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SECURITIES AND EXCHANGE COMMISSION
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1) | Title of each class of securities to which transaction applies: |
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2) | Aggregate number of securities to which transaction applies: |
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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: |
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5) | Total fee paid: |
[_] | Fee paid previously with preliminary materials: |
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[_] | 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: |
SCP POOL CORPORATION
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Sincerely, Wilson B. Sexton Chairman and Chief Executive Officer, Director |
(1) | The election of six directors to hold office for a term of one year or until their successors have been elected and qualified; |
(2) | The ratification of the appointment of Ernst & Young LLP as the Companys independent auditors for the fiscal year ending December 31, 2000; and |
(3) | 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 Companys Common Stock at the close of business on April 3, 2000 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 Companys principal executive offices located at 109 Northpark Boulevard, Suite 400 in Covington, Louisiana for a period of 10 days prior to the meeting. |
By Order of the Board of Directors, Wilson B. Sexton Chairman and Chief Executive Officer, Director |
March 22, 2000 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 AND MAIL IT PROMPTLY IN THE ENVELOPE PROVIDED TO ENSURE THAT YOUR SHARES WILL BE REPRESENTED. YOUR PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS VOTED OR BY DELIVERY OF A LATER-DATED PROXY. IN ANY EVENT, YOU MAY VOTE IN PERSON IF YOU ATTEND THE ANNUAL MEETING. |
SCP POOL CORPORATION
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Wilson B. Sexton Director since: 1993 |
Age: 63 |
Mr. Sexton, current Chairman and Chief Executive Officer of the Company, was appointed CEO in January 1999. Prior to his appointment as CEO, Mr. Sexton served as Chairman and a director of the Company and its wholly owned subsidiary, South Central Pool Supply, Inc. (SCP) since 1993. Mr. Sexton serves as a director for Utiliserve, Inc. and Stronghaven, Inc. |
Andrew W. Code Director since: 1993 |
Age: 41 |
Mr. Code served as Vice President of the Company and SCP from December 1993 to May 1995. Mr. Code has, since August 1998, been a general partner of CHS Management Limited Partnership (CHS Management) and a general partner of Code, Hennessy & Simmons Limited Partnership (CHS). |
James J. Gaffney Director since: 1998 |
Age: 59 |
Mr. Gaffney is Deputy Chairman of Viking Pacific Holdings, Ltd., a diversified holding company involved in retail, manufacturing and distribution activities. From 1995 to 1997, Mr. Gaffney was the President and Chief Executive Officer of General Aquatics, Inc. From 1993 to 1995, Mr. Gaffney was President and Chief Executive Officer of KDI Corporation. Mr. Gaffney serves as a director of Advantica Restaurant Group, Inc. and Hvide Marine, Inc. |
Peter M. Gotsch Director since: 1993 |
Age: 36 |
Mr. Gotsch served as Vice President of the Company and SCP from December 1993 to May 1995. Mr. Gotsch has been a partner of Code, Hennessy & Simmons LLC, an affiliate of CHS, since August 1997. Mr. Gotsch was a managing director of Code, Hennessy & Simmons, Inc., an affiliate of CHS, between January 1996 and August 1997, and was Vice President of CHS Management from June 1994 to December 1995. Mr. Gotsch does not intend to stand for re-election. |
Frank J. St. Romain Director since: 1993 |
Age: 64 |
In January 1999, Mr. St. Romain retired from his positions of President and Chief Executive Officer of the Company and SCP, positions that he had held since December 1993. Mr. St. Romain held the same positions with Lake Villa Corporation (formerly known as South Central Pool Supply, Inc.), a Louisiana corporation (the Predecessor), since its founding in 1980. |
Robert C. Sledd Director since: 1996 |
Age: 47 |
Mr. Sledd has served as Chairman of the Board of Directors of Performance Food Group Company (PFG) since February 1995 and has served as a director and as Chief Executive Officer of PFG since 1987. Mr. Sledd served as President of PFG from 1987 to February 1995. Mr. Sledd serves as a director of Eskimo Pie Corporation and Taylor & Sledd, Inc. |
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John E. Stokely Nominated for election at Annual Meeting |
Age: 48 |
John E. Stokely has worked as a business consultant since August 1999. Mr. Stokely is the former President, Chief Executive Officer and Chairman of the Board of Directors of Richfood Holdings, Inc., a food retailer and wholesale grocery distributor (Richfood). Mr. Stokely held this position with Richfood since January 1997, served as President and Chief Operating Officer from April 1995 to January 1997 and served as Executive Vice President from 1990 to April 1995. Richfood Holdings, Inc. merged with Supervalu, Inc. on August 31, 1999. Mr. Stokely is also a director of Performance Food Group and Nash Finch Company. |
Manuel J. Perez de la Mesa Officer since: 1999 |
Age: 43 |
Mr. Perez de la Mesa was appointed in January 1999 as President and Chief Operating Officer for the Company with employment commencing in February 1999. Prior to joining the Company, Mr. Perez de la Mesa was Vice President, Distribution Operations for Watsco, Inc., a NYSE-listed HVAC/R distribution company. From 1994 to 1996, Mr. Perez de la Mesa was Vice President, Finance & Operations for Gemaire Distributors, Inc., presently a wholly owned subsidiary of Watsco, Inc. |
A. David Cook Officer since: 1997 |
Age: 44 |
Mr. Cook has served as Vice President of Sales for the Company and SCP since February 1997. From December 1993 until February 1997, he served as the Director of National Sales Development for SCP, and he held the same position with the Predecessor since 1993. |
Craig K. Hubbard Officer since: 1997 |
Age: 48 |
Mr. Hubbard has served as Chief Financial Officer, Treasurer and Secretary for the Company and SCP since February 1997. From December 1993 until February 1997, he served as Controller for SCP, and he held the same position with the Predecessor since 1991. |
John M. Murphy Officer since: 1997 |
Age: 39 |
Mr. Murphy has served as Vice President of Marketing for the Company and SCP since February 1997. From December 1993 until February 1997, he served as the Director of Marketing for SCP, and he held the same position with the Predecessor since 1988. |
Richard P. Polizzotto Officer since: 1993 |
Age: 58 |
Mr. Polizzotto has served as Vice President of Operations for the Company since May 1995. He has served as Vice President for SCP since December 1993, and he held the same position with the Predecessor since 1992. |
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Name of Beneficial Owner | Number of Shares (1) |
Percent of Class (2) |
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St. Denis J. Villere & Company (3) | 1,526,549 | 13.5% | |||
T. Rowe Price (4) | 765,700 | 6.8% | |||
Wellington Management Company, LLP (5) | 503,650 | 4.5% | |||
Wilson B. Sexton (6) | 360,752 | 3.2% | |||
Frank J. St. Romain (7) | 175,938 | 1.6% | |||
Andrew W. Code (8) | 163,763 | 1.4% | |||
Robert C. Sledd (9) | 99,250 | * | |||
Richard P. Polizzotto (10) | 73,673 | * | |||
John M. Murphy (11) | 51,411 | * | |||
A. David Cook | 42,000 | * | |||
Peter M. Gotsch (12) | 11,750 | * | |||
Craig K. Hubbard (13) | 28,997 | * | |||
Manuel J. Perez de la Mesa (14) | 32,000 | * | |||
James J. Gaffney (15) | 15,625 | * | |||
All executive officers and directors as a group (11 persons)(16) | 1,052,496 | 9.3% | |||
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1. | Includes shares of Common Stock subject to options that are exercisable within 60 days of March 14, 2000 and shares of Common Stock issuable upon conversion of the Companys Convertible Subordinated Promissory Notes due December 31, 2002 (the Convertible Notes). |
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2. | Shares of Common Stock subject to options which are exercisable within 60 days of March 14, 2000 and shares of Common Stock issuable upon conversion of the Convertible Notes are considered outstanding for the purpose of determining the percent of the class held by the holder of such options or notes, but not for the purpose of computing the percentage held by others. An asterisk denotes percentages less than one percent. |
3. | Based upon such holders Schedule 13G/A filed with the SEC on February 15, 2000, St. Denis J. Villere & Company holds shared power to vote or direct the vote of 1,461,949 of such shares and sole power to dispose or direct the disposition of 64,600 shares. The business address of such holder is 210 Baronne Street, Suite 808, New Orleans, Louisiana 70112. |
4. | Based upon such holders Schedule 13G filed with the SEC on February 9, 2000, T. Rowe Price Associates, Inc. (Price Associates) serves as 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. The business address of such holder is 100 E. Pratt Street, Baltimore, Maryland 21202. |
5. | Based upon such holders Schedule 13G/A filed with the SEC on February 14, 2000, Wellington Management Company, LLC is a registered investment adviser and holds shared power to vote or direct the vote of 318,150 of such shares and shared power to dispose or to direct the disposition of 503,650 of such shares. 503,650 shares represent 4.5% of the Companys Common Stock as of March 14, 2000. The business address of such holder is 75 State Street, Boston, Massachusetts 02109. |
6. | Includes 46,869 shares issuable upon conversion of the Convertible Note held of record by Mr. Sexton, options to purchase 90,000 shares and 30,000 shares issued to Mr. Sexton pursuant to the 1995 Plan and the 1998 Plan, respectively. |
7. | Includes options to purchase 90,000 shares, 15,000 shares and 5,625 shares issued to Mr. St. Romain pursuant to the 1995 Plan, the 1998 Plan and the Directors Plan, respectively. Includes 590 shares purchased on behalf of Mr. St. Romain pursuant to the Companys Employee Stock Purchase Plan. |
8. | Includes options to purchase 33,750 shares issued pursuant to the Directors Plan which are held by a partnership of which Mr. Code is a general partner and, as a result, Mr. Code may be deemed to have voting and dispositive power with respect to such shares. 56,000 of such shares are held directly by a charitable foundation of which Mr. Code is a director, President and the sole member, and, as a result, Mr. Code may be deemed to have voting and dispositive power with respect to such shares, although neither Mr. Code nor any members of his immediate family have any pecuniary interest in such shares. 1,350 of such shares are held by Mr. Code as custodian for his minor children under the Uniform Gifts to Minors Act. 2,663 of such shares are held by a partnership of which Mr. Code is a general partner, and, as a result, Mr. Code may be deemed to have voting and dispositive power with respect to such shares. |
9. | Includes options to purchase 28,125 shares issued to Mr. Sledd pursuant to the Directors Plan. 45,000 of such shares are held in three trusts for the benefit of the minor children of Mr. Sledd; Mr. Sledd is the trustee of such trusts, and, as a result, he may be deemed to have voting and dispositive power with respect to such shares. |
10. | Includes 13,392 shares issuable upon conversion of the Convertible Note held of record by Mr. Polizzotto and options to purchase 20,057 shares issued to Mr. Polizzotto pursuant to the 1995 Plan. |
11. | Includes 13,392 shares issuable upon conversion of the Convertible Note held of record by Mr. Murphy and options to purchase 15,375 shares issued to Mr. Murphy pursuant to the 1995 Plan. |
12. | 2,663 of such shares are held by partnership of which Mr. Gotsch is a general partner and as a result, Mr. Gotsch may be deemed to have voting and dispositive power with respect to such shares. |
13. | Includes options to purchase 27,151 shares issued to Mr. Hubbard pursuant to the 1995 Plan. Includes 70 shares purchased on behalf of Mr. Hubbard pursuant to the Companys Employee Stock Purchase Plan. |
14. | Includes options to purchase 12,000 shares issued to Mr. Perez de la Mesa pursuant to the 1998 Plan. |
15. | Includes options to purchase 5,625 shares issued to Mr. Gaffney pursuant to the Directors Plan. |
16. | The 2,663 shares held by a general partnership, which may be attributable to both Messrs. Code and Gotsch, are counted once. |
Annual Compensation |
Long Term Compensation |
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Awards |
Payouts |
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Name and Principal Position |
Fiscal Year |
Salary ($) |
Bonus ($) |
Other Annual Compensation ($) (1) |
Restricted Stock Awards ($) |
Securities Underlying Options/SARs (#) |
LTIP Payouts ($) |
All Other Compensation ($) | |||||||||
Wilson B. Sexton (2) | 1999 | 250,000 | 250,000 | | | 30,000 | | 5,855 | |||||||||
Chairman and Chief | 1998 | 214,000 | 214,000 | | | 22,500 | | 10,113 | |||||||||
Executive Officer | 1997 | 204,768 | 205,000 | | | 33,750 | | 12,554 | |||||||||
Frank J. St. Romain (3) | 1999 | 21,506 | | | | 20,625 | | 5,881 | |||||||||
President and Chief | 1998 | 214,000 | 214,000 | | | 22,500 | | 10,181 | |||||||||
Executive Officer | 1997 | 204,768 | 205,000 | | | 33,750 | | 12,554 | |||||||||
Manuel J. Perez de la Mesa (4) | 1999 | 184,727 | 200,000 | | | 100,000 | | 180 | |||||||||
President and Chief | |||||||||||||||||
Operating Officer | |||||||||||||||||
A. David Cook (5) | 1999 | 130,000 | 130,000 | | | 15,000 | | 5,881 | |||||||||
Vice President- | 1998 | 110,000 | 110,000 | | | 5,250 | | 10,181 | |||||||||
Sales | 1997 | 104,712 | 64,100 | | | 6,750 | | 9,844 | |||||||||
John M. Murphy (6) | 1999 | 130,000 | 130,000 | | | 15,000 | | 5,881 | |||||||||
Vice President- | 1998 | 110,000 | 110,000 | | | 7,500 | | 10,181 | |||||||||
Marketing | 1997 | 104,712 | 75,000 | | | 7,875 | | 10,329 | |||||||||
Richard P. Polizzotto (7) | 1999 | 124,708 | 80,000 | | | 9,750 | | 5,860 | |||||||||
Vice President- | 1998 | 120,000 | 50,000 | | | 5,250 | | 10,071 | |||||||||
Operations | 1997 | 114,942 | 40,000 | | | 5,625 | | 11,526 |
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1. | Other annual compensation amounts were not reportable in 1999, 1998 and 1997. |
2. | Mr. Sexton was appointed Chief Executive Officer effective January 4, 1999. For 1999, All Other Compensation reflects a $190 life insurance premium, $3,165 paid under the Companys profit sharing program, and $2,500 contributed under the Companys 401(k) plan. For 1998, All Other Compensation reflects a $126 life insurance premium, $7,487 paid under the Companys profit sharing program and $2,500 contributed under the Companys 401(k) plan. For 1997, All Other Compensation reflects a $126 life insurance premium, $10,053 paid under the Companys profit sharing program and $2,375 contributed under the Companys 401(k) plan. |
3. | Mr. St. Romain resigned as President and Chief Executive Officer effective January 4, 1999. For 1999, All Other Compensation reflects a $216 life insurance premium, $3,165 paid under the Companys profit sharing program, and $2,500 contributed under the Companys 401(k) plan. For 1998, All Other Compensation reflects a $194 life insurance premium, $7,487 paid under the Companys profit sharing program and $2,500 contributed under the Companys 401(k) plan. For 1997, All Other Compensation reflects a $126 life insurance premium, $10,053 paid under the Companys profit sharing program and $2,375 contributed under the Companys 401(k) plan. |
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4. | Mr. Perez de la Mesa was appointed President and Chief Operating Officer in January 1999. For 1999, All Other Compensation reflects a $180 life insurance premium. |
5. | For 1999, Mr. Cooks All Other Compensation reflects a $216 life insurance premium, $3,165 paid under the Companys profit sharing program and $2,500 contributed under the Companys 401(k) plan. For 1998, All Other Compensation reflects a $194 life insurance premium, $7,487 paid under the Companys profit sharing program and $2,500 contributed under the Companys 401(k) plan. For 1997, All Other Compensation reflects a $126 life insurance premium, $8,147 paid under the Companys profit sharing program and $1,571 contributed under the Companys 401(k) plan. |
6. | For 1999, Mr. Murphys All Other Compensation reflects a $216 life insurance premium, $3,165 paid under the Companys profit sharing program and $2,500 contributed under the Companys 401(k) plan. For 1998, All Other Compensation reflects a $194 life insurance premium, $7,487 paid under the Companys profit sharing program and $2,500 contributed under the Companys 401(k) plan. For 1997, All Other Compensation reflects a $126 life insurance premium, $8,633 paid under the Companys profit sharing plan and $1,570 contributed under the Companys 401(k) plan. |
7. | For 1999, Mr. Polizzottos All Other Compensation reflects a $216 life insurance premium, $3,165 paid under the Companys profit sharing program and $2,479 contributed under the Companys 401(k) plan. For 1998, All Other Compensation reflects a $194 life insurance premium, $7,487 paid under the Companys profit sharing program and $2,390 contributed under the Companys 401(k) plan. For 1997, All Other Compensation reflects a $126 life insurance premium, $9,376 paid under the Companys profit sharing program and $2,024 contributed under the Companys 401(k) plan. |
Individual Grants (1) |
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Number of Securities Underlying Options/SARs Granted |
% of Total Options/SARs Granted to Employees in |
Exercise or Base Price |
Expiration | Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term (2) | ||
Name |
(#) |
Fiscal Year |
($/Sh) |
Date (3) |
5% ($) |
10% ($) |
Wilson B. Sexton (4) | 30,000 | 11% | 13.38 | 2009 | 252,636 | 641,263 |
Frank J. St. Romain (5) | 15,000 | 13.38 | 2009 | 126,318 | 320,632 | |
5,625 | 17.50 | 2009 | 61,992 | 157,400 | ||
20,625 | 7% | 188,310 | 478,032 | |||
Manuel J. Perez de la Mesa (6) | 20,000 | 15.06 | 2009 | 213,954 | 558,159 | |
30,000 | .01 | 2009 | 720,724 | 1,148,880 | ||
50,000 | 13.38 | 2009 | 421,060 | 1,068,772 | ||
100,000 | 35% | 1,355,738 | 2,775,811 | |||
A. David Cook (7) | 5,000 | .01 | 2009 | 163,447 | 260,716 | |
10,000 | 13.38 | 2009 | 84,212 | 213,754 | ||
15,000 | 5% | 247,659 | 474,470 | |||
John M. Murphy (7) | 5,000 | .01 | 2009 | 163,447 | 260,716 | |
10,000 | 13.38 | 2009 | 84,212 | 213,754 | ||
15,000 | 5% | 247,659 | 474,470 | |||
Richard P. Polizzotto (7) | 3,750 | .01 | 2009 | 122,585 | 195,537 | |
6,000 | 13.38 | 2009 | 50,527 | 128,253 | ||
9,750 | 3% | 173,112 | 323,790 | |||
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1. | In order to prevent dilution or enlargement of rights under the options, in the event of a reorganization, recapitalization, stock split or combination or other change in the shares of the Companys Common Stock, the number and type of shares available upon exercise and the exercise price will be adjusted accordingly. The Compensation Committee may, subject to certain restrictions, accelerate or defer the date on which an option becomes exercisable. |
2. | Amounts reflect assumed rates of appreciation from the fair market value on the date of grant as set forth in the SECs 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. |
3. | In February 2000, the Board approved an extension of expiration dates of grants under the 1995 Plan and the 1998 Plan to 10 years from 5 years. |
4. | Options were granted and became exercisable on the date of grant, February 25, 1999, pursuant to the 1998 Plan. |
5. | Options that were granted on February 25, 1999 became exercisable immediately pursuant to the 1998 Plan and options that were granted on May 13, 1999 become exercisable on May 13, 2000 pursuant to the Directors Plan. |
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6. | Options that were granted on January 25, 1999 become exercisable over a period of 5 years beginning January 25, 2000 pursuant to the 1998 Plan. Options that were granted on February 25, 1999 become exercisable in February 2004 pursuant to the 1998 Plan. In the event of a sale of the capital stock of the Company with the voting power to elect a majority of the directors or a sale of more than 50% of the Companys total assets (on a consolidated basis), all options become fully vested and exercisable. |
7. | Options that were granted on February 25, 1999 become exercisable on February 25, 2001 and options granted on August 16, 1999 become exercisable on August 16, 2004 pursuant to the 1998 Plan. In the event of a sale of the capital stock of the Company with the voting power to elect a majority of the directors or a sale of more than 50% of the Companys total assets (on a consolidated basis), all options become fully vested and exercisable. |
Aggregated Option/SAR Exercises in Last Fiscal
Year
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Name |
Shares Acquired on Exercise |
Value Realized ($) |
Number of Securities Underlying Unexercised Options/SARs at Fiscal Year End (#) Exercisable/ Unexercisable |
Value of Unexercised In-the-Money Options/SARs at Fiscal Year End ($) Exercisable/ Unexercisable | |||||
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Wilson B. Sexton | | | 120,000/0 | 1,942,485/0 | |||||
Frank J. St. Romain | | | 105,000/5,625 | 1,754,041/47,463 | |||||
Manuel J. Perez de la Mesa | 20,000 | 301,050 | 0/80,000 | 0/1,405,990 | |||||
A. David Cook | 14,063 | 224,103 | 0/20,250 | 0/320,570 | |||||
John M. Murphy | | | 7,875/22,500 | 135,119/348,555 | |||||
Richard P. Polizzotto | | | 14,807/15,000 | 313,677/237,908 |
| to establish pay levels that are necessary to retain and attract highly qualified executives in light of the overall competitiveness of the market for high quality executive talent |
| to recognize superior individual performance, new responsibilities and new positions within the Company |
| to balance short-term and long-term compensation to complement the Companys annual and long-term business objectives and strategy and encourage executive performance in furtherance of the fulfillment of those objectives |
| to provide variable compensation opportunities based on the Companys performance |
| to encourage stock ownership by executives and other employees |
| to align executive and employee remuneration with the interests of stockholders |
Compensation Program Components. The Committee regularly reviews the Companys 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. In the case of Mr. St. Romain, the following explanation applies to his employment prior to his retirement in January 1999. In the case of Mr. Perez de la Mesa, the following explanation applies to his employment with the Company that commenced February 1, 1999. |
Base Salary. Base pay levels for Messrs. Sexton, Perez de la Mesa, and St. Romain are determined pursuant to their employment agreements. See Executive Compensation Employment Agreements. The base pay levels for Messrs. Cook, Hubbard, Murphy and Polizzotto are determined by the Committee in its discretion based on achievement of goals and objectives. |
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Annual Incentives. Annual bonus formulae for Messrs. Sexton, Perez de la Mesa, and St. Romain have been negotiated and agreed upon. The bonus formulae include bonuses payable in immediately exercisable options to purchase Common Stock under the 1998 Plan. See Executive Compensation - Employment Agreements. The annual bonuses for Messrs. Cook, Hubbard, Murphy and Polizzotto are determined by the Committee in its discretion based on achievement of goals and objectives. The Company uses annual bonuses to enhance managements contribution to stockholder returns by offering competitive levels of compensation for the attainment of the Companys financial objectives. In particular, the Company utilizes annual bonuses to focus corporate behavior on the achievement of goals for growth, financial performance and other objectives. |
Stock Ownership. The Committee believes that it can align the interests of stockholders, executives and other employees of the Company by providing those persons who have substantial responsibility over the management and/or growth of the Company with an opportunity to establish a meaningful ownership position in the Company. Under the 1995 Plan, the Company granted stock options to Messrs. Sexton, Cook, Hubbard, Murphy, Polizzotto and St. Romain in January of 1995, 1996 and 1997 and February of 1998. Under the 1998 Plan, the Company granted stock options to Messrs. Sexton, Cook, Hubbard, Murphy, Perez de la Mesa, Polizzotto and St. Romain in January and February of 1999. The Company also granted stock options to Messrs. Sexton, Cook, Hubbard, Murphy, Perez de la Mesa and Polizzotto in August of 1999 and/or February of 2000. |
Senior Executive Officer Compensation. The base pay level and annual incentive bonus compensation for Mr. Sexton, the Companys Chairman and Chief Executive Officer, and Mr. Perez de la Mesa, the Companys President and Chief Operating Officer, are determined in accordance with their respective employment agreements. Mr. Sexton. In addition to a base salary, Mr. Sexton is eligible for an annual bonus consisting of up to 100% of his base salary to be paid in cash plus an amount of stock options determined by the Committee based on achievement of goals and objectives set by the Committee. Pursuant to his employment agreement, Mr. Sextons base salary for 1999 was set at $250,000. In addition, in 1999 Mr. Sexton received a bonus of 100% of base salary and 30,000 options immediately exercisable for Common Stock at an exercise price of $13.38 per share. Mr. Perez de la Mesa. Mr. Perez de la Mesa was appointed in January 1999 as President and Chief Operating Officer of the Company with employment commencing in February 1999. In addition to a base salary, Mr. Perez de la Mesa is eligible for an annual bonus to be paid in cash as determined by the Committee based on achievement of goals and objectives. The base salary of Mr. Perez de la Mesa is set at $200,000. In addition, Mr. Perez de la Mesa received the following stock option grants in connection with the commencement of his employment: (i) a 1999 grant of options to purchase 20,000 shares of Common Stock at $15.0625 per share (granted and exercised during the first quarter of 1999); (ii) a 1999 grant of options to purchase 30,000 shares of Common Stock at $0.01 per share (granted January 1999), the exercise of which is conditioned on exercise of and payment for the option described in clause (i); and (iii) a 2000 grant of options to purchase 30,000 shares of Common Stock at $0.01 per share, the exercise of which is conditioned on exercise of and payment for the option described in clause (i). The options listed in clause (ii) and (iii) shall vest over the first five years of Mr. Perez de la Mesas employment with the Company. The employment agreement with Mr. Perez de la Mesa provides for annual stock option grants of 50,000 shares with a fair market value exercise price determined on the date of grant during each of 1999, 2000 and 2001. |
14 Certain Tax Considerations. Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the deductibility on the Companys tax return of compensation over $1 million to any of the Named Executive Officers, unless, in general, the compensation is paid pursuant to a plan which is performance-based, non-discretionary and has been approved by the Companys stockholders. The Companys policy with respect to Section 162(m) is to make reasonable efforts to ensure that compensation is deductible without limiting the Companys ability to attract and retain qualified executives. Summary. After its review of all existing programs, the Committee believes that the total compensation program for executives of the Company is focused on increasing values for stockholders and enhancing corporate performance. The Committee currently believes that the compensation of executive officers and other employees is properly tied to stock appreciation through stock options or stock ownership. The Committee believes that executive and employee compensation levels at the Company are competitive with the compensation programs provided by other corporations with which the Company competes. All members of the Committee have approved the foregoing report. |
COMPENSATION COMMITTEE Andrew W. Code Peter M. Gotsch Robert C. Sledd |
10/12/95 | 12/29/95 | 12/31/96 | 12/31/97 | 12/31/98 | 12/31/99 | |
SCP Pool Corporation | $100 | $99 | $198 | $275 | $324 | $556 |
S&P SmallCap 600 | $100 | $104 | $127 | $159 | $157 | $176 |
The Nasdaq Stock Market | $100 | $102 | $125 | $154 | $216 | $391 |
The Board of Directors |
March 22, 2000
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