<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<CAPTION>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
MERIDIAN SPORTS INCORPORATED
- -------------------------------------------------------------------------------
(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)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
---------------------------------------------------------------------
(Set forth the amount on which the filing fee is calculated and state
how it was determined):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
---------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
---------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange
---------------------------------------------------------------------
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
number, or the Form or Schedule and the date of its filing.
---------------------------------------------------------------------
(1) Amount Previously Paid:
---------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[MERIDIAN SPORTS INCORPORATED LETTERHEAD]
April 21, 1997
To Our Stockholders:
You are cordially invited to attend the 1997 Annual Meeting of
Stockholders of Meridian Sports Incorporated to be held at Airport Hilton
Hotel, McGhee Tyson Airport (Knoxville Metropolitan Airport) 2001 Alcoa
Highway, Alcoa, Tennessee 37701, on Thursday, May 29, 1997, at 11:00 a.m. local
time.
The business of the meeting will be to elect directors, and ratify the
selection of independent auditors for 1997. Information on each of these
matters can be found in the accompanying Proxy Statement.
While stockholders may exercise their right to vote their shares in
person, we recognize that many stockholders may not be able to attend the
Annual Meeting. Accordingly, we have enclosed a proxy which will enable you to
vote your shares on the issues to be considered at the Annual Meeting even if
you are unable to attend. If you desire to vote in accordance with management's
recommendations, you need only sign, date and return the proxy in the enclosed
postage-paid envelope to record your vote. Otherwise, please mark the proxy to
indicate your vote; date and sign the proxy; and return it in the enclosed
postage-paid envelope as soon as conveniently possible.
Sincerely,
J. Eric Hanson
President and Chief Executive Officer
<PAGE>
MERIDIAN SPORTS INCORPORATED
100 CHEROKEE COVE DRIVE
VONORE, TENNESSEE 37885
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
Meridian Sports Incorporated:
Notice is hereby given that the Annual Meeting of Stockholders of
Meridian Sports Incorporated, a Delaware corporation (the "Company"), will be
held on the 29th day of May 1997 at 11:00 a.m., local time, at Airport Hilton
Hotel, McGhee Tyson Airport (Knoxville Metropolitan Airport) 2001 Alcoa
Highway, Alcoa, Tennessee 37701, for the following purposes:
1. To elect the nominees for the Board of Directors of the Company
to serve until the next annual meeting and until such directors'
successors are duly elected and shall have qualified.
2. To ratify the selection of Ernst & Young LLP as the Company's
independent auditors for 1997.
3. To transact such other business as may properly come before the
Annual Meeting or at any adjournments or postponements thereof.
A Proxy Statement describing the matters to be considered at the
Annual Meeting is attached to this notice. Only stockholders of record at the
close of business on April 15, 1997 (the "Record Date") are entitled to notice
of, and to vote at, the Annual Meeting and at any adjournments thereof. A list
of stockholders entitled to vote at the Annual Meeting will be located at the
offices of the Company at 100 Cherokee Cove Drive, Vonore, Tennessee 37885, at
least ten days prior to the Annual Meeting and will also be available for
inspection at the Annual Meeting.
To ensure that your vote will be counted, please complete, date and
sign the enclosed proxy card and return it promptly in the enclosed prepaid
envelope, whether or not you plan to attend the Annual Meeting. Since proxies
may be revoked at any time, any stockholder attending the Annual Meeting may
vote in person even if that stockholder has returned a proxy.
By Order of the Board of Directors
Meridian Sports Incorporated
APRIL 21, 1997
PLEASE COMPLETE, SIGN AND DATE THE ACCOMPANYING
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
THIS WILL ENSURE THAT YOUR SHARES ARE VOTED
IN ACCORDANCE WITH YOUR WISHES.
<PAGE>
MERIDIAN SPORTS INCORPORATED
----------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 29, 1997
----------------------------
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors (the "Board of Directors") of Meridian
Sports Incorporated, a Delaware corporation (the "Company"), of proxies to be
voted at the 1997 Annual Meeting of Stockholders to be held on the 29th day of
May 1997 at 11:00 a.m., local time, at Airport Hilton Hotel, McGhee Tyson
Airport (Knoxville Metropolitan Airport) 2001 Alcoa Highway, Alcoa, Tennessee
37701, and at any adjournments or postponements thereof (the "Annual Meeting").
This Proxy Statement and the enclosed proxy are first being sent to
stockholders on or about April 21, 1997.
At the Annual Meeting, the Company's stockholders will be asked (1) to
elect the nominees for the Board of Directors of the Company until the
Company's next annual meeting and until such Directors' successors are duly
elected and shall have qualified: Ronald O. Perelman, J. Eric Hanson, Jerry W.
Levin, John P. Murray, Jr., Martin D. Payson and Bruce Slovin; (2) to ratify
the selection of Ernst & Young LLP as the Company's independent auditors for
1997; and (3) to transact such other business as may properly come before the
Annual Meeting or at any adjournments or postponements thereof.
The principal executive offices of the Company are located at 100
Cherokee Cove Drive, Vonore, Tennessee 37885 and the telephone number is
423-884-6776.
SOLICITATION AND VOTING OF PROXIES; REVOCATION
All proxies duly executed and received by the Company will be voted on
all matters presented at the Annual Meeting in accordance with the instructions
given therein by the person executing such proxy or, in the absence of such
instructions, will be voted FOR the election of the nominees for the Board of
Directors of the Company identified in this Proxy Statement and FOR The
ratification of Ernst & Young LLP as the Company's auditors. The submission of
a signed proxy will not affect a stockholder's right to attend, or vote in
person at, the Annual Meeting of stockholders. Any stockholder may revoke his
or her proxy at any time before it is voted by written notice to such effect
received by the Company at 100 Cherokee Cove Drive, Vonore, Tennessee 37885,
Attention: Secretary, by delivery of a subsequently dated proxy or by attending
the Annual Meeting and voting in person (although attendance at the Annual
Meeting will not in and of itself constitute a revocation of a proxy).
The accompanying form of proxy is being solicited on behalf of the
Board of Directors. The solicitation of proxies may be made by mail and may
also be made by personal interview,
<PAGE>
telephone and facsimile transmission, and by directors, officers and regular
employees of the Company without special compensation therefor. The Company
will bear the costs incurred in connection with the solicitation of proxies and
expects to reimburse banks, brokers and other persons for their reasonable
out-of-pocket expenses in handling proxy materials for beneficial owners.
RECORD DATE; OUTSTANDING SHARES; VOTING AT THE ANNUAL MEETING
Only holders of record of the Company's common stock, par value $0.01
(the "Common Stock"), at the close of business on April 15, 1997 (the "Record
Date") will be entitled to notice of and to vote at the Annual Meeting. On that
date, there were issued and outstanding 8,000,000 shares of Common Stock, each
of which is entitled to one vote. The presence, in person or by properly
executed proxy, of the holders of a majority of the shares of Common Stock
outstanding and entitled to vote at the Annual Meeting is necessary to
constitute a quorum at the Annual Meeting. Any stockholder present (including
broker non-votes) at the Annual Meeting but who abstains from voting shall be
counted for purposes of determining whether a quorum exists. With respect to
all matters considered at the Annual Meeting (other than the election of
directors), an abstention (or broker non-vote) has the same effect as a vote
against the proposal. Abstentions from voting on the election of directors
(including broker non-votes) will have no effect on the outcome of the vote.
The affirmative vote of the holders of at least a majority of the
shares of Common Stock outstanding and entitled to vote is required to ratify
the appointment of Ernst & Young LLP. The affirmative vote of the holders of a
plurality of the votes cast is required to elect the nominees for the Board of
Directors of the Company.
Meridian Sports Holdings Inc. ("Meridian Holdings"), which
beneficially owns 5,200,000 shares or 65% of the outstanding Common Stock as of
the Record Date, has informed the Company of its intention to vote its shares
of Common Stock FOR each of the matters to be acted on at the Annual Meeting
(collectively, the "Proposals").
PROPOSAL 1 - ELECTION OF DIRECTORS
All of the Company's Directors will be elected at the Annual Meeting
to serve until the next succeeding Annual Meeting of stockholders and until
their successors are duly elected and shall have qualified. All of the nominees
listed herein are currently members of the Board of Directors and, except as
herein stated, the proxies solicited hereby will be voted FOR the election of
the nominees listed herein. All nominees, if elected, are expected to serve
until the next succeeding Annual Meeting. Directors of the Company will be
elected by a plurality vote of the outstanding shares of Common Stock present
in person or represented by proxy at the Annual Meeting. Under applicable
Delaware law, in tabulating the vote, abstentions from voting on the election
of Directors (including broker non-votes) will be disregarded and have no
effect on the outcome of the vote.
2
<PAGE>
The Board of Directors has been informed that all persons listed below
are willing to serve as Directors, but if any of them should decline or be
unable to act as a Director, the individuals named in the proxies will vote for
the election of such other person or persons as they, in their discretion, may
choose. The Board of Directors has no reason to believe that any such nominees
will be unable or unwilling to serve.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF EACH OF THE NOMINEES LISTED HEREIN FOR DIRECTOR.
DIRECTOR NOMINEES
The name, age (as of April 1, 1997), principal occupation for the last
five years, selected biographical information and period of service as a
Director of the Company of each Director nominee is set forth hereafter.
RONALD O. PERELMAN (54) has been Chairman of the Board of Directors
and a Director of the Company since 1995 and has been Chairman of the Board of
Directors and Chief Executive Officer of Mafco Holdings Inc. ("Holdings") and
MacAndrews & Forbes Holdings Inc. ("MacAndrews Holdings"), diversified holding
companies, and various affiliates since 1980. Mr. Perelman is also Chairman of
the Board of Directors of Andrews Group Incorporated ("Andrews Group"),
Consolidated Cigar Holdings Inc. ("Cigar Holdings"), Mafco Consolidated Group
Inc. ("Mafco Consolidated") and Power Control Technologies Inc. ("Power
Control") and Mr. Perelman is the Chairman of the Executive Committees of the
Boards of The Coleman Company, Inc. ("Coleman"), Marvel Entertainment Group,
Inc. ("Marvel"), Revlon Consumer Products Corporation ("Revlon Products") and
Revlon, Inc. ("Revlon"). Mr. Perelman is also a Director of the following
corporations which file reports pursuant to the Securities Exchange Act of 1934
(the "Exchange Act"): Andrews Group, Coleman, Coleman Holdings Inc. ("Coleman
Holdings"), Coleman Worldwide Corporation ("Coleman Worldwide"), Cigar
Holdings, Consolidated Cigar Corporation ("Cigar Corp."), California Federal
Bank, A Federal Savings Bank ("CalFed"), First Nationwide Holdings Inc. ("First
Nationwide Holdings"), First Nationwide (Parent) Holdings Inc. ("First
Nationwide Parent"), Mafco Consolidated, Marvel, Marvel Holdings Inc. ("Marvel
Holdings"), Marvel III Holdings Inc. ("Marvel III"), Marvel (Parent) Holdings
Inc. ("Marvel Parent"), Pneumo Abex Corporation ("Pneumo Abex"), Power Control,
Revlon Worldwide Corporation ("Revlon Worldwide"), Revlon, Revlon Products and
Toy Biz, Inc. (On December 27, 1996, Marvel Holdings, Marvel Parent, Marvel III
and Marvel and several of its subsidiaries filed voluntary petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code.)
J. ERIC HANSON (50) has been a Director of the Company since 1994. Mr.
Hanson has been Executive Vice President of Power Control since 1997 and Senior
Vice President of Holdings and MacAndrews Holdings, diversified holding
companies, and various affiliates since 1994 and Vice President of Holdings
from 1993 to 1994. Mr. Hanson was President of Edina Group Inc., a private
investment firm, from 1992 to 1993 and prior to 1992 served in various
positions
3
<PAGE>
culminating in his appointment as Chief Executive Officer of Ground Round
Restaurants, Inc. Mr. Hanson is also a Director of Power Control which files
reports pursuant to the Exchange Act.
JERRY W. LEVIN (52) has been a Director of the Company since its
formation in 1994, has been Chairman of the Board and Chief Executive Officer
of Coleman since February 1997 and has been Chairman of the Boards of Revlon
and of Revlon Products, cosmetics, skin care, fragrance, personal care and
professional products companies, since November 1995. Mr. Levin was Chief
Executive Officer of Revlon and Revlon Products from 1992 to 1997. Mr. Levin
has been Executive Vice President of MacAndrews Holdings since March 1989.
Prior to joining MacAndrews Holdings, for 15 years he held various senior
executive positions with The Pillsbury Company. Mr. Levin is a Director of the
following corporations which file reports pursuant to the Exchange Act:
Coleman, Coleman Holdings, Coleman Worldwide, Revlon, Revlon Products, Revlon
Worldwide, First Bank System, Inc. and Ecolab, Inc.
JOHN P. MURRAY, JR. (69) has been a Director of the Company since
November 1994 and was Chairman of the Board and Chief Executive Officer of
Wilson Sporting Goods Company, a sporting goods company, from 1985 until 1989
when he retired. Mr. Murray is the founder and a Director of the Murray
Foundation for Eye Research.
MARTIN D. PAYSON (61) has been a Director of the Company since
November 1994. He was Vice Chairman and a Director of Time Warner Inc., an
entertainment company, from 1990 through 1992 when he retired. Prior to 1990,
Mr. Payson was President and General Counsel of Warner Communications Inc. Mr.
Payson also is a Director of Delta Financial Corporation, Panavision Inc. and
Unapix Entertainment, Inc., which file reports pursuant to the Exchange Act.
BRUCE SLOVIN (61) has been a Director of the Company since 1994 and
the President of Holdings and MacAndrews Holdings, diversified holding
companies, and various affiliates since 1982. Mr. Slovin is a Director of the
following corporations which file reports pursuant to the Exchange Act: Andrews
Group, Cantel Industries, Inc., Coleman, Coleman Holdings, Coleman Worldwide,
Power Control, Continental Health Affiliates, Inc. Infu-Tech, Inc. and Oak Hill
Sportswear Corporation.
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors has an Executive Committee, an Audit Committee
and a Management Compensation and Stock Option Committee.
The Executive Committee consists of Messrs. Perelman and Slovin. The
Executive Committee may exercise all of the powers and authority of the Board
of Directors, except as otherwise provided under the Delaware General
Corporation Law. The Audit Committee,
4
<PAGE>
consisting of Messrs. Murray and Payson, makes recommendations to the Board of
Directors regarding the engagement of the Company's independent auditors,
reviews the plan, scope and results of the audit, reviews with the auditors and
management the Company's policies and procedures with respect to internal
accounting and financial controls and reviews changes in accounting policy and
the scope of the non-audit services which may be performed by the Company's
independent auditors. The Compensation Committee, consisting of Messrs. Levin
and Slovin, makes recommendations to the Board of Directors regarding
compensation, benefits and incentive arrangements for officers and other key
managerial employees of the Company. The Compensation Committee may consider
and recommend awards of options to purchase shares of Common Stock pursuant to
the Company's Stock Option Plan.
During 1996, the Board of Directors held five meetings. During 1996,
the Executive Committee acted four times by unanimous written consent. The
Compensation Committee acted once by unanimous written consent and the Audit
Committee held three meetings during 1996.
COMPENSATION OF DIRECTORS
Directors who are not currently receiving compensation as officers or
employees of the Company or any of its affiliates are paid an annual $25,000
retainer fee, payable in monthly installments, plus reasonable out-of-pocket
expenses and a fee of $1,000 for each meeting of the Board of Directors or any
committee thereof they attend.
EXECUTIVE OFFICERS
The following table sets forth as of the date hereof the executive
officers of the Company and executives of its operating subsidiaries,
MasterCraft Boat Company ("MasterCraft"), O'Brien International, Inc.
("O'Brien") and Soniform, Inc. ("Soniform").
NAME POSITION
---- --------
Ronald O. Perelman Chairman of the Board and Director
J. Eric Hanson President and Chief Executive Officer
Irwin Engelman Executive Vice President and Chief Financial
Officer
James W. Hoag Chairman, MasterCraft Boat Company
Gary J. Keller President, Soniform, Inc.
Thomas E. Kohut Vice President and Controller
Gary Lownsdale President, MasterCraft Boat Company
Barry T. Tait President, O'Brien International, Inc.
For biographical information about Messrs. Perelman and Hanson, see
"Director Nominees."
Irwin Engelman (62) has been Executive Vice President and Chief
Financial Officer since 1996. Mr. Engelman has been Executive Vice President,
Chief Financial Officer of Holdings
5
<PAGE>
and MacAndrews Holdings, diversified holding companies, and various affiliates
since 1992. Mr. Engelman was Executive Vice President and Chief Financial
Officer of GAF Corporation, a specialty chemical and building materials
company, from 1990 to 1992. Mr. Engelman is also a Director of CalFed and
Revlon Products. (On December 27, 1996, Marvel Holdings, Marvel Parent and
Marvel III, of which Mr. Engelman is an executive officer, filed voluntary
petitions for reorganization under Chapter 11 of the United States Bankruptcy
Code.)
James W. Hoag (58) has been Chairman of MasterCraft since March 1997.
From July 1996 through March 1997, Mr. Hoag was President and Chief Executive
Officer of the Company and from February 1996 through March 1997 he was also
the President of MasterCraft. Prior to joining the Company, Mr. Hoag had been
retired since 1994. From 1976 to 1994 he served at various capacities at the US
Marine Division of Brunswick Corporation (Bayliner), including President from
1989.
Gary J. Keller (45) has been President of Soniform since 1989. Since
1982, he served in various positions at Soniform, including Vice President.
Thomas E. Kohut (34) has been Vice President and Controller since
September 1993. Since 1987 he has served in various positions at Holdings, a
diversified holding company, including Assistant Vice President and Assistant
Controller from 1991 to 1993.
Gary Lownsdale (50) has been President of MasterCraft since March
1997. From April 1996 to March 1997 Mr. Lownsdale was Vice President-Operations
of MasterCraft. From 1994 to 1996 he was Vice President-Chief Operating Officer
of Trans2 Corporation, a manufacturer of alternative fuel vehicles, from 1993
to 1994, he was Director of Molded Composites Commercial Business at APX
International, an automotive engineering and composites manufacturer and from
1990 to 1993 was Industry Director of Worldwide Automotive Business for
Hercules, a chemical and aerospace manufacturer.
Barry T. Tait (52) has been President of O'Brien since early 1996.
Prior to joining O'Brien, Mr. Tait served as President and Chief Executive
Officer of ICEX, Inc., a developer and manufacturer of hockey stick products,
from 1993 to 1995. From 1989 to 1993, he was President, Canada and Latin
America of Wilson Sporting Goods Company.
EXECUTIVE COMPENSATION
The compensation paid by the Company for services during each of the
years ended December 31, 1994, 1995 and 1996 to its Chief Executive Officer and
each of the Company's four most highly compensated executive officers was as of
follows:
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-
TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------------------------------------------------------
Number of Se-
Other curities Under- All
Annual lying Options/ Other
Name and Compensa- SARs Compen-
Principal Position Year Salary ($)(a) Bonus ($)(b) tion ($)(c) (#) sation ($)(d)
- ------------------ ---- ------------- ------------ ----------- --- -------------
<S> <C> <C> <C> <C> <C> <C>
James W. Hoag(e) 1996 242,306 50,000 4,646 50,000 10,070
Chairman, MasterCraft
George Napier(f) 1996 448,462 0 23,860 0 9,951
1995 440,000 0 19,108 0 38,143
1994 370,000 278,735 25,313 59,250 12,745
Gary J. Keller, 1996 115,000 0 3,080 0 1,900
President, Soniform 1995 125,186 0 3,080 0 1,848
1994 105,834 66,000 5,600 5,000 1,848
Thomas E. Kohut 1996 125,000 10,000 12,710 0 4,124
Vice President and 1995 125,000 0 12,785 0 6,145
Controller 1994 110,000 41,052 13,919 5,000 5,433
Gary Lownsdale(g) 1996 99,417 0 4,725 0 12,090
President, MasterCraft
Barry T. Tait(h) 1996 141,539 28,492 5,900 0 32,759
President, O'Brien
</TABLE>
- --------------
(a) Includes salary paid or accrued during year indicated.
(b) Includes bonus accrued during the applicable year.
(c) Includes automobile allowances.
(d) The amounts reported for 1996, 1995 and 1994 include payments for life
insurance premiums ($70 for Mr. Hoag; $7,226, $2,693 and $3,983 for Mr.
Napier; $1,624, $1,645 and $933 for Mr. Kohut; $63 for Mr. Lownsdale);
matching contributions under the Company's 401(k) plan ($0, $4,500 and
$4,500 for Mr. Napier; $1,900, $1,848 and $1,848 for Mr. Keller; $2,500,
$4,500 and $4,500 for Mr. Kohut); membership and dues, professional fees
and relocation assistance payments ($10,000 for Mr. Hoag; $2,725, $30,950
and $4,262 for Mr. Napier; $12,027 for Mr. Lownsdale and $32,759 for Mr.
Tait).
(e) Mr. Hoag commenced employment in March 1996. In March 1997, Mr. Hoag
resigned as President and Chief Executive Officer of the Company and as
President and Chief Executive Officer of the Company and MasterCraft and
became Chairman of MasterCraft.
(f) Mr. Napier was President and Chief Executive Officer of the Company for a
portion of 1996. In connection with Mr. Napier's resignation, the Company
agreed to continue payment of Mr. Napier's salary and benefits through
December 31, 1997, subject to certain limitations.
(g) Mr. Lownsdale commenced employment as Vice President-Operations of
MasterCraft in April 1996. In March 1997 Mr. Lownsdale became President
of MasterCraft.
(h) Mr. Tait commenced employment in February 1996.
7
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN 1996
AND YEAR END 1996 OPTION/SAR VALUES
The following chart shows, for 1996, the number of stock options
exercised and the 1996 year-end value of the options held by the executive
officers named in the Summary Compensation Table:
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs at
Shares at Year End (#) Year End ($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#)(a) Realized ($) Unexercisable Unexercisable
- ------------------- --------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
James W. Hoag 0 $0 16,667/33,333 0
Gary J. Keller 0 $0 2,500/2,500 0
Thomas E. Kohut 0 $0 2,500/2,500 0
</TABLE>
- --------------
(a) Calculated using actual December 31, 1996 closing price per common share
on the NASDAQ National Market of $1 1/4.
8
<PAGE>
MANAGEMENT COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Management Compensation and Stock Option Committee of the Board of
Directors (the "Committee") is comprised of Messrs. Levin and Slovin, neither
of whom is an officer of the Company. The Committee's duties include
determination of the Company's compensation and benefit policies and practices
for executive officers and key managerial employees. In accordance with rules
established by the Securities and Exchange Commission (the "SEC"), the Company
is required to provide certain data and information in regard to the
compensation provided to the Company's Chief Executive Officer and the three
other most highly compensated executive officers. The Committee has prepared
the following report for inclusion in this Proxy Statement.
Compensation Policies.
The Company's current compensation arrangements for senior executives
are designed to incentivize and reward management for creating enterprise
value. To encourage the achievement of short to middle term objectives, the
compensation program for officers emphasizes a base salary with an annual bonus
opportunity dependent on achieving aggressive operating performance levels in
its subsidiaries. For the year ended December 31, 1996, each of the
subsidiaries had "minimum", "target", and "stretch" operating income goals. The
"target" operating income goals were established based on each subsidiary's
business plan at levels higher than 1995 actual results. No bonuses were paid
under the Executive Bonus Plan in 1996, other than to executives of O'Brien,
which achieved its performance targets.
In connection with the initial public offering, the Company also
adopted the Stock Option Plan to encourage management to participate in the
equity of the business and provide rewards for the success of the business in
building stockholder value over the long term. Options granted under the Stock
Option Plan vest in equal installments over four years to ensure that
management balances its short term and long term objectives. The use of stock
options also provides a long term incentive for executives and key management
officers to remain in the Company's employ.
Compensation of Chief Executive Officer
The Company's former President and Chief Executive Officer entered
into an employment agreement with the Company in February 1996 when his
employment commenced. The recall and repair program of the Company's WetJet
operation and the related poor financial performance of the Company required
new leadership with experience in the marine industry, a consolidation of the
headquarters function into one location and a commitment to rejuvenating the
business. The compensation for the former Chief Executive Officer was
established, consistent with these needs and the Company's emphasis on
rewarding the achievement of aggressive performance levels which are
established consistent with industry market conditions and financial objectives
of the Company. In 1996, the former Chief Executive Officer was paid a
guaranteed bonus of $50,000 in accordance with his employment agreement.
The Management Compensation and
Stock Option Committee
Jerry W. Levin
Bruce Slovin
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Management Compensation and Stock Option Committee consists of
Messrs. Levin and Slovin.
EMPLOYMENT ARRANGEMENTS
The Company has an agreement with Mr. Hoag which provides that Mr.
Hoag will be the Chairman of MasterCraft and a consultant to the Company
through December 31, 1997. Mr. Hoag will receive compensation at the rate of
$12,500 per month.
The Company has an employment agreement with Mr. Kohut which provides
for Mr. Kohut to be employed at a base salary of $134,000. At any time the
Company may give written notice of non-renewal of the employment term. In such
event, the employment term will be extended 12 months after the last day of the
month in which such notice is given. From and after January 1, 1997, unless the
Company gives notice of non-renewal, the employment term is extended
automatically day-by-day. Mr. Kohut also is eligible to participate in the
Company's Stock Option Plan. If Mr. Kohut's employment is terminated other than
for "cause," he is entitled to receive for 12 months continued payment of base
salary, continued provision for benefits and accelerated vesting of any stock
options.
O'Brien has a retention agreement with Mr. Tait which is in effect for
a period of six months after a Change in Control, as defined (but only if a
Change in Control occurs on or prior to December 31, 1997), and provides that
if Mr. Tait is employed by O'Brien on the date six months after a Change in
Control, he will receive a payment of $100,000. If Mr. Tait's employment is
terminated by O'Brien without "cause" prior to such date, Mr. Tait will receive
a payment of $100,000.
Soniform has an employment agreement with Mr. Keller which provides
for Mr. Keller to be employed at a base salary of $115,000. At any time
Soniform may give written notice of non-renewal of the employment term. In such
event, the employment term will be extended 12 months after the last day of the
month in which such notice is given. From and after January 1, 1997, unless
Soniform gives notice of non-renewal, the employment term is extended
automatically day-by-day. Mr. Keller also is eligible to participate in the
Meridian's Stock Option Plan. If Mr. Keller's employment is terminated other
than for "cause," he is entitled to receive for 12 months continued payment of
base salary, continued provision for benefits and accelerated vesting of any
stock options.
Soniform has a retention agreement with Mr. Keller which is in effect
for a period of six months after a Change in Control, as defined (but only if a
Change in Control occurs on or prior to December 31, 1997), and provides that
if Mr. Keller is employed by Soniform on the date six months after a Change in
Control, he will receive a payment of $100,000. If Mr. Keller's employment is
terminated by Soniform without "cause" prior to such date, Mr. Keller will
receive a payment of $100,000.
10
<PAGE>
COMMON STOCK PERFORMANCE
The Company's Common Stock is traded on the Nasdaq National Market
("Nasdaq"). The graph set forth below presents a comparison of cumulative
shareholder return through December 31, 1996, assuming reinvestment of
dividends, for the Company's Common Stock since the date of the initial public
offering, as compared to the Standard & Poor's Smallcap 600 index and the
Company's marine competitors, Outboard Marine Corporation and Brunswick
Corporation, assuming $100 was invested on October 12, 1994, the date of the
initial public offering.
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE
OCTOBER 1994 AMONG MERIDIAN SPORTS INCORPORATED,
BRUNSWICK CORPORATION, OUTBOARD MARINE CORPORATION
AND THE S & P SMALLCAP 600 INDEX
10/12/94 12/94 12/95 12/96
MERIDIAN SPORTS INCORPORATED 100 86 47 11
BRUNSWICK CORPORATION 100 87 114 123
S&P SMALLCAP 600 100 98 128 155
OUTBOARD MARINE CORPORATION 100 83 88 84
11
<PAGE>
RETIREMENT PLANS
DEFINED BENEFITS PLANS. The executive officers named in the Summary
Compensation Table participate in the Meridian Sports Incorporated Retirement
Plan for Salaried Employees (the "Meridian Pension Plan") and Benefit
Restoration Plan (the "Benefit Restoration Plan" and, together with the
Meridian Pension Plan, the "Meridian Pension Plans").
The following table shows estimated annual benefits payable upon
retirement under the Meridian Pension Plan (and, where applicable, the Benefit
Restoration Plan):
<TABLE>
<CAPTION>
Years of Service(b)
------------------------------------------------------------------
REMUNERATION(A) 10 15 20 25 30 35
------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$ 50,000............ $8,345 $12,518 $16,691 $20,864 $25,036 $29,209
100,000............ 18,345 27,518 36,691 45,864 55,036 64,209
150,000............ 28,345 42,518 56,691 70,864 85,036 99,209
200,000............ 38,345 57,518 76,691 95,864 115,036 134,209
250,000............ 48,345 72,518 96,691 120,864 145,036 169,209
</TABLE>
- --------------
(a) For 1996, the Benefit Restoration Plan covered annual compensation
greater than $150,000.
(b) Years of service for plan benefits is limited to 35. Therefore, no
additional service levels are illustrated. Benefits shown above reflect
the straight life benefit form of payment for employees, assuming normal
retirement at age 65 in 1996 and reflecting reductions for Covered
Compensation (as defined in the Meridian Pension Plan). The Meridian
Pension Plan provides a benefit of 2% of the highest 60 consecutive
months of base compensation less 0.6% of the employee's Covered
Compensation, for each year of service to a maximum of 35 years of
service. As of December 31, 1996, the executive officers named in the
Summary Compensation Table had included compensation and credited service
as follows: Mr. Hoag, $242,306 and 1 year; Mr. Napier, $448,462 and 5
years; Mr. Keller $115,000 and 14 years; Mr. Lownsdale, $99,417 and 1
year; Mr. Kohut, $125,000 and 9 years; Mr. Tait, $141,539 and 1 year.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the SEC and the NASDAQ Stock Market.
Officers, directors and greater than ten percent owners are required to furnish
the Company with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it
has received and representations from certain reporting persons that they were
not required to file Forms 3, 4 or 5 for a specified fiscal year, the Company
believes that all its officers, Directors and greater than
12
<PAGE>
ten percent beneficial owners complied with all filing requirements applicable
to them with respect to transactions during 1996.
PROPOSAL 2 - RATIFICATION OF SELECTION OF AUDITORS
The Audit Committee and the Board of Directors have selected, subject
to ratification by the stockholders, Ernst & Young LLP to audit the accounts of
the Company for the fiscal year ending December 31, 1997. The ratification of
the selection of Ernst & Young LLP will require the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock present in
person or represented by proxy at the Annual Meeting and entitled to vote.
Under applicable Delaware law, in tabulating the votes, abstentions from voting
on the ratification of the auditors (including broker non-votes) will be
counted and will have the same effect as a vote against the proposal.
Ernst & Young LLP has audited the consolidated financial statements of
the Company for the past five years. Ernst & Young LLP representatives will be
present at the Annual Meeting and will have an opportunity to make a statement
if they desire to do so and will be available to respond to appropriate
questions.
THE COMPANY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF
THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
1997.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS
The following table sets forth as of April 1, 1997, the total number
of shares of Common Stock beneficially owned, and the percent so owned, by each
Director of the Company, by each person known to the Company to be the
beneficial owner of more than 5% of the outstanding Common Stock, by the
officers named in the summary compensation table and by all Directors and
officers (including two former executive officers) as a group. The number of
shares owned are those "beneficially owned," as determined under the rules of
the SEC, and such information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership
includes any shares as to which a person has sole or shared voting power or
investment power and any shares of Common Stock which the person has the right
to acquire within 60 days through the exercise of any option, warrant or right,
through conversion of any security, or pursuant to the automatic termination of
power of attorney or revocation of trust, discretionary account or similar
arrangement.
13
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percent of
Ownership(a) Class
----------------- ----------
<S> <C> <C>
Ronald O. Perelman (b) 5,200,000 64.8%
35 East 62nd Street
New York, NY 10021
Irwin Engelman 5,000 *
J. Eric Hanson 5,000 *
James W. Hoag(c) 16,667 *
Gary R. Keller(d) 2,500 *
Thomas E. Kohut(d) 4,500 *
Jerry W. Levin 5,000 *
John P. Murray, Jr. 17,000 *
Martin D. Payson 12,000 *
Bruce Slovin 10,000 *
All Directors and executive officers 5,277,667 65.8%
as a group (10 persons)
</TABLE>
- --------------
* Less than 1%.
(a) Includes Common Stock and options exercisable within 60 days.
(b) All of such shares of Common Stock are indirectly owned by Mr. Perelman
through Holdings. The shares owned and shares of intermediate holding
companies may from time to time be pledged to secure obligations of
Holdings or its affiliates.
(c) Includes 16,667 shares of Common Stock subject to stock options granted
pursuant to the Company's Stock Option Plan.
(d) Includes 2,500 shares of Common Stock subject to stock options granted
pursuant to the Company's Stock Option Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Holdings owns indirectly 65% of the outstanding Common Stock. Due to
its stock ownership, Holdings is able to control the Company and elect the
entire Board of Directors. Holdings is wholly owned by Ronald O. Perelman.
CREDIT AGREEMENT. The Company is party to a Credit Agreement (the
"Credit Agreement") with an indirect wholly owned subsidiary of Holdings (the
"Lender") entered into in March 1997 which provides for borrowings on a
revolving basis of up to $30,000,000, bears interest at the prime rate plus 1%
and matures December 1, 1998. Loans under the Credit Agreement are secured by a
pledge of stock of the Company's subsidiaries, MasterCraft and Soniform, Inc.
and guaranteed by the subsidiaries of the Company (other than O'Brien).
Borrowings outstanding under the Credit Agreement are required to be prepaid
with the net cash proceeds of the sales of any subsidiaries of the Company. The
commitment under the Credit
14
<PAGE>
Agreement will be reduced by any such required prepayments. The Credit
Agreement contains typical events of default including change of control,
material adverse change and non-payment of obligations. Borrowings under the
Credit Agreement refinanced unsecured borrowings from the Lender and provide
financing for the operations, including seasonal working capital needs and
restructuring liabilities, of the Company.
INTERNATIONAL SALES ARRANGEMENTS. In two markets, the Company sells
products to subsidiaries of Coleman, which act as distributors for the Company.
These products are purchased at arms' length prices that reflect competitive
export practices. In 1996 such amounts were not material.
TAX INDEMNIFICATION AGREEMENT. Concurrent with the consummation of the
initial public offering, the Company, Holdings and certain of its affiliates
entered into a tax indemnification agreement (the "Tax Indemnification
Agreement"). Pursuant to the Tax Indemnification Agreement, all prior tax
sharing agreements between any subsidiaries of the Company and Holdings or any
affiliate of Holdings were terminated with respect to all periods ending after
the date of the initial public offering. Such prior tax sharing agreements
continue with respect to periods ending on or before the date of the initial
public offering. In addition, pursuant to the Tax Indemnification Agreement,
Holdings is obligated to indemnify the Company, on an after-tax basis, against
(i) any liability to the Internal Revenue Service for any consolidated federal
income taxes of the Company for any period (or portion thereof) beginning on or
after April 28, 1989 and ending on or before the date of the initial public
offering, (ii) any liability to a state or local taxing authority for any
combined state and local income taxes of the Company for any period (or portion
thereof) beginning on or after April 28, 1989 and ending on or before the date
of the initial public offering, to the extent such taxes arise in any return in
which the Company or any affiliate thereof files a combined return with
Holdings or any Holdings affiliate, and (iii) any liability to the Internal
Revenue Service or a state or local taxing authority, as the case may be, for
any consolidated federal or combined state or local income taxes incurred by
the Company as a result of the Company or any affiliate thereof being part of
any consolidated or combined tax return with Holdings or any Holdings
affiliate. No indemnification claims were made for the year ended December 31,
1996.
REGISTRATION RIGHTS AGREEMENTS. In connection with the initial public
offering, the Company and Meridian Holdings entered into a registration rights
agreement (the "Registration Rights Agreement") pursuant to which Meridian
Holdings and certain transferees of Common Stock held by Meridian Holdings (the
"Holders") have the right to require the Company to register all or part of the
Common Stock owned by such Holders under the Securities Act of 1933 (a "Demand
Registration"); provided that the Company may postpone giving effect to a
Demand Registration up to a period of 30 days if the Company believes such
registration might have a material adverse effect on any plan or proposal by
the Company with respect to any financing, acquisition, recapitalization,
reorganization or other material transaction, or the
15
<PAGE>
Company is in possession of material non-public information that, if publicly
disclosed, could result in a material disruption of a major corporate
development or transaction then pending or in progress or in other material
adverse consequences to the Company. In addition, the Holders will have the
right to participate in registrations by the Company of its Common Stock (a
"Piggyback Registration"). The Holders will pay all out-of-pocket expenses
incurred in connection with a Piggyback Registration, except for underwriting
discounts, commissions and expenses attributable to the shares of Common Stock
sold by such Holders.
ADDITIONAL INFORMATION
The Company will make available a copy of its Annual Report on Form
10-K for the fiscal year ended December 31, 1996 and any Quarterly Reports on
Form 10-Q filed thereafter, without charge, upon written request to the
Secretary, Meridian Sports Incorporated, 100 Cherokee Cove Drive, Vonore,
Tennessee 37885. Each such request must set forth a good faith representation
that, as of the Record Date, April 15, 1997, the person making the request was
a beneficial owner of Common Stock entitled to vote.
In order to ensure timely delivery of such documents prior to the
Annual Meeting, any request should be received by the Company promptly.
STOCKHOLDER PROPOSALS
Under the rules and regulations of the SEC as currently in effect, any
holder of at least $1,000 in market value of Common Stock who has held such
securities for at least one year and who desires to have a proposal presented
in the Company's proxy material for use in connection with the Annual Meeting
of stockholders to be held in 1998 must transmit that proposal (along with his
name, address, the number of shares of Common Stock that he holds of record or
beneficially, the dates upon which the securities were acquired and documentary
support for a claim of beneficial ownership) in writing as set forth below.
Proposals of stockholders intended to be presented at the next annual meeting
must be received by the Secretary, Meridian Sports Incorporated, 100 Cherokee
Cove Drive, Vonore, Tennessee 37885, not later than November 30, 1997.
16
<PAGE>
OTHER BUSINESS
The Company knows of no other matters which may come before the annual
meeting. However, if any such matters properly come before the meeting, the
individuals named in the proxies will vote on such matters in accordance with
their best judgment.
April 21, 1997
BY ORDER OF THE BOARD OF DIRECTORS
17
<PAGE>
PROXY MERIDIAN SPORTS INCORPORATED
COMMON STOCK
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING TO BE HELD ON MAY 29, 1997
The undersigned hereby appoints Joram C. Salig, Barry F. Schwartz and Thomas
E. Kohut, and each of them, attorneys and proxies, each with power of
substitution, to vote all shares of Common Stock of Meridian Sports Incorporated
("Meridian") that the undersigned may be entitled to vote at the Annual
Meeting of Stockholders of Meridian to be held on Thursday, May 29, 1997 at
11:00 A.M., local time, at the Knoxville Airport Hilton, 2001 Alcoa Highway,
Alcoa, Tennessee, on the proposals set forth on the reverse side hereof and on
such other matters as may properly come before the meeting and any adjournments
or postponements thereof.
THE PROXY HOLDERS WILL VOTE THE SHARES REPRESENTED BY THIS PROXY IN THE MANNER
INDICATED ON THE REVERSE SIDE HEREOF. UNLESS A CONTRARY DIRECTION IS INDICATED,
THE PROXY HOLDERS WILL VOTE SUCH SHARES "FOR" THE PROPOSALS SET FORTH ON THE
REVERSE SIDE HEREOF. IF ANY FURTHER MATTERS PROPERLY COME BEFORE THE ANNUAL
MEETING, IT IS THE INTENTION OF THE PERSON NAMED ABOVE TO VOTE SUCH PROXIES IN
ACCORDANCE WITH THEIR BEST JUDGMENT.
SEE REVERSE
SIDE
<PAGE>
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
MERIDIAN SPORTS INCORPORATED
MAY 29, 1997
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
The Board of Directors recommends a vote FOR the following proposals.
FOR all WITHHOLD AUTHORITY
nominees to vote for all nominees
1. Election of [ ] [ ] NOMINEES: Ronald O. Perelman
Directors J. Eric Hanson
of Meridian to serve Bruce Slovin
until Meridian's next Annual Meeting and Jerry W. Levin
until their successors are duly elected John P. Murray, Jr.
and qualified. Martin D. Payson
WITHHOLD for the following only. (Write the name
of the nominee(s) in the space below)
- ------------------------------------------------
FOR AGAINST ABSTAIN
2. To ratify the appointment of Ernst & Young LLP [ ] [ ] [ ]
as the independent certified public accountants
of Meridian for the fiscal year ending
December 31, 1997.
3. To transact such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD USING THE ENCLOSED ENVELOPE.
SIGNATURE ______________________________________________________ DATE__________
NOTE: Please sign exactly as name appears hereon. If a joint account, each
joint owner must sign. If signing for a corporation or partnership or as agent,
attorney or fiduciary, indicate the capacity in which you are signing.
