SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities and Exchange Act of 1934
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CHECKPOINT SYSTEMS, INC.
- - -----------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
CHECKPOINT SYSTEMS, INC.
- - -----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(l), or 14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
[ ] Fee computed on table below per exchange Act Rules 14a6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- - -----------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - -----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 1-11:
- - -----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - -----------------------------------------------------------------------------
[ ] 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 For Schedule and the date of its filing.
(1) Amount Previously Paid: ...........................................
(2) Form Schedule or Registration Statement No: .......................
(3) Filing Party:......................................................
(4) Date Filed: .......................................................
CHECKPOINT SYSTEMS, INC.
550 Grove Road
P.O. Box 188
Thorofare, NJ 08086
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on Friday, April 29, 1994
------------
The Annual Meeting of Shareholders (the "Meeting") of Checkpoint Systems,
Inc. (the "Company") will be held on Friday, April 29, 1994, at 10:00 a.m.,
local time, at the Company's corporate headquarters located at 550 Grove Road,
Mid-Atlantic Corporate Center, Thorofare, New Jersey, for the following
purposes:
1. To elect one Class III director to hold office until the 1997 Annual
Meeting of Shareholders and until his successor is duly elected and
qualified; and
2. To transact such other business as may properly come before the Meeting.
You are cordially invited to attend the Meeting in person. The Board of
Directors has fixed the close of business on March 9, 1994 as the record date
for the Meeting. Only Shareholders of record at that date are entitled to
notice of and to vote at the Meeting and any adjournment or postponement
thereof.
The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the attached proxy statement for further information with
respect to the business to be transacted at the Meeting. The Board of
Directors urges you to sign, date and return the enclosed proxy promptly.
Should you decide to attend the Meeting in person, you may revoke your proxy at
that time.
NEIL D. AUSTIN
Secretary
March 29, 1994
CHECKPOINT SYSTEMS, INC.
550 Grove Road
P.O. Box 188
Thorofare, NJ 08086
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PROXY STATEMENT
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GENERAL
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Checkpoint Systems, Inc. (the "Company")
for use at the Company's Annual Meeting of Shareholders (the "Meeting") which
will be held on the date, at the time and place and for the purposes set forth
in the foregoing notice, and any adjournment or postponement thereof. This
proxystatement, the foregoing notice and the enclosed proxy are first being
sent to shareholders of the Company (the "Shareholders") on or about
March 29, 1994.
The Board of Directors does not presently intend to bring any matter before
the Meeting except as specifically indicated in the notice and does not know
of anyone else who intends to do so. If any other matters properly come
before the Meeting, however, the persons named in the enclosed proxy, or their
duly constituted substitutes acting at the Meeting, will be authorized to vote
or otherwise act thereon in accordance with their judgment on such matters.
If the enclosed proxy is properly executed and returned prior to voting at the
Meeting, the shares represented thereby will be voted in accordance with the
instructions marked thereon. In the absence of instructions, the shares will
be voted "FOR" the nominee of the Board of Directors in the election of the
Class III director.
Any proxy may be revoked at any time prior to its exercise by notifying the
Secretary in writing, by delivering a duly executed proxy bearing a later date,
or by attending the Meeting and voting in person.
VOTING SECURITIES AND SECURITY OWNERSHIP
Voting Securities
At the close of business on March 9, 1994, the record date fixed for the
determination of Shareholders entitled to notice of and to vote at the Meeting,
there were outstanding 10,183,948 shares of the Company's Common Stock, $.10
par value per share (the "Common Stock") outstanding, each entitled to one
vote. There is no other class of voting securities outstanding. The presence
at the Meeting, in person or by proxy, of at least a majority of the votes that
all Shareholders are entitled to cast shall constitute a quorum for purposes of
conducting business. If the Meeting is adjourned, any unfinished business of
the Meeting may be carried on at any continuation of the original meeting,
notwithstanding that a quorum is not present at the continued meeting. In the
election of the Class III director, Shareholders entitled to vote do not have
cumulative voting rights.
Security Ownership of Principal Shareholders
The following table sets forth certain information respecting the holdings of
the parties who were known to the Company to be the beneficial owners of more
than 5% of the outstanding Common Stock of the Company as of March 7, 1994.
The parties named below have sole voting power and sole investment power with
respect to the shares indicated as beneficially owned, except where otherwise
indicated.
Amount and Nature of Percent of
Name and Address of Beneficial Owner Beneficial Ownership Common Stock(1)
- - ------------------------------------ -------------------- ---------------
Gintel Equity Management, Inc. 605,000(2) 5.94
6 Greenwich Office Park
Greenwich, CT 06831
Albert E. Wolf 751,744(3) 7.38
550 Grove Road
P.O. Box 188
Thorofare, NJ 08086
- - ------------
(1) Unissued shares subject to options exercisable within 60 days of March 7,
1994 are deemed to be outstanding for the purpose of calculating the
percent of Common Stock beneficially owned.
(2) Based on information supplied in a Schedule 13G dated December 31, 1993 and
filed with the Securities and Exchange Commission on February 14, 1994 by
Gintel Equity Management, Inc., a registered investment advisory firm, as
being owned in its various managed accounts at December 31, 1993.
(3) Includes 3,460 shares held on behalf of Mr. Wolf as of March 7, 1994
by the custodian of the Company's Employees' Stock Purchase Plan, as to
which Mr. Wolf has sole voting power; currently exercisable options
to purchase 225,000 shares of Common Stock; 58,153 shares held in trust for
Mr. Wolf in accordance with the Will of his late father, as to which Mr. Wolf
is both a Trustee and income beneficiary and has sole voting power. Amount
shown excludes 40,900 shares owned by Mr. Wolf's wife and 49,844 shares held
in trust for Mr. Wolf's children, as to which Mr. Wolf's children are
principal beneficiaries and Mr. Wolf is the income beneficiary, both as to
which Mr. Wolf disclaims beneficial ownership.
Security Ownership of Management
The following table sets forth certain information respecting the Common
Stock of the Company beneficially owned by each director and nominee for
director, the Chief Executive Officer and the four other most highly
compensated executive officers of the Company other than the Chief Executive
Officer, and by the group consisting of such persons and the other executive
officers as of March 7, 1994. Each of the persons named below has sole
voting power and sole investment power with respect to the shares indicated as
beneficially owned, unless otherwise stated.
Amount and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership Common Stock(1)
- - --------------------------- -------------------- ---------------
Dr. Roger D. Blackwell 42,100(2) .41
Richard J. Censits 25,900(3) .25
David W. Clark, Jr. 65,000(4) .64
Jermain B. Porter 39,920(5) .39
Albert Soffa 46,500(6) .46
Peter Stern 30,154(7) .30
Albert E. Wolf 751,744(8) 7.38
Kevin P. Dowd 151,989(9) 1.49
Steven G. Selfridge 101,888(10) 1.00
Neil D. Austin 25,715(11) .25
Luis A. Aguilera 80,000(12) .79
All Directors and Officers as a Group 1,640,302(13) 16.11
(16 persons)
- - ------------
(1) See footnote 1 to previous table.
(2) Includes 42,000 shares subject to currently exercisable options to
purchase the Company's Common Stock. All options reported herein and in the
footnotes below are currently exercisable to purchase the company's Common
Stock (the "Options").
(3) Consists of 25,900 Options.
(4) Consists of 50,000 Options.
(5) Includes 32,000 Options, and excludes 1,100 shares owned by Mr. Porter's
wife, as to which Mr. Porter disclaims beneficial ownership.
(6) Consists of 44,500 Options.
(7) Consists of 18,500 Options.
(8) See footnote 3 to the preceding table.
(9) Includes 150,000 Options and 1,989 shares held by the custodian of the
Company's Employees' Stock Purchase Plan ("ESPP").
(10) Includes 101,000 Options and 888 shares held by the custodian of the ESPP.
(11) Includes 25,000 Options and 715 shares held by the custodian of the ESPP.
(12) Consists of 80,000 Options.
(13) See footnotes 1-12 above. Total shown includes 15,231 shares held by the
custodian of the ESPP and excludes 700 shares held by an officer's wife as to
which shares the officer disclaims beneficial ownership.
ELECTION OF DIRECTORS
Identification of the Directors to be Elected
At the Meeting, the Shareholders will elect one Class III director to hold
office until the 1997 Annual Meeting of Shareholders and until his respective
successor has been duly elected and qualified. The Company's Board of
Directors is divided into three classes serving staggered three-year terms, the
term of one class of directors expiring in each year. The term of the
Company's two Class III directors, Albert E. Wolf and Peter Stern will
expire at the Meeting. Pursuant to the Company's Amended and Restated By-Laws,
a Director reaching the age of 70 is no longer qualified to stand for
re-election; therefore, Mr. Stern will not stand for re-election. A successor
has not yet been nominated.
The Board of Directors has nominated Albert E. Wolf for election at the
Meeting as the Company's Class III director and Mr. Wolf has indicated his
willingness to continue to serve as a director. If a nominee, at the time of
his election, is unable or unwilling to serve, and as a result a substitute
nominee is designated, the persons named in the enclosed proxy or their
substitutes will have discretionary authority to vote or to refrain from
voting for the substitute nominee in accordance with their judgment. Unless
contrary instructions are given, the shares represented by the enclosed proxy
will be voted "FOR" the election of Mr. Wolf.
The nominee for election as the Class III director and the directors whose
terms of office will continue after the Meeting, together with certain
information about them, are as follows:
Director Term
Name Age Since Expires Positions with the Company
- - ---- --- -------- ------- --------------------------
Roger D. Blackwell 54 1990 1995 Director
Richard J. Censits 56 1985 1995 Director(1)(3)
David W. Clark, Jr. 56 1982 1996 Director(1)(3)
Jermain B. Porter 68 1981 1995 Director(2)
Albert Soffa 73 1984 1996 Director(1)(2)(3)
Albert E. Wolf 64 1969 1994 Chairman of the Board,
Chief Executive Officer,
and Director
- - ------------
(1) Member of the Company's Audit Committee.
(2) Member of the Company's Compensation and Stock Option Committee.
(3) Member of the Company's Corporate Development Committee.
Principal Occupations and Directorships Held by Each Nominee For Director and
the Directors Whose Terms of Office Continue After the Meeting
For more than the past five years, Dr. Blackwell has been a professor of
marketing at the Ohio State University, the President of Roger Blackwell
Associates, Inc., a consulting firm, and a member of the Board of Directors of
Max & Erma's, Inc. In February, 1992, Dr. Blackwell became a member of the
Board of Directors of Worthington Foods, Inc., and in September, 1992, a member
of the Board of Directors of Paul Harris Stores, Inc.
Mr. Censits has been President and Chief Executive Officer and a member of
the Board of Directors of MedQuist, Inc. (formerly Summit Health Group, Inc.)
a company that provides business and information services to hospitals and
other health care providers nationwide, since 1987. Mr. Censits is a director
of Penny Plate, Inc., EnergyNorth, Inc., DiMark, Inc., and MonTech
International, Inc., a member of the Board of Trustees of the United Way of
Camden County, New Jersey, and a Trustee of the University of Pennsylvania.
Mr. Clark has been a managing director of Pryor & Clark, a company engaged in
investments, since June, 1992. He served as President and Chief Operating
Officer of Corcap, Inc. ("Corcap"), a company engaged in the manufacture of
elastomer materials and components, from July, 1988 through June, 1992. From
October, 1985 to July, 1988, Mr. Clark was the President and Chief Operating
Officer of Lydall, Inc. ("Lydall"), a diversified manufacturing concern which
manufactures industrial materials and components. Mr. Clark is a director of
Acme United Corp., Corcap, Northeast Federal Corp., Conning & Company, and
CompuDyne Corporation and Securities Software and Consulting, Inc.
Mr. Porter has been a private consultant to business since January, 1982.
Mr. Porter previously was a principal and consultant with Towers, Perrin,
Forster & Crosby, international consultants to business in the management of
human resources.
Until October, 1992 and for more than five years prior to such date, Mr.
Soffa served as director of Kulicke & Soffa Industries, Inc., a company engaged
in the manufacture and sale of equipment for the semiconductor industry. Prior
to March, 1987, he served as Vice Chairman and was a founder of that Company.
Mr. Soffa is a director of Commercial Bancorporation of Colorado.
Mr. Wolf has been Chairman of the Board since April, 1986, Chief Executive
Officer of the Company since April, 1972, President of the Company from July,
1977 to April, 1986 and from July, 1991 through August, 1993, and a director of
the Company since July, 1969. Mr. Wolf is a director of Lydall.
Meetings and Committees of the Board of Directors
The Board of Directors held 4 regular and 2 special meetings during
the past fiscal year.
The Board of Directors has an Audit Committee, a Compensation and Stock
Option Committee and a Corporate Development Committee. Messrs. Censits,
Clark and Soffa constitute the members of the Audit Committee; Messrs. Porter,
Soffa and Stern constitute the members of the Compensation and Stock Option
Committee; and Messrs. Censits, Clark and Soffa constitute the members of the
Corporate Development Committee. The Audit Committee met once during the
last fiscal year with the Company's independent public accountants to
discuss the scope and results of the annual audit and questions of
accounting and tax policy. The Compensation and Stock Option Committee acted
at various times during the last fiscal year to approve salaries and
benefits and compensation arrangements for the Company's officers
and to grant stock options. The Corporate Development Committee, met once
during the year to consider strategic financing alternatives, acquisitions
and long-range goals of the Company. During the fiscal year, all directors
attended all of the regularly scheduled meetings of the Board of Directors
and of the committees on which they served.
Compensation Committee Interlocks and Insider Participation
The Company's Compensation and Stock Option Committee (the "Committee")
consists of Messrs. Porter, Soffa and Stern. None of the members of the
Committee is, or, during the last fiscal year was, an officer or employee
of the Company or any of its subsidiaries; however, Mr. Stern served as
President of the Company from 1969 to 1977 and as Chairman of the Company
from 1977 to 1985.
EXECUTIVE COMPENSATION
Cash, Bonus and Deferred Compensation
The following table sets forth the total annual and long-term compensation
paid by the Company for services in all capacities rendered during the fiscal
years ended December 26, 1993, December 27, 1992 and December 29, 1991 to the
Company's Chief Executive Officer and its four most highly compensated
executive officers other than the Chief Executive Officer (the "Named
Officers"):
Summary Compensation Table
Annual
Compensation Awards
-------------------- -------
Stock
Salary Bonus Options
Name and Principal Position Year ($)(1) ($)(2) ($)(3)
- - -------------------------- ---- ------- ------- -------
Albert E. Wolf 1993 328,136 0 75,000
Chairman of the Board, Chief 1992 284,150 0 0
Executive Officer and Director 1991 258,139 0 0
Kevin P. Dowd 1993 247,102 0 75,000
President and 1992 192,572 0 0
Chief Operating Officer 1991 172,219 0 0
Luis A. Aguilera 1993 169,941 0 20,000
Senior Vice President - 1992 124,934 0 25,000
Manufacturing 1991 115,803 0 0
Steven G. Selfridge 1993 168,102 0 45,000
Senior Vice President - 1992 140,272 0 37,000
Operations, Chief Financial 1991 104,877 0 15,000
Officer and Treasurer
Neil D. Austin 1993 163,708 0 15,000
Vice President - General 1992 139,449 0 35,000
Counsel and Secretary 1991 121,353 0 10,000
- - ------------
(1) Amounts shown in the "Salary" column include payments to the Named Officers
under the Company's Executive Supplemental Plan, a plan adopted in 1991 for
those of its highly compensated officers who are excluded by Internal Revenue
Service regulations from participating in the Company's 401(k) savings plans.
Amounts shown for Mr. Aguilera reflect the Company's matching contributions
under one of the Company's 401(k) Savings Plans as follows: 1993 - $4,941;
1992 - $3,434; 1991 - $2,985. Payments under the Executive Supplemental Plan
were made to or for the benefit of the Named Officers as follows: Mr. Wolf:
1993 - $24,021; 1992 - $21,215; 1991 - $24,629; Mr. Dowd: 1993 - $18,272;
1992 - $14,522; 1991 - $17,707; Mr. Selfridge: 1993 - $13,273; 1992 - $11,227;
1991 - $9,730; Mr. Austin: 1993 - $12,010; 1992 - $10,450; 1991 - $11,009.
Amounts shown also reflect the Company's matching contribution under the
Checkpoint Systems, Inc. Employee Stock Purchase Plan for the Named Officers
as follows: Mr. Wolf: $884 (1993-1991); Mr. Dowd: $884 (1993-1991);
Mr. Selfridge: $884 (1993-1991); Mr. Austin: $828 (1993) $676 (1992-1991).
(2) No bonus amounts were paid pursuant to the Company's Management Incentive
Plan, described under the caption "Compensation Committee Report on Executive
Compensation."
(3) Options reflected in the "Awards/Stock Options" column reflect grants of
options to purchase the Company's Common Stock under the Company's Stock Option
Plan (1992) and its predecessor plans, described under the caption
"Compensation Committee Report on Executive Compensation."
The Company does not grant SARs or restricted stock to officers.
The aggregate value of personal benefits received by each executive officer
named in the foregoing table during the last fiscal year did not exceed the
lesser of $50,000 or 10% of the annual salary and bonus reported for the Named
Officer in the "Salary" and "Bonus" columns of the Summary Compensation Table
above and thus is not required to be disclosed.
Set forth below is further information with respect to grants of stock
options made during the fiscal year ended December 26, 1993 under the
Checkpoint Systems, Inc. Stock Option Plan (1992) to the Named Officers:
Option Grants in Last Fiscal Year
- - ------------------------------------------------------------------------------
Potential
Individual Grants Realizable
- - --------------------------------------------------------- Value at
Assumed Annual
Number of % of Total Rates of
Securities Options/ Stock Price
Underlying SAR's Appreciation
Options/ Granted to Exercise for Option
SAR's Employees or Base Term (2)(3)
Granted in Fiscal Price Expiration -----------------
Name (#)(1) Year ($/Sh) Date 5%($) 10%($)
- - ---- ------- ---------- -------- ---------- -------- -------
Albert E. Wolf 6,060 1.28 16.50 01/04/2003 $ 62,883 $159,358
18,940 4.00 16.50 07/04/2003 $209,002 $537,291
50,000 10.55 9.56 02/13/2004 $320,083 $823,047
Kevin P. Dowd 6,060 1.28 16.50 01/04/2003 $ 62,883 $159,358
18,940 4.00 16.50 07/04/2003 $209,002 $537,291
50,000 10.55 9.56 02/13/2004 $320,083 $823,047
Luis A. Aguilera 6,060 1.28 16.50 01/04/2003 $ 62,883 $159,358
13,940 2.94 16.50 07/04/2003 $153,827 $395,450
Steven G. 6,060 1.28 16.50 01/04/2003 $ 62,883 $159,358
Selfridge 13,940 2.94 16.50 07/04/2003 $153,827 $395,450
25,000 5.27 9.56 02/13/2004 $160,042 $411,524
Neil D. Austin 6,060 1.28 16.50 01/04/2003 $ 62,883 $159,358
8,940 1.89 16.50 07/04/2003 $ 98,653 $253,610
- - -----------
(1) Table reflects a grant to each of the Named Officers listed to purchase
the Company's Common Stock. For each of the named officers, the top figure
reflects an incentive stock option ("ISO") and the bottom figure(s) reflect a
grant which is not an ISO ("NSO"). Under the Checkpoint Systems, Inc. Stock
Option Plan (1992) (the "Stock Option Plan"), options are immediately
exercisable (subject to a six-month holding requirement in the case of
management subject to Section 16 of the Securities Exchange Act of 1934) to
purchase Common Stock; the term of such options is generally ten years (in
the case of an ISO), and ten years and six months (in the case of an NSO).
(2) Represents gain that would be realized assuming the options were held
until expiration and the stock price increased at compounded rates of
5% and 10% from the base price ($9.56 or $16.50 per share).
(3) The dollar amounts under these columns use the 5% and 10% rates of
appreciation required by the Securities and Exchange Commission. This
presentation is not intended to forecast possible future appreciation of the
Company's Common Stock.
Option Exercises and Fiscal Year-End Option Values
Set forth below is information with respect to options exercised and
unexercised as of the fiscal year ended December 26, 1993 for each of the Named
Officers.
Aggregated Option Exercises in Last Fiscal Year and FY End Option Values
Number of
Securities Value of
Underlying Unexercised
Shares Acquired on Unexercised In-the-Money
Exercise or With Options/SAR's Options/SAR's
Respect to Which at FY-End(#)(2) at FY-End($)(3)
Option Grants --------------- ---------------
Exercised Value Exercisable/ Exercisable/
Name (#) ($)(1) Unexercisable Unexercisable
- - ---- ------------------ ------- --------------- ---------------
Albert E. Wolf 0 0 225,000/0 559,375/0
Kevin P. Dowd 25,000 276,250 150,000/0 171,875/0
Luis A. Aguilera 0 0 80,000/0 137,500/0
Steven G. Selfridge 15,000 178,125 101,000/0 154,063/0
Neil D. Austin 10,000 100,000 25,000/0 0/0
- - ------------
(1) Represents the difference between the fair market value of the shares at
the date of exercise and the exercise price multiplied by the number of shares
acquired.
(2) The first number represents the number of exercisable but unexercised
options; the second number represents the number of unexercisable options.
(3) The first number represents the value based upon the stock price at fiscal
year-end of exercisable but unexercised options; the second number represents
the value of unexercisable options.
Compensation of Directors
In 1993, directors who were not employees of the Company received $1,000 each
fiscal quarter and $2,000 for each Board of Directors' meeting that they
attended. Directors who are employees of the Company do not receive any
additional compensation for their service as directors.
Effective April 29, 1992, the Company implemented the Checkpoint Systems,
Inc. 1992 Director Bonus Award Plan, pursuant to which non-employee directors
of the Company received performance units, the value of which varies based on
the appreciation in value of the Company's Common Stock from the date of award
until the payment date (two years from the date of award). The awards are
payable in cash on such date to the participating directors. On April 29, 1992
the following awards of performance units under the 1992 Director Bonus
Award Plan were granted: Mr. Blackwell - 8,000; Mr. Censits - 15,500;
Mr. Clark - 30,000; Mr. Porter - 8,000; Mr. Soffa - 15,500; and Mr. Stern -
8,000. For calculation purposes under the Plan, each unit was assigned a
value of $8.125 which was the value of a share of the Company's common stock
on the award date.
In addition, non-employee directors are eligible to receive NSO's pursuant to
a formula set forth in the Company's Employee Stock Option Plan (1992) (the
"Stock Option Plan"), described in footnote (1) to the "Option Grants" table
and under the heading "Compensation Committee Report on Executive
Compensation." Under the Stock Option Plan, each non-employee member of the
Board of Directors shall be granted a NSO on April 29, 1995 and on April 29
of each third year thereafter during which the Plan shall remain in effect,
provided that the non-employee member of the Board of Directors is then
serving in such position and provided further that there are then available
sufficient shares under this Plan each such NSO will cover the lesser of (i)
5,000 shares (approximately adjusted if necessary for stock dividends, stock
split or other changes) of common stock, (ii) a number of shares of common
stock having an aggregate fair market value on the date of grant equal to
$100,000, or (iii) the number of shares then available under the applicable
limits of the plan.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
Under the supervision of the Compensation Committee of the Board of
Directors, the Company has developed and implemented compensation
policies, plans and programs which seek to enhance the profitability of
the Company, and thus shareholder value, by aligning the financial
interests of the Company's senior management with those of its
shareholders. In furtherance of these goals, and because the Committee
believes that it is appropriate that senior management have a greater
portion of their compensation at risk than other employees, annual cash
base salaries of senior management are generally set somewhat below what
the Company (based on a review of various analytical data secured from
outside consultants) believe to be salary levels paid to senior
management of similar sized companies with comparable responsibilities.
Annual base salary and longer term incentive compensation provides an
important incentive in attracting and retaining corporate officers and
other key employees and motivating them to perform to the full extent of
their abilities in the best long-term interests of the Shareholders.
Neither type of compensation is formula driven and both types are
variable and closely tied to the Company's performance in a manner that
encourages a sharp and continuing focus on building profitability and
shareholder value.
In the early part of each fiscal year, the Committee reviews with the
Chief Executive Officer and approves, with any modifications it deems
appropriate, an annual salary plan for each of the Company's senior
executives (other than the Chief Executive Officer). This salary plan is
developed by the Company's human resources staff based on a review of
industry, peer group and national surveys of compensation levels,
historical compensation policies of the Company, and, to a large extent,
subjective judgments of the Committee relating to the past and expected
future contribution, level of experience, leadership abilities and
overall performance. In addition, the Committee is advised, from time to
time upon request, by independent compensation consultants concerning
compensation competitiveness.
The Committee also reviews and fixes the base salary of the Chief Executive
Officer based on a review of similar data and the Committee's
subjective assessment of his past performance and its expectation as to
his future contributions in leading the Company and its businesses. For
1993, Mr. Wolf's compensation was formulated by the Committee based on
these factors as well as the Committee's expectation that revenue growth
of the Company would continue in the 25% to 30% range and that
significant structural changes would have to be made in 1993 for the
long-term benefit of the Company. Mr. Wolf's salary and incentive
program was approved by unanimous vote of the Board of Directors (with
Mr. Wolf abstaining). Mr. Wolf's base salary for the fiscal year 1993
included a 9% increase over his prior base salary. In addition, Mr. Wolf
was given the right to participate in a pool equal to 15% of the result
of (a) the Company's post-tax, pre-bonus earning for the year, less (b)
15% of the shareholders equity at the beginning of the year. Mr. Wolf's
participation percentage was 25%. No payments were paid out under this
plan in 1993.
In addition to salary, senior management of the Company has the
potential to receive additional compensation from one of three possible
sources: the Company's Profit Incentive Plan (formerly the Management
Incentive Plan), discretionary management bonuses and the Checkpoint
Systems, Inc. Stock Option Plan (1992).
Originally adopted in 1978, the Management Incentive Plan ("MIP")
provided for annual distributions to be made out of a bonus pool to
certain executive officers in the event the Company met certain pre set
fiscal objectives which were set by the Board of Directors each year.
Because the Company did not meet the Plan's minimum financial
requirements in 1993, no payments were paid under the MIP for 1993 and
there were no discretionary management bonuses paid for 1993.
For 1994 and subsequent years, the Board of Directors has approved an
amended MIP and has designated such revised plan the Profit Incentive
Plan ("PIP"). The Chief Executive Officer, President and all Vice
Presidents will participate in the PIP. Under the PIP, no bonus pool
will be created unless pre-tax, pre-bonus earnings exceed 18% of the
beginning balance of Shareholders Equity for the relevant year. If such
earnings are attained, a bonus pool will be created and will be equal to
(i) 3% of all pre-tax, pre-bonus earnings, plus (ii) 6% of pre-tax, pre-
bonus earnings in excess of 27% of the beginning balance of Shareholders
Equity for the relevant year. Distribution of the pool, if any, will be
automatically determined as follows: 20% to Mr. Wolf; 15% to Mr. Dowd;
8% to Mr. Aguilera; 8% to Mr. Selfridge; 4% to Mr. Austin; 8% to Mr.
Reilly, the Company's Senior Vice President-Americas' and Pacific Rim;
8% to Mr. Smith, the Company's Senior Vice President- Marketing and
Western European Operations; 4% to Mr. Farestad, the Company's Vice
President- Research and Development; and 4% to Mr. Cavaliere, the
Company's Vice President- Customer Service. The remaining 21% may be
divided among the foregoing at the discretion of the Committee taking
into account such subjective factors as they determine to be appropriate
under the circumstances. The Board of Directors, in conjunction with
the Compensation Committee recommendation, has determined that setting
a minimum floor on the PIP before any bonus pool is created, equal to
18% of the beginning balance of Shareholder Equity, focuses the
executive management of the Company on first addressing the minimum
appropriate level of shareholder value increases. Only after attaining
this appropriate return for shareholders, will senior management begin
to participate in the PIP.
In order to provide incentives to employees over the longer term, the
Company maintains a stock option plan. At various times during the year,
the Committee grants options to purchase the Company's Common Stock
under the Checkpoint Systems, Inc. Stock Option Plan (1992) (the "Stock
Option Plan"). The Company has granted options under various plans since
1982, but the current plan has been in effect since 1987. Under this
plan, as most recently approved by the Shareholders at the 1992 Annual
Meeting of Shareholders, the Committee has the authority to grant both
incentive and non-incentive options to purchase the Company's Common
Stock at an exercise price of at least 100% of the fair market value on
the date of grant. All employees of the Company and its affiliates are
eligible to receive awards of options thereunder; non-employee directors
may only receive non-incentive options pursuant to a formula set forth
in the Stock Option Plan. The maximum number of shares available for
option under the Plan from its inception is 3,000,000; 226,500 remain
available for grant thereunder as of March 7, 1994. The Committee
believes that the Stock Option Plan has been well-received by employees
and directors as a way to attract and retain quality management and
encourage them to strive for the long-term success of the Company.
Stock option awards under the Stock Option Plan typically are granted
annually, although several grants were made in 1993. In fixing the
grants of stock options to the individual senior management group during
1993, including the Named Officers other than the Chief Executive
Officer, the Committee reviewed with the Chief Executive Officer the
recommended individual awards, taking into account such facts and
subjective issues such as the respective scope of accountability,
strategic and operational goals, anticipated performance requirements
and contributions of each of the senior management group and information
on previous awards under the Stock Option Plan. The award to the Chief
Executive Officer was fixed separately by the Committee and was based,
among other things, upon a subjective review of competitive compensation
data from several surveys, data from selected peer companies,
information regarding his total compensation and historical information
regarding his long-term compensation awards as well as the Committee's
subjective evaluation of his past and expected future contributions to
the Company's achievement of long-term performance goals, including
revenue and earnings growth.
The Committee believes that its past grants of options and the Profit
Incentive Plan have successfully focused the Company's senior management
on building profitability and shareholder value.
The foregoing report submitted by:
Jermain B. Porter
Albert Soffa
Peter Stern
Stock Price Performance Graph
[Stock Price Performance Graph filed separately under Form SE]
Assumes $100 invested on December 23, 1988 in Checkpoint Systems, Inc.
Common Stock, the Center for Research in Security Prices ("CRSP Index")
for NYSE/AMEX/NASDAQ Stock market, the CRSP Index for NYSE/AMEX/NASDAQ
Electronic Components and Accessories and the NASDAQ Electronic Component
Industry Index.
On October 29, 1993, the Company changed its stock exchange listing from
NASDAQ to the New York Stock Exchange, therefore, the Company has selected
different index comparisons from those used in the prior year. The graph
includes the NASDAQ Electronic Component Industry Index which was used
in the prior year for comparison purposes.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Coopers & Lybrand ("Coopers"), the Company's independent certified public
accountants for the year 1993, have been selected to continue for the year
1994. A representative of Coopers is expected to be present at the Meeting and
will have the opportunity to make a statement if he desires to do so. The
representative is also expected to be available to respond to appropriate
questions.
SHAREHOLDER PROPOSALS
In order for Shareholder proposals to be considered for inclusion in the
Company's proxy materials for the next Annual Meeting of Shareholders, such
proposals must be received by the Company no later than November 28, 1994.
COST OF SOLICITATION OF PROXIES
The Company will bear the cost of the solicitation of the Board of Directors'
proxies for the Meeting, including the cost of preparing, assembling and
mailing proxy materials, the handling and tabulation of proxies received and
charges of brokerage houses and other institutions, nominees and fiduciaries
incurred in forwarding such materials to beneficial owners. In addition to the
mailing of the proxy material, such solicitation may be made in person or by
telephone or telegraph by directors, officers or regular employees of the
Company who will not be specifically compensated therefor, or by a professional
proxy solicitation organization engaged by the Company.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE, WITHOUT CHARGE TO EACH PERSON SOLICITED BY THIS
PROXY STATEMENT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K (INCLUDING THE FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES THERETO) AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION FOR ITS MOST RECENT FISCAL YEAR. SUCH WRITTEN REQUEST
SHOULD BE DIRECTED TO NEIL D. AUSTIN, SECRETARY, AT THE ADDRESS OF THE COMPANY
APPEARING ON THE FIRST PAGE OF THIS PROXY STATEMENT.
CHECKPOINT SYSTEMS, INC.
Annual Meeting of Shareholders - April 29, 1994
The undersigned shareholder of CHECKPOINT SYSTEMS, INC. (the "Company),
revoking all previous proxies, hereby appoints Neil D. Austin and Steven
G. Selfridge, and each of them acting individually, as the attorney and
proxy of the undersigned, with full power of substitution, to vote all
shares of Common Stock of the Company which the undersigned would be
entitled to vote if personally present at the Annual Meeting of
Shareholders of the Company, to be held on Friday, April 29, 1994, at
10:00 a.m., at 550 Grove Road, Mid-Atlantic Corporate Center, Thorofare,
New Jersey, and at any adjournment or postponement thereof, provided
that said proxies are authorized and directed to vote as indicated with
respect to the following matters. THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS. UNLESS OTHERWISE SPECIFIED, THE SHARES WILL BE
VOTED "FOR" THE ELECTION OF THE NOMINEE FOR THE CLASS III DIRECTOR.
THIS PROXY ALSO DELEGATES DISCRETIONARY AUTHORITY TO VOTE WITH RESPECT
TO ANY OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT OR POSTPONEMENT THEREOF. THE UNDERSIGNED HEREBY
ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING, PROXY STATEMENT
AND ANNUAL REPORT OF CHECKPOINT SYSTEMS, INC.
(Please mark, date and sign on reverse side)
PLEASE MARK YOUR
[ ] VOTES AS IN THIS
EXAMPLE
The Board of Directors recommends a vote FOR the Item listed below:
1. Election of FOR WITHHELD Nominee: Albert E. Wolf
Class III [ ] [ ]
Director
SIGNATURE(S)......................... DATE ............................
NOTE: Please sign this Proxy exactly as name(s) appear in address.
When signing as attorney-in-fact, executor, administrator, trustee or
guardian, please add your title as such. If the shareholder is a
corporation, please sign with full corporate name by duly authorized
officer or officers and affix the corporate seal. Where stock is held
in the name of two or more persons, all such persons should sign.