<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SLI, 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:
<PAGE> 2
SLI, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 24, 1999
To the Shareholders of SLI, Inc.:
The Annual Meeting of Shareholders of SLI, Inc. (the "Company") will
be held at the offices of BankBoston, 100 Federal Street, Boston, Massachusetts
on May 24, 1999, at 11:00 a.m. (the "Meeting") for the following purposes:
1. To elect six directors to hold office until the 2000 Annual Meeting
of Shareholders and until their successors have been elected and
qualified;
2. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
Shareholders of record as of the close of business on April 14, 1999,
will be entitled to vote at the Meeting or any adjournment thereof. Information
relating to the matters to be considered and voted on at the Annual Meeting is
set forth in the proxy statement accompanying this Notice.
By Order of the Board of Directors,
/s/ Richard F. Parenti
--------------------------------------
Richard F. Parenti
Secretary
April 16, 1999
THE BOARD OF DIRECTORS IS SOLICITING THE ENCLOSED PROXY. WHETHER OR
NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT IN THE PRE-ADDRESSED ENVELOPE PROVIDED FOR THAT
PURPOSE. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW THE ENCLOSED PROXY GIVEN
BY YOU AND VOTE YOUR SHARES IN PERSON.
<PAGE> 3
SLI, INC.
500 CHAPMAN STREET
CANTON, MASSACHUSETTS 02021
---------------------------
PROXY STATEMENT
Introduction. This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of SLI, Inc. (the "Company"), of proxies
for use at the Annual Meeting of Shareholders to be held at the offices of
BankBoston, 100 Federal Street, Boston, Massachusetts, on May 24, 1999, at
11:00 a.m., or any adjournment thereof. This Proxy Statement and the enclosed
Annual Report to Shareholders for the Company's fiscal year ended January 3,
1999 are being mailed to shareholders on or about April 16, 1999.
Solicitation. The entire cost of preparing, assembling, and mailing
this proxy material will be borne by the Company. In addition, the Company may
reimburse brokerage firms and other persons representing certain beneficial
owners of shares for their reasonable expenses in sending proxy material to and
obtaining proxies from such beneficial owners.
Revocation. A proxy may be revoked by a shareholder at any time prior
to its use by giving written notice of such revocation to the Secretary of the
Company, by appearing at the Meeting and voting in person, or by returning a
later dated proxy in the form enclosed.
Quorum and Voting. Shareholders of record as of the close of business
on April 14, 1999 will be entitled to vote at the Meeting. As of such record
date, there were issued and outstanding and entitled to vote 28,982-341 shares
of the common stock, $.01 par value per share, of the Company (the "Common
Stock"). Holders of shares of Common Stock are entitled to one vote for each
share owned at the record date on all matters to come before the Meeting and
any adjournments thereof. The presence in person or by proxy of holders of a
majority of the shares of Common Stock entitled to vote at the Meeting
constitutes a quorum for the transaction of business.
Tabulation of Votes. Election of each director nominee will be by the
affirmative vote of a majority of the shares of Common Stock present or
represented at the Meeting by proxy. The Company will appoint an inspector of
election to tabulate all votes and to certify the results of all matters voted
upon at the Meeting. Brokerage firms who hold shares in "street name" for
customers have the authority to vote those shares with respect to the election
of directors if such firms have not received voting instructions from a
beneficial owner.
If the enclosed proxy is properly executed and returned prior to or at
the Meeting, and is not revoked prior to or at the Meeting, all shares
represented thereby will be voted at the Meeting as specified in the proxy by
the persons designated therein. If a signed proxy card is returned and the
stockholder has made no specifications with respect to voting matters, the
shares will be voted "FOR" the election of the nominees as directors, and in
accordance with the judgment of the person or persons voting such proxies with
respect to such other matters, if any, as may properly come before the Meeting.
The Board of Directors does not know of any matters that will be
brought before the Meeting other than those matters specifically set forth in
the Notice of Annual Meeting of Shareholders. However, if any other matter
properly comes before the Meeting, it is intended that the persons named in the
enclosed form of proxy, or their substitute acting thereunder, will vote on
such matter in accordance with their best judgment.
1
<PAGE> 4
ELECTION OF DIRECTORS
The Board of Directors currently consists of six members. It is
proposed that the shareholders re-elect the present six directors, each of whom
is a nominee: Frank M. Ward, Werner Arnold, Donald S. Dewsnap, Frederick B.
Howard, Richard E. Ingram and Maurice B. Hare. The term of each director
elected will be until the next Annual Meeting of Shareholders or until his
successor is duly elected and qualified. It is intended that the proxies will
be voted for the nominees listed above and cannot be voted for more than six
nominees. Each nominee is at present available for election, but if any nominee
should become unavailable, the persons voting the accompanying proxy may, at
their discretion, vote for a substitute.
Unless authority is withheld, it is the intention of the persons
voting under the enclosed proxy to vote such proxy in favor of the election of
these six nominees to be directors of the Company until the 2000 Annual Meeting
of Shareholders and until their successors are elected and qualified. The
affirmative vote of a majority of the shares of Common Stock present or
represented at the Meeting by proxy is required for the election of these
nominees as directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES.
INFORMATION REGARDING DIRECTORS
<TABLE>
<CAPTION>
Year First
Became Positions and Offices
Name Age Director with the Company
- ---- --- ---------- ---------------------
<S> <C> <C> <C>
Frank M. Ward(a) 55 1992 President, Chief Executive Officer Director
and Chairman of the Board
Frederick B. Howard 63 1998 Executive Vice President and Director
Werner Arnold 45 1996 Director and President of Alba Speziallampen
Holding GmbH
Maurice B. Hare 60 1998 Director and President of VCH International
Limited (United Kingdom)
Donald S. Dewsnap (b) 64 1995 Director
Richard E. Ingram (b) 57 1996 Director
</TABLE>
- ------------------
(a) Member of the Special Option Committee.
(b) Member of the Compensation Committee, Audit Committee and Stock
Option Committee.
BACKGROUND OF DIRECTORS
FRANK M. WARD has served as President, Chief Executive Officer and
Director of the Company and its predecessor, Xenell Corporation, since 1985.
Prior to 1985, Mr. Ward was President of Xenell Marketing Corporation, an
organization formed to manage the product development, marketing and
distribution
2
<PAGE> 5
of the products of Xenell. Mr. Ward received a Bachelor of Science degree in
Electrical Engineering from Northeastern University and has completed post
graduate studies in physics and metallurgy.
WERNER A. ARNOLD is the President of Alba Speziallampen Holding GmbH
("CML-Alba"), a subsidiary of the Company formed in May 1996 to consummate the
acquisition of W. Albrecht GmbH u. Co. KG ("Alba-Germany") and its interest in
certain other affiliated entities (the "Alba Acquisition"). From 1994 to 1996,
Mr. Arnold served as President and Chief Executive Officer of Alba-Germany.
From 1985 to 1993, he served as General Manager and Executive Vice President of
Engineering, Sales and Marketing of Alba-Germany. Mr. Arnold also served as an
officer and Director of certain affiliates of Alba-Germany. Mr. Arnold has a
Masters in Engineering from Technical University of Munich, Germany.
DONALD S. DEWSNAP has been Chairman of Norlico Corp., a supplier of
engineered chemical dispense systems to industrial users, since 1977. Prior
thereto he was involved in industrial research at Arthur D. Little Corp. and
spent fourteen years with GTE Sylvania Lighting Division in various product
marketing, management and sales engineering positions. Mr. Dewsnap holds a
Bachelor of Arts degree from Merrimack College.
FREDERICK B. HOWARD had been, until his retirement in June 1997, Vice
President and General Manager of Electronic Control Systems, a division of
Osram Sylvania Inc., since its formation in June 1996. From 1994 until 1996, he
had been Vice President and General Manager of Osram Sylvania Glass
Technologies. Other positions held during his 35 year tenure with GTE Sylvania
include Vice President of marketing for the Sylvania Lighting Division - U.S.,
Vice President of Lighting Special Products, Vice President, Latin America, for
International Lighting. Mr. Howard was appointed Executive Vice President of
the Company in September 1998. Mr. Howard holds a B.A. degree in economics from
Babson College, serves as a member of the Advisory Board of Directors, Mayer
Electric Supply Company, and is a member of the National Electric Manufacturers
Association.
RICHARD E. INGRAM has been the Chairman of the Board of Builder Marts
of America, Inc., a national distributor of lumber and building materials,
since November 1988, and he was its Chief Executive Officer until November
1993. He was a founding director of Carolina First Corporation, the holding
company for Carolina First Bank, and Ingram Enterprises, Inc., a real estate
development and investment banking company. He is also a director of Synalloy
Corporation, Columbia Lumber, a retail lumber business, and Tel-Pan
Communications, Inc., a long distance provider in Panama. He has served on the
Policy Advisory Board of the Joint Center for Urban Studies at Harvard
University. Mr. Ingram is a graduate of the American Institute of Banking and
the University of North Carolina Executive Program.
MAURICE B. HARE is President of VCH International Limited, a
subsidiary of the Company, and General Manager of SLI Miniature Lighting
Europe, a division formed by the amalgamation of Alba (Germany), Socop (France)
and VCH (United Kingdom), subsidiaries of the Company. Mr. Hare was a Director
and Chief Executive Officer of VCH International Ltd. at the date of
acquisition, having headed the management buy-out of the USA and UK lamp
interests of General Instrument Corporation in 1987. Prior to that date he
served for 13 years as General Manager and Vice President of the General
Instrument Lamp Division responsible for the USA and UK businesses. Prior
thereto he was involved in various financial roles in diverse businesses both
in Germany and the United Kingdom. Mr. Hare is a Fellow of the UK Association
of Certified Accountants and a past member of the Institute of Taxation.
3
<PAGE> 6
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held 13 meetings during the year ended January
3, 1999. The current standing committees of the Board of Directors are the
Audit Committee, the Compensation Committee, the Stock Option Committee, and
the Special Option Committee. The Audit Committee met once, the Compensation
Committee met once, the Stock Option Committee met once and the Special Option
Committee met once during the year ended January 3, 1999. All directors
attended at least 75% of the meetings held during the year ended January 3,
1999 (during the period for which each was a director).
The members of the Audit Committee, Compensation Committee and the
Stock Option Committee are Donald S. Dewsnap and Richard E. Ingram. The Audit
Committee has general responsibility for accounting and audit activities of the
Company and its subsidiaries. The Audit Committee annually reviews the
qualifications of the independent certified public accountants, makes
recommendations to the Board as to their selection, reviews the scope, fees and
results of their audit and approves their non-audit services and related fees.
The Audit Committee meets periodically with management and with the Company's
independent auditors to determine the adequacy of internal controls and other
financial reporting matters. The Compensation Committee reviews general policy
matters relating to compensation and benefits of employees generally and has
responsibility for reviewing and approving compensation and benefits for all
executive officers of the Company. The Stock Option Committee administers the
Company's Incentive and Non-Statutory Stock Option Plan (the "Stock Option
Plan") and recommends grants of the specific options under the Stock Option
Plan. The Special 1997 Stock Option Plan (the "Special Option Plan", and
collectively with the Stock Option Plan, the "Option Plans") is administered by
a separate committee with the right to make grants of options under the Special
Option Plan (the "Special Option Committee"). Currently, the Special Option
Committee consists of Frank Ward only, with authority from the Board to grant
options only with respect to the employees of Sylvania Lighting International
B.V. and its subsidiaries.
COMPENSATION OF DIRECTORS
The Company currently pays its non-employee and non-affiliated
directors an annual fee of $10,000 for attendance at meetings of the Board of
Directors or committees thereof. All directors are reimbursed for their
reasonable expenses in connection with the performance of their duties.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No person serving on the Compensation Committee at any time during
fiscal 1998 was a present or former officer or employee of the Company or any
of its subsidiaries. During fiscal 1998, no executive officer of the Company
served as a member of the board of directors or compensation committee (or
other board committee performing equivalent functions) of another entity, one
of whose executive officers served on the Company's Board of Directors or
Compensation Committee.
4
<PAGE> 7
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
Under rules of the Commission, the Company is required to provide
certain information concerning compensation provided to the Company's President
and Chief Executive Officer and the other executive officers of the Company.
The disclosure requirements for the executive officers include the use of
tables and a report of the Committee responsible for compensation decisions for
the named executive officers, explaining the rationale and considerations that
led to those compensation decisions. Therefore, the Compensation Committee of
the Board of Directors (the "Committee") has prepared the following report for
inclusion in this Proxy Statement.
COMPENSATION COMMITTEE ROLE
Since its formation, the Committee has been responsible for making
recommendations to the Board of Directors concerning the salaries of executive
officers. The Committee is also responsible for overseeing other forms of
compensation and benefits to other senior officers. The Committee's
responsibilities include reviewing salaries, benefits and other compensation of
senior officers and making recommendations to the full Board of Directors with
respect to these matters.
COMPENSATION PHILOSOPHY
The compensation philosophy for executive officers conforms to the
compensation philosophy of the Company generally for all employees. The
Company's compensation is designed to:
o provide compensation comparable to that offered by companies with
similar businesses, allowing the Company to successfully attract
and retain the employees necessary to its long-term success;
o provide compensation which relates to performance of the individual
and is based upon individual performance;
o provide incentive compensation that varies directly with both
Company performance and individual contribution to that
performance; and
o provide an appropriate linkage between compensation and the
creation of shareholder value through awards tied to the Company's
performance and through facilitating employee stock ownership.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The Company's executive officer compensation program is comprised of
base salary, cash bonuses based upon individual performance and long-term
incentive compensation in the form of stock options under the Stock Option
Plan, which options are recommended by the Stock Option Committee. In addition,
the Company's executive officers receive various other benefits, including
medical benefits, which are generally available to the employees of the
Company.
5
<PAGE> 8
BASE SALARY AND BONUS AWARDS
The Committee reviews the salaries of the executive officers of the
Company annually. The Committee made salary decisions about the executive
officers based upon a variety of considerations in conformance with the
compensation philosophy stated above. First, salaries are competitively set
relative to companies with similar businesses to that of the Company. Second,
the Committee considered the performance of the individual executive officer
with respect to the areas under his or her responsibility, including an
assessment of the value of each to the Company. Third, internal equity among
employees was factored into the decision. Finally, the Committee considered the
Company's financial performance and its ability to absorb any increases in
salaries.
The Company entered into a two year employment agreement with Mr. Ward
effective January 5, 1998 which provides for a base compensation of $500,000
for each of the two years with a discretionary bonus of $500,000. On March 4,
1999, the Board, upon the recommendation of the Compensation Committee,
increased Mr. Ward's base salary from $500,000 to $1,000,000, commencing April
5, 1999. Mr. Ward also receives employee health benefits and automobile and
expense allowances. The Board of Directors has established the salary of (i)
Mr. Frederick Howard, the Executive Vice President of the Company at $175,000
per year and the Company, on September 11, 1998, entered into a two year
employment agreement with him and (ii) Mr. Richard Parenti, Vice President of
Finance, at $125,000 per year and the Company on May 1, 1998 entered into a
four year employment agreement with him. See "Employment Agreements" below. A
cash bonus of $88,039 was paid to Mr. Parenti in 1998. The Committee believes
that the aggregate compensation for each of Messrs. Ward, Howard and Parenti is
reasonable based upon each of their responsibilities, the revenue size of the
Company, profitability of the Company, growth and other factors when compared
to executive officers of similar companies having comparable positions.
STOCK OPTION AWARDS
The Company maintains the Stock Option Plan, which is designed to
align executive officers' and shareholders' interests in the enhancement of
shareholder value. Stock options are granted upon the recommendation of the
Stock Option Committee with the approval of the disinterested members of the
Board. Executive officers and others are eligible to receive options under the
Stock Option Plan. The Committee strongly believes that the interests of
shareholders and executives become more closely aligned when such executives
are provided an opportunity to acquire a proprietary interest in the Company
through ownership of the Company's Common Stock. Accordingly, key employees of
the Company, including executive officers, as part of their overall
compensation package, are eligible for participation in the Stock Option Plan,
whereby they are granted options generally exercisable at no less than fair
market value on the date of grant. Because no benefit is generally received
unless the Company's stock price performs favorably, awards under the Stock
Option Plan are intended to provide incentives for executive officers to
enhance long-term Company performance, as reflected in stock price
appreciation, thereby increasing shareholder value.
The stock option grants are principally based on overall consolidated
results of the Company, achievement of Company objectives, individual
performance, including managerial effectiveness, initiative and team work, and
are in such amounts that reflect what the Stock Option Committee believes are
necessary to attract, retain and motivate senior management and other key
employees. The members of the Stock Option Committee and the Compensation
Committee are the same, and stock option awards are considered in the package
of the key employees. The Committee believes that stock option awards are
rewards for past growth and the incentive for continued growth.
6
<PAGE> 9
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
The Committee has reviewed the potential consequences for the Company
of Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), which imposes a limit on tax deductions for annual compensation in
excess of $1 million for certain executives of public companies. The Company
believes that options granted under the Option Plans are exempt from the
limitation, and other compensation expected to be paid during fiscal year 1998
is at or below this compensation limitation.
COMPENSATION COMMITTEE
Donald S. Dewsnap
Richard Ingram
The report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or under
the Securities Act of 1934 (together, the "Acts"), except to the extent that
the Company specifically incorporates this information by reference, and shall
not otherwise be deemed filed under such Acts.
COMPENSATION TABLES
The following tables set forth certain information relating to the
compensation earned by the Chief Executive Officer of the Company and each of
the other most highly compensated executive officers of the Company whose total
cash compensation for the fiscal year indicated exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation
Compensation Awards
--------------------------------------------- Securities Underlying
Name and Principal Position Year Salary Bonus(a) Options
- --------------------------- ---- ------------ -------- ---------------------
<S> <C> <C> <C> <C>
Frank A Ward 1998 $500,000 -- --
President and 1997 250,000 -- --
Chief Executive Officer 1996 250,000 $74,000 --
Richard F. Parenti 1998 125,000 $88,039 75,000(b)
Vice President - Finance 1997 109,299 - 75,000(b)
1996 100,000 - --
</TABLE>
(a) Represents bonus earned during the indicated fiscal year. In some
instances, all or a portion of the bonus was paid during the next fiscal
year.
(b) The options granted in 1997 were canceled and reissued in 1998 as a result
of a repricing which occurred in September 1998. The exercise price was
reduced form $16.00 per share to $9.9375 per share.
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<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Percent of
Total Potential Realizable Value at
Number of Options Assumed Annual Rates of
Securities Granted to Stock Price Appreciation for
Underlying Employees Exercise Option Term (a)
Options In Price Expiration ------------------------------
Name Granted(b) Fiscal Year ($/sh) Date 5% 10%
- ---- ---------- ----------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Richard F. Parenti 75,000 2.58 9.9375 7/3/02 $468,802 $1,188,028
Vice President - Finance
</TABLE>
- -----------------
(a) The assumed annual rates of appreciation of 5% and 10% would result in the
price of the Company's stock increasing 62.9% and 159.4%, respectively over
the term of the option.
(b) All options were granted at an exercise price equal to the fair market
value of the Company's Common Stock on the date of grant. Options vest at
the rate of 20% per year for each of the first five years after the date of
grant and terminate ten years from the date of grant.
TEN YEAR OPTION REPRICING
<TABLE>
<CAPTION>
Number of Length of
Securities Market Price Exercise Original
Underlying of Stock at Price at New Option Term
Options Time of Time of Exercise Remaining at
Name Date Repriced(#) Repricing($) Repricing($) Price($) Date of Repricing
- ---- ------- ----------- ------------ ------------ -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Richard F. Parenti 9/10/98 75,000 9.9375 16.00 9.9375 46 months
Robert J. Mancini 9/10/98 60,000 9.9375 25.92 9.9375 51 months
Frederick B. Howard 9/10/98 20,000 9.9375 33.69 9.9375 52 months
</TABLE>
On September 10, 1998 the Board of Directors approved the repricing of
outstanding options granted under the Company's 1995 and 1997 Incentive and
Non-Statutory Stock Option Plans held by certain key employees and the
Company's non-employee directors. The Board considered the fact that a portion
of the outstanding options that would be affected by a repricing were held by
the above named executive officers, certain key employees, including Mr. Werner
Arnold, President of a subsidiary company and director, who held options to
purchase 150,000 shares and Messrs. Dewsnap and Ingram, the Company's two
non-employee directors, who each held the options to purchase 15,000 shares. It
was unanimously agreed that the continuation of the Company's growth and
success in 1998 and 1999 would be dependent on the continued efforts of these
individuals and other key employees. The Board believes that stock options
provide meaningful long-term incentives for key employees. Because of the
significant decline in the market price of the Company's stock which had
occurred subsequent to the grant of these options, from a high of $41.00 per
share on April 22, 1998 to $9.9375 per share on April 10, 1998, it was
determined that these options were not providing the incentive intended when
granted. The Board concluded that repricing the outstanding options would be an
appropriate means to provide these optionees with a continuing incentive to
work for the long-term success of the Company. The terms of the reissued
options, except for the exercise price, were the same as those of the canceled
options. The repricing to $9.9375 per share was equal to the closing market
price of the Company's Common Stock on September 10, 1998, the repricing date.
8
<PAGE> 11
OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Securities
Shares Underlying Unexercised In-the-Money
Acquired on Value Options at 1/3/99 Options at 1/3/99(b)
Name Exercise Realized(a) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard F. Parenti -- -- 31,051 60,000 578,606 1,008,750
Vice President - Finance
</TABLE>
(a) Value realized is based on the fair market value of the Common Stock as of
the date of exercise, minus the exercise price, multiplied by the number of
shares to which the exercise relates.
(b) Value is based on the closing price of the Common Stock as reported on the
Nasdaq National Market as of the last business day prior to the end of
Fiscal 1998, $26.75, minus the exercise price, multiplied by the number of
shares to which the exercise relates.
EMPLOYMENT AGREEMENTS
The Company has entered into a two year employment agreement with Mr.
Frank Ward, effective as of January 5, 1998 pursuant to which Mr. Ward receives
an annual salary of $500,000 plus a bonus of $500,000 based upon the Company
achieving net income of $30 million for 1998 and $41 million for 1999, after
accruing for the bonus amount. Although the Company realized net income in
excess of $30 million for 1998, Mr. Ward waived his bonus. On March 4, the
Board increased Mr. Ward's annual salary to $1 million commencing April 5,
1999. Mr. Ward is also entitled to participate in all employee benefit plans,
use of an automobile and certain expense allowances.
On September 11, 1998 the Company entered into a two year employment
agreement with Mr. Fred Howard pursuant to which Mr. Howard receives an annual
Salary of $175,000 per year. In the event of death or termination of employment
the agreement will terminate without recourse to either the Company or Mr.
Howard. Mr. Howard is also entitled to a bonus of $50,000 each year based on
certain pre-determined objectives. Mr. Howard also received options to purchase
80,000 shares of the Company's Common Stock, exercisable at $9.9375 per share,
of which 40,000 will vest on October 1, 1999 and 40,000 on October 1, 2000. The
agreement also provides (i) for the Company to furnish Mr. Howard with an
automobile during the term of the agreement and (ii) in the event of the death
of Mr. Ward or a change in control of the Company, the option granted to Mr.
Howard will immediately vest and terminate within two years of the immediate
vesting.
The Company has also entered into a four year employment agreement
with Mr. Richard Parenti, the Company's vice president of finance and chief
accounting officer, commencing as of May 1, 1998. Mr. Parenti receives an
annual salary of $125,000 and is entitled to participate in all employee
benefits. In the event of disability that renders the employee incapable of
performing his normal duties that continues for a period of 90 days, the
Company may terminate the employee's employment. The employment agreement is
also terminable by either party for cause.
In connection with the Alba acquisition in May 1996, the Company
entered into a three-year employment agreement with Mr. Werner A. Arnold. After
the first three-year term, the agreement can be extended annually for
additional one-year terms. Mr. Arnold is paid an annual salary of DM 225,000
and has received stock options totaling 112,500 shares of common stock, which
options have a current exercise price of $9.9375 per share and vest at the rate
of 20% per year commencing May 30, 1997. The agreement with
9
<PAGE> 12
Mr. Arnold also provides for reimbursement of reasonable and necessary business
expenses and the use of an automobile. Under the employment agreement, Mr.
Arnold is entitled to participate in all employee benefits. In the event of
disability that renders the employee incapable of performing his normal duties
that continues for a period of six consecutive months, the Company may
terminate the employee's employment. The employment agreement is also
terminable by either party for cause. The agreement also contains a non-compete
clause that prohibits Mr. Arnold from competing with the Company for a period
of five years following termination of his employment with the Company.
STOCK PRICE PERFORMANCE GRAPH
The following graph presents a comparison of the cumulative total
shareholder return on the Company's Common Stock with the Standard & Poors 500
Index and a Market Cap-Weighted Comparables Composite Index. This graph assumes
that $100 was invested as of the close of markets on June 16, 1995, the date of
the Company's initial public offering, in the Company's Common Stock and in the
indices, and that all dividends were reinvested. The stock price performance
shown below is not necessarily indicative of future price performance.
Table reflecting plot points of graph
-------------------------------------
<TABLE>
<CAPTION>
Date SLI S&P 500 Composite Index(a)
- ----------------- ------- ------- ---------------
<S> <C> <C> <C>
June 16, 1995 $100.00 $100.00 $100.00
December 3, 1995 136.67 116.14 103.05
December 1, 1996 335.00 142.26 131.34
November 30, 1997 342.50 179.47 156.85
January 3, 1999 394.69 227.50 145.34
</TABLE>
(a) Market Cap-Weighted Comparables Composite Index includes the stock of nine
companies selected for comparison purposes.
The stock price performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Acts except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under the Acts.
10
<PAGE> 13
PRINCIPAL SHAREHOLDERS
The following table sets forth as of April 1, 1999, information with
respect to the beneficial ownership of the Common Stock by (i) each person who
is known by the Company to be the beneficial owner of more than 5% of the
Company's outstanding shares of Common Stock, (ii) each director and executive
officer of the Company, and (iii) all directors and executive officers of the
Company as a group. Unless otherwise indicated, each of the shareholders listed
below has sole voting and investment power with respect to the shares of Common
Stock beneficially owned.
<TABLE>
<CAPTION>
Shares Beneficially
Owned
----------------------------------------
Name and Address(a) Number Percent
- ------------------- ------------- -------
<S> <C> <C>
Frank M. Ward 12,383,355(b) 42.0%
Patrick J. Cox and
Marianne Connaughton,
Trustees of Trusts
established for the children
of Frank M. Ward (c) 2,059,395 7.0
Richard F. Parenti(d) 56,551 *
Robert Mancini(e) 18,000 *
Werner A. Arnold(f) 307,500 1.0
Donald S. Dewsnap(g) 23,925 *
Frederick B. Howard(h) 10,100 *
Richard E. Ingram(i) 40,950
Maurice B. Hare -- *
All directors and
executive officers as
a group (8 persons) 12,840,381 43.4%
</TABLE>
- ------------------
* Less than 1%
(a) The address of the Company's directors and officers is SLI, Inc., 500
Chapman Street, Canton, Massachusetts 02021.
(b) Includes 11,633,355 shares owned by Frank M. Ward and Eileen M. Ward as
joint tenants with right of survivorship and 750,000 shares owned by the
Frank M. Ward GRAT Trust, of which Mr. Ward is one of two Trustees.
(c) Ms. Connaughton is the sister of Mr. Frank Ward. The address of the Trusts
is c/o Veritas Advisers, Inc., 84 State Street, Boston, Massachusetts
02109.
(d) Includes 10,500 shares owned by Mr. Parenti and 46,051 shares subject to
options exercisable within 60 days of the date of this Proxy Statement.
(e) Includes 18,000 shares subject to options exercisable within 60 days of the
date of this Proxy Statement.
(f) Includes 255,000 shares owned by Mr. Arnold and 82,500 shares subject to
options exercisable within 60 days of the date of this Proxy Statement.
(g) Includes 3,000 shares subject to options exercisable within 60 days of the
date of this Proxy Statement.
(h) Includes 3,450 shares owned by Mr. Ingram, 34,500 shares owned by Richard
E. Ingram as trustee of the Donna C. Ingram Trust and 3,000 shares subject
to options exercisable within 60 days of the date of this Proxy Statement.
11
<PAGE> 14
CERTAIN TRANSACTIONS
The Company leases on a month-to-month basis approximately 2,200
square feet of office space in Canton, Massachusetts from Frank M. Ward, the
President, Chief Executive Officer and a director of the Company. Rent expense
on this facility was $67,000 for Fiscal 1996, $60,000 for the Fiscal 1997 and
$60,000 for Fiscal 1998. Management believes the rent to be comparable to the
rent that would be paid to an unrelated party. At January 3, 1999, Mr. Ward
owed the Company $88,569 for advances made to him or payments made on his
behalf. Such amount was repaid by Mr. Ward in April 1999.
Based solely on its review of the copies of forms received by it, or
representations from certain reporting persons, the Company believes that
certain of the directors and officers of the Company filed late Forms 3 or 4
during the fiscal year ended January 3, 1999. Robert Mancini filed one late
Form 3 Report. The following persons filed one late Form 4 reflecting one
transaction: Messrs. Parenti, Mancini and Arnold. Mr. Howard filed two late
Form 4's, each reflecting one transaction.
INDEPENDENT PUBLIC ACCOUNTANTS
On the recommendation of the Audit Committee, the Certified Public
Accounting firm of Ernst & Young LLP, the Company's independent accountants for
the fiscal year ended November 30, 1997, has been selected as the Company's
independent accountants for the fiscal year ending January 3, 1999. The Company
does not expect that a representative of that accounting firm will be present
at the Meeting.
OTHER MATTERS
The management has no information that any other matters will be
brought before the Meeting. If, however, other matters do come before the
Meeting, it is the intention of the persons named in the Proxy to vote the
shares to which the proxy relates on such matters in accordance with their best
judgment, discretionary authority to do so being included in the Proxy.
SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
In order to be included in the proxy materials for the 2000 Annual
Meeting of Shareholders of the Company, shareholder proposals must be received
by the Company not later than December 27, 1999.
GENERAL
THE COMPANY WILL PROVIDE FREE OF CHARGE TO ANY SHAREHOLDER FROM WHOM A
PROXY IS SOLICITED PURSUANT TO THIS PROXY STATEMENT, UPON WRITTEN REQUEST FROM
SUCH SHAREHOLDER, A COPY OF THE COMPANY'S ANNUAL REPORT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K FOR THE COMPANY'S FISCAL YEAR
ENDED JANUARY 3,1999. REQUESTS FOR SUCH REPORT SHOULD BE DIRECTED TO INVESTOR
RELATIONS AT SLI, INC., 500 CHAPMAN STREET, CANTON, MA 02021.
12
<PAGE> 15
The Company expects to hold its next shareholder meeting on or about
May 24, 2000 and proxy materials in connection with that meeting are expected
to be mailed approximately 30 days prior to the meeting.
SLI, Inc.
/s/ Richard F. Parenti
-------------------------------------
Richard F. Parenti, Secretary
Date: April 16, 1999
13
<PAGE> 16
APPENDIX A
SLI, Inc.
500 Chapman Street
Canton, MA 02021
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Frank M. Ward or Richard F. Parenti,
as Proxy for the undersigned, to vote all shares of Common Stock of the
undersigned in SLI, Inc. with all the powers that the undersigned would have if
personally present, at the Annual Meeting of Shareholders to be held at the
offices of BankBoston, 100 Federal Street, Boston, Massachusetts on May 24,
1999, at 11:00 local time and at nay postponement of adjournment thereof.
1. To elect six Directors to hold office until the next Annual Meeting of
Shareholders.
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for all nominees listed below
</TABLE>
Werner Arnold Donald S. Dewsnap Frederick B. Howard
Richard E. Ingram Maurice B. Hare Frank M. Ward
INSTRUCTIONS: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided.
--------------------------------------------------------------
2. In their discretion, the holders of this Proxy are authorized to vote upon
such other business as may properly come before the Meeting.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted for the election of the nominees listed above.
(Continued, and to be signed on next page)
(Continued, and from other side)
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator
or trustee or guardian, please give full title as such. If 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.
-------------------------------------
Signature
-------------------------------------
Signature, if held jointly
DATED: , 1999
-------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
