-----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, OSqIo+ALF+5zvmd4fFNO2UPimk0tL+ZJrnNGQrvH1ZUzhraqYNBWAdyamsf0hUGg In/Nugw1GOnjj1A5X9mwXg== 0000950137-98-000864.txt : 19980305 0000950137-98-000864.hdr.sgml : 19980305 ACCESSION NUMBER: 0000950137-98-000864 CONFORMED SUBMISSION TYPE: PRE 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980520 FILED AS OF DATE: 19980304 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOME PRODUCTS INTERNATIONAL INC CENTRAL INDEX KEY: 0000814457 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 364147027 STATE OF INCORPORATION: DE FISCAL YEAR END: 1227 FILING VALUES: FORM TYPE: PRE 14A SEC ACT: SEC FILE NUMBER: 000-17237 FILM NUMBER: 98557183 BUSINESS ADDRESS: STREET 1: 4501 WEST 47TH ST CITY: CHICAGO STATE: IL ZIP: 60632 BUSINESS PHONE: 3128901010 MAIL ADDRESS: STREET 1: 4501 WEST 47TH STREET CITY: CHICAGO STATE: IL ZIP: 60632 FORMER COMPANY: FORMER CONFORMED NAME: SELFIX INC DATE OF NAME CHANGE: 19920703 PRE 14A 1 PRELIMINARY PROXY STATEMENT 1 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 (AMENDMENT NO. ) Filed by the registrant [X] Filed by a party other than the registrant [ ] Check the appropriate box: [X] Preliminary proxy statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [ ] Definitive proxy statement [ ] Definitive additional materials [ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12 Home Products International, Inc. - -------------------------------------------------------------------------------- (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: - -------------------------------------------------------------------------------- 2 HOME PRODUCTS INTERNATIONAL, INC. 4501 WEST 47TH STREET CHICAGO, ILLINOIS 60632 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 20, 1998 To the Stockholders of Home Products International, Inc. The Annual Meeting of Stockholders of Home Products International, Inc. a Delaware corporation (the "Company"), will be held on Wednesday, May 20, 1998 at 10:00 a.m., local time, at The Standard Club, 320 South Plymouth Court, Chicago, IL 60604 for the following purposes, as more fully described in the accompanying Proxy Statement. 1. To elect eight (8) directors for a term of one year, or, if Proposal Number 2 is adopted by the stockholders, for staggered terms of one to three years, or until their successors are elected and qualified. 2. To approve an amendment to the Company's Certificate of Incorporation to provide for a staggered Board of Directors. 3. To transact such other business as may properly come before the annual meeting or any adjournment thereof. Stockholders of record of the Company's Common Stock at the close of business on March 25, 1998, the record date fixed by the Board of Directors, are entitled to notice of, and to vote at, the meeting, also as more fully described in the Proxy Statement. All stockholders are cordially invited to attend the meeting. Those who cannot attend are urged to sign, date and otherwise complete the enclosed proxy and return it promptly in the envelope provided. Any stockholder giving a proxy has the right to revoke it at any time before it is voted. For the Board of Directors, James R. Tennant James R. Tennant Chairman of the Board Chicago, Illinois April 13, 1998 3 HOME PRODUCTS INTERNATIONAL, INC. 4501 WEST 47TH STREET CHICAGO, ILLINOIS 60632 ------------------ PROXY STATEMENT ------------------ APPROXIMATE DATE PROXY MATERIAL FIRST SENT TO STOCKHOLDERS: APRIL 13, 1998 ------------------ The following information is provided in connection with the solicitation of proxies for the Annual Meeting of Stockholders of Home Products International, Inc., a Delaware corporation (the "Company" or "HPI"), to be held on Wednesday, May 20, 1998, and any adjournments thereof (the "Meeting"), for the purposes stated in the attached Notice of Annual Meeting of Stockholders. GENERAL INFORMATION SOLICITATION OF PROXIES A form of proxy is being furnished herewith by the Company to each stockholder and, in each case, such proxy is solicited on behalf of the Board of Directors of the Company for use at the Meeting. The entire cost of soliciting these proxies will be borne by the Company. Solicitation will be made by mail, and may also be made by telephone or facsimile by directors, officers and regular employees of the Company, but these persons will not be separately compensated for such solicitation services. The Company will reimburse brokerage houses and other nominees for their expenses in forwarding proxy solicitation material to beneficial owners of the Company's Common Stock. AUTHORITY CONFERRED BY PROXIES The shares represented by proxies duly executed and returned by stockholders and received by the Company before the Meeting will be voted as directed in the proxies. In the absence of specific direction, the shares represented by proxies will be voted; (1) FOR the election of all nominee directors specified herein; and (2) FOR the approval of the amendment to the Company's Certificate of Incorporation to provide for staggered three year terms for members of the Board of Directors (the "Staggered Board Amendment"). As to the other matters, if any, to be voted upon at the Meeting, the persons designated as proxies in the accompanying form of proxy will take such action as they, in their discretion, may deem advisable. The persons named as proxies were selected by the Board of Directors and one is a director and executive officer of the Company and the other is an executive officer of the Company. REVOCABILITY OF PROXIES Execution of the enclosed proxy will not affect your right as a stockholder to attend the Meeting and to vote in person. Any stockholder giving a proxy has the right to revoke it at any time by: (i) a later dated proxy, duly executed and delivered or presented at the Meeting; (ii) a written revocation sent to and received by the Secretary of the Company prior to the Meeting; or (iii) attendance at the Meeting and voting in person. VOTING SECURITIES AND RECORD DATE The Company's voting securities consist of one class of Common Stock, par value $0.01 per share (the "Common Stock"), and one class of Preferred Stock, par value $0.01 per share (the "Preferred Stock"). The Company had 7,943,680 issued and outstanding shares of Common Stock and no shares of Preferred Stock issued and outstanding as of the close of business on March 25, 1998 (the "Record Date"). Only stockholders 4 of record on the books of the Company at the close of business on the Record Date will be entitled to vote at the Meeting. Each share of Common Stock is entitled to one vote. Representation at the Meeting by the holders of one-third of the shares of Common Stock outstanding on the Record Date, either in person or by proxy, will constitute a quorum. Votes for and against, abstentions and "broker non-votes" will each be counted as present for purposes of determining the presence of a quorum. To determine whether a specific proposal has received sufficient votes to be passed, for shares deemed present, an abstention and a broker non-vote will have the same effect as a vote "against" the proposal. The affirmative vote by a majority of the shares present (whether in person or by proxy) will be required to approve the Staggered Board Amendment. For the election of directors, the eight nominees who receive the most votes will be elected. SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT The following table sets forth certain information as of March 25, 1998 (as of December 31, 1997 with respect to Warburg Pincus Asset Management, Inc.; SAFECO Asset Management Co.; Putnum Investments, Inc.; Putnum Investment Management, Inc.; The Putnum Advisory Company, Inc.; Marsh & McLennan Companies, Inc.; T. Rowe Price Associates, Inc.; and T. Rowe Price Small Cap Value Fund, Inc.) with respect to the beneficial ownership of the Company's issued and outstanding Common Stock by (i) each stockholder known by the Company to be the beneficial owner of more than 5% of its Common Stock, (ii) each director, (iii) each executive officer named in the Summary Compensation Table and (iv) all of the directors and executive officers of the Company as a group. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission ("SEC") which generally attribute beneficial ownership of securities to persons which generally possess sole or shared voting power and/or investment power with respect to those securities. Unless otherwise indicated, the persons or entities identified in the table have sole voting and investment power with respect to the shares shown as beneficially owned by them. Percentage ownership calculations are based upon 7,943,680 shares of Common Stock outstanding.
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS ------------------- ------------------ -------- Chase Venture Capital Associates, L.P.(1)................... 1,289,760 16.2% Warburg Pincus Asset Management, Inc.(2).................... 868,500 10.9 SAFECO Asset Management Company(3).......................... 489,200 6.2 Putnum Investments, Inc.; Putnum Investment Management, Inc.; The Putnum Advisory Company, Inc.; and Marsh & McLennan Companies, Inc.(4)............................... 438,000 5.5 T. Rowe Price Associates, Inc., and T. Rowe Price Small Cap Value Fund, Inc(5)........................................ 427,500 5.4 Jeffrey C. Rubenstein(6).................................... 568,858 7.2 James R. Tennant(7)......................................... 389,300 4.9 Charles R. Campbell......................................... 6,000 * Daniel B. Shure............................................. 6,400 * Marshall Ragir(8)........................................... 231,093 2.9 Joel D. Spungin............................................. 7,500 * Stephen P. Murray(9)........................................ 1,289,760 16.2 Joseph Gantz................................................ 8,200 * James E. Winslow(10)........................................ 31,397 * All directors and executive officers as a group (10 persons)(11).............................................. 2,307,515 29.0%
- ------------------------- * Less than 1%. (1) According to information provided by Chase Venture Capital Associates, L.P. ("CVCA"), CVCA is California limited partnership whose address is 380 Madison Avenue, New York, NY 10017. The 2 5 general partner is Chase Capital Partners ("CCP"), New York general partnership, whose address is the same as CVCA . The shares being reported include 319,599 shares of Common Stock which, as of March 25, 1998, were held in escrow pursuant to an escrow agreement entered into in connection with the Company's December 30, 1997 acquisition of Seymour Sales Corporation ("Seymour") (CVCA was the majority shareholder of Seymour prior to acquisition by the Company). The escrow was created to provide the Company with means to secure certain indemnification obligations pursuant to the Seymour acquisition agreement. The shares may be transferred by the escrow agent to the Company to satisfy certain indemnification claims. The escrow will terminate on December 30, 1998, and based upon the number of shares of the Company's Common Stock remaining in the escrow, CVCA may receive no shares, a currently undeterminable number of the 319,599 shares, or all of the 319,599 shares. CCP and CVCA expressly disclaim that they are, in fact, the beneficial owner of such shares. (2) According to information contained in report on Schedule 13G/A dated January 12, 1998, filed by Warburg Pincus Asset Management, Inc. ("Warburg"), Warburg serves as investment adviser to numerous accounts. The shares being reported in Schedule 13G/A are owned by Warburg's accounts. Warburg and the various accounts to which they are advisers have sole power to vote 361,100 shares of Common Stock (which represent 4.5% of the shares outstanding); have shared power to vote 463,400 shares of Common Stock (which represent 5.8% of the shares outstanding); and have sole power to dispose of 868,500 shares of Common Stock (which represent 10.9% of the shares outstanding). For purposes of the reporting requirements of the Securities Exchange Act of 1934, (the "1934 Act"), Warburg is deemed to be beneficial owner of such shares; however, Warburg expressly disclaims that it is, in fact, the beneficial owner of such shares. Warburg's address is 466 Lexington Avenue, New York, NY 10017. (3) According to information contained in report on Schedule 13G/A dated February 10, 1998, filed by SAFECO Asset Management Company ("SAMC"), wholly owned subsidiary of SAFECO Corporation ("SAFECO"), SAMC beneficially owns 489,200 shares of Common Stock (which represent 6.2% of the shares outstanding) as a result of acting as an investment adviser for registered investment companies. SAFECO and the various accounts to which they are advisers have shared power to vote and sole power to dispose of 489,200 shares of Common Stock (which represent 6.2% of the shares outstanding). Such shares include 293,200 shares beneficially owned by SAFECO Common Stock Trust (which represents 3.7% of the shares outstanding). SAMC and SAFECO expressly disclaim that, they are in fact, the beneficial owners of such shares. SAMC's address is 601 Union Street, Suite 2500, Seattle, WA 98101 and SAFECO's address is SAFECO Plaza, Seattle, WA 98185. (4) According to information contained in report on Schedule 13G dated January 16, 1998, filed by Putnum Investment, Inc. ("PI"), the shares being reported are beneficially owned by Putnum Investment Management, Inc. ("PIM") and the Putnum Advisory Company, Inc. ("PAC"), each a registered investment adviser subsidiary of PI. PI is a wholly owned subsidiary of Marsh & McLennan Companies, Inc. ("M&M"). PI and PAC share voting power with respect to 286,600 shares of Common Stock (which represent 3.6% of the shares outstanding) and PIM and PI share investment power with respect to 133,100 shares of Common Stock (which represent 1.7% of the shares outstanding) and PI and PAC share investment power with respect to 304,900 shares (which represent 3.8% of the shares outstanding). PI, PIM, PAC and M&M expressly disclaim that they are, in fact, the beneficial owners of such shares. The address for PI, PIM, and PAC is One Post Office Square, Boston, MA 02109 and the address for M&M is 1166 Avenue of the Americas, New York, NY 10036. (5) According to information contained in a report on Schedule 13G/A dated February 12, 1998, and correspondence to the Company from T. Rowe Price Associates, Inc. ("Price Associates"), the shares of Common Stock being reported are owned by various individual and institutional investors, including T. Rowe Price Small Cap Value Fund, Inc. ("Price Fund") (which owned 402,500 shares and represents 5.1% of the shares outstanding), which Price Associates serves as an investment adviser. Price Associates has sole voting power with respect to 25,000 shares and sole investment power with respect to 427,500 shares, (which represent 5.4% of the shares outstanding). Price Fund has sole voting power with respect to 402,500 shares and does not have investment power with respect to any shares. For purposes of the reporting requirements of the 1934 Act, Price Associates is deemed to be a beneficial 3 6 owner of such shares; however, Price Associates and Price Fund expressly disclaim that they are, in fact, the beneficial owners of such shares. The address for Price Associates and Price Fund is 100 East Pratt Street, Baltimore, Maryland 21202. (6) Jeffrey C. Rubenstein is the executor of the Norma L. Ragir Estate and in such capacity exercises voting and investment power with respect to the shares of Common Stock beneficially owned by the Norma L. Ragir Estate (248,251 shares). Mr. Rubenstein is a director of the Meyer and Norma Ragir Foundation (the "Ragir Foundation") and in such capacity exercises shared voting and investment power with respect to the shares of Common Stock beneficially owned by the Ragir Foundation (164,000 shares). Mr. Rubenstein is co-trustee of five separate trusts and, in such capacities exercises shared voting and investment power with respect to the shares of Common Stock beneficially owned by the five separate trusts. The five trusts, and the respective number of shares held by each is as follows: MJR/NLR Gift Trust -- Judith Ragir Separate Trust (15,189 shares); MJR/NLR Gift Trust -- Robert Ragir Separate Trust (13,985 shares); MJR/NLR Gift Trust -- Marshall Ragir Separate Trust (15,190 shares) (collectively, the "Ragir Gift Trusts"); Meyer J. Ragir Family Irrevocable Trust -- Judith Ragir (24,750 shares); and the Meyer J. Ragir Family Irrevocable Trust -- Marshall Ragir Separate Trust (66,993 shares) (collectively, the "Ragir Family Trusts"). All five trusts are collectively referred to herein as the "Ragir Trusts". None of the Ragir Trusts individually owns more than 1% of the Common Stock of the Company. The shares of Common Stock beneficially owned by the Norma L. Ragir Estate, the Ragir Foundation and the Ragir Trusts are deemed to be beneficially owned by Mr. Rubenstein pursuant to the 1934 Act. Mr. Rubenstein, as executor of the Norma L. Ragir Estate and a director of the Ragir Foundation and co-trustee of the Ragir Trusts, exercises either sole or shared voting and investment power with respect to 548,358 shares of Common Stock (which represent 6.9% of the outstanding shares). Mr. Rubenstein expressly disclaims that he is, in fact, the beneficial owner of such shares. The address for Mr. Rubenstein is 200 North LaSalle Street, Suite 2100, Chicago, IL 60601. (7) Includes 371,668 shares of Common Stock subject to stock options exercisable within 60 days of March 25, 1998. (8) Includes 164,000 shares of Common Stock beneficially owned by the Ragir Foundation with respect to which Mr. Ragir, in his capacity as a director, exercises shared voting and investment power. These shares are deemed to be beneficially owned by Mr. Ragir pursuant to the 1934 Act. Mr. Ragir expressly disclaims that he is, in fact, the beneficial owner of such shares. The number of shares reported in the table also includes 66,993 shares of Common Stock beneficially owned by the Meyer J. Ragir Family Irrevocable Trust -- Marshall Ragir Separate Trust with respect to which Mr. Ragir, in his capacity as a co-trustee, exercises shared voting and investment power. Does not include 15,190 shares of Common Stock beneficially owned by the MJR/NLR Gift Trust -- Marshall Ragir Separate Trust with respect to which Mr. Ragir does not exercise sole or shared voting or investment power. (9) Mr. Murray is a general partner of Chase Capital Partners, which is the general partner of CVCA, and in such capacity exercises shared voting and investment power with respect to the shares beneficially owned by CVCA (1,289,760 shares which represent 16.2% of the shares outstanding). These shares are deemed to be beneficially owned by Mr. Murray pursuant to the 1934 Act. Mr. Murray expressly disclaims that he, is in fact, the beneficial owner of such shares. Mr. Murray's address is Chase Capital Partners, 380 Madison Ave., 12th Floor, New York, NY 10017. (10) Includes 20,035 shares of Common Stock subject to stock options exercisable within 60 days of March 25, 1998. (11) Includes 391,703 shares of Common Stock subject to stock options exercisable within 60 days of March 25, 1998. 4 7 PROPOSAL NO. 1 ELECTION OF DIRECTORS The By-Laws of the Company currently provide that the Board of Directors shall consist of eight directors to be elected at the annual meeting of stockholders to hold office until the next annual meeting or until their successors are elected and qualified. The proxies solicited by and on behalf of the Board of Directors will be voted FOR the election of the eight nominees listed below, unless authority to do so is withheld as provided in the proxy. All nominees other than Joseph Gantz and Stephen P. Murray, have served as directors since the last annual meeting. Mr. Gantz and Mr. Murray were appointed to the Board of Directors in January, 1998. The proxies cannot be voted for a greater number of persons than the number of nominees named. If for any reason one or more of the nominees should be unable to serve or refuse to serve as a director (an event which is not anticipated), the persons named as proxies will vote for another candidate or candidates nominated by the Board of Directors, and discretionary authority to cast such votes is included in the proxy. The nominees receiving the highest number of votes of shares of Common Stock, up to the number of directors to be elected, shall be elected. Proposal No. 2 as contained in this Proxy Statement would amend the Company's Certificate of Incorporation to provide for staggered three (3) year terms for members of the Board of Directors. If the Staggered Board Amendment is approved by stockholders, the Directors who are elected shall fill the terms as designated below: Class I Directors: Joseph Gantz, Marshall Ragir, and Daniel B. Shure; Class II Directors: Joel D. Spungin and James R. Tennant; and Charles R. Campbell, Stephen P. Murray, and Jeffrey C. Class III Directors: Rubenstein.
Class I Directors' terms would expire at the 1999 annual meeting of stockholders; Class II Directors' terms would expire at the 2000 annual meeting of stockholders; and Class III Directors' terms would expire at the 2001 annual meeting of stockholders. In the event that the Staggered Board Amendment is not approved, the terms of each of the elected directors will expire at the next annual meeting of stockholders or when their successors are elected and qualified. NOMINEES FOR DIRECTORS Information regarding the Board's nominees for election as directors is set forth below. Charles R. Campbell, age 58, has been a Director of the Company since September, 1994. Since 1996 Mr. Campbell has been a principal with the Everest Group, a management consulting firm. From 1995 to 1996 Mr. Campbell was President of C. R. Campbell & Associates, a management consulting firm. From 1985 to 1995, Mr. Campbell was Senior Vice President, Chief Financial and Administrative Officer of Federal Signal Corporation, a diversified manufacturer of capital goods. From 1982 to 1985, he was Vice President and Chief Financial Officer of the Masonite Corporation, a manufacturer of building products. Mr. Campbell is a member of the Audit Committee. Joseph Gantz, age 50, was appointed to the Board of Directors in January, 1998 in connection with the Company's acquisition of Seymour Sales Corporation on December 30, 1997. Mr. Gantz joined Seymour Housewares, Inc., as Chairman of the Board in 1996. From 1994 to 1996, Mr. Gantz was President and General Manager of Rubbermaid Cleaning & Maintenance Products ("RCMP"), a manufacturer and marketer of brooms, brushes and mops. RCMP, formerly, Empire Brushes, Inc., was a $1 billion division of Rubbermaid. From 1974 to 1994 Mr. Gantz held various positions at Empire Brushes, Inc., a manufacturer and marketer of brooms, brushes and mops, with his final position being President. Mr. Gantz is a member of the Nominating Committee. Stephen P. Murray, was appointed to the Board of Directors in January, 1998 in connection with the Company's acquisition of Seymour Sales Corporation on December 30, 1997. Mr. Murray is a general partner of Chase Capital Partners. Prior to joining Chase Capital Partners, Mr. Murray was a Vice President with the 5 8 Middle Market Lending Division of Manufacturers Hanover. Mr. Murray is a member of the Audit Committee. Mr. Murray is a director of several privately held companies. Marshall Ragir, age 53, has been a Director of the Company since July, 1995. Since 1991, Mr. Ragir has been President and Chief Executive Officer of Know Business Inc., a venture capital and investment company. Mr. Ragir is a member of the Compensation Committee. Mr. Ragir is a director of several charitable foundations and non-profit agencies. Jeffrey C. Rubenstein, age 56, has been a director of the Company since September, 1986. Since 1991, Mr. Rubenstein has been a principal with the law firm of Much Shelist Freed Denenberg Ament Bell & Rubenstein, P.C., an Illinois professional corporation, which is counsel to the Company. From January, 1989 until June, 1991, Mr. Rubenstein was of counsel to the law firm of Sachnoff & Weaver, Ltd., an Illinois professional corporation, and of which he had been a principal prior to July, 1988. From March, 1988 until January, 1989, Mr. Rubenstein was President of Medical Management of America, Inc., ("MMA"), a management services company for health care providers. Mr. Rubenstein is a member of the Audit Committee and Compensation Committee. Mr. Rubenstein is a director of Miller Building Systems, Inc., Vita Food Products, Inc. and a number of privately held companies. Daniel B. Shure, age 40, has been a director of the Company since December, 1994. Since 1988, Mr. Shure has been President and Chief Executive Officer of Strombecker Corporation, an international toy manufacturer and distributor. From 1987 to 1988, he was Vice President of Giftco, Inc., a wholesaler and distributor of non-durable products. From 1986 to 1987, Mr. Shure was Executive Vice President of North American Bear Company, a toy manufacturer. Mr. Shure is a member of the Nominating Committee. He is also a director of a number of privately held companies. Joel D. Spungin, age 60, has been director of the Company since September, 1996. Mr. Spungin is managing Partner of DMS Enterprises, L.P., a consulting and management advisory partnership. Mr. Spungin was formerly Chairman and Chief Executive Officer of United Stationers and since 1994, he has been Chairman Emeritus of United Stationers, Inc. From 1981 to 1995, Mr. Spungin was employed by United Stationers, Inc., in various capacities with his final position being Chairman of the Board and Chief Executive Officer. Mr. Spungin is a member of the Compensation Committee. Mr. Spungin is also a director of AAR Corporation and a number of privately held companies. James R. Tennant, age, 45, joined the Company as Chairman of the Board and Chief Executive Officer in April, 1994. Mr. Tennant was elected a director of the Company in December, 1992, and was a member of the Company's Compensation Committee until April, 1994. From 1982 to 1994, Mr. Tennant was President of Foote, Cone & Belding/Direct, an international marketing services company. Previously, he was employed by Young and Rubicam, an advertising agency, his final position being Executive Vice President. Mr. Tennant is a member of the Nominating Committee. COMMITTEES AND ATTENDANCE The Board of Directors met seven times during the 1997 fiscal year. All of the directors attended at least 75% of the meetings of the Board of Directors and the committees on which they served. The Audit Committee, which was comprised of directors Charles R. Campbell, and Jeffrey C. Rubenstein, met twice during the 1997 fiscal year. The Audit Committee oversees the activities of the Company's independent auditors. The Compensation Committee, which was comprised of directors Charles R. Campbell, Marshall Ragir, Daniel B. Shure, and Joel D. Spungin met four times during the 1997 fiscal year. This Committee reviews and makes recommendations to the Board of Directors with regard to the salaries, incentive compensation and related benefits of corporate officers and other employees. The Company formed a nominating committee in 1998. COMPENSATION OF DIRECTORS Directors who are employees of the Company are not separately compensated for serving on the Board of Directors or on any board committees. Non-employee directors were paid an annual retainer of $2,500 for the 6 9 1997 fiscal year. In addition, they received a fee of $1,750 for each Board of Directors' meeting attended. Non-employee directors who are members of board committees also received $500 for each committee meeting attended. Beginning in 1998, all non-employee directors will receive an annual retainer of $7,500, payable in Common Stock. The number of shares to be received by each non-employee director will be based upon the closing price per share of the Common Stock as reported on The NASDAQ National Market(sm) on the first business day of the Company's fiscal year. Non-employee directors will receive a fee of $1,750 for each Board of Directors' meeting attended and $500 for each committee meeting attended. Each non-employee director has the option to receive these fees in cash or in Common Stock. If a non-employee director elects to receive Common Stock, the number of shares to be received will be based upon the closing price per share of the Common Stock as reported on The NASDAQ National Market(sm) on the day of the Board of Directors' meeting or the committee meeting. All of the shares of Common Stock which the non-employee directors are entitled to receive as compensation will be delivered after the end of the fiscal year in which such shares were earned. Additionally, each non-employee director may defer payment of his director's fees (whether payable in cash or shares of Common Stock) until termination of the director's services or the attainment of a certain age. Non-employee directors will also be granted an option to purchase 2,500 shares of Common Stock annually, and new non-employee directors will be granted an option to purchase 5,000 shares of common stock in in their first year of service. All of the stock options granted to the non-employee directors will be granted on the first business day of each fiscal year (or date of election to the Board with respect to the new directors) at an exercise price equal to the closing price per share as reported on The NASDAQ National Market(sm) on such date and will become exercisable in equal annual increments over a five year period beginning one year from the date of grant. THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE ELECTION OF THE NOMINEES SET FORTH HEREIN. PROPOSAL NO. 2 PROPOSAL TO CREATE A STAGGERED BOARD OF DIRECTORS The Board of Directors has determined that it would be advisable to amend Article Eighth of the Company's Certificate of Incorporation to create a staggered board of directors, such that each director would be elected to a three-year staggered term. A copy of Article Eighth of the Company's Certificate of Incorporation, as proposed to be amended, is attached to this Proxy Statement as Exhibit A. STAGGERED BOARD AMENDMENT The Board of Directors has approved, subject to stockholder approval at the Meeting, the Staggered Board Amendment. The Company's directors are presently elected annually to hold office until the next annual meeting of stockholders or until their successors are elected and qualified. If the Staggered Board Amendment is approved by the stockholders, directors will be elected for three-year terms, with approximately one-third of such overall directors elected each year; except that at the Meeting, Class I Directors will be elected for a one-year term, Class II Directors will be elected for a two-year term and Class III Directors will be elected for a full three-year term. Thereafter, Class I Directors will be elected for a full three-year term commencing with the 1999 annual meeting of stockholders and Class II Directors will be elected for a full three-year term commencing with the 2000 annual meeting of stockholders. In the event that the stockholders do not approve the Staggered Board Amendment, the directors elected at the Meeting will continue to serve until the next annual meeting. If the Staggered Board Amendment is approved by the stockholders, any subsequent action to amend or repeal the Staggered Board Amendment will require the affirmative vote of the holders of 66 2/3% of the outstanding shares of the Company's Common Stock, voting together as a single class, unless such action has been previously approved by a majority vote of the full Board of Directors, in which case the affirmative vote of the holders of a majority of the outstanding shares of the Company's Common Stock entitled to vote 7 10 thereon will be sufficient to amend or repeal any provision of the Staggered Board Amendment. The Staggered Board Amendment will allow the Board of Directors to fill vacancies on the Board which occur during the year with appointees who will serve for the remainder of the full term of the resigning director's seat. Currently, the election of directors is governed by the Company's By-laws, which provides that the Company shall have eight directors. The By-laws also provide that the number of directors may be increased or decreased from time to time by resolution of the Board of Directors. Each director serves until the next annual meeting of stockholders or until his successor has been duly elected and qualified. Because the directors will be directly affected by the proposed Staggered Board Amendment, they may be deemed to have an interest in the outcome of such proposal. The text of Article Eighth of the Certificate of Incorporation as it would read assuming approval of the Staggered Board Amendment is set forth on Exhibit A to this Proxy Statement. POSSIBLE BENEFITS OF THE STAGGERED BOARD AMENDMENT The Board of Directors believes that a staggered system of electing directors would provide important benefits to the Company, including: - The staggered Board system helps assure continuity and stability of the Company's business strategies and policies. Because at least two stockholder meetings will generally be required to effect a change in control of the Board, a majority of directors at any given time will have prior experience as directors of the Company. This is particularly important to a growth-oriented organization, such as the Company. - In the event of an unfriendly or unsolicited proposal to take-over or restructure the Company, the staggered Board system would give the Company time to negotiate with the sponsor, to consider alternative proposals and to assure that stockholder value is maximized. POSSIBLE ANTI-TAKEOVER EFFECT OF THE STAGGERED BOARD AMENDMENT A staggered Board of Directors may be deemed to have an anti-takeover effect because it may create, under certain circumstances, an impediment which would frustrate persons seeking to effect a takeover or otherwise gain control of the Company. A possible acquiror may not proceed with a tender offer because it would be unable to obtain control of the Company's Board of Directors for a period of at least two years. Generally, approximately one-third of the sitting Board of Directors would be up for election at any annual meeting of the stockholders. VOTE REQUIRED AND BOARD RECOMMENDATION The adoption of the Staggered Board Amendment requires the affirmative vote of not less than a majority of the votes entitled to be cast by all shares of Common Stock issued and outstanding on the Record Date. If the Staggered Board Amendment is approved by the stockholders, any subsequent action to amend or repeal the Staggered Board Amendment will require the affirmative vote of the holders of 66 2/3% of the outstanding shares of the Company's Common Stock, voting together as a single class, unless such action has been previously approved by a majority vote of the full Board of Directors, in which case the affirmative vote of the holders of a majority of the outstanding shares of the Company's Common Stock entitled to vote thereon will be sufficient to amend or repeal any provision of the Staggered Board Amendment. The Staggered Board Amendment will allow the Board of Directors to fill vacancies on the Board which occur during the year with appointees who will serve for the remainder of the full term of the resigning director's seat. If the proposed Staggered Board Amendment is approved by the stockholders, it will become effective upon filing and recording of a Certificate of Amendment as required by the Delaware General Corporation Law. If the Staggered Board Amendment is not approved, the terms of the Company's directors will not change. The effect on an abstention or a broker non-vote is the same as that of a vote against the proposal. THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE APPROVAL OF THE STAGGERED BOARD AMENDMENT. 8 11 COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the 1934 Act requires the Company's directors and executive officers, and persons who beneficially own more than 10% of the Company's Common Stock, to file with the SEC initial reports of beneficial ownership ("Form 3") and reports of changes in ownership of the Company's Common Stock and other equity securities of the Company ("Form 4"). Executive officers, directors, and greater than 10% stockholders of the Company are required by SEC regulations to furnish the Company with copies of all Section 16(a) reports that they file. Based solely upon review of the copies of such reports furnished to the Company or written representations that no other reports were required, the Company believes that during the 1997 fiscal year, all Section 16(a) filing requirements applicable to its executive officers, directors and greater than 10% beneficial owners were complied with. COMPENSATION OF EXECUTIVE OFFICERS The following table sets forth the compensation paid or earned by the Company's Chief Executive Officer and each other executive officer of the Company (collectively, the Named Executive Officers"), during each of the Company's last three fiscal years. The Company has named Stephen R. Brian as President and Chief Operating Officer of the Company, effective January 1, 1998, and as such, Mr. Brian's compensation is not required to be reported in the following table. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION ANNUAL COMPENSATION AWARD ---------------------- ------------ SECURITIES ALL OTHER UNDERLYING COMPENSATION NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS # ($)(1) - --------------------------- ---- ---------- --------- ---------- ------------ James R. Tennant.......................... 1997 $288,750 $314,913 250,000 $ 8,775 Chairman of the Board and Chief Executive 1996 250,000 125,000 200,000 13,161 Officer of HPI 1995 250,000 100,000 350,000 4,243 James E. Winslow.......................... 1997 185,785 143,714 20,000 8,775 Executive Vice President, Chief Financial 1996 173,262 60,000 25,000 10,576 Officer and Secretary of HPI 1995 170,000 118,000(2) 60,000 4,141
- ------------------------- (1) Reflects amounts contributed by the Company to the Company's Profit Sharing/401(k) Plan and Trust (including elective 401(k) deferrals). (2) Includes a $50,000 payout pursuant to Mr. Winslow's continued employment by the Company. LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR The table below represents deferred portions of the awards earned in fiscal 1997 under the Executive Incentive Bonus Plan (described in the Compensation Committee Report). The awards are to be paid in three annual installments with vesting beginning on the third anniversary of the award; however for the award earned in 1997, the vesting will begin after the second anniversary of the award. The awards are paid partly in cash and partly in Share Units. Each Share Unit has the value of one share of the Company's Common Stock and is converted to one share at the time of distribution. No amounts deferred under the Executive Incentive Bonus Plan were paid out in fiscal 1997. The value as of December 27, 1997 is determined by multiplying the number of Share Units awarded under the Executive Incentive Bonus Plan by the closing price per share of the Company's Common Stock as reported on The NASDAQ National Market(sm) on the last business day in the Company's fiscal year (December 26, 1997, $11.125/share). The cash portion of the award is calculated as 30% of the value of the award as of the date it is paid. 9 12 LONG-TERM INCENTIVE PLAN -- AWARDS IN FISCAL 1997
VALUE OF DEFERRED AWARD AS OF SHARE UNITS NAME OF EXECUTIVE 12/27/97 # ----------------- ----------------- ----------- James R. Tennant.......................... $111,895 10,058 James E. Winslow.......................... 44,222 3,975
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES The following table provides information on option exercises in fiscal 1997 by the Named Executive Officers and the value of such officers' unexercised options at December 27, 1997.
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN THE SHARES OPTIONS AT MONEY OPTIONS AT ACQUIRED FISCAL YEAR-END(1) FISCAL YEAR-END(2) ON VALUE --------------------------- --------------------------- NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ---- -------- -------- ----------- ------------- ----------- ------------- James R. Tennant............... -0- $-0- 188,335 616,665 $921,048 $1,795,827 James E. Winslow............... -0- -0- 34 105,066 234 419,829
- ------------------------- (1) Future exercisability is subject to vesting and the optionee remaining employed by the Company. (2) Value is calculated by subtracting the exercise price from the assumed fair market value of the securities underlying the option at fiscal year-end and multiplying the result by the number of in-the-money options held. There is no guarantee that if and when these options are exercised they will have this value. Fair market value was calculated based on the last reported sale price per share of the Common Stock as reported on The NASDAQ National Market(sm) on the last business day of the Company's fiscal year, December 26, 1997 ($11.125). OPTION GRANTS IN LAST FISCAL YEAR The following table provides information on option grants in fiscal 1997 to the Named Executive Officers.
INDIVIDUAL GRANTS ----------------------------------------- POTENTIAL REALIZABLE VALUE AT NUMBER OF PERCENTAGE ASSUMED ANNUAL RATES OF SECURITIES OF TOTAL OPTIONS STOCK PRICE APPRECIATION FOR UNDERLYING GRANTED TO EXERCISE OPTION TERM(2) OPTIONS EMPLOYEES IN PRICE EXPIRATION ----------------------------- GRANTED(1) FISCAL YEAR(3) ($/SHARE) DATE 5% 10% ---------- ---------------- --------- ---------- -- --- James R. Tennant.......... 250,000(4) 50.2% $11.147 06-08-06 $1,330,549 $3,186,896 James E. Winslow.......... 20,000 4.0% $10.375 12-09-07 130,496 330,702
- ------------------------- (1) All options (with the exception of options granted to Mr. Tennant) have a ten-year term and become exercisable in equal annual increments over a five- year vesting period beginning one year from the date of grant. (2) Potential realizable value is based on an assumption that the stock price of the Common Stock appreciates at the annual rate shown (compounded annually) from the date of grant until the end of the option term. These numbers are based on the requirements of the SEC and do not reflect the Company's estimate of future stock price performance. (3) The Company granted options representing 497,900 shares in 1997. (4) The options become exercisable upon the attainment of certain predetermined 30-day trading average price per share of the Company's Common Stock, or a change in control of the Company as determined in Mr. Tennant's option agreement, or June 8, 2006, whichever occurs first. The predetermined per share prices and number of shares which become exercisable are as follows: 83,333 shares ($16.72/share); 83,333 shares ($19.50/share); 83,334 shares ($21.18/share). 10 13 EMPLOYMENT AGREEMENTS James R. Tennant is employed as Chairman of the Board and Chief Executive Officer of the Company pursuant to an employment agreement dated as of January 1, 1997. Such employment agreement expires on December 31, 1999, with automatic one year extensions thereafter unless canceled by either party. The employment agreement provides for an annual base salary of $275,000. The Board of Directors increased Mr. Tennant's base salary to $350,000 in November, 1997. Mr. Tennant is also entitled to receive a discretionary bonus, based on the Company's financial performance, as well as to receive incentive bonuses subject to the terms of the Executive Incentive Bonus Plan and the Management Incentive Plan. If the Company does not renew Mr. Tennant's employment agreement for any renewal year after December 31, 1999, Mr. Tennant will be entitled to receive a severance payment of $250,000, payable in twelve monthly installments, and may exercise options which have vested prior to such date. If Mr. Tennant's employment is terminated after a change in control of the Company, Mr. Tennant is entitled to receive a $500,000 severance payment and all of his stock options will immediately vest. In the event that the Company is sold for a price of $5.50 per share or more in a stock sale or asset sale and Mr. Tennant is employed by the Company on the closing of any such event, Mr. Tennant will be entitled, at his option, to (i) receive a $1,000,000 payment from the Company or (ii) exercise all stock options he holds as if they were then available and vested. Mr. Tennant's employment agreement provided for the granting of 350,000 options to purchase Common Stock, (100,000 options at $6.00/share; 175,000 options at $7.00/share; and 75,000 at $8.00/share). The 350,000 options vest one-third each year beginning on January 1, 1997, and expire on December 31, 1999. The expiration of these options can be extended for a period of five years if the trading price of the Common Stock exceeds $10.00 per share for the entire month of December, 1999. Mr. Tennant was granted additional stock options for 200,000 shares at a price of $5.00 per share, which vest in equal increments over a three year period. These options may be extended until April 30, 2005, under the same conditions as the other options. The principal terms of Mr. Tennant's employment agreement, including the grant of additional stock options at an exercise price of $5.00 per share, were included in an agreement between the Company and Mr. Tennant dated September 19, 1996. The last reported sale price of the Company's Common Stock on The NASDAQ National Market(sm) on September 19, 1996 was $5.00 per share. COMPENSATION COMMITTEE REPORT The Compensation Committee ("Committee") determines and administers the compensation of the Company's executive officers and key employees. The Committee is comprised entirely of non-employee directors. COMPENSATION PHILOSOPHY At the direction of the Board of Directors and pursuant to the charter of the Committee, the Committee endeavors to ensure that the compensation programs for executive officers and key employees of the Company are effective in attracting and retaining key executives responsible for the success of the Company and are administered in an appropriate fashion in the long-term interests of the Company. The Committee actions related to the compensation of the chief executive officer, the chief financial officer and the chief operating officer of the Company are submitted to the full Board of Directors for ratification. The Committee believes that the Company's overall financial performance should be an important factor in the total compensation of the Company's executive officers and key employees. At the executive officer and key employee level, the Committee has a policy that a significant portion of the total compensation should consist of variable, performance-based components, such as stock awards and bonuses, which can increase or decrease to reflect changes in corporate and individual performances. These incentive compensation programs are intended to reinforce management's commitment to enhancement of profitability and stockholder value. The Committee takes into account various qualitative and quantitative indicators of Company and individual performance in determining the level and composition of compensation for the chief executive officer, other executive officers, and other key employees. While the Committee considers such Company performance measures as net income, earnings per share, return on average stockholders' equity return of 11 14 capital employed and return on average total assets, the Committee does not apply any specific quantitative formula in making compensation decisions. However, the Executive Incentive Bonus Plan and the Management Incentive Bonus Plan are based on the specific Company performance measures of return on capital employed and the attainment of certain budgeted goals, respectively. The Committee also appreciates the importance of achievements that may be difficult to quantify and, accordingly, recognizes qualitative factors, such as successful supervision of major corporate projects, demonstrated leadership ability and contributions to the industry. Where possible, the Committee will attempt to evaluate the total compensation of the Company's chief executive officer, other executive officers, and key employees in light of information regarding the compensation practices and corporate financial performance of a peer group consisting of competitive companies of similar asset size. From time to time, the Committee also receives assessments and advice regarding the Company's compensation practices from independent compensation consultants. BASE SALARY Base salaries for the chief executive officer and other executive officers are established at levels considered appropriate in light of the duties and scope of responsibilities of each executive officer's position. Salaries are reviewed periodically and adjusted as warranted to reflect sustained individual executive officer's performance. The Committee focuses primarily on total annual compensation, including incentive awards, rather than base salary alone, as the appropriate measure of executive officer performance and contribution. INCENTIVE BONUS EXECUTIVE INCENTIVE BONUS PLAN. The Executive Incentive Bonus Plan, (the "Executive Plan"), initiated in 1997, applies to the Company's senior executive management. The purpose of the Executive Plan is to make available to the participants, a portion of their total compensation in the form of an incentive opportunity when they discharge their duties in a manner which makes a measurable contribution to the Company's earnings and achieves an improved return on capital employed ("ROCE"). While the Executive Plan provides annual incentive opportunity, it also focuses on long-term results. Under the Executive Plan, participants are eligible to earn incentive awards based on the Company's performance as measured by annual ROCE goals. Participants are assigned a target incentive award stated as a percentage of base salary. The target incentive award can be earned based upon the attainment of the Company's ROCE goal, which is determined as of the beginning of the fiscal year. Awards are made annually, if earned, based on the percentage achievement of targets set with 50% of the award paid to the participant following year-end and 50% of the award deferred and paid over a three-year period starting on the third anniversary of the award. Of the deferred award, approximately 30% is to be paid in cash, and 70% of the award is to be converted to "Share Units" having a value equal to the market price of one share of Company Common Stock as of the end of the fiscal year. Thus the value of the Share Unit rises and falls in response to market fluctuations. The Share Units are converted into Common Stock upon distribution in three annual increments beginning on the third anniversary of the award. However; because 1997 was the first year of the Executive Plan, the award based upon the 1997 ROCE goal will be paid in three annual installments beginning on the second anniversary of the award. The entire deferred award will vest equally over the three year period as long as the participant remains an employee of the Company, except an award may be recommended in the event of retirement or death during the year. MANAGEMENT INCENTIVE BONUS PLAN. The Management Incentive Plan, initiated in 1997 applies to key employees of the Company. Participants are eligible to earn an annual incentive award based on the attainment of pre-approved Company and subsidiary goals. Participants are assigned a target incentive award stated as a percent of their salary, based on a participant's duties and responsibilities. The target incentive award is calculated at the end of the fiscal year based upon the attainment of predetermined goals. The goals consist of (i) earnings performance goals expressed as earnings before interest, taxes, depreciation, amortization, and bonus expense ("EBITDAB"), and (ii) a discretionary performance goal with respect to specific performance objectives established at the beginning of the year. 12 15 STOCK OPTIONS In approving grants under the 1994 Stock Option Plan, the Committee considers various quantitative and qualitative factors. The number of options previously awarded to and held by executive officers and key employees is reviewed but is only one factor in determining the size of current option grants. CHIEF EXECUTIVE OFFICER COMPENSATION Compensation of the Chief Executive Officer for the 1997 fiscal year was primarily determined pursuant to the terms of Mr. Tennant's employment agreement. The Board of Directors, upon recommendation of the Compensation Committee, increased Mr. Tennant's annual base salary of $275,000, provided under his employment agreement, to $350,000, effective November, 1997. The Board of Directors also granted Mr. Tennant options to purchase 250,000 shares of Common Stock. These options were not required to be granted under the terms of Mr. Tennant's employment agreement. See "Option Grants in the Last Fiscal Year" for a description of the terms of these options. Mr. Tennant also participates in the Executive Incentive Bonus Plan as well as the Management Incentive Bonus Plan. The Compensation Committee recommended, and the Board of Directors approved, the increase in Mr. Tennant's base salary and grant of additional options to recognize the pivotal role played by Mr. Tennant in increasing stockholder value during fiscal 1997. Compensation Committee Charles R. Campbell Daniel B. Shure Marshall Ragir Joel Spungin The report of the Compensation Committee and the performance graph included in "Company Stock Performance" shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filings under either the 1933 Act or the 1934 Act (together, the "Acts"), except to the extent that the Company specifically incorporates such report or graph by reference; and further, such report and graph shall not be deemed filed under the Acts. 13 16 COMPANY STOCK PERFORMANCE The following graph compares the cumulative total return on the Company's Common Stock with the cumulative total return on the NASDAQ Market Index and a selected industry index (SIC code 3089 -- Plastics Products N.E.C.). The graph is for a period of five years and assumes $100 was invested on January 1, 1993. Cumulative total return assumes that dividends, if any, were reinvested. The cumulative total return set forth in the graph is not necessarily indicative of future returns.
Measurement Period Home SIC Code NASDAQ (Fiscal Year Covered) Products Index Market Index 1992 100.00 100.00 100.00 1993 219.23 127.21 119.95 1994 138.46 125.02 125.94 1995 173.08 151.54 163.35 1996 253.85 195.17 202.99 1997 361.54 239.39 248.30
ASSUMES $100 INVESTED ON JAN. 1, 1993 ASSUMES DIVIDEND REINVESTED FISCAL YEAR ENDING DEC., 27, 1997
1/1/93 12/25/93 12/31/94 12/30/95 12/28/96 12/27/97 ------ -------- -------- -------- -------- -------- Home Products................................ $100.00 $219.23 $138.46 $173.08 $253.85 $361.54 SIC Code Index............................... 100.00 127.21 125.02 151.54 195.17 239.39 NASDAQ Market Index.......................... 100.00 119.95 125.94 163.35 202.99 248.30
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Company leases its principal office and the Selfix manufacturing and distribution facility in Chicago, Illinois from the Ragir Gift Trusts. Marshall Ragir is a director of the Company and is the brother of Judith Ragir and Robert Ragir. The Company made aggregate payments to the Ragir Gift Trusts under the lease of $519,687 during fiscal 1997 and $467,139 during fiscal 1996. Rent payments are subject to adjustment every three years to reflect increases in the Consumer Price Index. The lease expires in July, 2010. The Company believes that the rent paid to the Ragir Gift Trusts under the lease represents fair market value and that the other terms and conditions are commercially reasonable. The Company entered into three exclusive patent licensing agreements with Meyer J. Ragir, two in 1971 and one in 1981, relating to patented manufacturing processes used to produce wood insert molded products and the patented design of certain suction lock and shower organizer products, which in each case were developed by Mr. Ragir. The licensing agreements also cover any improvements which Mr. Ragir developed with respect to such patents. The licensing agreements provide for payment of royalties based upon unit sales of licensed products subject to annual minimum royalties in the aggregate amount of $8,500. Pursuant to the 14 17 licensing agreements, the Company accrued approximately $28,500 for fiscal 1997 payable to Mr. Ragir's estate (the "MEYER J. RAGIR ESTATE") and paid $47,194 to the Meyer J. Ragir Estate for fiscal 1996. Jeffrey C. Rubenstein, a director of the Company, is executor of the Meyer J. Ragir Estate. Jeffrey C. Rubenstein, a director of the Company is a principal with the law firm Much Shelist Freed Denenberg Ament Bell & Rubenstein, P.C., which serves as general counsel to the Company. The Company made aggregate payments to Much Shelist Freed Denenberg Ament Bell & Rubenstein, P.C. during fiscal 1997 in the amount of $730,000. Mr. Rubenstein, as executor of the Meyer J. Ragir Estate, executor of the Norma L. Ragir Estate, a director of the Ragir Foundation, and co-trustee of the Ragir Trusts, exercises either sole or shared voting and investment power with respect to 548,358 shares of the Company's Common Stock, or 6.9% of the outstanding shares of Common Stock as of March 25, 1998. The Company's principal office and the Selfix manufacturing facility in Chicago, Illinois is owned by the Ragir Gift Trust, of which Mr. Rubenstein serves as co-trustee. In fiscal 1997, the Company engaged the services of the Everest Group, a management consulting firm to assist it with the preparation of a long term strategic plan. Charles R. Campbell, a director of the Company, was a principal with the Everest Group. The Company made aggregate payments to the Everest Group during fiscal 1997 in the amount of $99,400. Management believes this transaction was conducted on an arm's length basis at competitive prices. INDEPENDENT ACCOUNTANTS The Board of Directors of the Company has appointed Arthur Andersen LLP, independent public accountants, as independent auditors to examine the annual consolidated financial statements of the Company and its subsidiary companies for 1998. Arthur Andersen LLP has served as the Company's independent auditors since 1996. A representative of Arthur Andersen LLP will be present at the meeting to make a statement, if such representative so desires, and to respond to stockholders' questions. The Company dismissed Grant Thornton LLP, its independent certified public accountants for the 1995 fiscal year effective April 12, 1996. In connection with the audits of the Company's annual consolidated financial statements for the 1995 fiscal year (the "1995 Audit") and during the interim period prior to the dismissal, there were no disagreements with the former accountants on any matter or accounting principle or practice, financial statement disclosure, or auditing scope or procedure. The former accountant's report included in the 1995 Audit was unqualified. The Company engaged Arthur Andersen LLP as its new independent public accountants effective with the dismissal of it former accountants. During the Company's 1995 fiscal year and during the interim period prior to engagement, there were no consultations with Arthur Andersen LLP with regard to either the application of accounting principles as to any specific transaction, either complete or proposed; the type of audit opinion that would be rendered on the Company's financial statements; or any matter of disagreements with the former accountants. The Company's Board of Directors approved the Audit Committee's recommendation to change accountants. ANNUAL REPORT A copy of the Company's Annual Report to Stockholders has previously been sent to the Company's stockholders or accompanies this Proxy Statement. The Company's Annual Report on Form 10-K for the fifty-two weeks ended December 27, 1997, as filed with the Securities and Exchange Commission, is available without charge to any stockholder upon written request to James E. Winslow, Investor Relations, Home Products International, Inc., 4501 West 47th Street, Chicago, Illinois 60632. Copies of exhibits filed with the Form 10-K will be furnished, if requested, upon payment of the Company's reasonable expenses in furnishing those materials. 15 18 STOCKHOLDER PROPOSALS Stockholder proposals submitted for evaluation as to inclusion in the proxy materials for the Company's 1999 annual meeting of stockholders must be received by the Company not later than December 14, 1998, at the Company's principal executive offices at 4501 West 47th Street, Chicago, Illinois 60632. OTHER MATTERS Management is not aware of any other matters to be presented for action at the Meeting. If any other matters are properly brought before the Meeting, it is the intention of the persons named as proxies in the accompanying form of proxy to vote the shares represented thereby in accordance with their best judgment. For the Board of Directors, JAMES R. TENNANT James R. Tennant Chairman of the Board Chicago, Illinois April 13, 1998 16 19 EXHIBIT A AMENDMENT TO ARTICLE EIGHTH OF THE CERTIFICATE OF INCORPORATION EIGHTH: For the management of the business and for the conduct of the affairs of the Corporation and in further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders, it is further provided: 1. Board of Directors. All corporate powers shall be exercised by the Board of Directors, except as otherwise provided by statute or by this Certificate of Incorporation, or any amendment thereof, or by the By-Laws. The By-Laws may be adopted, amended or repealed by the Board of Directors of the Corporation, except as otherwise provided by law, but any by-law made by the Board of Directors is subject to amendment or repeal by the stockholders of the Corporation. 2. The number of directors of the Corporation shall be as specified in the By-Laws of the Corporation but such number may from time to time be increased or decreased in such manner as prescribed by the By-Laws. In no event shall the number of directors be less than the minimum prescribed by law. Directors need not be stockholders. 3. Classification. The directors shall be classified with respect to the time for which they shall severally hold office into three classes as nearly equal in number as possible. The Class I directors shall be elected to hold office for an initial term expiring at the 1999 annual meeting of stockholders, the Class II directors shall be elected to hold office for an initial term expiring at the 2000 annual meeting of stockholders and the Class III directors shall be elected to hold office for an initial term expiring at the 2001 annual meeting of stockholders, with the members of each class of directors to hold office until their successors have been duly elected and qualified. At each annual meeting of stockholders, the successors to the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election and until their successors have been duly elected and qualified. At each annual meeting of stockholders at which a quorum is present, the persons receiving a plurality of the votes cast shall be elected directors. Election of directors need not be by written ballot unless the By-Laws of the Corporation so provide. 4. Vacancies. Any vacancy on the Board of Directors resulting from death, retirement, resignation, disqualification or removal from office or other cause, as well as any vacancy resulting from an increase in the number of directors which occurs between annual meetings of the stockholders at which directors are elected, shall be filled only by a majority vote of the remaining directors then in office, though less than a quorum, except that those vacancies resulting from removal from office by a vote of the stockholders may be filled by a vote of the stockholders at the same meeting at which such removal occurs. The directors chosen to fill vacancies shall hold office for a term expiring at the end of the next annual meeting of stockholders at which the term of the class to which they have been elected expires. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. Notwithstanding the foregoing, whenever the holders of one or more classes or series of Preferred Stock shall have the right, voting separately, as a class or series, to elect directors, the election, term of office, filling of vacancies, removal and other features of such directorships shall be governed by the terms of the resolution or resolutions adopted by the Board of Directors applicable thereto, and each director so elected shall not be subject to the provisions of this Article Eighth unless otherwise provided therein. 5. Amendment and Repeal of Article Eighth (Paragraphs 1, 2, 3, 4, and 5). Notwithstanding any provisions of this Certificate of Incorporation and of the By-Laws, and notwithstanding the fact that a lesser percentage may be specified by Delaware law, unless such action has been approved by a majority vote of the full Board of Directors, the affirmative vote of 66 2/3 percent of the votes which all holders of the then outstanding shares of capital stock of the Corporation would be entitled to cast thereon, voting together as a single class, shall be required to amend or repeal any provision of this Article Eighth (Paragraphs 1, 2, 3, 4, and 5) or to adopt any provision inconsistent with this Article Eighth (Paragraphs 1, 2, 3, 4, and 5). In the A-1 20 event such action has been previously approved by a majority vote of the full Board of Directors, the affirmative vote of the holders of a majority of the outstanding stock entitled to vote thereon shall be sufficient to amend or repeal any provision of this Article Eighth (Paragraphs 1, 2, 3, 4, and 5) or adopt any provision inconsistent with this Article Eighth (Paragraphs 1, 2, 3, 4, and 5). 6. Any director or any officer elected or appointed by the stockholders or by the Board of Directors may be removed at any time in such manner as shall be provided in the By-Laws of the Corporation. 7. Stockholders of the Corporation shall have no preemptive right to subscribe to any capital stock to be hereafter issued, whether now authorized and unissued or hereafter authorized. 8. In the absence of fraud, no contract or other transaction between the Corporation and any other corporation and no act of the Corporation, shall in any way be affected or invalidated by the fact that any of the directors of the Corporation are pecuniarily or otherwise interested in, or are directors or officers of, such other corporation; and in the absence of fraud, any director, individually, or any firm of which any director may be a member, may be a party to, or may be pecuniarily or otherwise interested in, any contract or transaction of the Corporation; provided, in any case, that the fact that he or such firm is so interested shall be disclosed or shall have been known to the Board of Directors or the majority thereof; and any director of the Corporation, who is also a director or officer of any such other corporation, or who is also interested, may be counted in determining the existence of a quorum at any meeting of the Board of Directors of the Corporation which shall authorize any such contract, act or transaction, and may vote thereat to authorize any such contract, act or transaction, with like force and effect as if he were not such director or officer of such other corporation, or not so interested. 9. To the fullest extent permitted by the Delaware General Corporation Law as it now exists or may be hereafter amended, no director of this Corporation shall be liable to this Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director. A-2 21 PROXY HOME PRODUCTS INTERNATIONAL, INC. 4501 West 47th Street Chicago, Illinois 60632 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints James R. Tennant and James E. Winslow as Proxies, (jointly and severally), each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side, all the shares of Common Stock of Home Products International, Inc. held of record by the undersigned on March 25, 1998 at the Annual Meeting of Stockholders to be held on May 20, 1998 or any adjournment thereof. In their discretion the Proxies are authorized to vote upon such other business as may properly come before the meeting. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THE SHARES WILL BE VOTED "FOR" ALL NOMINEES FOR DIRECTOR AND "FOR" APPROVAL OF THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO PROVIDE FOR A STAGGERED BOARD OF DIRECTORS. The undersigned hereby acknowledges receipt of the Notice of the Annual Meeting of Stockholders and the related proxy statement. (continued on reverse side) 22 Backside of Proxy I plan to attend meeting [ ] 1. ELECTION OF DIRECTORS. FOR all nominees listed below WITHHOLD AUTHORITY (except as marked to the contrary below)___ to vote for all nominees listed below_____ (Instructions: To withhold authority to vote for any individual nominee, strike a line through a nominee's name in the list below.) Charles R. Campbell, Joseph Gantz, Stephen P. Murray, Marshall Ragir, Jeffrey C. Rubenstein, Daniel B. Shure, Joel D. Spungin, James R. Tennant. 2. Approval of amendment to the Company's Certificate of Incorporation to provide for a staggered Board of Directors. ________ FOR ________ AGAINST ________ ABSTAIN THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THESE PROPOSALS In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. Dated __________________, 1998 ______________________________ Signature ______________________________ Signature (if held jointly) Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee, or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. -----END PRIVACY-ENHANCED MESSAGE-----