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 Paragraph 240.14a-11(c)
or Paragraph 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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[Logo]
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 27, 1998, 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>
[Logo]
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 27, 1998,
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 three directors to hold office for
a term of three years;
2. The approval of the second amendment and
restatement of the Company's Amended and
Restated 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 27, 1998; 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 5, 1998 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 22, 1998
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. YOU MAY NEVERTHELESS VOTE
IN PERSON IF YOU ATTEND THE ANNUAL MEETING. IN ADDITION,
YOUR PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS VOTED BY
WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY OR BY
DELIVERY OF A LATER-DATED PROXY.
<PAGE>
[Logo]
8607 Roberts Drive, Suite 250
Atlanta, Georgia 30350
PROXY STATEMENT
Annual Meeting of Stockholders
to be held on
February 27, 1998
This proxy statement (this "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 27, 1998 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 three directors to the
Board, to approve the second amendment and restatement of
the Company's Amended and Restated 1995 Long-Term Incentive
Plan and to ratify the appointment of Deloitte & Touche LLP
as the Company's independent public accountants for the 1998
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 28, 1997, are being mailed on or about
January 22, 1998 to holders of record of the Common Stock at
the close of business on January 5, 1998.
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
second amendment and restatement of the Company's Amended
and Restated 1995 Long-Term Incentive Plan and FOR the
ratification of the appointment of Deloitte & Touche LLP as
the Company's independent public accountants for the 1998
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 5, 1998, there
were 9,485,905 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
<PAGE>
entitled to vote at the Annual Meeting. Under Delaware law,
broker "non-votes" are considered present but 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. The Board currently
consists of eight directors, who are divided into three
classes, each consisting of three directors, who serve
staggered three-year terms. Class I consists of James W.
Milton, John E. 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 2000 Annual Meeting, and one vacant
directorship. The Board has not yet identified and
nominated any person to fill the vacant Class II
directorship. When the Board identifies a person to fill
the vacant Class II directorship it will appoint that person
to serve on the Board until the 2000 Annual Meeting. Class
III consists of Warren J. Hayford, Thomas A. Donahoe and
Alexander P. Dyer, 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. Hayford, Donahoe and Dyer have been nominated
for re-election at the Annual Meeting as Class III
directors. See "Management Nominees for Director" and
"Management Continuing Directors" for information with
respect to Messrs. Hayford, Donahoe and Dyer 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.
<PAGE>
PROPOSAL 2
APPROVAL OF THE SECOND AMENDMENT AND RESTATEMENT
OF THE COMPANY'S AMENDED AND RESTATED 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 Company's 1995 Long-Term
Incentive Plan (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 735,000 shares of Common Stock (after
giving effect to the 3-for-2 split of the Company's
Common Stock on September 22, 1997 (the "Stock Split")) for
a wide array of equity-based incentive grants for
certain directors, officers, employees and consultants of
the Company and its subsidiaries. The Formula Plan
provided for the issuance of an aggregate of 150,000 shares
of Common Stock (after giving effect to the Stock
Split) 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 45,000 shares of Common Stock (after giving effect
to the Stock Split) 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 "Current Plan") and (ii) froze the Formula
Plan with respect to any future grants thereunder. The
stockholders approved the Current Plan in February 1997.
The Current Plan authorizes the Board to issue an aggregate
of 1,125,000 shares of Common Stock (after giving effect to
the Stock Split) and permits non-employee directors to
participate in grants under the Current Plan while they
serve on the Compensation Committee of the Board (the
"Compensation Committee"), which authorizes those grants.
The Board has approved the second amendment and
restatement of the Current Plan (as so amended and
restated, the "Amended Plan") and directed that the Amended
Plan be submitted for approval by the Company's
stockholders at the Annual Meeting. The Amended Plan
authorizes the Board to issue an aggregate of 1,425,000
shares of Common Stock, which is 300,000 more shares of
Common Stock than are authorized under the Current
Plan, and grants the Compensation Committee authority to
permit participants in the Amended Plan to more
freely transfer certain options granted under the Amended
Plan under certain circumstances. The Board approved
the Amended Plan to 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, directors and
consultants. The Company does not pay any cash compensation
to directors. Instead, the Company utilizes
equity-based incentives to motivate and compensate
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 Amended Plan will 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.
<PAGE>
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.
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,
employees and consultants of the Company and its
subsidiaries selected by the Compensation Committee may
participate in the Amended Plan. A grant of any
type made under the Amended Plan in any one year to an
eligible participant 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 1,425,000 shares of Common Stock may be
issued pursuant to the Amended Plan (1,125,000 shares were
authorized under the Current Plan). The shares to be
delivered under the Amended Plan may consist, in whole or in
part, of authorized but unissued shares of 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 16, 1998 was $21.38. Based upon
this price per share for the Company's Common Stock, the
aggregate market value of 1,425,000 shares of Common Stock
is $30,466,500.
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 service to the
Company, but in no event after the expiration date of the
option. Notwithstanding the foregoing, if the disability
giving rise to such termination 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
<PAGE>
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,
employee or consultant, (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 ceases to be a director, officer,
employee or consultant of the Company due to cause, all
of his or her options and SARs shall be forfeited
immediately upon such cessation. 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 a director,
employee or consultant 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 such termination, 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 375,000 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 422 of the Code. 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
<PAGE>
five years from the date it is granted if required by the
Code. 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.
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, in the case of an NQO,
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.
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
<PAGE>
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.
Transferability
Except as set forth in the next sentence, and unless
the agreement pursuant to which a grant is made
provides otherwise, an option, SAR, performance award or
restricted stock granted under the Amended Plan (i)
shall not be transferable by an employee other than by
operation of a death beneficiary designation made by the
participant in accordance with rules established by the
Compensation Committee, by will or by the applicable
laws of descent and distribution and (ii) shall be
exercisable during the employee's lifetime only by him or
her or his or her guardian or legal representative.
Notwithstanding the foregoing, except to the extent that it
would cause the Amended Plan to fail to meet the conditions
required to be met under Rule 16b-3 under the Exchange
Act, the Compensation Committee shall have the power and
authority to provide, as a term of any NQO granted
under the Amended Plan, that such NQO may be transferred
without consideration by the optionee, as applicable,
to a member or members of his or her immediate family and/or
to a trust or trusts for the benefit of an immediate
family member or family members. In contrast, the Current
Plan provided that (i) no option, SAR, performance
award or restricted stock granted under the Current Plan
could be transferred by an employee otherwise than by
will or the laws of descent and distribution or pursuant to
a qualified domestic relations order as defined by the
Code and (ii) an option, SAR or performance award may be
exercised only by the optionee or grantee thereof or
his guardian or legal representative, provided that ISOs
could be exercised by such guardian or legal representative
only if permitted by the Code.
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
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
<PAGE>
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 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 20% for
the sale of capital assets held more than eighteen
months or 28% for the sale of capital assets held more than
one year but not more than eighteen months. 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.
<PAGE>
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 capital gain or loss, as the case
may be, measured by the difference between the stock's
selling price and the exercise price. The net capital gain
of an individual taxpayer is subject to a maximum rate of
20% for the sale of capital assets held more than eighteen
months or 28% for the sale of capital assets held more than
one year but not more than eighteen months. 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.
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.
<PAGE>
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 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
<PAGE>
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 second amendment and restatement of the Current 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 second amendment and
restatement of the Current 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 second amendment and restatement of the Company's
Amended and Restated 1995 Long-Term Incentive Plan.
<PAGE>
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 1998 fiscal year
to examine the financial statements of the Company for the
fiscal year ending September 27, 1998 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 1998.
<PAGE>
MANAGEMENT
The following sets forth certain information as of
January 5, 1998, with respect to the Company's
nominees for director, the Company's continuing directors,
and certain officers of the Company and certain of
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
Warren J. Hayford Age: 68
Warren J. Hayford has been Chairman of the Board and
Chief Executive Officer of the Company since 1989. Mr.
Hayford is also Chairman of the Board and Chief
Executive Officer of Brockway Standard, Inc. ("BSI"), a
wholly-owned subsidiary of the Company. 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.
Thomas A. Donahoe Age: 62
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 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, 1978 to June 1995; member
of the Firm's Policy Board, 1976 to June 1995; and
Managing Partner of the Chicago Office, 1976 to June
1994. Mr. Donahoe also serves as a Director or Trustee
of a number of not-for-profit entities, including:
Chicago Botanic Garden, Chicago Central Area Committee,
Executive Service Corp. of Chicago, Kohl's Children's
Museum and Rush-Presbyterian-St. Luke's Medical Center.
Alexander P. Dyer Age: 65
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.
<PAGE>
Continuing Directors
John T. Stirrup Age: 62
John T. Stirrup has served as President and Chief
Operating Officer of the Company since 1995 and has
served as a director of the Company since 1989. Mr.
Stirrup joined Brockway, Inc. (later acquired by
Owens-Illinois Corporation) in 1980 and has held a
variety of positions including: President and Chief
Operating Officer of BSI, 1989 to 1997; 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.
James W. Milton Age: 58
James W. Milton has served as Executive Vice President
and a director of the Company since May 1996 and as
President and a director 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"). Prior thereto, Mr. Milton
held several positions, including President, at Milton
Can Company, Inc. (a former entity separate from MCC
that was merged with and into BSNJ) ("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 a trustee of
New Jersey Business and Industry Association and is a
director of New Jersey Manufacturers Re-Insurance
Company, New Jersey Manufacturers Insurance Company and
Can Manufacturers Institute.
Jean-Pierre M. Ergas Age: 58
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.
John E. Jones Age: 63
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.
<PAGE>
Jones is a director of Allied Products Corporation,
Amsted Industries, Inc., 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.
John W. Puth Age: 68
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)
John M. Casey Age: 49
John M. Casey has been Chief Financial Officer of the
Company since December 1997 and has been Executive Vice
President of the Company and Vice President of BSI,
BSNJ and MCC since November 1997. From October 1994 to
August 1997, Mr. Casey served as Executive Vice
President and Chief Financial Officer of Birmingham
Steel Corporation. From April 1993 to August 1994, Mr.
Casey served as Executive Vice President and Chief
Financial Officer of Safeskin Corporation. Prior
thereto, Mr. Casey held various positions at Spiegel,
Inc., including Treasurer of Spiegel, Inc. and Vice
President and Chief Financial Officer of Spiegel
Acceptance Corporation.
Robert C. Coleman Age: 52
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: 49
Marguerite E. Ferrazzano has been Vice President
Planning and Development for the Company since November
1997. From April 1994 to November 1997, Ms. Ferrazzano
served as Vice President of Operations Analysis and
Business Development for BSI. From 1990 to May 1994,
Ms. Ferrazzano 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: 41
David P. Hayford has been Senior Vice President of the
Company since May 1996 and was appointed by the Board
in November 1997 to serve as President of BMAT, Inc.,
which will manage the Company's materials center
services. From May 1996 to December 1997, Mr. Hayford
served as Chief Financial Officer of the Company. From
June 1995 to May 1996, Mr. Hayford served as Vice
President, Treasurer and Secretary of the Company.
From June 1994 to June 1995, Mr. Hayford served as an
independent consultant to the Company. From August
1992 to June 1994, Mr. Hayford
<PAGE>
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.
Larry N. Hopkins Age: 55
Larry N. Hopkins has been Vice President Manufacturing
of BSI since September 1997. From 1993 to September
1997, Mr. Hopkins held various management positions at
BSI, including General Plants Manager for BSI's
Homerville, Georgia and Memphis, Tennessee facilities.
Prior thereto, Mr. Hopkins had over 30 years of
experience in manufacturing previously working for
Continental Can Company, Armstrong Containers, Inc. and
Davies Can Company, Inc.
David P. Hull Age: 56
David P. Hull has been Executive Vice President of the
Company and President of BSI and BSNJ since October
1997. From July 1994 to September 1997, Mr. Hull
served as Vice President of Operations of Imperial
Wallcoverings Inc. Prior thereto, Mr. Hull served as
Senior Vice President of Operations and a director of
Heekin Can Inc. from January 1990 to March 1993.
Richard E. Jakubecy Age: 51
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: 38
Kevin C. Kern has been Vice President and Corporate
Controller of the Company 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.
Jeffrey M. O'Connell Age: 44
Jeffrey M. O'Connell has been Vice President and
Treasurer of the Company since May 1997. From June
1996 to May 1997, Mr. O'Connell served as Assistant
Treasurer of the Company. From June 1995 to June 1996,
Mr. O'Connell served as Vice President of Finance of
Macmillan Bloedel Packaging Inc. From October 1994 to
June 1995, Mr. O'Connell served as Director of
Financial Planning of the Company. Prior thereto, Mr.
O'Connell served as Vice President of Administration of
Mead Coated Board Division of The Mead Corporation.
Harry F. Payton Age: 61
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.
<PAGE>
Patrick J. Rourke Age: 39
Patrick J. Rourke joined BSI in November 1994 as Vice
President 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 Inc., 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
increasing responsibility within the purchasing
organization of Marathon Oil Company.
Blair G. Schlossberg Age: 31
Blair G. Schlossberg has served as General Counsel of
the Company since December 1995 and has served as
Secretary of the Company since May 1996. Mr.
Schlossberg is also Secretary of BSI, BSNJ and MCC.
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: 55
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. Prior thereto, Mr. Treadwell was employed
for 23 years by Bethlehem Steel Company in a variety of
senior marketing and sales positions.
Clarence W. Wellman Age: 53
Clarence W. Wellman has served as Vice President 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.
David P. Hayford, Senior Vice President of the Company,
is the son of Warren J. Hayford, Chairman and Chief
Executive Officer of the Company. There are no other family
relationships between any of the foregoing persons.
Information About the Board of Directors
The Board of Directors met five times during fiscal
1997. 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 1997.
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 1997.
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 1997.
The Company does not have a nominating committee.
<PAGE>
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. All directors
are reimbursed for out-of-pocket expenses related to their
service as directors.
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 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.
Formula Plan. Under the Formula Plan, each
non-employee director was to be granted an option to
purchase 15,000 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 15,000 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
1,500 shares of the Initial Grant vested immediately upon
grant. Thereafter, the right to exercise an additional
2,700 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 3,000 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.
Currently, all the unvested options owned by each
non-employee director will vest at an equal rate of
7,500 options at each of the 1998, 1999, 2000 and 2001
annual meetings of the Board.
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 representations 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 1997.
<PAGE>
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 December 31, 1997 by (i) each stockholder known
by the Company to own beneficially 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 (as defined) of the Company and (iv) all
directors of the Company and executive officers of the
Company and BSI as a group. As of December 31, 1997, there
were 9,485,905 shares of Common Stock outstanding. The
Company effected a 3-for-2 split of its Common Stock on
September 22, 1997. 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>
Number of Shares of
Beneficial Owner Common Stock (1) Percent of Class(2)
<S> <C> <C>
Warren J. Hayford (3) 2,075,441 21.6%
Mary Lou Hayford (4) 1,851,273 19.5
John T. Stirrup (5) 315,000 3.3
David P. Hayford (6) 42,242 *
James W. Milton (7) 663,588 7.0
Thomas A. Donahoe (8) 22,500 *
Alexander P. Dyer (9) 98,970 1.0
Jean-Pierre M. Ergas (10) 64,200 *
John E. Jones (11) 25,500 *
John W. Puth (12) 65,970 *
Dimensional Fund Advisors Inc. (13) 547,050 5.8
PNC Bank Corp. (14) 535,785 5.6
T. Rowe Price Associates, Inc. (15) 776,250 8.2
Wellington Management Company, LLP (16) 549,000 5.8
All Directors and Executive
Officers as a Group (9 persons) 3,373,411 34.5
</TABLE>
__________________________
(1) The number of shares includes shares of Common Stock
subject to options exercisable within 60 days
of December 31, 1997.
<PAGE>
(2) Shares subject to options exercisable within 60 days of
December 31, 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 1,851,273 shares owned directly by his
wife, Mary Lou Hayford, and 92,918 shares owned
directly by Mr. W. Hayford. In addition, the shares of
Common Stock beneficially owned by Mr. W. Hayford
include 131,250 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 92,918 shares owned directly by
her husband, Warren J. Hayford, and do not include
131,250 shares subject to options owned directly by her
husband.
(5) The shares of Common Stock beneficially owned by Mr.
Stirrup include 47,250 shares subject to options.
(6) The shares of Common Stock beneficially owned by Mr. D.
Hayford include 37,700 shares subject to options.
(7) The shares of Common Stock shown as beneficially owned
by Mr. Milton include 9,000 shares subject to options.
The shares of Common Stock shown as beneficially owned
by Mr. Milton do not include 106,220 shares owned
directly by his wife, 76,487 owned by his wife as
trustee of a trust for the benefit of Sean A. Milton
and 75,137 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 15,000 shares subject to options.
(9) The shares of Common Stock beneficially owned by Mr.
Dyer include 19,200 shares subject to options.
(10) The shares of Common Stock beneficially owned by Mr.
Ergas include 19,200 shares subject to options.
(11) The shares of Common Stock beneficially owned by Mr.
Jones include 15,000 shares subject to options.
(12) The shares of Common Stock beneficially owned by Mr.
Puth include 19,200 shares subject to options.
(13) Based solely upon a Schedule 13G dated February 5, 1997
filed by Dimensional Fund Advisors Inc.
("Dimensional"), Dimensional, a registered investment
advisor, is deemed to have beneficial ownership of
547,050 shares of Common Stock as of December 31, 1996,
all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end
investment company, or in series of the DFA Investment
Trust Company, a Delaware business trust, or the DFA
<PAGE>
Group Trust and DFA Participation Group Trust,
investment vehicles for qualified employee benefit
plans, all of which Dimensional serves as investment
manager. Dimensional disclaims beneficial ownership of
all such shares. Such person's address is 1299 Ocean
Avenue, 11th Floor, Santa Monica, CA 90401.
(14) Based solely upon a Schedule 13G dated February 14,
1997 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 521,880
shares of Common Stock and sole dispositive power with
respect to 535,785 shares of Common Stock. Such
person's address is One PNC Plaza, 249 5th Avenue,
Pittsburgh, PA 15222-2707.
(15) Based solely upon a Schedule 13G dated February 14,
1997 filed jointly by each of T. Rowe Price Associates,
Inc. ("Price Associates") and T. Rowe Price Small Cap
Value Fund, Inc. ("Small Cap"), the shares of Common
Stock shown as beneficially owned by Price Associates
are owned by various individual and institutional
investors including Small Cap (which owns 716,250
shares, representing 7.3% of the shares of Common Stock
outstanding), which Price Associates serves as an
investment adviser with power to direct investments
and/or sole power to vote the securities. For purposes
of the reporting requirements of the Securities
Exchange Act of 1934, Price Associates is deemed to be
a beneficial owner of such securities; however, Price
Associates expressly disclaims that it is, in fact, the
beneficial owner of such securities. Such person's
address is 100 E. Pratt Street, Baltimore, MD 21202.
(16) Based solely upon a Schedule 13G dated January 24,
1997, Wellington Management Company, LLP has shared
voting power with respect to 198,000 shares of Common
Stock and shared dispositive power with respect to
549,000 shares of Common Stock. In its capacity as an
investment advisor, Wellington Management Company, LLP
may be deemed beneficial owner of such shares, which
are owned by numerous investment counseling clients.
Such person's address is 75 State Street, Boston, MA
02109.
<PAGE>
EXECUTIVE COMPENSATION
The compensation of executive officers of the Company
will be determined by the Board of Directors of the Company.
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 1997
exceeded $100,000 (the "Named Executive Officers") for
services rendered to the Company in all capacities during
fiscal years 1997, 1996 and 1995.
<TABLE>
Summary Compensation Table
Annual Compensation Long Term Compensation
Awards Payouts
All
Restricted Securities Other
Other Annual Stock Underlying LTIP Compen-
Name and Principal Fiscal Salary Bonus Compensation Awards Options/SARs Payouts sation
Position Year ($) ($)(1) ($) ($) (#)(2) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Warren J. Hayford (3). . . 1997 416,667 416,667 -- -- 75,000(4) -- 260,749(5)
Chairman of the Board 1996 400,000 400,000 -- -- 33,750(6) -- 256,329(7)
and Chief Executive 1995 133,000 200,000 -- -- 180,000(8) -- 75,508(9)
Officer of the Company
John T. Stirrup. . . . . . 1997 275,000 206,250 -- -- -- -- 186,754(10)
President and Chief 1996 226,875 170,153 -- -- 33,750(6) -- 196,141(11)
Operating Officer of the 1995 218,180 175,000 -- -- 54,000(8) -- 62,543(12)
Company
David P. Hayford (13). . . 1997 153,125 91,875 -- -- -- -- 4,671(14)
Senior Vice President of 1996 139,619 59,625 -- -- 27,000(6) -- 2,933(15)
the Company 1995 45,329 13,125 -- -- 37,500(16) -- 61,527(17)
James W. Milton (18) . . . 1997 197,692 148,275 -- -- -- -- 136,251(19)
Executive Vice President 1996 75,000 50,000 -- -- 27,000(6) -- 49,690(20)
of the Company 1995 -- -- -- -- -- -- --
</TABLE>
(1) Amounts shown for fiscal 1995, 1996 and 1997 were
earned during fiscal 1995, 1996 and 1997, respectively,
under the Company's Management Incentive Plan and were
paid during calendar 1995, 1996 and 1997, respectively.
(2) The amounts shown have been adjusted to reflect the
3-for-2 split of Common Stock on September 22, 1997.
(3) 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 provided management
services to the Company in exchange for the payment of
a fee. Mr. Hayford also participated in certain
benefit plans of the Company prior to June 1, 1995.
(4) Options to acquire 37,500 shares become exercisable in
three equal annual installments with the first
installment exercisable on May 17, 1998, and were
granted pursuant to the Current Plan. Options to
acquire 37,500 shares become exercisable in three equal
annual installments with the first installment
exercisable on August 19, 1998, and were granted
pursuant to the Current Plan.
(5) The amount shown includes an accrual of $225,468 for
supplemental executive retirement payments pursuant to
his employment agreement, $8,845 of premium for Group
Term Life Insurance and $26,436 of premium for
additional optional life insurance for which Mr. W.
Hayford was reimbursed by the Company pursuant to his
employment agreement.
(6) 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.
(7) The amount shown includes an accrual of $225,468 for
supplemental executive retirement payments pursuant to
his employment agreement, a $3,881 contribution under
the Brockway Standard Inc. Profit Sharing and Savings
Plan (the " Profit Sharing Plan"), $1,248 of 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.
<PAGE>
(8) Options become exercisable in three equal annual
installments with the first installment exercisable on
June 12, 1996, and were granted pursuant to the
Original Plan and the terms of the respective
employment agreements with Messrs. Hayford and Stirrup.
(9) The amount shown includes an accrual of $75,156 for
supplemental executive retirement payments pursuant to
his employment agreement and $352 of premium for life
insurance.
(10) The amount shown includes an accrual of $174,000 for
supplemental executive retirement payments pursuant to
his employment agreement, $2,850 of Company matching
401(k) contributions under the Profit Sharing Plan,
$2,626 of premium for Group Term Life Insurance and
$7,278 of premium for additional optional life
insurance for which Mr. Stirrup was reimbursed by the
Company pursuant to his employment agreement.
(11) The amount shown includes an accrual of $174,000 for
supplemental executive retirement payments pursuant to
his employment agreement, 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.
(12) The amount shown includes an accrual of $58,001 for
supplemental executive retirement payments pursuant to
his employment agreement, 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.
(13) David P. Hayford became an employee of the Company
effective June 15, 1995. Mr. Hayford served as Senior
Vice President and Chief Financial Officer of the
Company until December 1997, at which time he ceased
serving as Chief Financial Officer of the Company and,
accordingly, ceased to be an executive officer of the
Company. Mr. Hayford continues to serve as Senior Vice
President of the Company and, in addition, in November
1997 the Board appointed Mr. Hayford to serve as
president of BMAT, a start-up unit that will manage the
Company's materials center services.
(14) The amount shown includes $4,500 of Company matching
401(k) contributions under the Profit Sharing Plan and
$171 of premium for Group Term Life Insurance.
(15) 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.
(16) Options become exercisable in three annual
installments, with an installment of options to acquire
22,500 shares of Common Stock exercisable on June 12,
1996 and installments of options to acquire 7,500
shares of Common Stock exercisable on each of June 12,
1997 and June 12, 1998, and were granted pursuant to
the Original Plan.
(17) The amount shown includes $61,387 in reimbursements for
relocation and moving expenses and $140 of premium for
life insurance.
(18) James W. Milton became an employee of the Company
effective May 28, 1996.
(19) The amount shown includes an accrual of $121,820 for
supplemental executive retirement payments pursuant to
his employment agreement, $4,431 of Company matching
401(k) contributions under the Profit Sharing Plan and
$10,000 of premium for Group Term Life Insurance.
(20) The amount shown includes an accrual of $49,572 for
supplemental executive retirement payments pursuant to
his employment agreement and $118 of premium for life
insurance.
The Company originally adopted the Original Plan for
its directors, officers and key employees of the Company and
its subsidiaries in May 1995 and the Company's stockholders
approved the Original Plan in June 1995. The Current Plan,
which the Board adopted in August 1996 and the Company's
stockholders approved in February 1997, replaced the
Original Plan. The Current 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 Current Plan covered an aggregate of
1,125,000 shares of Common Stock. The Amended Plan, which
the Board approved in November 1997 and which is submitted
to the stockholders for approval at the Annual Meeting,
among other things increases this aggregate amount to
1,425,000 shares of Common Stock. See "Proposal 2 Approval
of the Second Amendment and Restatement of the Company's
Amended and Restated 1995 Long-Term Incentive Plan."
In addition, Mr. Milton participates in the Milton Can
Salaried Employees' Retirement Plan, a defined benefit plan
sponsored by the Company. The Company froze this plan
effective December 31, 1996, thereby preventing any future
benefit accruals under this plan. The estimated annual
benefit payable at retirement at age 65 for Mr. Milton is
$77,065.
<PAGE>
The following tables set forth, for the Named Executive
Officers, information regarding stock options granted or
exercised during, or held at the end of, fiscal 1997.
<TABLE>
Option/SAR Grants in Last Fiscal Year
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term
Number of %of Total
Securities Options
Underlying Granted to
Options/SARs Employees Exercise
Granted in Price Expiration
Name (#)(1) Fiscal Year ($/Sh) Date 5%($)(2) 10%($)(2)
<S> <C> <C> <C> <C> <C> <C>
Warren J. Hayford 37,500 36.1% $14.33 5/17/07 $337,952 $ 856,437
37,500 36.1 18.17 8/19/07 428,513 1,085,936
John T. Stirrup -- -- -- -- -- --
David P. Hayford -- -- -- -- -- --
James W. Milton -- -- -- -- -- --
</TABLE>
(1) Options to acquire 37,500 shares become exercisable in
three equal annual installments with the first
installment exercisable on May 17, 1998, and were
granted pursuant to the Current Plan. Options to
acquire 37,500 shares become exercisable in three equal
annual installments with the first installment
exercisable on August 19, 1998, and were granted
pursuant to the Current 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.
<PAGE>
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR Values
Number of
Securities Value of
Underlying Unexercised In-the-
Unexercised Money
Options/SARs at Options/SARs at
Fiscal Year End (#) Fiscal Year End ($)
Shares
Acquired Value Realized Exercisable/ Exercisable/
Name of Exercise (1) ($)(1) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Warren J. Hayford -- -- 131,250 $1,387,688
157,500 1,144,351
John T. Stirrup -- -- 47,250 477,968
40,500 371,115
David P. Hayford -- -- 39,000 476,595
25,500 222,165
James W. Milton -- -- 9,000 70,470
18,000 140,940
</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 180,000 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).
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
<PAGE>
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 54,000
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, which was
amended effective as of November 18, 1997. Under the
agreement, as amended, Mr. Hayford will serve as President
of BMAT, Inc. to manage the Company's materials center
services and will report directly to the Chief Operating
Officer of the Company. Under the agreement, as amended,
Mr. Hayford receives an annual base salary of $120,000 (or
such higher amount determined 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
<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."
401(k) Plan
The Company maintains a savings plan (the "Savings
Plan") qualified under Sections 401(a) and 401(k)
of the Internal Revenue Code. Generally, all salaried
employees of the Company in the United States who have
completed one year of service are eligible to participate in
the Savings Plan. For each employee who elects to
participate in the Savings Plan and makes a contribution
thereto, the Company makes a matching contribution
of 100% of the first 2% of annual compensation contributed
and 50% of the next 2% of annual compensation
contributed. The maximum contribution for any participant
for any year is 10% of such participant's eligible
compensation.
Compensation Committee Interlocks and Insider Participation
Messrs. Puth, Donahoe, Dyer, Ergas and Jones served as
members of the Compensation Committee during all of fiscal
1997. 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 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
<PAGE>
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:
[BULLET] 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.
[BULLET] To recognize superior individual performance,
new responsibilities and new positions within
the Company.
[BULLET] 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.
[BULLET] To provide variable compensation
opportunities based on the Company's
performance.
[BULLET] To encourage stock ownership by executives.
[BULLET] 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 " 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. The annual bonus
for Mr. Milton is determined annually by the
Compensation Committee. See " 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.
<PAGE>
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 Amended Plan, the Company
granted stock options to Mr. W. Hayford during fiscal
1997. See " Option/SAR Grants in Last Fiscal Year." In
addition, the Company granted other key employees stock
options during fiscal 1997.
Chief Executive Officer Compensation. The base pay
level and annual incentive bonus compensation for Mr. W.
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. The
board has set Mr. W. Hayford's base salary for the year
beginning on June 1, 1997 and ending on May 31, 1998 at
$450,000. See " 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
1997 to Mr. W. Hayford of options to purchase 37,500 shares
of Common Stock at $14.33 and a grant in August 1997 of
options to purchase 37,500 shares of Common Stock at $18.17.
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, is
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
<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 New York Stock Exchange
Composite Index and the Dow Jones Complete Return Index
(Complete Industrial Sector). In its proxy statement
relating to the 1997 annual meeting of stockholders, the
Company had compared its cumulative total stockholder
return to that of the Nasdaq Total Return Composite Index
(U.S. Companies). In this Proxy Statement, the
Company has chosen to compare its cumulative total
stockholder return to that of the New York Stock Exchange
Composite Index rather than the Nasdaq Total Return
Composite Index (U.S. Companies) because (i) the
Company's Common Stock has been traded on the New York Stock
Exchange, rather than the Nasdaq National
Market, since November 20, 1996 and (ii) the Company's
management believes that the New York Stock
Exchange Composite Index now provides a more meaningful
comparison. In addition, for illustrative purposes,
the following graph also compares the Company's cumulative
stockholder return with that of the Nasdaq Total
Return Composite Index (U.S. Companies).
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
Measurement Period
(Fiscal 1997, Fiscal 1996 and
Period Between Initial Trading
Date and End of
Fiscal 1995 BWAY NYSE CI Dow Jones CRI NASDAQ TRCI
<S> <C> <C> <C> <C>
6/20/95 $100.00 $100.00 $100.00 $100.00
9/29/95 118.97 107.20 105.36 112.45
9/27/96 125.00 125.40 129.21 132.29
9/28/97 212.07 169.50 174.29 180.92
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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, George Milton, Patrick Milton and Michael Milton
each hold (i) a 12.5% limited partnership interest in DSP
and (ii) a 12.5% interest in the general partner of DSP.
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. Each of
George Milton, Patrick Milton and Michael Milton is a
brother of James W. Milton, the Executive Vice President and
a director of the Company. George Milton is an employee of
MCC and Patrick Milton is an employee of BSI.
BSNJ is party to another lease agreement pursuant to
which BSNJ leases a warehouse. Mr. Milton, George Milton,
Patrick Milton, Michael Milton, Bill Milton and Carolyn
Milton Walker 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. Each of Patrick Milton, George Milton and
Michael Milton is a brother of, and each of Bill Milton and
Carolyn Milton Walker is a cousin of, James W. Milton, the
Executive Vice President and a director of the Company.
In connection with the Company's acquisition of Milton
Can in May 1996, BSNJ assumed a $125,000 mortgage on Mr.
Treadwell's home. In fiscal 1997, the Company canceled the
total amount owed by Mr. Treadwell to BSNJ.
As employees of the Company in fiscal 1997, George
Milton, Patrick Milton, James J. Milton and Dennis Milton
received $85,985, $79,317, $75,900 and $66,550,
respectively, in salary, bonuses and commissions from the
Company. George Milton, Patrick Milton, James J. Milton and
Dennis Milton are the brother, brother, son and son,
respectively, of James W. Milton, the Executive Vice
President and a director of the Company.
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.
<PAGE>
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 28, 1997, are
being mailed with this Proxy Statement to each stockholder
entitled to vote at the Annual Meeting of Stockholders.
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) 645-4800.
SUBMISSION OF STOCKHOLDER PROPOSALS
FOR THE 1999 ANNUAL MEETING
Stockholder proposals for inclusion in the Proxy
Statement to be issued in connection with the 1999
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
24, 1998. The Company will consider only proposals meeting
the requirements of applicable SEC rules.
The Board of Directors
January 22, 1998
PAGE
<PAGE>
[ATTACHMENT - PROXY CARD]
BWAY CORPORATION
8607 Roberts Drive, Suite 250
Atlanta, Georgia 30350
PROXY
Solicited by the Board of Directors
The undersigned hereby appoints John M. Casey 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
27, 1998 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 [ ] WITHHELD [ ] FOR ALL EXCEPT
Nominees: Warren J. Hayford, Thomas A. Donahoe and
Alexander P. Dyer
(To withhold authority to vote for any nominee, strike
out that nominee's name.)
2. Approval of the second amendment and restatement of the
Company's Amended and Restated 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: , 1998
Signature(s):
[ ] Check here if you plan to attend the annual meeting.
[ ] Check here for address change.
New Address
<PAGE>
Appendix A
BWAY CORPORATION
SECOND AMENDED AND RESTATED
1995 LONG-TERM INCENTIVE PLAN
Recitals
This second amendment amends and restates the Amended
and Restated 1995 Long-Term Incentive Plan established in
June of 1995 and amended in August of 1996 to (a) increase
the aggregate number of shares of common stock that may be
issued under this Plan to 1,425,000 shares and (b) to allow,
with the consent of the Committee, participants to more
freely transfer certain options granted under this Plan
under certain circumstances.
1. Purpose.
This plan shall be known as the BWAY Corporation Second
Amended and Restated 1995 Long-Term Incentive Plan (the
"Plan"). The purpose of the Plan shall be to promote the
long-term growth and profitability of BWAY Corporation (the
"Company") and its subsidiaries by (i) providing
certain directors, officers, employees and consultants of
the Company and its subsidiaries with incentives to maximize
stockholder value and otherwise contribute to the success of
the Company and (ii) enabling the Company to attract, retain
and reward the best available persons for positions
of substantial responsibility. Grants of incentive or
nonqualified stock options, stock appreciation
rights ("SARs") in tandem with options, restricted stock,
performance awards, or any combination of the foregoing may
be made under the Plan.
2. Definitions.
(a) "Board of Directors" and "Board" mean the board of
directors of BWAY Corporation.
(b) "Cause" means the occurrence of one of the
following events:
(i) Conviction of a felony or any crime or
offense lesser than a felony involving the property of the
Company or a subsidiary; or
(ii) Conduct that has caused demonstrable and
serious injury to the Company or a subsidiary, monetary or
otherwise; or
(iii) Willful refusal to perform or substantial
disregard of duties properly assigned, as determined by the
Company.
(c) "Change in Control" means the occurrence of one
of the following events:
(i) if any "person" or "group" as those terms
are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), other
than an Exempt Person, is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act),
<PAGE>
directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of
the Company's then outstanding securities; or
(ii) during any period of two consecutive
years, individuals who at the beginning of such period
constitute the Board and any new director whose election by
the Board or nomination for election by the Company's
stockholders was approved by at least two-thirds (2/3) of
the directors then still in office who either were directors
at the beginning of the period or whose election was
previously so approved, cease for any reason to constitute a
majority thereof; or
(iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which
would result in all or a portion of the voting securities of
the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity)
more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation,
or the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or
substantially all the Company's assets, other than
a sale to an Exempt Person.
(d) "Code" means the Internal Revenue Code of 1986,
as amended.
(e) "Committee" means the compensation committee of
the Board. The membership of the Committee shall be
constituted so as to comply at all times with the applicable
requirements of Rule 16b-3 under the Exchange Act and
Section 162(m) of the Code.
(f) "Competition" is deemed to occur if a person whose
employment with the Company or its subsidiaries has
terminated obtains a position as a full time or part-time
employee of, as a member of the board of directors of, or as
a consultant or advisor with or to, or acquires an
ownership interest in excess of 5% of, a corporation,
partnership, firm or other entity that engages
in any of the businesses of the Company or any subsidiary
with which the person was involved in a management role at
any time during his or her last five years of employment
with the Company or any subsidiary.
(g) "Disability" means a permanent and total
disability as defined in the Company's Long-Term Disability
Plan or as otherwise approved by the Committee.
(h) "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
(i) "Exempt Person" means (i) the Chairman of the
Company on the effective date of this Plan, (ii) any person
who owns 15% or more of the outstanding shares of Common
Stock on the effective date of this Plan, (iii) any person
(or group of related persons) that becomes the owner of
15% or more of the outstanding shares of Common Stock as a
result of a gift or bequest from a person included in (i) or
(ii) above, (iv) any person, entity or group under the
control of any party included in clause (i), (ii) or (iii),
and (v) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company.
<PAGE>
(j) "Fair Market Value" of a share of Common Stock of
the Company means, with respect to the date in question, the
officially-quoted closing selling price of the stock on the
New York Stock Exchange (the "Market") or if the Common
Stock is not listed or quoted in the Market, the Fair Market
Value shall be the fair value of the Common Stock determined
in good faith by the Board; provided, however, that when
shares received upon exercise of an option are immediately
sold in the open market, the net sale price received may be
used to determine the Fair Market Value of any shares used
to pay the exercise price or withholding taxes and to
compute the withholding taxes.
(k) "Incentive Stock Option" means an option
conforming to the requirements of Section 422 of the Code.
(l) "Non-Employee Director" has the meaning given to
such term in Rule 16b-3 under the Exchange Act.
(m) "Nonqualified Stock Option" means any stock option
other than an Incentive Stock Option.
(n) "Retirement" means retirement as defined under the
Company's Pension Plan or termination of one's employment on
retirement with the approval of the Committee.
(o) "Subsidiary" means a corporation or other entity
of which outstanding shares or ownership interest
representing 50% or more of the combined voting power of
such corporation or other entity are owned directly or
indirectly by the Company.
3. Administration.
The Plan shall be administered by the Committee.
Subject to the provisions of the Plan, the Committee shall
be authorized to (i) select persons to participate in the
Plan, (ii) determine the form and substance of grants made
under the Plan to each participant, and the conditions and
restrictions, if any, subject to which such grants will be
made, (iii) interpret the Plan and (iv) adopt, amend, or
rescind such rules and regulations for carrying out the Plan
as it may deem appropriate. Decisions of the Committee on
all matters relating to the Plan shall be in the Committee's
sole discretion and shall be conclusive and binding on all
parties. The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan shall be
determined in accordance with applicable federal and state
laws and rules and regulations promulgated pursuant thereto.
4. Shares Available for the Plan.
Subject to adjustments as provided in Section 15, an
aggregate of 1,425,000 shares of Common Stock, par value
$.01 per share, of the Company (hereinafter the "Shares")
may be issued pursuant to the Plan. Such Shares may be in
whole or in part authorized and unissued, or shares
which have been reacquired by the Company and held as
treasury shares. If any grant under the Plan expires or
terminates unexercised, becomes unexercisable or is
forfeited as to any Shares, such unpurchased or forfeited
Shares shall thereafter be available for further grants
under the Plan unless, in the case of options granted under
the Plan, related SARs are exercised.
<PAGE>
Without limiting the generality of the foregoing
provisions of this Section 4 or the generality
of the provisions of Sections 3, 6 or 17 or any other
section of this Plan, the Committee may, at any
time or from time to time, and on such terms and conditions
(that are consistent with and not in contravention of the
other provisions of this Plan) as the Committee may, in its
sole discretion, determine, enter into agreements (or take
other actions with respect to the options) for new options
containing terms (including exercise prices) more (or less)
favorable than the outstanding options.
5. Participation.
Participation in the Plan shall be limited to those
directors (including Non-Employee Directors) and officers,
employees and consultants of the Company and its
Subsidiaries selected by the Committee. Nothing in the Plan
or in any grant thereunder shall confer any right on an
employee to continue in the employ of the Company or shall
interfere in any way with the right of the Company
to terminate an employee at any time.
Incentive Stock Options or Nonqualified Stock Options,
SARs in tandem with options, restricted stock awards,
performance awards, or any combination thereof, may be
granted to such persons and for such number of Shares as the
Committee shall determine (such individuals to whom
grants are made being sometimes herein called "optionees" or
"grantees" as the case may be). A grant of any type made
hereunder in any one year to an eligible participant shall
neither guarantee nor preclude a further grant of that or
any other type to such participant in that year or
subsequent years.
6. Incentive and Nonqualified Options.
The Committee may from time to time grant to eligible
participants Incentive Stock Options, Nonqualified Stock
Options, or any combination thereof. In any one calendar
year, the Committee shall not grant to any one participant,
options to purchase a number of shares of Common Stock in
excess of 375,000. The options granted shall take such form
as the Committee shall determine, subject to the following
terms and conditions.
(a) Price. The price per Share deliverable upon
the exercise of each option ("exercise price") shall be
established by the Committee, except that in the case of the
grant of any Incentive Stock Option, the exercise price may
not be less than 100% of the Fair Market Value of the Shares
at the close of the market on the day next preceding grant
of the option unless otherwise permitted by Section 422 of
the Code. In the case of the grant of any Incentive Stock
Option to an employee who, at the time of the grant, owns
more than 10% of the total combined voting power of all
classes of stock of the Company or any of its Subsidiaries,
such price per Share, if required by the Code, shall
not be less that 110% of the Fair Market Value of the Shares
at the close of the market on the day next preceding grant
of the option.
(b) Payment. Options may be exercised in whole or
in part, upon payment of the exercise price of the Shares to
be acquired. Payment shall be made in cash (including check,
bank draft or money order) or, in the discretion of the
Committee, (i) in cash and/or shares of Common Stock
and/or by delivery of the optionee's promissory note (if in
accordance with policies approved by the Committee), or (ii)
by special arrangement through a broker selected by the
Committee. The
<PAGE>
fair market value of shares of Common Stock tendered on
exercise of options shall be the Fair Market Value of such
shares as of the close of the market on the day next
preceding exercise of the option.
(c) Withholding Tax. Unless otherwise determined by
the 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.
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. 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.
(d) Terms of Options. The term during which each
option may be exercised shall be determined by the
Committee, but, except as otherwise provided herein, in no
event shall an option be exercisable in whole or in part in
the case of a Nonqualified Stock Option, more than ten years
and one day from the date it is granted or, in the case of
an Incentive Stock Option, ten years from the date it is
granted; and, in the case of the grant of an Incentive Stock
Option to an employee who at the time of the grant owns more
than 10% of the total combined voting power of all classes
of stock of the Company or any of its Subsidiaries, in no
event shall such option be exercisable, if required by
the Code, more than five years from the date of the grant.
All rights to purchase shares pursuant to an option shall,
unless sooner terminated, expire at the date designated by
the Committee. The Committee shall determine the date on
which each option shall become exercisable and may provide
that an option shall become exercisable in installments.
The shares constituting each installment may be purchased in
whole or in part at any time after such installment becomes
exercisable, subject to such minimum exercise requirements
as are designated by the Committee. Unless otherwise
provided herein or in the terms of the related grant, an
optionee may exercise an option only if he or she is, and
has been continuously since the date the option was granted,
a director, officer or employee of the Company or a
Subsidiary. Prior to the exercise of the option and
delivery of the Shares represented thereby, the optionee
shall have no right to any dividends or be entitled to any
voting rights on any Shares covered by outstanding options.
(e) Limitations on Grants. If required by the Code,
the aggregate Fair Market Value (determined as of the grant
date) of Shares for which an Incentive Stock Option is
exercisable for the first time during any calendar year may
not exceed $100,000.
(f) Termination of Employment; Change in Control.
(i) If a participant ceases to be a director,
officer, employee or consultant of the Company or any
Subsidiary due to death or Disability, 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 such termination, 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 Code, Incentive Stock Options not exercised
by such participant within 90 days after the date of
termination of employment will cease to qualify as Incentive
Stock Options
<PAGE>
and will be treated as Nonqualified Stock Options under the
Plan if required to be so treated under the Code.
(ii) If a participant ceases to be a director,
officer, employee or consultant of the Company or a
Subsidiary upon the occurrence of his or her Retirement, (A)
each of his or her options and SARs that was exercisable on
the date of Retirement shall remain exercisable for, and
shall otherwise 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 engage in Competition during such
five-year period unless he or she receives written consent
to do so from the Board or the Committee, and (B) all of the
participant's options and SARs that were not exercisable
on the date of Retirement shall be forfeited immediately
upon such cessation. Notwithstanding the foregoing,
Incentive Stock Options not exercised by such participant
within 90 days after Retirement will cease to qualify as
Incentive Stock Options and will be treated as Nonqualified
Stock Options under the Plan if required to be so treated
under the Code.
(iii) If a participant ceases to be a director,
officer, employee or consultant of the Company or a
Subsidiary due to Cause, all of his or her options and SARs
shall be forfeited immediately upon such cessation.
(iv) Unless otherwise determined by the
Committee, if a participant ceases to be a director,
employee or consultant of the Company or a Subsidiary for
any reason other than death, Disability, Retirement or
Cause, (A) each of his or her options and SARs that was
exercisable on the date of termination shall remain
exercisable for, and shall otherwise terminate at the end
of, a period of 90 days after the date of such termination,
but in no event after the expiration date of the option;
provided that participant does not engage in Competition
during such 90-day period unless he or she receives written
consent to do so from the Board or the Committee, and (B)
all of the participant's options and SARs that were not
exercisable on the date of such termination shall be
forfeited.
(v) If there is a Change in Control of the
Company, all of the participant's options and SARs shall
become fully vested and exercisable.
7. Stock Appreciation Rights.
The Committee shall have the authority to grant SARs
under this Plan to any optionee, either at the time of grant
of an option or, in the case of an NQO, thereafter by
amendment to an option. The exercise of an option shall
result in an immediate forfeiture of its related SAR to the
extent the option is exercised, and the exercise of an SAR
shall cause an immediate forfeiture of its related
option to the extent the SAR is exercised. SARs shall be
subject to such other terms and conditions as the Committee
may specify. An SAR shall expire at the same time as the
related option expires and shall be transferable only when,
and under the same conditions as, the related option is
transferable.
SARs shall be exercisable only when, to the extent and
on the conditions that the related option is exercisable.
No SAR may be exercised unless the Fair Market Value of a
share of
<PAGE>
Common Stock of the Company on the date of exercise exceeds
the exercise price of the option to which the SAR
corresponds.
Upon the exercise of an SAR, the optionee shall be
entitled to a distribution in an amount equal to the
difference between the Fair Market Value of a share of
Common Stock of the Company on the date of exercise and the
exercise price of the option to which the SAR is related
multiplied by the number of Shares as to which the SAR is
exercised. The Committee shall decide whether such
distribution shall be in cash, in shares, or in a
combination thereof.
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 the Company's
Common Stock on that date exceeds the exercise price of the
related option.
8. Restricted Stock.
The Committee may at any time and from time to time
grant Shares of restricted stock under the Plan to such
participants and in such amounts as it determines. Each
grant of restricted stock shall specify the applicable
restrictions on such Shares, the duration of such
restrictions (which shall be at least one year), and the
time or times at which such restrictions shall lapse with
respect to all or a specified number of Shares that are part
of the grant.
The participant will be required to deposit Shares with
the Company during any period of restriction thereon and to
execute a blank stock power therefor. Except as otherwise
provided by the Committee, during such period of restriction
the participant shall have all of the rights of a holder
of Common Stock, including but not limited to the rights to
receive dividends (or amounts equivalent to dividends) and
to vote.
Except as otherwise provided by the Committee, on a
Change in Control or on termination of a grantee's
employment due to death, Disability or Retirement with the
consent of the Company during any period of restriction all
restrictions on Shares granted to such grantee shall lapse.
On termination of a grantee's employment for any other
reason, all restricted stock granted to such grantee on
which the restrictions have not lapsed shall be forfeited to
the Company.
9. Performance Awards.
Performance awards may be granted on a contingent basis
to participants at any time and from time to time as
determined by the Committee. The Committee shall have
complete discretion in determining the size and composition
of performance awards so granted to a participant and the
appropriate period over which performance is to be measured
("performance cycle"). Performance awards may include (i)
specific dollar-value target awards (ii) performance units,
the value of each such unit being determined by the
Committee at the time of issuance, and/or (iii) performance
Shares, the value of each such Share being equal to the Fair
Market Value of a share of the Company's Common Stock.
The value of each performance award may be fixed or it
may be permitted to fluctuate based on a performance factor
(e.g., return on equity) selected by the Committee.
<PAGE>
The Committee shall establish performance goals and
objectives for each performance cycle on the basis of such
criteria and objectives as the Committee may select from
time to time. During any performance cycle, the Committee
shall have the authority to adjust the performance goals and
objectives for such cycle for such reasons as it deems
equitable.
The Committee shall determine the portion of each
performance award that is earned by a participant on the
basis of the Company's performance over the performance
cycle in relation to the performance goals for such cycle.
The earned portion of a performance award may be paid out in
Shares, cash, or a combination of both, as the Committee may
determine.
A participant must be an employee of the Company at the
end of the performance cycle in order to be entitled to
payment of a performance award issued in respect of such
cycle; provided, however, that, except as otherwise
determined by the Committee, if a participant ceases to be
an employee of the Company upon the occurrence of his or her
death, Retirement, or Disability prior to the end of the
performance cycle, the participant shall earn a
proportionate portion of the performance award based upon
the elapsed portion of the performance cycle and the
Company's performance over that portion of such cycle.
In the event of a Change in Control, a participant
shall earn no less than the portion of the performance award
that the participant would have earned if the performance
cycle(s) had terminated as of the date of the Change in
Control.
10. Withholding Taxes.
The Company may require, as a condition to any grant or
exercise under the Plan or to the delivery of certificates
for Shares issued hereunder, that the grantee pay to the
Company, in cash, any federal, state or local taxes of any
kind required by law to be withheld with respect to any
grant or any delivery of Shares. The Company, to the extent
permitted or required by law, shall have the right
to deduct from any payment of any kind (including salary or
bonus) otherwise due to a grantee any federal, state or
local taxes of any kind required by law to be withheld with
respect to any grant or to the delivery of Shares under the
Plan, or to retain or sell without notice a sufficient
number of the Shares to be issued to such grantee to cover
any such taxes, provided that the Company shall not sell
any such Shares if such sale would be considered a sale by
such grantee for purposes of Section 16 of the Exchange Act
that is not exempt from matching thereunder.
11. Written Agreement; Vesting.
Each employee to whom a grant is made under the Plan
shall enter into a written agreement with the Company that
shall contain such provisions, including without limitation
vesting requirements, consistent with the provisions of the
Plan, as may be approved by the Committee. Unless the
Committee determines otherwise, no grant under this Plan may
be exercised within six months of the date such grant is
made.
<PAGE>
12. Transferability.
Except as set forth in the next sentence of this
Section 12, and unless the agreement pursuant to which a
grant is made provides otherwise, an option, tandem SAR,
performance award, or restricted stock granted under the
Plan shall not be transferable by an employee other than by
operation of a death beneficiary designation made by the
participant in accordance with rules established by the
Committee, by will or the applicable laws of descent and
distribution and shall be exercisable during the employee's
lifetime only by him or her or his or her guardian or legal
representative if the employee is legally incompetent.
Notwithstanding the foregoing, except to the extent that it
would cause the Plan to fail to meet the conditions required
to be met under Rule 16b-3 under the Exchange Act, the
Committee shall have the power and authority to provide, as
a term of any Nonqualified Stock Option granted under the
Plan, that such Nonqualified Stock Option may be
transferred without consideration by the optionee, as
applicable, to a member or members of his or her immediate
family (i.e., a child, children, grandchild, grandchildren
or spouse) and/or to a trust or trusts for the benefit of an
immediate family member or family members.
13. Listing and Registration.
If the Committee determines that the listing,
registration or qualification upon any securities exchange
or under any law of Shares subject to any option, SAR,
performance award, or restricted stock grant is necessary or
desirable as a condition of, or in connection with, the
granting of same or the issue or purchase of Shares
thereunder, no such option or SAR may be exercised in whole
or in part, no such performance award paid out and no Shares
issued unless such listing, registration or qualification is
effected free of any conditions not acceptable to the
Committee.
14. Transfer of Employee.
Transfer of an employee from the Company to a
Subsidiary, from a Subsidiary to the Company, and from one
Subsidiary to another shall not be considered a termination
of employment; nor shall it be considered a termination of
employment if an employee is placed on military or sick
leave or such other leave of absence which is considered by
the Committee as continuing intact the employment
relationship.
15. Adjustments.
In the event of a reorganization, recapitalization,
stock split, stock dividend, combination of shares, merger,
consolidation, distribution of assets, or any other change
in the corporate structure or shares of the Company, the
Committee shall make such adjustment as it deems appropriate
in the number and kind of Shares or other property reserved
for issuance under the Plan, in the number and kind of
Shares or other property covered by grants made under the
Plan, and in the exercise price of outstanding options. 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 is to
occur, all of the Company's obligations regarding options,
SARs performance awards, and restricted stock that were
granted hereunder and that are outstanding on the date of
such event shall, on such terms as may be approved by the
Committee prior to such event, be assumed by the surviving
or continuing corporation or canceled in exchange for
property (including cash).
<PAGE>
16. Termination and Modification of the Plan.
The Board of Directors, without further approval of the
stockholders, may modify or terminate the Plan, except that
no modification shall become effective without prior
approval of the stockholders of the Company if stockholder
approval would be required for continued compliance
with the performance-based compensation exception of Section
162(m) of the Code.
17. Amendment or Substitution of Awards under the Plan.
The terms of any outstanding award under the Plan may
be amended from time to time by the Committee 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 written consent, unless the 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 Committee in its
discretion to have or to be expected to have a substantial
effect on the performance of the Company, or any subsidiary,
affiliate, division or department thereof, on the Plan or on
any award under the Plan. However, the Committee may not
reduce the exercise price of an outstanding option. The
Committee may, in its discretion, permit holders of awards
under the Plan to surrender outstanding awards in order to
exercise or realize rights under other awards, or in
exchange for the 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 Plan.
The Committee may amend or modify the grant of any
outstanding option, tandem SAR, performance award, or
restricted stock in any manner to the extent that the
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 are to
be removed. No modification may be made that would
materially adversely affect any grant previously made under
the Plan without the approval of the grantee. The Committee
shall be authorized to make minor or administrative
modifications to the Plan as well as modifications to the
Plan 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.
18. Commencement Date; Termination Date.
The Board and the stockholders initially approved the
Plan as of June, 1995. On August 20, 1996, the Board
approved an amendment and restatement of the Plan. The
stockholders approved this amendment and restatement of the
Plan in February 1997. On November 17, 1997, the Board
approved a second amendment and restatement of the Plan.
Unless previously terminated upon the adoption of a
resolution of the Board terminating the Plan, the Plan shall
terminate at the close of business on May 31, 2005. No
termination of the Plan shall materially and adversely
affect any of the rights or obligations of any person,
without his consent, under any grant of options or other
incentives theretofore granted under the Plan.<PAGE>
<PAGE>
STOCK OPTION PLAN PROPOSAL
Term
The 1995 Plan will terminate on May 31, 2005 unless
sooner terminated by the Board. Termination of the 1995
Plan will not affect grants made prior to termination, but
no grants will be made after termination.
Administration
The 1995 Plan is administered by a committee appointed
by the Board (the "Committee") composed of two or more
persons not eligible to receive awards under the 1995 Plan.
Subject to the terms of the 1995 Plan, the Committee has
authority to (i) select employees to participate in the 1995
Plan, (ii) determine the form of grants and the conditions
and restrictions, if any, subject to which grants will be
made and become payable under the 1995 Plan, (iii) construe
and interpret the 1995 Plan, and (iv) adopt, amend or
rescind such rules and regulations and make such
other determinations for carrying out the 1995 Plan, as the
Committee deems necessary or appropriate.
Eligibility
Directors, officers and key employees of the Company and
its subsidiaries selected by the Committee may participate
in the 1995 Plan. Selection for participation with respect
to one form of award under the 1995 Plan does not
automatically result in selection for participation with
respect to other forms of awards under the 1995 Plan unless
such result is specified by the Committee or by
the terms of the 1995 Plan.
