<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
COASTCAST CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
COASTCAST CORPORATION
3025 EAST VICTORIA STREET
RANCHO DOMINGUEZ, CALIFORNIA 90221
(310) 638-0595
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 11, 1997
------------------------
To the Shareholders of COASTCAST CORPORATION:
You are cordially invited to attend the Annual Meeting of Shareholders of
Coastcast Corporation, a California corporation (the "Company"), which will be
held at the Four Seasons Hotel, 300 South Doheny Drive, Los Angeles, California,
at 10:00 a.m., California time, on Wednesday, June 11, 1997, to consider and act
upon the following matters, all as more fully described in the accompanying
Proxy Statement which is incorporated herein by this reference:
1. To elect a board of seven directors to serve until the next annual
meeting of the Company's shareholders and until their successors have
been elected and qualify;
2. To ratify the selection of Deloitte & Touche LLP as the Company's
independent auditors for fiscal year 1997; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Shareholders of record of the Company's common stock at the close of
business on April 21, 1997, the record date fixed by the Board of Directors, are
entitled to notice of, and to vote at, the meeting.
THOSE WHO CANNOT ATTEND ARE URGED TO SIGN, DATE, AND OTHERWISE COMPLETE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. ANY SHAREHOLDER
GIVING A PROXY HAS THE RIGHT TO REVOKE IT ANY TIME BEFORE IT IS VOTED.
BY ORDER OF THE BOARD OF DIRECTORS
Robert C. Bruning
SECRETARY
Rancho Dominguez, California
April 25, 1997
<PAGE>
COASTCAST CORPORATION
3025 EAST VICTORIA STREET
RANCHO DOMINGUEZ, CALIFORNIA 90221
(310) 638-0595
------------------------
PROXY STATEMENT
---------------------
APPROXIMATE DATE PROXY MATERIAL FIRST SENT TO SHAREHOLDERS: MAY 7, 1997
The following information is given in connection with the solicitation of
proxies for the Annual Meeting of Shareholders of Coastcast Corporation, a
California corporation (the "Company"), to be held at the Four Seasons Hotel,
300 South Doheny Drive, Los Angeles, California, at 10:00 a.m., Pacific time, on
Wednesday, June 11, 1997, and adjournments thereof (the "Meeting"), for the
purposes stated in the Notice of Annual Meeting of Shareholders preceding this
Proxy Statement.
SOLICITATION AND REVOCATION OF PROXIES
A form of proxy is being furnished herewith by the Company to each
shareholder, and, in each case, is solicited on behalf of the Board of Directors
of the Company for use at the Meeting. The entire cost of soliciting these
proxies will be borne by the Company. The Company may pay persons holding shares
in their names or the names of their nominees for the benefit of others, such as
brokerage firms, banks, depositaries, and other fiduciaries, for costs incurred
in forwarding soliciting materials to their principals. Members of the
Management of the Company may solicit some shareholders in person, or by
telephone, telegraph or telecopy, following solicitation by this Proxy
Statement, but will not be separately compensated for such solicitation
services.
Proxies duly executed and returned by shareholders and received by the
Company before the Meeting will be voted FOR the election of all seven of the
nominee-directors specified herein and FOR the ratification of the selection of
Deloitte & Touche LLP as the Company's independent public accountants for fiscal
year 1997, unless a contrary choice is specified in the proxy. If a
specification is indicated as provided in the proxy, the shares represented by
the proxy will be voted and cast in accordance with the specification made. As
to other matters, if any, to be voted on, the persons designated as proxies will
take such actions as they, in their discretion, may deem advisable. The persons
named as proxies were selected by the Board of Directors of the Company and each
of them is a director of the Company.
Under the Company's bylaws and California law, shares represented by proxies
that reflect abstentions or "broker non-votes" (i.e., shares held by a broker or
nominee which are represented at the Meeting, but with respect to which such
broker or nominee is not empowered to vote on a particular proposal) will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. Any shares not voted (whether by
abstention, broker non-vote or otherwise) will have no impact on the election of
directors, except to the extent that the failure to vote for an individual
results in another individual receiving a larger proportion of votes. Any shares
represented at the Meeting but not voted (whether by abstention, broker non-vote
or otherwise) with respect to the proposal to ratify the selection of Deloitte &
Touche LLP will have no effect on the vote for such proposal except to the
extent the number of abstentions causes the number of shares voted in favor of
such proposal not to equal or exceed a majority of the quorum required for the
Meeting (in which case the proposal would not be approved).
Your execution of the enclosed proxy will not affect your right as a
shareholder to attend the Meeting and to vote in person. Any shareholder giving
a proxy has a right to revoke it at any time by either (i) a
1
<PAGE>
later-dated proxy, (ii) a written revocation sent to and received by the
Secretary of the Company prior to the Meeting, or (iii) attendance at the
Meeting and voting in person.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
The Company has outstanding only common stock, of which 8,794,334 shares
were outstanding as of the close of business on April 21, 1997 (the "Record
Date"). Only shareholders of record on the books of the Company at the close of
business on the Record Date will be entitled to vote at the Meeting. Each share
of common stock is entitled to one vote.
Representation at the Meeting by the holders of a majority of the
outstanding shares of common stock of the Company, either by personal attendance
or by proxy, will constitute a quorum.
The following table sets forth, as of the Record Date, the only persons
known to the Company to be the beneficial owners of more than 5% of the
Company's common stock:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) CLASS(2)
- -------------------------------------------------------------- ------------------ -----------
<S> <C> <C>
Hans and Vivian Buehler....................................... 1,137,447 shs. (3 ) 12.88%
3025 East Victoria Street
Rancho Dominguez,
California 90221
</TABLE>
- ------------------------
(1) Except as otherwise indicated and subject to applicable community property
and similar laws, the Company assumes that each named person has the sole
voting and investment power with respect to such person's shares.
(2) Percent of class is based on the number of shares outstanding on the Record
Date plus the number of shares which Mr. Buehler has the right to purchase
pursuant to options which either are currently exercisable or will be
exercisable within 60 days after the Record Date.
(3) Includes 37,497 shares which are subject to options held by Mr. Buehler
which either are currently exercisable or will be exercisable within the 60
days after the Record Date. All shares (other than shares subject to such
option) are held by Mr. and Mrs. Buehler as co-trustees of the Buehler
Living Trust dated August 22, 1990. Does not include 186,000 shares held by
a charitable foundation of which Mr. and Mrs. Buehler are directors and
officers, beneficial ownership of which Mr. and Mrs. Buehler disclaim. The
Company knows of no contractual arrangements which may at a subsequent date
result in a change of control of the Company.
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the shares of
the Company's common stock beneficially owned as of the Record Date by (i) each
director and director nominee, (ii) the executive
2
<PAGE>
officers identified in the Summary Compensation Table below, and (iii) all
directors, director nominees and executive officers of the Company as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP(1) CLASS(2)
- ------------------------------------------------------------------------------ ---------------------- -----------
<S> <C> <C>
Hans H. Buehler............................................................... 1,137,447(3) 12.88%
Richard W. Mora............................................................... 38,664(4) *
George L. Graziadio........................................................... 23,334(5) *
Edwin A. Levy................................................................. 18,467(6) *
Vernon R. Loucks Jr........................................................... 10,000 *
Lee E. Mikles................................................................. 10,000(7) *
Paul A. Novelly............................................................... 13,334(8) *
Robert C. Bruning............................................................. 5,100 *
Ramon F. Ibarra............................................................... 94,836(9) 1.07%
Thomas D. Dixon............................................................... 91,381(10) 1.03%
All directors, director nominees and executive officers as a group
(12 persons)................................................................ 1,445,697(11) 16.02%
</TABLE>
- ------------------------
(1) Except as otherwise indicated and subject to applicable community property
and similar laws, to the best of the Company's knowledge and belief, each
person listed has sole voting and investment power as to shares beneficially
owned by such person.
(2) Percent of class is based on the number of shares outstanding on the Record
Date plus, with respect to each named person or group, as applicable, the
number of shares of common stock, if any, which the listed individual or
group has the right to acquire within 60 days after the Record Date.
Ownership of less than one percent is indicated by an asterisk.
(3) Includes 37,497 shares which are subject to options. All shares (other than
shares subject to such option) are held by Mr. Buehler and his wife as
co-trustees of the Buehler Living Trust dated August 22, 1990. Does not
include 186,000 shares held by a charitable foundation of which Mr. and Mrs.
Buehler are directors and officers, beneficial ownership of which Mr. and
Mrs. Buehler disclaim.
(4) Includes 31,664 shares which are subject to options.
(5) Includes 10,000 shares owned by a partnership controlled by Mr. Graziadio
and 13,334 shares which are subject to options.
(6) Includes 16,667 shares subject to options.
(7) All shares are subject to options. Does not include 15,100 shares owned by
Kodiak Opportunity, L.P. ("Kodiak"), of which Mikles/Miller Management, Inc.
("MMI") is the general partner. Mr. Mikles is a principal shareholder of MMI
and disclaims beneficial ownership of the shares owned by Kodiak.
(8) All shares are subject to options. Does not include 39,000 shares owned by
the Novelly Exempt Trust, U/I/T dated 8/12/92. Mr. Novelly disclaims
beneficial ownership of these shares.
(9) Includes 63,328 shares which are subject to options.
(10) Includes 42,202 shares which are subject to options.
(11) Includes 231,160 shares which are subject to options.
NOMINATION AND ELECTION OF DIRECTORS
The Company's directors are to be elected at each annual meeting of
shareholders. At the Meeting, seven directors are to be elected to serve until
the next annual meeting of shareholders and until their successors are elected
and qualify. The nominees for election as directors at the Meeting set forth in
the
3
<PAGE>
table below are all recommended by the Board of Directors of the Company. In the
event that any of the nominees for director should become unable to serve if
elected, it is intended that shares represented by proxies which are executed
and returned will be voted for such substitute nominee(s) as may be recommended
by the Company's existing Board of Directors.
The seven nominee-directors receiving the highest number of votes cast at
the Meeting will be elected as the Company's directors. Subject to certain
exceptions specified below, shareholders of record on the Record Date are
entitled to cumulate their votes in the election of the Company's directors
(i.e., they are entitled to the number of votes determined by multiplying the
number of shares held by them times the number of directors to be elected) and
may cast all of their votes so determined for one person, or spread their votes
among two or more persons as they see fit. No shareholder shall be entitled to
cumulate votes for a given candidate for director unless such candidate's name
has been placed in nomination prior to the vote and the shareholder has given
notice at the Meeting, prior to the voting, of the shareholder's intention to
cumulate his or her votes. If any one shareholder has given such notice, all
shareholders may cumulate their votes for candidates in nomination.
Discretionary authority to cumulate votes is hereby solicited by the Board of
Directors.
The following table sets forth certain information concerning the nominees
for election as directors.
<TABLE>
<CAPTION>
NOMINEE(1) PRINCIPAL OCCUPATION AGE
- ---------------------------- --------------------------------------------------------- ---
<S> <C> <C>
Hans H. Buehler Chairman of the Board and Chief Executive Officer of the 64
Company
Edwin A. Levy(2) Principal of Levy, Harkins & Co. 60
Paul A. Novelly(3) President of Apex Oil Company, Inc. 53
George L. Graziadio President and Chief Executive Officer of Imperial Bancorp 77
Vernon R. Loucks Jr.(2) Chairman of the Board and Chief Executive Officer of 62
Baxter International, Inc.
Lee E. Mikles(2)(3) Chairman of Mikles/Miller Management, Inc. 41
Richard W. Mora President and Chief Operating Officer of the Company 56
</TABLE>
- ------------------------
(1) The Company does not have a nominating committee of the Board of Directors.
The nominees for election as directors at the Meeting were selected by the
Board of Directors of the Company.
(2) Member of the compensation committee of the Board of Directors of the
Company, currently consisting of three directors, none of whom is an
employee of the Company. The compensation committee held two meetings during
the last fiscal year of the Company in addition to discussions in meetings
of the Board of Directors. See "Executive Compensation and Other
Information--Report of Compensation Committee on Executive Compensation" for
a discussion of the functions performed by the compensation committee.
(3) Member of the audit committee of the Board of Directors of the Company,
currently consisting of two directors, neither of whom is an employee of the
Company. The audit committee held one meeting during the last fiscal year of
the Company in addition to discussions in meetings of the Board of
Directors. The audit committee reviews, acts on, and reports to the Board of
Directors with respect to various auditing and accounting matters, including
the selection of the Company's auditors, the scope of the annual audits, the
nature of non-audit services, fees to be paid to the auditors, the
performance of the Company's auditors, and the accounting practices of the
Company.
4
<PAGE>
Mr. Buehler is one of the founders of the Company and has been the Chief
Executive Officer, Chairman of the Board and a Director since the Company's
inception in 1980. Mr. Buehler has more than 30 years of experience in the
investment-casting business, including more than 20 years of experience in the
manufacture of golf clubheads.
Mr. Levy has been a director of the Company since February 9, 1994. He is
one of the founders of, and since 1979 has been a principal of, Levy, Harkins &
Co., an investment advisory firm. Mr. Levy is a director of Quintel
Entertainment, Inc.
Mr. Novelly has been a director of the Company since December 14, 1994.
Since 1975, Mr. Novelly has been the President of Apex Oil Company, Inc., a
company which together with its subsidiaries is engaged in oil and gas
exploration, transportation, trading and storage, and coal mining. Mr. Novelly
also served as a director of Imperial Bancorp, a bank holding company, and Vista
2000, Inc.
Mr. Graziadio has been a director of the Company since January 16, 1995.
Since 1968 he has been the President and Chief Executive Officer of Imperial
Bancorp, a bank holding company. He also is a director of Imperial Bancorp. Mr.
Graziadio is the uncle of Mr. Mikles.
Mr. Loucks has been a director of the Company since September 30, 1996.
Since 1987, Mr. Loucks has served as Chairman of the Board of Baxter
International, Inc., a provider of cardiovascular, kidney dialysis and
intravenous products to the health care market, and he has served as Chief
Executive Officer of Baxter since 1980.
Mr. Mora has been the President and Chief Operating Officer of the Company
since May 9, 1995. From November 1991 to April 1995, he was chief operating
officer of Pharmavite Corporation, a manufacturer and distributor of nutritional
supplements. For many years before that, he was a senior officer of Bergen
Brunswig Corp., a large distributor of pharmaceutical and health and beauty aid
products.
Mr. Mikles has been the Chairman of Mikles/Miller Management, Inc., a
professional money management firm, since October 1992. From November 1990 to
October 1992, he was the Chairman of Mikles/Miller Group, an affiliate of
Shearson Lehman Brothers. From May 1989 to November 1990, he was a first vice
president of the corporate finance department of Bateman Eichler, Hill Richards,
Inc., a securities firm. Previous to joining Bateman Eichler, Hill Richards,
Inc., Mr. Mikles was a first vice president with Drexel Burnham Lambert, Inc.,
from 1981 through 1989. While there he formed KCM Equities to become a
co-general partner of several joint venture limited partnerships with DBL Group,
Inc. Mr. Mikles was instrumental in the creation, financing and management of
these limited partnerships. Mr. Mikles filed for personal bankruptcy in 1992 as
part of a personal restructuring as a direct result of his service as a general
partner of a real estate partnership organized in 1986 by Drexel Burnham Lambert
Group Inc. Mr. Mikles also serves as a director of Imperial Bancorp and Vista
2000, Inc. Mr. Mikles is the nephew of Mr. Graziadio.
There were five meetings of the Board of Directors of the Company during the
last fiscal year of the Company. Each of the directors of the Company attended
75% or more of the aggregate of the total number of meetings of the Board of
Directors held during the period in which he was a director and the total number
of meetings held by all committees of the Board of Directors on which he served
during such period.
DIRECTOR COMPENSATION
FEES AND BENEFITS
Each member of the Board of Directors who is not an employee of the Company
receives an annual fee of $10,000, paid in quarterly installments of $2,500, and
a fee of $2,000 for each board meeting
5
<PAGE>
attended. The Company also reimburses directors for expenses related to
attending board and committee meetings.
OPTION PLAN
The Company has adopted and holders of a majority of the outstanding shares
of Common Stock of the Company have approved the Coastcast Corporation
Non-Employee Director Stock Option Plan (the "Director Plan") under which a
maximum of 200,000 shares of common stock of the Company may be issued pursuant
to exercise of stock options granted under the plan. Only Eligible Directors may
receive options under the Director Plan. An Eligible Director is a director of
the Company who (i) is not then an employee of the Company or any of its
subsidiaries, (ii) has not, within the period of three years immediately
preceding such time, received any stock option, stock bonus, stock appreciation
right, or other similar stock award from the Company or any of its subsidiaries
other than options granted to such director under the Director Plan, and (iii)
does not then beneficially own more than 10% of the outstanding stock of the
Company. The Director Plan provides that an option to purchase 30,000 shares of
common stock of the Company shall be granted automatically to each Eligible
Director who first becomes an Eligible Director after December 31, 1995 on the
date on which such director first becomes an Eligible Director. Thereafter, an
option to purchase an additional 10,000 shares of common stock of the Company
shall be granted automatically to each such director on the third anniversary of
the date on which such director first became an Eligible Director and on each
subsequent anniversary of such date if such director is still an Eligible
Director on such anniversary. The Director Plan further provides that an option
to purchase 10,000 shares of common stock of the Company shall be granted
automatically on December 13, 1998 to each Eligible Director who first became an
Eligible Director prior to December 13, 1995, and on each subsequent December 13
if such director is still an Eligible Director on such December 13. The exercise
price of an option shall be 100% of the fair market value per share of the
common stock on the date of grant. No option granted under the Director Plan is
exercisable after the expiration of the earlier of (i) ten years following the
date the option is granted, or (ii) one year following the date the optionee
ceases to be a director of the Company for any reason. An option becomes
exercisable as to one-third of the shares subject to the option on each
anniversary of the date the option is granted if the optionee is still a
director of the Company on such anniversary. Unless sooner terminated by the
Board of Directors, the Director Plan expires in December 2003. The Director
Plan is administered by the Board of Directors.
6
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth information concerning compensation of the
chief executive officer and the four other most highly compensated executive
officers of the Company for each of the last three completed fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------------- -------------
OTHER ANNUAL STOCK OPTION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) GRANTS(2) COMPENSATION(3)
- --------------------------------------- --------- ---------- ---------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Hans H. Buehler, 1996 $ 450,000 $ 350,000 250,000
Chairman of the Board and 1995 350,000 -0- 72,500
Chief Executive Officer 1994 350,000 75,000 -0-
Richard W. Mora, 1996 $ 325,000 $ 250,000 100,000 $ 969(6)
President and Chief Operating 1995 178,750 -0- $ 45,313(5) 65,000
Officer(4)
Ramon F. Ibarra, 1996 $ 160,000 $ 60,000 -0- $ 969
Vice President -- 1995 147,000 -0- 27,167
Manufacturing 1994 140,000 31,000 -0-
Thomas D. Dixon, 1996 $ 160,000 $ 30,000 -0- $ 1,200
Vice President -- 1995 147,000 -0- 33,000
Marketing 1994 129,935 26,500 -0-
Robert C. Bruning, 1996 $ 116,702 $ 45,000 25,000
Chief Financial Officer(7)
Robert C. Milo, 1996 $ 191,081 $ 50,000 38,333(9) $ 79,949(10)
Executive Vice President -- 1995 242,308 -0- 45,000
Manufacturing(8)
</TABLE>
- ------------------------
(1) Except where indicated in this table, perquisites and other personal
benefits did not in the aggregate equal or exceed the lesser of $50,000 for
any named individual or 10 percent of the total of annual salary and bonus
reported in this table for such person.
(2) Number of shares of the Company's common stock subject to stock options
granted to the named individual under the Company's employee stock option
plan.
(3) Represents contributions made by the Company to the Company's 401(k)
retirement savings plan for the named executive officer. Unless otherwise
noted, the named executive is vested in full with respect to such
contributions.
(4) Mr. Mora joined the Company in May 1995.
(5) Includes $33,279 in relocation expenses.
(6) $388 is vested and the remainder is unvested.
(7) Mr. Bruning joined the Company in May 1996.
(8) Mr. Milo joined the Company in January 1995 and resigned from his position
with the Company on October 28, 1996.
7
<PAGE>
(9) Includes 30,000 shares subject to an option granted in 1996 which terminated
when Mr. Milo resigned and 8,333 shares subject to an option granted in 1995
the vesting on which was accelerated at the time of Mr. Milo's resignation.
(10) Includes severance compensation and benefits paid to Mr. Milo, unvested
matching contributions made to the Company's 401(k) plan given to Mr. Milo
and the value of a car and club membership given to Mr. Milo under an
agreement executed in connection with his resignation. Does not include
approximately $83,192 of severance compensation and benefits payable in 1997
to Mr. Milo under such agreement.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Company has established a Supplemental Executive Retirement Plan (the
"Plan"), which became effective September 1, 1996. The Plan is a nonqualified
deferred compensation arrangement that covers a select group of management and
highly compensated employees. The specific objective of the Plan is to provide a
retirement benefit at age 65 of 70% of the final average salary. An actuarially
reduced early retirement benefit is available after age 55 if the participant
has terminated employment with five or more years of participation. The final
average salary is the participant's average annual salary (excluding bonuses and
other non-regular forms of compensation) earned from the Company (before
adjustments for contributions to Company-sponsored employee benefit plans)
during the three highest salary years of the five year period ending on the
December 31 next preceding the earlier of termination of employment or the date
on which the participant qualifies for retirement. Benefits do not vest until a
participant has participated in the Plan for five years. The retirement benefit
accrues ratably over ten years of participation at seven percent per year, with
the actual retirement benefit being dependent on years of participation in the
Plan at the actual time of retirement. At the time of adoption of the Plan, the
Board of Directors credited Hans H. Buehler with 10 years of participation such
that he currently is vested as to the maximum benefits under the Plan. The Board
also has amended the Plan to provide that, starting in 1997, Richard W. Mora
shall be credited with two years of participation for each actual year of
participation for the accrual of benefits and all other purposes under the Plan.
The following table sets forth approximate annual retirement benefits for
retirement at age 65, expressed as a single life annuity, which would be payable
under the Plan:
<TABLE>
<CAPTION>
YEARS OF
PARTICIPATION
--------------------
AVERAGE ANNUAL COMPENSATION 5 10
- --------------------------- --------- ---------
<S> <C> <C>
$ 125,000 43,750 87,500
150,000 52,500 105,000
175,000 61,250 122,500
200,000 70,000 140,000
225,000 78,750 157,500
250,000 87,500 175,000
300,000 105,000 210,000
400,000 140,000 280,000
450,000 157,500 315,000
500,000 175,000 350,000
525,000 183,750 367,500
</TABLE>
As of December 31, 1996, all of the executive officers named in the Summary
Compensation Table, except Robert C. Milo, were participating in the Plan. The
average salary of the named executive officers for purposes of the Plan does not
differ substantially from that set forth in the annual compensation columns of
the Summary Compensation Table, except for Hans Buehler, whose average annual
salary currently is $516,667, which is the average of his annual compensation
for the years 1992, 1993 and 1996. Credited years of participation in the Plan
by the participants are as follows: Hans Buehler, 10 years of participation;
Richard Mora, 1 year of participation; Ramon Ibarra, 1 year of participation;
Thomas Dixon, 1 year of participation; and Robert Bruning, 1 year of
participation. Amounts payable under the Plan are not reduced by Social Security
benefits.
8
<PAGE>
OPTION GRANTS DURING 1996
The following table sets forth information concerning grants of stock
options to the executive officers named in the Summary Compensation Table during
1996. No options were granted to Ramon F. Ibarra or Thomas D. Dixon in 1996.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- ---------------------------------------------------------------------------------------- VALUE AT ASSUMED
% OF TOTAL RATES OF STOCK PRICE
OPTIONS APPRECIATION FOR
GRANTED TO OPTION TERM(3)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION --------------------------
NAME GRANTED(1) 1996 PRICE(2) DATE 5% 10%
- -------------------------------- ----------- ----------------- --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Hans H. Buehler................. 200,000 33.35% $ 15.375 02/20/06 $ 1,933,868 $ 4,900,935
Hans H. Buehler................. 50,000 8.34 13.625 12/26/06 428,438 1,085,776
Richard W. Mora................. 50,000 8.34 19.625 08/07/06 617,108 1,563,917
Richard W. Mora................. 50,000 8.34 13.625 12/26/06 428,438 1,085,776
Robert C. Bruning............... 15,000 2.50 21.000 05/06/06 198,103 502,047
Robert C. Bruning............... 10,000 1.67 13.625 12/26/06 85,668 217,155
Robert C. Milo(4)............... 30,000 5.00 19.625 08/07/06 370,265 938,350
</TABLE>
- ------------------------
(1) The amounts in the table represent shares of the Company's common stock
covered by stock options granted to the named individual under the Company's
employee stock option plan. Options become exercisable as to one-third of
the option shares two years after the date of grant and as to an additional
one-third of the option shares each one-year interval thereafter, except
that the options which expire on December 26, 2006 for Hans H. Buehler will
became exercisable on December 27, 1997. Certain transactions or potential
transactions relating to a change in control of the Company may accelerate
the vesting of options outstanding at such time.
(2) The exercise price of each option is the market price of the common stock of
the Company on the date of grant.
(3) These columns present hypothetical future values of the stock purchasable
upon exercise of the options net of the option's exercise price, assuming
that the market price of the Company's common stock appreciates at a five or
ten percent compound annual rate over the ten-year term of the options. The
five and ten percent rates of stock price appreciation are presented as
examples pursuant to the Proxy Rules and do not necessarily reflect
management's assessment of the Company's future stock price performance. The
potential realizable values presented are not intended to indicate the value
of the options.
(4) Options expired upon Mr. Milo's resignation on October 28, 1996.
9
<PAGE>
OPTION EXERCISES IN 1996 AND YEAR-END OPTION VALUES
The following table sets forth information concerning stock options which
were exercised during, or held at the end of, 1996 by the officers named in the
Summary Compensation Table:
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED OPTIONS AT VALUE OF UNEXERCISED
DECEMBER 31, 1996 IN-THE-MONEY OPTIONS(1)
SHARES ACQUIRED VALUE -------------------------- --------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ------------------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Hans H. Buehler................ -0- -0- 20,000 302,500 $ 90,000 $ 225,313
Richard W. Mora................ -0- -0- 15,000 150,000 67,500 250,000
Ramon F. Ibarra................ -0- -0- 56,942 21,967 491,091 65,939
Thomas D. Dixon................ -0- -0- 33,871 27,100 263,546 85,625
Robert C. Bruning.............. -0- -0- -0- 25,000 -0- 8,750
Robert C. Milo................. -0- -0- 8,333 -0- 34,374 -0-
</TABLE>
- ------------------------
(1) Valued based on closing sale price of $14.50 per share on December 31, 1996.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors makes this report on
executive compensation pursuant to Item 402 of Regulation S-K. Notwithstanding
anything to the contrary set forth in any of the Company's previous filings
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, that might incorporate future filings, including this Proxy
Statement, in whole or in part, this report and the graph which follows this
report shall not be incorporated by reference into any such filings, and such
information shall be entitled to the benefits provided in Item 402(a)(9).
The Compensation Committee reviews the performance of the executive officers
of the Company, makes recommendations to the Board of Directors as to their
compensation and reviews the compensation programs for other key employees,
including salary and cash bonus levels. The Compensation Committee also
administers the Company's employee stock option plan (the "Employee Plan") and
authorizes grants of options to officers and other key employees based on
recommendations of Management.
COMPENSATION POLICIES AND PHILOSOPHY
The Company's executive compensation policies are designed to attract,
retain and reward executive officers who contribute to the Company's success, to
provide economic incentives for executive officers to achieve the Company's
business objectives by linking their compensation to the performance of the
Company, to strengthen the relationship between executive pay and shareholder
value and to reward individual performance. The Company uses a combination of
base salary, cash bonuses and stock options to achieve these objectives.
The Compensation Committee considers a number of factors, including the
level and types of compensation paid to persons in similar positions by
comparable companies. In addition, the Compensation Committee evaluates
corporate performance by looking at factors such as performance relative to
competitors, performance relative to business conditions and the success of the
Company in meeting its financial objectives. The Compensation Committee also
reviews the performance of each executive officer, including a review of his or
her ability to meet individual performance objectives, demonstration of job
knowledge and skills and the ability to work with others toward the achievement
of the Company's goals.
COMPONENTS OF COMPENSATION
Executive officer salaries are established in relation to a range of
salaries for comparable positions in companies of comparable size and
complexity. The Company seeks to pay salaries to executive officers that
10
<PAGE>
are commensurate with the qualifications, duties and responsibilities and that
are competitive in the marketplace. In making its annual salary recommendations,
the Compensation Committee looks at the Company's financial position and
performance, the contribution of the individual executive officers during the
prior fiscal year in helping to meet the Company's financial and business
objectives as well as the executive officers' performance of their individual
responsibilities.
Cash bonuses are used to provide executive officers with financial
incentives to meet quarterly and annual performance targets of the Company.
Performance targets and bonus recommendations for executives other than the
chief executive officer are proposed by the chief executive officer, reviewed
and, when appropriate, revised by the Compensation Committee and approved by the
Board of Directors. Personal goals and bonus recommendations for the chief
executive officer are recommended by the Compensation Committee and approved by
the Board. Cash bonuses were paid to Hans H. Buehler, Richard W. Mora, Ramon F.
Ibarra, Thomas F. Dixon and Robert C. Bruning for 1996, based on the performance
of the Company in fiscal year 1996.
The Compensation Committee believes that equity ownership by executive
officers provides incentives to build shareholder value and align the interests
of executive officers with the interests of shareholders. Upon hiring executive
officers, the Compensation Committee typically recommends stock option grants to
the officers under the Employee Plan, subject to applicable vesting periods.
Thereafter, the Compensation Committee considers awarding additional grants
under the Employee Plan. The Compensation Committee believes that these
additional grants provide incentives for executive officers to remain with the
Company. Options are granted at the current market price for the Company's
common stock and, consequently, have value only if the price of the Company's
common stock increases over the exercise price. In determining the size of the
periodic grants, the Compensation Committee considers prior option grants to the
executive, the executive's performance during the current fiscal year and his or
her expected contributions during the succeeding fiscal year.
COMPENSATION OF THE PRINCIPAL EXECUTIVE OFFICER
The Compensation Committee reviews the performance of the chief executive
officer of the Company, as well as other executive officers of the Company,
annually. In 1996, Mr. Buehler received a bonus of $350,000, based on the
performance of the Company in fiscal year 1996. In December 1996, on the
recommendation of the Compensation Committee, the Board of Directors increased
Mr. Buehler's salary for 1997 to $500,000 in recognition of his contributions to
the Company in 1996, including his role in strengthening the Company's
management team with the addition of new personnel.
Respectfully submitted,
Compensation Committee:
Edwin A. Levy
Vernon R. Loucks Jr.
Lee E. Mikles
11
<PAGE>
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The graph below compares the cumulative total shareholder return on the
Company's common stock with the cumulative total return on the Standard & Poor's
500 Index and a peer group index for the period commencing on December 10, 1993
(the date trading of the Company's common stock commenced on the New York Stock
Exchange) and ending on December 31, 1996. The data set forth below assumes the
value of an investment in the Company's common stock and each index was $100 on
December 10, 1993.
COMPARISON OF TOTAL RETURN
SINCE THE INITIAL PUBLIC OFFERING OF COASTCAST CORPORATION COMMON STOCK
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL RETURN TO STOCKHOLDERS
<S> <C> <C> <C>
(Assumes $100 investment on 12/10/93)
Dollars
Coastcast Corporation Peer Group* S&P 500
12/10/93 $ 100.00 $ 100.00 $ 100.00
12/31/93 $ 113.28 $ 98.24 $ 100.65
12/30/94 $ 73.44 $ 69.48 $ 101.98
12/29/95 $ 63.28 $ 31.23 $ 140.25
12/31/96 $ 90.63 $ 31.71 $ 172.43
</TABLE>
*Peer Group Index consists of Royal Grip Inc. and Aldila Inc.
12
<PAGE>
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The accounting firm of Deloitte & Touche LLP serves the Company as its
independent auditors at the direction of the Board of Directors of the Company.
One or more representatives of Deloitte & Touche LLP are expected to be present
at the Meeting and will have an opportunity to make a statement if they desire
to do so and to be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR the ratification of the
selection of Deloitte & Touche LLP as the independent auditors for the Company
for fiscal year 1997. This matter is not required to be submitted for
shareholder approval, but the Board of Directors has elected to seek
ratification of its selection of the independent auditors by the affirmative
vote of a majority of the shares represented and voting at the Meeting (which
affirmative vote must equal or exceed a majority of the quorum required for the
Meeting).
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16 of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and executive officers and persons who own more than 10% of
a registered class of the Company's equity securities to file various reports
with the Securities and Exchange Commission and the New York Stock Exchange
concerning their holdings of, and transactions in, securities of the Company.
Copies of these filings must be furnished to the Company.
Based on a review of the copies of such forms furnished to the Company and
written representations from the Company's executive officers and directors, the
Company notes that (a) Richard W. Mora inadvertently failed to file a Form 4 for
certain transactions and failed to file the Form 5 reporting such transactions
on a timely basis, and (b) Messrs. Thomas D. Dixon and Ramon F. Ibarra failed to
file a Form 5 for options granted in December 1995 on a timely basis.
SHAREHOLDER PROPOSALS
Shareholders who wish to present proposals for action at the 1998 Annual
Meeting of Shareholders should submit their proposals in writing to the
Secretary of the Company at the address of the Company set forth on the first
page of this Proxy Statement. Proposals must be received by the Secretary no
later than January 7, 1998, for inclusion in next year's proxy statement and
proxy card.
ANNUAL REPORT TO SHAREHOLDERS
The Annual Report to Shareholders of the Company for the year ended December
31, 1996, including audited consolidated financial statements, has been mailed
to the shareholders concurrently herewith, but such report is not incorporated
in this Proxy Statement and is not deemed to be a part of the proxy solicitation
material.
OTHER MATTERS
Management of the Company does not know of any other matters which are to be
presented for action at the Meeting. Should any other matters come before the
Meeting or any adjournment thereof, the persons named in the enclosed proxy will
have the discretionary authority to vote all proxies received with respect to
such matters in accordance with their collective judgment.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K, as filed with the
Securities and Exchange Commission (exclusive of Exhibits), will be furnished
without charge to any person from whom the accompanying proxy is solicited upon
written request to Corporate Secretary, Coastcast Corporation, 3025
13
<PAGE>
East Victoria Street, Rancho Dominguez, California 90221. If Exhibit copies are
requested, a copying charge of $.20 per page will be made.
BY ORDER OF THE BOARD OF DIRECTORS
Robert C. Bruning
SECRETARY
Rancho Dominguez, California
April 25, 1997
SHAREHOLDERS ARE URGED TO SPECIFY THEIR CHOICES AND TO DATE, SIGN, AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL
AND YOUR COOPERATION WILL BE APPRECIATED.
14
<PAGE>
COASTCAST CORPORATION
3025 EAST VICTORIA STREET
RANCHO DOMINGUEZ, CALIFORNIA 90221
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Hans H. Buehler and Richard W. Mora as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them or either of them to represent and to vote as designated below, all the
shares of common stock of Coastcast Corporation held of record by the
undersigned on April 21, 1997, at the Annual Meeting of Shareholders to be
held on June 11, 1997, or any adjournment thereof.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
Please mark your
votes as /X/
indicated in
this example
FOR all nominees below WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE TO VOTE FOR ALL NOMINEES
CONTRARY BELOW) LISTED BELOW
1. ELECTION OF
DIRECTORS / / / /
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE MARK
THE LINES NEXT TO THE NOMINEE'S NAME BELOW:
Hans H. Buehler ______ George L. Graziadio ______ Edwin A. Levy _____
Vernon R. Loucks, Jr. ______ Lee E. Mikles ______ Richard W. Mora ______
Paul A. Novelly ______
2. RATIFICATION OF FOR AGAINST ABSTAIN
SELECTION OF INDEPENDENT / / / / / /
AUDITORS
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Signature(s) Dated 1997
------------------------------------------- ----------
PLEASE READ, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
