UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Crown Central Petroleum Corporation
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[ l o g o ]
Crown Central Petroleum Corporation
One North Charles Street
Baltimore, Maryland 21201
--------------------------------------
_________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 23, 1998
---------------------------------------
_________________________
To the Stockholders of CROWN CENTRAL PETROLEUM
CORPORATION:
Notice is hereby given that the Annual Meeting of
Stockholders of Crown Central Petroleum Corporation (the
"Company") will be held at the Turf Valley Conference
Center, 2700 Turf Valley Road, Ellicott City, Maryland
on Thursday, the 23rd day of April, 1998 at two o'clock
in the afternoon, Eastern Daylight Time, for the
following purposes:
1. ELECTION OF DIRECTORS. To elect a Board of nine
(9) directors, each to serve for the next succeeding
year and until his or her successor is elected and has
qualified. Seven (7) of such directors will be elected
by the holders of the Class A Common Stock and two (2)
of such directors will be elected by the holders of the
Class B Common Stock.
2. SHAREHOLDER PROPOSALS. To vote upon two (2)
shareholder proposals, if properly presented at the
meeting. .
3. OTHER BUSINESS. To transact such other business as
may properly come before the meeting. The Board of
Directors
of the Company knows of no business other than the
election of directors which will be presented for
consideration
at the Annual Meeting.
Details respecting these matters are set forth in
the Proxy Statement. Only stockholders of record at the
close of business on March 12, 1998 will be entitled to
notice of and to vote at the Annual Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ACCOMPANYING POSTAGE PAID,
ADDRESSED ENVELOPE AS PROMPTLY AS POSSIBLE. YOU MAY
REVOKE THE PROXY BY GIVING WRITTEN NOTICE TO THE
SECRETARY OF THE COMPANY AT THE ADDRESS ABOVE OR BY
EXECUTION AND DELIVERY OF A LATER-DATED PROXY.
By order of the Board of
Directors,
[
Signature ]
/S/---Dolores B. Rawlings
--------------------------
Dolores B. Rawlings,
Vice President - Secretary
Crown Central Petroleum Corporation
One North Charles Street
Baltimore, Maryland 21201
-----------------------------------------
_________________________
Proxy Statement
For Annual Meeting of Stockholders
to be held April 23, 1998
------------------------------------------
_________________________
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished in connection with
the solicitation of proxies on behalf of the Board of
Directors of Crown Central Petroleum Corporation
("Crown" or the "Company") for use at the Company's
Annual Meeting of Stockholders (the "Annual Meeting") to
be held at the Turf Valley Conference Center, 2700 Turf
Valley Road, Ellicott City, Maryland on Thursday, the
23rd day of April, 1998 at two o'clock in the afternoon.
This Proxy Statement and a form of Proxy will first be
mailed to stockholders on or about March 30 ,, 1998.
The Board of Directors of the Company has fixed the
close of business on March 12, 1998 as the record date
(the "Record Date") for the determination of Company
stockholders entitled to notice of and to vote at the
Annual Meeting. Accordingly, only holders of record of
Class A Common Stock, par value $5.00 per share ("Class
A Stock"), and holders of record of Class B Common
Stock, par value $5.00 per share ("Class B Stock"), at
the close of business on the Record Date ("Record
Holders") are entitled to notice of the Annual Meeting
and to attend and vote at the Annual Meeting. The holder
of a valid proxy will be permitted to attend the Annual
Meeting and to vote the stock of a Record Holder. To be
valid, a proxy must either be in writing and be signed
by the Record Holder or be authorized by an electronic
transmission from the Record Holder. In addition, to be
valid, a proxy cannot have been revoked or superseded by
a valid proxy with a later date.
* The Proxy Card provided with this Proxy Statement is
for completion both by holders of Class A Stock and by
holders of Class B Stock. If a stockholder owns shares
of Class A Stock, the stockholder should vote on the
election of the directors to be elected by the holders
of Class A Stock. If a stockholder owns shares of
Class B Stock, the stockholder should vote on the
election of the directors to be elected by the holders
of Class B Stock. If a stockholder owns shares of both
Class A Stock and Class B Stock, the stockholder should
vote on the election of all directors. All properly
executed proxies delivered pursuant to this solicitation
will be voted at the Annual Meeting, or any adjournments
thereof, in accordance with instructions contained
therein, if any. IF NO INSTRUCTIONS ARE INDICATED,
SHARES OF CLASS A STOCK AND CLASS B STOCK FOR WHICH
EXECUTED PROXIES ARE RECEIVED WILL BE VOTED:
* FOR THE ELECTION OF THE NOMINEES NAMED IN THE PROXY
AS DIRECTORS OF THE COMPANY,
* AGAINST THE TWO SHAREHOLDER PROPOSALS, AND
* IN THE DISCRETION OF THE PROXY HOLDER AS TO ANY OTHER
MATTER WHICH MAY PROPERLY COME BEFORE THE MEETING.
Execution and return of the accompanying Proxy Card
will not in any way affect a stockholder's right to
attend the Annual Meeting and, if such stockholder's
proxy is revoked, to vote in person. The stockholder
giving the proxy has the power to revoke it at any time
before it is exercised by filing with the Secretary of
the Company a written revocation or a duly executed
proxy bearing a later date. Presence at the Annual
Meeting will not, of itself, revoke the proxy.
The expense of the solicitation of proxies for the
Annual Meeting, including the cost of preparing and
mailing this Proxy Statement, will be borne by the
Company. Proxies may be solicited by use of the mails,
by personal interview or by telephone or other
electronic means and may be solicited, to a limited
extent, by officers and directors and by other employees
of the Company. Brokers, nominees, fiduciaries and
other custodians will be requested to forward soliciting
material to the beneficial owners of shares and to
request authority for the execution of proxies and will
be reimbursed by the Company for their expenses in
forwarding such material.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, DATE, EXECUTE
AND RETURN THE PROXY CARD SENT TO THEM WITH THIS PROXY
STATEMENT.
MATTERS TO BE VOTED ON AT THE ANNUAL MEETING
--------------------------------------------
ELECTION OF DIRECTORS. Nine (9) directors are to be
elected, each to serve until the next annual meeting of
stockholders and until his or her successor is duly
elected and has qualified. Seven (7) directors will be
elected by the holders of the Class A Stock, and two
(2) directors (who may not be employees of the Company
or any subsidiary of the Company) will be elected by the
holders of the Class B Stock. See "Voting at the Annual
Meeting - Voting Rights of Class A and Class B Stock"
for a description of the voting rights of the Class A
Stock and of the Class B Stock in the election of
directors. A plurality of all votes cast by the
applicable class will be sufficient to elect each such
director. For purposes of the election of directors,
abstentions will not be counted as votes cast and will
have no effect on the result of the vote.
SHAREHOLDER PROPOSALS. Two (2) shareholder
proposals will be voted on at the Annual Meeting. Two-
thirds of all of the votes cast on a proposal will be
necessary to approve a shareholder proposal. See
"Voting at the Annual Meeting - Voting Rights of Class A
and Class B Stock" for a description of the voting
rights of the Class A Stock and Class B Stock as to the
approval of the shareholder proposals. For purposes of
the vote on the shareholder proposals, abstentions and
broker non-votes will not be counted as votes cast and
will have no effect on the result of the vote.
VOTING AT THE ANNUAL MEETING
----------------------------
OUTSTANDING SHARES; QUORUM. At the close of
business on the Record Date, there were 4,817,394 shares
of Class A Stock outstanding and 5,141,390150,118 shares
of Class B Stock outstanding. The presence, in person
or by properly executed and delivered proxy, of the
holders of a majority of the votes of Class A Stock and
Class B Stock entitled to vote at the Annual Meeting,
taken together, is necessary to constitute a quorum at
the Annual Meeting. For information with respect to
stockholders who own more than 5% of the outstanding
Class A Stock or Class B Stock, see "Security Ownership
by Certain Beneficial Owners and Management."
VOTING RIGHTS OF CLASS A AND CLASS B STOCK. The
holders of record of the Class A Stock are entitled,
voting separately as a class, to elect and to remove all
directors other than directors to be elected by any
other class or classes or series of stock. The holders
of record of the Class B Stock may elect and remove two
(2) directors, who may not be employees of the Company
or of any subsidiary of the Company. There are no
classes of stock other than Class A Stock and Class B
Stock currently outstanding.
Except with respect to the election of directors as
described above, in all proceedings in which action of
the stockholders of the Company is to be taken, each
share of Class A Stock shall entitle the holder of
record thereof to one vote, and each share of Class B
Stock shall entitle the holder of record thereof to one-
tenth (1/10) vote. Except with respect to the election
of directors, holders of Class A Stock vote together
with holders of Class B Stock as a single class.
THE COMPANY SAVINGS PLAN. A unit of T. Rowe Price
serves as the trustee for the Company's Employees
Savings Plan and the Employees Supplemental Savings Plan
(collectively the "Savings Plans"). Each plan
participant with an investment in Class A Stock or Class
B Stock will be given a form of proxy by the trustee to
be used to instruct the trustee how to vote the Company
stock held in the Savings Plans for the benefit of the
participant. Shares for which no instructions are
timely given will be voted as provided in the Savings
Plans by the trustee in the same proportion as the votes
cast with respect to those shares for which the trustee
receives proper instructions. There is no provision in
the Savings Plans to permit the trustee to grant a proxy
to a plan participant, and as a result, all shares of
Class A Stock and Class B Stock held in the Savings
Plans will be voted by the trustee in accordance with
the procedures described in this paragraph.
ELECTION OF DIRECTORS
---------------------
At the Annual Meeting, nine (9) directors will be
elected, each to serve until the next annual meeting of
the stockholders and until his or her successor is duly
elected and has qualified. Seven (7) directors will be
elected by the holders of the Class A Stock, and two (2)
directors (who may not be employees of the Company or
any subsidiary of the Company) will be elected by the
holders of the Class B Stock.
INFORMATION CONCERNING THE NOMINEES
-----------------------------------
The names and ages (as of December 31, 1997) of
those persons nominated to be directors of the Company,
as well as their principal occupations for the last five
years, directorships held by them in certain other
publicly held companies, the year in which they became a
director of the Company and certain other information
with respect to such nominees are set forth below. The
first seven (7) nominees listed are presented for
election by the holders of Class A Stock, and the last
two (2) nominees listed are presented for election by
the holders of Class B Stock. All of the nominees are
presently directors of the Company, and all of such
nominees were elected at the Annual Meeting of
Stockholders on April 24, 1997.
There are no family relationships among any of the
directors. Edward L. Rosenberg, Executive Vice
President - Supply and Transportation and Frank B.
Rosenberg, Senior Vice President - Marketing, are sons
of Henry A. Rosenberg, Jr., Chairman of the Board,
President and Chief Executive Officer. There are no
other family relationships among the directors and the
executive officers, and there is no arrangement or
understanding between any director and any other person
pursuant to which the director was elected.
Proxies received will be voted in the manner
directed in the proxy or, if no direction is made, for
the election of the nominees named below. Although it
is not expected that such a contingency will occur, if
any nominee declines or is unable to
serve, the proxies will be voted for a substitute
nominee and, unless otherwise directed, for the other
nominees named below.
PRINCIPAL OCCUPATION FOR
NAME AND AGE LAST 5 YEARS; DIRECTORSHIPS
ON IN PUBLIC CORPORATIONS DIRECTOR
DECEMBER 31, SINCE
1997
- ----------------- ------------------------- ------------
- ------ --
TO BE ELECTED BY THE HOLDERS OF THE CLASS A
STOCK:
TO BE ELECTED BY THE HOLDERS OF THE CLASS A
STOCK:
JACK AFRICK President and Chief 1991
(69) Operating Officer, North
Atlantic Trading Company,
Inc. since January 1998;
Vice Chairman, UST, Inc.
from September 1990 through
May 1993. Also a director
of Tanger Factory Outlet
Centers, Inc. and Transmedia
Network, Inc.
GEORGE L. President and Chief 1992
BUNTING, JR. Executive Officer, Bunting
(57) Management Group since July
1991. Also a director of
Guilford Pharmaceuticals
Inc., Mercantile Bankshares
Corporation, and USF&G
Corporation.
MICHAEL F. President, The Evolution 11991
DACEY (53) Consulting Group, Inc.
since March 1995; Executive
Vice President, The Chase
Manhattan Bank, N.A. from
September 1987 through
September 1994.
PATRICIA A. Retired. Formerly, Senior 1989
GOLDMAN Vice President - Corporate
(55) Communications, USAir, Inc.
from February 1988 through
January 1994. Also a
director of Erie Family
Life Insurance Company and
rie Indemnity Company.
WILLIAM L. President and Chief 1992
JEWS (45) Executive Officer,
CareFirst, Inc. since
January 1998; President and
Chief Executive Officer,
Blue Cross and Blue Shield
of Maryland from April 1993
through December 1997;
President and Chief
Executive Officer,
Dimensions Health
Corporation from March 1990
through March 1993. Also a
director of Municipal
Mortgage and Equity, L.L.C.
and The Ryland Group, Inc.
HENRY A. Chairman of the Board and 1955
ROSENBERG, JR. Chief Executive Officer of
(68) the Company since May 1975
and President since March
1996.
SANFORD V. Senior Vice President and 1997
SCHMIDT Chief Administrative
(50) Officer, American Trading
and Production Corporation
("Atapco") since May 1992.
TO BE ELECTED BY THE HOLDERS OF THE CLASS B STOCK:
NAME AND AGE PRINCIPAL OCCUPATION FOR LAST
ON 5 YEARS; DIRECTORSHIPS IN DIRECTOR
DECEMBER 31, PUBLIC CORPORATIONS SINCE
1997
- -------------- ------------------------------ --------
- -- ------- ----
THE REVEREND President, Loyola College in 1995
HAROLD RIDLEY, Maryland since July 1994;
S. J. (58) Professor of English and
Department Chair, LeMoyne
College from September 1985
through June 1994.
<FN>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE FOR THE NOMINEES PRESENTED HEREIN.
</FN>
BOARD OF DIRECTORS
------------------
ATTENDANCE. The Board of Directors held ten
meetings during the past year. All of the directors
attended at least 75% of the aggregate of the total
number of meetings of the Board of Directors and the
committees on which he or she served during the year.
COMPENSATION OF DIRECTORS. Each director who is not
an employee of the Company or a subsidiary of the
Company is paid $12,000 per year for serving as a
director and a meeting fee of $600, plus travel
expenses, for attendance at each meeting. Each non-
employee director who is a member of any committee of
the Board of Directors other than the Executive
Committee is paid $3,000 per year for serving on each
such committee. The chairman of any committee other than
the Executive Committee is paid a fee of $1,000 for
serving in that capacity. Directors who are employees
receive no separate compensation for serving on the
Board, on any Board committee or as Chairman of any
committee. See "Interest of Management and Others in
Transactions with the Company and its Subsidiaries" for
a description of Mr. Africk's consulting agreement under
which he is paid a fee of $3,000 per month.
Under a Deferred Compensation Plan for non-employee
directors, a director may defer all or a portion of his
or her compensation for payment after his or her
termination as a director. The plan provides for the
accrual of interest quarterly on the funds at the 90-day
Treasury Bill rate in effect at the beginning of the
quarter. The director may elect to receive the deferred
compensation in one lump sum payment or in a number of
annual installments (not exceeding ten).
BOARD COMMITTEES
----------------
EXECUTIVE COMMITTEE. The Executive Committee has
the authority to act on behalf of the Board of Directors
between meetings of the Board. Mr. Rosenberg serves as
Chairman and Messrs. Africk and Gibbons are members of
the Committee.
AUDIT COMMITTEE. Mr. Africk serves as Chairman and
Messrs. Bunting, Dacey, Gibbons and Schmidt served in
1997 as members of the Audit Committee. The Audit
Committee met five times during the past year. The
functions which this Committee performs under its
charter include: (i) recommending the selection of
independent public accountants and reviewing with such
accountants the audit scope and the results of the audit
engagement, (ii) reviewing matters pertaining to
internal audit and other internal control procedures,
(iii) reviewing the audited and the unaudited statements
to be submitted to the Board for approval, (iv)
reviewing substantial claims by or against the Company,
(v) reviewing the Company's financing plans and its
compliance with debt covenants, (vi) reviewing current
accounting related matters affecting the Company, and
(vii) reviewing the effect of the scope of non-audit
services rendered by the independent public accountants
on their independence.
EXECUTIVE COMPENSATION AND BONUS COMMITTEE. Mr.
Gibbons serves as Chairman and Ms. Goldman, Mr. Jews and
Father Ridley are members of the Executive Compensation
and Bonus Committee (the "Compensation Committee"). The
Compensation Committee met three times during the past
year. The Compensation Committee has the principal
responsibility for the administration of the Company's
annual incentive plan which is known as the Performance
Incentive Plan and the 1994 Long-Term Incentive Plan
(the "Long-Term Plan") and the authority and duty to
submit recommendations to the Board with respect to the
salaries of the Chairman of the Board and President. In
addition, the Compensation Committee has the authority
to submit recommendations to the Board with respect to
plans for the compensation of executives of the Company,
including amendments to any plans for compensation.
SUCCESSION PLANNING COMMITTEE. In 1996, the
Board of Directors established the Succession Planning
Committee as a special committee of the Board. The
Succession Planning Committee has been directed to
report to and make recommendations to the Board with
regard to the line of succession within Senior
Management. Mr. Africk serves as Chairman and Messrs.
Bunting, Gibbons and Rosenberg are members of the
Committee. The Committee met nine times during the past
year.
REPORT OF EXECUTIVE COMPENSATION AND BONUS COMMITTEE
----------------------------------------------------
On an annual basis, the Company engages an
internationally known management consulting firm to
assist it in performing a review of its executive
compensation practices. Compensation philosophy, the
Company's objectives and Crown's total direct
compensation package which consists of base salary and
annual and long-term incentives are reviewed. The
results of this study are carefully considered by the
Compensation Committee in connection with its approval
of the compensation to be paid to the Company's
executive officers.
The following objectives and guiding principles have
been identified in establishing the Company's executive
compensation program: (1) provide a strong link between
management and shareholder interests by rewarding
executives for the creation of shareholder value, (2)
attract and retain key executive talent by providing
competitive total reward opportunities based on the
Company's performance, (3) provide an appropriate
balance between short and long-term reward
opportunities, and (4) ensure there is a clear line-of-
sight between reward opportunities and performance
controlled or directly influenced by the executive.
Specifically, base salaries are targeted to the
median or fiftieth percentile of overall competitive
practices. Recommendations for base salary adjustments
for officers are determined by considering the
executive's position, experience, knowledge, skills, job
performance and the strategic importance of the
individual and the position, as reflected in the
Chairman's recommendations to the Compensation
Committee. Annual incentive and long-term incentive
awards are each targeted to generate total cash
compensation between the fiftieth and seventy-fifth
percentile of competitive practices and are based on the
Company's performance.
The Company's competitive position is determined by
conducting an annual survey of the practices at other
companies, both national and regional, including
companies of similar size and focus within the petroleum
industry. Six of the nine companies most recently
selected as industry comparables are included in the
more than two dozen companies in the Value Line
Integrated Petroleum Index shown on the Performance
Graph in this Proxy Statement.
The Company's most recent survey analysis of
compensation practices shows that officers' base
salaries, total cash compensation (base salary and
annual incentives) and total direct compensation (total
cash compensation plus the estimated annualized present
value of long-term incentive awards) are generally below
the median. The Compensation Committee is, to the extent
practicable, attempting to insure that increases in base
salaries and total cash compensation are targeted to
median levels. During 1997, the Compensation Committee
recommended, and the Board approved, a $25,000 increase
(4%) in the base salary previously established for Mr.
Henry A. Rosenberg, Jr. in July 1995. This increase
places Mr. Rosenberg in the comparable median salary
range for chief executive officers.
In 1994, the Company adopted, with stockholder
approval, the Long-Term Plan, and in 1996 it adopted the
Performance Incentive Plan. These Plans are intended to
provide additional incentives to officers and senior
managers for improvements in Company-wide performance.
The 1998 Performance Incentive Plan is a cash plan
offered to officers, senior management and other
salaried employees. Minimum, target and maximum awards
are established by the Compensation Committee for the
Plan year. Executive officers can earn a target award
of 35-65% of base salary based upon the Company's
performance, as measured by EBITDAAL which is defined as
earnings before interest, taxes, depreciation,
amortization, abandonments and LIFO accounting
provisions. EBITDAAL must meet the annual minimum
threshold approved by the Compensation Committee for any
awards to be earned in a Plan year. The Company's 1997
actual operating performance was within the range that
allowed for the payment of incentive awards at
approximately the target level provided by the 1997
Performance Incentive Plan.
The Long-Term Plan is designed to provide incentives
to officers and key employees who have significant
responsibilities for the successful implementation of
the Company's long-term business strategies. The Long-
Term Plan provides for awards of non-qualified stock
options ("Options") for the purchase of the Company's
Class B Stock and for Performance Vested Restricted
Stock ("PVR Stock") which is also awarded in shares of
Class B Stock. Awards are made by the Compensation
Committee, and no participant may receive Options for
more than 150,000 shares of stock or more than 50,000
shares of PVR Stock in any one year.
PVR Stock is issued to a participant subject to the
attainment of performance goals and the satisfaction of
various restrictions established by the Compensation
Committee. The performance goals are currently based
upon the Company's operating performance as measured by
EBITDAAL. In addition, three-year Net Income on a FIFO
Basis must meet the minimum threshold approved by the
Compensation Committee for any awards of PVR Stock to
vest at the end of the performance cycle. In 1996, the
Compensation Committee amended the Plan to permit PVR
Stock that has not vested at the end of the performance
cycle to vest at the end of five years rather than being
forfeited by the participant. This feature is intended
to help the Company retain the services of participants
in the Long-Term Plan and to simplify the accounting
treatment of PVR Stock. The 1995 - 1997 Plan cycle has
been completed and, because the minimum performance
goals established were not achieved, the PVR Stock
issued under the Plan for that cycle has been forfeited
by the participants.
The Company's Supplemental Retirement Income Plan
for Senior Executives (the "SRI Plan") and the Executive
Severance Plan (the "Severance Plan") are designed to
provide competitive executive benefits which are
consistent with current practices. All officers at the
Vice President level and above are participants in the
SRI Plan and benefits vest after five years of service.
All current officers at the Vice President level and
above have been designated as participants in the
Severance Plan. Under the Severance Plan, if a
participant is terminated without good reason within two
years of a change of control, as defined in the
Severance Plan, the participant receives credit for
enhanced age and service under the SRI Plan and the
immediate payment of SRI Plan benefits. In addition,
the participant receives a payment of two times the
executive's annual salary, full payment under the annual
Performance Incentive Plan, an additional contribution
equal to a two-year Company match for participants in
the Savings Plans, the continuation of certain welfare
benefits for a two-year period and certain other
miscellaneous benefits. The Committee views the
Severance Plan as a typical executive benefit that will
help insure stability and continuity of employment of
key management personnel at the time of a proposed or
threatened change of control, if any.
It is not currently anticipated that any officer
could earn annual compensation in excess of one million
dollars under the existing compensation plans.
Stockholder approval of the Performance Incentive Plan
would be required for compensation under this plan to
qualify for deductibility under Section 162(m) of the
Internal Revenue Code. Some additional limitations on
the PVR Stock portion (but not the portion relating to
Options) of the Long-Term Plan might also be required to
qualify that compensation for deductibility. The
Compensation Committee will consider recommending such
steps as may be required to qualify either annual or
long-term incentive compensation for deductibility if
that appears appropriate at some time in the future.
This Report has been submitted by the Compensation
Committee: Thomas M. Gibbons, Chairman; Patricia A.
Goldman; William L. Jews; and Reverend Harold Ridley,
S.J.
INTEREST OF MANAGEMENT AND OTHERS IN TRANSACTIONS WITH
THE COMPANY AND ITS SUBSIDIARIES
--------------------------------------------------------
----------
Effective November 1, 1993, Mr. Africk became a
general business adviser and consultant to the Company
for which he is paid a consultancy fee of $3,000 per
month. His work in this capacity is in addition to his
service as a director, member of the Executive
Committee, Chairman of the Audit Committee and Chairman
of the Succession Planning Committee.
ADDITIONAL INFORMATION WITH RESPECT TO COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN
COMPENSATION DECISIONS
--------------------------------------------------------
--------
None
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
--------------------------------------------------------
------
OWNERS OF MORE THAN FIVE PERCENT. The following
table sets forth the class of shares of the Company's
stock, and the amount and percentage of that class,
owned by all persons known by the Company to be the
beneficial owners of more than 5% of the shares of any
class of the Company's stock on December 31, 1997:
Percent
Name and Address of Class
of Beneficial Owner Title of Class Amount --------
- ---------------------- --------------- -----------
--- --- --
American Trading and Class A Stock 2,462,071 51.11
Production Corporation Class B Stock 863,109 16.31
"group" (a)
Blaustein Building
P.O. Box 238
Baltimore, MD 21203
A.I.C. Limited "group" Class A Stock 448,900 9.32
(b)
7930 Clayton Road
St. Louis, MO 63117
FMR Corp. (c) Class A Stock 510,000 10.59
82 Devonshire Street
Boston, MA 02109
Franklin Resources, Class B Stock 500,000 9.54
Inc. (c)
777 Mariners Island
Boulevard
P.O. Box 7777
San Mateo, CA 94403
Schneider Capital Class B Stock 554,000 10.57
Management, L.P. (c)
480 East Swedesford
Road
Suite 1080
Wayne, PA 19087
Donald Smith & Co., Class B Stock 453,400 8.65
Inc. (c)
East 80 Route 4
Paramus, NJ 07652
-------------------------______________
-----
<FN>
(a)Atapco and various persons who (or whose spouse) hold
stock in Atapco either individually or in a fiduciary or
beneficial capacity are a "group" (the "Atapco Group") as
that term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934 (the "Exchange Act"). ATAPCO, Inc., a
Delaware corporation and a wholly owned subsidiary of
Atapco, is the holder of 2,366,526 shares of Class A Stock
and 591,629 shares of Class B Stock, and other members of
the Atapco Group are the holders of 95,545 shares of Class
A Stock and 271,480 shares of Class B Stock. The Class B
Stock shown in the table includes 61,400 shares of stock
granted to members of the Atapco Group as PVR Stock under
the Long-Term Plan and 183,037 shares that members of the
Atapco Group have a right to acquire pursuant to Options
granted under the Long-Term Plan if the right to acquire the
shares under the Option vested on or before March 1, 1997
("Vested Option"). The percentage calculation is based on
the shares outstanding following cancellation of the PVR
Stock granted in 1995 and the shares that may be acquired
pursuant to Vested Options granted to members of the Atapco
Group.
(b)This information was obtained from a report on Schedule
13D dated January 14, 1983 and Amendment No. 7 dated June
18, 1990, which were filed with the Securities and Exchange
Commission (the "Commission"). A.I.C. Limited, the record
owner of 448,900 shares of Class A Stock, and two
associates, who have no record ownership of Class A Stock,
are a "group" as that term is used in Section 13(d)(3) of
the Exchange Act.
(c)Information concerning the stock holdings of FMR Corp.;
Franklin Resources, Inc.; Schneider Capital Management,
L.P.; and Donald Smith & Co. Inc. was obtained from reports
on Schedule 13G and amendments to those schedules that have
been filed with the Commission. Each of these four entities
reports that it is registered as an investment adviser. The
percentage calculation for each is based on the shares
outstanding as shown on the Company's financial statements
for the fiscal year ended December 31, 1997.
</FN>
DIRECTORS AND OFFICERS. The following table sets forth
the number of shares of each class of the Company's stock
and the percentage of each class owned by each of the
directors and nominees, by certain executive officers and by
all directors and officers as a group on December 31, 1997:
Shares of Securities Beneficially Owned
on December 31, 1997 (a)
-----------------------------------------
Class B Common Stock
Class A
Common
Stock
Name % Amount %
Amoun
t
- ----------------- ------ ---- ------- ---
-
Jack Africk -- 500 (b)
--
George L. Bunting, Jr. -- 1,000 (b)
--
Michael F. Dacey -- --
1,000 (b)
Thomas M. Gibbons 200 (b) -- --
Patricia A. Goldman 100 (b) -- --
William L. Jews 200 (b)
-- --
Rev. Harold Ridley, S.J. -- 100 (b)
--
Edward L. Rosenberg 3,712 (b) (b)
36,599(c)
Henry A. Rosenberg, Jr. 2,458,3 826,510 15.56
(d) 59 51.03
Sanford V. Schmidt 200 (b) -- --
Phillip W. Taff 500 (b) (b)
51,279(c)
Randall M. Trembly 11,774 (b) (b)
48,856(c)
John E. Wheeler, Jr. 3,264 (b) (b)
37,044(c)
All Directors, Nominees 2,483,1 51.55 1,123,964( 20.45
and Officers as a group 79 e)
including those listed
above
(20 individuals)
---------------------------------------
<FN>
_______________________
(a) Each director holds sole voting and investment
power over the shares listed; however, in one or
more cases the stock may be registered in the name
of a trust or retirement fund for the benefit of the
director. In the case of officers of the Company,
the table includes interest in shares held by the
trustee under the Savings Plans, the Class B Stock
granted as PVR Stock under the Long-Term Plan (but
not shares of PVR stock granted in the 1994-1996 and
the 1995-1997 cycles which have been forfeited) and
shares subject to Options. See footnote (c).
(b)Represents less than one percent of the shares
outstanding.
(c)Includes Vested Options as follows: Mr. Edward L.
Rosenberg, 26,709 shares; Mr. Taff, 34,739 shares;
Mr. Trembly, 29,413 shares and Mr. Wheeler, 27,533
shares.
(d) Mr. Rosenberg is a director and stockholder of
Atapco which is a member of the Atapco Group. See
"Security Ownership by Certain Beneficial Owners and
Management." The shares listed are the shares owned
by the Atapco Group other than shares reported
separately in the table as owned by Edward L.
Rosenberg. Henry A. Rosenberg, Jr. owns shares of
preferred stock and is a beneficiary of a trust of
which he is one of the trustees holding common stock
of Atapco. In addition, Mr. Rosenberg is one of the
trustees of other trusts, in which he has no
beneficial interest, which own shares of preferred
and common stock of Atapco. Of the shares listed
above, Mr. Rosenberg holds 21,544 shares of Class A
Stock and 53,764 shares (including PVR Stock) of
Class B Stock individually and in the Company's
Savings Plans. The Class B Stock shown on the table
also includes 132,806 shares that may be acquired by
Mr. Rosenberg and 23,522 shares that may be acquired
by another member of the Atapco Group upon the
exercise of Vested Options granted under the Long-
Term Plan. The percentage calculation is based on
the shares outstanding following cancellation of the
PVR Stock granted in 1995 and the shares that may be
acquired pursuant to Vested Options granted to
members of the Atapco Group other than Edward L.
Rosenberg.
(e)Includes 368,721 shares that may be acquired
pursuant to Vested Options granted under the Long-
Term Plan and the 1995 Management Stock Option
Plan. The percentage calculation is based on the
shares outstanding following cancellation of the PVR
Stock granted in 1995 and the shares that may be
acquired pursuant to Vested Options granted to
Officers.
</FN>
COMPLIANCE WITH SECTION 16(A). Based upon a
review of the Forms 3, 4 and 5 and any
amendments thereto, filed with the Commission
and furnished to the Company as well as letters
provided to the Company by various reporting
persons, the Company is of the opinion that no
reporting person has failed to file on a timely
basis the reports required by Section 16(a) of
the Exchange Act during the Company's most
recent fiscal year.
SUMMARY COMPENSATION TABLE
---------------------------
The following table sets forth the
compensation awarded to, earned by or paid to
the Chief Executive Officer and the other four
most highly compensated executive officers for
all services rendered in all capacities to the
Company and its subsidiaries during the last
three fiscal years. The positions shown on the
table are those held by the officers on December
31, 1997:
LONG-TERM
ANNUAL COMPENSATION AWARDS
COMPENSATION -------------------
------------------
-
Name and Other Securiti All
Principal Annual es Other
Position Yea Salary Bonus Compensat Underlyi Compensati
r ion (a) ng on (c)
Options
(b)
- ----------------- --- ------- ------ --------- -------- ----------
- -- - --
Henry A.Rosenberg, 199 $591,66 $321,3 $ 20,519 50,000 $ 20,799
Jr., Chairman 7 8 90 19,832 30,360 21,770
of the Board, 199 575,004 97,248 20,231 88,800 20,358
President 6 562,506 ---
and Chief 199
Executive 5
Officer
Edward L. 199 $176,67 $ $ 17,239 6,600 $ 43,974
Rosenberg 7 6 86,621 16,717 4,620 10,808
Senior Vice 199 168,840 21,526 17,085 23,340 7,873
President- 6 154,254 ---
Supply 199
and 5
Transportation
Phillip W. Taff 199 $255,84 $ $ 19,256 18,600 $ 13,029
Executive Vice 7 8 64,692 17,398 8,870 28,311
President and 199 241,257 38,439 16,853 30,430 78,910
Chief 6 207,504 ---
Financial 199
Officer 5
Randall M. Trembly 199 $236,68 $163,3 $ 17,250 17,600 $ 12,170
Executive Vice 7 0 91 16,650 6,520 11,594
President 199 208,758 33,826 15,600 27,250 7,528
6 167,508 ---
199
5
John E. Wheeler, 199 $201,67 $ $ 18,913 7,800 $ 9,974
Jr. 7 2 79,868 18,783 5,150 10,023
Senior Vice 199 188,754 23,985 19,007 24,130 8,175
President- 6 165,012 ---
Finance 199
and Treasurer 5
<FN>
-----------------------
(a) These amounts include automobile allowances, gasoline
allowances, and the tax gross-ups applicable to the
gasoline allowances. Perquisites below the required
reporting levels are not included in this table.
(b) The Options are for the purchase of shares of Class B
Stock.
(c) These amounts include imputed income related to excess
life insurance, payments for executive medical insurance
and the Company's matching payments under the Savings
Plans. In 1997, the imputed income for Mr. Henry A.
Rosenberg, Jr. was $8,640; for Mr. Taff, $2,160 and for
Mr. Trembly, $846. The executive medical payments for each
of the officers listed in the table were $1,940. The
Company's matching payments under the Savings Plans were
for Mr. Henry A. Rosenberg, Jr. $10,219; for Mr. Edward
L. Rosenberg, $7,034; for Mr. Taff, $8,929; for Mr.
Trembly, $9,384 and for Mr. Wheeler, $8,034. The amounts
shown for Mr. Edward L. Rosenberg include the payment of
$5,000 for moving expenses and $20,000 as a housing
allowance in 1997 and the reimbursement of moving expenses
of $1,560 in 1996. The amounts shown for Mr. Taff include
the reimbursement of moving expenses of $15,082 in 1996
and of $73,140 in 1995.
</FN>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
Number % of Total
of Options
Securiti Granted to
es Employees Grant Date
Underlyi in Fiscal Exercise Expiratio Present
Name ng YYear Price n Value
Options Date (b)
Granted
(a)
- -------------------- -------- ---------- --------- --------- -----------
- - -- - -- -
Henry A. Rosenberg, 30.0 $ May 1, $
Jr. 50,000 11.69 2007 115,687
Edward L. Rosenberg 6,600 4.0 11.69 May 1, 15,271
2007
Phillip W. Taff 11.1 11.69 43,035
18,600 May 1,
2007
Randall M. Trembly 10.5 11.69 May 1, 40,722
17,600 2007
John E. Wheeler, 7,800 4.7 11.69 May 1, 18,047
Jr. 2007
<FN>
---------------------
(a)All of the grants shown were made on May 1,
1997. For each grant, one-third of the
Options granted are exercisable one year from
the date of the grant; an additional one-
third will be exercisable on the second
anniversary of the grant; and the final one-
third will be exercisable on the third
anniversary of the grant. Tax withholding
obligations may be satisfied upon exercise by
the deduction of Option shares.
(b)For the purposes of this presentation, the
Company valued its Options based upon the
Black-Scholes model, a widely used and
accepted formula for valuing traded stock
options. The actual increase in value will
occur directly with the appreciation of the
per share market price of the Company's Class
B Stock as stockholders' return on investment
increases. There is no gain to the
executives, however, if the per share market
price of the Company's Class B Stock does not
increase or if it declines. The following
assumptions were used to calculate the Black-
Scholes value: a three-year expected option
life, a 27 percent stock price volatility, a
5.67 percent risk free rate of return, an
annual dividend yield of 0 percent, and an
exercise price equal to the stock price on
the date of grant. This resulted in an
Option value of $2.31 per share. The Company
has used the historical annual dividend yield
and stock prices as assumptions for the Black-
Scholes model. These calculations are not
projections; and there is, therefore, no
guarantee that the assumptions will be the
actual annual dividend yield or stock price
volatility rate over the next three years.
</FN>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR,
AND FISCAL YEAR-END OPTION VALUES (a)
Number of Value of
Securities Unexercised
Underlying In-The-Money
Unexercised Options at
Options at FY- FY-End
End ------------
-------------- ---
---
Name Exercisable Unexercisabl Exercisabl Unexercisa
e e ble
- --------------------- -------------- ------------ ---------- ----------
- - --- --- -- ---
Henry A. Rosenberg, 94,320 99,840 $ 473,269 $
Jr. 642,953
22,498 17,462 117,524
Edward L. Rosenberg
28,642 34,658 154,171 110,084
Phillip W. Taff
25,039 31,031 132,485
Randall M. Trembly 228,422
23,202 19,278 121,542
John E. Wheeler, Jr.
208,977
122,158
<FN>
------------------------------
(a) The Options are for the purchase of Class B Stock.
</FN>
LONG -TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR (a)
Estimated Future
Payouts
---------------------
---------------------
-
Maximu
mm
Numbe Performa Thresh Targe (Share
Name r nce old t s) and
--------------- of Period (Share (Shar Cash
--------------- Share -------- s) es) (b)
-- s -------- ------ ----- ------
----- -- ------ ----- ------
----- - -
--
Henry A. 29,90 Jan. 1, 14,950 29,90 29,900
Rosenberg, Jr. 0 1997 - 0
Dec.
31, 1999 2,000 4,000
Edward L.
Rosenberg 4,000 Jan. 1, 4,000
1997 -
Dec.
31, 1999
Phillip W. Taff 11,10 Jan. 1, 5,550 11,10
0 1997 - 0 11,100
Dec.
31, 1999
Randall M. 10,40 Jan. 1, 5,200 10,40
Trembly 0 1997 - 0 10,400
Dec.
31, 1999
John E. Wheeler, Jan. 1, 2,300
Jr. 4,600 1997 - 4,600 4,600
Dec.
31, 1999
<FN>
------------------------------
(a)The shares listed are Class B Stock which
was issued as PVR Stock and was awarded to
participants under the Long-Term Plan. The
performance goals applicable to these awards
are based upon EBITDAAL. See "Report of
Executive Compensation and Bonus Committee."
Net Income on a FIFO Basis must meet the
minimum threshold established for the cycle for
any of this PVR Stock to be earned during the
Performance Period.
(b) The cash earned at the maximum level is
equal to 50% of the value of the stock earned
on the Performance Period date that the
restrictions lapse.
</FN>
PENSION PLAN TABLE (a)
Years
of
Service
Remuneratio 15 20 25 30 35 40 45
n
$150,000 $54,000 $ $ $ $ $ $
72,000 94,500 117,000 139,500 162,000 84,500
200,000 72,000 96,000 126,000 156,000 186,000 216,000 246,000
250,000 90,000 120,000 157,500 195,000 232,500 270,000 307,500
300,000 108,000 144,000 189,000 234,000 279,000 324,000 369,000
400,000 144,000 192,000 252,000 312,000 372,000 432,000 492,000
500,000 180,000 240,000 315,000 390,000 465,000 540,000 615,000
600,000 216,000 288,000 378,000 468,000 558,000 648,000 738,000
<FN>
---------------------
(a) The table above reflects the retirement
benefits (life annuity with 60 months certain)
which would be payable under the Company's
Retirement Plan at various base salary levels
and years of service projected to normal
retirement. The table assumes that the
participant has earned the annual remuneration
shown in the table in every year of credited
service. The Retirement Plan is a career
average plan with benefits based on taxable
compensation. Limitations imposed by the
Internal Revenue Code or any other statute are
not reflected in the table since the Company's
Supplemental Retirement Income Plan for Senior
Executives is designed to provide or restore to
participants the benefits that would have been
received under the Retirement Plan if
calculated without regard to such limitations.
All officers at the Vice President level and
above participate in the Supplemental
Retirement Income Plan. Henry A. Rosenberg,
Jr.'s normal retirement date was December 1,
1994. His credited service at that time was 42
years and 4 months. The estimated credited
service projected to normal retirement for the
other executives listed in the Summary
Compensation Table are: Edward L. Rosenberg, 39
years and 10 months; Phillip W. Taff, 12 years
and 7 months; Randall M. Trembly, 27 years and
10 months and John E. Wheeler, Jr., 41 years
and 8 months.
</FN>
PERFORMANCE GRAPH
------------------
1992 1993 1994 1995 1996 1997
Crown
Common
Stock $100 $114 $96 $114 $95 $164
Amex
Market
Value 100 120 109 137 146 177
Index
Value Line
Int. Pet.
Index 100 122 131 169 220 284
<FN>
The graph above plots the cumulative shareholder's
return on a $100 investment in Crown Common Stock (Class
A and Class B Stock combined on a weighted market value
basis) over a five-year period assuming that all
dividends are reinvested. The American Stock Exchange
Market Value Index and the Value Line Integrated
Petroleum Index are also shown on the graph for
comparative purposes. It should be noted that the Value
Line Index includes a number of major oil companies that
are significantly larger than Crown. Many of these
companies are also engaged in the upstream production of
both crude oil and natural gas and are in other lines of
business in addition to their refining and marketing
activities.
</FN>
SHAREHOLDER PROPOSALS
FIRST SHAREHOLDER PROPOSAL.
----------------------------
Mr. John R. McDowell of 8231 Coastway Lane,
Houston, Texas 77075 has advised the Company that
he holds approximately 100 shares of Class A Stock
as a participant in the Company's Employees
Savings Plan and that he intends to present the
following shareholder proposal for consideration
at the Annual Meeting:
SHAREHOLDER PROPOSAL. [SUBMITTTED BY MR. MCDOWELL.]
----------------------------------------------------
BE IT RESOLVED: That the shareholders of
Crown Central Petroleum Corporation ("Crown" or
the "Company") request that Crown's Board of
Directors commission an independent study to
evaluate the criteria, methods and procedures
whereby Crown determines the compensation of its
top five executive officers. The study would
explore ways to more effectively link Crown's
executive compensation system to Company
performance, and would make recommendations as to
such criteria, methods and procedures that the
Executive Compensation and Bonus Committee of the
Board of Directors (the "Committee") should adopt
in bringing Crown's compensation policies more in
line with overall Company performance, and
specifically, with the performance of the stock.
A written report of the study and the resulting
recommendations would be included in the next
annual report, proxy statement and/or other
appropriate filing, with a copy made available to
shareholders on request.
SUPPORTING STATEMENT. [SUBMITTED BY MR.
MCDOWELL.]
-------------------------------------------------
--
Crown's shareholders should be concerned
about the effect of the Company's executive
compensation system on their investment. The
factors currently considered by the Committee do
not adequately measure the performance of the
executives and do not effectively tie executive
compensation to Company performance. To the
contrary, while Company performance has declined
throughout the 1990s, Crown CEO Henry Rosenberg,
Jr. and other Crown executives have been rewarded
with increased total compensation packages,
including higher salaries, bonuses and/or stock
options.
Throughout this decade, Crown stock has
consistently ranked as one of the poorest
performers among oil refining and marketing
companies in the United States, dramatically
declining in value even as stock of other oil
refining companies to which analysts routinely
compare Crown has increased significantly. From
the beginning of 1990 to the end of 1996, Crown's
Class A Common Stock plummeted from over $31 per
share to below $13 per share, and Crown's Class B
Common Stock similarly fell from over $29 per
share to $12 per share. Moreover, during the
past five years, Crown's operations annually have
posted net losses.
Market analysts have commented on this dismal
performance. Jeff Rosenberger, a fund manager
for Clover Capital Management, stated, "These
guys can't execute--they're the Mets" (BALTIMORE
SUN, Apr. 1, 1995). Marc Perkins of Perkins
Capital Advisors blamed Crown's management,
observing, "They just don't understand the oil
business...people around them make money; they
don't make any money" (BALTIMORE DAILY RECORD,
February 1, 1996).
Crown's current executive compensation
program has four guiding principles which , but
only one of these even purports to link executive
compensation to "shareholder value".
Nevertheless, these guiding principles are vague
and do Even this one guiding principle is vague
and does not provide clear direction to the
Committee as to how ithey should be implemented.
As a result, executives are not held accountable
to shareholders for their performance.
Accordingly, independent, third-party
scrutiny of Crown's executive compensation
system, followed by a written report that would
be made available to the shareholders, is both
overdue and critical to enforcing management
accountability. Only once measures are
implemented that better link executive
compensation to Company performance will Crown's
current practice of rewarding management failures
come to an end.
BOARD OF DIRECTORS STATEMENT IN OPPOSITION.
-------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE MCDOWELL SHAREHOLDER PROPOSAL.
-------------------------------------------------
--------
As noted in the Report of Executive
Compensation and Bonus Committee in this Proxy
Statement, the Company annually "engages an
internationally known management consulting firm
to assist it In performing a review of its
executive compensation practices....The results
of this study are carefully considered by the
Compensation
Committee in connection with its approval of the
compensation to be paid to the Company's
executive officers." The Compensation Committee
is an independent committee of outside directors,
advised by an independent management consultant.
As the Report of the Compensation Committee
clearly states, cCompany performance and
increased shareholder value are key factors
considered by the Compensation Committee in its
administration of the Company's executive
compensation program;. T and the Company's
performance as measured by EBITDAAL is
determative of the awards earned by senior
executives under both the Company's annual
incentive plan and its long-term incentive plan.
The study requested in the McDowell shareholder
proposal would, therefore, simply duplicate work
currently done for and by the Compensation
Committee. Furthermore, information concerning
the compensation of the five most highly
compensated executive officers is fully disclosed
in this Proxy Statement in accordance with the
Commission's proxy rules. The Board of Directors
believes that furtherthe public disclosure of
confidential, competitive and proprietary
information developed by the management
consulting firm employed to assist the
Compensation Committee would be inappropriate.
The Board of Directors recommends a vote AGAINST
the McDowell shareholder proposal. See "OCAW's
Corporate Campaign."
SECOND SHAREHOLDER PROPOSAL.
----------------------------
Mr. Ernest Gilchrest of 419 Yorkshire,
Pasadena, Texas 77503 has advised the Company
that he is the beneficial owner of approximately
777 shares of Class A Stock and approximately 13
shares of cClass B Stock as a participant in the
Company's Employees Savings Plan and that he
intends to present the following shareholder
proposal for consideration at the Annual Meeting:
SHAREHOLDER PROPOSAL. [SUBMITTED BY MR.
GILCHREST.]
---------------------------------------------
-------
BE IT RESOLVED: That the shareholders of
Crown Central Petroleum Corporation ("Crown" or
the "Company") request that Crown's Board of
Directors consider commissioning a study of the
relationships between the Company and members of
the Rosenberg family, to be made by independent
management consultants. It is recommended that
the study, among other things:
(a)(a) Investigate, determine and evaluate
the work performed for the Company by Edward
L. Rosenberg, Senior Vice President-Supply and
Transportation and Frank B. Rosenberg, Senior
Vice President-Marketing (together, the
"Rosenberg brothers");
(b) Investigate and determine the total
remuneration, including salaries, fees,
commissions, bonuses and benefits, paid or made
available by the Company to the Rosenberg
brothers during the last five fiscal years.
(c) Evaluate whether the total remuneration
paid to each of the Rosenberg brothers is
appropriate for the work performed;
(d) Review the standards or criteria set by the
Succession Committee of the Crown Board of
Directors in choosing a new CEO and Chairman of
the Board and/or other executive officers,
particularly as such standards of criteria relate
to, or involve consideration of, the Rosenberg
brothers; and
(e) Prepare a written report of the study to
the Board of Directors, and make such report
available to individual shareholders on request.
SUPPORTING STATEMENT. [SUBMITTED BY MR.
GILCHREST.]
---------------------------------------------
-------
Crown is a publicly-held corporation
controlled by family interests. CEO Henry
Rosenberg, Jr. beneficially owns a majority of
Crown's Class A Common Stock, and his two sons,
the Rosenberg brothers, occupy key executive
positions within the Company. Moreover, Henry
Rosenberg, Jr. is a member of Crown's Succession
Committee. Clearly, potential conflicts may
arise between Henry Rosenberg, Jr.'s family
interests and his obligations to the Crown
shareholders.
First, it is possible that corporations
controlled by one family may pay excessive
remuneration to members of the controlling
family. Especially during times of corporate
financial difficulties and lackluster
performance, it is imperative that the
performance and compensation of family members
be reviewed by an independent party.
Second, it is worth noting that the
Rosenberg brothers were both promoted to Senior
Vice President on the same day, which gives the
rise to speculation that the Rosenberg brothers
are being prepared or "groomed" to someday take
over their father's leadership of Crown. At the
same time, the deficient performance of the
Company under the leadership of Henry Rosenberg,
Jr. and his sons indicates that their promotions
may have been made at the expense of creating
shareholder value.
Given this situation, it is crucial that the
Succession Committee formulate clear and
rational standards of criteria in carrying out
its functions. The Succession Committee did not
meet in 1996, and shareholders have not
otherwise been informed of what, if anything,
the Succession Committee has done and what, if
any, standards or criteria they have set. This
information is of vital importance to
shareholders, as well as to the long-term
performance of the Company.
BOARD OF DIRECTORS STATEMENT IN OPPOSITION.
-------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST THE GILCHREST SHAREHOLDER PROPOSAL.
The Compensation Committee, an independent
committee of outside directors, periodically
reviews and evaluates the work performed and the
level of compensation paid to all executive
officers, including the work and compensation of
Edward L. Rosenberg and Frank B. Rosenberg.
Information concerning competitive practices and
market rates for executive compensation provided
to the Compensation Committee by the independent
management consulting firm includes data
relevant to the positions of Senior Vice
President-Marketing and Senior Vice President-
Supply and Transportation and that information
is carefully considered by the Compensation
Committee in formulating its recommendations to
the Board of Directors. The Proxy Statement
contains all of the required disclosures with
respect to any potential conflict of interest or
relationship between officers and directors of
the Company. The Board of Directors does not
believe any further study or report is
appropriate or justified. The Board of Directors
recommends a vote AGAINST the Gilchrest
shareholder proposal.
OCAW'S CORPORATE CAMPAIGN.
--------------------------
For over two years, Tthe Company has for
over two years been involved in a protracted
labor dispute with the Oil Chemical and Atomic
Workers International Union ("OCAW") bargaining
unit at the Company's Pasadena, Texas refinery.
In February 1996, following incidents of
sabotage at the refinery, Crown locked out
approximately 250 OCAW employees. Since that
time, OCAW has waged an orchestrated corporate
campaign against the Company. That campaign has
at times become very personal in its attacks on
and attempts to denigrate the Rosenberg family.
At At the time of the lockout, Mr.
McDowell was an OCAW member in the Pasadena
refinery bargaining unit, and he has been
actively involved in various aspects of the
corporate campaign against Crown since the
lockout. At the time of his retirement from
Crown, Mr. Gilchrest was also a member of OCAW.
Neither Mr. McDowell nor Mr. Gilchrest has been
named as an individual defendant in Crown's
civil action in Federal court in Texas to
recover, from fifteen OCAW members and the local
OCAW bargaining unit, damages arising from the
alleged sabotage at the Pasadena refinery.
The Board of Directors believes that it is
important for stockholders to have this
additional information available when the
stockholder considerings the shareholder
proposals that will be voted upon at the Annual
Meeting.
OTHER MATTERS
-------------
Management does not know of any business
other than the election of directors and the
vote on the two shareholder proposals to come
before the meeting. However, if any other
business should properly come before the
meeting, the proxies will be voted with respect
thereto in accordance with the direction of the
stockholders.
Relationship With Independent Public Accountants
------------------------------------------------
The principal independent public accountant
for the Company and its subsidiaries since the
organization of the Company has been Ernst &
Young LLP or its predecessors, and such firm has
been selected again for the current fiscal year.
A representative of Ernst & Young LLP will be
present at the Annual Meeting. Their
representative does not intend to make any
formal statement but will respond to any
questions.
INFORMATION INCORPORATED BY REFERENCE
-------------------------------------
The Company's Financial Statements and
Supplementary Data (Item 8), Management's
Discussion and Analysis of Financial Condition
and Results of Operations (Item 7) and
supplementary financial information with respect
to Quarterly Results of Operations are set forth
in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997 and are
hereby incorporated by reference.
STOCKHOLDERS' PROPOSALS FOR THE 1999 ANNUAL
MEETING
------------------------------------------------
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Proposals of stockholders of the Company
intended to be presented at the Annual Meeting
of stockholders of the Company in 1999 must be
received by the Secretary of the Company, One
North Charles Street, P.O. Box 1168, Baltimore,
Maryland 21203 on or before November 16 30,,
1998 and must otherwise comply with the rules of
the Commission and the Bylaws of the Company to
be eligible for inclusion in the Proxy Statement
for the Annual Meeting in 1999.
By order of the Board of
Directors,
/s/- -Dolores B. Rawlings[
Signature]
-----------------------------
-----
DOLORES B. RAWLINGSDolores B.
Rawlings
Vice President - Secretary
March 16 26,, 1998
ADDENDUM
(Crown Logo, registered trademark)
PROXY
CROWN CENTRAL PETROLEUM CORPORATION
P. O. BOX 1168
BALTIMORE, MARYLAND 21203
PROXY FOR CLASS A COMMON STOCK AND CLASS B COMMON STOCK
Solicited on behalf of the Board of Directors
for the Annual Meeting of Stockholders - April 23, 1998
Reserving the right of revocation, the undersigned
hereby appoints as his or her proxy or proxies, with
full power of substitution, Thomas L. Owsley,
Dolores B. Rawlings, and Henry A. Rosenberg, Jr., or
any one or more of them, to vote all Class A Common
Stock and Class B Common Stock of the undersigned at
the Annual Meeting of Stockholders of Crown Central
Petroleum Corporation, a Maryland corporation, to be
held at Turf Valley Conference Center, 2700 Turf
Valley Road, Ellicott City, Maryland on Thursday,
April 23, 1998 or at any adjournment of said
meeting.
This proxy when properly executed will be voted in
the manner directed by the undersigned stockholder.
If no direction is made, this proxy will be voted
for the election of the nominees named, and against
proposals 2 and 3, and at the proxy holder's
discretion on any other matter or matters which may
properly come before the Meeting.
[SEE REVERSE] [ SEE
REVERSE ]
SIDE CONTINUED AND TO BE SIGNED ON REVERSE
SIDE
(Crown Logo, registered trademark)
(letterhead)
Crown Central Petroleum Corporation
Refiners / marketers of refined petroleum products
and petrchemicals
One North Charles Street - P.O. Box 1168 -
Baltimore, Maryland 21203 - (410) 539-7400
This proxy card is provided for completion both by
holders of Class A Stock and by holders of Class B
Stock.
If a stockholder owns shares of Class A Stock, the
stockholder should vote on the election of the
directors to be elected by the holders of Class A
Stock.
If a stockholder owns shares of Class B Stock, the
stockholder should vote on the election of the
directors to be elected by the holders of Class B
Stock.
If a stockholder owns shares of both Class A Stock
and Class B Stock, the stockholder should vote on
the election of all directors.
DETACH HERE
Please mark
votes as in
Xthis example.
---
The Board of Directors recommends a vote FOR the
nominees listed.
1.Election of seven (7) Directors. Class A Common
Stock Nominees: Jack Africk, George L. Bunting,
Jr., Michael F. Dacey, Patricia A. Goldman,
William L. Jews, Henry A. Rosenberg, Jr. and
Sanford V. Schmidt
FOR WITHHELD
ALL FROM BOTH
NOMINEES NOMINEES
------- --------
------------------------------------------------------------
For, except vote withheld from the nominee(s) listed above.
Election of (2) Directors
Class B Common Stock Nominees:
Thomas M. Gibbons and Rev. Harold Ridley, S.J.
FOR WITHHELD
ALL FROM BOTH
NOMINEES NOMINEES
------- ------
---------------------------------------------------------
For, except vote withheld from the nominee(s) listed above.
The Board of Directors recommends a vote AGAINST
proposals 2 and 3 and to GRANT discretion under
Item 4.
2. Shareholder proposal concerning executive
compensation.
FOR AGAINST ABSTAIN
--- --- ---
3. Shareholder Proposal concerning relationships between
Company and certain officers.
FOR AGAINST ABSTAIN
--- --- ---
4. In their discretion on any other matter or
matterswhich may properly come before said meeting or any
adjournment thereof.
GRANTED WITHHELD
--- ---
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
----
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY IN
THE ENCLOSED ENVELOPE.This proxy should be
signed by the stockholder in person. If a joint
account, all joint owners should sign.
Signature: Date:
-------------------------- -------------
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Signature: Date:
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