<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities and Exchange Act of 1934
Filed by the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
STANDARD BRANDS PAINT COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
STANDARD BRANDS PAINT COMPANY
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
-----------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------
Set forth the amount on which the filing fee is calculated and state
how it was determined.
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: $
-----------------------------------------------------------------
(2) Form, Schedule, or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
STANDARD BRANDS PAINT COMPANY
4300 WEST 190TH STREET
TORRANCE, CALIFORNIA 90509
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
---------------------
To the Shareholders of
STANDARD BRANDS PAINT COMPANY:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of STANDARD
BRANDS PAINT COMPANY (the "Corporation") will be held at the offices of the
Corporation, 4300 West 190th Street, Torrance, California on August 7, 1995 at
10:00 a.m., for the following purposes:
(1) To elect nine directors to serve until the 1996 Annual Meeting of
Shareholders and until their successors shall have been duly elected and
qualified.
(2) To vote upon a proposal to ratify the appointment of Price Waterhouse
LLP as the Corporation's independent auditors for the current fiscal
year.
(3) To transact such other business as may properly come before the meeting
and any adjournments thereof.
Only shareholders of record at the close of business on June 29, 1995, are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
Your attention is called to the Proxy Statement and accompanying Proxy Card.
You are requested, whether or not you plan to be present at the meeting, to
sign, date and return the Proxy Card in the enclosed envelope, to which no
postage need be affixed if mailed in the United States. If you attend the Annual
Meeting, you may withdraw your proxy and vote your own shares.
A copy of the 1995 Annual Report of the Corporation on Form 10-K accompanies
this Notice but is not a part of the proxy solicitation material.
By order of the Board of Directors
EDWARD A. DRURY
SECRETARY
Torrance, California
July 3, 1995
<PAGE>
IT IS IMPORTANT THAT ALL SHAREHOLDERS BE REPRESENTED AT THE ANNUAL MEETING.
SHAREHOLDERS WHO ARE UNABLE TO ATTEND THE MEETING IN PERSON SHOULD MARK, SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD WHICH WILL BE USED AT THE ANNUAL
MEETING. A SELF-ADDRESSED, STAMPED ENVELOPE IS ENCLOSED HEREWITH FOR THAT
PURPOSE. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION IS APPRECIATED.
Requests for additional copies of proxy material should be addressed to
Edward A. Drury, Secretary, at the offices of the Corporation, Standard Brands
Paint Company, 4300 West 190th Street, Torrance, California 90509.
Standard Brands Paint Company is listed and traded on the New York Stock
Exchange (Symbol: "SBP").
<PAGE>
STANDARD BRANDS PAINT COMPANY
4300 WEST 190TH STREET
TORRANCE, CALIFORNIA 90509
------------------------
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 7, 1995
---------------------
The accompanying proxy is solicited by the Board of Directors of Standard
Brands Paint Company (the "Corporation"), to be used at the Annual Meeting of
Shareholders to be held on August 7, 1995 and any adjournment thereof (the
"Meeting"). Shares represented by valid proxies in the enclosed form will be
voted as specified if executed and received in time for the Meeting. THE PROXY
IS REVOCABLE AT ANY TIME PRIOR TO BEING VOTED BY DELIVERING WRITTEN NOTICE TO
THE SECRETARY OF THE CORPORATION OR BY ATTENDING THE MEETING AND VOTING IN
PERSON.
This Notice of Annual Meeting and Proxy Statement is being mailed to
shareholders on or about July 3, 1995.
VOTING SECURITIES
Only shareholders of record at the close of business on June 29, 1995, are
entitled to notice of and to vote at the Meeting, each share having one vote. In
electing directors, shareholders entitled to vote are entitled to vote in favor
of all nominees or withhold their votes as to all nominees or withhold their
votes as to specific nominees. With respect to the other proposals to be voted
on shareholders may vote in favor of a proposal, against a proposal or may
abstain from voting. Shareholders should specify their choices on the enclosed
form of proxy. If no specific instructions are given with respect to the matters
to be acted upon, the shares represented by a signed proxy will be voted FOR the
election of all nominees to the Board of Directors, and FOR the proposal to
ratify the appointment of Price Waterhouse LLP as the Corporation's independent
auditors for the current fiscal year. The election of directors will require the
affirmative vote of a plurality of the shares of Common Stock voting in person
or by proxy at the Meeting. Ratification of the appointment of Price Waterhouse
LLP as the Corporation's independent auditors for the current fiscal year will
require the affirmative vote of a majority of the shares of Common Stock of the
Corporation voting in person or by proxy at the Meeting. Abstentions and broker
non-votes will not be included in vote totals and will have no effect on the
outcome of the vote. On the record date the Corporation had issued and
outstanding approximately 20,634,936 shares of Common Stock, par value $.01.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates the number of shares of the Corporation's
Common Stock beneficially owned as of May 16, by (i) all persons known to the
Corporation to own more than 5% thereof, (ii) all directors and nominees for
director of the Corporation, and (iii) all directors and officers of the
Corporation as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP COMMON STOCK
- --------------------------------------------------------------------------- -------------------- ---------------
<S> <C> <C>
Corimon Corporation (1) ................................................... 23,922,342 84.0%
c/o Corimon, S.A.C.A.
Calle Hans Neumann
Edificio Corimon
Los Cortijos de Lourdes
Caracas, Venezuela 0171
Fidelity Capital & Income Fund (2)(3) ..................................... 8,823,242 32.1
82 Devonshire Street, F7E
Boston, Massachusetts 02109
Kodak Retirement Income Plan Trust Fund("KRI") (2)(4) ..................... 1,659,240 7.6
c/o Fidelity Investments
82 Devonshire Street, F7e
Transamerica Occidental Life Insurance Company (5) ........................ 1,084,691 5.1
1150 S. Olive Street
Los Angeles, CA 90015
Roland F. Breault.......................................................... 0 *
Arthur W. Broslat.......................................................... 0 *
Juan Gramage............................................................... 0 *
Gustavo Jose Blanco-Uribe.................................................. 0 *
Thomas A. White............................................................ 0 *
Richard Boje............................................................... 1,000 *
Robert N. Dangremond....................................................... 1,000 *
Deborah Hicks Midanek...................................................... 1,000 *
William E. Yingling, III................................................... 1,000 *
All directors and officers as a group, (11 persons)........................ 5,326 *
<FN>
- ------------------------
* Less than 1% ownership.
(1) Includes 15,972,332 shares, 1,529,161 shares upon conversion of Preferred
Stock, 6,308,489 shares upon purchase and conversion of Preferred Stock and
112,360 shares under a Put Agreement with Libra Investments, Inc. Corimon
Corporation is a wholly-owned subsidiary of Corimon S.A.C.A., a Venezuelan
corporation with operations in paint and related products (collectively,
"CRM").
(2) Fidelity Capital & Income Fund ("FCI") is a portfolio of an investment
company registered under Section 8 of the Investment Company Act of 1940,
as amended. Fidelity Management and Research Company, a Massachusetts
corporation and an investment advisor registered under Section 203 of the
Investment Advisors Act of 1940 ("FMRC") provides investment advisory
services to FCI, to certain other registered investment companies and to
certain other funds that are generally offered to United States groups of
investors. Kodak Retirement Income Plan Trust Fund is an account managed by
Fidelity Management Trust Company, a Massachusetts corporation and a bank
as defined in Section 3(a)(6) of the Securities Exchange Act of 1934, as
amended ("FMTC"). FMRC and FMTC are wholly owned subsidiaries of FMR Corp.,
a Massachusetts corporation.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
(3) Includes 1,979,626 shares and 6,843,616 shares upon conversion of Preferred
Stock.
(4) Includes 372,148 shares and 1,287,092 shares upon conversion of Preferred
Stock.
(5) Includes 345,416 shares and 739,275 shares upon conversion of Preferred
Stock. Transamerica Occidental Life Insurance Company is a subsidiary of
Transamerica Insurance Corporation of California which is a subsidiary of
Transamerica Corporation and is an affiliate of Transamerica Life Insurance
and Annuity Corporation.
</TABLE>
ELECTION OF DIRECTORS
The Corporation's Bylaws were amended, on February 15, 1995, as part of the
Corporation's financial restructuring approved by the shareholders on May 16,
1995 (the "Restructuring") and provide for a Board of Directors consisting of
between eight (8) and twelve (12) members, the exact number within this range
being determined by resolution of the Board of Directors. The Board of Directors
has set the number of director positions at ten. After the election of nine
directors, the Board of Directors will have a vacancy which the Board will seek
to fill in the next year. The persons named below will be nominated for election
to serve until the 1996 Annual Meeting of Shareholders and until their
respective successors are elected and qualified. In the event that any nominee
for director should become unavailable, it is intended that votes will be cast,
pursuant to the enclosed proxy, for such substitute nominee as may be nominated
by the Board of Directors. The Board of Directors has no present knowledge that
any of the persons named will be unavailable to serve. It is expected that
Arthur W. Broslat will be elected as Chairman of the Board, President and Chief
Executive Officer of the Company following the Meeting.
INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR BOARD OF DIRECTORS
The following table sets forth the principal occupation or employment and
principal business of the employer, if any, of each director and nominee for
director of the Corporation, as well as his or her age, business experience,
other directorships held by him or her and the period during which he or she has
previously served as director of the Corporation:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FOR PAST FIVE YEARS; OTHER DIRECTORSHIPS; BUSINESS
NAME, AGE AND PRESENT POSITION EXPERIENCE
- ------------------------------------- --------------------------------------------------------------------------
<S> <C>
Gustavo Jose Blanco Uribe, 50 Gustavo Blanco-Uribe was appointed to the Board of Directors on May 16,
Director 1995. Mr. Blanco-Uribe is the corporate controller and a member of the
executive committee of CRM. Prior to joining CRM in 1994, he was the
corporate vice president of administration for Corporacion Venezolana de
Cementos, S.A.C.A. From 1984 to 1990, he was vice president of
administration and finance for C.A. Venezolana de Ceramicas.
Richard L. Boje, 58 Richard L. Boje was elected to the Board of Directors on December 10, 1993
Director at a meeting of the Board of Directors. Mr. Boje was Chairman of the
Corporation's Executive Committee and is a member of the Corporation's
Compensation Committee. From 1977 through 1987, Mr. Boje served in
various positions at Carter Hawley Hale Stores, Inc. and its subsidiaries
and affiliates (specialty/retail), including serving as Chairman of the
Board and Chief Executive officer of Weinstocks from 1982 through 1985
and Chairman of the Board and Chief Executive Officer of the John
Wanamaker Division from 1985 through 1987. From 1987 through 1992, Mr.
Boje served as Chairman of the Board and Chief Executive Officer of the
Lynn-Edwards Corporation (office products distributor). Mr. Boje
presently is an independent investor and consultant.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FOR PAST FIVE YEARS; OTHER DIRECTORSHIPS; BUSINESS
NAME, AGE AND PRESENT POSITION EXPERIENCE
- ------------------------------------- --------------------------------------------------------------------------
<S> <C>
Roland F. Breault, 55 Roland F. Breault was elected to the Board of Directors in February 1995.
Director Mr. Broslat is the director of corporate planning for Dakota Services,
Inc., a subsidiary of CRM. Prior to joining CRM in 1994, Mr. Breault was
Vice-President and Area Director of the Latin American division of Olin
Corporation, a chemicals, metals and defense company. He joined Olin
Corporation in 1983 and held several positions in operations, strategic
planning and marketing.
Arthur W. Broslat, 50 Arthur W. Broslat is the Executive Vice-President of CRM. Prior to joining
Nominee for Director CRM in 1989, Mr. Broslat was Director of Bank of America's Latin America
Corporate Finance Division based in Venezuela. Before joining Bank of
America, Mr. Broslat was a captain in the U.S. Air Force and held a
variety of financial management positions for a major U.S. computer
manufacturer. He is currently a member of the Board of the Venezuelan
American Chamber of Commerce (VENAMCHAM) and the Board of Directors of
Grow Group, Inc., a paint and consumer products company. It is expected
that Mr. Broslat will resign from the Grow Group Board before his
election as a Director of the Corporation.
Robert N. Dangremond, 52 Robert N. Dangremond was elected to the Board of Directors on Director
Director December 10, 1993 at a meeting of the Board of Directors. Mr. Dangremond
was a member of the Corporation's Executive Committee and is Chairman of
the Corporation's Audit Committee. Mr. Dangremond was the Chairman of the
Board, President and Chief Executive Officer of AM International, Inc.
(graphic arts supplies and manufacturing). AM International is listed on
the American Stock Exchange. Mr. Dangremond was elected to his former
positions at AM International on February 6, 1993. AM International filed
a voluntary petition under the Federal bankruptcy laws on May 17, 1993.
On September 29, 1993, AM International's plan of reorganization was
confirmed by the Bankruptcy Court and became effective on October 13,
1993. Since August 1989, Mr. Dangremond has been a Principal with Jay
Alix & Associates, a consulting and accounting firm specializing in
corporate restructurings and turnaround activities. From 1981 through
1989, Mr. Dangremond was the Chief Financial Officer and Treasurer of the
Leach & Garner Company (manufacturing). From 1969 to 1981, Mr. Dangremond
held various positions with Chase Manhattan Bank, N.A. and prior to that
was with Scott Paper Company. Mr. Dangremond is also a director of
Envirodyne Industries, Inc. (manufacturing) and Barry's Jewelry, Inc.
(retail).
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FOR PAST FIVE YEARS; OTHER DIRECTORSHIPS; BUSINESS
NAME, AGE AND PRESENT POSITION EXPERIENCE
- ------------------------------------- --------------------------------------------------------------------------
<S> <C>
Juan J. Gramage, 43 Juan J. Gramage was elected to the Board of Directors in February 1995.
Director Mr. Gramage is General Manager of the Construcentro division of CRM and a
consultant with Dakota Services, Inc. On May 16, 1995, Mr. Gramage became
the General Manager, President and Chief Operating Officer of the
Corporation. Prior to joining CRM in 1992, Mr. Gramage held various
positions with Industrias Plycem S.A., including General Manager from
1988 to 1992.
Deborah Hicks Midanek, 40 Deborah Hicks Midanek was elected to the Board of Directors on December
Chairman of the Board 10, 1993 at a meeting of the Board of Directors. Ms. Midanek was elected
Chairman of the Board in February 1995 and is expected to hold such
office until Mr. Broslat's election as a Director. Ms. Midanek is
Chairman of the Corporation's Compensation Committee and is a member of
the Corporation's Audit Committee. Ms. Midanek presently serves as
Chairman of the Board of Trustees and the Chief Executive Officer of The
Solon Funds, a registered investment company, positions she has held
since March 1, 1994. Since 1989, Ms. Midanek has served as the Chief
Executive Officer of Solon Asset Management Corporation, a registered
investment advisor. In 1994, Solon Asset Management Corporation became
the general partner of Solon Asset Management L.P., also a registered
investment advisor and advisor to The Solon Funds. During the period from
1992 through 1993, Ms. Midanek served as Managing Director and Director
of Mutual Funds for Montgomery Asset Management, L.P. From 1984 through
1990, Ms. Midanek held various positions with Drexel Burnham Lambert,
Inc. in the Mortgage Backed Securities Department.
Thomas A. White, 52 Thomas A. White was elected to the Board of Director in February 1995. Mr.
Director White is the Director of Manufacturing for Dakota Services, Inc., and he
has held that position since June of 1994. He is responsible for
manufacturing for the Paint Division coatings plants across North and
South America. Before joining CRM, he was employed at PPG Industries, a
chemicals and coatings company, from 1985 to 1994, as the Director of
Manufacturing and previously as the Director of Quality Assurance.
William E. Yingling, III, 51 William E. Yingling, III was elected to the Board of Directors on Director
Director December 10, 1993 at a meeting of the Board of Directors. Mr. Yingling is
a member of the Corporation's Compensation and Audit Committees. Mr.
Yingling from 1991 through 1993 was the Chairman of the Board and Chief
Executive Officer of Thrifty Corporation (pharmaceuticals and
specialty/retail). During the period 1986 through 1991, Mr. Yingling was
the President of the Southern a California division of Lucky Stores, Inc.
(supermarket).
</TABLE>
5
<PAGE>
THE BOARD OF DIRECTORS
MEETINGS, ORGANIZATIONS AND REMUNERATION
The business affairs of the Corporation are managed under the direction of
the Board of Directors, although the Board is not involved in day-to-day
operations. During the fiscal year ended January 29, 1995, the Board of
Directors met 14 times. For their services on the Board during the 1994 fiscal
year, non-employee directors were paid a retainer fee of $15,000 per annum, $750
for each regular board meeting attended and $500 for each special board meeting
and committee meeting attended. In fiscal 1994, each non-employee director
received 1,000 shares (as adjusted for the reverse stock split) of the
Corporation's Common Stock. Each director attended at least 75% of all Board and
applicable committee meetings.
In addition to the following, the Board established a special Independent
Committee in connection with the Restructuring which Committee has subsequently
been dissolved. Each member of the Independent Committee (Messrs. Boje, Midanek
and Yingling) received payments of $250 per hour up to a maximum of $2,000 per
day for their work on the committee.
AUDIT COMMITTEE
The Audit Committee recommends to the Board of Directors a firm of
independent certified public accountants to conduct the annual audit of the
Corporation's books and records; reviews with such accounting firm the scope and
results of the annual audit; reviews the performance of such independent
accountants of professional services, in addition to those which are audit
related; consults with the independent accountants with regard to the adequacy
of the Corporation's system of internal accounting controls; and reviews fees
charged by the independent accountants for professional services.
The Corporation's independent auditors are invited to attend meetings of the
Audit Committee and certain members of management may also be invited to attend.
The Audit Committee consists of three nonemployee directors, Robert N.
Dangremond who is the chairman of the Committee, William E. Yingling III and
Deborah Hicks Midanek. The Audit Committee met twice during the fiscal year
ended January 29, 1995.
COMPENSATION COMMITTEE
The Compensation Committee reviews and approves all salary arrangements and
other remuneration for officers of the Corporation. The Compensation Committee
consists of three nonemployee directors, Deborah Hicks Midanek, who is the
chairman of the Committee, Richard L. Boje, and William E. Yingling, III. The
Compensation Committee met 5 times during the fiscal year ended January 29,
1995. The Compensation Committee also acts as the Company's Nominating
Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee was an officer or employee of the
Corporation or any of its subsidiaries during the fiscal year. None of the
executive officers of the Corporation has served on the board of directors or on
the compensation committee of any other entity, any of whose officers served
either on the Board of Directors or on the Compensation Committee of the
Corporation.
EXECUTIVE COMMITTEE
The Executive Committee, during intervals between meetings of the Board of
Directors, previously exercised the powers of the Board of Directors, except
with respect to a limited number of matters. The Executive Committee consisted
of non-employee directors, Messrs. Richard L. Boje, who was the chairman of the
Committee, Robert N. Dangremond, and William E. Yingling, III. The Executive
Committee met once during the fiscal year ended January 29, 1995. The Executive
Committee was dissolved at a meeting of the Board of Directors held on May 16,
1995.
6
<PAGE>
EXECUTIVE COMPENSATION
The following tables and narrative text discuss the compensation paid in
1994 and the two prior fiscal years to the Corporation's Chief Executive
Officer, the Corporation's four other most highly compensated executive
officers, and all other former executive officers whose compensation must be
disclosed pursuant to applicable law (the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
FISCAL -------------------------------- OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION
- ----------------------------------------- --------- ----------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Fletcher L. Byrom (1) 1994 $ 360,000 -0- (10) -0-
1993 $ 195,667(4) -0- $ 8,250
1992 N/A N/A N/A
Harvey W. Rosen (1) 1994 $ 189,424(1)(5) -0- (10) -0-
1993 N/A N/A N/A
1992 N/A N/A N/A
Stuart Buchalter (2) 1994 $ 145,000(6) -0- (10) -0-
1993 $ 447,500 $ 78,000(9) $ 2,866
1992 $ 390,000 -0- $ 3,396
Ronald I. Scharman (3) 1994 $ 180,000 -0- (10) -0-
1993 $ 95,367(7) -0- $ 29,003 -0-
1992 N/A N/A N/A
Howard Schwartz (3) 1994 $ 160,000 -0- (10) -0-
Senior Vice President and 1993 $ 27,898(8) -0- -0-
Chief Financial Officer 1992 N/A N/A N/A
<FN>
- ------------------------
(1) On February 15, 1995, pursuant to the terms of the Restructuring, Mr. Byrom
resigned as Chairman of the Board and Chief Executive Officer, and Mr.
Rosen resigned as president. In lieu of any other severance obligations,
the Corporation agreed to pay Mr. Byrom $421,422 in twelve equal
installments paid quarterly over three years beginning February 15, 1995,
and the Corporation agreed to pay Mr. Rosen $187,500, pursuant to the terms
of his employment agreement, constituting six months at full salary and six
months at 1/2 salary, with said amounts payable monthly, commencing in
March 1995.
(2) Subsequent to the effective date of the Reorganization Plan, Mr. Buchalter
resigned as Chairman of the Board and Chief Executive Officer, but was
retained by the Corporation to consult on financial matters.
(3) On February 15, 1995, pursuant to the terms of the Restructuring, Mr.
Scharman was appointed interim chief executive officer of the Corporation,
prior to that Mr. Scharman was Executive Vice President of the Corporation.
He resigned as interim chief executive officer on May 16, 1995. The
Corporation has agreed to pay Mr. Scharman a bonus in the amount of six
months salary upon his resignation from the Corporation effective May 31,
1995. In lieu of other severance benefits, Mr. Scharman will receive one
year and one month severance, payable monthly commencing June 1995, as well
as up to $10,000 for moving expenses. Mr. Schwartz is also entitled to
severance in the amount of his annual salary in the event of his
termination of employment by the Corporation.
(4) Compensation for fiscal 1993 reflects 5 3/4 months of service.
(5) Compensation for fiscal 1994 reflects 9 months of service.
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
(6) On March 29, 1991 Stuart Buchalter entered into an employment agreement
("Employment Agreement"). The Employment Agreement was extended through the
effective date of the Reorganization Plan and provided for annual base
salary of $390,000. The Employment Agreement entitled Mr. Buchalter to
share or participate in any profit sharing, pension, stock, incentive
compensation or other benefit plan, insurance or other "fringe benefits"
available to executive employees of the Corporation. If Mr. Buchalter had
been terminated without cause, he would have been entitled to a severance
payment of $750,000. When the Reorganization Plan became effective in 1993,
the Employment Agreement was no longer in effect. The Corporation, however,
desired to retain Mr. Buchalter as an employee. In a renegotiated agreement
with the Corporation, Mr. Buchalter accepted a new contract without
severance benefits that provided for a salary of $360,000 for the first
year and $120,000 for the second year following the Effective Date of the
Reorganization Plan.
(7) Compensation for fiscal 1993 reflects 7 months of service.
(8) Compensation for fiscal 1993 reflects 2 months of service.
(9) During the pendency of the reorganization proceedings, the Corporation,
with U.S. Trustee approval, adopted a Senior Executive Retention Program
("SERP") which was approved by the Bankruptcy Court as a part of the
Reorganization Plan. Under the SERP, key management personnel received one
time cash payments on the Effective Date of the Reorganization Plan as
compensation for remaining with the Corporation and providing services
essential to the Corporation during the pendency of the Chapter 11 process.
Under the SERP, Mr. Buchalter received $78,000. The SERP has been
terminated.
(10) No disclosure is necessary since the aggregate value of perquisites and
other personal benefits, securities or property is the lesser of either
$50,000 or 10% of the total of annual salary and bonus and none of these
Named Executives received any other amounts required to be disclosed in
this column.
</TABLE>
THE RETIREMENT PLAN FOR SALARIED EMPLOYEES
Retirement benefits under The Retirement Plan for Salaried Employees of
Standard Brands Paint Company (the "Retirement Plan"), a defined benefit plan
qualified under Section 401(a) of the Internal Revenue Code (the "Code"), are
payable to salaried employees who have vested (generally requiring the
completion of five years of service) upon retirement at age 65 or in reduced
amounts upon earlier retirement prior to age 65 in accordance with the
Retirement Plan. A retiree's benefit amounts are determined as the sum, for each
year of credited service, of 70% of annual compensation (base salary) plus 65%
of annual compensation in excess of Social Security Covered Compensation.
As of June 15, 1994, the Corporation ceased the accrual of benefits under
the plan. The estimated annual benefit accrued to Mr. Buchalter (the only
applicable Named Executive) up to the date the accrual of benefits ceased is
$43,983.
The following table shows the estimated annual benefits payable upon
retirement to persons of the specific compensation and years of credited service
classifications, as reduced by Social Security Covered Compensation (the latter
is based on the amounts in effect for 1993 using 1944 as the year of birth).
Such amounts assume payments in the form of a straight life annuity commencing
at age 65.
8
<PAGE>
RETIREMENT PLAN TABLE
ESTIMATED ANNUAL BENEFITS PAYABLE ON RETIREMENT
<TABLE>
<CAPTION>
CAREER AVERAGE
ANNUAL YEARS OF CREDITED SERVICE
COMPENSATION --------------------------------------------------------------------------------------------
(AS DEFINED) 10 15 20 25 30 35 40 45
- -------------- --------- --------- --------- --------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 10,438 $ 15,657 $ 20,875 $ 26,094 $ 31,313 $ 36,532 $ 40,032 $ 43,532
$ 125,000 $ 13,813 $ 20,719 $ 27,625 $ 34,532 $ 41,438 $ 48,345 $ 52,720 $ 57,095
$ 150,000 $ 17,188 $ 25,782 $ 34,375 $ 42,969 $ 51,563 $ 60,157 $ 65,407 $ 70,657
$ 175,000 $ 20,563 $ 30,844 $ 41,125 $ 51,407 $ 61,688 $ 71,970 $ 78,095 $ 84,220
$ 200,000 $ 23,938 $ 35,907 $ 47,875 $ 59,844 $ 71,813 $ 83,782 $ 90,782 $ 97,782
$ 225,000 $ 27,313 $ 40,969 $ 54,625 $ 68,282 $ 81,938 $ 93,393 $ 103,470 $ 107,928
$ 250,000 $ 28,776 $ 43,164 $ 57,552 $ 71,940 $ 86,328 $ 100,716 $ 107,928 $ 107,928
</TABLE>
Payment of the indicated benefits from the Retirement Plan is subject to
provisions as may be necessary to continue its qualified status under the Code
and, more particularly, subject to certain limits imposed by Section 415 of the
Code upon the annual benefit payable to a retiree from a pension plan qualified
under the Code. The above table reflects the 1993 limit, assuming birth in 1944.
Prior to 1994, the Code prohibited compensation in excess of $200,000
adjusted for the cost of living ($235,840 for 1993), from being taken into
account in determining benefits payable under a pension plan that is qualified
under the Code. Effective January 1, 1994, compensation in excess of $150,000,
adjusted for future increases in the cost of living, is prohibited from being
taken into account. The above table reflects the 1993 limitation for all years
of credited service.
At June 15, 1994, credited years of service under the Retirement Plan for
the applicable Named Executive was: Mr. Buchalter, 15 years. The compensation
covered by the Retirement Plan is equal to the amounts shown in the Summary
Compensation Table as Salary plus Bonus. Covered compensation up to the
cessation of the accrual of benefits for Mr. Buchalter was $60,000 which amounts
to more than 10% lower than his total annual compensation.
REPORT OF THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
COMMITTEE CHARTER
In December 1993, the Board of Directors of the Corporation delegated to the
Compensation Committee the authority to review, consider and determine the
compensation of the Corporation's then executive officers. The Committee's
activities include annual review of executive salaries and review and
development of executive compensation programs.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to align compensation with
business objectives and performance, and to enable the Corporation to attract,
retain and reward executive officers who contribute to the long-term success of
the Corporation. The Corporation is committed to providing a pay program that
helps attract and retain the best people in the industry. Targeted levels of the
executives' overall compensation are set at levels that the Compensation
Committee believes, based on survey data provided by an independent compensation
firm, is at the median of other companies in comparable retail and manufacturing
businesses.
Executive officers are rewarded based upon corporate performance, business
unit performance and individual performance. Corporate performance and business
unit performance are evaluated by reviewing the extent to which strategic and
business plan goals are met, including such factors as operating profit and
performance relative to competitors. Individual performance is evaluated by
reviewing organizational and management development progress against set
objectives.
9
<PAGE>
Base salaries provide a basis for (i) attracting, retaining, and motivating
valuable professional and managerial talent, (ii) recognizing substantial
differences in accountability and responsibility, (iii) providing a base line
for variable pay programs in defining target incentive levels, (iv) providing
periodic salary adjustments (when business conditions allow) that are based on
both labor market economics and incumbent job performance.
COMPENSATION OF EXECUTIVE OFFICERS AS A GROUP
In June, 1993, the Corporation emerged from its bankruptcy proceedings and
completed its recapitalization. The Board's Compensation Committee was
reconstituted in December, 1993, with the addition of several new independent
directors, including those directors now on the Compensation Committee. When the
Company emerged from bankruptcy, salaries were established for the Company's
then executive officers. After the Compensation Committee was reconstituted in
December 1993, the salaries of the then executive officers including executive
officers added during the fiscal year were reviewed based on a survey conducted
by an independent compensation firm. The Compensation Committee was not
influenced in those reviews by any existing arrangements set by the
Reorganization Plan. As a result of that review, the Compensation Committee
believed that Ronald I. Scharman's salary should be set at $180,000 per year,
which put his salary at the midpoint compensation range for similar executives
in comparable companies. The comparable companies used were from the S&P Salary
Index, the Ernst & Young National Executive Compensation Survey, the Peat
Marwick National Compensation Survey and the Mercantile & Manufacturers Annual
Salary Survey (West Coast). The Compensation Committee used this composite of
comparisons instead of the Wilshire Retail Industry Index (used in the
Performance Graph) since the composite is a more accurate measure since the
Company is both a retailer and a manufacturer.
When the Corporation's financial condition has stabilized, the Compensation
Committee believes that the compensation of the executives will be balanced
among (a) annual base salary, (b) the potential for an annual incentive award
consistent with industry practices based on the level of the Corporation's
operating income and other financial strategies and individual performance
criteria, and (c) an equity-based plan that would align the interest of the
executive with the Corporation's shareholders.
In July, 1994, the Stockholders approved the Standard Brands Paint Company
1994 Performance Employee Stock Option Plan. The Plan was adopted to better
align the interests of the Corporation's management and employees with those of
the shareholders. Options have not been granted, but as the Corporation's
financial condition stabilizes, the Committee will consider the granting of
Options upon recommendations of management and guidelines to be established by
an independent compensation firm.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Fletcher L. Byrom was elected to the Board of Directors on June 14, 1993
when the Corporation emerged from bankruptcy. He was elected Chairman of the
Board, Chief Executive Officer and President in August 1993. At that time, Mr.
Byrom's compensation was set at $420,000, which was the compensation paid to the
former chief executive officer. In January, 1994, the Compensation Committee
reviewed Mr. Byrom's compensation in view of the survey completed by its
compensation consultant. The Compensation Committee recommended, and Mr. Byrom
agreed to reduce his salary to $360,000 which is the midpoint of the range for
comparable companies. The Compensation Committee's consideration of the
compensation of Mr. Byrom in the 1994 fiscal year was strongly influenced by his
vast experience as an executive and director over the course of his career with
various public corporations, and the Corporation's immediate need for expertise
and leadership as it sought to structure, negotiate and implement a
restructuring and financing plan.
Deborah Hicks Midanek, Chairman
Richard L. Boje
William E. Yingling, III
10
<PAGE>
PERFORMANCE GRAPH
The Performance Graph below compares total cumulative shareholder return on
the Corporation's common stock.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STANDARD BRANDS WILSHIRE S & P 500
<S> <C> <C> <C>
1990 100 100 100
1991 41 112 107
1992 17 169 137
1993 16 191 149
1994 18 189 167
1995 2 174 168
</TABLE>
ASSUMES $100 INVESTED ON JANUARY 26, 1990
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDING JANUARY 29, 1995
<TABLE>
<CAPTION>
STANDARD
FISCAL YEAR ENDED BRANDS WILSHIRE S&P 500
- ---------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
1990................................................ $ 100 $ 100 $ 100
1991................................................ 41 112 107
1992................................................ 17 169 137
1993................................................ 16 191 149
1994................................................ 18 189 167
1995................................................ 2 174 168
</TABLE>
11
<PAGE>
CERTAIN TRANSACTIONS WITH RELATED PARTIES
On May 16, 1995, at a Special Meeting, shareholders of the Corporation
approved the Restructuring which involves certain related parties.
The principal elements of the Restructuring were:
A. Amendment to the Corporation's Restated Certificate of Incorporation
which increased the amount of authorized capital stock of the Corporation,
and effected a 1-for-10 Reverse Stock Split pursuant to which each
shareholder holds one share of the Corporation's post-split shares for every
ten shares presently held;
B. Sale to CRM of 15,700,496 newly issued shares of the Corporation's
common stock ("Common Stock"), which constitutes approximately 76.1% of the
Corporation's outstanding common stock, for $14 million (such issuance was
priced at $0.89 per share post-Reverse Stock Split, and the $14 million paid
by CRM was previously advanced in the form of an interim loan);
C. Exchange of $16 million of the Corporation's outstanding debt
(including approximately $2 million of debt held by CRM) into 2,242,928
newly issued shares of Common Stock (at the same price per share as the CRM
shares under B above) and 1,570,049 newly issued shares of 8% cumulative
convertible redeemable preferred stock of the Corporation ("Preferred
Stock") (priced at $8.92 per share of the Preferred Stock and including a
conversion price for the Common Stock of $1.11 per share);
D. Transfer of 15 of the Corporation's real estate properties to the
Liquidating Property Trust established on July 12, 1994, in which the
Corporation had a residual interest; release of related long-term debt; and
sale of the Corporation's residual interest in the Liquidating Property
Trust to, among others, CRM, FCI, and KRI for an additional $2 million
payable by CRM and in consideration of their participation in the
Restructuring.
Pursuant to the Investment Agreement, CRM loaned $14 million to the
Corporation at the signing of the Investment Agreement as of February 15, 1995
(the "Interim Financing"). The loan made as part of the Interim Financing was
exchanged on May 16, 1995 for Common Stock. The Interim Financing permitted the
Corporation to have access to the fund constituting the purchase price for the
Common Stock to be issued to CRM pursuant to the Investment Agreement during the
period prior to May 16, 1995. In addition, as of April 7, 1995, pursuant to an
amendment to the Investment Agreement and an unsecured loan agreement, CRM
loaned $2 million to the Company. On May 16, 1995 the loan was exchanged as
consideration for CRM's purchase from the Company of a 49% residual interest in
the Liquidating Property Trust.
Corimon Corporation funded its equity investment in the Corporation from the
proceeds of the sale to FCI of 516,129 shares of Corimon Corporation's Series A
Preferred Stock at $15.50 per share and $9,939,175 aggregate principal amount of
Put Notes of Corimon Corporation, at a purchase price of 100% of the principal
amount thereof, pursuant to a Stock and Note Purchase Agreement, dated as of
February 14, 1995, attached as an exhibit to the Schedule 13D, dated February
15, 1995, that Corimon Corporation filed with respect to the Corporation's
Common Stock.
As of May 17, 1995, FCI purchased an aggregate of $5 million of working
capital notes from the Corporation. The notes are secured by a second lien on
the Corporation's inventory and receivables and two warehouse properties that
comprise the paint facility of the Company's wholly-owned subsidiary, Major
Paint Company. The notes bear interest at the prime rate plus 5.5%.
On February 15, 1995, the Corporation and Dakota Services, Inc., a
subsidiary of CRM, entered into a contract for the provision of management
consulting services. Payment for such services was made monthly based on hours
worked, in an amount not less than $35,000 per month. The minimum payment under
this contract is not refundable to the Corporation and may only be credited
against services incurred during the corresponding calendar month. As of March
31, 1995, the Corporation has accrued $161,583 (and has paid $49,854 to Dakota
Services, Inc.) under this contract. This
12
<PAGE>
contract terminated on May 16, 1995, although the parties have agreed to
negotiate a replacement contract containing substantially the same terms. The
Corporation considered that it was in its best interests to obtain the benefit
of the expertise and experience of Dakota Services, Inc. through this consulting
relationship and that the amount of consideration was commensurate with the
benefit to the Corporation under such consulting relationship.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Corporation, upon the recommendation of the
Audit Committee, has appointed the firm of Price Waterhouse LLP to serve as
independent auditors of the Corporation for the current fiscal year, subject to
ratification of this appointment by the shareholders of the Corporation. The
Corporation has been advised by Price Waterhouse LLP that neither it nor any
member thereof has any financial interest, direct or indirect, in the
Corporation or any of its subsidiaries in any capacity.
On May 16, 1995, the Board of Directors of the Company engaged Price
Waterhouse LLP as the Corporation's principal accountant to audit the
Corporation's financial statements and dismissed the Corporation's former
account, Ernst & Young LLP. The reports of Ernst & Young LLP on the
Corporation's financial statements for each of the last two fiscal years
contained qualifications expressing substantial doubt about the Corporation's
ability to meet its obligations as they become due and therefore its ability to
continue as a going concern, and noting the absence of any adjustments to
reflect the possible further effects on the recoverability and classification of
assets or the amounts and classifications of liabilities that may result from
the possible inability of the Corporation to continue as a going concern.
During the two most recent fiscal years there were no disagreements with
Ernst & Young on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreements, if not
solved to the satisfaction of such accountants, would have caused them to make
reference to the subject matter of the disagreement in their reports.
Price Waterhouse LLP has served as the accountant for CRM and its
subsidiaries. Price Waterhouse LLP consulted with CRM prior to the Restructuring
as part of CRM's due diligence procedures. Prior to May 16, 1995, Price
Waterhouse LLP had not been consulted by the Corporation on either application
of accounting principles to a completed or proposed specified transaction or the
type of opinion to be rendered on any financial statements of the Corporation.
Representatives of both Ernst & Young and Price Waterhouse are expected to
be present at the Meeting, with an opportunity to make a statement should they
desire to do so, and will be available to respond to appropriate questions from
shareholders.
TRANSACTIONS WITH MANAGEMENT
The law firm of Buchalter, Nemer, Fields & Younger, a Professional
corporation, of which Stuart Buchalter, former Chairman of the Board and Chief
Executive Officer of the Corporation, is of counsel, has in the past performed
legal services for the Corporation, and the Corporation expects to retain such
firm for certain matters in the current fiscal year. The dollar amount of fees
paid by the Corporation to this law firm did not exceed 5% of this law firm's
gross revenues for its last fiscal year.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Shareholders of record who wish to have their proposals considered for
inclusion in the Corporation's Proxy Statement for the 1996 Annual Meeting of
Shareholders should deliver such proposals in writing to the Corporation,
addressed as follows: Standard Brands Paint Company, 4300 West 190th Street,
Torrance, California 90509, Attention: Edward A. Drury, Secretary. Such
proposals must be received by the Corporation at the foregoing address no later
than March 3, 1996, to be considered for inclusion in the Corporation's Proxy
Statement and form of proxy relating to that meeting.
13
<PAGE>
OTHER BUSINESS
The Board of Directors is not aware of any matter which may properly be
presented for action at the Meeting other than the matters set forth herein,
but, should any other matter requiring a vote of the shareholders arise, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the best judgment of the person or persons voting the
proxies, discretionary authority to do so being included in the proxy, in the
interests of the Corporation.
PROXIES AND SOLICITATIONS
Proxies for the Meeting are being solicited by mail directly and through
brokerage and banking institutions. The Corporation will pay all expenses in
connection with the solicitation of proxies. In addition to the use of the
mails, proxies may be solicited by directors, officers and regular employees of
the Corporation personally, by telephone, or by telegraph. The Corporation does
not expect to pay any fees or compensation for the solicitation of proxies but
may reimburse brokers and other persons holding stock in their names, or in the
names of nominees, for their expenses in sending proxy material to principals
and obtaining their proxies.
AVAILABILITY OF FORM 10-K
The Corporation's Annual Report on Form 10-K for the fiscal year ended
January 29, 1995, including the financial statements and schedules thereto, as
filed with the Securities and Exchange Commission, will be furnished to
shareholders upon written request without charge. A copy may be requested by
writing to Edward A. Drury, Secretary, Standard Brands Paint Company, 4300 West
190th Street, Torrance, California 90509.
By Order of the Board of Directors
Edward A. Drury
SECRETARY
Torrance, California
July 3, 1995
14
<PAGE>
PROXY STANDARD BRANDS PAINT COMPANY
Solicited on behalf of the Board of Directors of STANDARD BRANDS PAINT
COMPANY (the "Corporation") for use at the Annual Meeting of Stockholders (the
"Meeting") to be held on August 7, 1995 at 10:00 A.M., at 4300 West 190th
Street, Torrance, California.
The undersigned hereby appoints Edward A. Drury and Denise McHugh, or either
one of them, as Proxies, with full power of substitution, to vote all shares of
Common Stock of the Corporation held of record by the undersigned on June 29,
1995 at the Meeting or at any adjournments thereof, on the proposals set forth
below and in their discretion upon such other business as may properly come
before the Meeting.
The Board of Directors recommends a vote for all Nominees listed in Proposal
1 and ratification of Proposal 2.
<TABLE>
<C> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY
for the terms set forth in the Proxy Statement TO VOTE FOR ALL NOMINEES LISTED BELOW.
(EXCEPT AS MARKED TO THE CONTRARY BELOW). / / / /
</TABLE>
Gustavo Jose Blanco-Uribe Richard L. Boje Roland F. Breault Arthur W.
Broslat Robert N. Dangremond
Juan Gramage Deborah Hicks Midanek Thomas A. White William E. Yingling,
III
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
THAT NOMINEE'S NAME ON THE LINE PROVIDED BELOW.)
________________________________________
<TABLE>
<C> <C> <C>
2. Ratification of the appointment of Price Waterhouse LLP as the Corporation's independent auditors.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
<TABLE>
<C> <C> <C>
3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before
the Meeting.
</TABLE>
This proxy, when properly executed will be voted in the manner directed by
the undersigned stockholder. If no direction is given, this proxy will be voted
for all nominees listed in Proposal 1 and for Proposal 2. All proxies heretofore
given by the undersigned are hereby revoked. Receipt of the Proxy Statement
dated July 3, 1995 is acknowledged.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ACCOMPANYING PREPAID
ENVELOPE.
Date: _____________________, 1995
_________________________________
(Signature)
_________________________________
(Signature)
Please sign exactly as your name
appears hereon. When signing as
attorney, executor,
administrator, trustee, guardian
or corporate officer, please
include full title.
