THE STEPHAN CO.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held Friday, June 28, 1996
To the Stockholders:
The Annual Meeting of the Stockholders of The
Stephan Co. will be held on Friday, June 28, 1996 at 10:00
AM, local time, at the Del Ray Beach Club, 2001 South Ocean
Boulevard, Delray Beach, Florida 33483, for the following
purposes:
1. To elect six directors to hold office until
the Annual Meeting of Stockholders in 1997 and until their
respective successors have been duly elected and qualified;
and
2. To transact such other business as may
properly come before the meeting or any adjournment(s)
thereof.
The Board of Directors has fixed the close of
business on May 15, 1996 as the record date for the
determination of stockholders entitled to notice of, and to
vote at, the Annual Meeting of Stockholders (the "Meeting").
Only stockholders of record at the close of business on this
date will be entitled to notice of, and to vote at, the
Meeting or any adjournment(s) thereof.
By Order of the Board of Directors
STEPHEN LETIZIA
Secretary
May 18, 1996
YOU ARE URGED TO COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY AND RETURN IT PROMPTLY IN THE POSTAGE PREPAID ENVELOPE
WHICH HAS BEEN PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING IN PERSON. THE PROXY MAY BE REVOKED BY YOU AT
ANY TIME PRIOR TO EXERCISE, AND IF YOU ARE PRESENT AT THE
MEETING YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AT THAT TIME
AND EXERCISE YOUR RIGHT TO VOTE YOUR SHARES PERSONALLY.
PROXY STATEMENT
THE STEPHAN CO.
Annual Meeting of Stockholders
To Be Held on June 28, 1996
GENERAL INFORMATION
This proxy statement is furnished in connection with
the solicitation of proxies by the Board of Directors of The
Stephan Co. (the "Company") for use at the 1996 Annual
Meeting of Stockholders to be held on Friday, June 28, 1996,
and at any adjournment(s) thereof (the "Meeting"), for the
purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders. The Meeting is to be held at the
Del Ray Beach Club, 2001 South Ocean Boulevard, Delray
Beach, Florida.
The principal executive offices of the Company are
located at 1850 West McNab Road, Fort Lauderdale, Florida
(telephone no. 954-971-0600). The enclosed proxy and this
proxy statement are being first sent to stockholders of the
Company on or about May 18, 1996.
Solicitation and Revocation
Proxies in the form enclosed are solicited by, or on
behalf of, the Board of Directors. The persons named in the
proxy have been designated as proxies by the Board of
Directors. If a quorum, consisting of a majority of the
outstanding shares of common stock, $.01 par value, of the
Company (the "Common Stock"), is present at the Meeting, in
person or by proxy, the affirmative vote of a plurality of
the shares present at the Meeting and entitled to vote will
be required to elect directors, and, unless otherwise
specifically required by applicable law, to act on all
other matters to come properly before the Meeting.
Abstentions and shares of record held by a broker or nominee
("Broker Shares") that are voted on any matter will be
included in determining the existence of a quorum and will
be counted in determining whether a proposal has been
approved. Broker Shares that are not voted on any matter
are treated as shares as to which voting power has been
withheld by the beneficial owner of such shares and,
therefore, as shares not entitled to vote on the proposal,
and will not be included in determining the existence of a
quorum. Non-voted Broker Shares will, therefore, not have
an effect on the outcome of the election of the six nominees
for directors or any other proposal to come before the
Meeting.
Shares represented by properly executed proxies
received by the Company will be voted at the Meeting in the
manner specified therein or, if no specification is made,
will be voted "FOR" the election of all of the nominees for
directors named herein. In the unanticipated event that any
other matters are properly presented at the Meeting for
action, the persons named in the enclosed proxy will vote
the proxies (which confer authority upon them to vote on any
such matters) in accordance with their best judgment.
1
Any proxy given pursuant to this solicitation may be
revoked by the stockholder at any time before it is
exercised by written notification delivered to the Secretary
of the Company, by voting in person at the Meeting, or by
executing and delivering another proxy bearing a later date.
Attendance by a stockholder at the Meeting does not alone
serve to revoke his or her proxy.
The solicitation of proxies will be made by mail and,
in addition, may be made by directors, officers and
employees of the Company, personally or by telephone or
telegraph, without extra compensation. Brokers, nominees
and fiduciaries will be reimbursed for their out-of-pocket
and clerical expenses in transmitting proxies and related
material to beneficial owners. The costs of soliciting
proxies will be borne by the Company. It is estimated that
said costs will be nominal.
Annual Report
The Company's Annual Report to Stockholders for the
fiscal year ended December 31, 1995, which contains audited
financial statements, is being mailed with this Proxy
Statement to all persons who are stockholders of record as
of the close of business on May 15, 1996. Additional copies
of the Annual Report will be provided free of charge upon
written request to the Company, 1850 West McNab Road, Fort
Lauderdale, Florida 33309, Attn.: Secretary.
Record Date; Voting
The Company's Board of Directors has fixed the close of
business on May 15, 1996 as the record date for the
determination of stockholders of the Company who are
entitled to receive notice of, and vote at, the Meeting. At
the close of business on that date, an aggregate of
4,122,484 shares of Common Stock were issued and
outstanding, each of which is entitled to one vote on each
matter to be voted upon at the Meeting. The Company's
stockholders do not have cumulative voting rights. The
Company has no other class of voting securities entitled to
vote at the Meeting.
SECURITY OWNERSHIP
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of the close of
business on April 18, 1996, information as to the
stockholder which is known by the Company to beneficially
own more than 5% of its outstanding Common Stock (based
solely upon information furnished by such stockholder
(including filings made with the Securities and Exchange
Commission on Schedule 13G pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"))):
2
Number of Shares
Name and Address Beneficially Percent
of Beneficial Owner Owned (1) of Class
- ------------------- ---------------- --------
FMR Corp.(2) 412,200 10.00%
82 Devonshire St.
Boston, Mass. 02109
(1) Beneficial ownership, as reported in the above tables,
has been determined in accordance with Rule 13d-3 under the
Exchange Act. Unless otherwise indicated, beneficial
ownership includes both sole voting and sole dispositive
power.
(2) Fidelity Management & Research Company ("Fidelity"), a
wholly-owned subsidiary of FMR Corp., is the beneficial
owner of the shares reflected above as a result as acting as
a registered investment adviser to various registered
investment companies. One such company, Fidelity Low Priced
Stock Fund, owns the shares reflected above. FMR Corp.,
through its control of Fidelity, has sole voting power with
respect to zero shares and sole power to dispose of all the
above indicated shares.
Ownership by Management
The following table sets forth, as of April 9, 1996,
information concerning beneficial ownership of Common Stock
by each director and nominee for election as a director of
the Company, the Named Executive, as defined below, and all
directors and executive officers of the Company as a group
(based solely upon information furnished by such persons):
Number of Shares
Beneficially Percent
Name of Beneficial Owner Owned (1) (2) of Class
- --------------------------- ---------------- --------
Thomas M. D'Ambrosio. . . . . . 225,714 5.5%
W. Gregg Baldwin. . . . . . . . 35,172(3) (5)
John DePinto. . . . . . . . . . 120,766 2.9%
Frank F. Ferola . . . . . . . . 570,435(4) 13.7%
Stephen Letizia . . . . . . . . 91,476(6) 2.2%
Curtis Carlson. . . . . . . . . 4,026 (5)
All Executive Officers and Directors
as a Group (8 persons). . . . 1,083,089 25.7%
(1) Beneficial ownership, as reported in the above tables,
has been determined in accordance with Rule 13d-3 under the
Exchange Act. Unless otherwise indicated, beneficial
ownership includes both sole voting and sole dispositive
power.
3
(2) Includes the following shares that may be acquired upon
the exercise of options by the specified person within 60
days of April 9, 1996: Mr. Ferola -30,000; Mr. D'Ambrosio - 9,000;
Mr. Letizia -13,000; Mr. Baldwin -10,937; Mr. DePinto-10,937;
and all executive officers and directors as a
group(8 persons) -89,374
(3) Includes 1,005 shares owned by Mr. Baldwin's minor
children.
(4) Does not include 70,000 shares covered by options
granted to Mr. Ferola, whose exercise is contingent on
certain increases in the Company's Common Stock price, as
more fully set forth in the "Executive Compensation" section
hereof.
(5) Represents less than 1%.
(6) Includes 24,000 shares owned of record by Mr. Letizia's
wife.
PROPOSAL I: ELECTION OF DIRECTORS
The entire Board of Directors, consisting of six
members, is to be elected at the Meeting. The Company's By-
Laws provide that the number of directors shall be as set
from time to time by resolution of the Board of Directors
and always be a minimum of one director. The six persons
listed below, all of whom have consented to being named in
this Proxy Statement and to serving if elected, have been
nominated to serve as directors of the Company until the
annual meeting of stockholders to be held in 1997 and until
their respective successors have been duly elected and
qualified. In the unexpected event that any of such nominees
should become unable to or for good cause will not serve,
proxies may be voted for the election of substitute
nominees.
Proxies in the accompanying form will be voted at the
Meeting in favor of the election of each of the six nominees
listed on the accompanying form of proxy, unless authority
to do so is withheld as to an individual nominee or nominees
or all nominees as a group. Proxies cannot be voted for a
greater number of persons than the number of nominees named.
Directors will be elected by a plurality of the votes cast
by the holders of shares of Common Stock entitled to vote
thereon who are present at the Meeting in person or by
proxy.
4
Set forth below is certain information with respect to
each nominee for election as a director of the Company at
the Meeting:
Age Year of First Principal Occupations
(as of Election as During Past Five Years;
Name 3-1-96) a Director Other Directorships
- ------------------- ------- ------------- -----------------------
Frank F. Ferola 53 1980 For more than the past
five years, Chairman of
the Board, President
Chief Executive Officer
of the Company.
Thomas M. D'Ambrosio(1) 67 1980 For more than the past
five years, Vice
President and, since
March 1989, Treasurer of
the Company; practicing
attorney.
Stephen Letizia (2)(4) 73 1980 Since 1987, Vice
President and, since
March 1989, Secretary of
the Company.
W. Gregg Baldwin (3)(4) 44 1990 For more than the past
five years, a principal
of The Gustine Company,
and its predecessor, a
commercial real estate
firm.
John DePinto (3)(4) 78 1980 Retired executive.
Curtis Carlson (5) 43 ---- For more than the past
five years, partner in
the law firm of Carlson
& Bales, PA, a Miami
based law firm.
(1) Mr. D'Ambrosio intends to devote approximately 20% of
his business time to the affairs of the Company.
(2) Mr. Letizia intends to devote approximately 20% of his
business time to the affairs of the Company.
(3) Member of the Audit Committee.
(4) Member of the Stock Option and Compensation Committee.
5
(5) Mr. Carlson is being nominated for the first time as a
director to fill the vacancy caused by the death of Adolph
Hirsch. In 1995, The Company paid for legal services to Mr.
Carlson's law firm, Carlson & Bales, P.A., approximately
$100,000 and 4,026 shares of the Company's Common Stock.
The Board of Directors unanimously recommends a
vote "FOR" the election of the six nominees above as
directors of the Company.
Executive Officers
The executive officers of the Company consist of Mr.
Ferola, as President, Chairman of the Board and Chief
Executive Officer; Thomas M. D'Ambrosio, Vice President and
Treasurer; Stephen Letizia, Vice President and Secretary;
David A. Spiegel, Chief Financial Officer; and Charles
Walsh, Vice President of Corporate Development.
The following sets forth certain information with
respect to the executive officers of the Company who are not
directors or nominees for election as a director:
Mr. Spiegel was selected as Chief Financial Officer in
January 1994. For more than the past four years prior to
1994, Mr. Spiegel had been a certified public accountant,
engaged in private practice, until joining the Company. For
more than the past five years prior to 1994, Mr. Spiegel was
the independent public accountant for the Company.
Mr. Walsh was selected as Vice President of Corporate
Development in July 1994. For more than the past five years
prior, he was a consultant providing investor relation
services. From 1990 through 1993, Mr. Walsh was a Vice
President of W.H. Newbolds & Sons, Inc.
Board of Directors; Committees of the Board
The Board of Directors met five times during fiscal
1995. During fiscal 1995, no director attended fewer than
75% of the total number of meetings of the Board and of the
committees of the Board on which he served. The Board has
established two standing committees, which consist of an
Audit Committee, and a Stock Option and Compensation
Committee. The current functions of such committees are as
follows:
The Audit Committee, which held one meeting during
fiscal 1995, reviews the internal and external audit
functions of the Company and makes recommendations to the
Board of Directors with respect thereto. It also has
primary responsibility for the formulation and development
of the auditing policies and procedures of the Company, and
for making recommendations to the Board of Directors with
respect to the selection of the Company's independent
auditing firm.
6
The Stock Option and Compensation Committee, which held
one meeting during fiscal 1995, has primary responsibility
for the administration of the Company's 1990 Key Employee
Stock Incentive Plan, including primary responsibility for
the granting of options thereunder. The Committee is also
responsible for establishing the overall philosophy of the
Company's executive compensation program and overseeing the
executive compensation plan developed to execute the
Company's compensation strategy.
Compensation Committee Interlocks and Insider Participation
The Stock Option and Compensation Committee consists of
W. Gregg Baldwin and John DePinto, who are non-employee
directors and neither of whom have any direct or indirect
material interest in or a relationship with the Company,
other than stockholdings as discussed above and as related
to his position as a director. During 1995, no member of
the Stock Option and Compensation Committee had a
relationship that would constitute an interlocking
relationship with executive officers or directors of another
entity.
Compensation of Directors
All directors of the Company are compensated for their
services by payment of $300 for each Board Meeting attended.
During fiscal 1995, options to purchase an aggregate of
10,124 (as adjusted for four three-for-two stock splits)
shares of Common Stock, at an exercise price of $15.50 per
share, were granted by the Company to directors of the
Company who were not employees or regularly retained
consultants of the Company ("Outside Director") pursuant to
the Company's 1990 Outside Directors' Stock Option Plan.
Under such Plan, each Outside Director is automatically
granted an option, exercisable over five years, to purchase
Common Stock upon such person's election or re-election to
serve as a director of the Company. Upon initial election
to the Board of Directors, an Outside Director is granted an
option to purchase 5,062 shares of Common Stock. Options to
purchase 5,062 shares of Common Stock are granted to each
incumbent Outside Director for each fiscal year of the
Company thereafter on the earlier of (i) each June 30, or
(ii) the date on which the stockholders of the Company elect
directors at an Annual Meeting of such stockholders or any
adjournment thereof.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information for the
fiscal years ended December 31, 1995, December 31, 1994 and
December 31, 1993, with respect to compensation earned by
the Chief Executive Officer of the Company (the "Named
Executive") in all capacities in which he served. No other
officer of the Company received salary and bonus in excess
of $100,000 during fiscal 1995.
7
Other Securities All
Name and Annual Under- Other
Principal Compen- lying Compen-
Position Year Salary Bonus sation Options sation
Frank F. 1995 $157,594 $335,538 -0- -0- -0-
Ferola 1994 $143,268 $683,839 -0- -0- -0-
President 1993 $130,243 $413,216 -0- -0- -0-
and Chair-
man of the Board
and Chief Executive
Officer
Stock Option Grants In the Last Fiscal Year
No stock option grants or stock appreciation rights
were granted to the Named Executive during fiscal 1995.
Options Exercised in Last Fiscal Year and Year-End Option Values Table
The following table sets forth information at December
31, 1995, respecting exercisable and non-exercisable options
held by the Named Executive. During fiscal 1995, the Named
Executive did not exercise any stock options and no stock
appreciation rights were outstanding. The table also
includes the value of the "in-the-money" stock options which
represents the spread between the exercise price of the
existing stock option and the year-end price of the Common
Stock.
Value of
Number of Unexercised In-
Unexercised Options the-Money Options
Held at December 31, at December 31,
1995(1) 1995(1)
--------------------------- ------------------------
Non- Non-
Name Exercisable Exercisable Exercisable Exercisable
- --------------- ----------- ----------- ----------- -----------
Frank F. Ferola 30,000 0 $0 $0
(1) Based on the closing price of the Common Stock on
December 31,1995 ($ 15.63).
Employment and Termination Arrangements
In May 1992, Mr. Ferola's employment agreement with the
Company was extended for a period of four years until
January 1997. Pursuant to such agreement, as extended, Mr.
Ferola receives compensation of $118,403 per annum subject
to an annual increase of 10% and an amount equal to not less
than 7% nor more than 10% of the Company's income
8
before income taxes, as determined by a formula set forth in
his employment agreement. Mr. Ferola has the right to
terminate his employment with the Company without penalty
after submission of thirty days' written notice.
In the event that there is a change of control of the
Company, Mr. Ferola has a right to purchase all of the
outstanding capital stock of Old 97 Company, a wholly-owned
subsidiary of the Company at a price to be determined by the
Board of Directors.
In 1995, Mr. Ferola relinquished $335,000
(approximately 50%) of the 1995 annual bonus to which he was
otherwise entitled. In consideration thereof, the Stock
Option and Compensation Committee awarded him an option to
purchase 70,000 shares of the Company's Common Stock, whose
exercise is contingent on the Company's Common Stock trading
on an average for 20 consecutive business days at a 30%
increase over its price on the date of grant ($14.75). If
this condition is met, Mr. Ferola would also receive a cash
payment of $335,000.
STOCK OPTION AND COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Stock Option and Compensation Committee (the
"Committee") of the Company's Board of Directors is
comprised of two individuals, each of whom is non-employee
director. The Committee is responsible for establishing the
overall philosophy of the Company's executive compensation
program developed to execute the Company's compensation
strategy.
The Company's Executive Compensation Strategy
The Company's executive compensation program has been
designed to promote stockholder interests and to:
1. Attract, reward and retain key executives who are
important to the Company's long-term viability and success.
2. Provide compensation that is competitive with that
of companies of comparable size and stature.
It is the Company's intention to ensure that all
compensation paid to its executives is tax deductible under
Internal Revenue Code Section 162(m). Although Section
162(m) of the Internal Revenue Code imposes limits on
deductibility for compensation to certain executives
exceeding $1 million per year, the Company does not
currently anticipate that this limitation will affect the
deductibility of any compensation paid to any executive.
Elements of the Executive Compensation Program
The Company's executive compensation program includes
two principal elements: annual cash compensation and long-
term awards.
9
Annual cash compensation includes both base salaries
and bonuses. Executives' base salaries are evaluated each
year based upon an assessment of competitive market data of
comparable companies. Executives are eligible for
adjustments in base salary based upon assessments of
individual performance and changes in principal job duties
and responsibilities.
Long-term incentive compensation is granted pursuant to
the Company's 1990 Key Employee Stock Incentive Plan
("Incentive Plan"). The Incentive Plan permits the Company
to grant stock options to executives at a price no less than
100% of the fair market value of the Common Stock on the
date of the grant.
The Committee's Actions in 1995
Each year the Committee reviews and approves annual
salaries and bonuses, grants of long-term incentive awards
and the performance targets and criteria established for the
Incentive Plan. In addition, the Committee reviews the
performance of the Company and its divisions and
subsidiaries and exercises the final authority in
determining and approving the payout of executive incentive
awards.
No stock option grants were granted in 1995 to
executive officers.
Chief Executive Officer Compensation
In May 1992, the Committee extended Mr. Ferola's
employment agreement with the Company for a period of four
years until January 1997. Pursuant to such agreement, as
extended, Mr. Ferola receives compensation of $118,403 per
annum subject to an annual increase of 10% and a bonus
amount equal to and not less than 7% nor more than 10% of
the Company's income before taxes, as determined by a
formula set forth in his employment agreement.
Members of the Stock Option and Compensation Committee:
W. Gregg Baldwin
John DePinto
10
STOCK PERFORMANCE GRAPH
The line graph below compares cumulative total
stockholder return (assuming reinvestment of dividends) on
the Company's Common Stock, over the most recent five-year
(up to and including December 31, 1995) return to the
Standard & Poor's Composite 500 Stock Index and the Standard
& Poor's Midcap Consumer Products Index.
Measurement The S&P 500 S&P Midcap
Period Stephan Co. Index CPI
- ------------- ------------ --------- ------------
12/31/90 $ 100 $ 100 $ 100
12/31/91 497 130 148
12/31/92 820 140 146
12/31/93 1,006 155 139
12/31/94 634 157 108
12/31/95 779 215 123
INDEPENDENT AUDITORS
Pursuant to a recommendation of the Audit Committee,
the Board of Directors has selected and retained the firm of
Deloitte & Touche, CPAs to act as independent public
accountants for the Company for the 1996 fiscal year.
Representatives of Deloitte & Touche are expected to be
present at the Meeting, to have the opportunity to make a
statement, if they so desire, and will be available to
respond to appropriate questions.
11
OTHER MATTERS
At the date of this Proxy Statement, the Board of
Directors has no knowledge of any business which will be
presented for consideration at the Meeting, other than as
described above. If any other matter or matters are
properly brought before the Meeting or any adjournment(s)
thereof, it is the intention of the persons named in the
accompanying form of proxy to vote all proxies on such
matters in accordance with their best judgment.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any proposal which is intended to be presented by any
stockholder for action at the 1997 Annual Meeting of
Stockholders must be received in writing by the Secretary of
the Company at 1850 West McNab Road, Fort Lauderdale,
Florida 33309, not later than January 18, 1997, in order for
such proposal to be considered for inclusion in the Proxy
Statement and Proxy relating to the 1997 Annual Meeting of
Stockholders.
By Order of the Board of Directors
STEPHEN LETIZIA
Secretary
Dated: May 18, 1996
12
THE STEPHAN CO.
Proxy for Annual Meeting To Be Held on June 28, 1996
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
The undersigned stockholder(s) of THE STEPHAN CO., a
Florida Corporation (the "Company"), hereby constitutes and
appoints JOHN DE PINTO and W. GREGG BALDWIN or either of
them, with full power of substitution in each, as the agent,
attorneys and proxies of the undersigned, for and in the
name, place and stead of the undersigned, to vote at the
Annual Meeting of Stockholders of The Stephan Co. To be held
at the Del Ray Beach Club, 2001 South Ocean Boulevard,
Delray Beach, Florida 33483, on June 28, 1996 at 10:00 A.M.
(local time), and any adjournments thereof, all of the
shares of stock which the undersigned would be entitled to
vote if then personally present in the manner specified and
on any other business as may properly come before the
meeting.
This Proxy will be voted in accordance with the
instructions given on the reverse side. If no instructions
are given, this Proxy will be voted FOR the election of
Directors.
Please mark boxes __ or x in blue or black ink.
1. PROPOSAL I - ELECTION OF DIRECTORS
FOR all nominees listed below WITHHOLD AUTHORITY to
(except as marked to the vote for all nominees
contrary below) /__/ listed below /__/
W. Gregg Baldwin, Curtis Carlson, Thomas M. D'Ambrosio, John
DePinto, Frank F. Ferola, Stephen Letizia
(INSTRUCTION: To withhold authority to vote for any
individual nominee write the nominee's name in the space below.)
_____________________________________________________
(Continued and to be signed on the reverse side.)
2. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the
meeting or any adjournment thereof and as set forth in Rule
14a-4(c) of the Securities Exchange Act.
Please sign exactly as name appears above.
When shares are held by joint tenants,
both should sign. When signing as
attorney, executor, administrator, trustee
or guardian, a corporation, please sign in
full corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
Dated_____________________________, 1996
________________________________________
Signature
________________________________________
Signature if held jointly
Please Mark, Sign, Date and Return the Proxy Card Promptly
Using the Enclosed Envelope.
