SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
_____________________________UNITED STATIONERS INC._____________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
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computed pursuant to Exchange Act Rule 0-11 (set forth the
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UNITED STATIONERS INC. [LOGO]
2200 East Golf Road
Des Plaines, Illinois 60016-1267
- ----------------------------
Dear Stockholder:
On behalf of United Stationers Inc., I cordially invite you to attend the Annual
Meeting of Stockholders on Wednesday, May 9, 2001, at 2:00 p.m. Central Time, at
the Company's offices located at 2200 East Golf Road, Des Plaines, Illinois.
The record date for determining Stockholders who are eligible to vote at the
Annual Meeting of Stockholders has been established by the Board of Directors as
of the close of business on March 15, 2001. The matters to be considered by
Stockholders at the Annual Meeting are to elect three directors to serve for a
three-year term expiring in 2004 and to transact such other business as may
properly come before the meeting. The Board of Directors of the Company has
determined that approval of the proposed slate of directors is in the best
interest of the Company and its Stockholders, and has unanimously recommended a
vote "FOR" the election of directors.
Please read these materials so that you will be informed as to the
qualifications of the directors proposed for election at the meeting. During the
meeting, we will also report on the current activities of the Company, and you
will have an opportunity to ask questions.
Because the vote of each Stockholder is important, please sign and return the
enclosed proxy card in the envelope provided. This way, your shares will be
voted even if you can't attend the meeting. This will not, of course, limit your
right to attend the meeting or prevent you from voting in person at the meeting
if you wish to do so.
Your directors and management look forward to personally meeting those of you
who are able to attend. To assist us in preparation for the meeting, please
return your proxy card at your earliest convenience.
Sincerely yours,
[SIGNATURE]
FREDERICK B. HEGI, JR.
CHAIRMAN OF THE BOARD
Des Plaines, Illinois
April 3, 2001
UNITED STATIONERS INC. [LOGO]
2200 EAST GOLF ROAD
DES PLAINES, ILLINOIS 60016-1267
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
MAY 9, 2001
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The Annual Meeting of Stockholders of United Stationers Inc. will be held on
Wednesday, May 9, 2001, at 2:00 p.m. Central Time, at the Company's offices
located at 2200 East Golf Road, Des Plaines, Illinois.
The purpose of the meeting is:
1. to elect three directors to serve for a three-year term expiring in 2004;
and
2. to transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on March 15, 2001 are entitled
to vote at the meeting.
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 2000 is enclosed.
WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE MEETING, PLEASE MARK,
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors,
[SIGNATURE]
Susan Maloney Meyer
SECRETARY
April 3, 2001
UNITED STATIONERS INC.
2200 East Golf Road
Des Plaines, Illinois 60016-1267
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PROXY STATEMENT
APRIL 3, 2001
- ------------------------
GENERAL INFORMATION
This Proxy Statement has been prepared on behalf of the Board of Directors of
United Stationers Inc. (the "Company"), and is being furnished to Stockholders
in connection with the Annual Meeting of Stockholders of United Stationers Inc.
(the "Annual Meeting").
This Proxy Statement and the enclosed proxy are first being sent to Stockholders
on or about April 3, 2001.
The matters that are being submitted for approval are to be acted upon at the
Annual Meeting of Stockholders of United Stationers Inc. The record date for
determining Stockholders who are eligible to vote at the Annual Meeting of
Stockholders has been established by the Board of Directors as March 15, 2001
(the "Record Date"). The holders of the Company's Common Stock at the close of
business on the Record Date are entitled to vote on these matters. Each
outstanding share of Common Stock is entitled to one vote.
The Company's principal executive offices are located at 2200 East Golf Road,
Des Plaines, Illinois 60016-1267.
WHO CAN VOTE
Holders of record of Common Stock at the close of business on March 15, 2001 may
vote at the meeting.
On March 15, 2001, there were 33,306,149 shares of the Company's Common Stock
issued and outstanding. A majority of the outstanding shares of Common Stock
must be represented in person or by proxy in order to constitute a quorum at the
Annual Meeting.
HOW YOU CAN VOTE
If you sign your proxy and return it to the Company in time for the Annual
Meeting, your shares will be voted as you direct. You can specify on your proxy
whether your shares should be voted to approve, disapprove or abstain from
voting.
IF YOU RETURN YOUR SIGNED PROXY TO THE COMPANY BUT DO NOT SPECIFY ON YOUR PROXY
CARD HOW YOU WANT TO VOTE YOUR SHARES, THEY WILL BE VOTED "FOR" THE ELECTION OF
ALL THREE NOMINEES FOR DIRECTORS AS SET FORTH UNDER "ELECTION OF DIRECTORS."
REVOCATION OF PROXIES
If you vote by proxy, you may revoke it in three ways at any time before it is
exercised:
(1) by submitting written notice of revocation to the Secretary of the
Company;
(2) by submitting another proxy that is properly signed and later dated; or
(3) by attending the meeting and voting in person.
REQUIRED VOTES
The Company's Bylaws provide that the holders of a majority of the Common Stock
issued and outstanding and present in person or represented by proxy shall
constitute a quorum at all stockholders' meetings. When a quorum is present, the
vote of the holders of a majority of the Common Stock present in person or
represented by proxy decides any question brought before the meeting.
Under Delaware law, broker non-votes and abstentions will have no effect on the
outcome of the election of directors. In general, a broker who holds securities
in street name has limited authority to vote on matters submitted at a
stockholders' meeting in the absence of specific instructions from the
beneficial owner. In the absence of instructions from the beneficial owner or
authorization from the National Association of Securities Dealers, Inc. (the
"NASD") to vote on specific matters without the necessity of obtaining
instructions from the beneficial owner, a broker will specify a "non-vote" on
particular matters. For purposes of Delaware law, broker non-votes and
abstentions are counted as present for quorum purposes, but are generally
excluded entirely from determining whether a particular matter has been
approved. Typically, however, brokers are permitted by the NASD to vote for the
election of directors without instructions from the beneficial owner.
OTHER MATTERS TO BE ACTED UPON AT THE MEETING
We do not know of any other matters to be presented or acted upon at the
meeting. If any matter is presented at the meeting on which a vote may properly
be taken, the shares represented by the proxies will be voted in accordance with
the judgment of the persons entitled under the proxy to vote those shares.
EXPENSES OF SOLICITATION
The costs of soliciting the enclosed proxies for the Annual Meeting will be paid
by the Company. In addition to the use of the mail, proxies may be solicited in
person or by telephone, facsimile transmission or other means of electronic
communication by directors, officers and employees of the Company. The Company
does not expect to pay any fees for this solicitation, but will reimburse banks,
brokers and other persons holding stock in their names, or in the names of their
nominees, for their expenses in sending proxy materials to their principals.
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VOTING SECURITIES AND PRINCIPAL HOLDERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS (1):
The following table sets forth information as of March 15, 2001 with respect to
the beneficial ownership of Common Stock by each person who is known by the
Company to own beneficially more than five percent of the outstanding Common
Stock.
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT
- ------------------------------------ -------------------- --------
Farallon Partners, L.L.C./Farallon Capital Management, 2,537,600 7.62%
L.L.C. (2)................................................
One Maritime Plaza, Suite 1325
San Francisco, CA 94111
Private Capital Management, Inc. (3)........................ 2,302,102 6.91%
3003 Tamiami Trail North
Naples, Florida 34103
T. Rowe Price Associates, Inc. (4).......................... 1,916,300 5.75%
100 East Pratt Street
Baltimore, Maryland 21202
SAFECO Asset Management Company/SAFECO Corporation (5)...... 1,732,500 5.20%
SAFECO Plaza
Seattle, Washington 98185
Neuberger Berman, LLC/Neuberger Berman Management 1,685,912 5.06%
Company (6)...............................................
605 Third Avenue, 41st Floor
New York, New York 10158
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(1) To the knowledge of the Company, no other person was the beneficial owner of
5% or more of the outstanding shares of Common Stock.
(2) As the general partner of each of the Farallon Partnerships listed below,
Farallon Partners, L.L.C. ("FPLLC") may be deemed to own benefically each of
the shares owned by: Farallon Capital Partners, L.P. (574,100 shares),
Farallon Capital Institutional Partners, L.P. (493,300 shares), Farallon
Captial Institutional Partners II, L.P. (115,900 shares), Farallon Capital
Institutional Partners III, L.P. (122,600 shares), and Tinicum Partners,
L.P. (42,700 shares). FPLLC disclaims any beneficial ownership of such
shares and all of the above-mentioned entities disclaim group attribution.
By virtue of investment management agreements between Farallon Capital
Management, L.L.C., a registered investment adviser ("FCMLLC"), and various
managed accounts, FCMLLC may be deemed the beneficial owner of the
(1,189,000 shares) shares held, in aggregate, by such accounts. FCMLLC
disclaims any beneficial ownership of such shares and all of the
above-mentioned entities disclaim group attribution.
(3) Private Capital Management, Inc.'s ("PCM") shares are owned by its clients
individually. PCM shares dispositive power and voting power for the shares
listed above.
3
(4) T. Rowe Price Associates has sole dispositive power for the entire holding
of 1,916,300 shares and has sole voting power for 321,300 shares.
These securities are owned by various individual and institutional investors
for which T. Rowe Price Associates, Inc. ("Price Associates") serves as
investment adviser with power to direct investments and/or has sole power to
vote the securities. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
(5) Includes shares for which SAFECO Corporation and SAFECO Asset Management
Company may be deemed to be the indirect beneficial owners based upon their
respective ownership or control of one or more investment companies which
directly own such shares and for which SAFECO Asset Management serves as
adviser and shares directly owned by an employee savings plan, of which
SAFECO Corporation is the plan sponsor. SAFECO Corporation is treated as
having only the shared voting power and shared dispositive power for the
shares listed above, by virtue of its ownership and control of SAFECO Asset
Management.
(6) Neuberger Berman, LLC ("Neuberger") is a registered investment adviser. In
its capacity as investment adviser, Neuberger may have discretionary
authority to dispose of or to vote shares that are under its management. As
a result, Neuberger may be deemed to have beneficial ownership of such
shares. Neuberger does not, however, have any economic interest in the
shares. The clients are the actual owners of the shares and have the sole
right to receive and the power to direct the receipt of dividends from or
proceeds from the sale of such shares. Neuberger Berman Inc. is the parent
holding company and owns 100% of Neuberger Berman, LLC and Neuberger Berman
Management, Inc. As of March 15, 2001, of the shares set forth above,
Neuberger had shared dispositive power with respect to 1,685,912 shares,
sole voting power with respect to 683,112 shares and shared voting power on
1,002,800 shares. With regard to the shared voting power, Neuberger Berman
Management, Inc. and Neuberger Berman Funds ("Fund") are deemed to be
beneficial owners for purpose of Rule 13(d) since they have shared power to
make decisions whether to retain or dispose of the securities. Neuberger is
the sub-adviser to the above referenced Funds. It should be further noted
that the above mentioned shares are also included with the shared power to
dispose calculation.
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows how much Common Stock is beneficially owned by each
director and each of the executive officers named in the Summary Compensation
Table and all of the Company's directors and executive officers as a group as of
March 15, 2001. The Company
4
believes that, unless otherwise noted, each person shown in the following table
has sole voting and sole investment power with respect to the shares indicated.
PERCENT OF
COMMON STOCK EXERCISABLE COMMON STOCK
NAME BENEFICIALLY OWNED OPTIONS (1) OUTSTANDING (2)
- ---- ------------------ ----------- ---------------
Daniel J. Good................................... 152,360(3) 18,000 *
Ilene S. Gordon.................................. 2,250(4) 6,000 *
Roy W. Haley..................................... -- 18,000 *
Frederick B. Hegi, Jr............................ 534,048(5) 18,000 1.7%
Max D. Hopper.................................... 2,916(6) 12,000 *
James A. Johnson................................. 27,670(7) 18,000 *
Randall W. Larrimore............................. 10,000 392,000 1.2%
Benson P. Shapiro................................ 3,944(8) 18,000 *
Alex D. Zoghlin.................................. 172(9) -- *
Steven R. Schwarz................................ 11,368(10) 40,000 *
R. Thomas Helton................................. -- 43,600 *
Ergin Uskup...................................... 10,909(11) 14,000 *
Susan Maloney Meyer.............................. -- 8,400 *
All Officers and Directors as a Group (16
persons)....................................... 773,181(12) 618,400 4.1%
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* Represents less than 1%
(1) Options exercisable within 60 days of the date of this Proxy Statement.
(2) Including the beneficial ownership of each stockholder, (in accordance with
the Securities and Exchange Commission's definition of "beneficial
ownership") and any securities convertible into Common Stock within 60 days
of the date of this Proxy.
(3) Does not include 60,798 shares owned by Good Capital & Co., Inc. ("Good
Capital"). Mr. Good is Chairman and a controlling stockholder of Good
Capital and, accordingly, may be deemed to beneficially own the shares held
of record by Good Capital.
(4) Includes 1,250 shares issuable in satisfaction of accrued deferred equity
compensation under the Company's Nonemployee Directors' Deferred Stock
Compensation Plan.
(5) Includes (i) 318,358 shares held of record by Mr. Hegi, (ii) 42,312 shares
held of record by a family company of which he is managing partner,
(iii) 169,311 shares held in trust for his benefit and for which he serves
as trustee, (iv) 4,067 shares issuable in satisfaction of accrued deferred
equity compensation under the Company's Nonemployee Directors' Deferred
Stock Compensation Plan. Does not include (i) 20,818 shares held by Wingate
Management Corporation and (ii) 8,555 shares held by Wingate Management
Limited, L.L.C. Mr. Hegi is President of Wingate Management Corporation and
a manager of Wingate Management Limited, L.L.C. and accordingly, may be
deemed to beneficially own the shares owned of record by these entities.
(6) Consists of 2,916 shares issuable in satisfaction of accrued deferred equity
compensation under the Company's Nonemployee Directors' Deferred Stock
Compensation Plan.
5
(7) Includes (i) 23,664 shares held in a self-directed individual retirement
account for the benefit of Mr. Johnson and (ii) 4,006 shares issuable in
satisfaction of accrued deferred equity compensation under the Company's
Nonemployee Directors' Deferred Stock Compensation Plan. Does not include
8,555 shares held by Wingate Management Limited, L.L.C. Mr. Johnson is a
Manager of Wingate Management Limited, L.L.C., and accordingly, may be
deemed to beneficially own the shares owned of record by these entities.
(8) Includes 3,944 shares issuable in satisfaction of accrued deferred equity
compensation under the Company's Nonemployee Directors' Deferred Stock
Compensation Plan.
(9) Includes 172 shares issuable in satisfaction of accrued deferred equity
compensation under the Company's Nonemployee Directors' Deferred Stock
Compensation Plan.
(10) Includes (i) 11,268 shares owned of record by Mr. Schwarz and (ii) 100
shares held in an individual retirement account for the benefit of
Mr. Schwarz's wife.
(11) Includes 252 shares held in a trust for which Mr. Uskup serves as trustee.
(12) Includes 16,355 shares issuable in satisfaction of accrued deferred equity
compensation under the Company's Nonemployee Directors' Deferred Stock
Compensation Plan.
ELECTION OF DIRECTORS
The Board of Directors currently consists of nine members, divided into three
classes. Each class is elected for a three-year term. The terms of the four
Class III Directors will expire in 2001. James A. Johnson has decided not to
stand for reelection. Each of the other Class III Directors is a nominee for
election at this Annual Meeting and if elected, the terms of the following
Class III Directors will expire in 2004.
We will vote your shares as you designate on your proxy form. If you sign, date
and return the proxy form but don't indicate how you want your shares voted, WE
WILL VOTE THEM "FOR" THE ELECTION OF ALL OF THE NOMINEES LISTED BELOW. The
nominees have indicated that they are willing and able to serve. If any nominee
becomes unavailable for election for any reason, the shares represented by the
proxies will be voted for any substitute nominee designated by the Board of
Directors.
The nominees are as follows:
ROY W. HALEY (53)
Mr. Haley was elected to the Board of Directors of the Company in March 1998.
Mr. Haley currently serves as Chairman and Chief Executive Officer of WESCO
International Inc. ("WESCO"). Prior to joining WESCO in 1994, he served as
President and Chief Operating Officer of American General Corporation, one of
the nation's largest consumer financial services organizations. Mr. Haley also
serves as a director for Cambrex, Corp. and Development Dimensions, Inc.
BENSON P. SHAPIRO (58)
Mr. Shapiro was elected to the Board of Directors of the Company in
November 1997. Professor Shapiro has served on the faculty of Harvard University
for 31 years and until July 1997 was THE MALCOLM P. MCNAIR PROFESSOR OF
MARKETING at the Harvard Business School. He continues to teach a variety of
Harvard's executive programs on a part-time basis and spends most of his time
engaged
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in consulting, public speaking and writing. He serves as a director of Indus
River Networks, Inc. and Genuity, Inc., and serves on several advisory boards
for private companies.
ALEX D. ZOGHLIN (31)
Alex D. Zoghlin was elected to the Board of Directors of the Company in
November 2000. He currently serves as Chief Technology Officer of Orbitz, a
consumer-oriented travel industry portal backed by many of the world's leading
airlines, including American, United, Delta, Northwest and Continental. Before
joining Orbitz in January 2000, Mr. Zoghlin founded and then later sold
Sportsgear.com, a business-to-business sporting goods enterprise. He was the
Founder and from 1995 to 1998, Chief Executive Officer for Neoglyphics Media
Corporation, a leading Web developer serving "Fortune 500" companies and
selected government and non-profit organizations. In 1997, Mr. Zoghlin was
honored as one of four winners of the KPMG Illinois High Tech Award for
contributing to the advancement of high technology business in Illinois. He
served four years of active duty in the United States Navy as a cryptography
specialist. He currently serves as a director on UNICEF's board.
Your Board unanimously recommends a vote "FOR" the election of the three persons
nominated to serve as Class III directors.
OTHER DIRECTORS
The other directors, whose terms will continue after the Annual Meeting, are as
follows:
CLASS I DIRECTORS--CONTINUING IN OFFICE UNTIL MAY 2002
DANIEL J. GOOD (61) was elected to the Board of Directors of the Company in
March 1995. Mr. Good is Chairman of Good Capital Co., Inc. ("Good Capital"), an
investment firm in Lake Forest, Illinois. Until June 1995, Mr. Good was Vice
Chairman of Golden Cat Corp., the largest producer of cat litter in the United
States, and prior thereto he was Managing Director of Merchant Banking of
Shearson Lehman Bros. and President of A.G. Becker Paribas, Inc. Mr. Good serves
as a director of Tibersoft, Inc. and as Chairman of the Advisory Board of Brown
Simpson Asset Management LLC.
MAX D. HOPPER (66) was elected to the Board of Directors of the Company in
August 1998. In 1995, he founded Max D. Hopper Associates, Inc., a consulting
firm specializing in creating benefits from the strategic use of advanced
information systems. He is the retired chairman of the SABRE Technology Group
and served as Senior Vice President for American Airlines, both units of AMR
Corporation. Mr. Hopper currently serves as a director of Gartner Group, Inc.,
Metrocall, Inc., USDATA Corporation, Inc., Payless Cashways, Inc., Accrue
Software, Inc. and Exodus Communications, Inc.
CLASS II DIRECTORS--CONTINUING IN OFFICE UNTIL MAY 2003
FREDERICK B. HEGI, JR. (57) was elected to the Board of Directors of the Company
in March 1995 and served as Chairman, Interim President and Chief Executive
Officer from November 1996 until Randall Larrimore became President and Chief
Executive Officer in May 1997. Mr. Hegi is founding partner of Wingate Partners,
including the indirect general partner of each of Wingate Partners L.P. and
Wingate Partners II, L.P. Since May 1982, Mr. Hegi has served as President of
Valley View Capital Corporation, a private investment firm. Mr. Hegi also
currently serves as Chairman of the
7
Board of Loomis, Fargo & Co., the second largest armored car service company in
the United States; Chairman of Tahoka First Bancorp, Inc., a bank holding
company; and Chairman of Cedar Creek Bancshares, Inc., a bank holding company.
Additionally, he is a director of Texas Capital Bancshares, Inc., a bank holding
company; Lone Star Technologies, Inc., a diversified company engaged in the
manufacture of tubular products; Pro Parts Xpress, Inc., a wholesale distributor
of automotive parts; and ENSR International, an international environmental
service firm. Mr. Hegi is also Chairman, President and Chief Executive Officer
of Kevco, Inc., a publicly held distributor of building products to the
manufactured housing and recreational vehicle industries, which filed for
protection under Chaper 11 of the United States Bankruptcy Code on February 5,
2001.
RANDALL W. LARRIMORE (53) was elected to the Board of Directors of the Company
and became President and Chief Executive Officer of the Company on May 23, 1997.
From March 6, 2000 to October 2, 2000, Mr. Larrimore served as Interim Chief
Financial Officer. From February 1988 to May 1997, Mr. Larrimore had been
President and Chief Executive Officer of MasterBrand Industries, Inc., a
manufacturer of leading brands including Master Lock-Registered Trademark-
padlocks and Moen-Registered Trademark- faucets, and a subsidiary of Fortune
Brands (formerly American Brands). Prior to that time, Mr. Larrimore was
President and Chief Executive Officer of Twentieth Century Companies, a
manufacturer of plumbing repair parts and a division of Beatrice Foods. Prior
thereto, he was Vice President of Marketing for Beatrice Home Specialties, the
operating parent of Twentieth Century. Fortune Brands acquired Twentieth Century
Companies and other Beatrice Divisions and subsidiaries in 1988. Before joining
Beatrice in 1983, Mr. Larrimore was with Richardson-Vicks, McKinsey & Company
and then with PepsiCo International. Mr. Larrimore serves as a director of Olin
Corporation, a diversified manufacturer of chemicals, metals, and sporting
ammunition. He also serves as a director of Evanston Northwestern Healthcare and
S.I.F.E. (Students in Free Enterprise).
ILENE S. GORDON (47) was elected to the Board of Directors of the Company in
January 2000. She currently serves as Senior Vice President of Pechiney Group
and President of Pechiney Plastic Packaging, overseeing all aspects of
Pechiney's worldwide flexible films and laminations, and plastic bottles
activities, including manufacturing, sales and marketing operations. Prior to
joining Pechiney in 1999, Ms. Gordon spent 17 years with Tenneco Inc., where she
most recently headed the folding-carton business. She currently serves as a
director of A.J. Gallagher & Co., an international company in the insurance
brokerage and risk management business, and Evanston Northwestern Healthcare.
CONCERNING THE BOARD OF DIRECTORS AND BOARD COMMITTEES
The Board of Directors met ten times during 2000. Each current director, with
the exception of Alex D. Zoghlin, who joined the Board of Directors in
November 2000, attended more than 75% of all of the meetings of the Board of
Directors held during 2000 as well as the meetings held by all committees of the
board on which he/she served (during the periods that he/she served) during
2000.
The Board of Directors has an Executive Committee, an Audit Committee, a Human
Resources Committee and a Governance Committee.
The Executive Committee members are Frederick B. Hegi, Jr. (Chair), Randall W.
Larrimore and Benson P. Shapiro. The Executive Committee held no meetings during
2000. As permitted under Delaware law, the Executive Committee has the authority
to act upon most corporate matters that
8
require Board approval, except any of the functions of the Audit Committee or
the Human Resources Committee.
The Audit Committee consists of Roy W. Haley (Chair), Max D. Hopper, and Ilene
S. Gordon. The members of the Audit Committee are independent as defined in
Rule 4200(a)(15) of the National Association of Securities Dealers' listing
standards. The Audit Committee met three times during 2000. The functions of the
Audit Committee are to oversee (i) the financial reporting process as conducted
by management, including the overview of financial reports and other financial
information provided by the Company to any governmental or regulatory body, the
public or other users thereof; (ii) the Company's systems of internal accounting
and financial controls; (iii) the annual independent audit of the Company's
financial statements and the Company's legal compliance; and (iv) ethics
programs as established by management and the Board.
The Human Resources Committee met seven times during 2000 and consisted of James
A. Johnson (Chair), Roy W. Haley, Benson J. Shapiro (resigned February 23,
2000), Ilene Gordon (elected February 23, 2000) and Alex D. Zoghlin (elected
November 21, 2000.) The Human Resources Committee fulfills the functions of the
formerly named Compensation Committee in that it reviews and makes
recommendations upon proposals by management as to compensation, bonuses,
employment agreements and other benefits, and policies respecting such matters,
for the officers of the Company and its subsidiaries. As of January 30, 2001,
James A. Johnson resigned his chairmanship of this Committee and Ilene Gordon
was elected Chair. The members of the Human Resources Committee also serve as
the Committee for the Company's Management Equity Plans and Management Incentive
Plan.
The Governance Committee consists of Daniel J. Good (Chair), Frederick B. Hegi,
Jr. and Benson P. Shapiro. The Governance Committee met four times in 2000. This
Committee sets the principles for and oversees the governance of the Company,
including the evaluation of management and the Board of Directors. It also
serves as the Nominating Committee of the Board of Directors.
Directors who are not employees are entitled to fees for their services as
directors. The fees include a retainer of $25,000 per year and a fee of $1,000
for each Board or Committee meeting attended. (If a Committee meeting is held on
the same day as a Board meeting, or if held by telephone, a $500 fee is paid for
attendance.) Committee Chairs are entitled to a fee of $1,500 ($750 if held on
the same day as a Board meeting) for each Committee meeting attended. Board
members are reimbursed for reasonable expenses incurred in connection with
meetings. Pursuant to the Nonemployee Directors' Deferred Stock Compensation
Plan ("Directors' Plan"), nonemployee directors may defer their fees. Fees
deferred are credited to the director's Stock Unit Account under the Directors'
Plan based on the fair market value of the Common Stock on the day of the
deferral. Each Stock Unit will give the director the right to one share of
Common Stock when the Stock Unit Account is distributed.
Ordinarily, distribution of the Stock Unit Account will begin after the director
no longer serves. Distribution may either be in a lump sum or in substantially
equal installments over a period of not more than five years, as the director
has directed.
Traditionally, the Company has granted options for 30,000 shares to each
nonemployee director and intended to make additional grants at three-year
intervals. Those options vest at the rate of 20% per year with the possibility
of acceleration based on stock performance. The Company is reviewing this method
of director compensation to determine whether there is a more appropriate and
competitive method.
9
EXECUTIVE COMPENSATION
The table and notes below show the compensation paid to the Chief Executive
Officer of the Company during 2000 and the four other highest-paid officers of
the Company who were serving as executive officers on December 31, 2000.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------- ------------
FISCAL SECURITIES
YEAR UNDERLYING ALL OTHER
NAME AND ENDED SALARY BONUS OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION 12/31 ($)(1) ($)(2) (#) ($)(3)
- ------------------------------------ -------- -------- ---------- ------------ ------------
Randall W. Larrimore ............... 2000 575,000 690,000 100,000 20,732
PRESIDENT AND CHIEF 1999 540,000 511,056 150,000 22,520
EXECUTIVE OFFICER 1998 506,667 608,000 70,000 23,971
Steven R. Schwarz .................. 2000 356,775 346,098(4) 45,000 7,345
EXECUTIVE VICE PRESIDENT 1999 335,000 302,783(5) 70,000 5,403
AND PRESIDENT, SUPPLY DIVISION 1998 275,000 312,950(5) 30,000 4,027
R. Thomas Helton ................... 2000 225,000 150,000(4) 14,000 7,287
EXECUTIVE VICE PRESIDENT, 1999 212,000 121,318 20,000 5,415
HUMAN RESOURCES AND 1998 183,333 110,000 62,000 4,523
ORGANIZATION DEVELOPMENT
Ergin Uskup ........................ 2000 225,000 135,000 12,000 11,184
SENIOR VICE PRESIDENT, 1999 215,000 134,238(5) 20,000 10,121
MANAGEMENT INFORMATION 1998 205,500 155,800(5) 12,000 9,029
SYSTEMS AND CHIEF
INFORMATION OFFICER
Susan Maloney Meyer ................ 2000 215,000 129,000(6) 12,000 8,800
SENIOR VICE PRESIDENT, 1999 208,000 98,426 18,000 8,572
GENERAL COUNSEL & SECRETARY 1998 91,667 50,000 6,000 1,650
- ------------------------
(1) Includes compensation amounts earned during the fiscal year but deferred
pursuant to Section 401(k) of the Code under the Company's 401(k) Savings
Plan.
(2) Bonus earned pursuant to the Management Incentive Plan during the year
indicated were paid in the next year.
(3) Includes:
(a) Company contributions to the Company's 401(k) Savings Plan for 2000 for
Mr. Larrimore ($5,100); Mr. Schwarz ($5,100); Mr. Helton ($5,100); Mr.
Uskup ($5,100); and Ms. Maloney Meyer ($5,100).
10
(b) Taxable portion for benefits provided during 2000 related to Split
Dollar Life, Group Life and Accidental Death insurance policies for Mr.
Larrimore ($4,701); Mr. Schwarz ($2,245); Mr. Helton, ($2,187); Mr. Uskup
($6,084); and Ms. Maloney Meyer ($3,700); and for disability insurance
for Mr. Larrimore ($10,931).
(4) Includes Discretionary Bonuses awarded in addition to the bonuses awarded
under the Company's Management Incentive Plan. Mr. Schwarz received $25,000
and Mr. Helton received $15,000.
(5) Includes Special Bonus. In December 1996, the Board of Directors adopted a
Special Bonus Plan to encourage and reward key management participants for
creating the operational foundation that would result in a public offering
of the Company's Common Stock. The stock offering occurred on October 10,
1997. Specified cash awards were paid on the first and second anniversaries
of the stock offering to participants who were full-time employees of the
Company at the time the awards were paid. In both 1999 and 1998, Mr.
Schwarz received $65,000 and Mr. Uskup received $32,500, which represented
the final payments due under the Special Bonus Plan.
(6) The Company has a Deferred Compensation Plan for certain executives.
Pursuant to that Plan, Ms. Maloney Meyer deferred her 2000 bonus.
11
STOCK OPTIONS
The United Stationers Inc. Management Equity Plan and 2000 Management Equity
Plan allow grants of stock options and other rights relating to Common Stock.
Grants may be made to directors and to key employees.
The following two tables provide information on stock options granted by the
Company to the executive officers named in the Summary Compensation Table during
the 2000 fiscal year. No such executive officers exercised stock options during
the 2000 fiscal year.
OPTION GRANTS DURING LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENT OF TOTAL ANNUAL RATES OF STOCK
OPTIONS PRICE APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OR OPTION TERM ($)(1)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME (# OF SHARES) FISCAL YEAR ($ PER SHARE) DATE 5% 10%
- ---- ------------- ---------------- ------------- ---------- ---------- ----------
Randall W. Larrimore..... 100,000 10.7% 29.125 8/1/2010 1,831,656 4,641,775
Steven R. Schwarz........ 45,000 4.8% 29.125 8/1/2010 824,245 2,088,799
R. Thomas Helton......... 14,000 1.5% 29.125 8/1/2010 256,432 649,848
Ergin Uskup.............. 12,000 1.3% 29.125 8/1/2010 219,799 557,013
Susan Maloney Meyer...... 12,000 1.3% 29.125 8/1/2010 219,799 557,013
- ------------------------
(1) The amounts under the columns labeled "5%" and "10%" are included pursuant
to certain rules of the Securities and Exchange Commission. Those amounts
are not intended to forecast future appreciation, if any, in the price of
the shares. The actual value of the options will vary in accordance with the
market price of the shares.
FISCAL YEAR-END OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
YEAR END FISCAL YEAR END (1)
--------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) (#) ($) ($)
- ---- ----------- ------------- ----------- -------------
Randall W. Larrimore....................... 358,000 462,000 4,319,500 3,110,500
Steven R. Schwarz.......................... 26,000 119,000 47,250 144,000
R. Thomas Helton........................... 28,800 67,200 26,800 60,700
Ergin Uskup................................ 8,800 35,200 14,850 41,400
Susan Maloney Meyer........................ 6,000 30,000 7,050 28,200
- ------------------------
(1) The values given are based on the closing price of the shares on
December 31, 2000, which was $24.875, less the applicable exercise price,
before payment of applicable taxes.
12
EMPLOYMENT CONTRACTS
LARRIMORE EMPLOYMENT CONTRACT. Randall W. Larrimore entered into an Employment
Contract with the Company as of May 23, 1997 to serve as President and Chief
Executive Officer. Pursuant to the contract, Mr. Larrimore's employment began
May 23, 1997 and continues until Mr. Larrimore or the Company notifies the other
party. If Mr. Larrimore notifies the Company, the term of employment ends
90 days after such notification, and if the Company notifies Mr. Larrimore, the
term of employment ends two years after such notification. The term of
employment also may be terminated earlier under certain circumstances.
The contract provides for an annual base salary of at least $495,000, plus
participation in all bonus, stock option and other benefit plans generally
available to executive officers of the Company. The contract also provides for a
supplemental pension benefit that will provide Mr. Larrimore with an amount
equivalent to five additional credited years of service under the Company's
pension plan.
If Mr. Larrimore's employment is terminated by the Company (other than for
cause, as defined in the contract) without the specified notice, or by
Mr. Larrimore for good reason (as defined in the contract) he will be entitled
to specified benefits plus his salary and bonuses earned to the date of
termination plus an amount equal to two times his base pay plus bonuses, and
pursuant to a 2000 amendment, his stock options which otherwise would have
become exercisable during the 24 months following such termination become
exercisable upon such termination. If his employment terminates due to his death
or disability, he, or his beneficiary, will receive an amount equal to his
annual salary plus bonus, his unexercisable options will be forfeited, and his
exercisable options will remain exercisable for up to one year following such
termination. If there is a change in control, all stock options held by
Mr. Larrimore will become exercisable.
OTHER EXECUTIVE EMPLOYMENT CONTRACTS. The Company entered into an Employment
Contract effective as of June 1, 1997 with Mr. Schwarz. The term of employment
began on June 1, 1997 and continues until Mr. Schwarz or the Company notifies
the other party. If Mr. Schwarz notifies the Company, the term of employment
ends 90 days after such notification, and if the Company notifies Mr. Schwarz,
the term of employment ends two years after such notification. The term of
employment may also be terminated earlier by either Mr. Schwarz or the Company
under certain circumstances. The contract provides for an annual base salary of
at least $265,000, plus participation in all bonus, stock option and other
benefit plans generally available to executive officers of the Company.
If Mr. Schwarz's employment is terminated by the Company (other than for cause,
as defined in the contract) without the specified notice, or by the executive
for good reason (as defined in the contract) he will be entitled to a severance
amount (subject to mitigation) equal to the sum of his base salary and bonuses
for the months remaining in the term of employment (or which would have been
remaining if the Company had given notice on the termination date) payable over
the severance period. If his employment terminates due to his death or
disability, he, or his beneficiary, will receive an amount equal to the sum of
his annual salary and his previous year's bonuses, payable over a 12-month
period.
Effective as of February 1, 1998, the Company entered into an Employment
Contract with Mr. Helton. The term of employment automatically renews for
one-year periods unless specified notice is provided. The contract provides for
an annual base salary of at least $200,000 plus
13
participation in the bonus, stock option, and other benefit plans generally
available to executive officers of the Company. If Mr. Helton is terminated by
the Company (other than for cause as defined in the contract) without the
specified notice, or by Mr. Helton for good reason (as defined in the contract),
he will be entitled to a severance amount equal to the unpaid portion of his
base salary for the remainder of the contract year, not to exceed twelve
(12) months and a severance amount equal to his base salary and the prior year's
bonus payable over a 12-month period. If his employment terminates due to his
death or disability, he, or his beneficiary, will receive an amount equal to the
sum of his base salary and his previous year's bonus and his spouse and
dependent children will be entitled to health coverage for the remainder of his
spouse's life.
Ergin Uskup has an Employment Contract dated as of February 13, 1995. Upon
termination, Mr. Uskup will be entitled to specified benefits and a severance
payment equal to one year's salary plus bonus, payable in 12 monthly
installments.
The Company has a severance program for executive officers of the Company who do
not have employment contracts. The severance program provides a severance
payment of one year's base salary if an officer is terminated without cause.
PENSION PLANS
United Stationers Supply Co. maintains noncontributory pension plans covering
over fifty percent of its employees. Employees who are at least 21 years old are
eligible to participate after twelve months of employment. The Pension Plan
provides a benefit at age 65 equal to 1% percent of an employee's career-average
annual compensation, multiplied by the number of years of credited service up to
a maximum of 40 years. However, an employee's annual compensation for each year
of service prior to September 1989 is deemed to be the compensation earned by
such employee during the twelve months ending on August 31, 1989. Employees'
pension rights fully vest after five years of service. These benefits are in
addition to normal Social Security retirement benefits. Alternative benefit
options of early retirement, joint and survivor annuity, and disability are also
available. All such options are of actuarially equivalent value to the basic
pension. The normal retirement age under this plan is 65. The Pension Plan
contribution for the Plan year ending August 31, 2000 was $472,283.
The Company's operating subsidiary also maintains a number of retirement benefit
plans for its employees who are covered under collective bargaining contracts.
The following table shows the annual retirement benefits that would be payable
at normal retirement (age 65) under the Pension Plan to the executive officers
individually named in the Summary Compensation Table on page 10. (The benefits
are calculated on the basis of estimated
14
years of service at retirement age and current levels of compensation, assuming
5.5% compounded annual increases):
ESTIMATED ANNUAL PENSION
NAME OF PARTICIPANT AT RETIREMENT ($)
- ------------------- ------------------------
Randall W. Larrimore................................. 32,200
Steven R. Schwarz.................................... 78,351
R. Thomas Helton..................................... 33,500
Ergin Uskup.......................................... 13,720
Susan Maloney Meyer.................................. 19,100
As of December 31, 2000, the credited years of service under the Pension Plan
for the persons named were: Mr. Larrimore, 4 years; Mr. Helton, 3 years;
Mr. Schwarz, 22 years; Mr. Uskup, 7 years; and Ms. Maloney Meyer, 3 years.
The Company's contributions to the Pension Plan are not allocated to the
accounts of the individual participants.
REPORT OF THE HUMAN RESOURCES COMMITTEE ON EXECUTIVE COMPENSATION
The Human Resources Committee of the Board of Directors is appointed by the
Board of Directors from its membership. As related to executive compensation,
the Human Resources Committee determines annual competitive base compensation
structures and appropriate bonus criteria and stock option grants to officers
under the Company's Management Incentive Plan and Management Equity Plans.
PHILOSOPHY
The Human Resources Committee is guided by the following principles on executive
compensation:
- Compensation programs are designed to provide average base salaries and
better than average annual incentives and other rewards when the Company's
maximum objectives are met or exceeded.
- Participants are informed about the possible rewards and what they must do
to earn them.
- Compensation programs are designed to align long-term compensation with
the interests of stockholders.
COMPONENTS OF OVERALL COMPENSATION
The Human Resources Committee considers several factors when determining
compensation of executives.
- Company Performance--The Human Resources Committee sets annual earnings
targets, which are used in determining the level of incentive awards.
- Competitive Practice--The Human Resources Committee has engaged an
independent consulting firm to advise it and provide information regarding
competitive executive compensation practices. This data is abstracted from
general industry survey sources and from proxy statements of publicly
traded organizations. In 2000, a group of companies (consisting of
wholesalers and distributors and service and manufacturing firms) was
15
examined for this purpose. These are companies for which data was
available to the consultant and which were felt to be representative
competitors of the Company for executive talent. This group is not the
same peer group used for the Stock Performance Graph and is subject to
change in future years if information about any company included in a
group is not available, if it is determined that any companies are no
longer competitors for executive talent, or if different organizations are
determined to be competitors. During 2000, the Human Resources Committee
began a review of a broader group of competitors for executive talent and
intends to consider a broader group of competitors for executive talent in
future years.
- The Human Resources Committee considers the data provided by the
consultant in determining the executive pay package, in particular base
salary, incentive bonus, and long-term stock-based compensation. The Human
Resources Committee's philosophy is to set base salaries and benefits at
or near the median of the similarly-sized comparator companies, while
providing performance-based variable compensation to allow total
compensation to fluctuate according to the Company's financial
performance. Long-term incentive awards are stock-based (e.g., stock
options) to emphasize long-term stock price appreciation.
There are three basic components of the Company's compensation program: base
salary, short term awards through bonus plans, and long term incentives through
stock options and other stock-related vehicles.
BASE SALARY
A competitive base salary is essential. A salary range for positions is
developed based on average base pay for similar positions at comparative
companies described above under Competitive Practice. The salaries of executives
are reviewed annually against these ranges with adjustments in base compensation
normally becoming effective on January 1.
The Human Resources Committee generally considers levels of responsibility,
performance, internal equity, and competitive base compensation practices when
determining salary adjustments.
The CEO's base salary is determined based on the above principles.
Mr. Larrimore's base salary was increased from $540,000 to $575,000 effective
January 1, 2000, a salary the Committee believed appropriate to reflect the
Company's performance (including a substantial increase in EPS) over the
previous year. Other executive officers generally received a merit base salary
increase of approximately 4.5% while some officers received a greater percentage
increase based on promotions and market adjustments.
BONUS PLANS
The Company's Management Incentive Plan provides annual incentive compensation
opportunities to executives based on the Company's achieving performance goals
established by the Committee. Target bonuses are established as a percentage of
base salary. For 2000, the target bonuses for Mr. Larrimore, executive vice
presidents and other executive officers were 80%, 60% and 40%, respectively, of
base salary. Bonuses are awarded under a formula based on percentage attainment
of targets set annually. The incentive awards for 2000 were based primarily on
the earnings performance of the Company. The target level for 2000 was set at a
12% increase in adjusted earnings per share defined for purposes of the
Management Incentive Plan (EPS) over the EPS for
16
1999. If the Company failed to produce minimum targeted results (at least a 7%
increase in EPS), no bonuses would have been paid. Since the Company produced
over a 25% increase in EPS for 2000, excluding certain one-time charges, bonuses
of 150% of the target bonuses were paid. Mr. Larrimore's 2000 bonus was
$690,000. In addition to the bonuses paid under the Management Incentive Plan,
discretionary bonuses were paid to Steven R. Schwarz and R. Thomas Helton to
reward their performance during 2000.
LONG-TERM INCENTIVE COMPENSATION
Stock options are an important part of the Company's compensation program. The
Human Resources Committee believes that a significant amount of executive
compensation should be dependent on value created for stockholders. With
options, management gains only when stockholders gain--when the Company's Common
Stock value goes up.
As a general rule, the Human Resources Committee considers the level of job
responsibility and the participant's contribution and potential positive impact
on the Company's performance in arriving at the number of shares for which
options are granted.
The Human Resources Committee made option grants with an exercise price equal to
fair market value on the date of grant to officers in August of 2000. In the
future, the Human Resources Committee expects to continue awarding option grants
each summer. In 2000, options were granted to Mr. Larrimore for 100,000 shares
with an exercise price of $29.125. The other executive officers in the aggregate
were granted options for 145,000 shares with an exercise price of $29.125. These
options vest ratably over a three-year period. The vesting schedule for options
granted in 2000 was shortened from the five year vesting with certain
performance acceleration used in prior years after consultation with a national
consulting firm that option vesting schedules were typically three years or
shorter. Other officers received options with the same exercise price and
vesting terms. In connection with the hiring of one new executive officer, the
executive officer was granted shares in addition to options for shares (included
in the option number above) subject to certain vesting and transfer
restrictions.
In connection with the establishment of the 2000 Management Equity Plan,
approved by shareholders last year, and the issuance of certain accounting
rules, the Human Resources Committee considered the appropriate treatment of
options upon a change of control of the Company and determined to specify that
50% of the outstanding unvested options would become vested upon a change of
control (as defined) and the remainder of such outstanding options would become
vested upon the optionee's termination of employment in connection with a change
of control by the Company without cause or by the optionee for good reason. Also
in connection with the issuance of certain accounting rules and to minimize
potential future accounting charges, options which were granted to
Mr. Larrimore on May 23, 1997 were amended to provide that those options which
would have become vested as though he continued as an employee until the end of
any severance period would become vested as of the date of Mr. Larrimore's
termination of employment.
POLICY ON DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code limits the deductibility of certain
compensation paid to the CEO and the four other most highly compensated
executives to $1 million annually, unless
17
certain requirements are met. The limit does not apply to performance-based
compensation paid under a plan that meets the requirements of the Code.
The Human Resources Committee, currently consisting exclusively of directors who
qualify as independent under Section 162 (m), determined matters involving
performance-based compensation in connection with the Chief Executive Officer
and the other four most highly compensated officers.
The Company intends to use performance-based compensation to minimize the effect
of the limits imposed by Section 162(m) to the extent that compliance with Code
requirements does not conflict with the Company's compensation strategy.
Respectfully submitted:
HUMAN RESOURCES COMMITTEE
James A. Johnson, Member and through January 30, 2001, Chair
Ilene S. Gordon, Member and effective January 30, 2001, Chair
Roy W. Haley, Member
Benson P. Shapiro, Member through February 23, 2000
Alex D. Zoghlin, Member as of November 21, 2000
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of United Stationers Inc. is composed of three non-employee
directors and operates under a written charter (Exhibit A) adopted by the Board
of Directors on February 23, 2000 in accordance with applicable rules of the
Securities and Exchange Commission and Nasdaq. The members of the Audit
Committee are Roy W. Haley, Max D. Hopper, and Ilene S. Gordon.
Management is responsible for the Company's internal controls and the financial
reporting process. The independent accountants are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and issuing a report
thereon. The Audit Committee's responsibility is to monitor and oversee these
processes. The Audit Committee approves the selection of the Company's
independent accountants.
In this context, the Audit Committee has met and held discussions with
management of the Company, who represented to the Audit Committee that the
Company's consolidated financial statements were prepared in accordance with
generally accepted accounting principles. The Audit Committee has reviewed and
discussed the consolidated financial statements with both management and the
independent accountants. The Audit Committee also discussed with the independent
accountants matters required to be discussed by Statement on Auditing Standards
No. 61 (Communication with Audit Committees). The Company's independent
accountants also provided to the Audit Committee the written disclosures
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), and the Audit Committee discussed with the
independent accountants their independence and considered whether the non-audit
services are compatible with maintaining the auditor's independence.
18
Based upon the Audit Committee's discussion with management and the independent
accountants, and the Committee's review of the representation of management and
the report of the independent accountants to the Audit Committee, the Audit
Committee recommended that the Board of Directors include the audited
consolidated financial statements in the Company's Annual Report on Form 10-K
for the year ended December 31, 2000 filed with the Securities and Exchange
Commission.
Respectfully submitted:
AUDIT COMMITTEE
Roy W. Haley, Chair
Max D Hopper, Member
Ilene S. Gordon, Member
PRINCIPAL ACCOUNTING FIRM FEES
The fees for the fiscal year ended December 31, 2000 paid by the Company to its
principal accounting firm, Ernst & Young LLP, totaled $1.1 million, including
$0.5 million for the year-end audit and $0.6 million for other audit-related
services (pension and statutory audits, business acquisitions, accounting
consultations and internal audit services).
19
STOCK PERFORMANCE GRAPH
The following graph compares the performance of our Common Stock over a
five-year period with (1) the total returns of the Nasdaq Stock market (U.S.
Companies) and (2) a peer group comprised of companies included within Value
Line's Office Equipment Industry. The graph assumes $100 was invested on
December 31, 1995 in the Company's Common Stock and in each of the indices and
assumes reinvestment of all dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
UNITED STATIONERS (USTR) *NASDAQ (U.S. COMPANIES) **VALUE LINE OFFICE EQUIPMENT
1995 $100.00 $100.00 $100.00
1996 $70.27 $123.04 $126.80
1997 $173.42 $150.69 $181.06
1998 $187.39 $212.51 $246.12
1999 $205.86 $394.92 $247.59
2000 $171.65 $237.62 $192.29
Assumes $100 invested at the close of trading 12/95 in United Stationers (USTR)
common stock, *Nasdaq (U.S. Companies), and **Value Line Office Equipment.
Cumulative total return assumes reinvestment of dividends.
Source: Value Line, Inc.
FILINGS UNDER SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities and Exchange Act of 1934 requires the Company's
directors and officers to file reports of holdings and transactions in the
Company's Common Stock with the Securities and Exchange Commission. To the
Company's knowledge, based solely on a review of Forms 3, 4 and 5 filed with the
Security and Exchange Commission in accordance with the rules thereof, the
Company believes that for the year ended December 31, 2000 all Section 16(a)
filing requirements applicable to its directors and officers were in compliance.
20
INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Ernst & Young LLP as
independent auditors for the Company for the fiscal year ending December 31,
2001. Ernst & Young LLP has served as the Company's independent auditors since
March 1995. Ernst & Young LLP are independent certified public accountants with
respect to the Company within the meaning of the applicable published rules and
regulations of the Securities and Exchange Commission, the pronouncements of the
Independence Standards Board, and Rule 101 of the American Institute of
Certified Public Accountants' Code of Professional Conduct, its interpretations
and rulings.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting, are expected to be available to respond to appropriate questions, and
will have the opportunity to make a statement should they choose to do so.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Annual Meeting of
Stockholders to be held in May 2002, must be received by the Company no later
than November 29, 2001 in order to be considered for inclusion in the Company's
Proxy Statement and form of proxy relating to such meeting. Alternatively, under
the Company's Second Restated Certificate of Incorporation, a proposal that the
stockholder does not seek to include in the Company's Proxy Statement may be
submitted in writing to the Secretary of the Company for the 2002 Annual Meeting
of Stockholders not less than 10 days after notice of the 2002 Annual Meeting is
first given to stockholders. The stockholder's proposal must set forth a brief
description of the business to be brought before the annual meeting, the name
and address of the stockholder, the class and number of shares beneficially
owned by the stockholder, and any material interest of the stockholder in such
business to be brought before the meeting. If the stockholder does not also
comply with the requirements of Rule 14a-4(c)(2) under the Securities Exchange
Act of 1934 by notifying the Company of such proposal on or before February 13,
2002, in the case of the 2002 Annual Meeting of Stockholders, the Company may
exercise discretionary voting authority under proxies it solicits to vote in
accordance with its best judgment on any such proposal submitted by such
stockholder.
OTHER MATTERS
Management does not know of any other matter to be presented for action by the
stockholders at the Annual Meeting. The persons named in the accompanying proxy
will vote such proxy as determined by a majority of the Board of Directors with
respect to any other matter not now known which is properly brought before the
meeting.
By Order of the Board of Directors
[SIGNATURE]
SUSAN MALONEY MEYER
SECRETARY
Des Plaines, Illinois
21
EXHIBIT A
CHARTER OF
UNITED STATIONERS INC.
AUDIT COMMITTEE
OF THE
BOARD OF DIRECTORS
PURPOSE:
The primary purpose of the Audit Committee (the "Committee") is to assist the
Board of Directors (the "Board") in fulfilling its responsibility to oversee
(i) the financial reporting process as conducted by management, including
overviewing the financial reports and other financial information provided by
the Company to any governmental or regulatory body, the public or other users
thereof; (ii) the Company's systems of internal accounting and financial
controls; (iii) the annual independent audit of the Company's financial
statements and the Company's legal compliance; and (iv) ethics programs as
established by management and the Board.
In discharging its oversight role, the Committee is empowered to investigate any
matter brought to its attention with full access to all books, records,
facilities and personnel of the Company and the power to retain outside counsel,
auditors or other experts for this purpose. The Board and the Committee are in
place to represent the Company's stockholders; accordingly, the outside auditors
are ultimately accountable to the Board and the Committee.
The Committee shall review the adequacy of this Charter on an annual basis.
MEMBERSHIP:
The Committee shall be comprised of not less than three members of the Board,
and the Committee's composition will meet the requirements of the Audit
Committee Policy of the NASD. The Committee shall meet not fewer than three
times annually. At least once a year, the Committee shall meet (a) out of the
presence of management, with the independent accountants, (b) out of the
presence of management, with the Director, Internal Audit, and (c) with
representatives of senior management and with such other Company employees as
may be considered necessary in connection with the Company's performance of its
internal audit procedures.
Accordingly, all of the members will be directors:
1. Who have no relationship to the Company that may interfere with the exercise
of their independence from management and the Company; and
2. Who are financially literate or who become financially literate within a
reasonable period of time after appointment to the Committee. In addition,
at least one member of the Committee will have accounting or related
financial management expertise.
KEY RESPONSIBILITIES:
The Committee's role is one of oversight and the Committee recognizes that the
Company's management is responsible for preparing the Committee's financial
statements and that the outside auditors are responsible for auditing those
financial statements. Additionally, the Committee
22
recognizes that financial management, including the internal audit staff, as
well as the outside auditors, have more detailed information on the Company than
do Committee members; consequently, in carrying out its oversight
responsibilities, the Committee is not providing any expert or special assurance
as to the Company's financial statements or any professional certification as to
the outside auditors' work.
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight function. These functions are set forth
as a guide with the understanding that the Company may diverge from this guide
as appropriate given the circumstances.
- The Committee shall review with management and the outside auditors the
audited financial statements to be included in the Company's Annual Report
on Form 10-K (or the Annual Report to Stockholders if distributed prior to
the filing of Form 10-K) and review and consider with the outside auditors
the matters required to be discussed by Statement of Auditing Standards
("SAS") No. 61.
- As a whole, or through the Committee chair, the Committee shall review
with management and the outside auditors the Company's interim financial
results to be included in the Company's quarterly reports to be filed with
the Securities and Exchange Commission and the matters required to be
discussed by SAS No. 61; this review will occur prior to the Company's
filing of the Form 10-Q.
- The Committee shall discuss with management and the outside auditors the
quality and adequacy of the Company's internal controls.
The Committee shall:
- request from the outside auditors annually, a formal written statement
delineating all relationships between the auditors and the Company
consistent with Independence Standards Board Standard Number 1;
- discuss with the outside auditors any such disclosed relationships and
their impact on the outside auditors' independence;
- recommend that the Board take appropriate action to oversee the
independence of the outside auditors;
- review the scope of the activities of the firm of independent auditors
engaged by the Company;
- review the scope of the activities of the Company's Internal Audit
Department;
- make such reports of the Committee's activities as may be required by the
Securities and Exchange Committee from time to time; and
- periodically review the matters set forth on Attachment A.
The Committee, subject to any action that may be taken by the full Board, shall
have the ultimate authority and responsibility to select or nominate for
stockholder approval, evaluate and, where appropriate, replace the outside
auditors.
23
ATTACHMENT A
THE AUDIT COMMITTEE SHALL REVIEW EACH OF THE FOLLOWING MATTERS ONCE PER YEAR, ON
A SCHEDULE TO BE DETERMINED, UNLESS THE COMMITTEE DEEMS IT APPROPRIATE TO DEVOTE
MORE FREQUENT ATTENTION:
1. the scope of the activities of the firm of independent auditors engaged by
the Company;
2. the scope of the activities of the Company's Internal Audit Department;
3. the degree of coordination of the respective activities of the firm of
independent auditors and of the Internal Audit Department;
4. a) the independence of the firm of independent auditors,
b) the scope of its audit of the Company's financial statements, and
c) its discharge of its duties;
5. the effectiveness of, and the adequacy of resources available to, the
Company's Internal Audit Department;
6. the procedures established by the Company to establish and monitor its
internal controls, including the controls over the data processing
activities and programs for security to protect against computer fraud and
misuse;
7. the policies of the Company concerning financial reporting to shareholders
and the public, including the policies of the Company for compliance with
federal and state laws, and applicable standards and rules of regulatory and
advisory bodies that have jurisdiction over the Company's financial
reporting and audit processes;
8. the major findings of audits of the Company's financial statements performed
by
a) the Company's independent auditors and
b) the Internal Audit Department;
9. any management letter(s) received by the Company from its firm of
independent auditors having suggestions for improvement, and, after
discussing any such management letter(s) with the Board of Directors,
monitor the implementation of procedures suggested by such management
letter(s) and approved by the Board;
10. all related party transactions between the Company and any affiliate as such
term is defined in the rules and regulations of the Securities and Exchange
Commission, and any potential conflict of interest situation between the
Company and an affiliate, and to the extent appropriate, report to the Board
of Directors any such related party transactions or potential conflict of
interest;
11. the major findings of audits of the financial statements of the Company's
major employee benefit plans, performed by the Company's independent
auditors and the Internal Audit Department;
12. the status of the Company's federal income tax returns for open years and
whether there are any significant items that have been or might be disputed
by the IRS, including inquiry of
24
management and the independent auditors as to the adequacy of the related
tax reserves, and the policies and programs of the Company for compliance
with state and federal tax laws;
13. with Company counsel, any significant litigation;
14. fraudulent activities that have been detected within the Company which would
have a material adverse effect on the Company; and
15. appointment of independent auditors and the cost of audit, accounting and
management advisory services provided by the Company's independent auditors.
25
DETACH HERE
PROXY
UNITED STATIONERS INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - MAY 9, 2001
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints KATHLEEN S. DVORAK, EILEEN A. KAMERICK, AND
STEVEN R. SCHWARZ, or any of them, proxies, with full power of substitution, to
vote all the shares of common stock of UNITED STATIONERS INC. which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
at the Company's offices located at 2200 East Golf Road, Des Plaines, Illinois
on Wednesday, May 9, 2001, at 2:00 p.m., central time, and at any adjournment
thereof, with all powers the undersigned would possess if present.
THIS PROXY IS TO BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE DIRECTOR NOMINEES LISTED ON THE REVERSE
SIDE. IN THEIR DISCRETION, THE PROXIES MAY VOTE UPON ANY OTHER BUSINESS THAT
PROPERLY COMES BEFORE THE MEETING.
SEE REVERSE CONTINUED AND TO BE SIGNED SEE REVERSE
SIDE ON REVERSE SIDE SIDE
DETACH HERE
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE.
Election of three directors to serve for a three-year term expiring in 2004.
NOMINEES: (01) Roy W. Haley, (02) Benson P. Shapiro, (03) Alex D. Zoghlin
FOR ALL NOMINEES / / / / WITHHELD FROM ALL NOMINEES
/ / ______________________________________
For all nominees except as noted above
MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
Please date and sign exactly as your name appears below. Joint owners should all
sign. When signing as attorney, executor, administrator, trustee, guardian or
corporate officer, please give full title as such.
Signature:________________Date:________Signature:__________________Date:________