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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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 Only (as permitted by
Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
BWAY Corporation
- --------------------------------------------------------------------------------
(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)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
________________________________________________________________________________
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(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:
________________________________________________________________________________
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BWAY Corporation
8607 Roberts Drive, Suite 250
Atlanta, Georgia 30350
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
BWAY Corporation (the "Company"), which will be held on Friday, February 28,
1997, at 1:00 p.m., local time, at the Company's facility at Highway 84,
Homerville, Georgia 31634.
The Notice of Meeting, Proxy Statement, Proxy Form and Annual Report of the
Company are included with this letter. The matters listed in the Notice of
Meeting are more fully described in the Proxy Statement.
It is important that your shares are represented and voted at the Annual
Meeting, regardless of the size of your holdings. Accordingly, please mark,
sign and date the enclosed Proxy Form and return it promptly in the enclosed
envelope. If you attend the Annual Meeting, you may, of course, withdraw your
proxy should you wish to vote in person.
Sincerely,
/s/ BLAIR G. SCHLOSSBERG
Blair G. Schlossberg
General Counsel and Secretary
<PAGE>
BWAY Corporation
8607 Roberts Drive, Suite 250
Atlanta, Georgia 30350
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------------------------------
The Annual Meeting of Stockholders of BWAY Corporation (the "Company") will
be held on Friday, February 28, 1997, at 1:00 p.m., local time, at the Company's
facility at Highway 84, Homerville, Georgia 31634 to consider and take action
with respect to the following matters:
1. The election of two directors to hold office for a term of three
years;
2. The approval of the amendment and restatement of the Company's 1995
Long-Term Incentive Plan;
3. The ratification of the appointment of Deloitte & Touche LLP as the
Company's independent public accountants for the fiscal year ending
September 28, 1997; and
4. The transaction of such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.
Holders of record of the Company's Common Stock at the close of business on
January 3, 1997 are entitled to receive notice of and to vote on all matters
presented at the Annual Meeting and at any adjournments or postponements
thereof. A list of such stockholders will be available for examination by any
stockholder for any purpose germane to the meeting during normal business hours
at the Company's principal executive offices, 8607 Roberts Drive, Suite 250,
Atlanta, Georgia 30350, and at the location of the meeting set forth above, in
each case for a period of 10 days prior to the meeting.
By Order of the Board of Directors
/s/ BLAIR G. SCHLOSSBERG
Blair G. Schlossberg
General Counsel and Secretary
January 27, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON AND REGARDLESS OF
THE NUMBER OF SHARES YOU OWN, PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY FORM
AND MAIL IT PROMPTLY IN THE ENVELOPE PROVIDED TO ENSURE THAT YOUR SHARES WILL BE
REPRESENTED. YOUR PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS VOTED OR BY
DELIVERY OF A LATER-DATED PROXY, YOU MAY NEVERTHELESS VOTE IN PERSON IF YOU
ATTEND THE ANNUAL MEETING.
<PAGE>
BWAY Corporation
8607 Roberts Drive, Suite 250
Atlanta, Georgia 30350
------------------------------
PROXY STATEMENT
------------------------------
Annual Meeting of Stockholders
to be held on
February 28, 1997
------------------------------
This proxy statement (the "Proxy Statement") is being furnished to the
holders of common stock, par value $0.01 per share (the "Common Stock") of BWAY
Corporation (the "Company") in connection with the solicitation of proxies by
and on behalf of the Board of Directors of the Company (the "Board of Directors"
or the "Board") for use at the annual meeting of stockholders to be held on
February 28, 1997 at 1:00 p.m., local time, and at any adjournments or
postponements thereof (the "Annual Meeting"). The purpose of the Annual Meeting
is to elect two directors to the Board, to approve the amendment and restatement
of the Company's 1995 Long-Term Incentive Plan (the "Original Plan") and to
ratify the appointment of Deloitte & Touche LLP as the Company's independent
public accountants for the 1997 fiscal year.
This Proxy Statement, the Proxy Form and the Company's Annual Report to
Stockholders, which includes portions of the Company's Annual Report on Form
10-K for the Fiscal Year ended September 29, 1996, are being mailed on or about
January 23, 1997 to holders of record of the Common Stock at the close of
business on January 3, 1997.
If the enclosed proxy form (the "Proxy Form") is properly signed, dated and
returned to the Company, the individuals identified as proxies thereon will vote
the shares represented by the Proxy Form in accordance with the directions noted
thereon. If no direction is indicated, the proxies will vote FOR the election of
the nominees named herein as directors, FOR the approval of the amendment and
restatement of the Original Plan and FOR the ratification of the appointment of
Deloitte & Touche LLP as the Company's independent public accountants for the
1997 fiscal year. The Company's management does not know of any matters other
than those discussed in this Proxy Statement that will be presented at the
Annual Meeting. If other matters are presented, all proxies will be voted in
accordance with the recommendations of the Company's management.
Returning your completed Proxy Form will not prevent you from voting in
person at the Annual Meeting if you are present and wish to vote. In addition,
you may revoke your proxy any time before it is voted by written notice to the
Secretary of the Company prior to the Annual Meeting at the Company's principal
executive offices at the address above or by submission of a later-dated proxy.
Each outstanding share of Common Stock entitles the holder thereof to one
vote on each matter to come before the Annual Meeting. As of January 3, 1997,
there were 6,531,715 shares of Common Stock outstanding. The presence in person
or by proxy of a majority of the shares of Common Stock outstanding will
constitute a quorum for the transaction of business. Pursuant to Delaware law,
abstentions are treated as present and entitled to vote, and therefore are
counted in determining the existence of a quorum and will have the effect of a
vote against any matter requiring the affirmative vote of a majority of the
shares present and entitled to vote at the Annual Meeting. Under Delaware law,
broker "non-votes" are considered present but
<PAGE>
not entitled to vote, and thus will be counted in determining the existence of a
quorum but will not be counted in determining whether a matter requiring
approval of a majority of the shares present and entitled to vote has been
approved or whether a plurality of the vote of the shares present and entitled
to vote has been cast.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's by-laws provide that the size of the Board shall be
fixed from time to time by resolution of the Board and that vacancies on the
Board may be filled by the remaining directors. At the beginning of the 1996
fiscal year, there were five persons serving as directors and there was one
vacancy on the Board. In May 1996, the Board elected James W. Milton to fill the
vacant directorship. At its August 20, 1996 meeting, the Board increased the
number of directors constituting the Board from six to nine members and elected
John E. Jones and Thomas A. Donahoe to fill two of the three newly created
directorships.
The Board is divided into three classes, each consisting of three
directors, who serve staggered three-year terms. Class I consists of Mr.
Milton, Mr. Jones and John W. Puth, whose terms expire at the 1999 Annual
Meeting. Class II consists of John T. Stirrup and Jean-Pierre M. Ergas, whose
terms expire at the 1997 Annual Meeting, and one vacant directorship. The Board
has not yet identified and nominated any person to fill the vacant directorship.
Class III consists of Warren J. Hayford, Alexander P. Dyer and Mr. Donahoe,
whose terms expire at the 1998 Annual Meeting. Each director is elected to
serve for the remaining term of any vacancy filled by the director or for a
three-year term (if elected at an annual meeting of stockholders) or until a
successor is duly elected.
Messrs. Stirrup and Ergas have been nominated for re-election at the
Annual Meeting as Class II directors. When the Board identifies a person to
fill the vacant directorship it will appoint that person to serve on the Board
until the 2000 Annual Meeting. See "Management--Nominee for Director" and
"Management--Continuing Directors" for information with respect to Messrs.
Stirrup and Ergas and the continuing directors of the Company. The Company
believes that each nominee is willing to be elected and to serve. In the event
that any nominee is unable to serve or is otherwise unavailable for election,
which is not now contemplated, the incumbent Board may or may not select a
substitute nominee. If a substituted nominee is selected, all proxies will be
voted for the person selected.
Directors will be elected at the Annual Meeting by a plurality of the
votes cast at the meeting by the holders of shares represented in person or by
proxy. There is no cumulative voting as to any matter, including the election
of directors.
The Board of Directors recommends a vote "FOR" the election of the nominees.
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PROPOSAL 2
APPROVAL OF THE AMENDMENT AND RESTATEMENT
OF THE COMPANY'S 1995 LONG-TERM INCENTIVE PLAN
Introduction
The Board initially adopted in May 1995, and the stockholders
initially approved in June 1995, two equity-based incentive plans: the Original
Plan and the Formula Plan for Non-employee Directors (the "Formula Plan"). The
Original Plan provided for the issuance of an aggregate of 490,000 shares of
Common Stock for a wide array of equity-based incentive grants for certain
directors, officers and key employees of the Company and its subsidiaries, but
contained limitations on participation in the Original Plan by those directors
responsible for making grants under the Original Plan. The Formula Plan
provided for the issuance of an aggregate of 100,000 shares of Common Stock
underlying options granted pursuant to a pre-determined formula to those
directors who were not permitted to participate in the Original Plan. Options
to acquire 30,000 shares of Common Stock have been granted pursuant to the
Formula Plan.
In response to the promulgation by the Securities and Exchange
Commission (the "SEC") of an amendment to Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which amendment became
effective in August 1996, the Board (i) approved the amendment and restatement
of the Original Plan (as so amended and restated, the "Amended Plan"), (ii)
directed that the Amended Plan be submitted for approval by the Company's
stockholders at the Annual Meeting and (iii) froze the Formula Plan with respect
to any future grants thereunder. The Amended Plan authorizes the Board to issue
an aggregate of 750,000 shares of Common Stock, which is 260,000 more shares of
Common Stock than were authorized under the Original Plan, and permits non-
employee directors to participate in grants under the Amended Plan while they
serve on the Compensation Committee of the Board (the "Compensation Committee"),
which authorizes those grants. The Board approved the Amended Plan and froze
the Formula Plan to simplify the Company's equity-based incentive programs and
increase the number of shares of Common Stock available for equity-based
incentive grants to enable the Company to continue to attract, motivate and
retain qualified employees, officers and directors.
The Company does not pay any cash compensation to directors. Instead,
the Company utilizes equity-based incentives to motivate and compensate
directors. Consistent with this policy, the Compensation Committee granted
under the Amended Plan, subject to stockholder approval of the Amended Plan, (i)
options to acquire 25,000 shares of Common Stock to each of Messrs. Donahoe and
Jones and (ii) options to acquire 17,800 shares of Common Stock to each of
Messrs. Dyer, Ergas and Puth. As discussed above, a portion of these grants are
a replacement of grants that would have been made pursuant to the Formula Plan,
which has now been frozen. See "Management--Compensation of Directors."
The summary of the Amended Plan that appears below is qualified by
reference to the full text of the Amended Plan, a copy of which may be obtained
from the Company at no charge.
Term
The Board and the stockholders initially approved the Original Plan as
of June 1, 1995 and the Board approved the Amended Plan and froze the Formula
Plan on August 20, 1996. The Amended Plan will
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<PAGE>
terminate on May 31, 2005 unless sooner terminated by the Board. Termination of
the Amended Plan will not affect grants made prior to termination, but no grants
will be made after termination.
Administration
The Amended Plan is administered by the Compensation Committee, which
must consist of at least two non-employee directors, as defined in Rule 16b-3
under the Exchange Act. In contrast, the Original Plan had been administered by
a committee (the "Old Committee") that had to consist of at least two Board
members, neither of whom could have been granted or awarded any equity
securities under the Original Plan (or any other discretionary plan of the
Company or any of its affiliates) during the 12 months immediately preceding his
or her appointment to the Old Committee. Currently, the Compensation Committee
consists of Messrs. Dyer, Donahoe, Ergas, Jones and Puth. Subject to the terms
of the Amended Plan, the Compensation Committee has been authorized to (i)
select persons to participate in the Amended Plan, (ii) determine the form and
substance of grants, and the conditions and restrictions, if any, subject to
which grants will be made under the Amended Plan, (iii) interpret the Amended
Plan and (iv) adopt, amend or rescind such rules and regulations for carrying
out the Amended Plan, as the Compensation Committee deems appropriate.
Eligibility
Directors (including non-employee directors), officers and key
employees of the Company and its subsidiaries selected by the Compensation
Committee may participate in the Amended Plan. Under the Original Plan, no
member of the Old Committee could receive grants under the Original Plan while
serving on the Old Committee. A grant of any type made under the Amended Plan
in any one year to an eligible employee shall neither guarantee nor preclude a
further grant of that or any other type to such person in that year or
subsequent years.
Securities Subject to the Amended Plan
An aggregate of 750,000 shares of Common Stock may be issued pursuant
to the Amended Plan (490,000 shares were authorized under the Original Plan and
100,000 shares were authorized under the Formula Plan). The shares to be
delivered under the Amended Plan may consist, in whole or in part, of authorized
but unissued Common Stock not reserved for any other purpose or treasury shares.
If any grant made pursuant to the Amended Plan terminates unexercised, becomes
unexercisable or is forfeited as to any shares of Common Stock, such unpurchased
or forfeited shares shall thereafter be available for grant unless, in the case
of stock options granted under the Amended Plan, related stock appreciation
rights ("SARs") are exercised. In the event of any changes in the Common Stock,
such as stock splits or other similar events described in the Amended Plan, the
Compensation Committee shall make appropriate adjustments in the number and kind
of shares subject to grants theretofore made to participants, in the exercise
price per share of stock options theretofore granted to participants and in the
number and kinds of shares which may be distributed under the Amended Plan. In
the event of any merger, consolidation or other reorganization in which the
Company is not the surviving or continuing corporation or in which a change in
control of the Company (as defined in the Amended Plan) is to occur, all of the
Company's obligations regarding options, SARs, performance awards and restricted
stock that were granted thereunder and that are outstanding on the date of such
event shall, on terms approved by the Compensation Committee, be assumed by the
surviving or continuing corporation or canceled in exchange for property
(including cash). The last reported sales price of the Common Stock on January
3, 1997 was $19.25. Based upon this price per share for the Company's Common
Stock, the aggregate market value of 750,000 shares of Common Stock is
$14,437,500.
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<PAGE>
Effect of Termination of Employment or Change in Control on Grants
If a participant dies or becomes disabled, all of the participant's
options and SARs shall become fully vested and exercisable and shall remain so
for a period of one year from the date of termination of employment, but in no
event after the expiration date of the option. Notwithstanding the foregoing,
if the disability giving rise to the termination of employment is not within the
meaning of Section 422(e)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), ISOs (as defined below) not exercised by such participant within
90 days after the date of termination of employment will cease to qualify as
ISOs and will be treated as NQOs (as defined below) under the Amended Plan if
required to be so treated under the Code.
If a participant retires as a director, officer or employee, (A) all
of his or her options and SARs that were exercisable on the date of retirement
shall remain exercisable for, and shall terminate at the end of, a period of up
to five years after the date of retirement, but in no event after the expiration
date of the option; provided that the participant does not compete with the
Company (as described in the Amended Plan) without the consent of the Board or
the Compensation Committee during such five year period and (B) all of the
participant's options and SARs that were not exercisable on the date of
retirement shall be forfeited immediately upon his or her retirement.
Notwithstanding the foregoing, ISOs not exercised by such participant within 90
days after retirement will cease to qualify as ISOs and will be treated as NQOs
under the Amended Plan if required to be so treated under the Code.
If a participant is terminated for cause, then all of his or her
options and SARs shall be forfeited immediately upon such termination. The
Amended Plan defines "cause" as conviction of a felony or any crime or offense
lesser than a felony involving the property of the Company or a subsidiary, or
conduct that has caused demonstrable and serious injury to the Company or a
subsidiary, monetary or otherwise, or willful refusal to perform or substantial
disregard of duties properly assigned, as determined by the Company.
Unless otherwise determined by the Compensation Committee, if a
participant ceases to be an employee of the Company or a subsidiary for any
reason other than death, disability, retirement or cause, (A) all of his or her
options and SARs that were exercisable on the date of termination shall remain
exercisable for, and shall terminate at the end of, a period of 90 days after
the date of termination of employment, but in no event after the expiration date
of the option; provided that participant does not compete with the Company (as
described in the Amended Plan) without the consent of the Board or the
Compensation Committee during such 90-day period, and (B) all of the
participant's options and SARs that were not exercisable on the date of such
termination shall be forfeited.
If there is a change in control of the Company (as described in the
Amended Plan), all of the participant's options and SARs shall become fully
vested and exercisable.
Stock Options
The Amended Plan authorizes grants of stock options to participants
from time to time as determined by the Compensation Committee. Options granted
under the Amended Plan may be Incentive Stock Options ("ISOs") as described in
Section 422 of the Code, Non-Qualified Stock Options ("NQOs"), or any
combination thereof. In any one calendar year, the Compensation Committee may
not grant to any one participant options to purchase more than 250,000 shares of
Common Stock. The option price shall be established by the Compensation
Committee, except that in the case of an ISO, the option price may not be less
than the fair market value of the shares of Common Stock of the Company subject
to such option at the close of the market on the day next preceding the grant of
the option unless otherwise permitted by Section
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<PAGE>
422 of the Code. In contrast, under the Original Plan, the option price could
not be less than the fair market value of the shares of Common Stock of the
Company subject to such option at the close of the market on the day next
preceding the grant of the option. In the case of an ISO granted to an employee
who owns stock representing more than ten percent of the voting power of the
Company, the option price may not be less than 110% of such fair market value.
Options will become exercisable at such times and in such installments as the
Compensation Committee shall determine, but the option may not be exercisable in
whole or in part, (i) in the case of an NQO or ISO, more than ten years from the
date it is granted or, (ii) in the case of an ISO granted to an employee who
owns stock representing more than ten percent of the voting power of the
Company, more than five years from the date it is granted if required by the
Code. Under the Original Plan, the term of an NQO was limited to ten years and
one day from the date of grant. Payment for shares received upon exercise of a
stock option may be made in cash or, in the discretion of the Compensation
Committee, in shares of Common Stock, in a combination of cash and shares, by
delivery of the optionee's promissory note or by special arrangement through a
broker selected by the Compensation Committee.
Unless otherwise determined by the Compensation Committee, a
participant may elect to deliver shares of Common Stock (or have the Company
withhold shares acquired upon exercise of the option) to satisfy in whole or in
part, the amount the Company is required to withhold for taxes in connection
with the exercise of an option. For purposes of this election, the fair market
value of the shares to be withheld or delivered will be the fair market value as
of the close of the market on the day next preceding the date the amount of tax
to be withheld is determined. Such election must be made on or before the date
the amount of tax to be withheld is determined. Once made, the election shall
be irrevocable. Prior to its amendment, the Original Plan had also provided
that such elections by insider optionees subject to Section 16(b) of the
Exchange Act were subject to any additional requirements as may be imposed from
time to time by the SEC.
Stock Appreciation Rights
The Amended Plan authorizes the Compensation Committee to affix stock
appreciation rights to stock options either at the time the option is granted or
at any date (prior to the option expiration) thereafter. The Amended Plan does
not permit the grant of stand alone SARs. SARs give an option holder the right
to surrender all or a portion of the option and receive from the Company a
payment, in shares of Common Stock, cash or a combination thereof (as determined
by the Compensation Committee), equal to the difference between the option
exercise price and the fair market value at the time of surrender. SARs are
exercisable only to the extent that the related options are exercisable. The
exercise of any option will result in an immediate forfeiture of its related
SAR, and the exercise of an SAR will cause an immediate forfeiture of the
related option. All SARs will be exercised automatically on the last day prior
to the expiration date of the related option, so long as the fair market value
of a share of Common Stock on that date exceeds the exercise price of the
related option. Under the Original Plan, if an optionee was subject to Section
16 of the Exchange Act, then such optionee: (i) could not exercise any SAR for
cash in complete or partial settlement thereof until the Company had been
subject to the reporting requirements of Section 13 of the Exchange Act for one
year; (ii) could exercise SARs for cash in complete or partial settlement
thereof only (A) during the periods (the "window periods") beginning on the
third business day following the date of release for publication by the Company
of quarterly and annual summary statements of sales and earnings and ending on
the twelfth business day following such date and (B) during such periods as
determined by the Old Committee in connection with a change in control and (iii)
could not exercise any SAR or related option during the first six months of
their respective terms, except in the event the death or disability of the
optionee occurred prior to the expiration of such six-month period. The Amended
Plan does not contain such restrictions.
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Stock Indemnification Rights
The Amended Plan, in contrast to the Original Plan, does not authorize
the Compensation Committee to grant stock indemnification rights.
Restricted Stock
Shares of restricted Common Stock may be awarded to participants from
time to time as determined by the Compensation Committee under the Amended Plan.
The Compensation Committee will determine the restrictions on such shares and
the duration of such restrictions (which shall be at least one year).
Participants will be required to deposit the shares with the Company during the
period of any restriction thereon and, except as otherwise provided by the
Compensation Committee, during any such period of restriction participants shall
have all of the rights of a holder of Common Stock, including but not limited to
the rights to receive dividends and to vote. Unless otherwise provided by the
Compensation Committee, all restrictions on shares of Common Stock shall lapse
on a change in control of the Company or on the termination of a participant's
employment due to death, disability or retirement with the consent of the
Company. On termination of a participant's employment for any other reason, all
restricted stock granted to such person on which the restrictions have not
lapsed shall be forfeited to the Company.
Performance Awards
The Amended Plan permits grants of performance awards to participants
from time to time as determined by the Compensation Committee. Performance
awards may include specific dollar value target awards, performance units and
performance shares. The value of a performance unit granted under the Amended
Plan shall be determined by the Compensation Committee at the time of grant,
while the value of a performance share shall be equal to the fair market value
of a share of Common Stock. The Compensation Committee will establish the time
periods over which performances will be measured (the "performance cycle") and
the performance goals for each performance cycle. The Compensation Committee
may adjust performance goals and objectives for any cycle for such reasons as it
deems appropriate. The value of a performance award or the portion of a
performance award that is actually earned by participants, or both, shall be
determined by the Compensation Committee based upon the extent to which the
performance goals are attained. Payment of earned performance awards may be
made to participants in cash, shares of Common Stock or a combination thereof,
as determined by the Compensation Committee.
Amendment or Substitution of Awards
The Compensation Committee may amend the terms of any outstanding
award under the Amended Plan from time to time in its discretion in any manner
that it deems appropriate (including, but not limited to, acceleration of the
date of exercise of any award and/or payments thereunder); provided that no such
amendment shall adversely affect in a material manner any right of a participant
under the award without his or her written consent, unless the Compensation
Committee determines in its discretion that there have occurred or are about to
occur significant changes in the participant's position, duties or
responsibilities, or significant changes in economic, legislative, regulatory,
tax, accounting or cost/benefit conditions which are determined by the
Compensation Committee in its discretion to have or to be expected to have a
substantial effect on the performance of the Company, on the Amended Plan or on
any award under the Amended Plan. However, the Compensation Committee may not
reduce the exercise price of an outstanding option. The Compensation Committee
may, in its discretion, permit holders of awards under the Amended Plan to
surrender outstanding awards in order to exercise or realize rights under other
awards, or in exchange for the
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<PAGE>
grant of new awards, or require holders of awards to surrender outstanding
awards as a condition precedent to the grant of new awards under the Amended
Plan.
The Compensation Committee may amend or modify the grant of any
outstanding option, SAR, performance award, or restricted stock in any manner to
the extent that the Compensation Committee would have had the authority to make
such grant as so modified or amended, including without limitation to change the
date or dates as of which (i) an option or SAR becomes exercisable, (ii) a
performance award is to be determined or paid, or (iii) restrictions on shares
of Common Stock issued pursuant to the Amended Plan are to be removed. No
modification may be made that would materially adversely affect any grant
previously made under the Amended Plan without the approval of the grantee. The
Compensation Committee may make minor or administrative modifications to the
Amended Plan as well as modifications that may be dictated by requirements of
federal or state laws applicable to the Company or that may be authorized or
made desirable by such laws.
Certain Federal Income Tax Consequences
The following is intended only as a brief summary of the Federal
income tax rules relevant to recipients of awards under the Amended Plan and
does not purport to be a complete enumeration or analysis of all potential
relevant tax effects. These rules are highly technical and subject to change in
the future. It is accordingly recommended that all award recipients consult
their own tax advisors concerning federal, state, local and foreign income and
other tax considerations relating to such awards and rights thereunder. In
particular, it is recommended that each award recipient consult his or her own
tax advisor as to the AMT (as defined below) consequences of an award and the
special tax considerations for a 16(b) Person (as defined below) and whether and
when to make a Section 83(b) Election (as defined below), using a stock swap or
stock withholding, utilizing financial assistance from the Company or receiving
an award in connection with a deferral of compensation.
Nonqualified Stock Options. An optionee does not recognize any
taxable income, and the Company is not entitled to a deduction, upon the grant
of an NQO. Upon the exercise of an NQO, the optionee recognizes ordinary income
(subject to wage and employment tax withholding) equal to the excess of the fair
market value of the shares acquired over the option price. The amount of such
excess is generally determined by reference to the fair market value of the
Common Stock on the date of exercise. However, in the case of an optionee
subject to six month short-swing profit liability under Section 16(b) of the
Exchange Act (a "16(b) Person") (typically, officers, directors and major
stockholders of the Company), such excess is determined by using the fair market
value on the date of exercise (or, if later, the date six months after the date
of grant unless such optionee elects to be taxed based on the fair market value
of the Common Stock on the date of exercise by filing an appropriate election
with the Internal Revenue Service within 30 days after the exercise date (a
"Section 83(b) Election")). An optionee's basis in the stock received is equal
to such stock's fair market value on the date of exercise (or on the date six
months after the date of grant, if later, in the case of an optionee who is a
16(b) Person and who makes no Section 83(b) Election). Generally, the Company
is entitled to a deduction equal to the compensation taxable to the optionee.
If an optionee sells shares acquired pursuant to the exercise of an
NQO, the optionee will recognize capital gain or loss equal to the difference
between the selling price of the shares and the optionee's basis in the shares.
Such capital gain or loss is long-term or short-term, depending on whether the
optionee has held the shares for more than one year. In the case of an optionee
who is a 16(b) Person and who makes no Section 83(b) Election, any such capital
gain will be long-term only if the stock has been held for more than
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one year after the later of the exercise date or the date six months after the
date of grant. The Company is not entitled to any deduction with respect to any
capital gain recognized by the optionee.
Capital losses on the sale of such shares may be used to offset
capital gains. The net capital gain of an individual taxpayer is subject to a
maximum rate of 28%. The maximum tax rate on ordinary income is 39.6%. If
capital losses exceed capital gains, then up to $3,000 of the excess losses may
be deducted from ordinary income. Remaining capital losses may be carried
forward to future tax years.
Incentive Stock Options. In general, an optionee does not recognize
taxable income on the grant or exercise of an ISO. However, the excess of the
stock's fair market value on the exercise date (the fair market value on the
exercise date or six months after the date of grant, whichever is later, is
likely to govern in the case of a 16(b) Person who makes no Section 83(b)
Election) over the option price will be included in the optionee's alternative
minimum taxable income and thereby may subject the optionee to an alternative
minimum tax. Such alternative minimum tax may be payable even though the
optionee receives no cash upon the exercise of his or her ISO with which to pay
such tax. Upon the disposition of shares of Common Stock acquired pursuant to
the exercise of an ISO (i) more than one year after the date of exercise, and
(ii) more than two years after the date of grant (the "Required Holding
Periods"), the optionee recognizes long-term capital gain or loss, as the case
may be, measured by the difference between the stock's selling price and the
exercise price. The Company is not entitled to any tax deduction by reason of
the grant or exercise of an ISO, or a disposition of stock received upon the
exercise of an ISO after the Required Holding Periods have been satisfied.
If an optionee disposes of the shares of stock acquired pursuant to
the exercise of an ISO before the expiration of the Required Holding Periods (a
"Disqualifying Disposition"), the difference between the exercise price of such
shares and the lesser of (i) the fair market value of the shares upon the date
of exercise (the fair market value on the exercise date or six months after the
date of grant, whichever is later, is likely to govern in the case of a 16(b)
Person who makes no Section 83(b) Election), or (ii) the selling price, will
constitute compensation taxable to the optionee as ordinary income. Generally,
the Company is allowed a corresponding tax deduction equal to the amount of
compensation taxable to the optionee. If the selling price of the stock exceeds
the fair market value on the exercise date (or six months after the date of
grant, if later, in the case of a 16(b) Person who makes no Section 83(b)
Election), the excess will be taxable to the optionee as capital gain (long-term
or short-term, depending upon whether the optionee held the stock for more than
one year). The Company is not allowed a deduction with respect to any such
capital gain recognized by the optionee.
Use of Common Stock to Pay Option Price. If an optionee delivers
previously-acquired Common Stock, however acquired, in payment of all or part of
the option price of an NQO, the optionee will not, as a result of such delivery,
be required to recognize as taxable income or loss any appreciation or
depreciation in the value of the previously-acquired Common Stock after its
acquisition date. The optionee's tax basis in, and holding period for, the
previously-acquired Common Stock surrendered carries over to an equal number of
the option shares received on a share-for-share basis. The fair market value of
the shares received in excess of the shares surrendered constitutes compensation
taxable to the optionee as ordinary income. Such fair market value is
determined on the date of exercise, except in the case of 16(b) Persons as
discussed above. The tax basis for such shares is equal to their fair market
value as so determined, and with respect to such shares, the holding period
begins on the date on which the fair market value of such shares is determined.
Generally, the Company is entitled to a tax deduction equal to the compensation
income recognized by the optionee.
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If an optionee delivers previously-acquired Common Stock (other than
stock acquired upon exercise of an ISO and not held for the Required Holding
Periods) in payment of all or part of the option price of an ISO, the optionee
will not be required to recognize as taxable income or loss any appreciation or
depreciation in the value of the previously-acquired Common Stock after its
acquisition date. The optionee's tax basis in, and holding period (for capital
gain, but not Disqualifying Disposition, purposes) for the previously-acquired
stock surrendered carries over to an equal number of the option shares received
on a share-for-share basis. Shares received in excess of the shares surrendered
have a tax basis equal to the amount paid (if any) in excess of the previously-
acquired shares used to pay the exercise price, and such shares' holding period
will begin on the date of exercise (with the possible exception of 16(b)
Persons). Proposed regulations provide that where an ISO is exercised using
previously-acquired stock, a later Disqualifying Disposition of the shares
received will be deemed to have been a disposition of the shares having the
lowest basis first.
If an optionee pays the exercise price of an ISO in whole or in part
with previously-acquired Common Stock that was acquired upon the exercise of an
ISO and that has not been held for the Required Holding Periods, the optionee
will recognize ordinary income (but not capital gain) under the rules applicable
to Disqualifying Dispositions. The Company will be entitled to a corresponding
deduction. The optionee's basis in the shares received in exchange for the
shares surrendered will be increased by the amount of ordinary income recognized
by the optionee.
Stock Appreciation Rights. A grantee does not recognize any taxable
income, and the Company is not entitled to a deduction, upon the grant of an
SAR. Upon the exercise of an SAR, the grantee will recognize ordinary income
equal to the amount of (i) cash payable to the grantee (if any) and (ii) the
fair market value of the Common Stock distributed to the grantee (if any) by
reason of such exercise.
Restricted Stock. An officer, employee or other individual who
receives Common Stock pursuant to a restricted stock award should not recognize
any taxable income upon the receipt of such award unless he or she makes a
Section 83(b) Election. Instead, the recipient should recognize taxable
compensation income at the time his or her interest in such shares is no longer
subject to the repurchase option imposed by the Amended Plan, in an amount equal
to the fair market value of such shares at such time minus the amount, if any,
paid for such shares. The tax basis of such shares to the recipient should be
equal to the amount includable in his or her gross income as compensation, and
his or her holding period for such shares should normally commence on the day
following the date on which such shares are no longer subject to the repurchase
option imposed by the Amended Plan. Dividends paid on restricted stock awards
should be included as compensation for federal income tax purposes when
received. In lieu of being taxed under the foregoing rules, the recipient may
elect to be taxed on compensation income equal to the fair market value of the
shares on the award date minus the amount, if any, paid for such shares by
making a Section 83(b) Election no later than 30 days after the award date. If
a recipient makes a Section 83(b) Election, his or her tax basis in his or her
shares should be equal to the amount includable in his or her gross income as
compensation plus the amount, if any, paid for such shares, and his or her
holding period in the shares should begin on the day following the award date.
Performance Awards. An officer, employee or other individual to whom
a performance unit is made should recognize no taxable income at the time such
award is made. Such person should recognize taxable income, however, at the
time cash is paid to him or her pursuant to such award, and the amount of such
income should be the amount of such cash.
Limits on Company Deductions. The company for which an individual is
performing services will generally be allowed to deduct amounts that are
includable in the income of such person as ordinary
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compensation income at the time such amounts are so includable, provided that
such amounts qualify as reasonable compensation for personal services actually
rendered. However, if, in any taxable year, an employee's total compensation
from the Company exceeds $1 million, compensation in excess of $1 million that
would otherwise be deductible by the Company may not be tax deductible under
Code Section 162(m) if such employee is a "covered employee" at the time the
compensation is included in the employee's taxable income. An employee is a
covered employee if he or she is the chief executive officer or one of the four
most highly compensated employees employed by the Company at the end of the
taxable year, whose compensation is required to be disclosed under the Exchange
Act at the end of the Company's taxable year. Compensation that is "performance-
based" within the meaning of Code Section 162(m) is excluded from the
calculation of taxable income subject to the $1 million deduction limit. The
Company intends that compensation realized upon the exercise of an option or SAR
granted under the Amended Plan be regarded as "performance-based" under Code
Section 162(m) and that such compensation be deductible without regard to the
limits of Code Section 162(m).
The affirmative vote of a majority of the votes cast at the Annual
Meeting by the holders of shares of Common Stock represented in person or by
proxy is required for approval of the amendment and restatement of the Original
Plan; provided that the total vote cast on this proposal represents a majority
of shares of Common Stock entitled to vote. Stockholder approval of the
amendment and restatement of the Original Plan is required for shares of Common
Stock issued pursuant to the Amended Plan to be listed for trading on the New
York Stock Exchange and for grants of options and SARs made pursuant to the
Amended Plan to qualify as performance-based compensation deductible by the
Company without limitation under Section 162(m) of the Code.
The Board of Directors recommends a vote "FOR" the approval of the amendment and
restatement of the Company's 1995 Long-Term Incentive Plan.
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PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of its Audit Committee,
has selected the accounting firm of Deloitte & Touche LLP to serve as
independent auditors of the Company with respect to the 1997 fis cal year to
examine the financial statements of the Company for the fiscal year ending
September 28, 1997 and to perform other appropriate accounting services.
Representatives of Deloitte & Touche LLP are expected to be present at
the Annual Meeting to respond to questions and to make a statement if they
desire to do so. If the stockholders do not ratify this appointment by the
affirmative vote of a majority of the shares represented in person or by proxy
at the Annual Meeting, other independent public accountants will be considered
by the Board of Directors upon recommendation by the Audit Committee.
The Board of Directors recommends a vote "FOR" ratification of the appointment
of Deloitte & Touche LLP as the Company's independent public accountants for
fiscal year 1997.
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MANAGEMENT
The following sets forth certain information as of January 3, 1997,
with respect to the Company's nominees for director, the Company's continuing
directors, and certain officers of the Company and its subsidiaries (including
all executive officers of the Company). Officers of the Company serve at the
discretion of the Board of Directors.
Nominees for Director
John T. Stirrup Age: 61
John T. Stirrup has served as President and Chief Operating Officer of
the Company since 1995, has served as President of Brockway Standard,
Inc. ("BSI"), a wholly-owned subsidiary of the Company, since 1989,
and has served as a director of the Company and BSI since 1989. Mr.
Stirrup joined Brockway, Inc. (later acquired by Owens-Illinois
Corporation) in 1980 and has held a variety of positions including:
Executive Vice President of the Company, 1989 to 1995; Group Vice
President of Metal & Plastic Packaging, Corporate Purchasing and
Regional Airlines of Brockway, Inc., 1985 to 1988; Vice President of
Sales and Marketing Brockway Glass Containers of Brockway, Inc., 1983
to 1985; Vice President of Operations Brockway Glass Containers of
Brockway, Inc., 1981 to 1983; and Vice President of Manufacturing
Brockway Glass Containers of Brockway, Inc., 1980 to 1981. Prior to
joining Brockway, Inc., Mr. Stirrup held several positions at Kerr
Glass Manufacturing Corp., including Vice President of Manufacturing.
Jean-Pierre M. Ergas Age: 57
Jean-Pierre M. Ergas has served as a director of the Company since
August 1995. Mr. Ergas has also served as Executive Vice President,
Europe of Alcan Aluminium Limited, President of Alcan Europe Limited,
Executive Chairman of British Alcan Aluminium plc. and Chief Executive
Officer of Alcan Deutschland GmbH since June 1996. Mr. Ergas served as
Senior Advisor to the Chief Executive Officer of Alcan Aluminium
Limited from January 1995 to June 1996 and served as a Trustee of
DePaul University from February 1994 to December 1994. Prior thereto,
Mr. Ergas served as Senior Executive Vice President of Pechiney S.A.
and as a member of the Pechiney Group Executive Committee from 1987 to
January 1994 and also held several management positions with various
subsidiaries of Pechiney S.A., serving as: Chief Executive Officer of
American National Can Company from 1989 to January 1994 and Chairman
of the Board from 1991 to January 1994; Chief Executive Officer of
Cegedur Pechiney from 1982 to 1988 and Chairman of the Board from 1987
to 1988; Chief Executive Officer of Cebal S.A. from 1974 to 1982 and
Chairman of the Board during 1982; and Marketing Manager for Pechiney
Aluminum from 1967 to 1974. Mr. Ergas is a director of ABC Rail
Products Corporation and Dover Corporation.
Continuing Directors
Warren J. Hayford Age: 67
Warren J. Hayford has been Chairman of the Board, Chief Executive
Officer and a director of the Company, as well as a director of BSI,
since 1989 and has served as Chairman of the Board and Chief Executive
Officer of BSI since 1994. Mr. Hayford has held a number of senior
positions within the packaging industry over the past thirty-five
years including President and Chief Operating Officer of Gaylord
Container Corporation ("Gaylord"), a manufacturer of paper packaging
products, 1986 to 1988, and Vice Chairman of Gaylord, 1988 through
1992. Prior to Gaylord, Mr. Hayford served as President and a director
of Gencorp, Inc., President and a director of Navistar International
Corporation and Executive Vice President and a director of the
Continental Group, Inc. Mr. Hayford has also been a director of
Gaylord since 1986.
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James W. Milton Age: 57
James W. Milton has served as Executive Vice President and a director
of the Company since May 1996 and as President of Milton Can Company,
Inc. ("MCC") since October 1996. MCC is a subsidiary of the Company
that acquired the assets of the aerosol can business of Ball Metal
Food Container Corporation in October 1996. From May 1996 to October
1996, Mr. Milton also served as President of Brockway Standard (New
Jersey), Inc. ("BSNJ") (formerly known as Milton Acquisition Corp.).
BSNJ is a subsidiary of the Company into which Milton Can Company,
Inc. ("Milton Can") was merged in connection with the Company's
acquisition of Milton Can in May 1996. MCC and Milton Can are two
separate and unrelated entities. Prior thereto, Mr. Milton held
several positions, including President, at Milton Can from 1963 until
it merged with and into BSNJ in May 1996. Mr. Milton also served as
Vice President of Van Dorn Company from 1983 to 1988 and as a director
of Van Dorn Company from 1984 to 1988. Mr. Milton is Chairman of the
Board of Directors of New Jersey Manufacturers Institute and a
director of the Can Manufacturers Institute.
Thomas A. Donahoe Age: 61
Thomas A. Donahoe has served as a director of the Company since August
1996. Mr. Donahoe was a partner in the accounting firm Price
Waterhouse LLP (the "Firm") from 1970 until he retired as an active
partner in June 1996. As a partner in the Firm, Mr. Donahoe held a
variety of positions including: Managing Partner--Operations of the
Firm's Audit Business Advisory Practice, July 1995 to June 1996; Vice
Chairman of the Firm, 1988 to June 1995; member of the Price
Waterhouse World Firm General Council, 1985 to June 1995; Managing
Partner of the Great Lakes Region, 1978 to June 1995; member of the
Firm's Management Committee; member of the Firm's Policy Board, 1976
to June 1995; and Managing Partner of the Chicago Office, 1976 to June
1994.
Alexander P. Dyer Age: 64
Alexander P. Dyer has served as a director of the Company since August
1995. Mr. Dyer served as Chairman of Bunzl plc. from May 1993 to
July 1996 and currently serves as its Deputy Chairman and as Chairman
of its Remuneration Committee. Mr. Dyer also currently serves as
consultant to The BOC Group plc., having retired in January 1996 as
its Chief Executive Officer and Deputy Chairman, in which capacities
he served from November 1993 to January 1996. Prior thereto, Mr. Dyer
served as Managing Director-Gases of The BOC Group plc. from 1989 to
1993 and worked for Air Products and Chemicals Inc. for 26 years,
serving most recently as Executive Vice President responsible for
worldwide gases and equipment businesses from 1987 to 1989.
John E. Jones Age: 62
John E. Jones has served as a director of the Company since August
1996. From 1989 until his retirement in 1996, Mr. Jones served as
Chairman, President and CEO of CBI Industries, Inc. Mr. Jones is a
director of Amsted Industries, Inc., Allied Products Corporation,
Interlake Corp., NICOR Inc. and Valmont Industries, Inc. Mr. Jones
also serves as Trustee or Director on a number of not-for-profit
entities, including: The Robert Crown Center, Glenwood School for
Boys, IMSA, Rush-Presbyterian-St. Luke's Medical Center and Brookfield
Zoo.
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John W. Puth Age: 67
John W. Puth has served as a director of the Company since August
1995. Since December 1987 Mr. Puth has served as President of J.W.
Puth Associates, an industrial consulting firm. From 1983 to 1987, Mr.
Puth was Chairman and President of Clevite Industries, Inc., a
manufacturer of industrial products. From 1975 to 1983, Mr. Puth was
President and Chief Executive Officer of Vapor Corporation. Mr Puth is
a director of Allied Products Corporation, A.M. Castle & Co., L.B.
Foster Company, Lindberg Corporation, System Software Associates, Inc.
and USFreightways Corporation as well as several privately-held
corporations.
Officers (Other Than Those who are Directors and Listed Above)
Robert C. Coleman Age: 51
Robert C. Coleman has been Vice President of Marketing for BSI since
1987. Mr. Coleman joined BSI in January 1987 after a 15 year career in
sales, marketing, and manufacturing with American Can Company.
Marguerite E. Ferrazzano Age: 48
Marguerite E. Ferrazzano has been Vice President of Operations
Analysis and Business Development for BSI since April 1994. From 1990
to May 1994, she served as Manager of Business Analysis and
Development for BSI. Ms. Ferrazzano served in a number of other
managerial financial positions with Brockway, Inc. (later acquired by
Owens-Illinois Corporation) from 1981 to 1990, including Manager of
Cost Accounting and Budgeting and Corporate Manager of Planning and
Divisional Accounting. From 1974 to 1981, Ms. Ferrazzano held various
financial positions at Borden, Inc.
David P. Hayford Age: 40
David P. Hayford has been Senior Vice President and Chief Financial
Officer of the Company and BSI since May 1996. From June 1995 to May
1996, Mr. Hayford served as Vice President, Treasurer and Secretary of
the Company and BSI. From June 1994 to June 1995, Mr. Hayford served
as an independent consultant to the Company. From August 1992 to June
1994, Mr. Hayford attended the Kellogg Graduate School of Management
at Northwestern University and graduated with a Master of Management
degree. From January 1992 until August 1992, Mr. Hayford provided
independent corporate and financial consulting services.
Richard E. Jakubecy Age: 50
Richard E. Jakubecy has served as Vice President, Sales and Marketing
for BSI since 1991 and has been with the Company since 1991. From 1987
to 1991, Mr. Jakubecy was general manager of the Total Quality
Performance process for Continental Beverage Packaging. Prior thereto,
he spent 18 years in direct sales and marketing positions with
Continental Beverage Packaging, most recently as Area Manager for the
southeastern and Midwestern regions.
Kevin C. Kern Age: 37
Kevin C. Kern has been Vice President and Corporate Controller of the
Company and BSI since May 1995. From 1991 to May 1995, Mr. Kern was
Controller of McKechnie Plastics Components, Inc. From 1981 to 1991,
Mr. Kern was employed by Ernst & Young, most recently as a Senior
Audit Manager from 1988 to 1991.
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<PAGE>
Harry F. Payton Age: 60
Harry F. Payton has served as Executive Vice President of the Company
and Executive Vice President of BSI since 1989 and as Group President-
Government Business of BSI since May 1994. From 1994 to 1995, Mr.
Payton served as Treasurer of BSI and has worked for the BSI
organization for over thirty years in various managerial positions.
Prior thereto, Mr. Payton was employed by a major public accounting
firm.
Robert R. Plante Age: 58
Robert R. Plante has served as Vice President-Engineering and
Technology for BSI since March 1996. From June 1995 to March 1996, Mr.
Plante served as Vice President-Operations of BSI. From 1992 to 1995,
Mr. Plante was General Manager of Doerfer Engineering Company. From
1987 to 1992, Mr. Plante was President and owner of Boating Center of
Baltimore, Inc., a full service marina. From 1984 to 1987, Mr. Plante
served as Vice President of Operations of Maryland Cup Corporation, a
subsidiary of Fort Howard Paper Company. Prior thereto, Mr. Plante was
employed by Boise Cascade and served in several positions, including
Manager of Manufacturing from 1977 to 1984, Area Manufacturing Manager
from 1974 to 1977 and Assistant to the Manager of Manufacturing from
1972 to 1973.
Patrick J. Rourke Age: 38
Patrick J. Rourke joined BSI in November 1994 as Vice President of
Purchasing and Logistics. From March 1993 to November 1994, Mr. Rourke
was Director of Purchasing for Ball Corporation's metal container
division. From 1987 to March 1993, Mr. Rourke was employed by Heekin
Can, serving as General Manager of Purchasing from 1992 to March 1993,
as Director of Purchasing from 1989 to 1992 and as Purchasing Manager
from 1987 to 1989. From 1980 to 1987 Mr. Rourke held positions of
increas ing responsibility within the purchasing organization of
Marathon Oil Company.
Blair G. Schlossberg Age: 30
Blair G. Schlossberg has served as General Counsel of the Company
since December 1995 and has served as Secretary of the Company and BSI
since May 1996. From 1991 to December 1995, Mr. Schlossberg was a
transactional associate at the law firm of Alston & Bird in its
Atlanta, Georgia offices.
Barry L. Treadwell Age: 54
Barry L. Treadwell has served as Executive Vice President of MCC since
October 1996. From May 1996 to October 1996, Mr. Treadwell served as
Executive Vice President of BSNJ. Prior thereto, Mr. Treadwell served
as Executive Vice President and a director of Milton Can from 1988
until it was merged with and into BSNJ in May 1996.
Clarence W. Wellman Age: 52
Clarence W. Wellman has served as Vice President of Sales for BSI
since June 1995. He joined BSI in May 1985 and served as National
Sales Manager of BSI from May 1985 to June 1995.
Following the receipt of the requisite approval from its security
holders, Gaylord filed a "prepackaged" bankruptcy plan under the Bankruptcy Code
in September 1992. The plan was confirmed by the Bankruptcy Court in October
1992, and was consummated in November 1992. Warren J. Hayford served as an
executive officer of Gaylord in 1992.
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David P. Hayford, Senior Vice President and Chief Financial Officer of
the Company and BSI, is the son of Warren J. Hayford, Chairman and Chief
Executive Officer of the Company and BSI. There are no other family
relationships between any of the foregoing persons.
Information About the Board of Directors
The Board of Directors met eight times during fiscal 1996. The Board
of Directors has standing Audit and Compensation Committees. Each director
attended 75% or more of the meetings of the Board of Directors and any
committees on which such director served during fiscal 1996.
Audit Committee. The Audit Committee of the Board of Directors is
composed of five directors (currently Messrs. Puth, Donahoe, Dyer, Jones and
Ergas). The Audit Committee makes recommendations to the Board of Directors
regarding the selection of independent auditors, reviews the independence of
such auditors, approves the scope of the annual audit activities of the
independent auditors, and reviews such audit results. The Audit Committee met
four times during fiscal 1996.
Compensation Committee. The Compensation Committee is composed of
five directors (currently Messrs. Dyer, Donahoe, Ergas, Jones and Puth). The
Compensation Committee makes recommendations to the Board regarding the
compensation of officers of the Company, awards under the Company's compensation
and benefit plans and compensation policies and practices. The Compensation
Committee met four times during fiscal 1996.
The Company does not have a nominating committee.
Compensation of Directors
Directors who are employees of the Company or its subsidiaries are not
entitled to receive any fees for serving as directors. Non-employee directors
of the Company do not receive cash fees for serving as directors. Non-employee
directors were entitled to participate in the Formula Plan until the Board acted
to freeze the Formula Plan at its August 20, 1996 meeting with respect to any
future option grants thereunder. Instead, the Company intends to grant non-
employee directors options to purchase Common Stock under the Amended Plan. All
directors are reimbursed for out-of-pocket expenses related to their service as
directors.
Formula Plan. Under the Formula Plan, each non-employee director was
to be granted an option to purchase 10,000 shares of Common Stock when he or she
was elected or appointed to the Board (the "Initial Grant") and was to be
granted an option to purchase an additional 10,000 shares at the fifth annual
meeting of the Board following the Initial Grant (the "Subsequent Grant"), so
long as such person was still serving as a director of the Company. A
director's right to exercise 1,000 shares of the Initial Grant vested
immediately upon grant. Thereafter, the right to exercise an additional 1,800
shares of the Initial Grant vested at each of the five next succeeding annual
meetings of the Board. Options granted pursuant to a Subsequent Grant vested in
equal installments of 2,000 shares at the five next succeeding annual meetings
of the Board following such grant. The option price per share of Common Stock
under the Formula Plan was 100% of the fair market value of the Common Stock at
the date of grant. Each option granted under the Formula Plan was exercisable
for ten years after the date of grant. The Board acted to freeze the Formula
Plan at its August 20, 1996 meeting with respect to any future option grants
thereunder.
Amended Plan. Under the Amended Plan, the Compensation Committee may
grant to directors (including non-employee directors) of the Company and its
subsidiaries Nonqualified Stock Options, stock
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appreciation rights in tandem with options, restricted stock awards, performance
awards, or any combination thereof as the Compensation Committee shall
determine. Options may be exercised in whole or in part upon the payment of the
exercise price of the shares to be acquired and the Compensation Committee shall
determine the term of the exercise period. The Company intends to grant each
non-employee director, under the Amended Plan, an option to purchase 25,000
shares of Common Stock when he or she is elected or appointed to the Board, with
each director's right to exercise 5,000 options vesting at each of the five next
succeeding annual meetings of the Board after the date of grant. The Company
intends to grant such options (i) at an option price per share of Common Stock
at 100% of the fair market value of the Common Stock at the date of grant and
(ii) with an expiration date ten years from the date of grant.
Consistent with these intentions, the Company granted to each of
Messrs. Donahoe and Jones, the two non-employee directors appointed to the Board
in August 1996, options under the Amended Plan to acquire 25,000 shares of
Common Stock subject to these terms. In addition, in August 1996 the Company
granted to its other non-employee directors, whose unvested portions of prior
option grants under the Formula Plan will vest at a rate of 1,800 options at
each of the next four annual meetings of the Board, options under the Amended
Plan to acquire (i) 12,800 shares of Common Stock, which will vest at a rate of
3,200 options at each of the next four annual meetings and (ii) 5,000 shares of
Common Stock, which will vest on the date of the fiscal 2000 annual meeting. As
a result, all the unvested options owned by each non-employee director will vest
at an equal rate of 5,000 options at each of the next five annual meetings of
the Board. Such option grants under the Amended Plan are subject to the
approval of stockholders of the Amended Plan. See "Proposal 2--Approval of the
Amendment and Restatement of the Company's 1995 Long-Term Incentive Plan."
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers, directors and persons who beneficially own more
than ten percent of a registered class of the Company's equity securities to
file reports of securities ownership and changes in such ownership with the SEC.
Certain officers, directors and greater than ten-percent beneficial owners also
are required by rules promulgated by the SEC to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to
the Company, or written repre sentations that no Form 5 filings were required,
the Company believes that each of its officers, directors and greater than ten-
percent beneficial owners complied with all Section 16(a) filing requirements
applicable to them during fiscal 1996, with the exception of (i) Mr. David
Hayford, who inadvertently failed to file a statement of changes in beneficial
ownership with respect to two transactions under the Company's 401(k) Plan and,
therefore, reported such transactions on a Form 5, which was filed more than 45
days after fiscal 1996 year end, (ii) Mr. Stirrup, whose annual statement of
changes in beneficial ownership reporting one profit sharing contribution of
shares of Common Stock by the Company was inadvertently filed more than 45 days
after fiscal 1996 year end and (iii) Mr. Ergas, whose annual statement of
changes in beneficial ownership was inadvertently filed more than 45 days after
fiscal 1996 year end.
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of January 3, 1997 by (i)
each stockholder known by the Company to own ben eficially 5 percent or more of
the outstanding shares of such Common Stock, (ii) each director and nominee for
director of the Company, (iii) each "named executive officer" of the Company and
BSI as defined below and (iv) all directors of the Company and executive
officers of the Company and BSI as a group. To the knowledge of the Company,
each stockholder has sole voting and investment power with respect to the shares
indicated as beneficially owned, unless otherwise indicated in a footnote.
Unless otherwise indicated, the business address of each person is the Company's
corporate address.
<TABLE>
<CAPTION>
Percent of
Beneficial Owner Number of Shares(1) Class(2)
- ----------------------- ------------------- ----------
<S> <C> <C>
Warren J. Hayford (3) 1,336,127 20.3%
Mary Lou Hayford (4) 1,234,182 18.9%
John T. Stirrup (5) 310,291 4.7%
David P. Hayford (6) 17,351 *
James W. Milton (7) 436,392 6.7%
Thomas A. Donahoe (8) 8,500 *
Alexander P. Dyer (9) 50,980 *
Jean-Pierre M. Ergas (10) 35,980 *
John E. Jones (11) 12,000 *
John W. Puth (12) 48,980 *
PNC Bank Corp. (13) 328,450 5.0%
One PNC Plaza
249 5th Avenue
Pittsburgh, PA 15222-2707
Wellington Management 389,000 6.0%
Company (14)
75 State Street
Boston, MA 02109
All directors and 2,256,601 34.0%
executive officers as a
group (9 persons)
</TABLE>
- --------------------------
(1) The number of shares includes shares of Common Stock subject to options
exercisable within 60 days of January 3, 1997.
-19-
<PAGE>
(2) Shares subject to options exercisable within 60 days of January 3, 1997 are
considered outstanding for the purpose of determining the percent of the
class held by the holder of such option, but not for the purpose of
computing the percentage held by others. Percentages less than one percent
are denoted by an asterisk.
(3) The shares of Common Stock beneficially owned by Mr. W. Hayford include
1,234,182 shares owned directly by his wife, Mary Lou Hayford, and 61,945
shares owned directly by Mr. W. Hayford. In addition, the shares of Common
Stock beneficially owned by Mr. W. Hayford include 40,000 shares subject to
options. Mr. W. Hayford disclaims beneficial ownership of the shares owned
directly by his wife.
(4) The shares of Common Stock beneficially owned by Mrs. Hayford do not
include 61,945 shares owned directly by her husband, Warren J. Hayford, and
do not include 40,000 shares subject to options owned directly by her
husband.
(5) The shares of Common Stock beneficially owned by Mr. Stirrup include 12,000
shares subject to options. The shares shown as beneficially owned by Mr.
Stirrup do not include 34,000 shares owned directly by his wife. Mr.
Stirrup disclaims beneficial ownership of the shares owned directly by his
wife.
(6) The shares of Common Stock beneficially owned by Mr. D. Hayford include
15,000 shares subject to options.
(7) The shares of Common Stock shown as beneficially owned by Mr. Milton
include 30,027 shares that have been deposited with an escrow agent under a
Stock Escrow Agreement to secure performance of certain obligations of Mr.
Milton as agent for the Selling Stockholders (as defined below) under an
Agreement and Plan of Merger and Reorganization among the Company, Milton
Can, Mr. Milton and the other stockholders of Milton Can (the "Selling
Stockholders"). All dividend income and other distributions paid on such
shares shall be distributed, and all voting rights of such shares shall be
exercised, by the escrow agent according to the instructions of Mr. Milton,
as agent for the Selling Stockholders. These shares will be released from
the escrow on May 28, 1997. The shares of Common Stock shown as
beneficially owned by Mr. Milton do not include 70,813 shares owned
directly by his wife, 50,991 owned by his wife as trustee of a trust for
the benefit of Sean A. Milton and 50,091 owned by his wife as trustee of a
trust for the benefit of Daniel T. Milton. Mr. Milton disclaims
beneficial ownership of the shares owned directly by his wife and the
shares owned by his wife as trustee of these trusts.
(8) The shares of Common Stock beneficially owned by Mr. Donahoe include 5,000
shares subject to options, which have been granted subject to the approval
of stockholders of the amendment and restatement of the Original Plan.
(9) The shares of Common Stock beneficially owned by Mr. Dyer include 7,800
shares subject to options. Of the shares subject to options, 3,200 have
been granted subject to the approval of stockholders of the amendment and
restatement of the Original Plan.
(10) The shares of Common Stock beneficially owned by Mr. Ergas include 7,800
shares subject to options. Of the shares subject to options, 3,200 have
been granted subject to the approval of stockholders of the amendment and
restatement of the Original Plan.
-20-
<PAGE>
(11) The shares of Common Stock beneficially owned by Mr. Jones include 5,000
shares subject to options, which have been granted subject to the approval
of stockholders of the amendment and restatement of the Original Plan.
(12) The shares of Common Stock beneficially owned by Mr. Puth include 7,800
shares subject to options. Of the shares subject to options, 3,200 have
been granted subject to the approval of stockholders of the amendment and
restatement of the Original Plan. The shares of Common Stock shown as
beneficially owned by Mr. Puth also include 5,000 shares owned by JDA
Partners, L.P., of which Mr. Puth is the general partner. Mr. Puth
disclaims beneficial ownership of the shares owned by JDA Partners, L.P.
except to the extent of his pecuniary interest therein.
(13) Based solely upon a Schedule 13G dated February 12, 1996 filed jointly by
each of PNC Bank Corp. and its subsidiaries PNC Bancorp, Inc., PNC Bank,
National Association, PNC Asset Management Group, Inc. and Provident
Capital Management, Inc., each of such entities has sole voting power with
respect to 306,710 shares of Common Stock and sole dispositive power with
respect to 328,450 shares of Common Stock.
(14) Based solely upon a Schedule 13G dated February 9, 1996, Wellington
Management Company has shared voting power with respect to 145,000 shares
of Common Stock and shared dispositive power with respect to 389,000 shares
of Common Stock. In its capacity as an investment advisor, Wellington
Management Company may be deemed beneficial owner of such shares, which are
owned by numerous investment counseling clients.
-21-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation
paid or accrued by the Company to the Chief Executive Officer and each of the
Company's other executive officers whose total annual salary and bonus for
fiscal 1996 exceeded $100,000 (the "Named Executive Officers") for services
rendered to the Company in all capacities during fiscal years 1996, 1995 and
1994.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------------------ -----------------------------------------------
Awards Payouts
------------------------- ----------------
All
Restricted Securities Other
Other Annual Stock Underlying LTIP Compen-
Name and Principal Fiscal Salary Bonus Compensation Awards Options/SARs Payouts sation
Position Year ($) ($)(1) ($) ($) (#) ($) ($)
- ---------------------------- ------- ------- ------- ------------ ---------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Warren J. Hayford (2)...... 1996 400,000 400,000 -- -- 22,500(3) -- 30,861(4)
Chairman of the Board 1995 133,000 200,000 -- -- 120,000(5) -- 352(6)
and Chief Executive 1994 -- -- -- -- -- -- --
Officer of the Company
and BSI
John T. Stirrup............ 1996 226,875 170,153 -- -- 22,500(3) -- 22,141(7)
President and Chief 1995 218,180 175,000 -- -- 36,000(5) -- 4,542(8)
Operating Officer of the 1994 195,000 66,300 -- -- -- -- 13,164(9)
Company and President of
BSI
David P. Hayford (10)...... 1996 139,619 59,625 -- -- 18,000(3) -- 2,933(11)
Senior Vice President 1995 45,329 13,125 -- -- 25,000(12) -- 61,527(13)
and Chief Financial 1994 -- -- -- -- -- -- --
Officer of the Company
and BSI
James W. Milton (14)....... 1996 75,000 50,000 -- -- 18,000(3) -- 118(15)
Executive Vice President 1995 -- -- -- -- -- -- --
of the Company and 1994 -- -- -- -- -- -- --
President of MCC
</TABLE>
(1) Amounts shown for fiscal 1994, 1995 and 1996 were earned during fiscal
1994, 1995 and 1996, respectively, under the Company's Management Incentive
Plan and were paid during fiscal 1995, 1996 and 1997, respectively.
(2) Warren J. Hayford became an employee of the Company effective June 1, 1995.
Prior to such date, Mr. Hayford had not been paid a salary or bonus by the
Company but was a stockholder and director of AB Leasing and Management,
Inc., which has provided management services to the Company in exchange for
the payment of a fee. See "Certain Relationships and Related
Transactions." Mr. Hayford also participated in certain benefit plans of
the Company prior to June 1, 1995.
(3) Options become exercisable in three equal annual installments with the
first installment exercisable on May 14, 1997, and were granted pursuant to
the Original Plan.
(4) The amount shown includes a $3,881 contribution under the Brockway
Standard, Inc. Profit Sharing and Savings Plan (the "Profit Sharing
Plan"), $1,248 premium for life insurance and $25,732 of premium for
additional optional life insurance for which Mr. W. Hayford was reimbursed
by the Company pursuant to his employment agreement.
(5) Options become exercisable in three equal annual installments with the
first installment exercisable on June 1, 1996, and were granted pursuant to
the Original Plan and the terms of the respective employment agreements
with Messrs. Hayford and Stirrup.
(6) The amount shown is $352 of premium for life insurance.
(7) The amount shown includes a $4,025 contribution under the Profit Sharing
Plan, $4,500 of Company matching 401(k) contributions under the Profit
Sharing Plan, $748 of premium for life insurance, $2,386 of premium for
Group Term Life Insurance and $10,482 of premium for additional optional
life insurance for which Mr. Stirrup was reimbursed by the Company pursuant
to his employment agreement.
(8) The amount shown includes a $2,970 contribution under the Profit Sharing
Plan earned during fiscal 1995 but paid during fiscal 1996 in the form of
156.316 shares of Common Stock, $991 of Company matching 401(k)
contributions under the Profit Sharing Plan and $581 of premium for life
insurance.
(9) The amount shown includes amounts contributed under the Profit Sharing Plan
and $156 of premium for life insurance.
(10) David P. Hayford became an employee of the Company effective June 15, 1995.
-22-
<PAGE>
(11) The amount shown includes a $1,096 contribution under the Profit Sharing
Plan, $1,400 of Company matching 401(k) contributions under the Profit
Sharing Plan and $437 of premium for life insurance.
(12) Options become exercisable in three annual installments, with an
installment of options to acquire 15,000 shares of Common Stock exercisable
on June 20, 1996 and installments of options to acquire 5,000 shares of
Common Stock exercisable on each of June 20, 1997 and June 20, 1998, and
were granted pursuant to the Original Plan.
(13) The amount shown includes $61,387 in reimbursements for relocation and
moving expenses and $140 of premium for life insurance.
(14) James W. Milton became an employee of the Company effective May 28, 1996.
(15) The amount shown is $118 of premium for life insurance.
In May 1995, the Company adopted the Original Plan for its directors,
officers and key employees of the Company and its subsidiaries. The Original
Plan was approved by the Company's stockholders in June 1995. The Original Plan
provided for the award of stock options, restricted shares of Common Stock,
stock appreciation rights, stock indemnification rights, units valued on the
basis of the long-term performance of the Company, or some combination of the
foregoing to participants. The Original Plan covered an aggregate of 490,000
shares of Common Stock. The Amended Plan, which the Board approved in August
1996 and which is submitted to the stockholders for approval at the Annual
Meeting, among other things increases this aggregate amount to 750,000 shares of
Common Stock. See "Proposal 2--Approval of the Amendment and Restatement of the
Company's 1995 Long-Term Incentive Plan."
The following tables set forth, for the Named Executive Officers,
information regarding stock options granted or exercised during, or held at the
end of, fiscal 1996.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term
------------------------------------------------------ ----------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options/SARs Employees Exercise
Granted in Price Expiration
Name (#)(1) Fiscal Year ($/Sh) Date 5%($)(2) 10%($)(2)
- ------------------- --------------- ------------- -------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Warren J. Hayford 22,500 8.0% $19 5/13/06 $268,852 $681,325
John T. Stirrup 22,500 8.0% 19 5/13/06 268,852 681,325
David P. Hayford 18,000 6.4% 19 5/13/06 215,082 545,060
James W. Milton 18,000 6.4% 19 5/13/06 215,082 545,060
</TABLE>
- ----------------------------
(1) Options become exercisable in three equal annual installments with the
first installment exercisable on May 14, 1997, and were granted pursuant to
the Original Plan. In the event of a Change of Control all options become
fully vested and exercisable. In order to prevent dilution or enlargement
of rights under the options, in the event of a reorganization,
recapitalization, stock split, stock dividend, combinations of shares,
merger, consolidation, distribution of assets or other change in the
corporate structure of shares of the Company, the type and number of shares
available upon exercise and the exercise price will be adjusted
accordingly. The Compensation Committee may, subject to specified
limitations, advance the date on which an option shall become exercisable.
(2) Amounts reflect assumed rates of appreciation from the fair market value on
the date of grant as set forth in the Securities and Exchange Commission's
executive compensation disclosure rules. Actual gains, if any, on stock
option exercises depend on future performance of the Common Stock and
overall stock market conditions. No assurance can be made that the amounts
reflected in these columns will be achieved.
-23-
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised In-the-
Unexercised Money
Options/SARs at Options/SARs at
Fiscal Year End (#) Fiscal Year End ($)
Shares
Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise (1) ($)(1) Unexercisable Unexercisable
- ----------------- --------------- --------------- ------------------ -------------------
<S> <C> <C> <C> <C>
Warren J. Hayford -- -- 40,000 $145,000
102,500 290,000
John T. Stirrup -- -- 12,000 43,500
46,500 87,000
David P. Hayford -- -- 15,000 54,375
28,000 36,250
James W. Milton -- -- -- --
18,000 0
</TABLE>
- -------------------------
(1) As of the end of the fiscal year, none of the options held by the Named
Executive Officers had been exercised.
Management Employment Agreements
Warren J. Hayford is party to an employment agreement with the Company
dated as of June 1, 1995. Under the agreement, Mr. Hayford will receive an
annual base salary of $400,000 (or such higher amount determined by the Board of
Directors), and will be eligible to receive an annual bonus of between 50% and
100% of his base salary, based on the achievement of goals and objectives
determined by the Board of Directors, and will be eligible to participate in all
of the Company's employee benefits plans for which senior executive employees of
the Company are generally eligible. Mr. Hayford will also be entitled to life
insurance providing a death benefit of not less than three times the amount of
his base salary. Under the agreement, Mr. Hayford received options to purchase
120,000 shares of Common Stock. The term of the employment agreement is six
years, unless terminated earlier by the resignation, death, or permanent
disability or incapacity of Mr. Hayford or by the Company with or without cause.
In the event Mr. Hayford's employment is terminated by the Company without cause
prior to the sixth anniversary of the agreement, Mr. Hayford will be entitled to
receive his base salary, health benefits and an annual bonus equal to 50% of his
base salary until the later of the sixth anniversary of the agreement or the
first anniversary of the date of such termination, subject to certain
conditions. In the event Mr. Hayford's employment terminates other than for
cause or as a result of his death, beginning on his 74th birthday, Mr. Hayford
(and, following his death, his surviving spouse) will be entitled to a monthly
supplemental retirement benefit until his death (and, following his death, until
the death of his surviving spouse). The monthly benefit will be equal to one-
twelfth of 20 to 50 percent (depending upon Mr. Hayford's age at retirement or
death and subject to adjustment upon a change in control) of Mr. Hayford's base
salary in effect immediately preceding his retirement or death. Mr. Hayford has
agreed not to compete with the Company during the term of his employment and so
long as he is receiving salary and bonus under the agreement as a result of his
termination by the Company without cause (but in no event for less than three
years after the termination of his employment).
-24-
<PAGE>
John T. Stirrup is party to an employment agreement with the Company dated
as of June 1, 1995. Mr. Stirrup will receive an annual base salary of $220,000
(or such higher amount determined by the Board of Directors), and will be
eligible to receive an annual bonus of between 50% and 75% of his base salary,
based on the achievement of goals and objectives determined by the Board of
Directors, and will be eligible to participate in all of the Company's employee
benefits plans for which senior executive employees of the Company are generally
eligible. Mr. Stirrup is also entitled to life insurance providing a death
benefit of not less than two times the amount of his base salary. The Company
will nominate, and use its best efforts to elect, Mr. Stirrup to serve as a
member of the Board of Directors. Under the agreement, Mr. Stirrup received
options to purchase 36,000 shares of Common Stock. The term of the employment
agreement is three years, unless terminated earlier by the resignation, death,
or permanent disability or incapacity of Mr. Stirrup or by the Company with or
without cause. In the event Mr. Stirrup's employment is terminated by the
Company without cause prior to the third anniversary of the agreement, Mr.
Stirrup will be entitled to receive his base salary, health benefits and an
annual bonus equal to 50% of his base salary until the later of the third
anniversary of the agreement or the second anniversary of the date of such
termination, subject to certain conditions. In the event Mr. Stirrup's
employment has not been terminated for cause, and subject to certain conditions,
Mr. Stirrup will be entitled to deferred payments of $75,000 per year for a
period of 10 years beginning on Mr. Stirrup's 70th birthday or, in the event of
Mr. Stirrup's death, Mr. Stirrup's surviving spouse will be entitled to receive
50% of such deferred payments during such period. Mr. Stirrup has agreed not to
compete with the Company during the term of his employment and so long as he is
receiving salary and bonus under the agreement as a result of his termination by
the Company without cause (but in no event for less than two years after the
consummation of the Company's initial public offering ("IPO") of its Common
Stock in June 1995 or one year after the termination of his employment).
David P. Hayford is party to an employment agreement with the Company dated
as of June 15, 1995. Under the agreement, Mr. Hayford receives an annual base
salary of $120,000 (or such higher amount deter mined by the Board of
Directors), and is eligible to receive an annual bonus based on his performance,
the amount of which will be determined by the Board, and is eligible to
participate in all of the Company's employee benefits plans for which senior
executive employees of the Company are generally eligible. Mr. Hayford is also
entitled to participate in the Amended Plan. The term of the employment
agreement is three years, unless terminated earlier by the resignation, death,
or permanent disability or incapacity of Mr. Hayford or by the Company with or
without cause. Mr. Hayford has agreed not to compete with the Company during
the term of his employment and so long as he is receiving salary and bonus under
the agreement as a result of his termination by the Company without cause (but
in no event for less than twelve months after the termination of his
employment).
James W. Milton entered into an employment agreement with the Company and
BSNJ (formerly known as Milton Acquisition Corp.), a wholly-owned subsidiary of
the Company, on May 28, 1996. Mr. Milton, the Company, BSNJ and MCC amended
this agreement, effective as of November 1, 1996, to reflect the fact that Mr.
Milton now serves as President of MCC, rather than President of BSNJ. Under the
agreement, Mr. Milton will receive an annual base salary of $200,000 (or such
higher amount determined by the Board of Directors), and will be eligible to
receive an annual bonus of between 50% and 75% of his base salary, based on the
achievement of goals and objectives determined by the Board of Directors, and
will be eligible to participate in all of MCC's employee benefits plans for
which senior executive employees of MCC are generally eligible. Such employee
benefit programs shall be substantially similar to those benefit programs
available to the senior executive employees of the Company. Under the
agreement, the Company will pay all premiums and expenses payable to maintain
the life insurance policy for Mr. Milton that was purchased by Milton Can prior
to its merger with and into BSNJ. The term of the employment agreement is five
years, unless terminated earlier by the resignation, death, or permanent
disability or incapacity of
-25-
<PAGE>
Mr. Milton or by MCC with or without cause. In the event Mr. Milton's
employment is terminated by MCC without cause prior to the fifth anniversary of
the agreement, Mr. Milton will be entitled to receive his base salary, health
benefits and an annual bonus equal to 50% of his base salary until the later of
the fifth anniversary of the agreement or the first anniversary of the date of
such termination, subject to certain conditions. In the event Mr. Milton's
employment terminates other than for cause or as a result of his death,
beginning on his 65th birthday, Mr. Milton will be entitled to a monthly
supplemental retirement benefit until his death. The monthly benefit will be
equal to one-twelfth of 5 to 50 percent (depending upon Mr. Milton's age at
retirement or death and subject to adjustment upon a change in control) of Mr.
Milton's base salary in effect immediately preceding his retirement or death.
In the event Mr. Milton's spouse survives Mr. Milton, she will be entitled until
her death to a monthly benefit equal to 50% of the monthly benefit that Mr.
Milton (i) would have been entitled to had Mr. Milton retired on the date of his
death or (ii) was receiving at the time of his death. However, if Mr. Milton
dies before his 60th birthday, she will be entitled until her death to a monthly
benefit equal to one-twelfth of 10 percent of Mr. Milton's base salary in effect
immediately preceding his death. Mr. Milton has agreed not to compete with the
Company, MCC or their subsidiaries for a period of three years after the
termination of his employment. In addition, Mr. Milton is party to a non-
competition agreement with the Company and BSNJ dated as of May 28, 1996,
pursuant to which Mr. Milton has (among other things) agreed not to compete with
the Company, BSNJ or their subsidiaries prior to the fifth anniversary of the
non-competition agreement in exchange for certain compensation. See "Certain
Relationships and Related Transactions."
Compensation Committee Interlocks and Insider Participation
Messrs. Puth, Dyer and Ergas served as members of the Compensation
Committee during all of fiscal 1996. Messrs. Donahoe and Jones have served as
members of the Compensation Committee since August 20, 1996. The Company has no
Compensation Committee interlocks or insider participation relationships of such
persons with the Company to report.
Compensation Committee Report on Executive Compensation
The Compensation Committee reviews and makes recommendations to the Board
regarding salaries, compensation and benefits of executive officers and key
employees of the Company and develops and administers programs providing stock-
based incentives. After consideration of the Compensation Committee's
recommendations, the entire Board reviews and approves the salaries and bonuses
and the stock and benefit programs for the Company's executive officers. This
Compensation Committee report documents the components of the Company's
executive officer compensation programs and describes the bases upon which
compensation will be determined by the Compensation Committee with respect to
the executive officers of the Company.
This Compensation Committee report 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 Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
Compensation Philosophy. The compensation philosophy of the Company is to
link executive compensation to continuous improvements in corporate performance
and increases in stockholder value. The goals of the Company's executive
compensation programs are as follows:
-26-
<PAGE>
. To establish pay levels that are necessary to attract and retain
highly qualified executives in light of the overall
competitiveness of the market for high quality executive talent.
. To recognize superior individual performance, new
responsibilities and new positions within the Company.
. To balance short-term and long-term compensation to complement
the Company's annual and long-term business objectives and
strategy and to encourage executive performance in furtherance of
the fulfillment of those objectives .
. To provide variable compensation opportunities based on the
Company's performance.
. To encourage stock ownership by executives.
. To align executive remuneration with the interests of
stockholders.
Compensation Program Components. The Compensation Committee regularly
reviews the Company's compensation program to ensure that pay levels and
incentive opportunities are competitive with the market and reflect the
performance of the Company. The particular elements of the compensation program
for executive officers are further explained below.
Base Salary. The base pay level for each of the Named Executive
Officers is set forth in each such executive's employment agreement. Base
pay levels were negotiated with Messrs. W. Hayford, Stirrup and D. Hayford
in connection with the IPO and were determined in part by comparing the
salary scale with that of similar companies. Mr. Milton's base pay level
was negotiated in May 1996 contemporaneously with BSNJ's acquisition of
Milton Can, after which he was hired as President of BSNJ. See "Executive
Compensation--Management Employment Agreements."
Annual Incentives. Annual bonuses for Messrs. W. Hayford, Stirrup and
D. Hayford are determined by the Compensation Committee in its discretion
based on achievement of goals and objectives determined by it and in
accordance with their respective employment agreements, and were negotiated
in connection with the Company's IPO. Annual bonuses for Mr. Milton are
determined annually by the Compensation Committee. See "Executive
Compensation--Management Employment Agreements." The Company uses annual
bonuses to enhance management's contribution to stockholder returns by
offering competitive levels of compensation for the attainment of the
Company's financial objectives. In particular, the Company utilizes annual
bonuses to focus corporate behavior on the achievement of goals for growth,
financial performance and other items.
Stock Ownership. The Compensation Committee believes that it can align
the interests of stockholders and executives by providing those persons who
have substantial responsibility over the management and growth of the
Company with an opportunity to establish a meaningful ownership position in
the Company. Under the Company's Original Plan, the Company granted stock
options to Messrs. W. Hayford, Stirrup, D. Hayford and Milton during fiscal
1996. See "Executive Compensation--Option/SAR Grants in Last Fiscal Year."
In addition, the Company granted other
-27-
<PAGE>
key employees stock options during fiscal 1996, which grants are subject to
the approval of stockholders of the Amended Plan.
Chief Executive Officer Compensation. The base pay level and annual
incentive bonus compensation for Mr. Warren Hayford, the Company's Chief
Executive Officer, are determined by the Compensation Committee in its
discretion based on achievement of goals and objectives determined by it and in
accordance with his employment agreement. Pursuant to his employment agreement,
Mr. Warren Hayford's base salary for the year beginning on June 1, 1996 and
ending on May 31, 1997 was set at $400,000, subject to further increases at the
discretion of the Board. See "Compensation Program Components--Stock Ownership"
and "Executive Compensation--Management Employment Agreements."
In accordance with the Compensation Committee's compensation philosophy and
the factors described above, the Compensation Committee authorized a grant in
May 1996 to Mr. Warren Hayford of options to purchase 22,500 shares of Common
Stock at $19.00.
Certain Tax Considerations. Section 162(m) of the Internal Revenue Code of
1986, as amended, limits the deductibility on the Company's tax return of
compensation over $1 million to any of the Named Executive Officers, unless, in
general, the compensation is paid pursuant to a plan which is performance-based,
non-discretionary and has been approved by the Company's stockholders. The
Company's policy with respect to Section 162(m) is to make reasonable efforts to
ensure that compensation is deductible without limiting the Company's ability to
attract and retain qualified executives.
Summary. After its review of all existing programs, the Compensation
Committee believes that the total compensation program for executives of the
Company is focused on increasing values for stockholders and enhancing corporate
performance. The Compensation Committee currently believes that the
compensation of executive officers is properly tied to stock appreciation
through stock options or stock ownership. The Compensation Committee believes
that executive compensation levels at the Company are competitive with the
compensation programs provided by other corporations with which the Company
competes. The foregoing report has been approved by all members of the
Compensation Committee.
COMPENSATION COMMITTEE
Alexander P. Dyer
Thomas A. Donahoe
Jean-Pierre M. Ergas
John E. Jones
John W. Puth
-28-
<PAGE>
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total stockholder
return on an investment of $100 since June 20, 1995, the Company's initial
trading date, with that of the Nasdaq Total Return Composite Index (U.S.
Companies) and the Dow Jones Complete Return Index (Complete Industrial Sector).
[PERFORMANCE GRAPH APPEARS HERE]
MEASUREMENT PERIOD
(FISCAL YEAR COVERED FOR
FISCAL 1996 AND PERIOD
BETWEEN INITIAL TRADING
DATE AND END OF FISCAL 1995
COVERED FOR FISCAL 1995) BWAY NASDAQ TRCI DOW JONES CRI
- --------------------------- ---- ----------- -------------
6/20/95 $100.00 $100.00 $100.00
9/29/95 118.97 112.45 105.36
9/27/96 125.00 132.29 129.21
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1995, pursuant to the Company's employee stock repurchase
program then in effect, the Company repurchased 20,000 shares of Common Stock
owned by Mr. Stirrup at a price per share equal to $15.50, which price was
determined based upon the closing price of the Company's Common Stock on the
date immediately preceding the date the Company received Mr. Stirrup's notice of
his intent to sell. In January 1996, pursuant to the Company's employee stock
repurchase program then in effect, the Company again repurchased another 20,000
shares of Common Stock owned by Mr. Stirrup at a price per share equal to
$15.50, which price was determined based upon the closing price of the Company's
Common Stock on the date immediately preceding the date the Company received Mr.
Stirrup's notice of his intent to sell.
Mr. Milton is party to a non-competition agreement with the Company and
BSNJ dated as of May 28, 1996. Pursuant to the terms of the agreement, Mr.
Milton may not compete with, induce any employee to leave their employ with,
hire any person who was an employee of, own, manage, control or render services
to any business in competition with or induce any supplier, licensor or other
business relation to cease doing business with the Company, BSNJ or any of their
respective subsidiaries. In consideration of the non-competition covenants, Mr.
Milton will be entitled to $2,000,000 paid by BSNJ in twenty equal installments
of $100,000 per quarter during the term of the agreement payable on the first
day of each June, October, January and April. The agreement will continue for
five years from the date of the agreement.
BSNJ is party to a lease agreement with Division Street Partners ("DSP"), a
limited partnership, pursuant to which BSNJ leases its headquarters and
manufacturing facility. Mr. Milton, his brother George Milton, his brother
Patrick Milton and another brother of Mr. Milton each hold (i) a 12.5% limited
partnership interest in DSP and (ii) a 12.5% interest in the general partner of
DSP. George Milton is an employee of MCC and Patrick Milton is an employee of
BSI. BSNJ is obligated to pay annual rent in the amount of $629,484 through the
term of the lease, which ends in September 1999. BSNJ has the option to extend
the term of the lease for two additional five-year periods.
BSNJ is party to another lease agreement pursuant to which BSNJ leases a
warehouse. Mr. Milton and certain of his immediate family members are part of a
group that has an option to purchase this property from the lessor through
September 1999. BSNJ is obligated to pay annual rent in the amount of $137,038
through the term of the lease, which ends in September 1999.
In connection with the Company's acquisition of Milton Can in May 1996,
BSNJ assumed a $125,000 mortgage on Mr. Treadwell's home. Subsequent to the
consummation of the acquisition transactions, the Company canceled the total
amount owed by Mr. Treadwell to BSNJ.
As an employee of the Company in fiscal 1996, Susan Luciu received $64,000
in salary and bonuses from the Company. Susan Luciu is the daughter of Warren
J. Hayford, Chairman and Chief Executive Officer of the Company, and the sister
of David P. Hayford, Senior Vice President and Chief Financial Officer of the
Company.
In the ordinary course of its business, the Company purchases from Gaylord
certain corrugated con tainers used to ship the Company's products to its
customers. Such purchases amounted to $25,860 during fiscal 1996. All such
purchases are made at the prevailing market price for such containers. Mr. W.
Hayford is a stockholder and director of Gaylord.
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<PAGE>
SOLICITATION AND EXPENSES OF SOLICITATION
The solicitation of proxies will be made initially by mail. The Company's
directors, officers and employees may also solicit proxies in person or by
telephone without additional compensation. In addition, proxies may be
solicited by certain banking institutions, brokerage firms, custodians,
trustees, nominees and fiduciaries who will mail material to or otherwise
communicate with the beneficial owners of shares of the Company's Common Stock.
All expenses of solicitation of proxies will be paid by the Company.
ANNUAL REPORT AND FORM 10-K
Copies of the Company's Annual Report to Stockholders, which includes
portions of the Company's Annual Report on Form 10-K for the Fiscal Year ended
September 29, 1996, are being mailed with this Proxy Statement to each
stockholder entitled to vote at the Annual Meeting. Stockholders not receiving
a copy of the Annual Report may obtain one by writing or calling Mr. Blair G.
Schlossberg, General Counsel and Secretary, BWAY Corporation, 8607 Roberts
Drive, Suite 250, Atlanta, Georgia 30350, telephone (770) 587-0888.
SUBMISSION OF STOCKHOLDER PROPOSALS
FOR THE 1998 ANNUAL MEETING
Stockholder proposals for inclusion in the Proxy Statement to be issued in
connection with the 1998 Annual Meeting of Stockholders must be mailed to the
Corporate Secretary, BWAY Corporation, 8607 Roberts Drive, Suite 250, Atlanta,
Georgia 30350, and must have been received by the Corporate Secretary on or
before September 29, 1997. The Company will consider only proposals meeting the
requirements of applicable SEC rules.
The Board of Directors
January 27, 1997
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<PAGE>
BWAY CORPORATION
8607 Roberts Drive, Suite 250
Atlanta, Georgia 30350
PROXY
Solicited by the Board of Directors
The undersigned hereby appoints David P. Hayford and Blair G. Schlossberg,
and each of them, proxies, with power of substitution and revocation, acting
together or, if only one is present and voting, then that one, to vote the stock
of BWAY Corporation which the undersigned is entitled to vote at the Annual
Meeting of Stockholders to be held on February 28, 1997 and at any adjournments
or postponements thereof, with all the powers the undersigned would possess if
personally present, as designated herein and authorizes the proxies to vote in
accordance with the recommendations of the Company's management upon such other
business as may properly come before the Annual Meeting of Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1, 2, AND 3.
1. Election of directors FOR all nominees [_] WITHHOLD AUTHORITY [_]
(except as indicated) to vote for all nominees
Nominees: John T. Stirrup and Jean-Pierre M. Ergas
(To withhold authority to vote for any nominee, strike out that
nominee's name.)
2. Approval of the amendment and restatement of the Company's 1995 Long-Term
Incentive Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
3. Ratification of the appointment of Deloitte & Touche LLP as the Company's
independent public accountants.
[_] FOR [_] AGAINST [_] ABSTAIN
(Continued and to be signed and dated on the reverse side.)
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
THE NOMINEES LISTED IN ITEM 1 AND FOR ITEMS 2 AND 3.
Please date and sign exactly as names appear on
this Proxy. Joint owners should each sign.
Trustees, executors, etc. should indicate the
capacity in which they are signing.
Dated:_____________________________________, 1997
Signature(s):_____________________________________
[_] Check here if you plan __________________________________________________
to attend the annual
meeting.
[_] Check here for address
change.
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