[STANDARD LOGO]
STANDARD COMMERCIAL CORPORATION
2201 Miller Road
Wilson, North Carolina 27893
Notice of Annual Meeting of Shareholders
To Be Held August 10, 1999
Dear Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of Shareholders
of Standard Commercial Corporation to be held at Hardy Alumni Hall on the campus
of Barton College in Wilson, North Carolina, on Tuesday, August 10, 1999 at 12
noon to:
(a) elect three directors;
(b) ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors for fiscal 2000; and
(c) transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on June 16, 1999 will be
entitled to vote at the meeting.
Sincerely,
/s/ Robert E. Harrison
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Robert E. Harrison
President
June 25, 1999
You are invited to a luncheon immediately following the meeting. If you plan
to attend, please complete and return the enclosed card directly to the Company
or telephone Carol Whitehead at 252-291-5507 Extension 259. If you need
directions to Barton College please contact Mrs. Whitehead.
PLEASE VOTE YOUR SHARES PROMPTLY BY COMPLETING AND RETURNING YOUR PROXY IN
THE ENVELOPE PROVIDED.
<PAGE>
STANDARD COMMERCIAL CORPORATION
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Proxy Statement
Annual Meeting of Shareholders
August 10, 1999
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The accompanying proxy is solicited by the Board of Directors. A shareholder
giving a proxy may revoke it at any time before it is exercised. Shareholders of
record at the close of business on June 16, 1999 will be entitled to vote at the
meeting or any adjournments thereof. It is expected that proxy material will be
mailed on or about June 25, 1999.
ELECTION OF DIRECTORS
The Company's Articles of Incorporation divide the Board of Directors into
three classes as nearly equal in number as possible, each of which serves for
three years. The term of office of one class of directors expires each year in
rotation so that one class is elected at each Annual Meeting for a full
three-year term. Three of the present directors, Marvin W. Coghill, Robert E.
Harrison and William A. Ziegler, who were elected for three-year terms expiring
at this Annual Meeting, have been nominated for three-year terms expiring at the
Annual Meeting in 2002. Henry R. Grunzke, who has served as a Director since
1987, is retiring from the Board effective June 30, 1999. B. Clyde Preslar who
was appointed to the Board in June, 1999, will fill the unexpired term (2000) of
Ery W. Kehaya who died in November of 1998. In order to comply with the
Company's Articles of Incorporation, which require that there be a minimum of
three Directors in each class, Mr. Murray, who was elected to hold office until
2001, has consented to be reallocated to the class of Directors whose terms
expire in 2000. The five other directors, who were elected for terms expiring at
the Annual Meetings in 2000 and 2001, will remain in office.
INFORMATION ABOUT NOMINEES AND OTHER DIRECTORS
The information that follows as to the principal occupations and
directorships and the number of shares of the Company's common stock
beneficially owned, directly or indirectly, has been furnished to the Company by
such persons.
<TABLE>
Name, Age and Year First Became Director Principal Occupation During Past Five Years
<S> <C>
Nominees for Terms Expiring in 2002
Marvin W. Coghill - 65, Director 1974 Chairman - Tobacco Division; prior to April 1994, President of the
Company.
Robert E. Harrison - 45, Director 1995 President and Chief Executive Officer since August 1996. He was employed
in July 1995 as Senior Vice President and Chief Financial Officer and
retained the latter position until April 1998. Previously employed
by R J Reynolds International in a number of management positions,
primarily in the Far East.
William A. Ziegler - 74, Director 1985 Retired partner, Sullivan & Cromwell, attorneys.
Directors Continuing in Office Until 2000
J. Alec G. Murray - 62, Director 1977 Chairman of the Board since August 1996; previously President/Vice
Chairman and Chief Executive Officer.
Daniel M. Sullivan - 75, Director 1995 Founder and retired Chief Executive Officer, Frost & Sullivan, Inc.;
currently Chairman JLM Couture, Inc. and director of four private companies.
B. Clyde Preslar - 45, Director 1999 Vice President - Finance and Chief Financial Officer, Lance, Inc. Prior
thereto he was Director of Financial Services with Black & Decker.
Directors Continuing in Office Until 2001
William S. Barrack, Jr. - 69, Director 1992 Retired Senior Vice President, Texaco Inc. A director of Consolidated
Natural Gas Company.
Charles H. Mullen - 71, Director 1995 Retired Chairman and Chief Executive Officer, The American Tobacco
Company, and retired Vice President, American Brands, Inc. A director
of Swisher International Group Inc.
William S. Sheridan - 45, Director 1998 Senior Vice President and Chief Financial Officer Sotheby's Holdings,
Inc. since 1996. Prior thereto he was a partner with Deloitte & Touche LLP.
</TABLE>
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There are no family relationships among any of the directors and executive
officers.
PRINCIPAL SHAREHOLDERS
The following table sets forth at June 16, 1999 the common stock owned
beneficially, according to advice received by the Company, by each 5% or larger
shareholder, by each director, by each of the executive officers listed in the
Summary Compensation Table and by all executive officers and directors as a
group:
Name and Address Shares Owned % of Class
Estate of Ery W. Kehaya 1,541,666 1 11.9%
474 Dover Road
Tequesta, FL 33469
FMR Corp. 1,248,900 9.7%
82 Devonshire Street
Boston, MA 02109
Franklin Resources, Inc. 1,126,472 8.7%
777 Mariners Island Blvd
San Mateo, CA 94403-7777
Dimensional Fund Advisors, Inc. 803,106 6.2%
1299 Ocean Avenue
Santa Monica, CA 90401
Wellington Management Company, LLP 754,737 5.8%
75 State Street
Boston, MA 02109
Royce & Associates, Inc. 750,218 5.8%
1414 Avenue of the Americas
New York, NY 10019
Helga L. Kehaya 730,808 2 5.7%
474 Dover Road
Tequesta, FL 33469
Mark W. Kehaya 515,903 3 4.0%
474 Dover Road
Tequesta, FL 33469
Marvin W. Coghill 223,587 4 1.7%
J. Alec G. Murray 207,371 5 1.6%
William A. Ziegler 9,711 *
Robert E. Harrison 8,611 6 *
Alfred F. Rehm, Jr. 5,169 7 *
Henry C. Babb 4,919 8 *
William S. Barrack, Jr. 3,645 9 *
Charles H. Mullen 3,238 *
Daniel M. Sullivan 1,599 *
Paul H. Bicque 1,479 *
B. Clyde Preslar 1000 *
William S. Sheridan 24 *
All directors and officers as a group 941,661 7.3%
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* Less than one percent.
1 Executors of the estate are Helga L. Kehaya, Mark W. Kehaya and First Union
National Bank.
2 Includes 9,463 shares underlying $278,000 principal amount of the Company's 7
1/4% Convertible Subordinated Debentures assuming conversion thereof at the
current conversion price of $29.38 per share. Mrs. Kehaya is deemed a 10%
owner by virtue of her status as an executor of the estate of Ery W. Kehaya.
3 Mr. Kehaya is deemed a 10% owner by virtue of his status as an executor of
the estate of Ery W. Kehaya. Includes 493 shares held for Mr. Kehaya's
account by the trustee of the Company's 401-K Savings Plan. Includes 2,558
shares owned by his daughter and 1,830 shares owned by his wife.
4 Includes 3,864 shares held for Mr. Coghill's account by the trustee of the
Company's 401-K Savings Plan.
5 Includes 11,556 shares owned by Mr. Murray's wife.
6 Includes 717 shares held for Mr. Harrison's account by the trustee of the
Company's 401-K Savings Plan and 66,667 shares represented by vested,
unexercised stock options.
7 Includes 2,127 shares held for Mr. Rehm's account by the trustee of the
Company's 401-K Savings Plan.
8 Includes 398 shares held for Mr. Babb's account by the trustee of the
Company's 401-K Savings Plan.
9 Includes 555 shares owned by Mr. Barrack's wife.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning compensation of
the Chief Executive Officer and the other four most highly compensated executive
officers of the Company (the "named executive officers") for services in all
capacities for fiscal year ended March 31, 1999.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
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Restricted Securities
Fiscal Restrictedal Stock Underlying
Name and Principal Position Year Salary Bonus Compensation(1) Awards(2) Options
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<S> <C> <C> <C> <C> <C> <C>
Robert E. Harrison(3) 1999 $ 375,000 $125,000 $3,200 $20,776 45,144(5)
President & Chief Executive 1998 350,000 100,000 3,200 37,083 100,000
Officer 1997 271,250 -0- 2,250 -0- -0-
Marvin W. Coghill 1999 $ 342,000 $ 55,000 $3,200 $16,424 6,000
Chairman - Tobacco Division 1998 325,000 50,000 3,200 61,145 -0-
1997 310,000 -0- 3,000 -0- -0-
Henry C. Babb(4) 1999 $ 227,400 $ 8,000 $3,200 $ 4,008 600
VP, Corporate Counsel & 1998 75,800 -0- -0- -0- -0-
Secretary
Alfred F. Rehm, Jr. 1999 $ 200,000 $ 29,000 $3,200 $ 7,072 4,000
President & Chief Operating 1998 140,000 40,000 2,800 25,638 -0-
Officer - Tobacco Division 1997 130,000 30,000 2,600 -0- -0-
Paul H. Bicque 1999 $ 190,147 $ 19,000 $ -0- $ 4,360 6,000
Managing Director-Wool Div. 1998 182,430 18,000 -0- 16,118 -0-
1997 164,000 -0- -0- -0- -0-
</TABLE>
1. Employer contributions under the Company's 401(k) Savings Incentive Plan.
Eligible employees in the United States may contribute the lesser of 18%
of recognizable compensation or the maximum amount permitted under the
Internal Revenue Code. Employee contributions are partially matched with
employer contributions in the form of common stock of the Company. Noncash
personal benefits for the persons named above did not exceed the lesser of
$50,000 or 10% of the cash compensation reported.
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2. These awards were based on fiscal 1998 performance. The amounts shown in
this column were calculated by multiplying the number of shares issued by
the closing market price ($8.00 per share) of the Company's common stock
on the date of issuance. The shares awarded will vest proportionately over
a period of four years beginning August 1999.
As of March 31, 1999, the number of restricted shares (market value $4.75
per share) issued in 1998-99 to the persons included in the table were as
follows: Mr. Harrison 2597 ($12,336), Mr. Coghill 2053 ($9,752), Mr. Babb
501 ($2,380), Mr. Rehm 884 ($4,199), and Mr. Bicque 545 ($2,589). Each
recipient of restricted stock has all the rights, including voting and
dividends, of other shareholders, subject to certain restrictions and
forfeiture provisions.
3. Mr. Harrison was elected President, Chief Executive Officer, and Chief
Financial Officer on August 13, 1996; from July 1995 to August 1996 he was
Senior Vice President and Chief Financial Officer. He relinquished the
position of Chief Financial Officer effective April 1, 1998.
4. Mr. Babb was hired December 1, 1997.
5. See explanation of Mr. Harrison's repricing set forth in Employment
Agreements
Option Grants During Year Ended March 31, 1999
The following table summarizes all option grants during the year ended
March 31, 1999 to the named executive officers:
<TABLE>
<CAPTION>
% of Total Potential Realizable
Number of Options Value at Assumed
Shares Granted to Exercise Annual Rates of Stock
Underlying Employees in or Base Price Appreciation for
Options Fiscal Year Price Per Expiration Option Term(2)
Name Granted 1999 Share Date(1) 5% 10%
- ----- ------- ---- ----- ----- -- ---
<S> <C> <C> <C> <C> <C> <C>
Robert E. Harrison(3) 45,144 46% $8.875 August 10, 2005 $420,689 $440,718
Marvin W. Coghill 6,000 6% $8.875 August 10, 2005 $55,913 $58,575
Henry C. Babb 600 1% $8.875 August 10, 2005 $5,591 $5,858
Alfred F. Rehm, Jr. 4,000 4% $8.875 August 10, 2005 $37,275 $39,050
Paul H. Bicque 6,000 6% $8.875 August 10, 2005 $55,913 $58,575
</TABLE>
1. The stock option grants shown were made in August 1998 as a part of the
Long-Term Incentive component of the Executive Compensation Program and
become exercisable in equal annual installments over four years from the
date of the grant.
2. The compounding assumes a four-year exercise period for all option grants.
These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent on the future
performance of the Common Stock, and overall stock market conditions. The
amounts reflected in this table may not necessarily be achieved.
3. See explanation of Mr. Harrison's repricing set forth in Employment
Agreements.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth information concerning holdings as of March
31, 1999, by the named executive officers. No named executive officer exercised
options during the year ended March 31, 1999.
<TABLE>
<CAPTION>
Number of Unexercised Options Value of Unexercised In-the-Money
March 31, 1999 Options at March 31, 1999(1)
Name Exercisable(2) Unexercisable(2) Exercisable(2) Unexercisable(2)
- ---- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Robert E. Harrison -0- 45,144 $ -0- $ -0-
Marvin W. Coghill -0- 6,000 $ -0- $ -0-
Henry C. Babb -0- 501 $ -0- $ -0-
Alfred F. Rehm, Jr. -0- 4,000 $ -0- $ -0-
Paul H. Bicque -0- 6,000 $ -0- $ -0-
</TABLE>
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<PAGE>
1. Calculated by subtracting the exercise price from the closing price of the
Company's Common Stock as reported by the New York Stock Exchange on March
31, 1999 and multiplying the difference by the number of shares underlying
each option.
2. The first number represents the number or value (as called for by the
appropriate column) of exercisable options; the second number represents
the number or value (as appropriate) of unexercisable options.
Employment Agreements
In March 1997, the Company entered into a three-year Employment Agreement
with Robert E. Harrison, its President and Chief Executive Officer (and then
Chief Financial Officer). The agreement provided for a base salary at that time
of $350,000 per year, annual cash bonuses upon achievement of performance goals,
as determined by the Compensation Committee of the Board of Directors of the
Company, and other employee benefits. In addition, the agreement, which was
ratified by the Board of Directors on April 14, 1997, provides for the grant to
Mr. Harrison of nonqualified options to purchase 100,000 shares of Common Stock
of the Company at an exercise price equal to the fair market value as of the
date of the grant. These options will become exercisable, based on Mr.
Harrison's continued employment with the Company, in equal annual installments
over a three-year period. Mr. Harrison's employment agreement is renewable for
successive two-year periods after its initial three-year term. The agreement
also contains a covenant by Mr. Harrison not to compete with the Company until
one year after his termination, except if he is terminated by the Company
without cause. The agreement also provides that in the event Mr. Harrison's
employment is terminated without cause by the Company, including or in
connections with a Change in Control, he shall receive termination pay in a lump
sum equal to two years' base salary and one year's bonus.
In March 1997, the Company entered into an employment agreement with its
then new President and Chief Executive Officer, Robert E. Harrison that, among
other things, provided for the grant of an option to purchase 100,000 shares of
common stock for $17.00 per share, the fair market value on the date of grant.
The Committee later engaged an independent consulting firm to conduct a
review of the Company's compensation programs for all of its executives. As a
result of the study, the Committee approved the implementation of a stock option
program for its executives. In August 1998, executives, excluding Mr. Harrison,
were granted stock options with an exercise price of $8.875 per share, the fair
market value at that time.
As a result of litigation against the cigarette manufacturing industry and
the recent Asian financial crisis, the stock prices for many tobacco-related
companies have declined. In response to the significant decline in the price of
the Company's common stock since March 1997 and the exercise price of the
options issued to other executives, the Committee concluded that Mr. Harrison's
option grant was no longer an effective tool to achieve the Company's long-term
business strategies. The consulting firm which had conducted the study of the
executive compensation program recommended that Mr. Harrison's option be revised
and repriced to bring it into line with the options granted other executives. In
accordance with the firm's recommendation and with Mr. Harrison's consent, his
original option was, using the Black Scholes pricing model, exchanged for one of
approximately equivalent value. His original option to purchase 100,000 shares
at $17.00 a share was on December 15, 1998 replaced by one to purchase 45,144
shares at $8.875 a share (42 percent above the December 14, 1998 closing price
of $6.25), subject to the same vesting provisions as the options granted to
other executives.
REPRICING TABLE
<TABLE>
<CAPTION>
Length of
Number of Market price Exercise original
securities of stock at price at New option term
underlying time of time of exercise remaining
options repricing repricing price at date of
Name Repricing Date repriced (per-share) (per-share) (per-share) repricing
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Robert E. Harrison December 14, 1998 45,144 $6.25 $17.00 $8.87 67 months
</TABLE>
In December, 1997, the Company entered into an Employment Agreement with
Henry C. Babb, its Vice President - Public Affairs, Secretary and General
Counsel. The agreement provided for a base salary at that time of $225,000 and
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<PAGE>
eligibility to participate in other employee benefit programs. The agreement
also provides that in the event Mr. Babb's employment is terminated without
cause by the Company, including or in connection with a Change in Control, he
shall receive termination pay in a lump sum equal to two years' base salary.
In August, 1998, the Company entered into an Employment Agreement with
Paul H. Bicque, the Managing Director of its wool division. The agreement
provided for a base salary as determined from time to time by the Company's
management and eligibility to participate in other employee benefit programs.
The agreement also provides for certain severance benefits in the event of a
change in control of the Company's wool division; i.e., a lump sum of one half
of his then annual base salary in the event of his employment with an acquiring
entity, or a lump sum of two times his then annual base salary in the event of
his termination of employment without cause by the Company within one year after
a change in control of the wool division.
Retirement Plans
There is a Defined Benefit Pension Plan provided for participating
employees in the United States who retire directly from the Company or who
terminate service with vested rights. The Company pays the full cost of the
Plan, determined on employees who are at least 21 years old and have been
employed for at least one year are covered by the Plan. The right to receive
benefits under the Plan is 100% vested after five years of service. The monthly
benefit payable upon retirement is based on average compensation for the three
highest years multiplied by various factors for each year of service up to 40.
The definition of compensation includes amounts deferred under the 401(k)
Savings Incentive Plan and Pretax Medical Plans, but excludes bonuses and other
awards. The benefit normally is computed in the form of a straight-life annuity,
or the actuarial equivalent thereof under other options specified in the Plan.
In addition, an immediate benefit is provided to the surviving spouse upon death
of an active or disabled participant. The maximum annual benefit payable from
this Plan is limited by Section 415 of the Internal Revenue Code to $130,000 in
calendar 1999 ($130,000 in 1998 and $125,000 in 1997).
A nonqualified Supplemental Retirement Plan provides such benefits from
the Company's general funds as would otherwise be provided under the above
tax-qualified Plan except for Internal Revenue Code limitations on amounts which
may be paid out of a tax-qualified Plan.
The table below shows representative total annual retirement benefits
payable to an employee retiring in 1999 under the above Plans for specified
levels of compensation and years of service computed as a straight-life annuity
at age 65.
<TABLE>
<CAPTION>
Final Average Years of Credited Service at Age 65
Compensation 15 20 25 30 35 40
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<S> <C> <C> <C> <C> <C> <C>
100,000 21,500 28,700 35,900 43,100 49,000 52,700
150,000 33,900 45,200 56,500 67,800 77,200 82,900
200,000 46,300 61,700 77,100 92,600 105,500 113,000
250,000 58,700 78,200 97,800 117,300 133,700 143,100
300,000 71,000 94,700 118,400 142,100 162,000 173,200
350,000 83,400 111,200 139,000 166,800 190,200 203,400
400,000 95,800 127,700 159,600 191,600 218,500 233,500
</TABLE>
As of March 31, 1999, Messrs. Harrison, Coghill, Babb, Rehm, and Bicque
had 3, 41, 1, 20, and 7 years of service, respectively, for pension purposes.
The pensionable compensation covered by the US and foreign retirement plans in
1999, 1998, and 1997 for each executive officer listed in the Summary
Compensation Table is equal to the "salary" amount shown in the Table. Foreign
pension plans use different formulae than the one used in preparing the above
table. At March 31, 1999, Mr. Bicque had accrued annual benefits payable at age
65 of $26,940.
Performance Improvement Compensation Plan
On August 11, 1992 the shareholders of the Company approved the adoption
of a Performance Improvement Compensation Plan (the "Plan"), which is
administered by the Compensation Committee of the Board of Directors. The Plan
allows the grant of a number of different types of equity based compensation
vehicles. Awards under the Plan may be made to participants in the form of
incentive stock options, nonqualified stock options, discounted stock options,
restricted stock, stock appreciation rights, phantom stock, stock awards,
performance shares, and deferred stock. A maximum of 500,000 shares of Common
Stock may be issued under the Plan. To date there have been grants of restricted
stock awards and nonqualified stock options.
The restricted stock awards granted in fiscal 1999 vest proportionally
over four years, with any unvested portion of the award being subject to
forfeiture if a recipient's employment is terminated other than because of
death, disability, or retirement after age 62 under certain conditions. The
restricted stock awards granted prior to fiscal 1999 are subject to forfeiture
for a period of seven years if a recipient's employment is terminated other than
reasons listed previously. The Compensation Committee may also waive the
restriction. The recipient of an award may vote the stock and is entitled to
cash dividends.
The nonqualified stock option awards granted in fiscal 1999 vest
proportionally over four years, with the option expiring seven years from grant
date. Conditions are imposed upon the exercisability of Options in the event of
retirement, death, disability, or other termination of employment as determined
by the Compensation Committee.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The committees established by the Board of Directors to assist it in the
discharge of its responsibilities are an Executive Committee, an Audit
Committee, a Compensation Committee, a Finance Committee and a Nominating
Committee.
The Executive Committee consists of J. Alec G. Murray, Marvin W. Coghill
and Robert E. Harrison. This committee meets on call and has authority to act
on most matters during the intervals between Board meetings. During the last
fiscal year, the committee acted on various matters by unanimous written
consents.
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<PAGE>
The Audit Committee, which met five times during the last fiscal year,
consists of William S. Barrack, Jr. (Chairman), Charles H. Mullen, William S.
Sheridan, Daniel M. Sullivan and William A. Ziegler, none of whom have ever been
employees of the Company. This committee is primarily concerned with assisting
the Board in fulfilling its fiduciary responsibilities relating to accounting
policies and auditing and reporting practices, and assuring the independence of
the Company's public accountants, the integrity of management and the adequacy
of disclosure to shareholders. Its duties include recommending the selection of
independent accountants, reviewing the scope of the audits and the results
thereof, and reviewing the organization and scope of the Company's internal
systems of financial control and accounting policies followed by the Company.
The Compensation Committee, which met six times during the last fiscal
year, consists of William A. Ziegler (Chairman), William S. Barrack, Jr.,
Charles H. Mullen and Daniel M. Sullivan, none of whom have ever been employees
of the Company. This committee is primarily concerned with administering the
Performance Improvement Compensation Plan, determining compensation of executive
officers and oversight of the Company's pension plans.
The Finance Committee, which met four times during the last fiscal year,
consists of Daniel M. Sullivan (Chairman), William S. Barrack, Jr., Robert E.
Harrison, Charles H. Mullen, William S. Sheridan and William A. Ziegler. Of the
current membership on the Committee, only Mr. Harrison is an officer of the
Company, and there are no interlocking relationships. This Committee is
primarily concerned with monitoring the financial condition of the Company;
making recommendations regarding financial needs, business planning policies,
capital expenditures, dividends, stock repurchases, relations with the financial
community, mergers, acquisitions and other major projects; and management
structure and policy development.
The Nominating Committee, which met three times during the last fiscal
year, consists of William A. Ziegler (Chairman), Robert E. Harrison, Charles H.
Mullen and J. Alec G. Murray. This committee is primarily concerned with
recommending to the full Board of Directors candidates for election as
directors. The Committee will consider candidates recommended by shareholders.
Such recommendations should be sent to the Nominating Committee, c/o Henry C.
Babb, Secretary, Standard Commercial Corporation, 2201 Miller Road, Wilson,
North Carolina 27893.
The Board of Directors held five meetings during the last fiscal year.
During that year, each director was present at 75% or more of the meetings of
the Board and its committees on which the director served.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The rules of the Securities and Exchange Commission require disclosure of
late Section 16 filings by directors and executive officers. Except as described
hereinafter, to the best of the Company's knowledge and belief, there were no
late filings during fiscal 1999. Charles H. Mullen filed a late Form 5 reporting
his purchase of 1,000 shares in August 1998. In September 1998, Mr. Harrison,
the Company's Chief Executive Officer, filed a late Form 4 reporting his
acquisition of 1,000 shares during August 1998.
DIRECTORS' COMPENSATION
Directors who are not employees of the Company receive an annual retainer
of $15,000 for serving on the Board of Directors and $10,000 for serving on
Committees of the Board, plus a fee of $750 for each meeting of the Board and
$250 for each Committee meeting attended. On retirement after at least five
years service as a nonemployee Director, they receive annually for the number of
years equaling their years of service as a nonemployee director one half the
retainer in effect at the time of retirement.
COMPENSATION COMMITTEE REPORT
The compensation of the executive officers is determined by the
Compensation Committee.
Compensation Objectives
In determining the total compensation of an executive officer the
Committee has in mind the necessity of attracting and retaining exceptionally
competent employees and motivating them to achieve maximum profitability of the
Company. Compensation paid comparable executive officers by competitors is taken
into account, along with performance of the Company and the individual and of
the activities for which he is responsible.
Compensation Arrangements
Apart from benefits, which are dealt with in the accompanying tables, an
executive officer's total compensation consists of base salary, annual cash
incentives, and long-term incentives.
Base Salary. In determining base salaries for the executive officers, the
Committee examines available reports regarding salaries paid by competitors and
in industry generally and considers the executive officer's responsibilities,
the past and present performance of the Company and the individual and of the
activities for which he is responsible, and future potential.
Annual Cash Incentives. On June 11, 1998, the Board of Directors adopted
the Annual Cash Incentive Plan pursuant to which executive leadership is
rewarded with a performance based cash award for team and personal achievements
that lead to business growth and increased shareholder value. Award payouts are
measured during the plan year and determined by two components; business results
and key performance objectives. The business results component is based on
desired financial and operating performance as determined by the Committee. Key
performance objectives are based on individual goals established as at the start
of each plan year.
Long-Term Incentives. The long-term incentive arrangements allow
executives the opportunity to receive shares of the Company's common stock based
on the Performance Improvement Compensation Plan (the "PICP") approved by the
shareholders on August 11, 1992. The PICP authorizes the Committee to make
effective for designated employees various arrangements based on shares of
Company stock.
On June 14, 1993 the Committee adopted the Restricted Stock Plan (the
"RSP") as a means of awarding certain employees, to the extent specified
performance objectives are met, restricted shares of the Company's common stock.
In doing so, the Committee had in mind not only the objectives generally
applicable to the Company's compensation arrangements, but causing participating
employees to own more shares of the Company's stock than might otherwise be the
case and to identify more closely with shareholder interests. The Company's
executive officers are among those who have been designated as eligible to
participate. The RSP calls for awards of restricted stock being made on the
basis of overall Company performance in terms of return on net assets. No awards
are made on account of a year in which return on net assets is not at least
equal to a threshold figure. The Committee establishes a target return on net
assets for the year and the pool that will be available if that target is
achieved. Correspondingly more or fewer shares are awarded to the extent the
target is exceeded or not achieved. Shares awarded pursuant to the RSP on or
after June 10, 1998 vest over a four-year period at the rate of one fourth per
year. Shares awarded under the RSP prior so that date remain restricted for
seven years, except in the case of specified circumstances. The Committee has
the discretion to adjust awards because of changed conditions or for other
reasons. A total of 89,452 restricted shares were awarded in fiscal 1999 based
on fiscal 1998 performance.
A Nonqualified Stock Option Plan (the "NSOP") was adopted by the
Committee on June 10, 1998. The NSOP awards are made to certain executives on
the basis of the factors considered in determining their salaries. The NSOP
provides a participant the opportunity to purchase shares of the Company's
common stock at a fixed price, regardless of the actual stock market price. In
fiscal 1999, a total of 52,520 option shares were awarded at the option price
equal to the fair market value as of the date of the grant. These grant vest one
fourth on the first anniversary of the grant date and an additional one fourth
on each of the second, third, and fourth anniversaries of the grant date. Each
option expires seven years from its grant date, except as otherwise is provided
for in the Rules, Regulations and Procedures of the NSOP or as determined by the
Committee.
-7-
<PAGE>
Chief Executive Officer's Compensation
In determining Mr. Harrison's compensation (including base salary, bonus
and stock options) for the last fiscal year, the Committee took into
consideration primarily the compensation paid to chief executive officers by the
Company's principal competition and an appropriate relationship between Mr.
Harrison's compensation and those of the executive officers reporting to him.
Although no executive officer of the Company received compensation in
fiscal 1999 in excess of the $1 million deductibility threshold established by
Section 162(m) of the Internal Revenue Code, the Committee will continue to
consider the deductibility and performance-based compensation issues raised by
Section 162(m).
This report has been provided by the Compensation Committee: William A.
Ziegler, Chairman: William S. Barrack, Jr.; Charles H. Mullen; and Daniel M.
Sullivan.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee are currently William A.
Ziegler, William S. Barrack, Jr., Charles H. Mullen and Daniel M. Sullivan.
Messrs. Ziegler, Barrack, Mullen and Sullivan were not at any time during the
fiscal year ended March 31, 1999 or at any other time an officer or employee of
the Company. No executive officer of the Company serves as a member of the Board
of Directors or Compensation Committee of any entity which has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee.
PERFORMANCE GRAPH
The following graph compares total return, including reinvestment of
dividends, on the Company's Common Stock to the total returns of the Standard &
Poor's 500 Stock Index and a Peer Group Index (PGI) (as defined below) for the
last five fiscal years ending March 31, 1999. The comparison assumes a $100
investment on March 31, 1994 in (1) Standard Commercial Common Stock, (2) the
Standard & Poor's 500 Index and (3) the PGI, and shows in each case the change
in stock price and dividends paid (assuming dividend reinvestment) over the
ensuing five years.
-8-
<PAGE>
[GRAPH]
NOTE: The past performance shown in the graph above is not necessarily
indicative of future performance.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FYE March 31 1995 1996 1997 1998 1999
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Standard $ 88 $ 62 $128 $115 $ 35
S&P 500 $116 $153 $183 $270 $321
Peer Group $116 $148 $187 $219 $106
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The PGI combines the weighted total return, based on the average month-end
market capitalization, of the other two leaf tobacco dealers (DIMON Incorporated
and Universal Corporation) publicly traded in the United States.
Anything to the contrary notwithstanding in any of the Company's previous
filings under the Securities Act of 1933 or the Securities Exchange Act of 1934
that incorporates future filings, including this Proxy Statement, in whole or in
part, the preceding Compensation Committee Report and Performance Graph shall
not be incorporated by reference into any such filings nor shall they constitute
soliciting material.
VOTING RIGHTS AND PROXY
On June 16, 1999, the Company had outstanding 12,933,652 shares of common
stock, all of one class and each share entitled to one vote. Shares cannot be
voted at the meeting unless the owner is present or represented by proxy. A
proxy may be revoked by the shareholder at any time before it is voted.
The election of directors requires a plurality of the votes cast and the
appointment of the Company's auditors requires the affirmative vote of a
majority of the votes cast at the meeting. For purposes of determining the
number of votes cast with respect to a particular matter, only those cast "For"
or "Against" are included. Abstentions and votes withheld, as well as broker
nonvotes will be counted only in determining the presence of a quorum.
Unless a shareholder specifies otherwise in a proxy, it will be voted FOR
the election as director of the three nominees listed under the caption
"Election of Directors" herein and FOR approval of the appointment of Deloitte &
Touche LLP as the Company's independent auditors for fiscal 2000.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP audited the financial statements of the
Company in 1999 and, subject to shareholder ratification, the Board of Directors
has reappointed this firm as the Company's Independent Public Accountants for
fiscal 2000. Representatives of Deloitte & Touche LLP will be present at the
Annual Meeting, and will have an opportunity to respond to questions relating to
their audit of the Company's financial statements and to make a statement if
they so desire.
-9-
<PAGE>
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 2000 Annual
Meeting of Shareholders must be received by the Company before February 25,
2000. To be included, all such proposals must comply with the requirements of
Rule 14a-8 promulgated under the Exchange Act and the Board of Directors directs
the close attention of interested shareholders to that Rule. In addition, the
Company's Bylaws require that shareholders give advance notice and furnish
certain information to the Company in order to bring a matter of business before
an annual meeting or to nominate a person for election as a director.
SOLICITATION OF PROXIES
The cost of soliciting proxies in the accompanying form will be borne by
the Company. In addition to solicitations by mail, employees of the Company may
solicit proxies in person or by telephone.
At the time of mailing this Proxy Statement, the management is not aware
of any matters not referred to herein to be presented for action at the meeting.
If any other matters properly come before the meeting, it is intended that the
shares represented by the proxies will be voted with respect thereto in
accordance with the judgment of the persons voting them.
/s/ Henry C. Babb
-----------------
Henry C. Babb
June 25, 1999 Secretary
