SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
STANHOME INC.
_______________________________________________________________________
(Name of Registrant as Specified In Its Charter)
_______________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction applies:
__________________________________________________
2) Aggregate number of securities to which transaction applies:
__________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount
on which the filing fee is calculated and state how it was determined):
__________________________________________________
4) Proposed maximum aggregate value of transaction:
__________________________________________________
5) Total fee paid:
__________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
__________________________________________________
2) Form, Schedule or Registration Statement No.:
__________________________________________________
3) Filing Party:
__________________________________________________
4) Date Filed:
__________________________________________________
[STANHOME INC. LETTERHEAD]
March 13, 1998
Dear Stockholder:
On behalf of the Stanhome Inc. Board of Directors, we invite you
to attend the Annual Meeting of Stockholders to be held on Thursday,
April 23, 1998, at the Le Meridien Boston, 250 Franklin Street, Boston,
Massachusetts. Information about the meeting is presented on the
following pages. Please note that the meeting is scheduled to start at
9:30 a.m.
In addition to the formal items of business to be conducted at the
meeting, management will report on the operations of the Company and
will answer stockholder questions.
It is important to ensure that your shares will be represented at
the Annual Meeting. Please complete, date, sign, and return your
enclosed Proxy card even if you plan to attend. Sending us your Proxy
will not prevent you from voting in person at the Annual Meeting should
you wish to do so. Please note that space limitations may make it
necessary to limit attendance only to stockholders of the Company.
Accordingly, admission to the meeting will be on a first-come, first-
served basis, and "street name" holders will need to bring a copy of a
brokerage statement reflecting stock ownership as of the Record Date
referred to in the Proxy Statement.
We look forward to seeing you on April 23rd, and thank you for
your continued support of Stanhome Inc.
Sincerely,
H.L. Tower
Chairman, President and CEO
STANHOME INC.
333 WESTERN AVENUE
WESTFIELD, MASSACHUSETTS 01085
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 23, 1998
Notice is hereby given that the Annual Meeting of Stockholders of
Stanhome Inc. will be held at Le Meridien Boston, 250 Franklin Street,
Boston, Massachusetts 02110, at 9:30 a.m. on Thursday, April 23, 1998,
for the following purposes:
1. To elect four Class III Directors for a three-year term.
2. To approve proposed amendments to the Company's Restated
Articles of Organization, as amended, in connection with the
ongoing restructuring of the Company.
3. To vote upon a stockholder proposal described in this proxy
statement, if the proposal is presented at the meeting.
4. To ratify the appointment by the Board of Directors of Arthur
Andersen LLP as the Company's independent accountants for 1998.
5. To transact such other business as may properly come before the
meeting and any postponement or adjournment thereof.
Stockholders of record as of the close of business on March 2, 1998
will be entitled to vote at the Annual Meeting and any postponement or
adjournment thereof.
By Order of the Board of Directors,
Peter R. Johnson, Clerk
Westfield, Massachusetts
March 13, 1998
----------------------------------------
IMPORTANT
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING.
PLEASE NOTE THAT SPACE LIMITATIONS MAY MAKE IT NECESSARY TO LIMIT
ATTENDANCE ONLY TO STOCKHOLDERS OF THE COMPANY. ACCORDINGLY, ADMISSION TO
THE MEETING WILL BE ON A FIRST-COME, FIRST-SERVED BASIS, AND "STREET
NAME" HOLDERS WILL NEED TO BRING A COPY OF A BROKERAGE STATEMENT
REFLECTING STOCK OWNERSHIP AS OF THE RECORD DATE REFERRED TO IN THE PROXY
STATEMENT. WHETHER OR NOT YOU PLAN TO ATTEND IN PERSON, YOU ARE URGED TO
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN
THE ENVELOPE PROVIDED. THIS WILL ASSURE YOUR REPRESENTATION AND A QUORUM
FOR THE TRANSACTION OF BUSINESS AT THE MEETING. IF YOU DO ATTEND THE
MEETING, YOU MAY VOTE IN PERSON, IF YOU DESIRE TO DO SO, EVEN IF YOU HAVE
RETURNED A PROXY CARD.
STANHOME INC.
PROXY STATEMENT
March 13, 1998
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors for
use at the annual meeting of stockholders of Stanhome Inc. (the
"Company") to be held at 9:30 a.m. on Thursday, April 23, 1998, at Le
Meridien Boston, 250 Franklin Street, Boston, Massachusetts 02110. Any
proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by: (i)
filing with the Clerk, at or before the 1998 annual meeting of
stockholders (the "Annual Meeting"), a written notice of revocation
bearing a later date than the proxy; (ii) duly executing and submitting a
subsequent proxy relating to the Annual Meeting; or (iii) voting in
person at the Annual Meeting (although attendance at the Annual Meeting
will not, in and of itself, constitute a revocation of a proxy). Any
written notice revoking a proxy should be sent to Peter R. Johnson,
Clerk, Stanhome Inc., c/o Enesco Corporation, 225 Windsor Drive, Itasca,
IL 60143.
The expense of solicitation of proxies will be borne by the
Company. The Company has retained Morrow & Co., New York, New York, to
aid in the solicitation of proxies. It is estimated that the cost of
these services will be approximately $6,500 plus expenses. Proxies will
be solicited by personal interview, mail and telephone. Brokerage houses,
other custodians and nominees will be asked whether other persons are the
beneficial owners of the Company's common stock, par value $.125 per
share, together with the associated common stock purchase rights (the
"Common Stock"), which they hold of record, and, if so, they will be
supplied with additional copies of the proxy card and proxy materials for
distribution to such beneficial owners. The Company will, in addition,
reimburse parties holding shares of the Common Stock of record in their
names or in the names of their nominees for their reasonable expenses in
sending proxy cards and proxy materials to the beneficial owners of the
shares of the Common Stock held of record by them.
The matters to be considered and acted upon at the Annual Meeting
are referred to in the preceding Notice. If the enclosed proxy card is
properly executed and returned to the Company, all shares of the Common
Stock represented thereby will be voted by the persons named as proxies
as designated or, if no designation is indicated thereon, as described
hereinafter. Where applicable, abstentions from voting will be treated as
votes cast and will have the effect of votes against in the voting count.
Shares of the Common Stock that are represented by a broker and not voted
with respect to a particular matter are not treated as being present at
the Annual Meeting and will have no effect on the voting count.
The address of the Company's principal executive offices is 333
Western Avenue, Westfield, MA 01085, U.S.A. This Proxy Statement and the
accompanying proxy card are being provided to the holders of record of
the Common Stock as of the close of business on March 2, 1998 (the
"Record Date").
ANNUAL REPORT
The Annual Report to Stockholders of the Company for the year ended
December 31, 1997, including the Company's financial statements for its
1997 fiscal year, accompanies this Proxy Statement, which is being mailed
on or about March 13, 1998.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
On the Record Date, there were outstanding __________ shares of the
Common Stock, which is the only class of stock outstanding and entitled
to vote at the Annual Meeting and any postponement or adjournment
thereof. The holders of such shares will be entitled to cast one vote for
each share of the Common Stock held of record as of the Record Date. The
only beneficial owners of more than 5% of the Common Stock as of December
31, 1997 were as follows:
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
- ------------------- -------------------- ----------
Royce & Associates, Inc. 1,402,600 shares(1) 8.06%(1)
("Royce")
Royce Management Company
("RMC")
1414 Avenue of the Americas
9th Floor
New York, NY 10019
First Chicago NBD Corporation 874,865 shares(2) 5.00%(2)
One First National Plaza
Chicago, IL 60670
- --------------
(1) Based on a statement on Schedule 13G filed with the Securities
and Exchange Commission on February 5, 1998 by Royce, RMC and Charles M.
Royce as a group. Royce has sole voting and dispositive power over
1,347,600 shares, RMC has sole voting and dispositive power over 55,000
shares, and Charles M. Royce may be deemed to beneficially own the shares
beneficially owned by Royce and RMC. Charles M. Royce disclaims
beneficial ownership of the shares beneficially owned by Royce and RMC.
(2) Based on a statement on Schedule 13G filed with the Securities
and Exchange Commission on February 4, 1998 by First Chicago NBD
Corporation. First Chicago NBD Corporation has sole voting power over
858,845 shares, sole dispositive power over 874,340 shares and shared
dispositive power over 175 shares.
Management of the Company beneficially owned, as of January 31,
1998, shares of the Common Stock (whether currently outstanding or
issuable upon exercise of stock options) as follows:
Outstanding Shares Shares Underlying
of the Common Stock- Stock Options-
Amount and Nature Amount and Nature Percent
Name of of Beneficial of Beneficial of
Beneficial Owner Ownership (1) Ownership (1)(2) Class (3)
- ---------------- ------------------- ----------------- ---------
John F. Cauley 1,800 Direct 7,125 --
Charles W. Elliott 2,600 Direct 1,125 --
Eugene Freedman 31,734 Direct, 196,900 1.62%
40,391 Indirect (4)
Judith R. Haberkorn 700 Direct 4,125 --
Thomas R. Horton 1,600 Direct 6,325 --
Jeffrey A. Hutsell 4,000 Direct, 66,500 --
12,146 Indirect
Allan G. Keirstead 46,676 Direct, 181,000 1.38%
1,575 Indirect
Homer G. Perkins 18,070 Direct, 7,125 --
14,000 Indirect (5)
H. L. Tower 78,509 Direct 34,125 --
Anne-Lee Verville 1,700 Direct 5,625 --
G. William Seawright 0 Direct, 312,250 1.87%
38 Indirect
John J. Dur 500 Direct, 26,250 --
196 Indirect
All Directors and 209,291 Direct, 960,350 7.17%
Executive Officers 77,331 Indirect
as a Group
(15 persons)
- -----------
(1) Unless otherwise noted, the nature of beneficial ownership is
sole voting and/or investment power. Fractional amounts have been rounded
to the nearest whole share of the Common Stock.
(2) Reflects the number of shares of the Common Stock which the
Directors, the named Executive Officers and All Directors and Executive
Officers as a Group are deemed to beneficially own by reason of options
granted to them under the Company's 1984, 1991 and 1996 Stock Option
Plans and Special Interim Chief Executive Officer Stock Option Plan which
are exercisable within 60 days of January 31, 1998.
(3) Unless otherwise noted, Percent of Class of each Director and
named Executive Officer is less than 1% of the total number of shares of
the Common Stock outstanding as of, and acquirable by such person within
60 days of, January 31, 1998.
(4) Includes 35,000 shares of the Common Stock owned by the Eugene
Freedman Family Limited Partnership, of which Mr. Freedman is the General
Partner, and 5,000 shares owned by the Eugene Freedman Family Foundation,
of which Mr. Freedman is an officer and a director. Mr. Freedman shares
voting and investment power over these shares and disclaims any
beneficial interest in all such shares, except to the extent of his
direct and indirect pecuniary interest in the Limited Partnership and the
Foundation.
(5) Includes 14,000 shares of the Common Stock held by the residuary
trust established under the Will of Frank Stanley Beveridge. Mr. Perkins
shares voting and investment power over these shares and disclaims any
beneficial interest in all such shares.
ELECTION OF DIRECTORS
Effective as of the Annual Meeting, the Board of Directors of the
Company (the "Board") consists of ten members who are constituted into
three separate classes serving three years each with one class being
elected each year. The Board has adopted several policies concerning
resignation and retirement of Directors from the Board, one providing for
review by the Board of the continued membership of a Director following a
change in his or her principal employment, and another providing for a
Director's retirement at age 72, except for Messrs. Freedman and Perkins,
who are not subject to this policy.
The terms of office of the four incumbent Class III Directors,
Messrs. John F. Cauley, Jeffrey A. Hutsell and Homer G. Perkins and Ms.
Anne-Lee Verville, expire at the Annual Meeting. The Board proposes their
reelection for three-year terms expiring at the annual meeting of
stockholders in April 2001. The election of the four nominees named above
requires the affirmative vote of the holders of a majority of the shares
of the Common Stock voting at the Annual Meeting, whether present in
person or represented by proxy; provided, however, that a quorum is
present or represented.
Valid proxies of stockholders containing no designation to the
contrary will be voted for the election of the four nominees named above
as proposed by the Board.
If for any reason any nominee is not available to serve when the
election occurs, the persons named as proxies in the proxy cards will
vote the proxies in accordance with their best judgment. The Board has no
reason to believe that any nominee will not be available.
INFORMATION AS TO BOARD OF DIRECTORS AND NOMINEES
NOMINEES FOR DIRECTORS IN CLASS III
TERMS EXPIRING IN 2001
- ---------------------------------------------------------------------------
JOHN F. CAULEY Retired as President of Friendly Ice
Cream Corporation, a subsidiary of
The Restaurant Company (restaurants
Director since 1987 [Photograph and food products), Memphis, TN, in
of Director 1990. Member of the Company's Audit,
Age 65 omitted] Executive, Governance and
Compensation and Stock Option
Committees.
- ---------------------------------------------------------------------------
JEFFREY A. HUTSELL Vice President of the Company and
President and Chief Operating
Officer of Enesco Corporation, a
Director since 1997 [Photograph subsidiary of the Company, since
of Director 1997. Formerly Executive Vice
Age 44 omitted] President-Worldwide Creative of
Enesco Corporation from 1992 until
1997, having previously served as
a Vice President of Enesco
Corporation from 1985 to 1992.
- ---------------------------------------------------------------------------
HOMER G. PERKINS Retired as Chairman of the Board of
the Company in 1982. Member of the
Company's Audit and Governance
Director since 1954 [Photograph Committees.
of Director
Age 81 omitted]
- ---------------------------------------------------------------------------
ANNE-LEE VERVILLE Retired as General Manager-Worldwide
Education Industry of International
Business Machines Corporation
Director since 1991 [Photograph ("IBM")(advanced information
of Director technologies), White Plains, NY,
Age 52 omitted] in 1997, a position which she had
held since 1994. Formerly
President-General Sector Division of
IBM from 1991 to 1994. Chair of the
Company's Compensation and Stock
Option Committee and member of the
Audit, Executive and Governance
Committees.
- ---------------------------------------------------------------------------
DIRECTORS CONTINUING IN OFFICE IN CLASS I
TERMS EXPIRING IN 1999
- ---------------------------------------------------------------------------
JUDITH R. HABERKORN President-Public and Operator
Services, Bell Atlantic
(telecommunications services),
Director since 1993 [Photograph New York, NY, since 1997. Formerly
of Director Vice President, Individual
Age 51 omitted] Communication Services, NYNEX
Corporation, New York, NY ("NYNEX")
from 1995 to 1997, having previously
served as Vice President-Consumer
Markets, NYNEX, from 1994 to 1995 and
Vice President-Sales and Marketing,
New York Telephone Co., New York, NY,
from 1992 to 1994. Chair of the
Company's Governance Committee and
Member of the Audit and Compensation
and Stock Option Committees.
- ---------------------------------------------------------------------------
THOMAS R. HORTON Retired as Chairman and Chief
Executive Officer of American
Management Association (management
training), New York, NY, in 1992
Director since 1991 [Photograph and 1991, respectively, positions
of Director which he had held since 1989 and
Age 71 omitted] 1982, respectively. Also, Director
of The Commercial Bank of Volusia
County, Ormond Beach, FL. Member of
the Company's Audit, Executive and
Governance Committees.
- ---------------------------------------------------------------------------
H. L. TOWER Chairman, President and Chief
Executive Officer of the Company
since 1997 and Chairman of the Board
Director since 1978 [Photograph since 1982. Formerly Chief Executive
of Director Officer from 1978 to 1990; retired
Age 65 omitted] as an associate from the Company in
1992; and served briefly in 1993
as interim President and Chief
Executive Officer. Chair of the
Company's Executive Committee.
- ---------------------------------------------------------------------------
DIRECTORS CONTINUING IN OFFICE IN CLASS II
TERMS EXPIRING IN 2000
- ---------------------------------------------------------------------------
CHARLES W. ELLIOTT Retired in 1995 as Executive Vice
President-Administration and Chief
Financial Officer, Kellogg Company
Director since 1995 [Photograph (food products), Battle Creek,
of Director MI, positions which he had held
Age 66 omitted] since 1987 and 1988, respectively.
Also, Director of Munder Funds,
Detroit, MI. Chair of the Company's
Audit Committee and member of the
Compensation and Stock Option,
Executive and Governance Committees.
- ---------------------------------------------------------------------------
EUGENE FREEDMAN Vice Chairman of the Company since
1997 and Executive Vice President of
the Company since 1988. Also serves
Director since 1997 [Photograph as Chairman and Chief Executive
of Director Officer of Enesco Corporation, a
Age 73 omitted] subsidiary of the Company, of which
he was a founder in 1959. Member of
the Company's Executive Committee.
- ---------------------------------------------------------------------------
ALLAN G. KEIRSTEAD Vice Chairman of the Company since
1997 and Executive Vice President and
Chief Administrative and Financial
Director since 1985 [Photograph Officer of the Company since 1988.
of Director Member of the Company's Executive
Age 53 omitted] Committee.
- ---------------------------------------------------------------------------
REMUNERATION OF NON-EMPLOYEE DIRECTORS
The Board establishes the compensation paid to each Director who is
not also an employee of the Company for all services in such capacity.
The current remuneration amounts are as follows:
(1) For service as a member of the Board, a retainer of 200
shares of the Common Stock and $15,000 per annum, plus $1,200
for attendance at each meeting of the Board;
(2) For service as Chairman of the Board, an additional retainer
of $50,000 per annum;
(3) For service as a Board Committee member, an attendance fee of
$800 for each Committee meeting and for each other meeting
attended by any Director which is held in connection with the
selection of potential nominees for positions on the Board;
except that for three special meetings of the Organization
Committee (now known as the Governance Committee) during
1997, the attendance fee was increased to $1,000 for each
such meeting; and
(4) For service as Chairman of a Committee of the Board, an
additional attendance fee of $200 per Committee meeting or
other meeting referred to above.
Payment of these cash amounts may be partially or fully deferred by
the Director (with interest payable to the Director at the Company's cost
of borrowing) until a later year, retirement from the Board or a change
in control of the Company (in which case the Director will also be
reimbursed for any excise or other taxes incurred as a result of such
payment).
In addition, during the three-year period ending in 1998, as of the
day following the Annual Meeting, each then serving non-employee Director
receives a grant of 1,500 non-qualified options to purchase shares of the
Common Stock at an exercise price per share equal to the fair market
value per share of the Common Stock on the grant date. The options become
exercisable on the eighth anniversary of the grant, unless they have
already become exercisable under other provisions of the Company's 1996
Stock Option Plan (which are more fully described elsewhere in this Proxy
Statement) and expire on the tenth anniversary of the grant.
Upon retirement of a non-employee Director at any time after age 60
with 5 years of service on the Board, he or she will become an "Advisory
Director" who may be called upon for advice by the Chief Executive
Officer of the Company as the occasion arises. For such services, an
Advisory Director shall receive, in addition to current attendance fees
for his or her requested participation at meetings, the annual retainer
at the rate in effect at the time of his or her retirement for a period
of years equal to the Director's years of service (but not in excess of
10 years) or until his or her earlier death. In the event of a change in
control of the Company, each Advisory Director and each Director then
eligible to retire and become an Advisory Director will receive the
balance of the retainer payments due for his or her term, or remainder
thereof, as an Advisory Director, plus reimbursement for any excise or
other taxes incurred as a result of such payment.
Directors receive reimbursement from the Company for expenses
incurred in connection with service in that capacity. Directors who are
also employees of the Company receive no additional compensation for
their services as Directors.
ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS
Committees
The Audit Committee, comprised of six Board members, held three
meetings during 1997. This Committee, which consists entirely of
non-employee Directors, provides oversight of the Company's audit,
accounting, reporting and control practices and provides a non-management
link between the Board and the Company's internal auditing department.
This Committee reviews the activities of the internal auditing department
and the Company's independent accountants. It also reviews the adequacy
of the Company's accounting, financial and operating controls and reports
to the full Board as necessary.
The Compensation and Stock Option Committee, comprised of four
Board members, held eight meetings during 1997. This Committee, which
also consists entirely of non-employee Directors, determines compensation
policy for the Company, approves or recommends to the Board compensation
of the Directors and officers of the Company and reviews and acts on
recommendations from the Chief Executive Officer regarding the award of
stock options and administration of the stock option plans of the Company
and the Non-employee Director Stock Plan.
The Executive Committee, comprised of seven Board members, held two
meetings during 1997. This Committee, which consists of four non-employee
and three employee Directors, acts on behalf of the Board on important
matters that arise between meetings of the Board and performs other tasks
as delegated by the Board.
The Governance Committee, formerly known as the Organization
Committee, comprised of six Board members, held four meetings during
1997. This Committee, which consists entirely of non-employee Directors,
provides the Board with Director and corporate officer recommendations,
including with respect to the Chief Executive Officer of the Company,
proposes to the Board each year a slate of Directors for recommendation
and submission to the stockholders at the Company's next annual meeting
of stockholders and deals with all aspects of the Director selection
process, reviewing prospective Director candidates in the light of
anticipated resignations and retirements and Board composition.
In accordance with the Company's Restated Articles of Organization,
as amended, nominations for the election of Directors at an annual
meeting of stockholders may be made by the Board, the Governance
Committee or by any stockholder entitled to vote generally in the
election of Directors. However, any stockholder may nominate one or more
persons for election as Directors at an annual meeting of stockholders
only if the stockholder gives notice in writing to the Secretary of the
Company at least 45 days in advance of the anniversary of the date of
the previous annual meeting of stockholders, which notice includes:
(a) The name and address of the stockholder who intends to make
the nomination and the name and address of each person to be
nominated;
(b) A representation that the stockholder is a holder of record
of the Common Stock and intends to appear in person or by
proxy at the Company's next annual meeting of stockholders to
nominate the person or persons specified in the notice;
(c) A description of all arrangements or understandings between
the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder;
(d) Such other information regarding each nominee proposed by
such stockholder as would be required to be included in a
proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission; and
(e) The consent of each nominee to serve as a Director if so
elected.
In addition to the Committee meetings referred to above, the full
Board held eight regular meetings and three special meetings during 1997.
EXECUTIVE COMPENSATION
The following table sets forth, for the fiscal years ended December
31, 1997, 1996 and 1995, the cash compensation paid by the Company and
its subsidiaries, as well as all other plan and non-plan compensation
awarded to, earned by or paid to the present Chief Executive Officer, the
former Chief Executive Officer and the four most highly compensated
Executive Officers of the Company other than the Chief Executive Officer
in office at the end of 1997 (all six persons being collectively referred
to herein as the "Named Executive Officers") for all services rendered in
all capacities to the Company and its subsidiaries:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compen-
Annual sation
Compensation (1) Awards (2)
---------------- ----------
Other Securities
Name Annual Under- All Other
and Compen- lying Compen-
Principal sation Options sation
Position Year Salary($) Bonus($) ($) (#) ($)(3)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
H. L. Tower, 1997 $180,000 $ ______ $ - 101,500 $ 8,967
Chairman, 1996 - - - 1,500 -
President and 1995 - - - 1,500 -
Chief Executive
Officer
G. W. Seawright, 1997 429,750 - - - 179,856
former President 1996 566,000 257,530 - 70,500 37,571
and Chief 1995 533,750 230,713 58,865(4) 125,000 41,295
Executive Officer
J. J. Dur, 1997 283,333 282,772 471,564(5) - 22,660
Vice President 1996 271,000 - 371,345(6) 15,000 13,792
(Chief Executive 1995 249,167 38,621 348,852(7) 35,000 3,866
Officer of
Stanhome Direct
Selling Group)
E. Freedman, 1997 475,000 _____ - 70,000 _____
Vice Chairman 1996 475,000 4,030,500 - 24,000 30,590
and Executive 1995 475,000 4,078,950 - 40,000 30,608
Vice President
(Chief Executive
Officer of Enesco
Giftware Group)
J. A. Hutsell, 1997 450,000 ______ - 56,000 _____
Vice President 1996 - - - - -
(President and 1995 - - - - -
Chief Operating
Officer of Enesco
Corporation)
A. G. Keirstead, 1997 381,000 ______ 38,696(8) 50,000 22,725
Vice Chairman, 1996 363,000 127,050 - 21,000 21,642
Executive Vice 1995 348,250 121,888 - 40,000 21,511
President and Chief
Administrative
and Financial Officer
</TABLE>
- -----------------
(1) Annual compensation includes bonus compensation for the year,
whether paid in the year indicated or in the succeeding year, under
agreements with Messrs. Seawright and Freedman and pursuant to the
Company's Management Incentive Plan (the "MIP") with respect to Messrs.
Tower, Seawright, Dur, Hutsell and Keirstead, and, except for Messrs.
Tower, Freedman and Hutsell, also includes salary compensation deferred
through the Company's Investment Savings Plan for 1995 and 1996 only and
Supplemental Investment Savings Plan for the entire three-year period.
For Mr. Tower, salary compensation includes amounts deferred through the
Company's Supplemental Investment Savings Plan, but excludes amounts paid
to him under the Company's Pension Plan and his supplemental retirement
agreement or in his capacity as the non-employee Chairman of the Board
until September 4, 1997 (other than the option grants), all of which is
more fully described elsewhere in this Proxy Statement. Compensation
information regarding 1995 and 1996 for Mr. Hutsell is not provided
because he was not an Executive Officer of the Company during those
years.
(2) All Long-term Compensation Awards to the Named Executive
Officers during the three-year period were made in the form of
non-qualified stock options granted under the Company's 1991 and 1996
Stock Option Plans and, with respect to Mr. Tower, the Company's 1997
President and Chief Executive Officer Stock Option Plan. No stock
appreciation rights ("SARs") were awarded either singly or in tandem with
the granted options.
(3) All Other Compensation in 1997 consisted of the following items
for each of the Named Executive Officers: H. L. Tower, $5,700 matching
contribution under the Company's Supplemental Investment Savings Plan,
$500 contribution under the Company's Payroll-Based Stock Ownership Plan
("PAYSOP Contribution") and $2,767 insurance premiums paid by the Company
with respect to term life insurance for his benefit ("Insurance
Premiums"); G. W. Seawright, $150,750 severance payments pursuant to his
employment agreement, $21,700 matching contribution under the Company's
Supplemental Investment Savings Plan, $500 PAYSOP Contribution and $6,906
Insurance Premiums; J. J. Dur, $17,937 matching contribution under the
Company's Supplemental Investment Savings Plan, $500 PAYSOP Contribution
and $4,223 Insurance Premiums; E. Freedman, $______ contribution under
the Enesco Profit Sharing Plan, $_____ contribution under the Enesco
Supplemental Profit Sharing Plan, $500 PAYSOP Contribution and $84
Insurance Premiums; J. A. Hutsell, $______ contribution under the Enesco
Profit Sharing Plan, $_____ contribution under the Enesco Supplemental
Profit Sharing Plan, $500 PAYSOP Contribution and $84 Insurance Premiums;
and A. G. Keirstead, $16,442 matching contribution under the Company's
Supplemental Investment Savings Plan, $500 PAYSOP Contribution and $5,783
Insurance Premiums.
(4) Includes $28,894 in automobile allowance and $24,521 in
reimbursed tax payments relating to relocation expenses for G. W.
Seawright.
(5) Includes $444,765 in total costs, including taxes, incurred by
the Company for J. J. Dur under the Company's Expatriate Policy.
(6) Includes $344,543 in total costs, including taxes, incurred by
the Company for J. J. Dur under the Company's Expatriate Policy.
(7) Includes $322,752 in total costs, including taxes, incurred by
the Company for J. J. Dur under the Company's Expatriate Policy.
(8) Includes $28,696 in automobile allowance for A. G. Keirstead.
The following table contains information concerning individual
grants of stock options made by the Company to each of the Named
Executive Officers during the last fiscal year:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Grant Date
Individual Grants (1) Value
--------------------- ----------
Number
of Sec- % of
urities Total
Under- Options Grant
lying Granted to Exercise Date
Options Employees or Base Present
Granted in Fiscal Price Expiration Value
Name (#)(2) Year ($/Sh) Date $(3)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
H. L. Tower 1,500 .3% $29.375 April 24, 2007 $ 12,338
100,000 18.0% 27.3125 November 13, 2007 819,375
G. W. Seawright 0 0% - - -
J. J. Dur 0 0% - - -
E. Freedman 70,000 12.6% 28.875 October 27, 2007 606,375
J. A. Hutsell 20,000 3.6% 31.9375 July 31, 2007 178,850
36,000 6.5% 28.875 October 27, 2007 311,850
A. G. Keirstead 50,000 9.0% 28.875 October 27, 2007 433,125
</TABLE>
- -----------------
(1) The individual grants described herein were all made in the
form of non-qualified stock options under the Company's 1996 Stock Option
Plan, except for the grant of 100,000 non-qualified stock options to Mr.
Tower (which was made under the Company's 1997 President and Chief
Executive Officer Stock Option Plan. No SARs were granted by the Company
during 1997).
(2) All options granted have a ten-year term and become exercisable
only (a) after six months from date of grant and upon the Company's
achievement of certain stock value performance criteria or (b) upon the
eighth anniversary of the date of grant, regardless of whether the stock
value performance criteria have been achieved, except for the grant of
100,000 non-qualified stock options to Mr. Tower, of which increments of
12,500 options vest monthly during his tenure as President and Chief
Executive Officer, that become exercisable after May 14, 1998 and, to the
extent not vested, will be forfeited following his termination of
employment at the Company.
(3) The Company used the Black-Scholes option pricing model to
determine the present value of each option granted as of its respective
date of grant. The assumptions used relating to the expected volatility,
risk-free rate of return, dividend yield and time of exercise were as
follows: (i) volatility was calculated based on the daily change in the
Common Stock price during the 250 trading days preceding the option grant
date; (ii) risk-free rate of return was the yield as of the option grant
date on U.S. Treasury bonds maturing in ten years; (iii) dividend yield
was computed based on the then most recent four quarterly dividends paid
on the Common Stock divided by the average of the highest and lowest
closing prices for the Common Stock during the twelve-month period ending
on the grant date; and (iv) time of exercise was the full term of the
option granted. There were no adjustments made in the option pricing
model for non-transferability or risk of forfeiture of the options
granted.
No stock options were exercised by each of the Named Executive
Officers during the last fiscal year. The following table sets forth
information concerning the value of unexercised stock options held by
each of them as of the end of the fiscal year:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#) FY-End ($)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
- -------------------------------------------------------------
H. L. Tower 33,375/ 29,125 $ 0/$0
G. W. Seawright 252,500/161,500 0/ 0
J. J. Dur 17,500/ 32,500 0/ 0
E. Freedman 176,150/124,750 122,375/ 0
J. A. Hutsell 56,500/ 83,000 33,375/ 0
A. G. Keirstead 160,500/101,500 0/ 0
Pension Plan
The Company maintains a qualified pension plan (the "Pension
Plan"), supplemental pension plans and certain supplemental retirement
agreements requiring contributions in amounts determined annually by
independent actuaries. In the case of the supplemental pension plans and,
if applicable, supplemental retirement agreements of Messrs. Tower,
Seawright, Dur and Keirstead, annual benefits generally will be paid on a
monthly basis commencing upon eligibility therefor; however, upon the
occurrence of a change in control of the Company (within the meaning of
these plans and agreements), the present value of the aggregate expected
remaining annual benefits will be paid to the executive in one lump sum.
Of the Named Executive Officers, only Messrs. Tower, Seawright and
Keirstead have supplemental retirement agreements. Mr. Tower is currently
receiving annual benefits pursuant to his agreement and in accordance
with the Pension Plan. Mr. Seawright will be receiving reduced annual
benefits pursuant to his agreement due to his involuntary termination
without cause on September 30, 1997 and is currently receiving annual
benefits in accordance with the Pension Plan. Mr. Keirstead is eligible
upon his reaching age 55 to receive reduced annual benefits pursuant to
his agreement in the event of an involuntary termination without cause.
Messrs. Tower, Seawright and Keirstead did not accrue any benefits under
the Pension Plan in 1997. The following table has been prepared without
regard to the Pension Plan limitations described below and represents
amounts attributable to the supplemental retirement agreements of Messrs.
Tower, Seawright and Keirstead, all of whom have been Executive Officers
who are or were also Directors:
PENSION PLAN TABLE (1)
<TABLE>
<CAPTION>
Remuneration Years of Service
- ---------------------------------------------------------------------------------------------------
Final
Average
Compen-
sation 5 10 15 20 25 30 35 40
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 300,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000
400,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000
500,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000
600,000 300,000 300,000 300,000 300,000 300,000 300,000 300,000 300,000
700,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000
800,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000
900,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000
1,000,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000
1,100,000 550,000 550,000 550,000 550,000 550,000 550,000 550,000 550,000
1,200,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000
</TABLE>
- ---------------
(1) The information contained herein represents the aggregate
estimated annual benefits payable to eligible employee Director
participants under the Pension Plan and the supplemental retirement
agreements.
The pension plans of the Company in which Mr. Dur is a participant
have a Pension Plan portion, as described below, and a supplemental
pension plan portion. Mr. Dur did not accrue any benefits under the
Pension Plan in 1997. If Mr. Dur's employment with the Company is
involuntarily terminated without cause, Mr. Dur will become eligible
upon his reaching age 55 to receive reduced annual benefits under the
Pension Plan and his supplemental pension plan. The supplemental pension
plan portion represents his benefit with no limits on compensation or
benefit amounts less his Pension Plan benefit which limits compensation
to $160,000 per year pursuant to Section 401(a)(17) of the Internal
Revenue Code of 1986, as amended (the "Code") and a maximum benefit
pursuant to Code Section 415 of $130,000 in 1998. The following table
has been prepared without regard to these limitations or certain social
security benefit offsets, however, and it includes amounts attributable
to the supplemental pension plan in which Mr. Dur participates:
PENSION PLAN TABLE (1)
<TABLE>
<CAPTION>
Remuneration Years of Service
- --------------------------------------------------------------------------------------------------------
Final
Average
Compen-
sation 5 10 15 20 25 30 35 40
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 7,500 $ 15,000 $ 22,500 $ 30,000 $ 37,500 $ 45,000 $ 50,830 $ 53,333
200,000 15,000 30,000 45,000 60,000 75,000 90,000 101,660 106,667
300,000 22,500 45,000 57,500 90,000 112,500 135,000 152,490 160,000
400,000 30,000 60,000 90,000 120,000 150,000 180,000 203,320 213,333
500,000 37,500 75,000 112,500 150,000 187,500 225,000 254,150 266,667
600,000 45,000 90,000 135,000 180,000 225,000 270,000 304,980 320,000
</TABLE>
- --------------
(1) The information contained herein represents the aggregate
estimated annual benefits payable to eligible employee non-Director
participants under the Pension Plan and the supplemental pension plan
in which Mr. Dur participates.
For purposes of the Pension Plan, supplemental retirement
agreements and supplemental pension plan referred to above,
"compensation" includes total wage, salary, bonus, Company automobile
benefit and any amount which is contributed by the employer pursuant to a
salary reduction agreement and which is not includible in gross income
under the Code, but it does not include other payments to benefit plans,
other perquisite compensation or reimbursement for business expenses.
Except for Messrs. Freedman and Hutsell, each of whose current covered
compensation under the Enesco Profit Sharing and Supplemental Profit
Sharing Plans is $200,000, and Mr. Tower, who is no longer accruing any
additional benefits under said agreements and plans, substantially all of
the items of current compensation covered by the Pension Plan,
supplemental retirement agreements and supplemental pension plan for each
of the other participating Named Executive Officers are included in the
Summary Compensation Table columns entitled "Salary ($)" and "Bonus ($)".
The Pension Plan benefit is based on the employee's "Final Average
Compensation" which means the highest average of annual compensation paid
during any five consecutive calendar years during the employee's last ten
years of employment through December 31, 1996. For purposes of the
Pension Plan, and of the supplemental retirement agreements and
supplemental pension plan in the event of an involuntary termination, the
number of credited years of service is currently as follows for each of
the Named Executive Officers (except for Messrs. Freedman and Hutsell who
instead are fully vested participants in the Enesco Profit Sharing and
Supplemental Profit Sharing Plans): Mr. Tower, 15; Mr. Seawright, 9; Mr.
Dur, 8; and Mr. Keirstead, 33. Each of Messrs. Tower, Seawright, Dur and
Keirstead is fully vested in the Pension Plan and became or will become
(unless terminated for cause) fully vested in his supplemental retirement
agreement/plan upon the following respective dates: July 16, 1987;
September 30, 1997; January 16, 2000 or, if applicable, the date of his
earlier involuntary termination; and November 17, 1999 or, if applicable,
the date of his earlier involuntary termination.
The Pension Plan's annual benefit is based upon an assumed normal
retirement in 1998 at age 65, is payable on a straight-life annuity basis
to participants under the Pension Plan in specified compensation and
years of service classifications and is equal to 1 1/2% of the
participant's Final Average Compensation multiplied by his years of
service up to 33 1/3 years, plus 1/2% for each Year of Service beyond
that. These benefits are reduced by a percentage of the participant's
primary Social Security benefit (not to exceed 50% of that benefit) and
also are offset by any benefits from Company contributions under the
Company's Profit Sharing Plan, to which Company contributions were
discontinued when the Pension Plan came into existence on January 1,
1980. The Pension Plan benefit is reduced in the event of termination of
employment prior to age 62. The Pension Plan and supplemental pension
plan also provide for a surviving spouse benefit in the event of the
death of a vested participant. None of the Named Executive Officers was
eligible to accrue any benefits under the Pension Plan after December 31,
1996. Upon his retirement on December 31, 1992, Mr. Tower elected to
receive annual benefits under the Pension Plan's 50% joint and survivor
annuity option in the amount of $71,454. Upon his termination of
employment on September 30, 1997, Mr. Seawright elected to receive annual
benefits under the Pension Plan's 100% joint and survivor annuity option
in the amount of $12,384.
The supplemental retirement agreements' portion of the estimated
annual benefits set forth in the first Pension Plan Table above is
computed based upon an assumed normal retirement in 1998 at age 65 and is
equal to 50% of the participant's average of annual compensation during
the five highest compensated years out of the last ten years of his
employment prior to retirement, or, in the case of Mr. Seawright, during
the period of his employment with the Company, less the following: (i)
benefits from Company contributions under the Pension Plan; (ii) benefits
from Company contributions under the Company's Profit Sharing Plan, to
which Company contributions were discontinued when the Pension Plan came
into existence on January 1, 1980; and (iii) 50% of the retired
employee's Social Security benefits. The retirement benefit is reduced in
the event of early retirement, as specified under the supplemental
retirement agreements, prior to age 62. The supplemental retirement
agreements of Messrs. Seawright and Keirstead also include disability and
surviving spouse benefits. These agreements provide for a monthly
retirement benefit in an amount based upon the individual taking a normal
or early retirement from the Company. An early retirement prior to age 62
for any reason other than a termination without cause at age 57 or later
shall subject the monthly retirement benefit to a stipulated percentage
reduction. Upon his retirement on December 31, 1992, Mr. Tower began to
receive annual benefits under his supplemental retirement agreement in
the amount of $284,813 plus an additional annual social security
supplement until he reached age 65 in the amount of $12,792, each of
which was or is payable as 50% joint and survivor annuities. Upon his
termination of employment on September 30, 1997, Mr. Seawright became
eligible to receive annual benefits under his supplemental retirement
agreement beginning on September 1, 1998 in the amount of $379,983 plus
an additional annual social security supplement until he reaches age 66
in the amount of $15,840, both of which are payable as 50% joint and
survivor annuities.
Employment Contracts and Termination of Employment
and Change in Control Arrangements
Mr. Seawright, former President and Chief Executive Officer of the
Company, received an annual base salary of $573,000 in 1997 and was
eligible for a bonus of up to 65% of his annual base salary under the MIP
program pursuant to his employment agreement, under which certain post-
termination benefits continue to be paid for a three-year period
following his termination of employment on September 30, 1997. Mr.
Seawright has a supplemental retirement agreement with the Company which
is more fully described elsewhere in this Proxy Statement.
Mr. Freedman, Vice Chairman and Executive Vice President of the
Company and Chairman and Chief Executive Officer of Enesco Corporation,
received an annual base salary of $475,000 in 1997 and was entitled to a
bonus in an amount equal to the excess of five percent of Enesco's
pre-tax net income over the paid annual base salary pursuant to his
employment agreement which expired on December 31, 1997. His agreement
had also included a severance benefit, payable in a lump-sum cash payment
within five business days of termination, equal to approximately three
times his annual base amount as defined in Section 280G of the Code if
his employment had terminated within two years following a change in
control of the Company for any reason other than death, disability,
retirement, cause or his voluntary termination without good reason.
The Company has entered into both a supplemental retirement agreement
and a severance agreement with Mr. Keirstead, Vice Chairman and Executive
Vice President of the Company. In addition, the Company has entered into a
severance agreement with Mr. Dur, a Vice President of the Company. Mr. Dur
also participates in a supplemental pension plan. Each of the
aforementioned agreements and plans is more fully described elsewhere in
this Proxy Statement.
The Company also has entered into a relocation letter agreement
with Mr. Keirstead providing for Mr. Keirstead's continuation as
Stanhome's Vice Chairman, Executive Vice President and Chief
Administrative and Financial Officer. In addition to summarizing his base
salary, bonus opportunity and other employee benefits, the letter
agreement provides for the receipt by Mr. Keirstead (subject to certain
conditions) of the severance payments, retention benefits and other
related termination benefits (including without limitation the
post-termination insurance benefits) described in this section and
elsewhere in this Proxy Statement in connection with a termination of his
employment with the Company, whether voluntary or involuntary, during a
period of two years following any relocation of his place of business to
Illinois. The letter agreement also clarifies Mr. Keirstead's eligibility
for relocation and related reimbursements.
The Company has separate change in control agreements or
commitments with Messrs. Dur, Freedman, Hutsell and Keirstead under which
each of these individuals is entitled to both (i) a severance benefit,
payable upon or before termination for any reason (other than death,
disability, retirement, termination for substantial cause or voluntary
termination without good reason) occurring within two years following a
change in control of the Company, equal to three (two in the case of Mr.
Hutsell) times the annual base salary rate plus bonus under the MIP
program and (ii) certain fringe benefits for up to a three-year term. In
accordance with their change in control agreements, Messrs. Dur and
Keirstead also will be reimbursed for any excise tax and other taxes
incurred as a result of such reimbursement. The types of events
constituting a change in control under these agreements include those
that require reporting under Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and certain other events specified in the change in
control agreements.
The terminations of Messrs. Dur and Keirstead absent a change in
control will be governed by the Company's employee severance policy as
confirmed by severance agreements with each of them, under which each of
them may be entitled to a severance benefit, payable in lump sum or over
a period of time, following termination for any reason (other than death,
disability, retirement or termination for substantial cause), equal to
his annual base salary for a period of between two and three years
depending on designated criteria, specified relocation reimbursements and
certain fringe benefits for up to a 36-month term. The termination of Mr.
Tower will be governed by the Company's employee severance policy under
which he may (subject to certain conditions) be entitled to a severance
benefit of at least one year, but no more than two years, of annual base
salary depending on designated criteria and to certain other continuing
group medical, life and accidental death and dismemberment insurance
coverage. The terminations of Messrs. Freedman and Hutsell absent a
change in control of the Company will be governed by the employee
severance policy of Enesco Corporation under which each of them may
(subject to certain conditions) be entitled to a severance benefit of at
least one year, but no more than two years, of annual base salary depending
on designated criteria and to certain other continuing group medical,
life and accidental death and dismemberment insurance coverage.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, the following Directors, none of whom were then officers
or employees of the Company or any of its subsidiaries, served on the
Board's Compensation and Stock Option Committee: Ms. Verville, Messrs.
Cauley and Elliott and Ms. Haberkorn. No current member of the Committee is
a former officer of the Company or any of its subsidiaries, and none had any
other relationship requiring disclosure.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on Company records and other information, the Company
believes that all Securities and Exchange Commission filing requirements
under Section 16(a) of the Exchange Act applicable to its Directors and
Executive Officers with respect to the Company's fiscal year ending
December 31, 1997 were complied with.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation and Stock Option Committee of the Board. The Committee is
comprised of non-employee Directors who approve or recommend to the Board
salary and bonus amounts and other annual compensation and long-term
compensation awards for the Executive Officers of the Company.
The Company's executive compensation program during 1997 had three
components: base salary and fringe benefits; incentive bonus opportunity;
and option awards to purchase shares of the Common Stock. The Committee's
compensation policies regarding these components are designed to provide
a compensation package which is targeted between the median and third
quartile level of total compensation for similarly situated executive
officers in a comparator group of other U.S. companies of comparable size
and geographic diversity. The comparator group used in establishing the
Company's compensation levels is composed of companies that participate
in the "Towers Perrin Executive Compensation Survey," a well established
and nationally recognized annual executive compensation survey. This
survey includes some of the companies included in the indices shown in
the Performance Graph set forth below. The Committee believes that
evaluating data from the broad group of industries and companies
represented in this survey is important in establishing the true market
for executive talent. To compete effectively in this market, the Company
believes that it must be aware of compensation levels in various
industries and companies of all sizes and, accordingly, does not limit
its compensation analyses to those constituting the indices shown in the
Performance Graph.
Base salaries and fringe benefits are set at the annual base salary
and fringe benefit amounts of comparable executive officers. Pay for
performance bonuses are determined under the Company's MIP program, which
provides for annual incentive opportunities amounting to pre-determined
percentages of the respective Executive Officers' annual base salaries
with the amount of the actual bonus payment being based on the
achievement of pre-selected personal performance criteria and certain
specified Company profitability and performance goals. Options to
purchase shares of the Common Stock are granted in amounts that are
competitive with long-term incentive award practices of comparable U.S.
companies, considering the number of options that have been previously
granted to each of the Executive Officers. With the exception of the
special grant noted below, the options, which correlate in number to
executive grade levels, are granted generally on an annual basis at the
then market value of the Common Stock and are exercisable at any time
after six months from the date of grant, subject to the Company's
achievement of certain stock value performance criteria, or upon the
eighth anniversary of the date of grant under the provisions of the
Company's 1996 Stock Option Plan, for a ten-year term, thus providing a
direct relationship between the Executive Officers' potentially
realizable long-term compensation amounts and actually recognizable
increases in stockholder value. Executive Officer and Director stock
ownership guidelines have been adopted with the objective of further
aligning the Executive Officers' and Directors' interests with those of
the Company's stockholders. The Committee's compensation policies are
intended to reinforce the Company's performance-oriented compensation
practices and are not impacted by potential non-deductibility of certain
compensation amounts for federal tax purposes under the provisions of
Section 162(m) of the Code and the regulations promulgated thereunder.
Compensation for each of the Company's Executive Officers in 1997
was determined by the foregoing program, except for Mr. Tower, whose
special grant noted below vests monthly in increments of 12,500 options
and becomes exercisable after six months from the date of grant, and Mr.
Freedman, who did not participate in the Company's MIP program but
received bonus compensation determined under a negotiated employment
agreement that was originally entered into during the acquisition of
Enesco Corporation, the terms and expiration of which are more fully
described elsewhere in this Proxy Statement.
Compensation paid to Mr. Seawright, former President and Chief
Executive Officer of the Company, from January 1, 1997 until September
30, 1997, included his base salary at the annual rate of $573,000 and
an annualized MIP target opportunity of $372,450. Mr. Seawright did
not receive any MIP bonus for 1997.
Compensation for Mr. Tower, President and Chief Executive Officer
of the Company since September 4, 1997, included his base salary at the
annual rate of $540,000 and an annualized MIP target opportunity of
$351,000. Mr. Tower did not receive any MIP bonus for 1997. Following his
return to the Company as President and Chief Executive Officer, the
Committee awarded Mr. Tower a special grant of 100,000 non-qualified
options to purchase shares of the Common Stock under the 1997 President
and Chief Executive Officer Stock Option Plan. The size of the grant
relative to all other 1997 option grants made by the Committee and based
upon its projected value as of the grant date was determined to be within
the guidelines which were developed by the Committee's executive
compensation consulting firm, William M. Mercer, Incorporated. Apart from
normal employment benefits provided to the other Executive Officers, Mr.
Tower received no other remuneration from the Company, except for amounts
paid to him under the Company's Pension Plan and his supplemental
retirement agreement and his remuneration as the non-employee Chairman of
the Board from January 1, 1997 until September 4, 1997, all of which is
more fully described elsewhere in this Proxy Statement.
The Compensation and Stock Option Committee:
A. L. Verville (Chair) J. F. Cauley C. W. Elliott J. R. Haberkorn
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG THE COMPANY,
THE STANDARD & POOR'S ("S&P") MIDCAP 400 INDEX AND THE COMPANY'S PEER
GROUP INDEX (1)
[GRAPHIC OMITTED]
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
Stanhome
Inc. $100.00 $100.71 $ 96.94 $ 92.42 $ 87.38 $ 88.15
S&P
Midcap
400 $100.00 $113.95 $109.87 $143.86 $171.49 $226.80
Company's
Peer
Group $100.00 $ 98.75 $ 70.34 $ 80.00 $ 84.16 $ 96.83
- ----------------
(1) This graphic presentation assumes (a) one-time $100 investments
in the Common Stock and in market capital base-weighted amounts
apportioned among all the companies whose equity securities constitute
the above named board equity market index and the Company's selected peer
group index, in each case made as of the market close on the last trading
day in 1992 and (b) the automatic reinvestment of dividends, if any, in
additional shares of the same class of equity securities constituting
such investments at the frequency with which dividends were paid on such
securities during the applicable fiscal years. The Company has chosen to
present a peer group index composed of the companies that formerly
constituted the former S&P Midcap 400 Consumer Products Index in order to
maintain continuity with comparisons provided in prior years' proxy
statement Performance Graph presentations. Tambrands Inc., however, is
unable to be used for such an index after 1996 because it is no longer
publicly traded. Therefore, for years commencing after December 31, 1996,
the Company's peer group is made up of the following nine companies:
Carter-Wallace, Inc.; Church & Dwight Co., Inc.; A.T. Cross Company; First
Brands Corporation; Gibson Greetings, Inc.; Lancaster Colony Corp.; National
Presto Industries, Inc.; Perrigo Company; and Stanhome Inc. (Source:
Standard & Poor's Compustat Custom Products Division, a Division of The
McGraw-Hill Companies.)
PROPOSAL TO APPROVE AMENDMENTS TO THE COMPANY'S RESTATED
ARTICLES OF ORGANIZATION, AS AMENDED
In connection with the Company's previously announced corporate
restructuring, at a meeting held on January 21, 1998, the Board voted to
approve amendments to the Company's Restated Articles of Organization, as
amended, to:
o change Article 1 to provide that the name by which the Company
shall be known is "Enesco Group, Inc."
o change Article 2 to provide that the purpose of the Company shall
read as follows:
"To manufacture, process, assemble, warehouse, buy, sell,
distribute and otherwise engage in and carry on the business of
marketing giftware and collectible products and other items,
materials, articles, goods and merchandise and otherwise dealing in
real, personal and intellectual or industrial property of all kinds
and descriptions; to exercise all of the powers conferred upon
business corporations by, and from time to time permitted to be
exercised by business corporations under, the laws of the
Commonwealth of Massachusetts; and to engage in and carry on any
other lawful business or transaction which may now or hereafter be
permitted under the laws of the Commonwealth of Massachusetts to be
conducted, whether in that Commonwealth or elsewhere, by a business
corporation organized under Chapter 156B of the Massachusetts
General Laws."
o change Article 6 to provide that meetings of stockholders of the
Company shall be held anywhere within the United States, as
determined by the Board, as permitted by the provisions of the
Massachusetts Business Corporation Law.
The Board also voted to authorize the officers of the Company to
make, execute and file with the Massachusetts Secretary of State Articles
of Amendment embodying these changes, to make, execute, file or deliver
other appropriate documents relating thereto and to take such other
necessary or desirable actions to effectuate the resulting change in the
Company's corporate name, the corporate purpose of the Company and the
allowable places for meetings of stockholders of the Company at or as
soon as practicable following the close of business on the second Friday
after the Annual Meeting, subject to the approval of the stockholders.
The Board believes that the foregoing changes will be beneficial to the
Company at this time in that they will better reflect the true image and
nature of the Company as it continues its ongoing corporate restructuring,
announced in the Spring of 1997. In that restructuring, the Company
(a) sold substantially all of the business and operations of its Hamilton
Direct Response Group and Stanhome Direct Selling Group; (b) refocused
its business and operations around the Enesco Giftware Group; and
(c) announced the closure of its corporate headquarters in Westfield,
Massachusetts and the relocation of those headquarters to Itasca,
Illinois, the current location of the headquarters of the Enesco Giftware
Group.
In the restructuring, the Company agreed to transfer all rights to
the "Stanhome" name to the buyer of substantially all the business and
operations of the Stanhome Direct Selling Group. In that connection, and
in light of the refocusing of its operations away from business and
operations conducted under the Stanhome name and toward business and
operations conducted under the Enesco name, the Company has determined it
now is appropriate to change its corporate name. The Company believes
that the proposed change in its name to "Enesco Group, Inc." fully aligns
its corporate name with the name of the sole business in which it will
now operate.
Similarly, the Company's newly refocused operations made inaccurate
the existing corporate purpose clause in its Restated Articles of
Organization, as amended, which includes references to the Company's
former direct response and direct selling businesses. Moreover, the form
of the existing corporate purpose clause is cumbersome and outdated. The
proposed change in the Company's corporate purpose corrects the
inaccuracies resulting from the restructuring and updates the form of
that clause to conform more closely to forms currently utilized by most
public companies.
Finally, the relocation of the Company's headquarters from
Massachusetts to Illinois may make it most efficient to hold future
meetings of the Company's stockholders in Illinois or elsewhere in the
United States. Currently, the Company's Restated Articles of
Organization, as amended, do not permit the Company to hold meetings of
its stockholders outside the Commonwealth of Massachusetts. Accordingly,
the Company is recommending that the Restated Articles of Organization,
as amended, be modified to permit meetings of stockholders to be held
anywhere in the United States, as determined by the Board.
The Articles of Amendment reflecting the foregoing amendments, if
approved by the stockholders, are planned to have an effective date on or
about May 1, 1998.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
YOU VOTE FOR THE PROPOSED AMENDMENTS TO THE COMPANY'S
RESTATED ARTICLES OF ORGANIZATION, AS AMENDED.
Approval of the foregoing amendments requires the affirmative vote
of the holders of a majority of all of the shares of the Common Stock
outstanding and entitled to vote thereon at the Annual Meeting; provided,
however, that a quorum is present or represented. The Board believes that
the proposed changes to the Company's Restated Articles of Organization,
as amended, are in the best interests of the Company and the stockholders
and recommends a vote FOR the approval of the foregoing amendments.
Valid proxies of stockholders containing no designation to the
contrary will be voted for the approval of the foregoing amendments as
recommended by the Board.
STOCKHOLDER PROPOSAL
The following proposal was submitted by Ralph F. Kanders, 330
Madison Avenue, Convent, NJ 07961. Based upon information available to
the Company, as of January 31, 1998, Dr. Kanders held or controlled
through various trusts an aggregate of 161,670 shares of the Common
Stock.
Stockholder Proposal
RESOLVED: That the shareholders of Stanhome, Inc. recommend to the
directors that they seek the sale of company and its subsidiaries (USA
and foreign [Lilliput]).
Stockholder's Supporting Statement
In 1997, Stanhome, Inc. including Enesco and foreign subsidiaries
continue to report continued record low earnings for this decade. This
involves the second restructuring in the past four years and a new low
for shareholder equity.
At the 1991 shareholder meeting, I had stated that Enesco is a
secondary player in giftware and accessories to Disney, Time Warner, and
MCA of the motion picture industry. Since 1989, Disney and Warner have
been opening between 40-50 new stores, USA and foreign. MCA has 1000
Spencer Gift Stores in the USA. All this is in addition to the theme park
sales.
Currently, the growth of the motion picture consumer products
(giftware and sundry) has been a most important factor to the bankers
when addressing loans for the sky-rocketing new film costs.
Since 1990, the growth of Enesco sales has been 4-5% per annum
compared to 15-16% in the '80s with gross profits reduced by the same
magnitude. We are losing our share, percentage-wise, of the total market.
This is a fiercely competitive market.
In 1994, in an effort to enlarge our gross sales in Europe,
Lilliput and some smaller companies were purchased; this although "thatch
cottages" have a small market in the USA. This, combined with the strong
dollar and high unemployment in Europe, has resulted in a negative profit
factor in relation to the outstanding loan and higher floating rates in
1998 which could be to a greater disadvantage.
The examination of Enesco "high end" of sales is Cherished Teddies
and Precious Moments; the latter has had declining sales as a result of
QVC discount TV promotions since July 1993 and periodically thereafter.
In 1995, Marshall's nationwide discount stores (450) sold Precious
Moments circa 1979-93.
The green book representing after market value of P.M. has been
discontinued. In all collector sales meetings with the public, the
regional salesmen introductory remarks concern the appreciation in the
aftermarket of the items.
The low end of the business, more than 50%, is Christmas ornaments
and other items as they appear in catalogers, Wal-Mart, Kmart, etc. This
is a commodity operations.
Enesco advertising and public relation expense involves about 3
million dollars in the annual Easter Seal promotion of which 50% consists
of merchandise, collector magazines and a partial expense if a dealer is
on a local spot TV, usually pre-holiday.
In order to move Enesco sales ahead in double digits as in the
'80s, we must have an entertainment affiliation for much wider exposure
to the public.
Reducing expenses with the elimination of the Westfield, MA office
and repurchase of additional shares will not be the answer to higher
sales and gross profits. Getting the message to the public takes time and
a new sales tactic.
We shareholders will never recoup the losses of the '90s compared
to the phenomenal growth of the S&P and it requires a company with deep
pockets and an entertainment division; nothing short will be most
productive.
The errors of the past cannot be covered by simply being patient.
The institutions own 62% of the total shares, let us put a halt to
continued promises and lack of profitability. We are entitled to complete
action now.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE AGAINST THE
STOCKHOLDER PROPOSAL.
Statement of the Board in Opposition to the Stockholder Proposal
The Stockholder Proposal calls for the Board to seek the sale of
the Company. Over the course of the last twelve months, as set forth
elsewhere in this Proxy Statement, the Company has divested itself of
substantially all of its former Hamilton Direct Response Group and
Stanhome Direct Selling Group and refocused the Company's business and
operations on its Enesco Giftware Group worldwide operations. The Company
also has announced the closure of its Massachusetts corporate
headquarters and the planned relocation of those headquarters to
Illinois. In short, the Board has already taken substantial and important
steps to reorganize its business and operations and focus the attention
of Company management on enhanced revenue expansion and increased
operating profitability in the Company's Enesco Giftware Group worldwide
operations. Accordingly, the Board believes that the forced sale of the
Company is not in the best interests of the Company and its stockholders
at this time.
As with a similar proposal submitted by Dr. Kanders last year, the
Stockholder Proposal fails to recognize that the Company has never
foreclosed the possibility of any strategic transaction that is in the
best interests of the Company and its stockholders. In fact, the
Company's officers and directors are committed to the exploration and
consideration of such transactions and their pursuit, when appropriate,
in order to enhance stockholder value. The Board maintains regular,
frequent and substantial contact with various outside advisors, including
management consultants, public accountants, legal counsel and investment
bankers. These outside advisors assist the Company in continually
monitoring the marketplace, evaluating potential opportunities and
pursuing transactions that the Board believes to be in the best interests
of the Company and its stockholders.
Moreover, adoption of the Stockholder Proposal would neither alter
nor, in the Board's view, promote the Directors' appropriate exercise of
their fiduciary duties under applicable law and could decrease the
Board's leverage in negotiating a transaction benefiting all
stockholders. For example, the Stockholder Proposal neglects to
articulate clearly or even provide for the exercise of the
statutorily-mandated fiduciary duties of each member of the Company's
management to act in good faith and with due care. The Board, however, is
aware of its fiduciary duties and is mindful of the interests of the
Company's constituencies and, consequently, it remains open to all
opportunities with the potential to enhance stockholder value and
otherwise realize the best interests of the Company and its stockholders.
In addition, the Board firmly believes that the adoption of the
Stockholder Proposal at this time could create an uncertain public
atmosphere which, in its judgment, would disadvantage the Company in any
future efforts to pursue successfully the sale recommendation mentioned
in the Stockholder Proposal. Simply put, such an environment could result
in the Company having diminished bargaining power in negotiating for the
best price and for other favorable terms of any such transaction for the
benefit of its stockholders. The uncertain atmosphere that could be
created by the adoption of the Stockholder Proposal also could result in
damage to the Company's employee, supplier, creditor and customer
relationships, further jeopardizing the Company's available business
opportunities.
FOR THE REASONS STATED ABOVE, THE COMPANY'S BOARD OF DIRECTORS BELIEVES
THAT THE STOCKHOLDER PROPOSAL IS NOT IN THE BEST INTERESTS OF THE COMPANY
AND ITS STOCKHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT YOU VOTE AGAINST THE STOCKHOLDER PROPOSAL.
The proposal requires for adoption the affirmative vote of the
holders of a majority of the shares of the Common Stock voting at the
Annual Meeting, whether present in person or represented by proxy;
provided, however, that a quorum is present or represented.
Valid proxies of stockholders containing no designation to the
contrary will be voted against the approval of the Stockholder Proposal
as recommended by the Board.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has been engaged by the Company as independent
public accountants since 1971. As recommended by its Audit Committee, the
Board has appointed that firm as independent accountants for the Company
for 1998, subject to ratification by the stockholders. Valid proxies of
stockholders containing no designation to the contrary will be voted for
the reappointment of that firm as recommended by the Audit Committee.
Representatives of Arthur Andersen LLP are expected to attend the Annual
Meeting and be available to respond to appropriate questions and to make
a statement if they so desire.
PROPOSALS OF SECURITY HOLDERS
Pursuant to rules of the Securities and Exchange Commission, a
stockholder owning of record or being the beneficial owner of at least
$1,000 in market value of the Common Stock may present a proposal to be
voted on at the 1999 annual meeting of stockholders. Provided such
proposal is received by the Company on or before November 13, 1998 and
meets all of the other requirements of those rules, it will be included
in the proxy statement and form of proxy relating to such meeting.
OTHER BUSINESS
The Annual Meeting is called for the purposes set forth in the
Notice. The Board does not know of any matter for action by the
stockholders at the Annual Meeting other than the matters described in
the Notice. However, the enclosed proxy card confers discretionary
authority with respect to matters which are not known to the Board at the
date of printing hereof and which may properly come before the Annual
Meeting and any postponement or adjournment thereof. Except as expressly
provided for hereinabove, it is the intention of the persons named as
proxies in the proxy card to vote shares represented by the proxy in
accordance with their best judgment on any such matter.
THE COMPANY FILES AN ANNUAL REPORT ON FORM 10-K WITH THE SECURITIES
AND EXCHANGE COMMISSION. STOCKHOLDERS MAY OBTAIN A COPY OF THE ANNUAL
REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 WITHOUT CHARGE BY
WRITING TO THE CLERK OF THE COMPANY, C/O ENESCO CORPORATION, AT 225 WINDSOR
DRIVE, ITASCA, ILLINOIS 60143.
By order of the Board of Directors,
STANHOME INC.
Peter R. Johnson
Clerk
March 13, 1998
PROXY STANHOME INC. PROXY
ANNUAL MEETING OF STOCKHOLDERS
APRIL 23, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having read the Notice of Annual Meeting of
Stockholders and Proxy Statement dated March 13, 1998, receipt of which
is hereby acknowledged, does hereby appoint and constitute H.L. TOWER
and ALLAN G. KEIRSTEAD, and each or either of them the attorneys and
proxies of the undersigned, with power of substitution to each, for and
in the name of the undersigned to vote and act at the Annual Meeting of
Stockholders of Stanhome Inc. to be held at Le Meridien Boston, 250
Franklin Street, Boston, Massachusetts, on Thursday, April 23, 1998 at
9:30 a.m. and at any postponement or adjournment thereof, with respect
to all shares of Common Stock, par value $.125 per share, together with
associated common stock purchase rights, of said Company, standing in
the name of the undersigned or with respect to which the undersigned is
entitled to vote or act, with all the powers that the undersigned would
possess if personally present and acting, as follows:
(Continued and to be signed and dated on the reverse)
THIS PROXY WILL BE VOTED AS DIRECTED BUT IN THE ABSENCE OF SUCH
DIRECTION, IT WILL BE VOTED FOR ITEMS 1, 2 AND 4, AND AGAINST ITEM 3,
BELOW.
1. To elect John F. Cauley, Jeffrey A. Hutsell, Homer G. Perkins and
Anne-Lee Verville as Class III Directors for a three-year term. If
any of such nominees should be unavailable, the proxies or any of
them may vote for substitute nominee(s) at their discretion.
FOR all TO WITHHOLD (INSTRUCTION: To
nominees listed authority to withhold authority to
above (except vote for all vote for one or more
as marked to nominees listed individual nominees,
the contrary) above write the nominee's
name in the space
provided below.)
______ ______
______ ______ ____________________
2. To approve amendments to the Restated Articles of Organization,
as amended, of the Company.
FOR AGAINST ABSTAIN
______ ______ ______
______ ______ ______
3. To approve the stockholder proposal recommending that the Board of
Directors seek the sale of the Company and its subsidiaries.
FOR AGAINST ABSTAIN
______ ______ ______
______ ______ ______
4. To ratify the appointment by the Board of Directors of Arthur
Andersen LLP as the Company's independent accountants for 1998.
FOR AGAINST ABSTAIN
______ ______ ______
______ ______ ______
5. To transact such other business as may properly come before the
meeting and any postponement or adjournment thereof.
_____________________________
_____________________________
Please sign above exactly as
name(s) appear(s) hereon.
(When signing as attorney,
executor, administrator,
trustee, guardian, etc., give
title as such. If joint
account, each joint owner
should sign.)
_______________________, 1998
(Please date)
I plan to attend the meeting.
_______
_______
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
STANHOME INC.
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, APRIL 23, 1998
9:30 A.M.
Le Meridien Boston
250 Franklin Street
Boston, Massachusetts 02110
