<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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
[X] Definitive Proxy Statement Commission Only (as permitted by Rule
Definitive Additional Material 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
M & F WORLDWIDE CORP.
- - -------------------------------------------------------------------------------
(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):
- - -------------------------------------------------------------------------------
(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 number, or the Form or Schedule and the
date of its filing.
- - -------------------------------------------------------------------------------
(1) Amount Previously Paid:
- - -------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- - -------------------------------------------------------------------------------
(3) Filing Party:
- - -------------------------------------------------------------------------------
(4) Date Filed:
- - -------------------------------------------------------------------------------
<PAGE>
M & F WORLDWIDE CORP.
35 East 62nd Street
New York, New York 10021
March 30, 1998
To Our Stockholders:
You are cordially invited to attend the 1998 Annual Meeting of
Stockholders of M&F Worldwide Corp. to be held at The Westin Hotel, 400
Corporate Drive, Fort Lauderdale, Florida 33334-3642 on Tuesday, May 12, 1998,
at 10:30 a.m. local time.
The business of the meeting will be to elect directors and ratify the
selection of independent auditors for 1998. Information on each of these matters
can be found in the accompanying Proxy Statement.
While stockholders may exercise their right to vote their shares in
person, we recognize that many stockholders may not be able to attend the Annual
Meeting. Accordingly, we have enclosed a proxy which will enable you to vote
your shares on the issues to be considered at the Annual Meeting even if you are
unable to attend. If you desire to vote in accordance with management's
recommendations, you need only sign, date and return the proxy in the enclosed
postage-paid envelope to record your vote. Otherwise, please mark the proxy to
indicate your vote; date and sign the proxy; and return it in the enclosed
postage-paid envelope as soon as conveniently possible.
Sincerely,
By: /s/ Theo W. Floz
--------------------------
Theo W. Folz
Chief Executive Officer
<PAGE>
M&F WORLDWIDE CORP.
35 East 62nd Street
New York, New York 10021
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
M&F Worldwide Corp.:
Notice is hereby given that the Annual Meeting of Stockholders of M&F
Worldwide Corp., a Delaware corporation (the "Company"), will be held on the
12th day of May 1998 at 10:30 a.m., local time, at The Westin Hotel, 400
Corporate Drive, Fort Lauderdale, Florida 33334-3642 for the following purposes:
1. To re-elect four members of the Company's Board of Directors
to serve until the annual meeting in 2001 and until such
directors' successors are duly elected and shall have
qualified.
2. To ratify the selection of Ernst & Young LLP as the Company's
independent auditors for 1998.
3. To transact such other business as may properly come before
the Annual Meeting or at any adjournments or postponements
thereof.
A Proxy Statement describing the matters to be considered at the Annual
Meeting is attached to this notice. Only stockholders of record at the close of
business on March 24, 1998 (the "Record Date") are entitled to notice of, and to
vote at, the Annual Meeting and at any adjournments thereof. A list of
stockholders entitled to vote at the Annual Meeting will be located at the
offices of the Company at 625 Madison Avenue, New York, New York 10022, at least
ten days prior to the Annual Meeting and will also be available for inspection
at the Annual Meeting.
<PAGE>
To ensure that your vote will be counted, please complete, date and
sign the enclosed proxy card and return it promptly in the enclosed prepaid
envelope, whether or not you plan to attend the Annual Meeting. Since proxies
may be revoked at any time, any stockholder attending the Annual Meeting may
vote in person even if that stockholder has returned a proxy.
By Order of the Board of Directors
M&F WORLDWIDE CORP.
March 30, 1998
PLEASE COMPLETE, SIGN AND DATE THE ACCOMPANYING
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
THIS WILL ENSURE THAT YOUR SHARES ARE VOTED
IN ACCORDANCE WITH YOUR WISHES.
<PAGE>
M&F WORLDWIDE CORP.
------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 12, 1998
------------------------------------
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors (the "Board of Directors") of M&F
Worldwide Corp., a Delaware corporation (the "Company"), of proxies to be voted
at the 1998 Annual Meeting of Stockholders to be held on the 12th day of May
1998 at 10:30 a.m., local time, at The Westin Hotel, 400 Corporate Drive, Fort
Lauderdale, Florida 33334-3642 and at any adjournments or postponements thereof
(the "Annual Meeting"). This Proxy Statement and the enclosed proxy are first
being sent to stockholders on or about March 30, 1998.
At the Annual Meeting, the Company's stockholders will be asked (1) to
re-elect the following persons as Directors of the Company until the Company's
annual meeting in 2001 and until such Directors' successors are duly elected and
shall have qualified: Ronald O. Perelman, Theo W. Folz, E. Gregory Hookstratten
and Bruce Slovin; (2) to ratify the selection of Ernst & Young LLP as the
Company's independent auditors for 1998; and (3) to transact such other business
as may properly come before the Annual Meeting or at any adjournments or
postponements thereof.
The principal executive offices of the Company are located at 35 East
62nd Street, New York, New York 10021 and the telephone number is 212-572-8600.
SOLICITATION AND VOTING OF PROXIES; REVOCATION
All proxies duly executed and received by the Company will be voted on
all matters presented at the Annual Meeting in accordance with the instructions
given therein by the person executing such proxy or, in the absence of such
instructions, will be voted FOR the election to the Board of Directors of the
four nominees for Director identified in this Proxy Statement and the
ratification of Ernst & Young LLP as the Company's auditors. The submission of a
signed proxy will not affect a stockholder's right to attend, or vote in person
at, the Annual Meeting. Any stockholder may revoke his or her proxy at any time
before it is voted by written notice to such effect received by the Company at
35 East 62nd Street, New York, New York 10021, Attention: Secretary, by delivery
of a subsequently dated proxy
<PAGE>
or by attending the Annual Meeting and voting in person (although attendance at
the Annual Meeting will not in and of itself constitute a revocation of a
proxy).
The accompanying form of proxy is being solicited on behalf of the
Board of Directors. The solicitation of proxies may be made by mail and may also
be made by personal interview, telephone and facsimile transmission, and by
directors, officers and regular employees of the Company without special
compensation therefor. The Company will bear the costs incurred in connection
with the solicitation of proxies and expects to reimburse banks, brokers and
other persons for their reasonable out-of-pocket expenses in handling proxy
materials for beneficial owners.
RECORD DATE; OUTSTANDING SHARES; VOTING AT THE ANNUAL MEETING
Only holders of record of the Company's common stock, par value $0.01
(the "Common Stock"), at the close of business on March 24, 1997 (the "Record
Date") were entitled to notice of and to vote at the Annual Meeting. On that
date, there were issued and outstanding 20,602,479 shares of Common Stock, each
of which is entitled to one vote. The presence, in person or by properly
executed proxy, of the holders of a majority of the shares of Common Stock
outstanding and entitled to vote at the Annual Meeting is necessary to
constitute a quorum at the Annual Meeting. Any stockholder present (including
broker non-votes) at the Annual Meeting but who abstains from voting shall be
counted for purposes of determining whether a quorum exists. The holder of the
outstanding shares of the Company's Series A 8% Convertible Redeemable Preferred
Stock (the "Series A Preferred Stock") does not have the right to vote such
Series A Preferred Stock or the Common Stock into which it may be converted at
the Annual Meeting. The affirmative vote of the holders of a plurality of the
votes cast is required to re-elect the director nominees. The affirmative vote
of the holders of at least a majority of the votes cast at the Annual Meeting by
the holders present or represented by proxy and entitled to vote is required
ratify the appointment of Ernst & Young LLP.
Mafco Consolidated Group Inc. ("Mafco Consolidated"), which
beneficially owns 6,239,400 shares or approximately 30.2% of the outstanding
Common Stock as of the Record Date (excluding shares of Common Stock issuable
upon conversion of the shares of Series A Preferred Stock owned by Mafco
Consolidated, which were not outstanding or entitled to vote as of the Record
Date), has informed the Company of its intention to vote its shares of Common
Stock FOR each of the matters to be acted on at the Annual Meeting
(collectively, the "Proposals"). Based on the foregoing, the affirmative vote of
the holders of 4,061,840 additional shares of Common Stock (representing
approximately 19.8% of the shares of Common Stock
2
<PAGE>
currently outstanding) would be required (assuming all shares of Common Stock
are voting at the meeting) to constitute a quorum, elect the director nominees
and approve the selection of auditors.
PROPOSAL 1 - ELECTION OF DIRECTORS
The Board of Directors consists of Ronald O. Perelman, Jaymie A.
Durnan, Theo W. Folz, Howard Gittis, J. Eric Hanson, E. Gregory Hookstratten,
Lance Liebman, Paul M. Meister, James G. Roche and Bruce Slovin. The Company's
Restated Certificate of Incorporation and By-Laws provide that the Board of
Directors shall be divided as evenly as possible into three classes.
The Board of Directors has nominated Messrs. Perelman, Folz,
Hookstratten and Slovin for re-election as Directors at the Annual Meeting to
serve until the annual meeting in 2001. Messrs. Perelman, Folz, Hookstratten and
Slovin are currently members of the Board of Directors whose terms expire at the
Annual Meeting and, except as herein stated, the proxies solicited hereby will
be voted FOR their election. The Board of Directors has been informed that
Messrs. Perelman, Folz, Hookstratten and Slovin are willing to serve as
Directors, but if any of them should decline or be unable to act as a Director,
the individuals named in the proxies will vote for the election of such other
person or persons as they, in their discretion, may choose. The Board of
Directors has no reason to believe that any such nominees will be unable or
unwilling to serve.
Directors of the Company will be elected by a plurality vote of the
outstanding shares of Common Stock present in person or represented by proxy at
the Annual Meeting. Under applicable Delaware law, in tabulating the votes,
abstentions from voting on the election of Directors (including broker
non-votes) will be disregarded and have no effect on the outcome of the vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF EACH OF THE NOMINEES LISTED HEREIN FOR DIRECTOR.
DIRECTORS AND DIRECTOR NOMINEES
The name, age (as of March 24, 1998), principal occupation for the last
five years, selected biographical information and period of service as a
Director of the Company of each Director and Director nominee are set forth
hereafter.
3
<PAGE>
RONALD O. PERELMAN (55) has been a Director and Chairman of the
Executive Committee of the Board of Directors since 1995 and was Chairman of the
Board of the Company from 1995 to 1997. Mr. Perelman has been Chairman of the
Board of Directors and Chief Executive Officer of Mafco Holdings Inc.
("Holdings") and MacAndrews & Forbes Holdings Inc. ("MacAndrews Holdings"),
diversified holding companies, and various affiliates since 1980. Mr. Perelman
is also Chairman of the Executive Committee of the Boards of Directors of
Consolidated Cigar Holdings Inc. ("Cigar Holdings") and Revlon, Inc. and is
Chairman of the Board of Meridian Sports Incorporated ("Meridian"). Mr. Perelman
is also a Director of the following corporations which file reports pursuant to
the Securities Exchange Act of 1934 (the "Exchange Act"): California Federal
Bank, A Federal Savings Bank ("CalFed"), Cigar Holdings, First Nationwide
Holdings Inc. ("First Nationwide Holdings"), First Nationwide (Parent) Holdings
Inc. ("First Nationwide Parent"), Meridian, REV Holdings Inc., Revlon, Inc., and
Revlon Consumer Products Corporation ("Revlon Products"). Mr. Perelman's term as
a Director of the Company expires in 1998. (On December 27, 1996, Marvel
Entertainment Group, Inc. ("Marvel"), Marvel Holdings Inc. and Marvel (Parent)
Holdings Inc., of which Mr. Perelman was then a director and Marvel III Holdings
Inc. of which Mr. Perelman is a director and several of subsidiaries of Marvel
filed voluntary petitions for reorganization under Chapter 11 of the United
States Bankruptcy Code.)
JAYMIE A. DURNAN (44) has been a Director of the Company since 1995 and
has been Vice President of Holdings and MacAndrews Holdings, diversified holding
companies, since 1992 and Special Counsel to the Chairman of MacAndrews Holdings
since 1995. Mr. Durnan was an attorney with the law firm of Marks & Murasi from
1990 through 1992 and a United States Naval officer from 1975 to 1990. Mr.
Durnan's term as a Director of the Company expires in 1999.
THEO W. FOLZ (54) has been a Director, President and Chief Executive
Officer of the Company since 1996 and Chairman of the Board since 1997. Mr. Folz
has been President, Chief Executive Officer and a Director of Cigar Holdings
since 1996 and President and Chief Executive Officer of Consolidated Cigar
Corporation since 1984. Mr. Folz's term as a Director of the Company expires in
1998.
HOWARD GITTIS (64) has been a Director of the Company since 1995 and
Vice Chairman of Holdings and MacAndrews Holdings, diversified holding
companies, and various affiliates since 1985. Mr. Gittis is a Director of the
following corporations which file reports pursuant to the Exchange Act: CalFed,
Cigar Holdings, First Nationwide Holdings, First Nationwide Parent, REV Holdings
Inc.,
4
<PAGE>
Revlon, Inc., Revlon Products, Jones Apparel Group, Inc., Loral Space &
Communications Ltd. and Rutherford-Moran Oil Corporation. Mr. Gittis' term as
a Director expires in 2000.
J. ERIC HANSON (51) has been a Director of the Company since 1995 and
Executive Vice President-Finance and Administration of the Company since 1997.
Mr. Hanson also has been President and Chief Executive Officer of Meridian since
1997. Mr. Hanson was Senior Vice President of Holdings and MacAndrews Holdings,
diversified holding companies, and various affiliates from 1994 and was Vice
President of Holdings from 1993 to 1994. Mr. Hanson is also a Director of
Meridian which files reports pursuant to the Exchange Act. Mr. Hanson's term as
a Director expires in 2000.
E. GREGORY HOOKSTRATTEN (65) has been a Director of the Company since
1997. He has been engaged in private law practice, specializing in entertainment
law as a partner in Hookstratten & Hookstratten for more than the past five
years. Mr. Hookstratten's term as a Director expires in 1998.
LANCE LIEBMAN (56) has been a Director of the Company since 1995.
Professor Liebman has been William S. Beinecke Professor of Law at Columbia Law
School since 1996 and was Dean of Columbia Law School from 1991 to 1996. From
1976 to 1991, Professor Liebman was Professor of Law at Harvard Law School and
from 1981 to 1984 also held the position of Associate Dean. Professor Liebman is
a Director of Greater New York Insurance Co. and World Financial Properties,
Inc. and a Trustee of National Income Realty Trust, a real estate investment
trust. Professor Liebman's term as a Director of the Company expires in 1999.
PAUL M. MEISTER (45) has been a Director of the Company since 1995. Mr.
Meister has been Vice Chairman of the Board and Executive Vice President of
Fisher Scientific International Inc. (scientific instruments, equipment and
supplies) since 1998 and was Senior Vice President-Chief Financial Officer of
Fisher Scientific International, Inc. from 1991 to 1998. Mr. Meister was Senior
Vice President of Abex, Inc. (diversified manufacturing) from 1992 to 1995 and
Managing Director- Chief Financial Officer of The Henley Group Inc. (diversified
manufacturing) from prior to 1990 to 1992. Mr. Meister is also a Director of the
following corporations which file reports pursuant to the Exchange Act: Fisher
Scientific International Inc., The General Chemical Group, Inc., Minerals
Technologies, Inc. and Wheelabrator Technologies, Inc. Mr. Meister's term as a
Director of the Company expires in 2000.
5
<PAGE>
JAMES G. ROCHE (58) has been a Director of the Company since 1995. Dr.
Roche has been Corporate Vice President and General Manager, Electronic Sensors
and Systems Division of Northrop Grumman Corporation, a maker of aircraft,
electronic systems and unmanned vehicles and a provider of information services,
since 1996 and was Chief Advanced Development, Planning and Public Affairs
Officer of Northrop Corporation from 1993 to 1996, Planning Officer since 1992
and Corporate Vice President and Assistant to the Chairman, President and Chief
Executive Officer of Northrop Corporation from prior to 1991 to 1992. Dr.
Roche's term as a Director of the Company expires in 1999.
BRUCE SLOVIN (62) has been a Director of the Company since 1995 and the
President of Holdings and MacAndrews Holdings, diversified holding companies,
and various affiliates since 1982. Mr. Slovin is a Director of the following
corporations which file reports pursuant to the Exchange Act: Cantel Industries,
Inc., Coleman, Meridian, Continental Health Affiliates, Inc. Infu-Tech, Inc. and
Oak Hill Sportswear Corporation. Mr. Slovin's term as a Director of the Company
expires in 1998.
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors has an Executive Committee, an Audit Committee
and a Compensation Committee.
The Executive Committee consists of Messrs. Perelman, Gittis and
Slovin. The Executive Committee may exercise all of the powers and authority of
the Board of Directors, except as otherwise provided under the Delaware General
Corporation Law. The Audit Committee, consisting of Mr. Meister, Professor
Liebman and Dr. Roche, makes recommendations to the Board of Directors regarding
the engagement of the Company's independent auditors, reviews the plan, scope
and results of the audit, reviews with the auditors and management the Company's
policies and procedures with respect to internal accounting and financial
controls and reviews changes in accounting policy and the scope of the non-audit
services which may be performed by the Company's independent auditors. The
Compensation Committee, consisting of Messrs. Gittis and Hookstratten, Professor
Liebman and Dr. Roche, makes recommendations to the Board of Directors regarding
compensation, benefits and incentive arrangements for officers and other key
managerial employees of the Company. The Compensation Committee may consider and
recommend awards of options to purchase shares of Common Stock pursuant to the
Company's stock option plans.
6
<PAGE>
During 1997, the Board of Directors and Audit Committee each held four
meetings. During 1997, the Executive Committee acted four times by unanimous
written consent. The Compensation Committee held one meeting and acted two times
by unanimous written consent during 1997.
COMPENSATION OF DIRECTORS
Directors who are not currently receiving compensation as officers or
employees of the Company or any of its affiliates are paid an annual $25,000
retainer fee, payable in monthly installments, plus reasonable out-of-pocket
expenses and a fee of $1,000 for each meeting of the Board of Directors or any
committee thereof they attend.
EXECUTIVE OFFICERS
The following table sets forth as of the date hereof the executive
officers of the Company and executive officers of its operating subsidiary,
Pneumo Abex Corporation, which operates its licorice and flavors business under
the name Mafco Worldwide Corporation ("Mafco Worldwide").
NAME POSITION
- - ---- --------
Ronald O. Perelman Chairman of the Executive Committee
Theo W. Folz Chairman, President and Chief Executive Officer
Irwin Engelman Executive Vice President and Chief Financial Officer
Barry F. Schwartz Executive Vice President and General Counsel
J. Eric Hanson Executive Vice President-Finance and Administration
Stephen G. Taub President and Chief Operating Officer of Mafco
Worldwide
Pramathesh S. Vora Senior Vice President of Mafco Worldwide
Peter W. Grace Senior Vice President-Finance of Mafco Worldwide
For biographical information about Messrs. Perelman, Folz and Hanson,
see "Directors and Director Nominees."
Irwin Engelman (63) has been Executive Vice President and Chief
Financial Officer since 1996 and Executive Vice President, Chief Financial
Officer and Director of Holdings and MacAndrews Holdings, diversified holding
companies, and various affiliates since 1992. Mr. Engelman was Executive Vice
President and Chief Financial Officer of GAF Corporation, a specialty chemical
and building materials
7
<PAGE>
company, from 1990 to 1992. Mr. Engelman is also a Director of CalFed and Revlon
Products. (On December 27, 1996, Marvel Holdings and Marvel Parent of which Mr.
Engelman was then an executive officer and Marvel III of which Mr. Engelman is
an executive officer, filed voluntary petitions for reorganization under Chapter
11 of the United States Bankruptcy Code.)
Barry F. Schwartz (48) has been Executive Vice President and General
Counsel of the Company since 1996 and Executive Vice President and General
Counsel of Holdings and MacAndrews Holdings, diversified holding companies, and
various affiliates since 1993 and was Senior Vice President of Holdings and
MacAndrews Holdings from 1989 to 1993. (On December 27, 1996, Marvel Holdings
and Marvel Parent of which Mr. Schwartz was then an executive officer and Marvel
III of which Mr. Schwartz is an executive officer, filed voluntary petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code.)
Stephen G. Taub (46) has been President and Chief Operating Officer of
Mafco Worldwide since 1993. Mr. Taub was elected Senior Vice President in 1987
and his responsibilities included the manufacturing, botanical and spice
operations of Mafco Worldwide, as well as product marketing to the confectionery
and pharmaceutical industries in Western Europe. Mr. Taub joined Mafco Worldwide
in 1975 as an Industrial Engineer and in 1982 became Vice President of
Marketing.
Pramathesh S. Vora (51) has been Senior Vice President of Mafco
Worldwide since 1993. Mr. Vora was elected Vice President of Research and
Development, including areas of quality control and technical marketing, in 1984
and in 1986, was also given responsibility for international tobacco sales and
marketing for Europe, Asia and South America. Mr. Vora joined Mafco Worldwide in
1977 as a chemical engineer, became the Research and Development Manager in 1978
and was given responsibility for Quality Control in 1982.
Peter W. Grace (53) has been Senior Vice President-Finance of Mafco
Worldwide since 1993. Mr. Grace joined Mafco Worldwide in 1978 as Controller and
was elected Vice President in 1982, responsible for all domestic and
international accounting, treasury and MIS functions.
8
<PAGE>
EXECUTIVE COMPENSATION
The compensation paid to the Company's Chief Executive Officer and each
of the four most highly compensated executive officers of the Company and the
Company's principal operating business, for all services rendered during each of
the three years ended December 31, 1997 is set forth in the following Summary
Compensation Table. The compensation shown includes amounts paid by the Company
and its subsidiary Mafco Worldwide in the periods prior to its acquisition by
the Company in 1996.
9
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-
Term
Compen-
sation
Annual Compensation Awards
------------------------------------------------------------------------------------
Number of
Securities
Other Underlying All
Annual Options/ Other
Name and Compen- SARs Compen-
Principal Position Year Salary ($) Bonus ($) sation ($) (#) sation ($)(b)
- - ------------------ ---- ---------- --------- ---------- --- -------------
<S> <C> <C> <C> <C> <C> <C>
Theo W. Folz 1997 360,000 396,000 0 525,000 0
Chief Executive Officer 1996 330,000 363,000 0 0 0
and President 1995 300,000 300,000 0 0 0
J. Eric Hanson(a) 1997 425,000 100,000 0 250,000 4,194
Executive Vice President 1996 -- -- -- -- --
1995 -- -- -- -- --
Stephen G. Taub 1997 500,000 550,000 0 150,000 4,914
President and Chief 1996 400,000 475,000 0 0 3,963
Operating Officer 1995 370,000 475,000 0 0 10,312
(Mafco Worldwide)
Pramathesh S. Vora 1997 192,500 211,750 0 50,000 3,892
Senior Vice President 1996 180,000 198,000 0 0 4,699
(Mafco Worldwide) 1995 170,000 107,500 0 0 4,699
Peter W. Grace 1997 170,000 187,000 0 35,000 3,557
Senior Vice President- 1996 158,500 174,350 0 0 5,219
Finance (Mafco World- 1995 150,000 90,000 0 0 5,219
wide)
</TABLE>
- - ---------------------------
(a) Mr. Hanson became an officer and employee of the Company in 1997.
(b) Represents, in each case, 401(k) contributions of $3,000 in 1995 and
1996, and $3,200 in 1997; the remainder represents the Supplemental
Medical and Dental Expense Plan benefits paid by Mafco Worldwide.
10
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN 1997
AND YEAR END 1997 OPTION/SAR VALUES
The following chart shows, for 1997, the number of stock options
exercised and the 1997 year-end value of the options held by the Company's Chief
Executive Officer and the other executive officers named in the Summary
Compensation Table:
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs at
Shares at Year End (#) Year End ($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable*
- - ---- ----------- ----------- ------------- ---------------
<S> <C> <C> <C> <C>
Theo W. Folz 0 0 0/525,000 0/1,221,250
J. Eric Hanson 0 0 0/250,000 0/610,000
Stephen Taub 0 0 0/150,000 0/375,000
Pramathesh Vora 0 0 0/50,000 0/125,000
Peter Grace 0 0 0/35,000 0/87,500
</TABLE>
- - ----------------------------
* Based on a year-end 1997 closing price of $97/8.
11
<PAGE>
OPTION GRANTS IN THE LAST FISCAL YEAR
During 1997, the following grants of stock options were made pursuant
to the Stock Plan to the executive officers named in the Summary Compensation
Table:
<TABLE>
<CAPTION>
OPTIONS/SAR GRANTS IN 1997
INDIVIDUAL GRANTS
-----------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED FISCAL YEAR (PER SHARE) DATE PRESENT VALUE(b)
---- --------- ------------- ----------- ------ ----------------
<S> <C> <C> <C> <C> <C>
Theo W. Folz 525,000 48% $ 7.55(a) 2007 $1,307,701
J. Eric Hanson 250,000 23% $ 7.44(a) 2007 $606,613
Stephen Taub 150,000 14% $7.375 2007 $358,874
Pramathesh S. Vora 50,000 5% $7.375 2007 $119,625
Peter Grace 35,000 3% $7.375 2007 $83,737
</TABLE>
- - ----------------------
(a) Represents a weighted average exercise price.
(b) The present value of the options are based on the Black-Scholes option
pricing model using the following weighted average assumptions: (i) stock
price volatility of 21%, (ii) risk-free rate of 6.39%, (iii) a dividend
yield of 0%, (iv) an exercise price equal to the fair market value on the
date of grant, (v) an expected life of five years and (vi) no discounts
for forfeiture or non-transferability.
During 1997 the Company also granted options to purchase 500,000 shares to Mr.
Perelman, Chairman of the Executive Committee. Such options were granted at the
then current market value of the Common Stock and do not vest until 2002.
12
<PAGE>
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is comprised of Messrs. Gittis and Hookstratten, Professor Liebman
and Dr. Roche, none of whom are officers or employees of the Company. The
Compensation Committee's duties include determination of the Company's
compensation and benefit policies and practices for executive officers and key
managerial employees. In accordance with rules established by the Securities and
Exchange Commission (the "SEC"), the Company is required to provide certain data
and information in regard to the compensation provided to the Company's Chief
Executive Officer and the four other most highly compensated executive officers.
The Compensation Committee has prepared the following report for inclusion in
this Proxy Statement.
Compensation Policies. The overall objectives of the Company's
compensation program are to attract and retain the best possible executive
talent, to motivate these executives to achieve the goals inherent in the
Company's business strategy, to maximize the link between executive and
stockholder interests through a stock option plan and to recognize individual
contributions as well as overall business results. To achieve these objectives,
the Company has developed an overall compensation strategy and specific
compensation plans that tie a substantial portion of an executive's compensation
to performance.
The key elements of the Company's compensation program consist of fixed
compensation in the form of base salary, and variable compensation in the forms
of annual incentive compensation and stock option awards. An executive officer's
annual base salary represents the fixed component of such executive officer's
total compensation, and variable compensation is intended to comprise a
substantial portion of an executive's total annual compensation. The
Compensation Committee's policies with respect to each of these elements,
including the bases for the compensation awarded to Mr. Folz, the Company's
Chief Executive Officer, are discussed below. In addition, while the elements of
compensation described below are considered separately, the Compensation
Committee takes into account the full compensation package afforded by the
Company to the individual, including pension benefits, insurance and other
benefits, as well as the programs described below.
13
<PAGE>
Base Salaries. Base salaries for executive officers are determined
based upon the Compensation Committee's evaluation of the responsibilities of
the position held and the experience of the individual, and by reference to
historical levels of salary paid by the Company and its predecessors.
Salary adjustments are based on a periodic evaluation of the
performance of the Company and each executive officer, as well as financial
results of the business. The Compensation Committee takes into account the
effect any corporate transactions that have been consummated during the relevant
year and, where appropriate, also considers non-financial performance measures.
These include increases in market share, manufacturing efficiency gains,
improvements in product quality and improvements in relations with customers,
suppliers and employees.
Annual Incentive Compensation Awards. The variable compensation payable
annually to executive officers (including the Chief Executive Officer) generally
consists principally of annual incentive compensation awards. Annual incentive
compensation is payable pursuant to contractual provisions with certain
executives which provide eligibility to receive bonuses under the Company's
Performance Bonus Plan determined in accordance with a formula relating to
achievement of Company performance goals. The Performance Bonus Plan is
described elsewhere in this Proxy Statement. Such performance goals, are based
upon the Company's operating income. The annual incentive compensation earned by
the executives with respect to 1997 was determined in accordance with such
provisions. In addition, executive officers of the Company may be awarded
discretionary bonuses by the Compensation Committee.
Other Incentive Compensation Awards. The other principal component of
executives' compensation is stock options, which are intended as a tool to
attract, provide incentive to and retain those executives who make the greatest
contribution to the business, and who can have the greatest effect on the
long-term profitability of the Company. The exercise price of stock options is
set at a price equal to the market price of the Common Stock at the time of the
grant. The options therefore do not have any value to the executive unless the
market price of the Common Stock rises. The Compensation Committee believes that
these stock options more closely align the executives' interests with those of
its stockholders, and focus management on building profitability and long-term
stockholder value.
Chief Executive Officer Compensation. Mr. Folz serves as Chief
Executive Officer of the Company and has served as Chief Executive Officer of
the Company's flavors business for the past three years. Mr. Folz also serves as
the Chief Executive
14
<PAGE>
Officer of the Company's affiliate, Consolidated Cigar Holdings Inc. Mr. Folz's
level of compensation from the Company had been set prior to the acquisition of
the Company's flavors business and has been increased by the Company as
determined to be appropriate in accordance with compensation philosophy set
forth above and the guidelines of the Compensation Committee. The Compensation
Committee believes Mr. Folz's compensation from the Company is appropriate in
light of the experience and expertise Mr. Folz brings to the position and the
fact that Mr. Folz does not devote full time to his position with the Company,
and considering compensation levels of Chief Executive Officers of comparable
companies (including, but not limited to, companies comprising the peer group
selected for the performance graph, as well as other companies of similar size
with which the Compensation Committee believes the Company competes for
executive talent). No specific weight is given by the Compensation Committee to
any of the foregoing factors. As additional compensation and to align Mr. Folz's
interest with the interests of the Company's stockholders, in 1997 Mr. Folz also
was granted options to acquire shares of the Company's Common Stock.
Deductibility of Compensation. The Compensation Committee attempts to
ensure full deductibility of compensation in light of the limitation on the
deductibility of certain compensation in excess of one million dollars under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
The Performance Bonus Plan and the Company's stock option plans, described
elsewhere in this Proxy Statement, are designed so as to cause stock options and
bonuses granted thereunder to be exempt from the limitations contained in such
Section 162(m).
The Compensation Committee
of the Board of Directors
Howard Gittis, Chairman
E. Gregory Hookstratten
Lance Liebman
James G. Roche
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Howard Gittis, E. Gregory Hookstratten, Lance Liebman and James G.
Roche served on the Compensation Committee during 1997. None of such individuals
are officers or employees of the Company or its subsidiaries.
15
<PAGE>
EMPLOYMENT ARRANGEMENTS
Certain of the executive officers are parties to employment agreements
with the Company, its parent or the Company's principal operating subsidiary.
The following is a description of certain terms of such agreements.
Mr. Folz has an employment contract with Mafco Consolidated which
includes compensation for his duties as Chief Executive Officer of Mafco
Worldwide. The portion of compensation allocable to Mafco Worldwide is
reimbursed by Mafco Worldwide and is shown in the compensation table above. Mr.
Folz received no other benefits from Mafco Worldwide nor is he a participant in
the Mafco Worldwide pension plans.
Mr. Hanson has an employment agreement with the Company which provides
for him to be employed through December 31, 1999. At any time on or after
January 1, 1999, the Company will have the right to give written notice of the
non-renewal of the employment term. Upon the giving of such notice, the
employment term is automatically extended so that it ends twenty-four months
after the last day of the month in which the notice was given. From and after
December 31, 1999, the employment term is extended on a day-to-day basis until
the Company gives notice of non-renewal, as described above. Mr. Hanson will be
paid an annual base salary of not less than $500,000. Because Mr. Hanson
allocates a certain portion of his time to the business of an affiliate of the
Company, since the second quarter of 1997 the Company has been reimbursed
$25,000 per quarter from such affiliate. Mr. Hanson is also eligible for a
discretionary bonus as determined by the Board of Directors. In the event of a
breach of the agreement by the Company, Mr. Hanson is entitled to terminate the
employment agreement; in that event or in the event that the Company terminates
the agreement other than for cause or Mr. Hanson's disability, Mr. Hanson is
generally entitled to receive payment of base salary and the continuation of
benefits for the longer of the remaining term of the agreement or twenty-four
months, offset by certain other compensation Mr. Hanson earns during the period.
Mafco Worldwide entered into an employment agreement with Mr. Taub
which provides for him to be employed commencing on September 1, 1996 through
December 31, 2000. At any time on or after December 31, 1999, Mafco Worldwide
will have the right to give written notice of the non-renewal of the employment
term. Upon the giving of such notice, the employment term is automatically
extended so that it ends twelve months after the last day of the month in which
the notice was given. From and after January 1, 2001, the employment term is
extended on a day-
16
<PAGE>
to-day basis until Mafco Worldwide gives notice of non-renewal, as described
above. Mr. Taub will be paid an annual base salary of not less than $500,000,
subject to increase at the discretion of Mafco Worldwide. In addition, Mr. Taub
may earn a performance bonus of up to 150% of base salary, subject to an annual
maximum of $1 million, pursuant to his participation in the Performance Bonus
Plan as set forth in his employment agreement. In the event of a breach of the
agreement by Mafco Worldwide, Mr. Taub is entitled to terminate the employment
agreement; in that event or in the event that Mafco Worldwide terminates the
agreement other than for cause or Mr. Taub's disability, Mr. Taub is generally
entitled to receive payment of base salary and bonus and the continuation of
benefits for the longer of the remaining term of the agreement or twelve months,
offset by any other compensation Mr. Taub earns during this period.
Mafco Worldwide also entered into employment agreements with Messrs.
Grace and Vora which provide for each to be employed commencing on September 1,
1996, through December 31, 1999. At any time on or after December 31, 1998,
Mafco Worldwide will have the right to give notice of the non-renewal of the
employment term. Upon the giving of such notice the employment term is
automatically extended so that it ends twelve months after the last day of the
month in which the notice was given. From and after January 1, 2000 the
employment term is extended on a day-to-day basis until Mafco Worldwide gives
notice of non-renew- al, as described above. Mr. Grace will be paid an annual
base salary of not less that $158,500, subject to increase at the discretion of
Mafco Worldwide. Mr. Vora will be paid an annual base salary of not less than
$180,000, also subject to increase at the discretion of Mafco Worldwide. In
addition, Messrs. Grace and Vora may each earn a performance bonus of up to 150%
of base salary, subject to an annual maximum of $1 million, pursuant to their
participation in the Performance Bonus Plan as set forth in their respective
employment agreements. In the event of a breach of an agreement by Mafco
Worldwide, Messrs. Grace and Vora are entitled to terminate their respective
employment agreements; in that event or in the event that Mafco Worldwide
terminates an agreement other than for cause or disability, the executive is
generally entitled to receive payment of base salary and bonus and the
continuation of benefits for the longer of the remaining term of the agreement
or twelve months, offset by any other compensation the executive earns during
this period.
COMMON STOCK PERFORMANCE
The Company's Common Stock commenced trading on the New York Stock
Exchange (the "NYSE") on June 16, 1995. The two graphs set forth below present a
comparison of cumulative stockholder return through December 31, 1997,
17
<PAGE>
assuming reinvestment of dividends, by an investor who invested $100 on June 16,
1995 in each of (i) the Common Stock, (ii) the S & P 500 Composite Index (the "S
& P 500 Index") and (iii) a peer group composed of the companies in the Dow
Jones Food Index.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
COMPANY COMMON STOCK, THE S & P 500
INDEX AND THE DOW JONES FOOD INDEX
[LINE GRAPH OMITTED]
<TABLE>
<CAPTION>
June 16, 1995 December 31, 1995 December 31, 1996 December 31, 1997
------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
M & F Worldwide Corp. 100 152 143 187
S&P 500 Index 100 116 142 189
Dow Jones Food Index 100 114 133 182
</TABLE>
18
<PAGE>
PENSION PLAN FOR SALARIED EMPLOYEES
The following table sets forth information concerning the estimated
annual benefits payable to Messrs. Hanson, Taub, Grace and Vora under Mafco
Worldwide's Defined Benefit Pension Plan (the "Salaried Pension Plan") effective
as of December 31, 1990, established in replacement of a prior plan.
Participants in the Salaried Pension Plan generally include participants under
the prior plan and certain salaried employees who are at least age 21 and
credited with at least one thousand hours of service in any Plan Year (as
defined in the Salaried Pension Plan) since the date such employee commenced
employment.
Benefits to participants vest fully after five years of service and
such benefits are determined primarily by a formula taking into account an
average final compensation determined by averaging the three consecutive
completed calendar years of greatest compensation earned during the
participant's service to Mafco Worldwide and the number of years of service
attained by the individual participants. Benefits are subject to the maximum
limitations imposed by federal law on pension benefits. The annual limitation in
1997 was $120,000 based on a maximum allowable compensation of $160,000. Such
compensation is composed primarily of regular base salary, bonus and employers'
contributions to qualified deferred compensation plans. Subject to certain
restrictions, participants may make voluntary after-tax contributions of up to
ten percent of their aggregate compensations. Any such voluntary contributions
are fully vested and nonforfeitable at all times.
Mafco Worldwide has established the Mafco Worldwide Corporation Benefit
Restoration Plan (the "Restoration Plan") effective January 1, 1994 which was
designed to restore retirement benefits to those employees whose eligible
pension earnings were limited to $150,000 under regulations enacted by the
Internal Revenue Service. The Omnibus Budget Reconciliation Act of 1993 ("OBRA
'93") limited pension benefits under tax qualified plans, based on maximum
compensation of $150,000, which will be adjusted annually based upon inflation.
Had the enactment of OBRA '93 not limited pension benefits under tax qualified
plans, the limit would have been $255,300 in 1996. As of January 1, 1997, the
Restoration Plan was amended to increase the retirement benefit to up to
$500,000. The Restoration Plan was established to provide pension benefits to
those employees who would have lost benefits due to the reduction in the maximum
compensation allowed for the calculation of benefits under the Salaried Pension
Plan. The Restoration Plan will not be funded and all other vesting and payment
rules will follow the Salaried Pension Plan.
19
<PAGE>
The following table shows estimated annual benefits payable upon
retirement under the Salaried Pension Plan and the Restoration Plan:
<TABLE>
<CAPTION>
HIGHEST
CONSECUTIVE
THREE YEAR
AVERAGE ESTIMATED ANNUAL STRAIGHT LIFE ANNUITY BENEFITS AT
COMPENSATION RETIREMENT WITH INDICATED YEARS OF CREDITED SERVICE
-------------- ---------------------------------------------------
15 20 25 30 35
---- ---- ---- ---- ---
<S> <C> <C> <C> <C> <C> <C>
$100,000 $ 25,169 $ 33,558 $ 41,948 $ 41,948 $ 41,948
150,000 40,169 53,558 66,948 66,948 66,948
200,000 55,169 73,558 91,948 91,948 91,948
250,000 70,039 93,385 116,732 116,732 116,732
300,000 75,569 100,758 125,948 125,948 125,948
350,000 80,569 107,425 134,282 134,282 134,282
400,000 85,569 114,092 142,615 142,615 142,615
450,000 90,569 120,758 150,948 150,948 150,948
500,000+ 95,569 127,425 159,282 159,282 159,282
</TABLE>
Benefits shown above reflect the straight life annuity benefit form of payment
for employees, assume normal retirement at age 65, reflect the deduction for
Social Security amounts, but do not reflect the offset for the actuarial
equivalent of the benefit derived from the employer contribution account in the
401(k) Plan.
As of December 31, 1997, credited years of service for each of the
following individuals were as follows: Mr. Taub, 22 years; Mr. Hanson, 1
year; Mr. Grace, 20 years; and Mr. Vora, 21 years.
PERFORMANCE BONUS PLAN
Messrs. Folz, Taub, Grace and Vora participate in and are eligible to
receive bonuses in accordance with the Company's Performance Bonus Plan which
has been approved by the Company's stockholders. Compensation payable under the
Performance Bonus Plan is intended to qualify as "performance based
compensation" under Section 162(m) of the Code. Under the Performance Bonus
Plan, the participants are eligible to receive annual performance bonus awards
based upon achievement of performance goals established by the Compensation
Committee and set forth in their respective employment agreements. Performance
goals under the Performance Bonus Plan are based upon the achievement of EBITDA
goals set forth in the Company
20
<PAGE>
business plan during each calendar year. The payments under the Performance
Bonus Plan may not exceed $1,000,000 with respect to any participant in any
calendar year and shall not be made unless the Compensation Committee certifies
that the performance goals with respect to the applicable year have been met.
STOCK OPTION PLAN
The Company has adopted and the Company's stockholders have approved,
the 1997 Stock Option Plan and the 1995 Stock Option Plan (together, the "Stock
Option Plans"). A maximum of 2,000,000 shares of Common Stock has been reserved
for issuance under the Stock Option Plans, subject to equitable adjustment upon
the occurrence of any stock dividend, stock split, recapitalization, combination
or exchange of shares.
The Stock Option Plans are administered by a committee appointed by the
Board ("Compensation Committee"), which consists of two or more members of the
Board who are "outside directors" within the meaning of Section 162(m) of the
Code. The Compensation Committee may, in its discretion, delegate to a
subcommittee its duties hereunder, including the grant of Options and Rights.
The full Board also has the authority, in its discretion, to grant Options and
Rights under the Stock Option Plans and to administer such plans. The
Compensation Committee has full authority, subject to the provisions of the
Stock Option Plans, among other things, to determine the persons to whom options
or stock appreciation rights will be granted, to determine the exercise price of
the stock options and to prescribe, amend and rescind rules and regulations
relating to the Stock Option Plans.
Grants of stock options and stock appreciation rights (collectively,
"Awards") may be made under the Stock Option Plans to selected employees,
directors (including directors who are not employees) and consultants of the
Company and its present or future affiliates, in the discretion of the
Compensation Committee. Stock options may be either "incentive stock options,"
as such term is defined in Section 422 of the Code, or nonqualified stock
options. The exercise price of a nonqualified stock option may be above, at or
below the fair market value per share of Common Stock on the date of grant; the
exercise price of an incentive stock option may not be less than the fair market
value per share of Common Stock on the date of grant.
No person may be granted stock options or stock appreciation rights
under any calendar year representing an aggregate of more than 600,000 shares of
Common Stock under the 1997 Stock Option Plan or 400,000 shares of Common Stock
under the 1995 Stock Option Plan. Stock options and stock appreciation rights
shall be
21
<PAGE>
exercisable at the times and upon the conditions that the Committee may
determine, as reflected in the applicable Award agreement. The exercise period
shall be determined by the Committee; provided, however, that in the case of an
incentive stock option, such exercise period shall not exceed ten (10) years
from the date of grant of such incentive stock option.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the SEC and the NYSE. Officers, directors and
greater than ten percent owners are required to furnish the Company with copies
of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received and representations from certain reporting persons that they were not
required to file such forms for a specified fiscal year, the Company believes
that all its officers, directors and greater than ten percent beneficial owners
complied with all filing requirements applicable to them with respect to
transactions during 1997.
PROPOSAL 2 - RATIFICATION OF SELECTION OF AUDITORS
The ratification of the selection of Ernst & Young LLP will require the
affirmative vote of the holders of a majority of the votes cast, in person or
represented by proxy, at the Annual Meeting. Under applicable Delaware law, in
tabulating the votes, abstentions from voting on the ratification of the
auditors (including broker non-votes) will be counted and will have the same
effect as a vote against the proposal.
Ernst & Young LLP representatives will be present at the Annual Meeting
and will have an opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions.
THE COMPANY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF
THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
1998.
22
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS
The following table sets forth as of March 1, 1998, the total number of
shares of Common Stock beneficially owned, and the percent so owned, by each
Director of the Company, by each person known to the Company to be the
beneficial owner of more than 5% of the outstanding Common Stock, by the
officers named in the summary compensation table and by all Directors and
officers as a group. The number of shares owned are those "beneficially owned,"
as determined under the rules of the SEC, and such information is not
necessarily indicative of beneficial ownership for any other purpose. Under such
rules, beneficial ownership includes any shares as to which a person has sole or
shared voting power or investment power and any shares of Common Stock which the
person has the right to acquire within 60 days through the exercise of any
option, warrant or right, through conversion of any security, or pursuant to the
automatic termination of power of attorney or revocation of trust, discretionary
account or similar arrangement.
23
<PAGE>
Amount and Nature
of Beneficial Percent of
Ownership(a) Class
----------------- -----------
Ronald O. Perelman(b) 8,739,400 37.6%
35 East 62nd Street
New York, NY 10021
Jaymie A. Durnan 500 *
Theo W. Folz 63,333 *
Howard Gittis 5,000 *
J. Eric Hanson 73,333 *
E. Gregory Hookstratten 0
Lance Liebman 1,000 *
Paul M. Meister 76,402 *
James G. Roche 3,000 *
Bruce Slovin(c) 10,000 *
Stephen G. Taub 50,000 *
Pramathesh S. Vora 16,666 *
Peter W. Grace 12,666 *
All Directors and executive officers 9,050,400 38.9%
as a group (13 persons)
- - ----------------------------------
* Less than 1%.
(a) Includes Common Stock and options exercisable within 60 days.
(b) Represents outstanding shares of Common Stock owned indirectly through
Holdings which is wholly owned by Mr. Perelman. Of such shares of Common
Stock, 2,500,000 represent shares of Common Stock issuable upon the
conversion of 20,000 shares of Series A Preferred Stock owned by Mafco
Consolidated. The shares owned and shares of intermediate holding
companies are or may from time to time be pledged to secure obligations
of Holdings or its affiliates.
(c) Of the shares owned, 5,000 are held in trust for a minor child. Mr.
Slovin disclaims beneficial ownership of such 5,000 shares.
24
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mafco Holdings Inc. beneficially owns 36% of the outstanding Common
Stock of the Company (assuming conversion of the Series A Preferred Stock).
Mafco Holdings, wholly-owned by Ronald O. Perelman, is a diversified holding
company with interests in several industries. Through its 83% ownership of
Revlon, Inc., Mafco Holdings is engaged in the cosmetics and skin care,
fragrance and personal care products business. Mafco Holdings also owns 65% of
Meridian, a manufacturer and marketer of specialized ski-boats. Through its 64%
ownership of Cigar Holdings, Mafco Holdings is engaged in the manufacture and
distribution of cigars and pipe tobacco. Through its ownership interest in the
Company, Mafco Holdings is in the business of processing licorice and other
flavors. On December 18, 1997, Mafco Holdings entered into an agreement pursuant
to which it will acquire a controlling interest in Panavision Inc., a
manufacturer and supplier of film camera systems to the motion picture and
television industries. Mafco Holdings is also in the financial services business
through its 80% ownership interest in Cal Fed. On February 4, 1998, Mafco
Holdings entered into an agreement with Golden State Bancorp Inc. pursuant to
which Cal Fed and Golden State Bancorp Inc. will merge. The resulting
corporation will retain the name California Federal. The principal executive
offices of Mafco Holdings are located at 35 East 62nd Street, New York, New York
10021.
FLAVORS ACQUISITION
On November 25, 1996, Mafco Consolidated and the Company consummated
the transactions contemplated by the stock and value support rights purchase
agreement, dated as of October 23, 1997 (the "Purchase Agreement"), by and among
Mafco Consolidated, the Company, and PCT International Holdings Inc.
("Purchaser"), a Delaware corporation and wholly-owned subsidiary of the
Company. Pursuant to the Purchase Agreement, Purchaser acquired from Mafco
Consolidated, all the shares of Flavors Holdings Inc. (the "Shares") and
23,156,502 Value Support Rights (each a "VSR", and collectively, the "VSRs")
issued pursuant to a Value Support Rights Agreement, dated November 25, 1996. In
consideration for the Shares and VSRs, Purchaser paid Mafco Consolidated cash in
the amount of $180.0 million. In addition, Purchaser paid Mafco Consolidated
deferred cash payments of $3.7 million on June 30, 1997 and $3.5 million on
January 2, 1998.
25
<PAGE>
RAW MATERIALS PURCHASES AND SALES
During 1997, the Company had sales of approximately $259,000 to
Consolidated Cigar Corporation, an affiliate. The Company also purchased
inventory of approximately $152,000 from Consolidated Cigar Corporation during
1997.
TRANSFER AGREEMENT
In connection with the merger of Abex, Inc. ("Abex"), currently known
as Mafco Consolidated, and a wholly owned subsidiary of Holdings (the "Abex
Merger") and the related transfer (the "Transfer") to a subsidiary of Mafco
Consolidated of substantially all of Abex's consolidated assets and liabilities
with the remainder being retained by the Company, the Company, a subsidiary of
Abex, Pneumo Abex and certain other subsidiaries of the Company entered into a
Transfer Agreement (the "Transfer Agreement"). The Transfer Agreement provides
for appropriate transfer, indemnification and tax sharing arrangements, in a
manner consistent with applicable law and existing contractual arrangements.
The Transfer Agreement requires such subsidiary of Mafco Consolidated
to undertake certain administrative and funding obligations with respect to
certain asbestos claims and other liabilities retained by the Company. The
Company will be obligated to make reimbursement for the amounts so funded only
when amounts are received by the Company under related indemnification and
insurance arrangements. Such administrative and funding obligations would be
terminated as to asbestos products claims in the case of a bankruptcy of Pneumo
Abex or the Company or of certain other events affecting the availability of
coverage for such claims from third party indemnitors and insurers. The Transfer
Agreement further provides that Mafco Consolidated will indemnify the Company
with respect to all environmental matters associated with Abex's former
operations to the extent not paid by third party indemnitors or insurers, other
than the operations relating to the Company's aerospace business which was sold
to Parker Hannifin Corporation in April 1996. The Transfer Agreement also
provides for certain funding indemnification and cooperation arrangements
between the Company and such subsidiary of Mafco Consolidated in respect of
certain liabilities which may arise under the Employee Retirement Income
Security Act of 1974 in respect of the sale of Abex Friction Products in 1994.
The Transfer Agreement also provides that the Company will be
reimbursed by a subsidiary of Mafco Consolidated at the end of 1995, 1996, 1997
and 1998 for amounts spent by the Company in excess of $1.5 million during each
such period in connection with certain costs and expenses incurred by the
Company by virtue of
26
<PAGE>
being a public company, such as compliance with certain SEC and stock exchange
filing requirements. Such reimbursement obligation is subject to early
termination in the case of certain "change in control" events affecting the
Company. No such reimbursements were required to be made in 1995, 1996 and 1997.
REGISTRATION RIGHTS AGREEMENT
In connection with the Abex Merger, Mafco Consolidated and the Company
entered into a Registration Rights Agreement providing Mafco Consolidated with
the right to require the Company to use its best efforts to register under the
Securities Act of 1933, as amended (the "Securities Act"), and the securities or
blue sky laws of any jurisdiction designated by Mafco Consolidated all or a
portion of the issued and outstanding Common Stock, if any, retained (the
"Retained Shares") by Mafco Consolidated in the Abex Merger (as a result of the
exercise of appraisal rights) or issuable upon conversion (the "Conversion
Shares") of the Series A Preferred Stock (collectively, the "Registrable
Shares"). Such demand rights are subject to the conditions that the Company is
not required to (i) effect a demand registration in the first year following the
effective time of the Abex Merger other than in respect of the Retained Shares,
(ii) effect a demand registration more than once in any 12 month period, (iii)
effect more than one demand registration with respect to the Retained Shares and
two demand registrations with respect to the Conversion Shares, or (iv) file a
registration statement during periods (not to exceed three months) (a) when the
Company is contemplating a public offering, (b) when the Company is in
possession of certain material non-public information, or (c) when audited
financial statements are not available and their inclusion in a registration
statement is required. In addition, and subject to certain conditions described
in the Registration Rights Agreement, if at any time the Company proposes to
register under the Securities Act an offering of Common Stock or any other class
of equity securities, then Mafco Consolidated will have the right to require the
Company to use its best efforts to effect the registration under the Securities
Act and the securities or blue sky laws of any jurisdiction designated by Mafco
Consolidated of all or a portion of the Registra- ble Shares as designated by
Mafco Consolidated. The Company is responsible for all expenses relating to the
performance of, or compliance with, the Registration Rights Agreement except
that Mafco Consolidated is responsible for underwriters' discounts and selling
commissions with respect to the Registrable Shares being sold.
ACQUISITION OF LIBRA SHARES
In connection with Mafco Consolidated's acquisition of 5,939,400 shares
of Common Stock from Libra Invest & Trade Ltd., the Company and Mafco
Consolidated entered into an agreement pursuant to which Mafco Consolidated
agreed to
27
<PAGE>
certain limitations on its ability to dispose of its shares of Common Stock or
Series A Preferred Stock for a period of three years in addition to the
limitations contained in the Company's Restated Certificate of Incorporation.
Pursuant to such agreement, the Company agreed to treat the shares so acquired
as "Registrable Shares" under the Registration Rights Agreement.
ADDITIONAL INFORMATION
The Company will make available a copy of its Annual Report on Form
10-K for the fiscal year ended December 31, 1997 and any Quarterly Reports on
Form 10-Q filed thereafter, without charge, upon written request to the
Secretary, M&F Worldwide, 35 East 62nd Street, New York, New York 10021. Each
such request must set forth a good faith representation that, as of the Record
Date, March 24, 1998, the person making the request was a beneficial owner of
Common Stock entitled to vote.
In order to ensure timely delivery of such documents prior to the
Annual Meeting, any request should be received by the Company promptly.
STOCKHOLDER PROPOSALS
Under the rules and regulations of the SEC as currently in effect, any
holder of at least $1,000 in market value of Common Stock who has held such
securities for at least one year and who desires to have a proposal presented in
the Company's proxy material for use in connection with the Annual Meeting of
stockholders to be held in 1999 must transmit that proposal (along with his or
her name, address, the number of shares of Common Stock that he or she holds of
record or beneficially, the dates upon which the securities were acquired and
documentary support for a claim of beneficial ownership) in writing as set forth
below. Proposals of stockholders intended to be presented at the next annual
meeting must be received by the Secretary, M&F Worldwide Corp., 35 East 62nd
Street, New York, New York 10021, not later than November 30, 1998.
28
<PAGE>
OTHER BUSINESS
The Company knows of no other matters which may come before the annual
meeting. However, if any such matters properly come before the meeting, the
individuals named in the proxies will vote on such matters in accordance with
their best judgment.
March 30, 1998
By Order of the Board of Directors
M & F WORLDWIDE CORP.
29
