-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UPoTmsxmsti3kDm+uJsxq0u4XE0ZCcxxDM+mFd3vxDawHTKwyIvGJt6vv6ybyn1/ A0hF3lKmRSyDzApbnPKobw== 0000950116-98-000507.txt : 19980304 0000950116-98-000507.hdr.sgml : 19980304 ACCESSION NUMBER: 0000950116-98-000507 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980415 FILED AS OF DATE: 19980302 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HUNT CORP CENTRAL INDEX KEY: 0000049146 STANDARD INDUSTRIAL CLASSIFICATION: PENS, PENCILS & OTHER ARTISTS' MATERIALS [3950] IRS NUMBER: 210481254 STATE OF INCORPORATION: PA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-08044 FILM NUMBER: 98554129 BUSINESS ADDRESS: STREET 1: ONE COMMERCE SQ STREET 2: 2005 MARKET ST CITY: PHILADELPHIA STATE: PA ZIP: 19103 BUSINESS PHONE: 2157327700 MAIL ADDRESS: STREET 1: ONE COMMERCE SQ STREET 2: 2005 MARKET ST CITY: PHILADELPHIA STATE: PA ZIP: 19103 FORMER COMPANY: FORMER CONFORMED NAME: HUNT MANUFACTURING CO DATE OF NAME CHANGE: 19920703 DEF 14A 1 DEFINITIVE PROXY STATEMENT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) /X/ Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12 Hunt Corporation - ----------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) - --------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ No fee required / / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. 1) Title of each class of securities to which transaction applies: ---------------------------------------------------------------------- 2) Aggregate number of securities to which transaction applies: ---------------------------------------------------------------------- 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ---------------------------------------------------------------------- 4) Proposed maximum aggregate value of transaction: ---------------------------------------------------------------------- 5) Total fee paid: ---------------------------------------------------------------------- / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: ___________________________________________________________________________ 2) Form, Schedule or Registration Statement No.: ___________________________________________________________________________ 3) Filing Party: ___________________________________________________________________________ 4) Date Filed: ___________________________________________________________________________ [GRAPHIC OMITTED] HUNT CORPORATION --------------------------- NOTICE OF ANNUAL MEETING OF SHAREHOLDERS To be Held on April 15, 1998 --------------------------- To Our Shareholders: The Annual Meeting of Shareholders of Hunt Corporation (formerly Hunt Manufacturing Co.) will be held at 10:00 o'clock a.m. on April 15, 1998, on the 8th Floor, Mellon Bank Center, 1735 Market Street, Philadelphia, Pennsylvania, for the following purposes: 1. To elect four directors to serve for a three-year term; 2. To vote on a proposal to ratify the appointment of independent accountants; and 3. To transact such other business as may properly come before the meeting and any adjournments thereof. The Board of Directors has fixed the close of business on February 13, 1998, as the record date for the determination of shareholders entitled to notice of, and to vote at, the meeting and any adjournments thereof. All shareholders are cordially invited to attend the meeting in person. However, whether or not you plan to attend, please promptly sign, date and mail the enclosed proxy card in the enclosed return envelope which requires no postage if mailed in the United States. Returning your proxy card does not deprive you of your right to attend the meeting and vote your shares in person. By order of the Board of Directors, WILLIAM E. CHANDLER, Secretary March 2, 1998 HUNT CORPORATION One Commerce Square 2005 Market Street Philadelphia, PA 19103 --------------------------- PROXY STATEMENT --------------------------- This proxy statement, which is being sent to shareholders on or about March 5, 1998, is furnished in connection with the solicitation of proxies by the Board of Directors of Hunt Corporation (the "Company") for use at the forthcoming Annual Meeting of Shareholders (the "Meeting") to be held on April 15, 1998, and at any adjournments thereof. At the close of business on February 13, 1998, the record date for determination of shareholders entitled to notice of, and to vote at, the meeting, there were outstanding an aggregate of 11,244,800 of the Company's Common Shares. Pursuant to the Company's 1990 shareholders' Rights Agreement, rights to purchase securities of the Company under certain circumstances are deemed to be attached to outstanding Common Shares. Voting and Revocability of Proxies Each Common Share outstanding on the record date is entitled to one vote on all matters to come before the Meeting, except that shareholders have the right to cumulate their votes in the election of directors. This means that shareholders may multiply the number of votes to which they are entitled by the number of directors to be elected, and the whole number of such votes may be cast for one nominee or distributed among any two or more nominees. If you wish to cumulate your votes in this manner, you must clearly indicate on your proxy card your desire to cumulate and how many votes you wish to cast for each nominee. A majority of the Common Shares entitled to vote at the Meeting, represented in person or by proxy, constitutes a quorum. In the election of directors, assuming a quorum is present, the four nominees receiving the highest number of votes cast at the Meeting will be elected. The affirmative vote of a majority of the votes cast at the meeting is required for approval of Proposal 2, assuming a quorum is present. Abstentions, the withholding of a vote, or the specific direction not to cast any vote on a specific matter, such as broker non-votes, will not constitute the casting of a vote on such matter. Your proxy may be revoked at any time prior to its exercise by giving written notice to the Secretary of the Company, by presenting a duly executed proxy bearing a later date or by voting in person at the Meeting, but your mere attendance at the Meeting will not revoke your proxy. Your proxy, when properly executed, will be voted in accordance with the specific instructions indicated on your proxy card. Unless contrary instructions are given, your proxy will be voted FOR the election of the four nominees for director, as provided under "Election of Directors" below (in equal amounts or cumulatively, as the persons voting the proxies may determine); FOR 1 ratification of the appointment of Coopers & Lybrand L.L.P. as the Company's independent accountants for the 1998 fiscal year; and, to the extent permitted by the rules of the Securities and Exchange Commission, in accordance with the judgment of the persons voting the proxies upon such other matters as may come before the Meeting and any adjournments. 1. ELECTION OF DIRECTORS The Restated Articles of Incorporation and By-laws of the Company provide that the number of directors shall be eleven, to be divided into three classes as nearly equal in number as possible. The Board of Directors has nominated, and recommends the election of, the following four persons to serve as directors of the Company until the 2001 Annual Meeting or until their successors are elected and have qualified: William F. Hamilton, Ph.D. Mary R. (Nina) Henderson Wilson D. McElhinny Roderic H. Ross All the nominees are presently serving as directors of the Company, having previously been elected by the shareholders of the Company. Mr. Belcher, of the class of 1999, was elected a director by the Board in June 1997. Although the Board of Directors has no reason to believe any of the nominees will be unable to serve, if such should occur, your proxy will be voted (unless marked to the contrary) for such person or persons, if any, as shall be recommended by the Board of Directors. However, your proxy will not be voted for the election of more than four directors. A vacancy currently exists on the Board of Directors (in the class of 1999). The Board may consider appointing a director to fill this vacancy at a later date. The following table sets forth, as of February 1, 1998, certain information with respect to each nominee for election as a director and each director whose term of office will continue after the Meeting:
Present Name, Age and Director Term Occupation(1) Since Expires ------------- ----- ------- Donald B. Belcher, 59 1997 1999 Chairman of the Board, President and Chief Executive Officer (since 1995) of Banta Corporation, a printing and digital imaging company. Previously, Senior Group Vice President (1990-1994) of Avery Dennison Corporation, an office products company. Jack Farber, 64 1970 2000 Chairman of the Board and President of CSS Industries, Inc., a diversified company. William F. Hamilton, Ph.D., 58 1986 1998 Landau Professor of Management and Technology, The Wharton School, University of Pennsylvania. Director of Centocor Inc., Neose Technologies, Inc., Marlton Technolo- gies, Inc. and Digital Lightwave, Inc.
2
Present Name, Age and Director Term Occupation(1) Since Expires ------------- ----- ------- Mary R. (Nina) Henderson, 47 1991 1998 President, Bestfoods Grocery, a division of BESTFOODS, and Corporate Vice President, BESTFOODS, an interna- tional branded food Company. Director of The Equitable Companies Incorporated and The Equitable Life Assurance Society of the United States. Gordon A. MacInnes, 56(2) 1970 2000 Author and Member of New Jersey State Senate (1994 to 1998). Wilson D. McElhinny, 67 1993 1998 Chairman of the Board of IREX Corporation, a specialty contract company (since 1992). Previously, Chairman, Presi- dent and Chief Executive Officer (1988-1990), and Chairman of Executive Committee (1983-1992), of Hamilton Bank. Robert H. Rock, D.B.A., 47 1989 1999 President of MLR Holdings, L.L.C., a publishing company which produces business publications, executive conferences and community newspapers. Director of R.P. Scherer Corpo- ration, Alberto-Culver Company and Quaker Chemical Co. Roderic H. Ross, 67 1978 1998 Chairman of the Board and Chief Executive Officer of Key- stone State Life Insurance Company. Director of PNC Bank Corp. and Pennsylvania Manufacturers Corporation. Donald L. Thompson, 56 1996 2000 Chairman, President and Chief Executive Officer of the Company (since 1996). Previously, Group Vice President of the Office Products Business (1993-96), and Vice President Sales and Customer Operations North America (1992-93), of Avery Dennison Corporation, an office products Company. Victoria B. Vallely, 47(2) 1976 1999 Manager, Bartol Family Partnership, an investment partner- ship.
- --------------- (1) Except as otherwise noted, the named individuals have had the occupations indicated (other than directorships) for at least five years. (2) Mr. MacInnes is married to Ms. Vallely's sister. Both Mrs. MacInnes and Ms. Vallely are daughters of the late George E. Bartol III, a former Chairman of the Board, Chief Executive Officer and principal shareholder of the Company. 3 Information Concerning Meetings and Certain Committees The Board of Directors held seven formal meetings during fiscal 1997. The Company has standing Audit, Compensation, and Nominating Committees of its Board of Directors. The Audit Committee members currently are Messrs. Farber, Hamilton and McElhinny. This Committee makes recommendations to the Board of Directors concerning the engagement, retention and discharge of independent accountants, reviews with members of the Company's management and internal auditors and with the Company's independent accountants the plans and results of the auditing engagement, the Company's financial statements and the adequacy of the Company's system of internal accounting controls, and directs any investigations into matters within the scope of the foregoing duties. During fiscal 1997, the Audit Committee met two times. The Compensation Committee currently is composed of Messrs. Rock and Ross and Ms. Henderson. This Committee establishes the salaries of executive officers and makes recommendations to the Board of Directors regarding the adoption, extension, amendment and termination of compensation plans in which officers or directors may participate. It also exercises administrative powers pursuant to certain of those plans. The Compensation Committee held five formal meetings during fiscal 1997. The members of the Nominating Committee currently are Messrs. Belcher, MacInnes and Rock and Ms. Vallely. The primary purpose of this Committee, which held three meetings during fiscal 1997, is to identify and recommend to the Board qualified individuals to serve as directors of the Company. The Nominating Committee has not determined whether it will consider nominees recommended by shareholders. The Board of Directors also has an Executive Committee whose current members are Messrs. MacInnes, Farber, Rock and Thompson. The Executive Committee generally is empowered, subject to certain limitations, to exercise the authority of the Board between Board meetings. The Board also, from time to time, appoints special committees for specific purposes. During fiscal 1997, all directors attended in person or by conference telephone at least 75% of the aggregate of the total number of meetings of the Board of Directors and committees of the Board on which they served. Compensation of Directors During fiscal 1997, the Company adopted the Non-Employee Director Compensation Plan for non-officer directors of the Company. Pursuant to this plan, the Company pays annual directors' fees of $5,000 in cash and $12,000 in grants of Common Shares, plus cash of $1,000 for each Board meeting and $1,000 ($1,250 for Committee Chairpersons) for each committee meeting attended, to each of its non-officer directors. In addition, the plan provides for annual grants to each non-officer director of non-qualified stock options to purchase up to 2,000 Common Shares at the fair market value of such shares on the date of grant, such options to vest after two years (subject to possible acceleration) and to extend for 10 years (subject to possible earlier termination). During fiscal 1997, options to purchase 1,000 Common Shares were granted to each of the nine non-officer directors pursuant to this plan. As of February 1, 1998, no such options had been exercised. In addition, the Company reimburses 4 directors for certain expenses incurred in attending Board and committee meetings. From time to time, the Company also compensates non-officer directors for special services but did not do so in fiscal 1997. The non-officer directors also participate in the 1994 Non-Employee Directors' Stock Option Plan. Pursuant to this plan, each of the then current non-officer directors on January 26, 1994 received one-time automatic grants of non-qualified stock options to purchase 5,000 Common Shares at an exercise price of $16.875 per share, which was the fair market value of a Common Share on the date of grant. Options granted under this plan extend for a term of ten years (subject to earlier termination in certain circumstances) and become exercisable at the rate of 20% per year over five years commencing one year after the date of grant, subject to acceleration in limited circumstances. During fiscal 1997, Mr. Belcher received a one-time automatic grant under this plan of non-qualified stock options to purchase 5,000 Common Shares at an exercise price of $18.6875 per share, which was the fair market value of a Common Share on the date of grant. As of February 1, 1998, an aggregate of 3,000 options had been exercised under this plan. 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS The firm of Coopers & Lybrand L.L.P. served as the Company's independent accountants for fiscal 1997 and has been selected by the Board of Directors to serve in the same capacity for fiscal 1998. The shareholders will be asked to ratify this appointment at the Meeting. A representative of Coopers & Lybrand L.L.P. is expected to be present at the Meeting and will be available to respond to appropriate questions. The representative will also have the opportunity to make a statement if he or she desires to do so. 3. OTHER MATTERS The Board of Directors knows of no matters to be presented for action at the Annual Meeting, other than those set forth in the attached Notice and customary procedural matters. However, if any other matters should properly come before the Meeting or any adjournments thereof, the proxies solicited hereby will be voted on such matters, to the extent permitted by the rules of the Securities and Exchange Commission, in accordance with the judgment of the persons voting such proxies. ADDITIONAL INFORMATION Common Share Ownership by Certain Beneficial Owners and Management The following table sets forth, as of February 1, 1998, certain information concerning the beneficial ownership of Common Shares by: (i) each person who is known by the Company to be the beneficial owner of more than 5% of such shares, (ii) each director and nominee for director of the Company, (iii) each of the executive officers of the Company named in the Summary Compensation Table appearing later in this proxy statement, and (iv) all directors and executive officers of the Company as a group. Such information is based upon information provided to the Company by such persons. 5
Common Shares Percent Name of Beneficial Owner Beneficially Owned(1) of Class(1) ------------------------ --------------------- ----------- Richard J. Bove ............................................ 2,069,766(2) 18.4 3700 Bell Atlantic Towers Philadelphia, PA 19103 Ariel Capital Management, Inc. ............................. 1,635,530(3) 14.5 307 North Michigan Avenue Chicago, IL 60601 Donald Belcher, director ................................... 1,800 * Jack Farber, director ...................................... 13,281(4) * William F. Hamilton, director .............................. 7,821(4)(5) * Mary R. (Nina) Henderson, director ......................... 4,721(4) * Gordon A. MacInnes, director ............................... 616,880(4)(6) 5.5 Wilson D. McElhinny, director .............................. 8,321(4) * Robert H. Rock, director ................................... 4,621(4) * Roderic H. Ross, director .................................. 10,796(4) * Donald L. Thompson, director and executive officer ......... 182,000(8) 1.6 Victoria B. Vallely, director .............................. 117,054(4)(7) 1.0 John W. Carney, executive officer .......................... 77,486(9) * William E. Chandler, executive officer ..................... 79,981(10) * Spencer W. O'Meara, executive officer ...................... 137,837(11) * W. Ernest Precious, executive officer ...................... 109,259(12) * All current directors and executive officers as a group (15 persons) .............................................. 1,417,955(13) 12.7
- --------------- *Less than 1% (1) Except as otherwise indicated, the beneficial ownership of Common Shares reflected in this proxy statement is based upon sole voting and dispositive power with respect to such shares. Further, for the purposes of computing beneficial ownership and the percent of class of an individual, Common Shares which the individual has the right, upon exercise of options and in certain other circumstances, to acquire within 60 days, are deemed to be outstanding and beneficially owned by the individual. (2) Represents shares held by Mr. Bove as successor and sole trustee under four irrevocable trusts established by the late George E. Bartol III (a former Chairman of the Board, Chief Executive Officer and principal shareholder of the Company) for the benefit of Mr. Bartol's four adult daughters. (3) According to information supplied by Ariel: the reported shareholdings include 1,515,530 shares as to which Ariel has sole voting power and 25,400 shares as to which Ariel has shared voting power; Ariel is a registered investment adviser; and all shares held by it are owned by its investment advisory clients, none of whom, to the knowledge of Ariel, owns more than 5% of the Company's Common Shares. (4) Includes 4,000 shares which the named individual has the right to acquire by exercise of stock options under the 1994 Non-Employee Directors' Stock Option Plan. 6 (5) Includes 3,500 shares held jointly with his wife. (6) Includes 532,293 shares as to which Mr. MacInnes has shared voting and dispositive power as co-trustee (with Katherine B. Lunt) of an irrevocable trust established by the late George E. Bartol III for the benefit of his grandchildren, and 74,529 shares held by Mr. MacInnes as custodian for his children. Does not include 159,840 shares beneficially owned by Mr. MacInnes' wife, the beneficial ownership of which shares is disclaimed by Mr. MacInnes. Mrs. Lunt and Mrs. MacInnes are daughters of the late George E. Bartol III. (7) Includes 19,224 shares held jointly with her husband. Does not include an aggregate of 44,057 shares held by her husband as trustee or custodian for their children, the beneficial ownership of which shares is disclaimed by Ms. Vallely. (8) Includes 175,000 shares which Mr. Thompson has the right to acquire by exercise of stock options. (9) Includes 70,612 shares which Mr. Carney has the right to acquire by exercise of stock options. Does not include 9,000 shares held for his account in the Supplemental Executive Retirement Plan. (10) Includes 76,497 shares which Mr. Chandler has the right to acquire by exercise of stock options. Does not include 12,000 shares held for his account in the Supplemental Executive Retirement Plan. (11) Includes 115,781 shares which Mr. O'Meara has the right to acquire by exercise of stock options. Does not include 12,000 shares held for his account in the Supplemental Executive Retirement Plan. (12) Includes 104,369 shares which Mr. Precious has the right to acquire by exercise of stock options. Does not include 12,000 shares held for his account in the Supplemental Executive Retirement Plan. (13) Includes an aggregate of 617,516 shares which certain directors and current executive officers have the right to acquire by exercise of stock options. Does not include shares which are excluded in the notes above. ------------------------- 7 Executive Compensation Compensation Committee Report on Executive Compensation The Company's Compensation Committee (the "Committee") is composed of three outside directors, none of whom has ever been an employee of the Company or any of its subsidiaries. The Committee makes recommendations to the full Board of Directors regarding the adoption, extension, amendment, and termination of the Company's compensation plans and also administers certain of these plans. The Committee also reviews in conjunction with the Company's Chairman, President and Chief Executive Officer (the "CEO") the performance of other executive officers and establishes the salaries of the CEO and other executive officers (subject to the terms of any employment agreements). The Committee has provided the following report on executive compensation: The Committee has been guided by the following executive compensation philosophy of the Company: 1. Align the interests of shareholders and management through a compensation program that provides a substantial proportion of executive officers' total compensation in the form of Company shares and options. 2. Make a significant portion of total compensation for executive officers contingent upon the attainment of demanding performance goals that support growth in the Company's share value over time. 3. Balance the objectives of short-term earnings increases and investment in the long-term financial health of the Company with an incentive compensation program that rewards improved profit performance with annual cash bonuses and stimulates a long-term perspective through the granting of options to purchase Common Shares of the Company. 4. Enable the Company to attract and retain superior management by providing a very competitive total compensation package. Executive compensation consists primarily of three components: base salary, incentive compensation, and stock options/stock grants. Base Salary The Company's policy generally has been to set base salaries for each executive officer position at a level up to the seventy-fifth percentile when compared to compensation survey data available for equivalent positions with other industrial, bonus-paying employers. The Company uses compensation studies, surveys and outside consultants to monitor the Company's competitive executive compensation position and to recommend salary ranges and compensation changes to the Committee. These studies may include but are not limited to the peer group of companies used for the Shareholder Return Performance Graph herein. The base salaries of executive officers other than the CEO are set by the Compensation Committee with input from the CEO. 8 The performance reviews of the executive officers other than the CEO are conducted by the CEO, and the results of such reviews are reported to the Committee by the CEO. The performance of the CEO is reviewed by the Compensation Committee and the Board of Directors. The Committee adjusts executive officers' salaries with input from the CEO based on the quality of their individual performance and the relationship of their salary to their established salary range. Merit increases in the form of a one-time payment (as distinct from the annual bonuses) are granted under certain circumstances, however no such merit increases were granted during fiscal 1997. The base salary of the CEO presently is set at $450,000 per year, subject to adjustment, by his employment agreement. Adjustments to the base salary of the CEO are governed by the same factors as other executive officers but also specifically take into account the Company's current financial performance (as measured by earnings, balance sheet strength, and overall financial soundness) and the extent to which the CEO is successful in establishing a vision and strategic plan for the Company and implementing that plan over time. The Committee also considers the CEO's leadership in setting high standards for financial performance, motivating management colleagues, and representing the Company and its values to internal and external constituencies. These factors are largely subjective in nature and are not specifically weighted. Incentive Compensation The Company's incentive compensation program as in effect during fiscal 1997 had only an annual component. Under the annual program, bonuses were based on achievement of a specific corporate operating profit (profit before taxes) threshold which was established by the Committee with reference to the Company's prior year's results and management's budget for the 1997 fiscal year, achievement of specific business unit operating margin and achievement of certain objectives for each individual executive. The maximum potential annual bonus award for executive officers for fiscal 1997 was 40% to 50% of base salary, depending on the executive's position. For fiscal 1997, an annual bonus of up to 50% of base salary was earned and paid to all executive officers (other than the CEO, Mr. Thompson). Mr. Thompson was paid a fixed minimum bonus of $225,000 for fiscal 1997 pursuant to his employment agreement. Stock Options/Stock Grants The Company's 1993 Stock Option and Stock Grant Plan provides for grants by the Compensation Committee of incentive and/or non-qualified stock options, as well as grants of stock, to executive officers and others, thus tying a portion of executive compensation directly to the performance of the Company stock. The exercise price of the stock options under the Plan (and predecessor option plans) may not be less than 100% of the fair market value of the Company's stock on the date of grant. Stock options become exercisable at least one year (usual practice has been two years) from the date of grant, subject to possible acceleration in certain circumstances, and usually expire ten years following the date of grant. Executive officers typically have 9 been granted stock options each year for a number of shares, the market value of which shares on the date of grant has been in a range of 80% to 120% of the executive officer's base salary. The Committee granted three years' worth of options to executive officers in fiscal 1997 (which were intended to be largely in lieu of grants to them during the next three fiscal years), in order to compensate the executive officers for their efforts related to the Company's restructuring and as part of the Committee's intention to have a greater portion of executive officers' total compensation be based on stock options. The Compensation Committee is mindful of the potential impact upon the Company of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), which prohibits public companies from deducting certain executive remuneration in excess of $1,000,000. While reserving the right of the Company to offer such compensation arrangements as may be from time-to-time necessary to attract and retain top-quality management, the Compensation Committee intends generally to structure such arrangements, where feasible, so as to minimize or eliminate the impact of the limitations of Section 162(m) of the Code. February 13, 1998 Compensation Committee: Robert H. Rock, Chairman Mary R. (Nina) Henderson Roderic H. Ross 10 Summary Compensation Table The following table sets forth certain information concerning the annual and long-term compensation paid or accrued to or for: (i) the Company's Chief Executive Officer and (ii) the Company's four most highly compensated other executive officers whose total annual salary and bonus exceeded $100,000 (collectively, the "Named Officers") for services rendered to the Company and its subsidiaries during fiscal years 1997, 1996 and 1995:
Annual Compensation ------------------------------------------------------------ Other Annual Name and Bonus Compen- Principal Position Year Salary (1) sation ------------------ ---- ------ --- ------ ($) ($) ($) ---------------- ---------------- ---------------- Donald L. Thompson 1997 450,000 225,000(6) -- Chairman of the Board, 1996 225,000(7) 300,000(7) 125,045(7) President and Chief Executive Officer William E. Chandler 1997 213,200 105,001 -- Senior Vice President, 1996 214,492 51,466 -- Finance; Chief Financial Officer and Secretary 1995 201,917 62,100 -- Spencer W. O'Meara 1997 245,595 118,665 -- Executive Vice President, 1996 239,023 59,431 -- Hunt Products 1995 207,604 65,490 -- W. Ernest Precious 1997 215,816 98,139 44,908(8) Executive Vice President, 1996 205,233 51,987 -- Hunt Graphics 1995 178,400 53,520 -- John W. Carney 1997 164,565 63,423 -- Vice President, General Manager, 1996 146,813 31,465 -- Substrates 1995 132,629 40,500 --
(RESTUBBED TABLE)
Long-Term Compensation ----------------------------------------- Awards Payouts ------------------------------ --------- Restricted Securities All Other Stock Underlying LTIP Compen- Name and Awards Options/ Payouts sation Principal Position (2) SARs (3) (4) (5) ------------------ --- -------- --- --- ($) (#) ($) ($) ------------ ---------------- --------- ---------- Donald L. Thompson -- 62,500 -- 11,250 Chairman of the Board, -- 350,000(7) -- 2,813 President and Chief Executive Officer William E. Chandler -- 124,000 -- 4,236 Senior Vice President, -- 18,145 26,278 4,707 Finance; Chief Financial Officer and Secretary 177,000 26,200 43,082 4,193 Spencer W. O'Meara -- 124,000 -- 4,901 Executive Vice President, -- 24,829 20,469 4,972 Hunt Products 177,000 22,500 29,968 4,112 W. Ernest Precious -- 124,000 -- 3,108 Executive Vice President, -- 19,417 17,554 4,025 Hunt Graphics 177,000 22,500 26,974 3,004 John W. Carney -- 89,000 -- 3,096 Vice President, General Manager, -- 12,127 11,523 3,076 Substrates 177,000 16,500 18,846 3,060
- --------------- (1) Represents annual bonuses awarded under the Company's Incentive Compensation Program for the respective fiscal years, unless otherwise indicated. (2) Represents the fair market value (based on the closing sales price of the Company's Common Shares on the date of grant) of stock grants for 12,000 Common Shares awarded to each of Messrs. Chandler, O'Meara, Precious, and Carney under the 1993 Stock Option and Stock Grant Plan. The stock grants vested in full in early 1997, and the fair market value of 12,000 Common Shares as of the vesting date was $207,000. A cash bonus, equivalent to the amount of all dividends on the unvested shares under these stock grants, was paid during the vesting period. (3) Represents shares underlying stock options unless otherwise indicated. (4) Includes cash and Common Shares, valued using the share price on the date of vesting, paid in respect of performance units and performance shares awarded under the Company's 1988 Long-Term Incentive Compensation Plan for the three year performance periods 1994-1996 and 1993-1995. The 1988 Plan was terminated in fiscal 1996, and participants received prorated awards under the plan. (5) Includes contributions made by the Company under its 401(k) Savings Plan and premiums paid by the Company for group term life insurance coverage, unless otherwise indicated. Does not include contributions made by the Company with respect to the Pension Plan or, except for matching contributions, to the Supplemental Executive Benefits Plan (see "Pension Plans" below). 11 (6) The bonus of $225,000 paid to Mr. Thompson represents the minimum annual incentive pay for the 1997 fiscal year under the terms of his employment agreement. (7) Mr. Thompson's fiscal 1996 salary was prorated for the portion of the year he was employed by the Company. His fiscal 1996 bonus was the minimum annual incentive pay for that year under the terms of his employment agreement. The other annual compensation includes reimbursement of $81,902 of relocation expenses and $43,152 of related taxes. The securities underlying Mr. Thompson's options and SARs for fiscal 1996 include 175,000 options granted on June 1, 1996 which became exercisable one year after the date of grant, as well as 175,000 SARs granted pursuant to Mr. Thompson's Phantom Stock Plan. The SARs vest at a rate of 25% per year commencing December 1, 1996, (See Aggregate Option/SAR Exercises in Fiscal 1997 Table and the footnotes thereto below.) (8) The other annual compensation includes reimbursement of $17,144 of relocation expenses, $13,652 of related taxes and $14,112 of compensation for relocation. Stock Option/SAR Grants, Exercises and Holdings The following table sets forth certain information concerning stock options and SARs granted to and exercised by the Named Officers during fiscal 1997 and unexercised stock options held by them at the end of fiscal 1997: Option/SAR Grants in Fiscal 1997
Individual Grants - ----------------------------------------------------------------------------------------------------------------------- Number of Percentage of Option Shares Total Options Exercise Market Grant Underlying Granted to or Base Price at Date Options Employees in Price Grant Date Expiration Value (2) Name Granted (1) Fiscal 1997 ($/sh) ($/sh) Date ($) - ----------------------------- ------------- --------------- ---------- ------------ ------------ ---------- Donald L. Thompson .......... 62,500 6% 18.625 18.625 04/16/07 308,750 William E. Chandler ......... 124,000 11% 18.625 18.625 04/16/07 612,560 Spencer W. O'Meara .......... 124,000 11% 18.625 18.625 04/16/07 612,560 W. Ernest Precious .......... 124,000 11% 18.625 18.625 04/16/07 612,560 John W. Carney .............. 89,000 8% 18.625 18.625 04/16/07 439,660
- --------------- (1) All of the options were granted under the 1993 Stock Option and Stock Grant Plan on April 16, 1997 at fair market value and become exercisable three years from the date of grant, subject to possible acceleration in certain events. No SARs were granted in fiscal 1997. (2) Based on the modified Black-Scholes extended binomial option valuation model adapted for use in valuing executive stock options. The estimated value under this model assumes: (i) an expected option term of five years, which represents the assumed average period from grant date of option to their exercise date, (ii) an interest rate that represents the interest rate on a U.S. Treasury bond with a maturity date corresponding to that of the adjusted option term, (iii) volatility calculated using monthly stock prices for the ten years prior to the grant date, and (iv) dividends at a rate of 2.29% based on the average dividends paid over the ten-year period prior to the grant date. The actual value, if any, an executive may realize will depend on the excess of the stock price over the exercise price on the date the option is exercised, so that there is no assurance the value realized will be at or near the value estimated by the model. 12 Aggregate Option/SAR Exercises in Fiscal 1997 and Fiscal Year-End Option/SAR Values
Number of Shares Value of Unexercised Underlying Unexercised In-the-Money Options/SARs Shares Value Options/SARs at FY-End at FY-End(3) Acquired on Realized -------------------------------- ----------------------------- Name Exercise(1) (2) Exercisable Unexercisable Exercisable Unexercisable (#) ($) (#) (#) ($) ($) --------------- ------------- ------------ --------------- --------------- ------------- -------------- Donald L. Thompson ...... -- (4) 87,500(4) 87,500(4) 1,881,250 1,881,250 Donald L. Thompson ...... -- -- 175,000 62,500 396,875 179,688 William E. Chandler ..... -- -- 45,252 162,293 307,868 593,423 Spencer W. O'Meara ...... 8,685 45,119 79,702 167,127 536,635 612,897 W. Ernest Precious ...... 8,435 48,486 73,702 161,715 498,297 586,176 John W. Carney .......... 16,535 104,356 50,235 116,425 325,838 427,619
- --------------- (1) The information presented in this table is with respect to options, unless otherwise noted. All options reflected in this table were granted at fair market value under the Company's 1983 or 1993 Stock Option Plans. (2) The value realized in the case of options is calculated by subtracting the exercise price from the fair market value of the shares underlying the options as of the exercise date. (3) The value in the case of options is calculated by subtracting the exercise price from the fair market value of the securities underlying the options at November 30, 1997. There is no exercise price for Mr. Thompson's phantom stock/SARs. (See footnote (4) below.) (4) Represents an aggregate of 175,000 shares of phantom stock/SARs which were granted to Mr. Thompson on June 1, 1996 pursuant to the terms of his employment agreement. (See "Employment and Severance Agreements and Arrangements" below.) These phantom shares/SARs vest at the rate of 25% per year commencing December 1, 1996. The fair market value of the 43,750 shares of phantom stock/SARs that vested on December 1, 1996 was $771,094 on that date. Upon his separation from the Company, Mr. Thompson will be entitled to receive, in monthly installments with interest, an aggregate amount equal to the number of such phantom shares/SARs as shall have vested, multiplied by the per share price of the Company's Common Shares as of the end of the month prior to his separation from the Company, plus an amount equal to the dividends which would have accrued on an equivalent number of Common Shares prior to his separation, minus any such dividend equivalent amounts as may previously have been distributed to him. 13 Pension Plans The following table sets forth the estimated annual retirement benefits payable under the Company's Pension Plan and the retirement benefits portion of the Supplemental Executive Benefits Plan (the "Supplemental Plan") to participants in both Plans, assuming they retired at age 65 in fiscal 1998 with the indicated levels of compensation and years of benefit service:
Years of Service ----------------------------------------------------------------------------------------- Remun- eration 10 15 20 25 30 35 40 or More - ----------- ---------- ---------- ---------- ---------- ---------- ---------- ----------- $100,000 $ 20,000 $ 30,000 $ 40,000 $ 50,000 $ 55,000 $ 60,000 $ 60,000 150,000 $ 30,000 $ 45,000 $ 60,000 $ 75,000 $ 82,500 $ 90,000 $ 90,000 200,000 $ 40,000 $ 60,000 $ 80,000 $100,000 $110,000 $120,000 $120,000 250,000 $ 50,000 $ 75,000 $100,000 $125,000 $137,500 $150,000 $150,000 300,000 $ 60,000 $ 90,000 $120,000 $150,000 $165,000 $180,000 $180,000 350,000 $ 70,000 $105,000 $140,000 $175,000 $192,500 $210,000 $210,000 400,000 $ 80,000 $120,000 $160,000 $200,000 $220,000 $240,000 $240,000 450,000 $ 90,000 $135,000 $180,000 $225,000 $247,500 $270,000 $270,000 500,000 $100,000 $150,000 $200,000 $250,000 $275,000 $300,000 $300,000 550,000 $110,000 $165,000 $220,000 $275,000 $302,500 $330,000 $330,000 600,000 $120,000 $180,000 $240,000 $300,000 $330,000 $360,000 $360,000
- --------------- (1) For the 1997 Plan year, amounts of benefits in the above table exceeding $120,000 could not be paid under the Pension Plan but would be paid pursuant to the retirement benefits portion of the Supplemental Plan. As used in the above table, the term, "Remuneration" means covered compensation (as defined below) averaged over a participant's highest five consecutive calendar years out of the last ten calendar years of employment. Covered compensation essentially means wages or salary, bonus, salary reductions elected under the Company's Savings Plan, and any cash awards under the Company's 1988 Long-Term Incentive Compensation Plan (which terminated in 1996), except that, for the purposes of determining Remuneration under the Pension Plan, but not the Supplemental Plan, only covered compensation not in excess of limitations imposed by the Internal Revenue Code ($160,000 for the Plan year which began October 1, 1997) may be taken into account. The covered compensation of the Named Officers for fiscal 1997 was as follows: Mr. Thompson - -- $686,250; Mr. Chandler -- $322,437; Mr. O'Meara -- $369,161; Mr. Precious -- $361,971; and Mr. Carney -- $231,084. The approximate present years of benefit service for the Named Officers are as follows: Mr. Thompson -- 2 years; Mr. Chandler -- 5 years; Mr. O'Meara - -- 18 years; Mr. Precious -- 20 years; and Mr. Carney -- 13 years. For purposes of calculating benefits, a participant may not be credited with more than 40 years of service under the Pension Plan or 35 years of service under the retirement benefits portion of the Supplemental Plan. 14 Retirement benefits shown in the above table have been computed on a single-life annuity basis and are not subject to any deduction for Social Security or other offset amount. The Pension Plan generally covers employees (including executive officers but excluding certain non-resident aliens) who are not covered by a collective bargaining agreement. The Supplemental Plan, provides supplemental benefits only to executive officers and other officers. The Supplemental Plan has an elective salary deferral feature with a Company matching contribution of 25% of an officer's elective deferral but not to exceed 6% of the officer's compensation. The Company made matching contributions to this portion of the Supplemental Plan for executive officers of $29,050 in fiscal 1997. Employment and Severance Agreements and Arrangements In connection with his hiring as Chairman, President and Chief Executive Officer by the Company in 1996, Donald L. Thompson and the Company entered into an employment agreement for an initial term ending May 31, 1998 and continuing thereafter from year to year until Mr. Thompson reaches the age of 65 or until earlier terminated by either party. The agreement provides for an initial annual base salary of $450,000 (subject to periodic review and possible increase by the Compensation Committee), plus an annual incentive bonus under the Company's incentive compensation program of up to a maximum of 70% of base salary, but not to be less than $225,000 for fiscal 1997. Pursuant to the agreement, Mr. Thompson was granted at the time his employment commenced: (i) stock options under the Company's 1993 Stock Option and Stock Grant Plan for 175,000 Common Shares, and (ii) 175,000 shares of phantom stock/SARs. He also is entitled to receive additional annual option grants of a value of up to 2 1/2% of his base salary under some circumstances. The agreement further provided for reimbursement of Mr. Thompson, on an after tax basis, for various moving and relocation expenses in connection with his move from California to Pennsylvania and entitles him to participate in most of the Company's benefit plans and programs for executives. (See the Summary Compensation and Option/SAR Grants in Fiscal 1997 Tables above for further information concerning Mr. Thompson's compensation and benefits.) In the event of termination of his employment with the Company, Mr. Thompson's entitlement to severance compensation and benefits varies depending upon the circumstances and timing of such termination. If his employment were terminated by reason of his death or disability, by the Company without cause, or by him because of a material reduction in his authority or duties, he would be entitled under the agreement to continuation of his base salary, bonus and benefits for periods of from six months to two years following termination of employment, and there would be acceleration of the vesting of certain of his benefits, including his phantom stock. Should there be a change in control of the Company (as defined in the agreement) and a termination of his employment within two years thereafter, his entitlement to severance compensation and benefits under the agreement would be essentially as provided in the change in control agreements with other executive officers discussed in the following paragraph, except that: (i) his severance allowance generally would be equal to 15 2.99 times his recent annual cash compensation; (ii) his life and health insurance plans and certain other benefits would continue for up to three years; and (iii) in the event of a change in control occurring prior to June 1, 1998, he would be entitled to additional payments sufficient, on an after tax basis, to pay any excise tax imposed on such severance payments. Since 1990 the Company has had change in control agreements with executive officers, as well as with other officers and certain key employees. These agreements currently extend through December 31, 1999. Under the agreements with executive officers, in the event of a change in control (as defined in the agreements) of the Company, the agreements would become effective and would provide for the executive officers' continued employment by the Company, generally for a period of two years following the change in control and generally at not less than their recent compensation and benefit levels. If within such two-year period an executive officer's employment is terminated by the Company without cause or if such executive officer resigns in certain specified circumstances, then the executive officer generally is entitled to the payment of a severance allowance equal to approximately twice his or her recent annual cash compensation level (including cash amounts earned under incentive compensation plans) and to the continuation of life and health insurance plans and certain other benefits for up to two years following such termination of employment. Mr. Thompson does not have a separate change in control agreement, but his employment agreement contains similar provisions, as described in the preceding paragraph. 16 Shareholder Return Performance Graph The following graph compares for fiscal years 1993 through 1997 the yearly change in the cumulative total return to holders of Common Shares of the Company with the cumulative total return of the Standard & Poor's Composite -- 500 Index (the "S&P 500") and of an index of peer group companies selected by the Company (the "Peer Group"). 275 ------------------------------------------------------------------------- 250 ---------------------------------------------------------------------#+- D 225 ------------------------------------------------------------------------- O L L 200-------------------------------------------------------------------------- A # R + S 175 ------------------------------------------------------------------------- * 150 ------------------------------------------#------------------------------ + * 125 ------------------------------------------------------------------------- + + * *# *# 100*#+----------------------------------------------------------------------- 75 ------------------------------------------------------------------------- 1992 1993 1994 1995 1996 1997 FISCAL YEAR - -------------------------------------------------------------------------------- * = Hunt Corportation # = S&P 500 Index + = Peer Group Index - -------------------------------------------------------------------------------- 1992 1993 1994 1995 1996 1997 ---- ---- ---- ---- ---- ---- Hunt Corporation 100 114.36 107.68 115.35 138.93 172.76 S&P 500 Index 100 110.10 111.25 152.39 194.85 250.41 Peer Group Index 100 118.69 118.74 145.65 189.24 243.65 The Company elected to use the Peer Group Index rather than a published industry or line of business index because the Company is not aware of any such published index which it believes is as appropriate for comparative cumulative total return purposes. The Peer Group consists of 20 publicly-held companies of various sizes.(1) Although none of these Peer Group companies is directly comparable with the Company in terms of all businesses engaged in, there are similarities in respect of certain products offered, specific lines of business and/or channels of distribution. For the purposes of the Peer Group Index, the Peer Group companies including the Company - --------------- (1) The Peer Group consists of Acme United Corporation; American Business Products Inc.; Aspen Imaging International Inc.; Avery Dennison Corporation; Bush Industries Inc.; A.T. Cross Company; Dixon Ticonderoga Company; Duplex Products Inc.; Ennis Business Forms Inc.; General Binding Corporation; Herman Miller Inc.; HON Industries; Moore Corporation Limited; Nashua Corporation; Paris Business Forms Inc.; S L Industries Inc.; Shelby Williams Industries Inc.; Tab Products Co.; Virco Mfg. Corporation; and Zero Corporation. 17 have been weighted based upon their relative market capitalizations. In calculating the value of a given index, the returns of the individual Peer Group companies and the Company are weighted according to their market capitalization as of the beginning of each period for which a return is indicated. In future years, the Company may utilize another published index, rather than the Peer Group Index, if an appropriate published index can be found. The above graph assumes that the value of the investment in Hunt Corporation, the S&P Composite--500 Index companies and the Peer Group Index companies was $100 on November 30, 1992, and that all dividends were reinvested. The performance as reported above provides no assurances that this performance will continue in the future. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, as well as persons beneficially owning more than 10% of the Company's Common Shares and certain other holders of such shares (collectively, "Covered Persons") to file with the Securities and Exchange Commission and the New York Stock Exchange, within specified time periods, initial reports of ownership, and subsequent reports of changes in ownership, of Common Shares and other equity securities of the Company. Based solely upon the Company's review of copies of such reports furnished to it and upon representations of Covered Persons that no other reports were required, to the Company's knowledge all of the Section 16(a) filing requirements applicable to Covered Persons were complied with on a timely basis in fiscal 1997 except as follows: (i) Messrs. Belcher and MacInnes and Ms. Vallely, directors of the Company, inadvertently were late in filing their Forms 5 for the year with respect to one transaction -- the receipt by each of 321 Common Shares pursuant to the Company's 1997 Non-Employee Director Compensation Plan, and (ii) John Fanelli III, Vice President and Chief Accounting Officer of the Company, inadvertently failed on two occasions to file required Forms 4 -- with respect to his exercise of a stock option granted under a Rule 16b-3 option plan of the Company and to his sale of stock in a subsequent month (both of which transactions subsequently were reported by Mr. Fanelli on a Form 5). Solicitation of Proxies The cost of soliciting the proxies will be paid by the Company. Directors, officers and employees of the Company may solicit proxies in person, or by mail, telephone or telegraph, but no such person will be specially compensated for such services. The Company will request banks, brokers and other nominees to forward proxy materials to beneficial owners of stock held of record by them and will reimburse them for their reasonable out-of-pocket expenses in so doing. Shareholder Proposals In order to be eligible for inclusion in the Company's proxy materials for the 1999 Annual Meeting, shareholders' proposals to take action at such meeting must comply 18 with applicable Securities and Exchange Commission rules and regulations, must be directed to the Secretary of the Company at its offices set forth on page 1 of this proxy statement, and must be received by the Company not later than November 16, 1998. Miscellaneous A copy of the Company's fiscal 1997 Annual Report to Shareholders is also enclosed but is not to be regarded as proxy solicitation material. The Company, upon request, will furnish to record and beneficial holders of its Common Shares, free of charge, a copy of its Annual Report on Form 10-K (including financial statements and schedules but without exhibits) for fiscal 1997. Copies of exhibits to the Form 10-K also will be furnished upon request and the payment of a reasonable fee. All requests should be directed to the Secretary of the Company at the offices of the Company set forth on page 1 of this proxy statement. By order of the Board of Directors, WILLIAM E. CHANDLER, Secretary March 2, 1998 19 HUNT CORPORATION PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS ANNUAL MEETING OF SHAREHOLDERS - APRIL 15, 1998 The undersigned hereby appoint(s) Donald L. Thompson and William E. Chandler, or any of them, with full power of substitution, proxies to vote, as designated on the reverse side of this proxy card, all the Common Shares of Hunt Corporation held of record by the undersigned on February 13, 1998, at the Annual Meeting of Shareholders to be held on April 15, 1998, and at any adjournments thereof. (Continued, and to be dated and signed, on other side) ----- Please mark your A X votes as in this example. ----- example. AUTHORITY GRANTED to vote for all nominees (except as marked to the AUTHORITY contrary below) WITHHELD (1) ELECTION / / / / Nominees: William F. Hamilton, Ph.D. OF Mary R. (Nina) Henderson DIRECTORS Wilson D. McElhinny Roderic H. Ross If you wish to withhold authority to vote for one or more but less than all of the nominees named at right, or to cumulate your votes for any such nominee(s), so indicate on the line provided below. - --------------------------------------------------- FOR AGAINST ABSTAIN (2) Ratification of the appointment of Coopers & / / / / / / Lybrand L.L.P. as the independent accountants of the Company for fiscal 1998; (3) and, to the extent permitted by the Rules of the Securities and Exchange Commission, upon such other matters as may properly come before the meeting and any adjournments thereof. This proxy when properly executed will be voted in the manner directed herein by the undersigned. If no contrary direction is made, this proxy will be voted FOR the nominee listed in Item 1 at left (in equal amounts or cumulatively, as the proxies may determine) or, if any such nominee(s) should be unable to serve, for such other person(s) as may be recommended by the Board of Directors; FOR the proposal set forth in Item 2 and in accordance with the proxies' best judgment upon other matters properly coming before the meeting and any adjournments thereof. SIGNATURE DATED , 1998 SIGNATURE DATED , 1998 ------------ ------ ----------- ------ (SIGNATURE IF HELD JOINTLY) NOTE: Please date and sign exactly as your name appears herein. In case of joint holders, each should sign. If the signer is a corporation or partnership, sign in full the corporate or partnership name by an authorized officer or partner. When signing as attorney, executor, trustee, officer, partner etc. give full title. -----END PRIVACY-ENHANCED MESSAGE-----