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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 7, 1997
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of DEP
Corporation, a Delaware corporation (the "Company"), will be held at the Holiday
Inn, 19800 South Vermont Avenue, Torrance, California, on Friday, February 7,
1997 (the "Meeting"), at 10:00 a.m. (local time) for the following purposes:
1. To elect two Class III directors to serve for three-year terms.
2. To transact such other business as may properly come before the Meeting
or any adjournment or postponement thereof.
The Board of Directors of the Company has fixed the close of business on
Tuesday, December 17, 1996 as the record date for the determination of
stockholders entitled to notice of, and to vote at, the Meeting and any
adjournment thereof. The list of stockholders entitled to vote at the Meeting
will be open to the examination of any stockholder during the ten days prior to
the Meeting at the Company's offices, 2101 East Via Arado, Rancho Dominguez,
California, during normal business hours.
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.
YOUR VOTE IS VERY IMPORTANT. TO ENSURE THAT YOUR STOCK IS REPRESENTED, WE
URGE YOU TO VOTE, SIGN, AND MAIL THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED,
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING. IF YOU DO ATTEND THE
MEETING, YOU MAY, IF YOU PREFER, REVOKE YOUR PROXY AND VOTE YOUR SHARES IN
PERSON.
By Order of the Board of Directors
[SIG]
JUDITH R. BERGLASS
SECRETARY
Rancho Dominguez, California
December 30, 1996
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2101 EAST VIA ARADO
RANCHO DOMINGUEZ, CALIFORNIA 90220-6189
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 7, 1997
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of DEP Corporation, a Delaware corporation (the "Company"),
of proxies for use at the Annual Meeting of Stockholders to be held on Friday,
February 7, 1997, at 10:00 a.m. (local time), at the Holiday Inn, 19800 South
Vermont Avenue, Torrance, California, and at any adjournment or postponement
thereof (the "Meeting").
Record holders of the Company's common stock, par value $.01 per share, (the
"Common Stock") as of the close of business on December 17, 1996 will be
entitled to receive notice of, and to vote at, the Meeting. As of December 17,
1996, there were 6,793,602 shares of Common Stock outstanding. Presence at the
Meeting, in person or by proxy, of a majority of the outstanding Common Stock
will constitute a quorum for the transaction of business at the Meeting. Each
share of the Common Stock will be entitled to cast one vote on each matter
presented to the stockholders. Abstentions and broker non-votes will be counted
for purposes of determining the presence or absence of a quorum for the
transaction of business. Abstentions (which are effective on all matters other
than the election of directors) will be considered as "against" votes for the
purpose of calculating whether the requisite percentage of votes cast has
approved a proposal, whereas broker non-votes will not be counted as cast.
Shares represented by duly executed proxies received prior to the Meeting
will be voted at the Meeting. Such shares will be voted in accordance with all
instructions validly given by a stockholder. When no such instruction is given,
the shares will be voted in accordance with the recommendation of the Board of
Directors of the Company (the "Board") indicated on the proxy.
The Company will pay all expenses of soliciting proxies. In addition to the
solicitation being made hereby, solicitation may be made in person or by
telephone by Company officers, directors or employees who will not be specially
compensated therefor. Upon request, the Company will reimburse banks, brokerage
firms and other custodians, nominees and fiduciaries for their reasonable
expenses incurred in forwarding proxy materials to beneficial owners of the
Common Stock.
1
A proxy may be revoked at any time before it is voted by giving written
notice of revocation to the Secretary of the Company, by submission of a
subsequent proxy or by attending and voting in person at the Meeting.
This Proxy Statement and the enclosed form of proxy are being mailed to
holders of the Common Stock on or about December 27, 1996.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following information is set forth as of December 1, 1996 with respect
to the Company's chief executive officer and four most highly compensated other
officers, each director, all directors and executive officers as a group, and
each other person or group known to the Company to be the beneficial owner of
more than 5% of the outstanding shares of the Common Stock:
COMMON STOCK
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BENEFICIALLY OPTIONS PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNERS(1): OWNED(2) EXERCISABLE(2) CLASS(3)
- ----------------------------------------------------- ----------- ------------- -------------
DIRECTORS AND OFFICERS
Robert Berglass.................................... 1,841,260 79,800 26.5
Judith R. Berglass (4)............................. 506,796 35,000 7.3
Grant W. Johnson................................... 70,494 65,000 1.0
Philip I. Wilber................................... -- 6,000 *
Michael Leiner..................................... 15,000 -- *
Alexander L. Kyman................................. 1,000 -- *
Jerome P. Alpin.................................... 55,916 35,000 *
Stephen R. Berry................................... 8,100 6,000 *
D. Lee Johnson..................................... 6,734 5,000 *
All Directors and Officers (11 Persons).............. 2,527,300 245,800 35.5
OTHER 5% BENEFICIAL OWNERS (5)
Dimensional Fund Advisors Inc...................... 362,524 -- 5.3
1299 Ocean Avenue, Ste. 850
Santa Monica, CA 90401
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* Denotes less than 1%.
Except as otherwise indicated, each person shown in the above table has sole
voting and dispositive power over the Common Stock or options.
(1) The address for each director and officer is c/o DEP Corporation, 2101 East
Via Arado, Rancho Dominguez, California 90220-6189.
(2) Includes options exercisable on December 1, 1996 or within 60 days
thereafter.
(3) The percentage calculation gives effect to 625,000 shares of the Common
Stock that the Company is obligated to issue to its secured lenders pursuant
to the Company's recent Plan of Reorganization under Chapter 11 of the
United States Bankruptcy Code.
(4) Includes 400,000 shares of the Common Stock held in the Berglass 1995
Irrevocable Trust dated June 27, 1995 for which Mrs. Berglass is the
Trustee.
(5) Based solely upon the information delivered to the Company by such
beneficial owners. Dimensional Fund Advisors Inc. ("Dimensional"), a
registered investment advisor, is deemed to have beneficial ownership of
362,524 shares of the Company's Common Stock as of September 30, 1996, all
of which shares are held in portfolios of DFA Investment Dimensions Group
Inc., a registered open-end investment company, or in series of The DFA
Investment Trust Company, a Delaware business trust,
2
or the DFA Group Trust and the DFA Participation Group Trust, investment
vehicles for qualified employee benefit plans, all of which Dimensional
serves as investment manager. Voting power with respect to certain of such
shares is shared with persons who are officers of Dimensional. Dimensional
disclaims beneficial ownership of all such shares.
ELECTION OF DIRECTORS
The Company's Board currently consists of six directors who are divided into
three classes. The term of office of the Class III directors, Mr. Berglass and
Mr. Johnson, expires at the Meeting and they have been nominated by the Board to
serve as Class III directors for a term of three years. The nominees have
indicated to the Company their availability and willingness to serve in such
capacity. However, if prior to the voting for directors, any of the nominees
becomes unavailable or unable to serve as a director, the proxy holders will
vote for a substitute nominee in accordance with their best judgment.
Information concerning the Class III director nominees and the continuing
directors, based on data furnished by them, is set forth below:
NAME AGE PRINCIPAL OCCUPATION AND POSITION WITH THE COMPANY
- --------------------------------- --- -------------------------------------------------------------------------
NOMINEES:
CLASS III DIRECTORS
(terms to expire in 1999)
Robert Berglass 58 Robert Berglass has served as President of the Company since 1969 and has
been Chairman of the Board of Directors since 1971. Immediately prior to
joining the Company, he was a Vice President of Faberge, Inc. He has more
than 35 years of experience in the personal care products industry.
Grant W. Johnson 52 Grant W. Johnson is the Senior Vice President, Finance and Chief
Financial Officer and has been employed by the Company since 1985 and as
a director since 1986. For approximately eight years preceding his
joining the Company, he was Vice President, Finance of Vidal Sassoon,
Inc. Mr. Johnson, a certified public accountant, also has seven years of
experience with Deloitte & Touche LLP.
CONTINUING DIRECTORS:
CLASS I DIRECTORS
(terms expire in 1997)
Alexander L. Kyman 67 Alexander L. Kyman has been a director of the Company since December
1994. Since January 1, 1994, Mr. Kyman has been the principal of Alex
Kyman & Associates, a business and financial consulting firm. For over 27
years prior thereto he was employed by City National Bank where he served
as Vice Chairman for one year and as President and Chief Operating
Officer for eight years prior thereto.
Michael Leiner 50 Michael Leiner has been a director of the Company since December 1994.
Mr. Leiner is Chairman Emeritus of Leiner Health Products Inc., a
manufacturer and marketer of pharmaceutical products. Since 1992 he has
been a consultant to that company and others. From 1979 to 1992, he
served as Chairman of the Board and Chief Executive Officer of Leiner
Health Products Inc.
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NAME AGE PRINCIPAL OCCUPATION AND POSITION WITH THE COMPANY
- --------------------------------- --- -------------------------------------------------------------------------
CONTINUING DIRECTORS:
CLASS II DIRECTORS
(terms expire in 1998)
Judith R. Berglass 45 Judith R. Berglass is a Senior Vice President and has been employed by
the Company since 1983. She has served as the Company's Vice President,
Corporate Development since 1984, a director since 1985 and since 1986
has also served as Secretary. For the three years prior to joining the
Company, she was Vice President of CLF Associates, a management
consulting firm. Mrs. Berglass is the wife of the President.
Philip I. Wilber 69 Philip I. Wilber has been a director of the Company since October 1993.
Mr. Wilber founded Drug Emporium, Inc. in 1977 and served as its
President, Chief Executive Officer and Chairman of the Board until 1989,
and as its Chairman of the Board from 1989 until his retirement in
January 1992. He then served as a director until January 1993 and has
been a consultant since that time. Drug Emporium is a chain of 136
company-owned deep discount drug stores which also provides certain
services for 100 independently franchised stores operating under the same
name.
BOARD OF DIRECTORS AND COMMITTEES
The Board held 11 meetings during fiscal 1996. Non-employee directors
receive an annual retainer of $6,000, plus $1,000 for each Board meeting
attended and $500 for each committee meeting attended on a date different from a
Board meeting. In addition, each non-employee director is entitled to receive
$2,000 for service as chairman of a committee of the Board. During fiscal year
1996, each director attended at least 75% of all meetings of the Board and any
committees of the Board on which such director served.
Under the Company's 1992 Stock Option Plan, each director of the Company
other than the Company's Chairman is entitled to receive an option grant
covering 1,000 shares of the Common Stock on the last business day of each
fiscal year, at an exercise price equal to the last reported sale price on such
day. Pursuant to an amendment to such Plan that was approved by the Company's
stockholders on January 9, 1996, any person becoming a director on or after
August 1, 1994 will receive a one-time grant of an option to purchase 5,000
shares of the Common Stock at an exercise price equal to the last reported sale
price on the date of grant. On September 19, 1995, Messrs. Leiner and Kyman each
was granted an option to purchase 5,000 shares at the price of $2.125 per share
pursuant to the foregoing amendment. However, in light of the Company's recent
plan of reorganization pursuant to Chapter 11 of the United States Bankruptcy
Code, all of the directors entitled to receive the annual grant covering 1,000
shares elected to defer the receipt of options during the fiscal year ended July
31, 1996.
The Board currently has an Audit Committee, a Compensation and Management
Stock Option Committee (the "Compensation Committee") and an Employee Stock
Option Committee. The Board does not have a standing Nominating Committee.
During fiscal 1996, the Audit Committee's responsibilities included
selecting the Company's independent auditors, examining the results of the
annual audit and reviewing the Company's internal accounting controls and
estimated fees of services performed by the Company's independent auditors. In
addition, the Audit Committee advised the Board as to particular accounting or
financial matters which came to its attention during the course of its review.
Messrs. Kyman and Leiner are currently the members of the Audit Committee, which
held five meetings during fiscal 1996.
4
The Compensation Committee is responsible for determining compensation for
the President and stock option grants to all executive officers. Messrs. Wilber
and Leiner are currently the members of the Compensation Committee, which held
two meetings during fiscal 1996.
The Employee Stock Option Committee is responsible for determining stock
option grants to employees who are not executive officers. Mr. Berglass is
currently the sole member of the Employee Stock Option Committee, which met once
during fiscal 1996.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 as amended (the
"Exchange Act"), requires the Company's officers and directors and persons who
own more than ten percent of a registered class of the Company's equity
securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and to furnish the Company with copies of
such reports. Based on the Company's review of the copies of those reports and
written representations which it has received, the Company believes that all
such filings have been made. Mr. Mark M. Jagusiak, the Company's Vice President,
Operations, was late in filing a Form 5 to report the expiration of certain
stock options, which expiration was exempt from liability under Section 16(b) of
the Exchange Act.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth compensation of the
Chief Executive Officer and the four other most highly compensated executive
officers of the Company for fiscal years 1996, 1995 and 1994:
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION(1) -----------------
FISCAL --------------------- STOCK OPTIONS ALL OTHER
NAME YEAR SALARY(2) BONUS(3) NUMBER GRANTED COMPENSATION(4)
- ------------------------------------------ --------- ---------- --------- ----------------- -----------------
Robert Berglass 1996 $ 546,892 $ -- -- $ 1,750
President and Chief Executive Officer 1995 523,651 -- -- 1,750
1994 566,085 -- 30,000 2,724
Grant W. Johnson 1996 209,814 -- -- 2,284
Senior Vice President and Chief 1995 204,990 -- 26,000 1,210
Financial Officer 1994 206,500 -- 11,000 4,032
Jerome P. Alpin 1996 200,168 -- -- 3,419
Senior Vice President and General 1995 195,594 17,970 25,000 2,060
Manager, International Sales and 1994 197,142 42,625 10,000 5,259
Marketing
Stephen R. Berry 1996 151,900 -- -- 1,815
Vice President, Sales 1995 142,200 9,157 10,000 1,293
1994 125,725 9,437 7,000 1,672
D. Lee Johnson 1996 134,750 -- -- 1,560
Vice President, Administration 1995 103,077 17,970 8,500 848
1994 -- -- -- --
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(1) Base salaries for Messrs. Berglass, Grant Johnson and Alpin in fiscal year
1996 remained unchanged from the prior year level; however, during the
period March 1995 through October 1995 all three participated in voluntary
salary reductions which amounted to 15% for Mr. Berglass and 10% for Messrs.
Johnson and Alpin.
5
(2) Compensation deferred at the election of the executive pursuant to the DEP
Corporation Executive Deferred Compensation Plan (the "Deferred Compensation
Plan") is included as salary in the year earned. The Deferred Compensation
Plan was terminated in November 1995.
(3) Bonuses are included in the fiscal year earned, but are typically paid in
the following fiscal year. Bonuses paid are subject to the Company's 1993
Stock Target Ownership Plan pursuant to which executives receive a portion
of their bonus compensation in shares of Common Stock based on the fair
market value of such stock. The fiscal 1995 and 1994 bonuses paid to Mr.
Alpin included the fair market value of 1,734 and 2,765 shares of Common
Stock, respectively. The fiscal 1995 bonus paid to Mr. D. Lee Johnson
included the fair market value of 1,734 shares of Common Stock.
(4) Amounts paid in fiscal 1996 represent: (i) the value of group and
supplemental term life insurance provided in excess of $50,000 basic
coverage of $1,350 for Mr. Berglass, $1,884 for Mr. Grant Johnson, $3,019
for Mr. Alpin, $1,415 for Mr. Berry and $1,160 for Mr. D. Lee Johnson; and
(ii) $400 for each of the named officers as matching contributions under the
Company's 401(k) plan. No contribution was made by the Company to its Profit
Sharing Plan for either fiscal 1996 or 1995.
CHANGE IN CONTROL BENEFITS
The Company has entered into an Executive Severance Agreement (the
"Severance Agreement") and a Retention Bonus Agreement (the "Retention
Agreement") (collectively, the "Agreements") with each of the executive officers
named in the Summary Compensation Table above, and other executive officers,
with the exception of Messrs. Berglass and Berry, who are covered only by a
Severance Agreement. The Agreements provide for a severance payment and a
retention bonus payment should a change in control of the Company occur.
The Severance Agreement provides an executive with a lump sum payment based
on an executive's current annual base salary, as of the date of termination, as
follows: (1) the President and senior vice presidents would receive payments
equal to 18 months of their annual base salary, (2) other executive officers
would receive payments equal to 12 or 18 months of their annual base salary, and
(3) other vice presidents and department directors would receive payments equal
to six months of their annual base salary plus one month of the executive's
annual base salary multiplied by a number equal to the number of years the
executive has been employed by the Company, provided, however, that the maximum
payment would not exceed 18 months of such executive's annual base salary. In
addition, all such executives would receive life, disability, accident and group
health insurance benefits for a like period of time.
A change in control will be deemed to have occurred if: (i) Robert Berglass,
Judith R. Berglass and any controlled affiliate thereof no longer is the
beneficial owner of securities of the Company representing 26% or more of the
combined voting power of the Company's then outstanding securities; (ii) within
a two consecutive year period, members of the Board at the beginning of such
period and approved successors no longer constitute a majority of such Board, or
(iii) stockholders of the Company entitled to vote thereon approve a merger or
consolidation (with certain exceptions) or a plan of complete liquidation.
An executive is not entitled to receive any compensation or benefits under
the Severance Agreement subsequent to a change in control if the executive's
employment is terminated (i) due to the disability of the executive, (ii) by the
Company, for "just cause," as defined in the Severance Agreement or (iii) by the
executive other than for "good reason," as defined in the Severance Agreement.
Each Severance Agreement will terminate three years from the date of execution
and will automatically be extended for one additional year unless either party
gives notice to the other of its intent not to extend the term.
The Retention Agreement provides that in the event a change in control
occurs within 24 months after such executive enters into such Retention
Agreement and (i) the executive remains in the employ of the Company for a
period of six months after such change in control or (ii) if such executive is
terminated by the Company or a successor, unless such termination is for "just
cause," as defined in the Retention
6
Agreement or voluntarily by the executive other than for "good reason," as
defined in the Retention Agreement, then each executive listed on the Summary
Compensation Table above, with the exception of Messrs. Berglass and Berry, will
receive a lump sum payment equal to approximately six months of the executive's
annual base salary.
If payments and benefits under the Agreements pursuant to a change in
control would subject such executive to excise tax under Section 4999 of the
Internal Revenue Code or would result in the Company's loss of a federal income
tax deduction for such payments, then such payments and benefits shall
automatically be reduced to the extent necessary to avoid the imposition of such
tax penalty.
The Board believes that the Agreements, which were unanimously approved by
the independent, non-management directors, reinforce and encourage the continued
attention and dedication of members of the Company's management team to their
assigned duties. The Agreements protect the best interests of the stockholders
by assuring such executives a level of financial security and inducing such
executives to remain in the employ of the Company. The Board believes that these
advantages outweigh the cost of such benefits.
OPTION GRANTS
With the exception of options with respect to 10,000 shares of the Common
Stock granted to two non-employee directors, Messrs. Kyman and Leiner, no other
options were granted to executives or other employees during fiscal 1996.
OPTION EXERCISES AND VALUES
The following table presents information regarding options exercised to
acquire shares of the Company's Common Stock during fiscal 1996 and the values
of unexercised options held at the end of fiscal 1996:
AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND 1996 FISCAL YEAR-END OPTION
VALUES
VALUE OF UNEXERCISED
NUMBER OF NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END(1)
ACQUIRED VALUE -------------------------- --------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- ----------- ---------- ----------- ------------- ----------- -------------
Robert Berglass................. -- $ -- 79,800 50,200 $ -- $ --
Grant W. Johnson................ -- -- 65,000 12,000 -- --
Jerome P. Alpin................. -- -- 35,000 10,000 -- --
Stephen R. Berry................ -- -- 6,000 12,000 -- 1,250
D. Lee Johnson.................. -- -- 5,000 3,500 -- --
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(1) Based on the difference between the closing price on the Nasdaq SmallCap
Market of $1.25 for the shares of Class A common stock and $1.625 for the
shares of Class B common stock at July 31, 1996, and the exercise price of
options having an exercise price lower than such closing prices. Pursuant to
the Company's Plan of Reorganization which was confirmed by the United
States Bankruptcy Court on October 23, 1996, effective November 4, 1996, the
Company's Class A and Class B common stock were both reclassified into
shares of the Common Stock.
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COMPENSATION COMMITTEE REPORT
The Company's executive compensation policies are designed to develop a high
quality management team and to motivate this team to achieve the Company's
short-term and long-term goals. With this in mind, the Company seeks to develop
overall compensation programs which provide the competitive compensation levels
necessary to attract and retain experienced, innovative, and well-qualified
executives from the health and beauty care industry and the Company's own middle
management. The Company then seeks to provide such executives with significant
performance bonuses closely linked to their achievement of objective financial
goals, such as growth in net sales and operating income and a favorable return
on equity, and to more subjective goals, such as organizational development,
team work and corporate efficiency.
Within this framework, the Company's Compensation Committee is responsible
for determining all aspects of the compensation for its president and chief
executive officer (the "CEO"), as well as the stock options to be granted to the
Company's other executive officers. The CEO is responsible for establishing all
compensation for the other executive officers, apart from their stock options.
As one of the factors in its review of compensation matters, the
Compensation Committee considers the anticipated tax effect on the Company and
executives of various payments and benefits. Section 162(m) of the Internal
Revenue Code generally disallows the Company's deduction for compensation in
excess of $1,000,000 paid to the CEO or to any of the four other most highly
compensated executive officers, unless such excess compensation qualifies as
"performance-based compensation." The Compensation Committee will not
necessarily limit executive compensation to that which is deductible by the
Company under Section 162(m), but believes that Section 162(m) will not limit
the deductibility of any compensation granted to date.
The three key components of the Company's compensation programs are base
salary, performance bonuses and stock options.
BASE SALARY
Base salary levels for all executive officers are reviewed annually. As part
of this review, the Company takes into account the compensation packages offered
by other companies in the health and beauty care industry and focuses particular
attention on the compensation paid by a group of the Company's peers (the "Peer
Group"). The Company also gives consideration to the experience,
responsibilities, management and leadership abilities of its individual
executive officers and their actual performance on behalf of the Company.
PERFORMANCE BONUSES
At the commencement of each fiscal year, the Company establishes objective
financial and certain subjective goals which are based upon and exceed the
Company's achievements in the prior year. Using these overall goals as a basis,
the CEO then establishes incentive programs which set forth performance goals
for the current fiscal year. In addition, at the end of each fiscal year, the
Company may award bonuses to recognize special contributions made by an
executive or his department to long-term strategic goals not specifically
addressed in the individual incentive programs. In compliance with the 1993
Stock Target Ownership Plan, a portion of the executive's performance bonus may
be paid in the form of Common Stock, with the remainder paid in cash.
STOCK OPTIONS
The Compensation Committee utilizes stock options as a key incentive because
they provide executives with the opportunity to become stockholders of the
Company and thereby share in the long-term appreciation in value of the
Company's Common Stock. The Compensation Committee believes that stock
8
options are beneficial to the Company and its stockholders because they directly
align the interests of the Company's executives with those of its other
stockholders.
The Compensation Committee determines the amount of stock options, if any,
to be granted from time to time to executive officers pursuant to the Company's
1992 Stock Option Plan. Substantially all of the options are incentive stock
options which are granted at no less than prevailing market value. In the case
of CEO incentive stock options, the exercise price is at least 110% of such
prevailing value. Accordingly, stock options will only benefit executives if the
price of the Company's Common Stock increases over the option term.
The number of shares of Common Stock subject to individual options are
usually based on the performance of the executive team as a group, as well as on
departmental and individual contributions. Options are granted as compensation
for performance and as an incentive to promote the future growth and
profitability of the Company. In determining the number of shares of Common
Stock subject to such options, the Committee considers the option and other
compensation policies of the industry, with particular attention to the Peer
Group. It also takes into account the outstanding options already held by each
individual executive officer, and the projected value of the options based on
historical and assumed appreciation rates of the Company's Common Stock.
CEO COMPENSATION
As is the case for the other executive officers, the CEO's compensation
package consists of base salary, performance bonuses and stock options.
The CEO's base compensation for fiscal 1996 was set by the Compensation
Committee in November 1995 and remained unchanged from the prior year's level.
In determining Mr. Berglass' compensation, the Compensation Committee considered
the overall compensation packages of other chief executive officers in the Peer
Group and other companies in the health and beauty care industry. In addition,
the Compensation Committee considered the Company's performance and its
achievement of its financial and business goals and evaluated Mr. Berglass'
overall individual performance, both in the prior fiscal year and in the prior
five years. The Compensation Committee does not assign relative weights or
rankings to each of these factors, but instead makes a subjective determination
based on consideration of all such factors.
The Compensation Committee met on October 23, 1996 to consider Mr. Berglass'
base salary for fiscal 1997 and to determine whether to award any performance
bonuses and stock options to him with respect to fiscal 1996. Based upon the
Company's financial results for fiscal 1996 and the fact that the Company filed
for reorganization under chapter 11 of the Bankruptcy Code, the Compensation
Committee did not award Mr. Berglass a performance bonus or a base salary
increase for fiscal 1996 or 1997.
COMPENSATION COMMITTEE
Philip I. Wilber, CHAIRMAN
Michael Leiner
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Wilber and Leiner served on the Compensation Committee during 1996.
9
COMPANY STOCK PRICE PERFORMANCE GRAPH
The following graph compares the Company's total return to stockholders over
a five-year period commencing August 1, 1991 against the Nasdaq Market index and
the Peer Group. The Peer Group currently consists of Chattem, Inc., Del
Laboratories, Inc. and Mem Company, Inc. The Peer Group for fiscal 1995 (the
"1995 Group") consisted of St. Ives Laboratories, Inc., Chattem, Inc., Del
Laboratories, Inc. and Mem Company, Inc. In February of 1996 St. Ives
Laboratories, Inc. was acquired by the Alberto-Culver Company. The Company
believes that, in view of its size and other factors, the Alberto-Culver Company
is not comparable to it or to other members of the Peer Group.
COMPARISON OF FIVE YEAR
CUMULATIVE TOTAL RETURNS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
DEP CORPORATION NASDAQ 1995 GROUP PEER GROUP
1991 $100 $100 $100 $100
1992 $125 $117 $118 $131
1993 $71 $143 $141 $164
1994 $29 $147 $113 $128
1995 $21 $206 $144 $172
1996 $15 $225 $253 $259
ASSUMPTIONS:
Assumes $100 invested on August 1, 1991 with reinvestment of any dividends.
No dividends were paid on the Company's securities during the period.
10
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP served as the Company's independent auditors for the
fiscal year ended July 31, 1996 and has been selected by the Company's Audit
Committee to serve as the independent auditors for the fiscal year ending July
31, 1997. Representatives of such firm are expected to be present at the Meeting
and will have the opportunity to respond to appropriate questions and to make a
statement if they desire to do so.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder proposal intended for consideration at the 1997 Annual
Meeting of Stockholders must be received by July 25, 1997 and otherwise conform
to the applicable requirements of the Exchange Act to be included in the proxy
materials relating to that meeting. It is recommended that any such proposals be
sent to the Secretary of the Company by certified mail, return-receipt
requested.
ANNUAL REPORT
The Annual Report to Stockholders covering the Company's fiscal year ended
July 31, 1996 is being mailed to stockholders of record at the same time as this
Proxy Statement.
The Company will provide without charge to each person who is a beneficial
owner of Common Stock, on written request of such person, a copy of the
Company's annual report on Form 10-K filed with the Securities and Exchange
Commission (not including exhibits). Written request for such copies should be
addressed to the Investor Relations Department, DEP Corporation, 2101 East Via
Arado, Rancho Dominguez, California 90220.
OTHER MATTERS
The Board does not intend to bring any matter before the Meeting except as
specifically indicated in the notice, nor does the Board know of any matters
which anyone else proposes to present for action at the Meeting. If any other
matters properly come before the Meeting, 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 best
judgment.
The Compensation Committee Report and the Company Stock Price Performance
Graph that appear herein shall not be deemed to be soliciting material or to be
filed with the Securities and Exchange Commission under the Securities Act of
1933 or Exchange Act and, unless specifically incorporated by the Company, shall
not be deemed incorporated by reference in any document filed under such Acts.
ALL STOCKHOLDERS ARE URGED TO PROMPTLY VOTE, SIGN AND MAIL THE ENCLOSED
PROXY CARD IN THE ENVELOPE PROVIDED.
[SIG]
JUDITH R. BERGLASS
SECRETARY
Rancho Dominguez, California
December 30, 1996
11
DEP CORPORATION
ANNUAL MEETING OF STOCKHOLDERS--FEBRUARY 7, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of DEP Corporation, a Delaware corporation (the
"Company"), hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated December 27, 1996, and appoints
Philip I. Wilber and Alexander J. Kyman, or either of them, proxies with full
power of substitution, on behalf and in the name of the undersigned, to
represent the undersigned at the Annual Meeting of Stockholders of the Company
to be held Friday, February 7, 1997, at 10:00 A.M. (local time) at the Holiday
Inn, 19800 South Vermont Avenue, Torrance, California, and at any adjournment or
postponement thereof, and to vote all of the shares of common stock of the
Company which the undersigned would be entitled to vote if personally present on
the matters set forth below:
1. Election of Directors:
/ / FOR the nominees listed / / WITHHOLD AUTHORITY to vote for
below all nominees listed below
(except as indicated)
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THAT NOMINEE'S NAME BELOW:
Robert Berglass Grant W. Johnson
2. Other Matters:
In their discretion, the proxies are authorized to vote upon any other
matters which may properly come before the Annual Meeting or at any
adjournment or postponement thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE ABOVE
DIRECTORS.
(CONTINUED ON OTHER SIDE)
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS IN PROPOSAL 1.
Dated _______________________, 1997
___________________________________
(Signature)
___________________________________
(Signature)
NOTE: Please sign exactly as shown
at left. If stock is jointly held,
each owner should sign. Executors,
administrators, trustees,
guardians, attorneys and corporate
officers should indicate their
fiduciary capacity or full title
when signing.
/ / Please check if you have had a
change of address and print your
new address and phone number below:
___________________________________
___________________________________
___________________________________
PLEASE VOTE, DATE, SIGN AND MAIL
THIS PROXY CARD PROMPTLY IN THE
ENCLOSED ENVELOPE.