercise procedure
under which the optionee provides irrevocable instructions to a brokerage
firm to sell the purchased shares and to remit to the Company, out of the
sale proceeds, an amount equal to the exercise price plus all applicable
withholding taxes.
(3) The dollar amounts set forth under these columns are the result of
calculations made at the 5% and 10% appreciation rates set forth in
Securities and Exchange Commission regulations and are not intended to
indicate future price appreciation, if any, of the Common Stock.
12
<PAGE>
The following table sets forth information concerning the exercise of options
to purchase shares of Common Stock by the Named Executives during the fiscal
year ended December 31, 1998, as well as the number of securities underlying
unexercised options and potential value of unexercised options (both options
which are presently exercisable and options which are not presently exercisable)
as of December 31, 1998.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUE(1)
<TABLE>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Options/SARs at Options/SARs at
Fiscal Year-End Fiscal Year-End
(#) ($)(2)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise (#) ($) Unexercisable Unexercisable
---- --------------- -------------- ------------------- ----------------------
<S> <C> <C> <C> <C>
Pierre Desjardins......................... 0 0 150,000 / 75,000 $609,375 / $304,688
Jeffrey Boehmer........................... 0 0 40,000 / 30,000 $ 71,000 / $106,500
Richard DiMaggio.......................... 0 0 20,000 / 30,000 $ 68,750 / $103,125
Homer N. Holden........................... 0 0 52,000 / 28,000 $ 53,250 / $ 79,875
John Wright Jr............................ 0 0 6,000 / 44,000 $ 25,125 / $144,250
</TABLE>
- -------------------
(1) All amounts represent stock options. No SARs or SARs granted in tandem with
stock options were either exercised during 1998 or outstanding at fiscal
year-end 1998.
(2) "In-the-money options" are stock options with respect to which the market
value of the underlying shares of Common Stock exceeded the exercise price
at December 31, 1998. The value of such options is determined by subtracting
the aggregate exercise price for such options from the aggregate fair market
value of the underlying shares of Common Stock.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
As of September 3, 1996, the Company entered into an employment agreement with
Pierre Desjardins under which Mr. Desjardins serves as President and Chief
Executive Officer of the Company. The initial term of the employment agreement
is three years, subject to an automatic one year extension on each anniversary
date thereof, unless the Company gives written notice to Mr. Desjardins of an
intention not to renew. Mr. Desjardins will receive an annual base salary of
$300,000 per year under the employment agreement. Mr. Desjardins was granted
options to purchase 225,000 shares of Common Stock. The Company may terminate
the employment agreement for cause. In the event the Company terminates the
employment agreement without cause (as defined in the employment agreement), Mr.
Desjardins is entitled to, among other things, an amount equal to the total
salary due for the unexpired term of the employment agreement.
In 1994, the Company entered into employment agreements with Homer N. Holden
and Jeffrey Boehmer. In 1996, the Company entered into an employment agreement
with Richard DiMaggio. In 1997, the Company entered into an employment
agreement with John Wright Jr. Under the respective employment agreements, Homer
N. Holden serves as Vice President of Research and Product Development, Richard
DiMaggio serves as Vice President, John Wright Jr. serves as Vice President
Marketing and Engineering, and Jeffrey Boehmer serves as Vice President of
Operations. The initial term of each employment agreement is three years,
subject to an automatic one year extension on each anniversary date thereof,
unless either party gives notice to the other of an intention not to renew. The
terms of the employment agreements provide an annual base salary of $118,000 to
Mr. Holden, $135,000 to Mr. DiMaggio, $130,000 to Mr. Wright, and $110,000 to
Mr. Boehmer. The employment agreements provide for an annual review by the Board
of the executives' base salaries for purposes of considering possible increases
thereto. The employment agreements also provide for the payment of bonuses and
the award of stock options in such amounts as shall be determined by the Board.
In addition, in the event of termination by the Company of an executive as a
result of disability or without cause (as defined in the employment agreements),
the
13
<PAGE>
terminated executive is entitled to continued payments of his base salary for a
period not to exceed the lesser of: (a) six months or (b) the date of the
executive's death, which amount will be offset by any payments received by the
executive under any disability plan sponsored by the Company. The employment
agreements also contain certain confidentiality, non-competition and non-
solicitation provisions. None of the employment agreements contains a change-in-
control provision.
ADDITIONAL INFORMATION REGARDING DIRECTORS AND OFFICERS
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and officers, and any persons
owning ten percent or more of the Common Stock, to file in their personal
capacities initial statements of beneficial ownership, statements of changes in
beneficial ownership and annual statements of beneficial ownership with the
Securities and Exchange Commission (the "SEC"). Persons filing such beneficial
ownership statements are required by SEC regulation to furnish the Company with
copies of all such statements filed with the SEC. The rules of the SEC regarding
the filing of such statements require that "late filings" of such statements be
disclosed in the Company's proxy statement. Based solely on the Company's review
of any copies of such statements it received and on written representations from
directors and officers, the Company believes that all such statements were
timely filed in 1998 except for a Form 3 required to be filed by both Mr.
Richard DiMaggio and Mr. Keith R. Ruck, Chief Financial Officer of the Company.
Messrs. DiMaggio and Ruck each filed the required Form 3, along with a Form 5,
in 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Pierre Desjardins, President and Chief Executive Officer of the Company,
serves as a member of the Compensation Committee, although he does not
participate in or vote on matters concerning his own benefits or awards. The
Board of Directors believes that Mr. Desjardins' position with the Company
provides him with perspective valuable to the Compensation Committee in
connection with performance of its duties.
Mr. Desjardins also serves as a member on the Board of Directors and as a
member of the Human Resources Committee of The Canam Manac Group, Inc. Mr.
Marcel Dutil, member of the Board of Directors of the Company and member of the
Compensation Committee of Board of Directors of the Company, is the Chairman and
Chief Executive Officer of The Canam Manac Group, Inc.
14
<PAGE>
PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative total
stockholder return on the Company's Common Stock against the cumulative total
return on the Nasdaq Market Value Index, Peer Group Index 083 and Peer Group
Index 621 for the periods indicated. Because there was no public market for the
Common Stock prior to the Offering, information is presented only for the period
from February 25, 1994 (the date the Common Stock commenced trading on the
Nasdaq Stock Market) through December 31, 1998. The graph assumes an initial
investment of $100.00 with dividends, if any, reinvested over the periods
indicated.
(GRAPH)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------------------------------
February 1994 1995 1996 1997 1998
25, 1994 --------- ---------- ----------- ---------- -----------
---------
<S> <C> <C> <C> <C> <C> <C>
The Company........................................ $100.00 $86.42 $ 39.51 $ 33.33 $ 27.16 $ 68.52
Peer Group Index 083(1)............................ 100.00 86.87 98.61 146.00 234.95 215.05
Peer Group Index 621(1)............................ 100.00 80.72 106.08 125.72 177.34 161.19
NASDAQ Market Value Index.......................... 100.00 97.21 126.09 156.68 191.60 270.32
</TABLE>
- -------------------
(1) For each of the years in the five year period ended December 31, 1998 the
Peer Group Index 083 consisted of those companies that comprised the Media
General Industry Group Index 083 -- Other Business and Institutional
Equipment. The composition of Peer Group Index 083 is as follows:
Educational Development Corp., Hon Industries, Inc.; Kimbal International B,
Knoll Inc., Lear Corp., Miller Herman, Inc., Mity Lite, Inc., Norwood
Promotional Prod., Open Plan Systems, Inc., Polyvision Corp., Tab Products
Co., Virco Manufacturing CP., and Winsloew Furniture, Inc. Media General
Financial Services ("Media General") will no longer support Peer Group Index
083 in the future as a result of a restructuring of its industry group
classification system. The Company has selected Media General's Group Index
621 - Industrial Equipment/Components ("Peer Group Index 621") as the new
peer group index to be used in the performance graph in the future in lieu
of Peer Group Index 083. The Composition of Peer Group Index 621 is as
follows: Aeroquip-Vickers, Inc., Aztec Manufacturing Co., BMC Industries,
Inc., Central Sprinkler Corp., CompX International Inc., Driver-Harris Co.,
General Magnaplate Corp., Intermagnetics General Corporation, Kinark Corp.,
Margate Industries Inc., Masco Corp., Material Sciences Corp., Morton
Industrial Group Inc., Ocal Inc., Parker-Hannifen Corp., Raytech Corp.,
Richton International Corp., The Shaw Group Inc., Sun Hydraulics Corp.,
Total Containment, Inc., United Capital Corp. and Watts Industries Inc.
15
<PAGE>
MATTER NO. 2
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed the firm of Grant Thornton
LLP, independent accountants, to provide auditing and accounting services for
the Company and its subsidiaries during fiscal year 1999. Such appointment is
being submitted to shareholders for ratification.
Grant Thornton LLP replaced Price Waterhouse LLP, which firm, on December 3,
1997, resigned as the Company's independent accountants in the midst of a
disagreement with the Company relating to the recoverability of a $6.8 million
deferred tax asset recorded by the Company during the third quarter of 1997.
During the third quarter of 1997, the Company sustained a $20 million
operating loss due in large measure to an $18 million warranty charge and
certain other charges of $2.6 million. Based on its review of all evidence and
other information available to it at September 30, 1997, the Company recorded,
as an asset, a $6.8 million tax benefit represented by deferred taxes which
management believed were fully realizable, based on the Company's historical
results of operations, management's forecast of future taxable income, and other
factors. Based on procedures performed in connection with its review of the
Company's unaudited financial information for the quarter ended September 30,
1997, Price Waterhouse LLP stated that the Company should record a substantial
valuation allowance (thus decreasing the amount of the deferred tax asset)
because, in its view, the objective evidence indicated it is more likely than
not that such deferred asset would not be fully realized in the future. A
substantial increase in the valuation allowance would have reduced the Company's
assets, net worth and net income by the amount of the increase in the valuation
allowance. This matter was discussed by the Company's Audit Committee with
representatives of Price Waterhouse LLP and was not resolved at the time of
Price Waterhouse's resignation or the appointment of Grant Thornton LLP prior to
the commencement of the 1997 year-end audit.
The Company evaluated whether a valuation allowance is appropriate under all
the facts and circumstances existing at December 31, 1997 in connection with the
1997 audit process and had concluded that a valuation allowance of approximately
$275,000 was required to cover various state net operating loss carryforwards
with relatively short carryforward periods. Grant Thornton LLP concurred with
the Company's determination that no additional valuation allowance was required.
The Company was unable to quantify the amount of a valuation allowance Price
Waterhouse LLP would have required.
The Company authorized Price Waterhouse LLP to respond fully to all inquiries
of Grant Thornton LLP concerning the subject matter of the disagreement
referenced above.
The Company did not consult with Grant Thornton LLP regarding any accounting
matter during the fiscal years ended December 31, 1996 and 1997 or any
subsequent interim period prior to engaging Grant Thornton LLP.
Grant Thornton LLP has conducted the audit of the financial statements of the
Company and its subsidiaries for the year ended December 31, 1998.
Representatives of Grant Thornton LLP are expected to be present at the Annual
Meeting. These representatives will be given an opportunity to make a statement
if they desire to do so, and will be available to answer appropriate questions
from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" RATIFICATION OF
THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
THE 1999 FISCAL YEAR. The affirmative vote of a majority of the shares present,
in person or by proxy, at the Annual Meeting is required to ratify the
appointment. All proxies will be voted "FOR" ratification of the appointment
unless a shareholder specifies to the contrary on such shareholder's proxy card.
16
<PAGE>
SHAREHOLDER PROPOSALS FOR 2000
Shareholders may propose matters for consideration at annual meetings of
shareholders by notice in writing, delivered to or mailed and received by the
Secretary of the Company no later than February 7, 2000. If proposals are
submitted after February 7, 2000, management proxyholders could have
discretionary authority to vote on those proposals at the 2000 annual meeting.
The 2000 Annual Meeting of Shareholders of the Company will be held on or
about April 14, 2000. Any shareholder desiring to submit a proposal to be
considered for inclusion in the 2000 proxy materials must submit such proposal
or proposals in writing, addressed to the Company at 422 Business Center, A130
North Drive, Oaks, Pennsylvania 19456, Attention: Secretary, on or before
November 24, 1999.
DIRECTOR NOMINATIONS BY SHAREHOLDERS
The Bylaws of the Company permit nominations for election to the Board of
Directors to be made by the Board of Directors or by any shareholder entitled to
vote for the election of directors. All shareholder nominations are referred to
the Board of Directors or a committee of the Board of Directors for
consideration. In determining the nominees for director for 2000, the Board will
consider nominees recommended by shareholders. Such shareholder recommendations
should be made in writing no later than January 1, 2000, addressed to Corporate
Secretary, 422 Business Center, A130 North Drive, P.O. Box 939, Oaks,
Pennsylvania 19456.
Under the Bylaws, nominations for director to be made at the Annual Meeting by
shareholders entitled to vote for the election of directors must be preceded by
written notice, received at the principal executive office of the Company not
less than 90 days prior to the Annual Meeting; provided, however, that if less
than 15 days' notice of the Annual Meeting is given to shareholders, such
written notice must be delivered to the Company not later than the close of the
third day following the day on which notice of the Annual Meeting was mailed to
shareholders. The notice must contain certain information specified in the
Bylaws, and should be delivered or mailed to the attention of the Secretary of
the Company. No notice of nomination for election as a director has been
received from any shareholder as of the date of this Proxy Statement. If a
nomination is attempted at the Annual Meeting which does not comply with the
procedures required by the Bylaws or if any votes are cast at the Annual Meeting
for any candidate not duly nominated, then such nomination and/or such votes may
be disregarded.
OTHER MATTERS
The Board of Directors does not intend to bring any other matter before the
Annual Meeting and is not presently informed of any other business which others
may bring before the Annual Meeting. If any other matters should properly come
before the Annual Meeting, or any adjournment or adjournments thereof, however,
it is the intention of the persons named in the accompanying proxy to vote on
such matters as they, in their discretion, may determine.
BY ORDER OF THE BOARD OF DIRECTORS
Richard H. Gross, Secretary
March 24, 1999
PLEASE SIGN, DATE AND MAIL YOUR PROXY NOW.
17
<PAGE>
NOTICE OF 1999 ANNUAL MEETING AND
PROXY STATEMENT
18
<PAGE>
PROXY CARD
TOTAL CONTAINMENT, INC.
THIS PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
I/We hereby appoint Keith R. Ruck and John R. Wright, Jr., or any one of
them acting in the absence of others, as proxyholders, each with the power to
appoint his substitute, and hereby authorize them to represent and to vote, as
designated on the reverse side, all the shares of Common Stock of Total
Containment, Inc. (the "Company") held of record by me/us on February 26, 1999,
at the Annual Meeting of Shareholders to be held on April 16, 1999, or at any
adjournment thereof.
This proxy when properly executed will be voted in the manner directed on
the reverse side. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES FOR DIRECTOR AND FOR THE RATIFICATION OF INDEPENDENT
AUDITORS. This proxy will be voted, in the discretion of the proxyholders, upon
such other business as may properly come before the Annual Meeting of
Shareholders or any adjournment thereof as provided in the rules of the
Securities and Exchange Commission.
(Please vote and sign on the other side)
<PAGE>
For all WITHHOLD
nominees AUTHORITY
listed at to vote for
right (except) all nominees
as marked to listed at Nominees:
the contrary) right Pierre Desjardins
Marcel Dutil
Bernard Gouin
MATTER NO. 1
ELECTION OF
CLASS I
DIRECTORS [ ] [ ]
FOR AGAINST ABSTAIN
MATTER NO. 2
RATIFICATION OF
INDEPENDENT AUDITORS [ ] [ ] [ ]
DIRECTORS
Please mark, sign, date and return the proxy
card promptly using the enclosed envelope
Signature Date:
------------------------------------ ------------------
Signature Date:
------------------------------------ ------------------
Signature if held jointly
NOTE: Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please
give full title as such.
