<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
THE STANDARD REGISTER COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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 statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ..................................................
(2) Form, Schedule or Registration Statement No.: ............................
(3) Filing Party: ............................................................
(4) Date Filed: ..............................................................
================================================================================
<PAGE> 2
Standard Register LOGO
P.O. BOX 1167 - DAYTON, OH 45401
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF THE STANDARD REGISTER COMPANY
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
The Standard Register Company which will be held at The Mandalay Banquet Center,
2700 East River Road, Dayton, Ohio, at 11:00 A.M. Eastern Daylight Savings Time
on Wednesday, April 16, 1997.
The subjects to be considered at this Annual Meeting are:
(1) To fix the number of Directors to be elected at ten;
(2) To elect ten Directors;
(3) To approve The Standard Register Company Management Incentive
Compensation Plan;
(4) To select and retain Battelle & Battelle, Certified Public Accountants,
as the Company's auditors for the year 1997; and to transact any other
business that may properly come before the meeting.
The Board of Directors has fixed the close of business on February 21,
1997, as the record date for determining the shareholders entitled to vote at
the Annual Meeting.
As part of the meeting, we will discuss the Company's 1996 operations and
our plans for the future. Directors and officers of the Company will be
available to discuss the Company's business with you.
Alan L. Baughn
Secretary
Dayton, Ohio
March 21, 1997
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE SIGN
AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING ENVELOPE.
<PAGE> 3
THE STANDARD REGISTER COMPANY
- - - --------------------------------------------------------------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING
OF
SHAREHOLDERS
- - - --------------------------------------------------------------------------------
PRINCIPAL EXECUTIVE OFFICES:
600 ALBANY STREET
DAYTON, OHIO 45408
(937) 443-1000
Mailing Date: March 21, 1997
- - - --------------------------------------------------------------------------------
This Proxy Statement accompanies the Notice of Annual Meeting of Shareholders of
The Standard Register Company, an Ohio corporation, to be held at The Mandalay
Banquet Center, 2700 East River Road, Dayton, Ohio, on Wednesday, April 16,
1997, at 11:00 A.M. The proxies are solicited on behalf of the Board of
Directors of the Company. Shareholders of record at the close of business
February 21, 1997, are entitled to notice of and to vote at the Annual Meeting.
At that date, the Company had outstanding 24,025,158 shares of Common Stock
(each share having one vote) and 4,725,000 shares of Class A Stock (each share
having five votes).
All properly cast votes, in person or by proxy, will be counted for purposes
of the issues to be voted on at the Annual Meeting. Abstentions and broker
non-votes will not be counted and therefore will have no impact on any matter
voted upon.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its exercise. Properly executed proxies received in
time to be voted at the Annual Meeting, or any adjournments thereof, will be
voted according to the instructions indicated on the proxies unless the proxies
have been revoked. If no choice is specified, the shares will be voted as
recommended by the Board of Directors. Proxies may be revoked by giving a later
dated proxy to the Company or by giving notice of revocation to the Company in
writing or orally at the Annual Meeting. The presence of a shareholder at the
Annual Meeting will not, by itself, revoke a proxy. The proxies solicited on
behalf of the Board of Directors of the Company contain the authority to vote
the shares of stock cumulatively in the election of directors to the Company's
Board of Directors at the Annual Meeting.
At the Annual Meeting, the shareholders will: (1) determine the number of
directors to be elected; (2) elect a Board of Directors; (3) approve or
disapprove a new Management Incentive Compensation Plan; and (4) select
independent auditors for the Company.
<PAGE> 4
PROPOSALS
PROPOSAL 1: FIXING NUMBER OF DIRECTORS
The Company has ten directors. The Board of Directors recommends fixing the
number of directors to be elected at ten. The affirmative vote of a majority of
the votes cast upon this proposal is required for approval.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR FIXING THE
NUMBER OF DIRECTORS TO BE ELECTED AT TEN.
PROPOSAL 2: ELECTION OF DIRECTORS
The Board of Directors is nominating for election the ten persons hereinafter
named to be directors of the Company and to hold office until the next annual
election or until their successors are elected and qualified.
Although the Board of Directors does not contemplate that any of the nominees
will be unavailable for election, if any of them is unavailable, the shares will
be voted for substitute nominees as determined by the persons voting the
proxies.
Cumulative voting is permitted by the laws of Ohio in voting for the election
of directors, if notice is given in writing by any shareholder to the President,
a Vice President or the Secretary of the Company not less than 48 hours before
the time fixed for the Annual Meeting. If any shares may be voted cumulatively
for the election of directors, each shareholder present at the Annual Meeting
and the persons voting the proxies shall have full discretion and authority to
cumulate such voting power as the shareholder or proxy possesses and to give one
candidate as many votes as the number of directors to be elected multiplied by
the number of votes which the shareholder or proxy is entitled to cast, or to
distribute such votes on the same principle among two or more candidates, as the
shareholder or proxy sees fit.
In the absence of cumulative voting, nominees receiving the highest number of
votes cast for the positions to be filled will be elected.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR EACH OF THE
FOLLOWING NAMED NOMINEES TO SERVE AS DIRECTORS OF THE COMPANY:
NOMINEES
All nominees recommended by the Company for election were previously elected
as Directors. Information concerning each nominee follows:
<TABLE>
<CAPTION>
SERVED AS
NAME AGE DIRECTOR SINCE
- - - ---------------------------- --------- ---------------
<S> <C> <C>
ROY W. BEGLEY, JR. * 41 1994
</TABLE>
Mr. Begley has been an Investment Officer with Key Trust Co. of Ohio, N.A.,
since 1995. Prior to that he was an Investment Executive with Society
Investments, Inc., from April 1994, and an Investment Specialist with Provident
Securities and Investments from August 1992 until April 1994. From 1987 until
1992, Mr. Begley was a Financial Consultant with Shearson-Lehman Brothers. He is
a member of the Pension Advisory Committee of the Board of Directors.
<TABLE>
<S> <C> <C>
F. DAVID CLARKE, III 40 1992
</TABLE>
Mr. Clarke has been Chairman of the Board of Directors of Clarke-Hook
Corporation as well as its Vice President and General Counsel since December
1990. He is Chairman of the Compensation Committee and a member of the Audit
Committee of the Board of Directors.
<TABLE>
<S> <C> <C>
PAUL H. GRANZOW 69 1966
</TABLE>
Mr. Granzow has been Chairman of the Board of Directors of the Company since
January 1984. He is a co-trustee of the John Q. Sherman Trust. See "Voting
Securities and Principal Holders Thereof". He is a Senior Vice-President and a
director of The Weston Paper and Manufacturing Co.
<TABLE>
<S> <C> <C>
GRAEME G. KEEPING 55 1996
</TABLE>
Mr. Keeping has been President of Information Resources Management Associates,
a consulting firm, since 1987. He is a member of the Pension Advisory Committee
of the Board of Directors.
<TABLE>
<S> <C> <C>
PETER S. REDDING 58 1992
</TABLE>
Mr. Redding was elected President & Chief Executive Officer of the Company
effective December 17, 1994. Prior to December 1994, he served the Company in
various executive, sales management and sales positions. Mr. Redding is a member
of the Dayton Region Advisory Board of KeyBank, NA. He is an ex-officio member
of all committees of the Board of Directors, except for the Audit Committee.
<TABLE>
<S> <C> <C>
DENNIS L. REDIKER 53 1995
</TABLE>
Mr. Rediker has been Chief Executive Officer of English China Clays, plc since
1996. From 1993 until 1996, Mr. Rediker was President and CEO of ECC
International Inc. From 1989 until 1993, Mr. Rediker was President of Mead
Coated Board Division of Mead Corporation Worldwide Operations. Mr. Rediker is
also a Director of English China Clays. He is a member of the Audit and
Compensation Committees of the Board of Directors.
2
<PAGE> 5
<TABLE>
<CAPTION>
SERVED AS
NAME AGE DIRECTOR SINCE
- - - ---------------------------- --------- ---------------
<S> <C> <C>
ANN SCAVULLO 50 1996
</TABLE>
Ms. Scavullo has been Vice President of Strategic Alliances and Joint Ventures
of Avon Products, Inc., since 1995. Avon Products is a global direct seller of
beauty and related products. From 1991 until 1995, she was Vice President of
Investor Relations at Avon Products and from 1986 until 1991, she was Director
of Investor Relations at Avon Products. She is a member of the Compensation
Committee of the Board of Directors.
<TABLE>
<S> <C> <C>
JOHN J. SCHIFF, JR. 53 1982
</TABLE>
Mr. Schiff is a director of John J. and Thomas R. Schiff & Co., Inc., an
insurance agency. Prior to January 1997, he was Chairman of the Board of
Directors of John J. and Thomas R. Schiff & Co. He is Chairman of the Board of
Directors of The Cincinnati Insurance Company and the Cincinnati Financial
Corporation. He is a director of The Cinergy Corp., Fifth Third Bankcorp, The
Fifth Third Bank, and the Cincinnati Bengals, Inc. He is Chairman of the Audit
Committee and Pension Advisory Committee of the Board of Directors.
<TABLE>
<S> <C> <C>
CHARLES F. SHERMAN * 69 1992
</TABLE>
Mr. Sherman has had personal business interests in Ohio and Kentucky for over
five years. He is a member of the Pension Advisory Committee of the Board of
Directors.
<TABLE>
<S> <C> <C>
JOHN Q. SHERMAN, II * 43 1994
</TABLE>
Mr. Sherman has been a manufacturer's representative for A. Rifkin Company,
Wilkes-Barre, Pennsylvania, since 1985. A. Rifkin Company is a manufacturer of
specialty security packaging. He is a member of the Compensation Committee of
the Board of Directors.
* Roy W. Begley, Jr. and John Q Sherman, II are first cousins, and are nephews
of Charles F. Sherman.
- - - --------------------------------------------------------------------------------
The Board of Directors met six times in 1996. All directors attended at least
75% of Board of Directors and committee meetings of which they were members
during 1996.
BOARD COMMITTEES
The Company's Audit Committee held three meetings in 1996. Mr. Schiff is
Chairman of the Committee. Messrs. Clarke and Rediker are the other members. The
Audit Committee is responsible for reviewing the Company's corporate accounting,
auditing and financial reporting practices. It also recommends the employment of
independent public accountants and reviews the relationships between the Company
and its outside accountants.
The Compensation Committee held five meetings in 1996. Mr. Clarke is Chairman
of the Compensation Committee. Messrs. Rediker and J. Sherman and Ms. Scavullo
are the other members. The Compensation Committee formulates the Company's
executive compensation program and determines executive compensation and
incentives each year. It also administers the Company's Stock Option Plan.
The Company does not have a Nominating Committee of the Board of Directors.
The Board of Directors, which performs the function of a Nominating Committee,
will consider nominees recommended by any shareholder if such recommendation is
submitted in writing by November 24, 1997.
BOARD COMPENSATION
Non-Officer members of the Board of Directors receive an annual fee of
$20,000, plus an annual fee of $3,000 for serving on the Audit Committee and
Compensation Committee, and $5,500 for serving on the Pension Advisory
Committee. The chairmen of the Audit and Compensation Committees receive an
additional annual fee of $1,000. The chairman of the Pension Advisory Committee
receives an additional annual fee of $2,000. Each non-officer director is paid
$1,000 for each Board of Directors' meeting attended. Officer members of the
Board of Directors do not receive any fees for serving as members of the Board
of Directors or as members of any committees.
The Company has a supplemental retirement benefit agreement with Paul H.
Granzow which provides that the Company will supplement his retirement benefits
from the Qualified Retirement Plan to the extent necessary to provide him with
annual retirement benefits equal to the greater of $150,000 or 50% of the
average annual compensation paid to him for the five year period immediately
preceding the year of his termination of employment with the Company.
3
<PAGE> 6
VOTING SECURITIES AND PRINCIPAL HOLDERS
OWNERS OF MORE THAN 5% OF THE SHARES OF THE COMPANY
The following are all of the persons known by the Company to own of record or
beneficially on February 21, 1997, five percent or more of the outstanding Class
A Stock and Common Stock of the Company:
<TABLE>
<CAPTION>
NAME AND PERCENT OF
ADDRESS OF COMBINED
BENEFICIAL NUMBER PERCENT VOTING
OWNERS CLASS OF SHARES OF CLASS POWER
- - - ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PAUL H. GRANZOW, Class A 2,516,856 53.27
JAMES L. SHERMAN Common 5,810,508 24.19 38.60
and CHARLES F. SHERMAN,
TRUSTEES(1)
50 East Third St.
Dayton, Ohio 45402
WILLIAM P. SHERMAN(2) Class A 359,551 7.61
50 East Third St. Common 878,187 3.66 5.61
Dayton, Ohio 45402
MARY C. NUSHAWG(2) Class A 359,551 7.61
50 East Third St. Common 842,996 3.51 5.54
Dayton, Ohio 45402
JAMES L. SHERMAN(2) Class A 359,551 7.61
50 East Third St. Common 909,795 3.79 5.68
Dayton, Ohio 45402
ROBERT N. SHERMAN(2) Class A 359,551 7.61
50 East Third St. Common 878,061 3.66 5.61
Dayton, Ohio 45402
CHARLES F. SHERMAN(2) Class A 359,551 7.61
50 East Third St. Common 880,935 3.67 5.62
Dayton, Ohio 45402
PATRICIA L. BEGLEY(2) Class A 359,550 7.61
50 East Third St. Common 830,073 3.46 5.52
Dayton, Ohio 45402
THE FIFTH THIRD BANK, Class A 1,081,392 22.89
TRUSTEE(3) Common 2,595,312 10.80 16.79
Cincinnati, Ohio 45202
THE FIFTH THIRD BANK, Class A 1,071,624 22.68
TRUSTEE(4) Common 2,571,912 10.70 16.64
Cincinnati, Ohio 45202
</TABLE>
- - - --------------------------------------------------------------------------------
(1) Paul H. Granzow, James L. Sherman and Charles F. Sherman, the Trustees under
the Last Will and Testament of John Q. Sherman, deceased, hold the voting
securities in separate equal trusts for each of the six surviving children
and heirs of the deceased children of John Q. Sherman, deceased, each of
whom is a life beneficiary of his or her respective trust. The Trustees
share voting and investment power for the securities in the trusts. The Will
of John Q. Sherman requires the Trustees to give each beneficiary who is a
child of John Q. Sherman, upon his or her request, a proxy authorizing the
beneficiary to vote the shares held in his or her respective trust.
(2) Each of these individuals is a child of John Q. Sherman, deceased. None of
them own in his or her own name more than five percent of the outstanding
voting securities of the Company; however, each has the right, upon his or
her request, to vote the shares of the Company held in his or her respective
trust created under the Will of John Q. Sherman, deceased.
(3) The trust under the Last Will and Testament of William C. Sherman, deceased,
provides for the payment of net income for life to Helen Margaret Hook
Clarke, niece of William C. Sherman, deceased. The Trustee, The Fifth Third
Bank ("Fifth Third"), has the sole voting and investment power for the
securities in the trust.
(4) The trust created under the Agreement with William C. Sherman dated December
29, 1939, provides for the payment of net income for life to Helen Margaret
Hook Clarke and the children of John Q. Sherman. Fifth Third has the sole
voting and investment power for the securities in the trust.
4
<PAGE> 7
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Each director and executive officer listed on the Summary Compensation Table and
all directors and executive officers as a group own of record or beneficially
Class A Stock and Common Stock of the Company on February 21, 1997, as follows:
<TABLE>
<CAPTION>
PERCENT OF
COMBINED
BENEFICIAL NUMBER PERCENT VOTING
OWNERS CLASS OF SHARES OF CLASS POWER
- - - ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ROY W. BEGLEY, JR. (1) Common 500 0.002 0.001
Director
CRAIG J. BROWN (2) Common 15,077 0.063 0.032
Sr. Vice President --
Administration,
Treasurer & CFO
F. DAVID CLARKE, III (3) Common 6,776 0.028 0.014
Director Class A 5,096 0.108 0.053
PETER A. DORSMAN (2) Common 7,752 0.032 0.016
Sr. Vice President &
General Manager --
Document Systems Div.
PAUL H. GRANZOW (2)(4)(5) Common 42,559 0.177 0.077
Director and Chairman of
Board
GRAEME G. KEEPING Common 0 0 0
Director
PETER S. REDDING (2)(6) Common 57,196 0.238 0.091
Director and President and
Chief Executive Officer
DENNIS L. REDIKER Common 0 0 0
Director
ANN SCAVULLO Common 550 0.002 0.001
Director
JOHN J. SCHIFF, JR. Common 36,200 0.151 0.076
Director
CHARLES F. SHERMAN (4)(7) Common 880,934 3.667 1.848
Director Class A 359,551 7.610 3.773
JOHN Q. SHERMAN, II Common 160 0.001 0.000
Director
JOSEPH V. SCHWAN (2)(8) Common 31,701 0.131 0.067
Sr. Vice President & General
Manager - Document Mgmt.
Div.
MICHAEL SPAUL Common 34,604 0.144 0.073
Sr. Vice President & General
Manager-Communicolor Div.
On February 21, 1997, the Common 1,171,566 4.876 2.456
shares beneficially owned by
all current executive Class A 364,647 7.717 3.826
officers and directors as a
group (2) (22 persons)
</TABLE>
- - - --------------------------------------------------------------------------------
(1) Roy W. Begley, Jr. and his wife, Margaret Begley, own as joint tenants 500
shares of Common Stock of the Company. Mrs. Begley owns 130 shares of Common
Stock of the Company as to which Mr. Begley disclaims beneficial ownership.
(2) Includes the following options to purchase Common Stock of the Company
exercisable before April 23, 1997: Craig J. Brown -- 5,000 shares; Peter A.
Dorsman -- 3,000 shares; Paul H. Granzow -- 6,000 shares; Peter S.
Redding -- 14,000 shares; Joseph V. Schwan -- 5,000 shares; Michael
Spaul -- 5,000 shares; and all executive officers and directors as a
group -- 46,000 shares.
(3) F. David Clarke, III and his wife, Loretta M. Clarke, own as joint tenants
6,776 shares of Common Stock of the Company.
(4) Paul H. Granzow, and Charles F. Sherman (along with James L. Sherman) are
trustees under the Last Will and Testament of John Q. Sherman. As such, the
Trustees have the power to vote shares held by the trusts in the event that
the beneficiaries of the trusts do not desire to exercise their right to
vote the shares. The John Q. Sherman Trust owns 2,516,856 shares of Class A
Stock and 5,810,508 shares of Common Stock which in the aggregate represents
38.65% of the outstanding votes of the Company. The Trustees share the
investment power with respect to Class A and Common Stock held by the
trusts. The beneficiaries of the trusts do not have the investment power
with respect to the securities in the trusts.
5
<PAGE> 8
(5) Lana T. Granzow, the wife of Paul H. Granzow, owns 1,300 shares of Common
Stock of the Company. Mr. Granzow disclaims beneficial ownership of these
shares of Common Stock.
(6) Lorelei L. Redding, the wife of Peter S. Redding, owns 250 shares of Common
Stock of the Company. Mr. Redding disclaims beneficial ownership of these
shares of Common Stock.
(7) Charles F. Sherman is a beneficiary of the John Q. Sherman Trust and as such
has the right to vote 359,551 shares of Class A Stock and 830,073 shares of
Common Stock of the Company. The Trustees have the investment power with
respect to these shares.
(8) Joseph V. Schwan and his wife, Charlann Schwan, own as joint tenants 650
shares of Common Stock of the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires directors,
executive officers and holders of 10% or more of the Company's Common Stock to
report certain transactions in the Common Stock to the Securities and Exchange
Commission. Alan L. Baughn, an executive officer of the Company, filed a report
of sale of Common Stock held in his employee stock purchase plan after the due
date of February 12, 1996. The following persons who were executive officers in
1996 filed reports of stock options granted to them in 1996 after the due date
of February 12, 1997: Rebecca H. Appenzeller, Alan L. Baughn, Craig J. Brown, H.
Frank Coffman, John L. Crawford, James H. DeYoung, Peter A. Dorsman, Paul H.
Granzow, Peter S. Redding, Vincent J. Reidy, C. Thomas Russell, John E.
Scarpelli, Joseph V. Schwan, Harry A. Seifert, and Michael Spaul.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ANNUAL COMPENSATION ALL OTHER
----------------------- COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (1) (2)
- - - --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PETER S. REDDING 1996 $344,531 $954,800 $950
President & Chief 1995 315,000 837,507 924
Executive Officer 1994 274,000 447,607 924
JOSEPH V. SCHWAN 1996 202,750 561,881 950
Sr. Vice President & 1995 191,500 509,151 924
General Manager -- Document 1994 168,000 274,445 924
Management Division
MICHAEL SPAUL 1996 155,031 429,637 950
Sr. Vice President & 1995 148,000 393,496 924
General Manager -- 1994 140,000 228,705 924
COMMUNICOLOR
PETER A. DORSMAN 1996 150,775 417,843 950
Sr. Vice President & 1995 n/a n/a n/a
General Manager -- 1994 n/a n/a n/a
Document Systems Division
CRAIG J. BROWN 1996 150,500 417,080 950
Sr. Vice President 1995 130,000 345,638 924
Administration, Treasurer 1994 120,000 196,032 924
& Chief Financial Officer
- - - --------------------------------------------------------------------------------------
</TABLE>
(1) Includes the cash and stock incentives earned by the officers pursuant to
the Key Employees Incentive Plan and Stock Incentive Plan.
(2) Includes the Company's matching contributions under The Standard Register
Employees Savings Plan which provides that the Company may make an annual
matching contribution for each participant in an amount up to 10% of each
participant's contribution; provided, however, the Company's matching
contribution for each participant shall in no event exceed .6% of the
participant's eligible compensation. Employee contributions to the Savings Plan
are fully vested. The Company's matching contribution vests after five years of
Company service.
6
<PAGE> 9
NAMED EXECUTIVE OFFICERS
Information concerning each of the Executive Officers named in the Summary
Compensation Table who are not nominees for election as directors is as follows:
<TABLE>
<CAPTION>
SERVED AS
NAME AGE OFFICER SINCE
- - - ---------------------------- --------- ---------------
<S> <C> <C>
CRAIG J. BROWN 47 1987
</TABLE>
Mr. Brown has been Senior Vice President -- Administration, Treasurer and
Chief Financial Officer since March 1995. From January 1993 through February
1995, he was Vice President -- Finance, Treasurer and Chief Financial Officer.
Prior to 1993, he served the Company in various executive and financial
positions.
<TABLE>
<S> <C> <C>
PETER A. DORSMAN 42 1996
</TABLE>
Mr. Dorsman has been Senior Vice President and General Manager -- Document
Systems Division since January 1996. From October 1977 until January 1996, Mr.
Dorsman served in a number of senior marketing, strategic planning and sales
management positions with NCR Corporation.
<TABLE>
<S> <C> <C>
JOSEPH V. SCHWAN 60 1991
</TABLE>
Mr. Schwan has been Senior Vice President and General Manager -- Document
Management Division since March 1995. From August 1991 through February 1995, he
was Vice President -- Forms Sales & Marketing. From approximately January 1990
through July 1991, Mr. Schwan was Vice President and Chief Operating Officer of
Rittenhouse Paper. Mr. Schwan is a member of the Board of Directors of Hach
Company in Loveland, Colorado, a manufacturer of water testing instrumentation.
<TABLE>
<S> <C> <C>
MICHAEL SPAUL 49 1991
</TABLE>
Mr. Spaul has been Senior Vice President and General Manager -- COMMUNICOLOR
Division since March 1, 1995. From 1989 through February 1995, he was Vice
President and General Manager -- COMMUNICOLOR Division.
RETIREMENT PLANS
The Stanreco Retirement Plan provides for retirement benefits based on the
average compensation for the highest five years of total plan participation and
is funded, in part, by contributions by the participants.
The Standard Register Company Non-Qualified Retirement Plan supplements the
Stanreco Plan. It provides retirement benefits which would have been payable
from the Stanreco Plan but for the limits imposed by the Tax Reform Act of 1986.
The Company does not currently fund or contribute to the Non-Qualified Plan but
does accrue for projected benefit expense annually.
The Standard Register Company Officers' Supplemental Non-Qualified Plan pays
retirement benefits in addition to the Stanreco Plan and Non-Qualified Plan
based on the number of years of credited service as an officer in excess of five
years.
RETIREMENT PLAN TABLES 1, 2 AND 3
Table 1 shows the estimated annual retirement benefits payable from the
Stanreco Plan and the Non-Qualified Plan to the Company's employees in specified
remuneration and years of service. Part of the estimated annual benefits include
the return of and earnings on contributions made by the employees. Table 2 shows
the estimated annual retirement benefits payable from the Supplemental Non-
Qualified Plan to officers based on remuneration and years of officer service
(in excess of five years). An officer's annual retirement benefit is equal to
the lesser of the sum of the benefits from Tables 1 and 2 or 50% of the average
of the highest five years of compensation.
TABLE 1
<TABLE>
<CAPTION>
AVERAGE OF FIVE YEARS OF CREDITED SERVICE
HIGHEST YEARS OF -------------------------------------------------------------------------------------------------
COMPENSATION 1 5 10 15 20 25 30 35
---------------- ------- ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$200,000 $ 2,600 $13,000 $ 26,000 $ 39,000 $ 52,000 $ 65,000 $ 78,000 $ 91,000
300,000 3,900 19,500 39,000 58,500 78,000 97,500 117,000 136,000
400,000 5,200 26,000 52,000 78,000 104,000 130,000 156,000 182,000
500,000 6,500 32,500 65,000 97,500 130,000 162,500 195,000 227,500
600,000 7,800 39,000 78,000 117,000 156,000 195,000 234,000 273,000
700,000 9,100 45,500 91,000 136,500 182,000 227,500 273,000 318,500
800,000 10,400 52,000 104,000 156,000 208,000 260,000 312,000 364,000
</TABLE>
7
<PAGE> 10
TABLE 2
<TABLE>
<CAPTION>
AVERAGE OF FIVE YEARS OF OFFICER SERVICE IN EXCESS OF FIVE
HIGHEST YEARS OF ----------------------------------------------
COMPENSATION 1 5 10 15
---------------- ------- -------- -------- --------
<S> <C> <C> <C> <C>
$200,000 $ 6,100 $ 30,500 $ 61,000 $ 67,100
300,000 9,150 45,750 91,500 100,650
400,000 12,200 61,000 122,000 134,200
500,000 15,250 76,250 152,500 167,750
600,000 18,300 91,500 183,000 201,300
700,000 21,350 106,750 213,500 320,250
800,000 24,400 122,000 244,000 366,000
</TABLE>
Estimated annual benefits are based upon the assumption that the employee
remains in the service of the Company until age 62, at which age the employee
qualifies for the maximum retirement benefit. Retirement prior to age 62 will
result in actuarially reduced benefits. The estimated annual benefits are
taxable income but are not subject to any deduction for social security
benefits. No additional benefit can be earned from the Supplemental
Non-Qualified Plan after the sixteenth year of officer service.
The table below shows the average of the highest five years of total
compensation and the years of service and officer service for each person listed
in the Summary Compensation Table except for Mr. Dorsman whose employment
commenced on January 6, 1996 and who is not yet eligible to participate in the
Company's retirement plans.
TABLE 3
<TABLE>
<CAPTION>
AVERAGE OF
THE HIGHEST FIVE YEARS OF YEARS OF
YEARS OF CREDITED OFFICER
NAME TOTAL COMPENSATION SERVICE SERVICE
- - - ------------------- ------------------ -------- --------
<S> <C> <C> <C>
Peter S. Redding $729,311 29 15
Joseph V. Schwan 438,056 4 5
Michael Spaul 379,293 13 6
Craig J. Brown 330,098 22 10
</TABLE>
STOCK OPTION TABLES
Options to purchase Common Stock of the Company for each executive officer
listed in the Summary Compensation Table are as follows:
OPTION GRANTS DURING FISCAL 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE
-------------------------------------------------------------------- AT ASSUMED ANNUAL RATES
NUMBER OF OF STOCK PRICE
SHARES APPRECIATION
UNDERLYING % OF TOTAL OPTIONS FOR OPTION TERM
OPTIONS GRANTED TO EMPLOYEES EXERCISE PRICE EXPIRATION -----------------------
NAME GRANTED IN FISCAL YEAR (PER SHARE) DATE 5% 10%
- - - ------------------- --------- -------------------- -------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Peter S. Redding 15,000 5.7% $ 32.375 12/28/06 $305,407 $773,961
Joseph V. Schwan 6,000 2.3% 32.375 12/28/06 122,163 309,584
Michael Spaul 6,000 2.3% 32.375 12/28/06 122,163 309,584
Peter A. Dorsman 6,000 2.3% 32.375 12/28/06 122,163 309,584
Craig J. Brown 5,000 1.9% 32.375 12/28/06 101,802 257,987
</TABLE>
Options to purchase Common Stock of the Company exercised in fiscal year 1996
for each executive officer listed in the Summary Compensation Table are as
follows:
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR ("FY") AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED VALUE OPTIONS AT FY-END OPTIONS AT FY-END
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- - - ------------------- --------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Peter S. Redding 0 0 14,000/71,000 $171,500/$686,000
Joseph V. Schwan 0 0 5,000/26,000 61,250/ 245,000
Michael Spaul 0 0 5,000/26,000 61,250/ 245,000
Peter A. Dorsman 0 0 3,000/18,000 36,750/ 147,000
Craig J. Brown 0 0 5,000/25,000 61,250/ 245,000
</TABLE>
8
<PAGE> 11
COMPENSATION COMMITTEE REPORT
The Compensation Committee has the overall responsibility for determining
specific compensation levels for executive officers and bonuses for executive
officers and key management personnel subject to approval of the full Board of
Directors. The Company's Stock Option Plan is administered by the Compensation
Committee.
The Compensation Committee's goal is to establish an executive compensation
program that enhances the Company's overall fundamental objective of providing
value for its shareholders. The Compensation Committee believes that the
interests of management and shareholders can be more closely aligned by
providing executives with competitive levels of compensation that will enable
the Company to attract and retain executives with the highest qualifications and
by tying executive pay to overall corporation performance. The compensation
system developed over the years by the Company has been designed so that a
relatively high percentage of all compensation is incentive-based. In addition,
the Stock Incentive Plan was, and Stock Option Plan is, designed to tie a
portion of the executives' compensation to the market performance of the
Company's stock.
All executive compensation was fully deductible for federal income tax
purposes for 1996 either because the individual compensation amounts were less
than $1 million or because any excess was incentive-based.
BASE COMPENSATION
In determining its recommendations to the Board of Directors for executive
officer salaries for 1996, the Compensation Committee assigned each executive
position, including the President and Chief Executive Officer position, a salary
range that defined a minimum, midpoint and maximum salary commensurate with the
responsibilities of the job, as determined by compensation guidelines and
competitive information provided to the Compensation Committee by an independent
compensation consultant. The ranges were adjusted to reflect changes in the
competitive business climate from the prior year. Executive officer salaries
were targeted at the midpoint of the range for that position. Factors that
determined the salary within the range included objective performance and level
of experience. Each executive officer's performance was judged on both
subjective and objective basis, the latter measured against specific, personal
objectives agreed upon at the outset of the year by the executive and the
President and Chief Executive Officer. Merit salary increases were awarded on
the basis of each executive officer's performance rating.
Mr. Redding's salary as President and Chief Executive Officer was determined
in the same manner as all other executive officers of the Company, except that
his performance was judged on a subjective basis by the Board of Directors. His
salary was not determined by specific performance measures.
After reviewing the determinations of the Compensation Committee, the Board of
Directors adopted them as its own and implemented the salary levels recommended.
This process resulted in the base salaries shown in the Summary Compensation
Table.
INCENTIVE COMPENSATION
All bonuses were determined by specific performance formulae contained in the
Key Employees Incentive Plan and Stock Incentive Plan previously approved by the
shareholders and which have been in effect since 1976 and 1978, respectively.
These bonus plans took total compensation levels to the third quartile (50%-75%)
of compensation for similar positions within the industry.
STOCK OPTIONS
Options to purchase Common Stock of the Company also represent a
performance-based component of the Company's compensation program. The
Compensation Committee's objective is to provide an incentive to management to
increase the value of the Company's Common Stock over the long term. To that
end, to reward past performance and to motivate future performance, stock
options were granted to all executive officers and certain key management
personnel under the Stock Option Plan. Another purpose of the Stock Option Plan
is to encourage participants to maintain a long term stock ownership position in
the Company in order that their interests are aligned with those of the
Company's shareholders. The Compensation Committee determines participants in
the Stock Option Plan, the timing of option grants, the numbers of shares
granted, vesting schedules, option prices and duration and other terms of the
options. All of the executives named in the Summary Compensation Table were
granted options during 1996 under the Stock Option Plan as disclosed in the
Stock Option Tables.
NEW COMPENSATION PROGRAM
During 1996, an independent compensation consulting firm was retained to
assist the Compensation Committee in conducting a thorough review of the
Company's then current compensation program. The purpose of the review was to
determine if each of the various components of the program was properly designed
to achieve the Committee's goal of establishing an executive compensation
program that enhances the Company's overall fundamental objective of providing
value for its shareholders. As a result of the review, the Committee decided
that certain components of the program should be changed in order to make the
overall program more effective in attaining the desired objective. The Committee
decided that base salaries should be established at levels that represent the
50th percentile of salaries paid for similar positions at comparable companies.
This would require an increase of the annual salaries paid to most officers of
the Company. The Committee also decided that the incentive-based part of the
compensation program should more clearly reflect a short term component which
rewards superior performance in the current year and a long term component which
rewards superior performance on average over a period of years. The Committee
also decided that the incentive-based components should be more flexible so that
performance goals and other objective criteria for awarding incentive
compensation can be established each year on an individual and
9
<PAGE> 12
group basis. It is anticipated that the changes in the incentive-based
components recommended by the Committee, when fully implemented, will require
higher levels of performance in the future to sustain or exceed the incentive
compensation awards that were paid, in the aggregate, to the officers of the
Company in 1996. As a result of the foregoing, upon recommendation of the
Compensation Committee, effective January 1, 1997, the Board of Directors
terminated the Key Employees Incentive Plan and the Stock Incentive Plan and
adopted the Management Incentive Compensation Plan which is described in
Proposal 3 and set forth in Appendix A, subject to shareholder approval.
THE COMPENSATION COMMITTEE:
F. DAVID CLARKE, III (Chairman)
DENNIS L. REDIKER
ANN SCAVULLO
JOHN Q. SHERMAN, II
PERFORMANCE GRAPH
The following Performance Graph presents a comparison of the yearly percentage
change in the Company's cumulative total shareholder return on its Common Stock
from December 31, 1991 to December 31, 1996 (as measured by dividing (i) the sum
of (a) the cumulative amount of dividends, assuming dividend reinvestment during
the periods presented, and (b) the difference between the Company's share price
at the end and beginning of the periods presented by (ii) the share price at the
beginning of the periods presented) with the Standard & Poor's 400 Midcap Index,
Standard & Poor's 500 Index and Peer Group Index. The S&P 400 Midcap Index and
S&P 500 Index have been used in the Performance Graph instead of the NASDAQ
Equity Index because the Company moved during 1996 from NASDAQ to the New York
Stock Exchange. Duplex Products, Inc., which was previously included in the Peer
Group, has been deleted because The Reynolds & Reynolds Company acquired Duplex
Products, Inc., during 1996. The Peer Group now consists of Moore Corporation,
Ltd., The Reynolds & Reynolds Company, Wallace Computer Sciences, Inc., and the
Company.
<TABLE>
<CAPTION>
Measurement Period Standard Reg-
(Fiscal Year Covered) ister S&P 400 MIDCAP S&P 500 Index Peer Group
<S> <C> <C> <C> <C>
1991 1.00 1.00 1.00 1.00
1992 1.34 1.12 1.08 1.05
1993 1.60 1.28 1.18 1.49
1994 1.40 1.23 1.20 1.58
1995 1.66 1.61 1.65 2.43
1996 2.77 1.92 2.03 3.51
</TABLE>
PROPOSAL 3: APPROVAL OF MANAGEMENT INCENTIVE COMPENSATION PLAN
At its December 1996 meeting, the Board of Directors unanimously adopted a
Management Incentive Compensation Plan, subject to shareholder approval. The
Plan is designed to provide a significant and flexible economic opportunity to
selected officers and employees of the Company as a reflection of their
individual and group contributions to the success of the Company. Fourteen
employees will initially be covered by the Plan. The full text of the Plan is
attached as Appendix A.
The Compensation Committee will administer the Plan. The amount and terms of
each incentive award to a participant in the Plan will be at the discretion of
the Compensation Committee, and may be paid in cash, Common Stock or a
combination of the two.
Incentive awards to participants in the Plan shall be subject to objective
performance goals established by the Compensation Committee. These goals will be
based on one or more of the following: earnings per share, market share, stock
price, sales, reduction of cost, net operating income, cash flow, retained
earnings, return on capital, return on equity, return on assets, results of
customer satisfaction
10
<PAGE> 13
surveys, aggregate product price and other product price measures, and operating
and maintenance cost management. The Compensation Committee will certify the
extent to which the performance objectives are attained.
Incentive awards under the Plan generally will be considered compensation for
purposes of calculating payments or benefits under the Company's retirement
plans and for the purchase of supplemental life insurance but shall not be
considered compensation for purposes of calculating benefits under any other
benefit plan or policy.
At its December 1996 meeting, the Compensation Committee adopted performance
goals and other criteria for awarding incentive compensation under the Plan for
fiscal 1997, subject to approval of the Plan by the shareholders. The Plan
includes a short term incentive compensation component and a long term incentive
compensation component.
For fiscal 1997, the short term component will consist of a compensation pool
in an amount equal to 5% of the amount by which 1997 net profit exceeds a 7%
return on capital up to, but not including any excess over, a 12% return on
capital, plus 8% of the amount by which 1997 net profit exceeds a 12% return on
capital. The pool will be distributed among the participants in proportion to
short term incentive compensation targets assigned to the participants by the
Compensation Committee. The targets range from 40% to 75% of salary, and the
maximum short term incentive compensation award for 1997 is two times a
participant's target.
The long term component envisioned by the Compensation Committee will
eventually be based upon a three year rolling average return on capital in
excess of the cost of capital. Since 1997 will be the first year in which the
Plan is effective, the long term component for 1997 will be based upon return on
capital for 1997 only; in fiscal 1998, the long term component will be based
upon the average return on capital in 1997 and 1998; and in the fiscal 1999 and
thereafter, the long term component will be based upon a three year average
return on capital. For fiscal 1997, long term incentive compensation will be
payable only if 1997 net profit equals or exceeds a 12% return on capital. The
amount of long term incentive compensation payable to each participant will be
determined by the long term incentive compensation targets assigned to the
participants by the Compensation Committee and the 1997 performance goals and
payout matrix approved by the Compensation Committee. The targets range from 45%
to 100% of salary, and the maximum long term incentive compensation award for
1997 is two times a participant's target.
The following table sets forth the incentive awards that each of the persons
named in the summary compensation table who were employed in March 1997, and all
executive officers as a group will be entitled to receive if the Plan is
approved by the shareholders and if the targeted and maximum performance
objectives are attained.
MANAGEMENT INCENTIVE COMPENSATION PLAN -- POTENTIAL AWARDS
<TABLE>
<CAPTION>
SHORT TERM LONG TERM
-------------------- --------------------
NAME AND POSITION TARGET MAXIMUM TARGET MAXIMUM
- - - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PETER S. REDDING $371,250 $742,500 $495,000 $990,000
President & Chief Executive Officer
JOSEPH V. SCHWAN 180,000 360,000 300,000 600,000
Sr. Vice President & General Manager -- Document
Management Division
CRAIG J. BROWN 111,000 222,000 222,000 444,000
Sr. Vice President Administration, Treasurer & Chief
Financial Officer
MICHAEL SPAUL 84,500 169,000 169,000 338,000
Sr. Vice President & General Manager -- COMMUNICOLOR
PETER A. DORSMAN 82,500 165,000 165,000 330,000
Sr. Vice President & General Manager -- Document
Systems Division
ALL EXECUTIVE OFFICERS AS A GROUP 1,306,850 2,613,700 1,957,050 3,914,100
(14 persons)
- - - ------------------------------------------------------------------------------------------------------
</TABLE>
The Internal Revenue Code limits the deductibility of executive compensation
paid to the Chief Executive Officer and the other persons named in the Summary
Compensation Table to $1 million per year, except to the extent that such
compensation is performance based. The Board of Directors believes that upon
shareholder approval, the Plan will meet those requirements and thereby preserve
the deductibility of such compensation to the Company.
Upon approval by the shareholders, the Plan will become effective
retroactively to January 1, 1997. The affirmative vote of a majority of the
votes cast upon this proposal is required for approval.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF
THE MANAGEMENT INCENTIVE COMPENSATION PLAN.
11
<PAGE> 14
PROPOSAL 4: SELECTION OF AUDITORS
Action will be taken by the shareholders with respect to the selection of
auditors for the Company to serve for 1997. The Board of Directors recommends
that the firm of Battelle & Battelle, PPL, Certified Public Accountants, who
served as auditors last year, be retained.
A representative of Battelle & Battelle is expected to be present at the
Annual Meeting. This representative will have an opportunity to make a statement
to the shareholders and will be available to respond to appropriate questions
from shareholders.
The affirmative vote of a majority of the votes cast is required to retain
Battelle & Battelle as the Company auditors for the year 1997.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE SELECTION
AND RETENTION OF BATTELLE & BATTELLE, CERTIFIED PUBLIC ACCOUNTANTS, AS THE
COMPANY'S AUDITORS FOR THE YEAR 1997.
The Board of Directors does not intend to present any other proposals for
action by the shareholders at the Annual Meeting and has not been informed that
any other person or persons intend to present any other proposal for action by
shareholders at the Annual Meeting. If any other matters come before the Annual
Meeting, the person voting the proxies will vote the shares they are authorized
to vote on the proposals or matters in their best judgment.
OTHER MATTERS
SOLICITATION EXPENSES
The expenses soliciting proxies and the expenses of brokers, custodians,
nominees or fiduciaries incurred in forwarding the documents to their principals
or beneficiaries will be paid by the Company.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Any proposal of a shareholder intended for inclusion in the Company's Proxy
Statement and form of proxy for the 1998 Annual Meeting of the Company, to be
held on April 15, 1998, must be received by the Secretary of the Company on or
before November 24, 1997, at its principal executive offices at 600 Albany
Street, Dayton, Ohio 45408.
BY ORDER OF THE BOARD OF DIRECTORS
ALAN L. BAUGHN
Secretary
Dayton, Ohio
12
<PAGE> 15
APPENDIX A
THE STANDARD REGISTER COMPANY
MANAGEMENT INCENTIVE COMPENSATION PLAN
I. PURPOSE AND EFFECTIVE TIME
This Management Incentive Compensation Plan (the "Plan") is designed to
provide a significant and flexible economic opportunity to selected officers and
employees of The Standard Register Company (the "Company") and its Affiliates as
a reflection of their individual and group contributions to the success of the
Company and its Affiliates. Payments pursuant to Section IX of the Plan are
intended to qualify under Section 162(m)(4)(C) of the Internal Revenue Code of
1986, as amended, as excluded from the term "applicable employee remuneration"
(such payments being hereinafter referred to as "Excluded Income"). The Plan
shall be effective January 1, 1997, provided that the shareholder approval
required by Section XV of the Plan is obtained.
II. DEFINITIONS
"Affiliate" shall mean (i) a corporation at least 50% of the common stock or
voting power of which is owned, directly or indirectly, by the Company and (ii)
any other corporation or other entity controlled by the Company and designated
by the Committee from time to time as such.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the Compensation Committee of the Board, or such other
committee of the Board as the Board may from time to time determine that, except
as specifically decided otherwise by the Board, is composed solely of not less
than two Disinterested Persons, each of whom shall be appointed by and serve at
the pleasure of the Board.
"Company" shall mean The Standard Register Company, an Ohio corporation.
"Covered Employees" shall mean Participants designated by the Committee prior
to the award of an Incentive Award opportunity hereunder who are or are expected
to be "covered employees" within the meaning of Section 162(m)(3) of the Code
for the Incentive Period as to which an Incentive Award hereunder is payable,
who have or may have compensation in excess of the limitation provided in
Section 162(m) of the Code, and for whom the Committee intends that amounts
payable hereunder constitute Excluded Income.
"Disinterested Person" shall mean a member of the Board who qualifies as an
"outside director" for purposes of Section 162(m) of the Code and the
regulations thereunder.
"Incentive Award" shall mean an award payable to a Participant pursuant to the
terms of the Plan, including a Special Incentive Award.
"Incentive Period" shall mean the period with respect to which a Participant
is eligible to earn an Incentive Award.
"Participant" shall have the meaning set forth in Article IV hereof.
"Payment Date" shall mean the date following the conclusion of a particular
Incentive Period on which the Committee certifies that applicable Performance
Goals have been satisfied and authorizes payment of corresponding Incentive
Awards.
"Performance Goals" shall have the meaning set forth in Article IX hereof.
"Special Incentive Award" shall have the meaning set forth in Article IX
hereof.
"Target Incentive Award" shall mean the amount determined by multiplying a
Participant's base salary as of the last day of the applicable Incentive Period
by a percentage designated by the Committee in its sole discretion at the time
the award is granted, which percentage need not be the same for each
Participant.
III. ADMINISTRATION
The Plan shall be administered by the Committee. In administering the Plan,
the Committee may at its option employ compensation consultants, accountants,
counsel, and other persons to assist or render advice to the Committee, all at
the expense of the Company. The Committee shall have sole authority to make
rules and regulations relating to the administration of the Plan, and any
interpretations and decisions of the Committee with respect to the Plan shall be
final and binding.
IV. ELIGIBILITY
The Committee shall, in its sole discretion, determine for each Incentive
Period those officers and salaried employees of the Company and its Affiliates
who shall be eligible to participate in the Plan (the "Participants") for such
Incentive Period based upon such Participants' opportunity to have a substantial
impact on the operating results of the Company or an Affiliate. Nothing
contained in the Plan shall be construed as, or be evidence of, any contract of
employment with any Participant for a term of any length nor shall participation
in the Plan in any Incentive Period by any Participant require continued
participation by such Participant in any subsequent Incentive Period.
A-1
<PAGE> 16
V. DETERMINATION OF INCENTIVE AWARDS
Subject to Article IX hereof, the amount and terms of each Incentive Award to
a Participant shall be determined by and in the discretion of the Committee. The
Committee may condition the earning of an Incentive Award upon the attainment of
specified performance goals, measured over a period ending no later than the end
of the applicable Incentive Period. Such performance goals may relate to the
Participant or the Company, or any Affiliate, division or department of the
Company for or within which the Participant is primarily employed, or upon such
other factors or criteria as the Committee shall determine, and may be different
for each Participant. Incentive Awards payable under the Plan will consist of an
award from the Company, based upon a percentage (which may exceed 100%) of the
Target Incentive Award and, if applicable, the degree of achievement of such
performance goals. Incentive Awards under this Plan for Covered Employees shall
be subject to preestablished Performance Goals in accordance with Article IX
hereof. Except with respect to Covered Employees, the Committee may, in its sole
discretion, increase or decrease the amount of any Incentive Award payable to a
Participant and, in recognition of changed or special circumstances, may award
an Incentive Award to a Participant even though the Incentive Award is not
earned. Incentive Awards earned or otherwise awarded will be paid as soon as
administratively feasible on or after the Payment Date. Incentive Awards shall
be paid in cash, shares (including restricted shares) of the Company's common
stock, or in such combination of cash and shares or such other form as the
Committee shall determine.
VI. TERMINATION OF EMPLOYMENT
If a Participant's employment with the Company and its Affiliates terminates
for any reason during the Incentive Period with respect to any Incentive Awards,
the balance of any Incentive Award which remains unpaid at the time of such
termination shall be payable to the Participant, or forfeited by the
Participant, in accordance with the terms of the award granted by the Committee;
provided, however, that in the case of a Covered Employee, to the extent
necessary for such amount to be deductible by the Company or its affiliates, no
amount shall be payable pursuant to the Plan unless the Performance Goals are
satisfied or the termination of the employment of the Covered Employee is due to
death or disability. A Participant who remains employed through the Incentive
Period but is terminated prior to the Payment Date shall be entitled to receive
any Incentive Award payable to such Participant with respect to such Incentive
Period. Notwithstanding any other provision of this Plan, if a Participant's
employment with the Company and its Affiliates is terminated for cause during
the Incentive Period with respect to any Incentive Awards, the balance of any
Incentive Award which remains unpaid at the time of such termination shall be
forfeited by the Participant. For purposes of this Article VI, cause is defined
as including, but not limited to, theft of or intentional damage to Company
property, intentional harm to the Company's reputation, material breach of the
Participant's duty of fidelity to the Company, chronic alcoholism, the use of
illegal drugs, the commission of a felony, willful violation of Company policy,
or trading in securities of the Company for personal gain based on knowledge of
the Company's activities or results when such information is not available to
the general public.
VII. AMENDMENT AND DISCONTINUANCE
The Board shall have the right to discontinue the Plan and to amend the Plan,
from time to time, but no such amendment (i) shall be effective until approved
by the Committee, (ii) shall impair any award made prior to the date of such
amendment without the consent of the Participant or Participants affected, or
(iii) which changes the basis on which Performance Goals are established or the
maximum awards set forth in subparts (c) and (e), respectively, of Article IX of
this Plan shall be effective until such amendment shall have been approved by
the affirmative vote of a majority of the votes cast by the holders of the
voting securities of the Company represented at a meeting and entitled to vote
thereon.
VIII. MISCELLANEOUS
It is presently intended that the Plan constitute an "unfunded" plan for
incentive and deferred compensation. The Committee may authorize the creation of
trusts or other arrangements to meet the payment obligations created under the
Plan; provided, however, that, unless the Committee otherwise determines, the
existence of such trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan. The Plan shall be governed by and construed in
accordance with the laws of the State of Ohio, without regard to its principles
of conflict of laws.
IX. PROCEDURES FOR CERTAIN DESIGNATED PARTICIPANTS
Incentive Awards under the Plan to Participants who are Covered Employees
shall be subject to preestablished Performance Goals as set forth herein.
Notwithstanding Article V hereof, the Committee shall not have discretion to
modify the terms of awards to such Participants except as specifically set forth
in this Article IX.
(a) Target Bonus. On or before the 90th day of each Incentive Period, and
in any event before 25% or more of the Incentive Period has elapsed,
the Committee shall establish in writing specific Performance Goals
for the Incentive Periods, upon the attainment of which will be
conditioned the payment of Incentive Awards ("Special Incentive
Awards") to such of the Participants who may be Covered Employees. A
Special Incentive Award shall consist of an award from the Company to
be based upon a percentage (which may exceed 100%) of a Target
Incentive Award. The extent, if any, to which a Special Incentive
Award will be payable will be based upon the degree of achievement of
preestablished Performance Goals over a specified Incentive Period;
provided, however, that the Committee may, in its sole discretion,
reduce the amount that would otherwise be payable with respect to an
Incentive Period.
A-2
<PAGE> 17
(b) Incentive Period. The Incentive Period will be a period of up to 12
months, unless a shorter period is otherwise selected and established
in writing by the Committee at the time the Performance Goals are
established with respect to such Incentive Period.
(c) Performance Goals. The Performance Goals established by the Committee
at the time a Special Incentive Award is granted will be based on one
or more of the following: earnings per share, market share, stock
price, sales, reduction of costs, net operating income, cash flow,
retained earnings, return on capital, return on equity, return on
assets, results of customer satisfaction surveys, aggregate product
price and other product price measures, and operating and maintenance
cost management; provided, however, that all Performance Goals shall
be objective performance goals satisfying the requirements for
"performance-based compensation" within the meaning of Section
162(m)(4) of the Code. Such Performance Goals also may be based on
the attainment of levels of performance of the Company and/or any
Affiliates under one or more of the measures described above relative
to the performance of other corporations.
(d) Payment of an Incentive Award. At the time the Special Incentive
Award is granted, the Committee shall prescribe a formula to
determine the percentage of the Target Incentive Award which may be
payable based upon the degree of attainment of the Performance Goals
during the Incentive Period. If the minimum Performance Goals
established by the Committee are not met, no payment will be made to
a Participant who is a Covered Employee. To the extent that the
minimum Performance Goals are satisfied or surpassed, and upon
written certification by the Committee that the Performance Goals
have been satisfied to a particular extent and any other material
terms and conditions of the Special Incentive Awards have been
satisfied, payment shall be made on the Payment Date in accordance
with the prescribed formula based upon a percentage of the Target
Incentive Award unless the Committee determines, in its sole
discretion, to reduce the payment to be made.
(e) Maximum Payable. The maximum amount payable to a Covered Employee
under this Plan for any fiscal year of the Company pursuant to this
Plan shall be $3,000,000.
(f) Accounting Adjustments. The Committee shall be authorized to make
adjustments in the method of calculating attainment of performance
goals in recognition of unusual or nonrecurring events affecting the
Corporation or its financial statements or changes in applicable
laws, regulations, or accounting principles; provided, however, that
any such adjustment shall be made in a manner consistent with Section
162(m) of the Code, and the regulations promulgated thereunder.
X. CHANGE IN CONTROL
Notwithstanding any other provision of this Plan, if a change in control of
the Company occurs, (i) each Participant who is employed by the Company or an
Affiliate immediately before the change in control shall be entitled to receive
a payment equal to his or her Target Incentive Award for the Incentive Period
that includes the date of the change in control, and (ii) any Incentive Award
that becomes payable to such a Participant for that Incentive Period, to the
extent that it is duplicative of the amount of the payment made to such
Participant pursuant to clause (i) of this Article X, shall be reduced (but not
below zero) by such prior payment. For purposes of this Article X, a change in
control of the Company shall be deemed to have occurred if any "person," as such
term is used in Sections 13(d) and 14(d) of the Securities and Exchange Act of
1934, as amended (the "Act"), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a trustee under the
John Q. Sherman Testamentary Trust or the William C. Sherman Testamentary Trust
or the William C. Sherman Intervivos Trust dated December 29, 1939, becomes the
"beneficial owner," as defined in Rule 13d-3 under the Act, directly or
indirectly, of securities of the Company representing 35% or more of the
combined voting power of the Company's then outstanding securities.
XI. DEFERRAL ELECTIONS
The Committee may at its option establish written procedures pursuant to which
Participants are permitted to defer the receipt of Incentive Awards payable
hereunder.
XII. EFFECT ON OTHER BENEFIT AND COMPENSATION PROGRAMS
Unless otherwise specifically provided to the contrary in the relevant plan,
program, or practice, Incentive Awards received by Participants under this Plan
shall be deemed a part of a Participant's compensation for purposes of
calculating payments or benefits under the Company's retirement plans and for
purchase of supplemental life insurance; and shall not be deemed a part of a
Participant's compensation for purposes of calculating payments or benefits
under any other Company benefit plan, program, practice, or severance policy.
XIII. SUCCESSORS AND ASSIGNS; NON-ALIENATION OF BENEFITS
This Plan shall be binding on all successors and assigns of a Participant
including, without limitation, the estate of such Participant and the executor,
administrator, or trustee of such estate, or any receiver or trustee in
bankruptcy or representative of the Participant's creditors. All rights and
benefits under this Plan are personal to the Participant and neither the Plan
nor any right or interest or a Participant or any other person arising under
this Plan is subject to voluntary or involuntary alienation, sale, transfer, or
assignment without the Company's consent. Subject to the foregoing, the Company
may establish such procedures as it deems necessary for a Participant to
designate one or more beneficiaries to whom any payment the Committee determines
to make would be payable in the event of the Participant's death.
A-3
<PAGE> 18
XIV. SECTION 162(M) COMPLIANCE; INTERPRETATION OF PLAN
This Plan is designed to comply with Section 162(m) of the Code, and all
provisions hereof shall be construed in a manner consistent with that intent.
XV. SHAREHOLDER APPROVAL
This Plan shall not become effective with respect to individuals who are
Covered Employees unless it shall have been approved by the affirmative vote of
a majority of the votes cast by the holders of the voting securities of the
Company represented at a meeting and entitled to vote thereon.
A-4
<PAGE> 19
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- - - ------------------------------
THE STANDARD REGISTER COMPANY
- - - ------------------------------
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date_____________________________
________________________________________________________________________________
Shareholder sign here Co-owner sign here
For Against Abstain
1. Proposal to fix and determine the number [ ] [ ] [ ]
of Directors to be ten.
2. Election of Directors.
A vote FOR includes discretionary authority (i) to cumulate votes
selectively among the nominees and (ii) to vote for a substitute nominee
if any of the nominees listed becomes unable or unwilling to serve.
<TABLE>
<CAPTION>
For Withhold For All Except
<C> <C> <C> <C> <C>
ROY W. BEGLEY, JR. DENNIS L. REDIKER [ ] [ ] [ ]
F. DAVID CLARKE, III ANN SCAVULLO
PAUL H. GRANZOW JOHN J. SCHIFF, JR.
GRAEME G. KEEPING CHARLES F. SHERMAN
PETER S. REDDING JOHN Q. SHERMAN, II
</TABLE>
NOTE: If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the nominee's(s')
name(s). Your shares will be voted for the remaining nominee(s).
For Against Abstain
3. Proposal to approve The Standard Register [ ] [ ] [ ]
Company Management Incentive Compensation
Plan.
4. Proposal to approve Battelle & Battelle, [ ] [ ] [ ]
Certified Public Accountants, as the
independent public accountants of the
Company.
5. According to their best judgment on any and all matters as may properly come
before the meeting or any adjournments thereof.
The Board of Directors does not know of any matters to be brought before the
Annual Meeting other than those described above.
Mark box at right if an address change or comment has been noted on
the reverse side of this card. [ ]
- - - --------------------------------------------------------------------------------
DETACH CARD DETACH CARD
<PAGE> 20
THE STANDARD REGISTER COMPANY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - APRIL 16, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, a shareholder of The Standard Register Company ("Company")
hereby appoints PETER S. REDDING, PAUL H. GRANZOW and CHARLES F. SHERMAN
("Appointed Proxies"), each with full power to substitute or act alone, to vote
(the action of a majority of those present to control) with respect to all
shares of stock of the undersigned in the Company at the Annual Meeting of
Shareholders of the Company ("Annual Meeting") to be held April 16, 1997, and
any adjournments thereof, upon the matters listed on the reverse side hereof.
THE APPOINTED PROXIES WILL VOTE FOR EACH OF THE MATTERS SET FORTH ON THE
REVERSE SIDE, WHICH ARE MORE FULLY DESCRIBED IN THE PROXY STATEMENT, UNLESS A
CONTRARY CHOICE IS SPECIFIED ON THE REVERSE SIDE, IN WHICH CASE THE APPOINTED
PROXIES WILL VOTE OR WITHHOLD IN ACCORDANCE WITH INSTRUCTIONS GIVEN.
- - - --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as your name(s) appear(s) on the reverse side hereof.
Joint owners should each sign personally. Trustees, custodians, and other
fiduciaries should indicate the capacity in which they sign, and where more
than one name appears, a majority must sign. If the shareholder is a
corporation, the signature should be that of an authorized officer who should
indicate his or her title.
- - - --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
____________________________________ _______________________________________
____________________________________ _______________________________________
____________________________________ _______________________________________
