SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
NEW ENGLAND BUSINESS SERVICE, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
NEW ENGLAND BUSINESS SERVICE, INC.
----------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
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[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
(4) Proposed maximum aggregate value of transaction:
* Set forth the amount on which the filing is calculated and state how it
was determined.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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Notes:
NEW ENGLAND BUSINESS SERVICE, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 27, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of New
England Business Service, Inc., a Delaware corporation (the "Company"), will
be held at the offices of the Company, 500 Main Street, Groton, Massachusetts,
on Friday, October 27, 1995 at 10:00 a.m., Eastern Daylight Savings Time, for
the purpose of considering and voting upon the following matters:
1. To fix the number of directors and elect a Board of Directors to serve
until the next Annual Meeting of Stockholders and until their successors
are elected and qualified;
2. To ratify the selection of Deloitte & Touche LLP as independent auditors
of the Company for the fiscal year ending June 30, 1996; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on September 1, 1995
as the record date for the determination of stockholders entitled to notice of
and to vote at this meeting. Accordingly, only stockholders of record at the
close of business on that date are entitled to vote at the meeting or at any
adjournment thereof.
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended June 30, 1995, which contains financial statements and other information
of interest to stockholders, accompanies this Notice and the accompanying
Proxy Statement.
The business matters enumerated above are discussed more fully in the
accompanying Proxy Statement. Whether or not you plan to attend the meeting,
you are urged to study the Proxy Statement carefully and then to fill out,
sign and date the enclosed Proxy. To avoid unnecessary expense, please mail
your Proxy promptly in the enclosed return envelope, which requires no postage
if mailed in the United States.
In accordance with Article Ten of the Company's By-Laws, notice is given
that on April 28, 1995 the Board of Directors voted to amend the By-Laws of
the Company to provide (i) that the Company's fiscal year shall end on June
30, rather than on the last Friday in June, and (ii) that the Annual Meeting
of Stockholders of the Company shall be held on the last Friday in October,
rather than the fourth Friday in October.
By order of the Board of Directors
John F. Fairbanks
Secretary
September 15, 1995
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN AND
MAIL PROMPTLY THE ENCLOSED PROXY WHICH IS BEING SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS. A RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES IS ENCLOSED FOR THAT PURPOSE.
NEW ENGLAND BUSINESS SERVICE, INC.
500 MAIN STREET
GROTON, MASSACHUSETTS 01471
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 27, 1995
The Proxy accompanying this Proxy Statement is solicited by the Board of
Directors of New England Business Service, Inc. (the "Company") to be voted at
the Annual Meeting of Stockholders to be held on Friday, October 27, 1995 and
at any adjournment thereof (the "Meeting").
It is expected that copies of the Notice of Meeting, this Proxy Statement
and the enclosed form of Proxy will be mailed approximately September 15, 1995
to each stockholder entitled to vote at the Meeting. The Company's Annual
Report to Stockholders for the fiscal year ended June 30, 1995 accompanies
this Proxy Statement.
VOTING SECURITIES
Only the record holders of shares of Common Stock ($1.00 par value) of the
Company ("Common Stock") at the close of business on September 1, 1995 may
vote at the Meeting. Each share of Common Stock is entitled to one vote on the
matters to be voted upon at the Meeting.
On September 1, 1995, there were 14,879,949 shares of Common Stock issued
and outstanding. On that date, the following persons were known by the Company
to own beneficially more than 5% of the Company's outstanding shares of Common
Stock:
NAME AND ADDRESS OF AMOUNT AND NATURE
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP PERCENT
------------------- ----------------------- -------
Jay R. Rhoads, Jr............................... 1,768,200(1) 11.53
New England Business Service, Inc.
500 Main Street
Groton, MA 01471
Richard H. Rhoads............................... 1,124,739(2) 7.34
New England Business Service, Inc.
500 Main Street
Groton, MA 01471
Systematic Financial Management, Inc. .......... 1,806,277(3) 11.78
Two Executive Drive
Fort Lee, NJ 07024
Fidelity Management and Research Corporation.... 1,181,408(4) 7.71
82 Devonshire Street
Boston, MA 02110
--------
(1) Sole voting and investment power with respect to 1,519,432 shares; shared
voting and investment power with respect to 245,768 shares. Includes 3,000
shares issuable within 60 days upon exercise of options.
(2) Sole voting and investment power with respect to 984,987 shares; sole
voting power only with respect to 69 shares; shared voting and investment
power with respect to 139,683 shares. Includes 60,000 shares issuable
within 60 days upon exercise of options.
(3) Sole investment power with respect to 1,806,277 shares; sole voting power
with respect to 1,648,272 shares; shared voting power with respect to
158,005 shares.
(4) Sole investment power with respect to 1,181,408 shares and sole voting
power with respect to 38,400 shares.
On September 1, 1995, the directors, the Chief Executive Officer, and the
other six executive officers of the Company beneficially owned the number of
shares of Common Stock shown below:
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
NAME OF DIRECTOR SOLE VOTING AND SHARED VOTING
OR EXECUTIVE OFFICER INVESTMENT POWER AND INVESTMENT POWER TOTAL PERCENT
-------------------- ---------------- -------------------- --------- -------
Jay R. Rhoads, Jr. ..... 1,522,432(8) 245,768(1) 1,768,200 11.53
Richard H. Rhoads....... 984,987(8) 139,752(2)(7) 1,124,739 7.34
William C. Lowe......... 153,969(8) 1,000(3) 154,969 *
Peter A. Brooke......... 18,624(8) 12,468(4) 31,092 *
Benjamin H. Lacy........ 18,000(8) 18,000 *
Frank L. Randall, Jr. .. 6,000(8) 6,000 *
Robert J. Murray........ 3,000(8) 1,000(5) 4,000 *
Brian E. Stern.......... 0 0 *
Russell V. Corsini,
Jr. ................... 86,483(8) 3,090(6)(7) 89,573 *
Robert S. Brown, Jr. ... 56,913(8) 3,232(7) 60,145 *
Gerald G. Kokos......... 20,807(8) 0 20,807 *
Edward M. Bolesky....... 46,672(8) 3,577(7) 50,249 *
Linda A. Jacobs......... 15,207(8) 908(7) 16,115 *
Michael F. Dowd......... 9,836(8) 412(7) 10,248 *
All Directors and
Executive Officers
as a Group (14
persons)............... 3,354,137(9) 21.87
--------
* Less than one percent
(1) Including 160,000 shares owned by a charitable foundation of which Mr.
Rhoads and his wife are directors and 85,768 shares owned by Mr. Rhoads'
wife, as to all of which Mr. Rhoads disclaims beneficial ownership.
(2) Including 66,000 shares owned by Mr. Rhoads' wife individually and 73,683
shares owned by his wife and a co-trustee of a trust for the benefit of
Mr. Rhoads' children, as to all of which shares Mr. Rhoads disclaims
beneficial ownership.
(3) Shares owned by Mr. Lowe's wife, as to all of which shares Mr. Lowe
disclaims beneficial ownership.
(4) Shares owned by Mr. Brooke's wife, as to all of which shares Mr. Brooke
disclaims beneficial ownership.
(5) Shares owned jointly by Mr. Murray and Mr. Murray's wife.
(6) Including 40 shares owned by Mr. Corsini's children, as to all of which
shares Mr. Corsini disclaims beneficial ownership.
(7) Shares owned by the following persons and held in an account by the
trustee of The 401(k) Plan for Employees of New England Business Service,
Inc.; Mr. Rhoads, 69 shares, Mr. Corsini, 3,050 shares; Mr. Brown, 3,232
shares; Mr. Bolesky, 3,577 shares; Ms. Jacobs, 908 shares; and Mr. Dowd,
412 shares.
(8) Includes shares which may be acquired within 60 days through the exercise
of stock options. The persons who have such options and the number of
shares which may be so acquired are as follows: Jay R. Rhoads, Jr., 3,000;
Richard H. Rhoads, 60,000; Mr. Lowe, 148,916; Mr. Brooke, 3,000; Mr. Lacy,
3,000; Mr. Randall, 3,000; Mr. Murray, 3,000; Mr. Corsini, 83,560; Mr.
Brown, 54,793; Mr. Kokos, 20,000; Mr. Bolesky, 43,447; Ms. Jacobs, 14,955;
and Mr. Dowd, 9,603.
(9) Including 398,959 shares owned by trusts or custodians for the benefit of
children of officers and directors, by spouses or dependent children of
officers and directors and by the charitable foundation referred to in
note (1) above, as to all of which shares the officers and directors
disclaim beneficial ownership, 450,274 shares which directors and officers
owning currently-exercisable options may acquire pursuant to Company stock
option and stock appreciation rights plans, 1,000 shares jointly owned by
officers or directors and their spouses and 11,248 shares held for the
accounts of current and former officers by the trustee of The 401(k) Plan
for Employees of New England Business Service, Inc.
2
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company's By-Laws provide for a Board of Directors of not fewer than
three nor more than nine directors. The persons named as proxies in the
accompanying form of Proxy intend (unless authority to vote therefor is
specifically withheld) to vote to fix the number of directors for the ensuing
year at eight and to vote for the election of the eight persons named below,
being the nominees of the present Board, as directors to hold office until the
next Annual Meeting and until their respective successors are elected and
qualified. All of the nominees except Mr. Stern were re-elected to their
position at the 1994 Annual Meeting. Mr. Stern was elected a director on April
28, 1995, effective July 28, 1995, to fill the vacancy caused by the
resignation of Robert Ripp. If any of the nominees becomes unavailable to
serve as a director, the persons named as proxies have discretionary authority
to vote for a substitute. The Board of Directors has no reason to believe that
any of the nominees will be unavailable to serve if elected.
NOMINEES FOR ELECTION AS DIRECTORS
Information regarding each nominee is presented below.
Richard H. Rhoads, age 65, joined the Company in 1965 and has been a
director since 1970. From 1975 to 1991, he was Chief Executive Officer. His
principal occupation since 1988 has been his position as Chairman of the
Board. Since January, 1980, he has served as a member and Chairman of the
Executive Committee of the Board. Mr. Rhoads is the brother of Jay R. Rhoads,
Jr.
Peter A. Brooke, age 66, has been a director of the Company since 1989. He
also served in that capacity from 1970 to 1983. His principal occupation for
more than five years has been his position as Chairman and Chief Executive
Officer of Advent International Corporation, an international venture capital
management firm. Mr. Brooke is a director of Unitrode Corporation.
Benjamin H. Lacy, age 69, has been a director of the Company since 1970. His
principal occupation is President of the Clipper Ship Foundation, Inc., a
grant-making charitable foundation. Prior to his retirement in May, 1995, Mr.
Lacy was of counsel to the law firm of Hill & Barlow, a Professional
Corporation, which has served as general counsel to the Company since 1973.
Mr. Lacy was a partner of Hill & Barlow, a partnership, for more than five
years prior to November 1, 1990.
William C. Lowe, age 54, has been a director of the Company since 1988, and
President and Chief Executive Officer since January, 1994. His principal
occupation from June, 1991 until December, 1993 was Chairman and CEO of
Gulfstream Aerospace Corporation. From December, 1988 to May, 1991 he was
Executive Vice President of Xerox Corporation. Prior to joining that company,
Mr. Lowe was a Vice President of IBM Corporation and President of its Entry
Systems Division from 1985 to 1988.
Robert J. Murray, age 54, has been a director of the Company since 1991. Mr.
Murray has, since January 1, 1991, been Executive Vice President, North
Atlantic Group of The Gillette Company. During 1990, he served as Vice
President, Chairman's Office of Gillette and from 1985 to 1989 as Chairman of
the Board of Management of Braun AG, one of Gillette's German subsidiaries.
Mr. Murray is a director of Fleet Bank of Massachusetts, Fleet Bank of
Connecticut, Fleet Bank of Rhode Island and LoJack Corporation.
Frank L. Randall, Jr., age 77, has been a director of the Company since
1980. His principal occupation for more than five years prior to his
retirement in November, 1982 was his position as Vice Chairman of North
American Philips Corporation. Mr. Randall is a director of B. I. Incorporated.
Jay R. Rhoads, Jr., age 70, has been a director of the Company since its
incorporation in 1955. He served as President from 1965 to 1971 and as Chief
Executive Officer from 1965 to 1975 and as Chairman of the Board from 1971 to
1987. Mr. Rhoads is the brother of Richard H. Rhoads.
3
Brian E. Stern, age 47, was elected a director of the Company on April 28,
1995, effective July 28, 1995 to fill a vacancy on the board and to serve
until the 1995 Annual Meeting of Stockholders and until his successor is
elected and qualified. Mr. Stern has been President of the Personal Document
Products Division and Corporate Vice President of Xerox Corporation since
1993. From 1992 to 1993, Mr. Stern was Vice President of Corporate Business
Strategy of Xerox and from 1990 to 1992, Vice President, Finance, Development
and Manufacturing of Xerox.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has standing audit, organization and compensation, stock option,
nominating and executive committees of the Board of Directors.
The Audit Committee consists of Messrs. Brooke (Chairman), Lacy and Murray.
The Committee met twice during the last fiscal year. The committee reviewed
the matters raised in the management letter which was submitted to the Company
by its independent public accounting firm, Deloitte & Touche LLP, and
discussed the management letter with representatives of Deloitte & Touche LLP.
The Audit Committee also recommended to the Board of Directors the selection
of Deloitte & Touche LLP to serve as the Company's auditors for the fiscal
year ending June 30, 1996.
The Organization and Compensation Committee consists of Messrs. Lacy
(Chairman), Brooke and Murray. The Committee met three times in fiscal year
1995 to discuss the existing executive organization and compensation structure
and proposed changes thereto and one time to review the annual evaluation of
the Company's officers, and, subject to final approval by the Board, to fix
their base salaries for fiscal year 1996 and to approve the substantitive
provisions of the 1996 Executive Bonus Plan.
The Stock Option Committee, consisting of Messrs. Murray (Chairman), Brooke
and Lacy met or acted by unanimous consent three times in fiscal year 1995 to
grant stock options to eligible employees of the Company pursuant to The NEBS
1990 Key Employee Stock Option and Stock Appreciation Rights Plan and The NEBS
1994 Key Employee and Eligible Director Stock Option and Stock Appreciation
Rights Plan. On January 20, 1995, Mr. Lacy resigned as a member of the Stock
Option Committee.
The Nominating Committee, consisting of Messrs. Randall (Chairman) and Jay
R. Rhoads, Jr., did not hold any formal meetings during fiscal year 1995.
During the regular Board Meeting held April 28, 1995, the Nominating Committee
nominated Mr. Stern to fill a vacancy on the Board of Directors. The
Nominating Committee also recommended to the Board of Directors the persons
nominated for election as directors by the stockholders at the Annual Meeting
of Stockholders to be held October 27, 1995.
The Executive Committee, consisting of Messrs. Richard H. Rhoads (Chairman),
Lacy and Lowe, met or acted by unanimous consent fifteen times in fiscal year
1995.
The Board of Directors met six times during fiscal year 1995. All of the
directors attended at least 75% of the meetings of the Board of Directors and
committees of the Board on which they served.
CERTAIN BUSINESS RELATIONSHIPS--COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The Company's general counsel is Hill & Barlow, a Professional Corporation,
of which Benjamin H. Lacy, a director and Chairman of the Organization and
Compensation Committee, was of counsel until his retirement from that firm in
May, 1995.
CERTAIN TRANSACTIONS
None.
4
COMPENSATION OF OFFICERS AND DIRECTORS
The following table sets forth all compensation paid by the Company through
September 1, 1995 to the Chief Executive Officer and each of the other four
most highly compensated executive officers of the Company (the "Named
Executive Officers") in all capacities as an officer during the fiscal years
ended June 30, 1995, June 24, 1994 and June 25, 1993.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- -------------------------------
OTHER
NAME AND ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION NO. OF OPTIONS COMPENSATION (1)
------------------ ---- ------------------- ------------ -------------- ----------------
William C. Lowe......... 1995 $ 375,000 $ 171,300 $ 0 45,833 $ 0
President, CEO 1994 187,500 212,500 110,500(2) 300,000 0
1993 0 0 0 0 0
Russell V. Corsini,
Jr. ................... 1995 193,000 63,000 0 19,300 3,700
Vice President, 1994 193,000 72,100 0 10,938 4,500
Chief Financial Officer 1993 186,000 57,800 0 22,698 0
Robert S. Brown, Jr. ... 1995 170,000 54,300 0 11,805 3,300
Vice President-- 1994 170,000 64,000 0 9,634 4,500
General Manager, 1993 157,000 48,800 0 19,158 4,400
Subsidiaries
Gerald G. Kokos......... 1995 165,000 82,500 0 40,000 0
Vice President-- 1994 0 0 0 0 0
General Manager, 1993 0 0 0 0 0
Software & Services
Edward M. Bolesky....... 1995 154,000 66,300 0 12,833 4,600
Vice President-- 1994 139,000 51,900 0 7,877 4,200
General Manager, 1993 130,000 40,400 0 15,864 4,400
Business Solutions &
Operations
--------
(1) The amounts reported in this column include the dollar value of Company
contributions to the account of the Named Executive Officers pursuant to
the terms of The 401(k) Plan for Employees of New England Business
Service, Inc.
(2) Other Annual Compensation for Mr. Lowe consists entirely of relocation
expenses paid by the Company in excess of those available generally to all
salaried employees under the Company's Relocation Policy. Of this amount
$31,250 represents one month's salary paid to Mr. Lowe to cover out-of-
pocket relocation expenses not otherwise covered by the said Policy and
$56,100 represents that portion of a $148,000 fee paid by the Company to a
relocation services firm in connection with the sale to it of Mr. Lowe's
former residence which exceeds the sum of the customary brokerage fee,
attorneys' fees, transfer taxes and other reasonable fees associated with
such sale, all of which are paid generally by the Company for all
relocating salaried employees under the said Policy.
5
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
OPTIONS APPRECIATION
NUMBER OF GRANTED EXERCISE FOR OPTION TERM
SHARES TO EMPLOYEES PRICE PER EXPIRATION ---------------------
NAME GRANTED IN FISCAL YEAR SHARE DATE 5% 10%
---- --------- -------------- --------- ---------- ---------------------
William C. Lowe......... 45,833(1) 12.26% $18.00 9/16/04 $ 518,800 $ 1,314,900
Russell V. Corsini, Jr.. 19,300(1) 5.16 18.00 9/16/04 218,500 553,700
Robert S. Brown, Jr..... 11,805(1) 3.16 18.00 9/16/04 133,600 338,700
Gerald G. Kokos......... 40,000(2) 10.70 17.75 8/17/04 446,400 1,131,600
Edward M. Bolesky....... 12,833(1) 3.43 18.00 9/16/04 145,300 368,200
--------
(1) The stock options awarded vest annually in four equal installments
beginning on September 16, 1994 and ending on September 16, 1997, except
that all of such options will vest immediately in case of a change in
control of the Company.
(2) The stock option awarded vests annually in four equal installments
beginning on August 17, 1994 and ending on August 17, 1997, except that
the entire option will vest immediately in case of a change in control of
the Company.
This presentation is intended to disclose the potential value which would
accrue to the option holder if the option were exercised the day before it
would expire and if the per share value had appreciated at the compounded
annual rate indicated above each column. The application of an absolute
mathematical formula results in a higher potential realizable value for
options granted at a time when the market value is relatively high. The
assumed rates of appreciation of 5% and 10% are prescribed by Securities and
Exchange Commission rules on disclosure of executive compensation. The Company
does not advocate or necessarily agree that these rates are indicative of
future growth in the market price of the Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND 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 ------------------------------ -------------------------
AT EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- -------- ------------- -------------- ----------- -------------
William C. Lowe......... 20,000 $92,500 137,458 184,375 $461,100 $585,200
Russell V. Corsini, Jr.. 5,284 23,100 72,438 20,772 193,100 49,700
Robert S. Brown, Jr..... 1,654 8,300 45,545 15,151 140,400 39,900
Gerald G. Kokos......... 0 0 10,000 30,000 20,000 60,000
Edward M. Bolesky....... 1,550 6,600 33,942 15,922 124,700 41,200
--------
(1) In-the-Money options are options where the current market value exceeds
the exercise price.
PENSION PLAN AND TRUST AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Along with other employees of the Company, the Named Executive Officers
participate in the Company's Pension Plan and Trust which is a defined benefit
plan that meets regulatory requirements (the "Pension Plan"). The Named
Executive Officers also participate in the Company's Supplemental Executive
Retirement Plan (the "Supplemental Plan"). Benefits under the Pension Plan,
payable upon normal retirement at age 65 as a life annuity or an actuarial
equivalent thereof, are based upon age, length of service and an average of
the participant's five highest consecutive years of compensation out of the
ten years immediately preceding the normal retirement date or other date of
termination of employment. The Supplemental Plan provides for making payments
concurrently with payments made under the Pension Plan in amounts equal to the
difference between the amount received by an executive (or his contingent
beneficiary) under the Pension Plan and the amount which would be receivable
in accordance with the Pension Plan's formula (as illustrated by the following
Retirement
6
Benefit Table) if the annual earnings taken into account in determining the
amount payable to any Participant as a pension under the Pension Plan were not
subject to the maximum dollar limitations under the Pension Plan.
RETIREMENT BENEFIT TABLE
YEARS OF SERVICE
--------------------------
AVERAGE
ANNUAL EARNINGS 15 20 25
--------------- -------- -------- --------
$ 25,000....................................... $ 5,000 $ 7,000 $ 8,000
50,000....................................... 10,000 14,000 17,000
100,000....................................... 25,000 34,000 42,000
150,000....................................... 40,000 54,000 67,000
200,000....................................... 55,000 74,000 92,000
250,000....................................... 70,000 94,000 117,000
300,000....................................... 85,000 114,000 142,000
400,000....................................... 115,000 154,000 192,000
500,000 and over.............................. 145,000 194,000 242,000
DEFERRED COMPENSATION PLAN
The Company has established the New England Business Service, Inc. Deferred
Compensation Plan (the "Plan") pursuant to which each of the Named Executive
Officers of the Company may elect to defer, until 60 days following his
termination of employment with the Company, a portion of all compensation
payable by the Company for his personal services rendered to the Company
during each Plan year (the "Deferral Amount"). Each participating officer may
request that his Deferral Amount be allocated among several available
investment options established and offered by the Company. The benefit payable
under the Plan at any time to a participant following termination of
employment is equal to the sum of the applicable Deferral Amounts and any
earnings or losses attributable to the investment of such Deferral Amounts.
COMPENSATION OF DIRECTORS
Directors of the Company generally receive as compensation for all services
as directors $12,000 per year plus $1,000 for each Board meeting and each
meeting (not held on the same day as a Board meeting) of any Committee of the
Board which they attend. Richard H. Rhoads receives an additional $50,000 per
year as compensation for his services as Chairman of the Board. Benjamin H.
Lacy receives an additional $20,000 per year as compensation for his services
as Chairman of the Organization and Compensation Committee, as a member of the
Executive Committee and as recording secretary to the Board. William C. Lowe
received no compensation for his services as director.
The directors of the Company both elected at the 1994 Annual Meeting of
Stockholders and not employed by the Company were granted stock options for
3,000 shares pursuant to The NEBS 1994 Key Employee and Eligible Director
Stock Option and Stock Appreciation Rights Plan with an exercise price
determined by the market value of the Company's Common Stock on the tenth day
following such Annual Meeting. Each eligible director will be granted 1,000
shares per year upon each subsequent election at an Annual Meeting of
Stockholders of the Company, under similar terms, except that any newly
elected director, or director retiring as an employee of the Company in the
preceding year, will be granted an option to acquire 3,000 shares following
the first subsequent Annual Meeting and 1,000 shares for each year of re-
election thereafter.
The Company has established The NEBS Deferred Compensation Plan for Outside
Directors, pursuant to which any director who is not an employee of the
Company may elect to defer until after his or her retirement as a director or
after his or her 70th birthday any or all of the compensation payable by the
Company for all services as a director. A retiring director may elect to be
paid in a lump sum on the first day of the first fiscal year beginning after
such date or in quarterly installments over a period of not to exceed ten
years. Interest is credited to each director's account quarterly at the so-
called "base rate" of interest of The First National Bank of Boston on the
last preceding June 30th and December 31st. No such elections are presently in
effect.
7
REPORT OF ORGANIZATION AND COMPENSATION
COMMITTEE AND STOCK OPTION COMMITTEE
POLICIES
In providing for the compensation of the Named Executive Officers, it is the
policy of the Organization and Compensation Committee (the "Committee") to
recommend base salaries for each of them within salary ranges, the midpoints
of which are in general at about the 60th percentile of the base salaries of
officers in similar positions in a representative group of non-durable goods
manufacturing companies of comparable size, as determined by a nationally
recognized compensation and benefits consultant. In addition, annual bonuses
are provided for, the payment and the amount of which will depend upon the
Company's degree of attainment of pre-established sales and earnings targets
and, in some instances and to varying extents, upon the attainment of pre-
established individual objectives. Long-range compensation is tied directly to
the increase in value of the Company's Common Stock and, hence, takes the form
of the award of stock options, with option prices equal to 100% of current
market value, in amounts reflecting the level of responsibility of the
grantees for the Company's long-range success.
In determining its executive compensation policies from year to year, the
Company expects to take appropriate measures to prevent the employee
remuneration paid by it from being rendered non-deductible by operation of the
terms of Section 162(m) of the Internal Revenue Code of 1986, as amended. Such
measures may include (i) limiting the amount of non-performance-based
compensation paid to any employee, and (ii) complying with the statutory
requirements for exempting performance-based compensation from non-
deductibility by obtaining stockholder approval of qualified performance-based
compensation plans. In October, 1994 such approval was obtained for the
Company's NEBS 1994 Key Employee and Eligible Director Stock Option and Stock
Appreciation Rights Plan and for the Company's Stock Compensation Plan.
IMPLEMENTATION
1. Salaries. The individual salaries of the Named Executive Officers other
than Gerald G. Kokos for fiscal year 1995 were recommended by the Committee
and approved by the Board at the beginning of the year. Mr. Kokos' salary was
approved by the Committee in August, 1994, in connection with his employment
as the Company's new Vice President--General Manager, Computer Forms and
Software. The salary ranges established for each of the Named Executive
Officers were based upon data compiled by a nationally recognized compensation
and benefits consultant concerning the base salaries paid to comparable
officers of like-sized non-durable goods manufacturers. The Committee believes
that the compensation paid to officers within this broad group of
manufacturers is more representative of the competition the Company must meet
in hiring and retaining its executives than the small group of companies,
mostly of substantially larger size than the Company, forming the peer group
with which the Company's results are compared in the graph on page 11 below.
Within these ranges, the actual salaries fixed for the Named Executive
Officers, in accordance with the President's recommendation, reflected no
change from those being paid to them at the close of the prior fiscal year,
except in the case of Mr. Bolesky who was given an increase by reason of his
recent assumption of new responsibilities. This decision marked a shift in
emphasis toward performance-based compensation, as discussed below, rather
than any dissatisfaction with the performance of the Named Executive Officers.
The Committee discussed with the President the performance of the Company
during fiscal year 1994 and the contribution of the individual Named Executive
Officers other than Mr. Lowe to that performance. The Committee also
considered a performance review prepared by the Chairman of the Board with
respect to Mr. Lowe, the President and Chief Executive Officer of the Company.
2. Annual Bonuses. At the beginning of fiscal year 1995, all of the Named
Executive Officers were designated as participants in the Company's 1995
Executive Bonus Plan (the "Bonus Plan") and target bonuses of 70% of base
salary for the Chief Executive Officer and 50% of base salary for the other
Named Executive Officers were established. This amounted to an increase over
the percentage used in the prior year's Executive Bonus Plan of 10 percentage
points in the case of each of the Named Executive Officers. In accordance with
the Bonus Plan, after the close of the fiscal year 1995, cash bonuses were
paid, the amounts of which in the case of
8
Mr. Lowe and Mr. Corsini were based entirely on the Company's performance for
the year versus budgeted net sales and earnings per share, and, in the case of
the other three Named Executive Officers, on those factors plus certain
individual performance objectives. The bonus paid to Mr. Kokos represented a
first year guaranteed amount in accordance with the terms of his employment by
the Company. The bonus paid to Mr. Bolesky included an additional amount of
$5,120 in recognition of the extraordinary contribution made by him to the
Company's performance in 1995. On this basis, the Named Executive Officers
received the bonuses indicated in the Summary Compensation table shown on page
5.
3. Stock Options. In September 1994, the Stock Option Committee (the
membership of which was then the same as that of the Committee) authorized the
granting of a stock option to Mr. Lowe covering shares with a market value on
the date of the grant equal to 220% of his 1995 base salary. The options
granted to the other Named Executive Officers other than Mr. Kokos were for
shares with a market value equal to the following respective percentages of
their 1995 base salaries: Mr. Corsini, 180%; Mr. Brown, 125%; and Mr. Bolesky,
150%. These awards were in part contingent upon the approval by the
Stockholders (which was given at the Annual Meeting of October 28, 1994) of
the NEBS 1994 Key Employee and Eligible Director Stock Option and Stock
Appreciation Rights Plan. These awards represented increases (in percentage of
base salary) from the awards made to such Named Executive Officers in the
prior fiscal year and were recommended by management and found by the
Committee to be appropriate in view of their individual performance and the
desire of the Committee to increase emphasis on long-range performance based
compensation of the executives in a fiscal year in which it was anticipated
that the Company's new leadership would make significant changes in the
organization and focus of the Company. Mr. Kokos received a stock option to
purchase 40,000 shares for $17.75 per share (their then market value) on
August 1, 1994 in accordance with the terms of his employment by the Company.
4. Mr. Lowe's Compensation. The process by which the compensation of William
C. Lowe as President and Chief Executive Officer of the Company was arrived at
in fiscal year 1995 was as stated above and differed in no material way from
that employed with respect to the other Named Executive Officers. Mr. Lowe was
given no fringe benefits other than those available to all officers of the
Company.
ORGANIZATION AND COMPENSATION COMMITTEE
Peter A. Brooke
Benjamin H. Lacy
Robert J. Murray
9
PERFORMANCE GRAPH
The following chart compares the value of $100 invested in the Company's
Common Stock from June 30, 1989 through June 30, 1995 with a similar
investment in the S&P 600 Stock Index, with the NASDAQ Composite Index and in
a peer group consisting of the eight publicly held companies listed below
which are in the same industry as the Company. This fiscal year, in accordance
with Securities and Exchange Commission Rules, the Company changed the
comparison index from the NASDAQ Composite Index to the S&P 600 Stock Index in
connection with the transfer of listing of Company Common Stock from the
NASDAQ National Market to the New York Stock Exchange. The NASDAQ Composite
Index return data is provided below for comparative purposes, but will not be
provided in future years.
[PERFORMANCE GRAPH APPEARS HERE]
--------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995
--------------------------------------------------------------------------------
NEB 100.00 118.96 112.45 117.86 144.37 158.56
--------------------------------------------------------------------------------
S&P 600 100.00 98.10 114.88 147.61 150.36 180.98
--------------------------------------------------------------------------------
NASDAQ 100.00 105.90 127.30 160.00 161.60 215.30
--------------------------------------------------------------------------------
Peer Group 100.00 93.92 84.45 98.15 109.41 137.17
--------------------------------------------------------------------------------
PEER GROUP COMPANIES:
American Business Products, Inc. Moore Corporation, Ltd. The Standard Register Company
Duplex Products, Inc. Paris Business Forms, Inc. Wallace Computer Services, Inc.
Ennis Business Forms, Inc. The Reynolds & Reynolds
Company
10
PROPOSAL TWO
ELECTION OF AUDITORS
Upon the recommendation of its Audit Committee, the Board of Directors
selected the firm of Deloitte & Touche LLP as auditors of the Company for the
fiscal year ending June 30, 1996, subject to ratification by a vote of the
holders of a majority of the shares of Common Stock voting thereon at the
Annual Meeting. A representative of Deloitte & Touche LLP, which served as
auditors for fiscal year 1995, is expected to be present at the Meeting, with
the opportunity to make a statement if he or she desires to do so, and to be
available to respond to appropriate questions.
The persons named as proxies in the accompanying form of Proxy intend
(unless specific contrary instructions are given) to vote for ratification of
the selection of Deloitte & Touche LLP as auditors for the 1996 fiscal year.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1996 Annual
Meeting of Stockholders must be received by the Company, at its offices at 500
Main Street, Groton, Massachusetts 01471, no later than May 10, 1996, in order
to be considered for inclusion in the Proxy Statement and form of proxy
relating to that meeting.
OTHER MATTERS
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than that shown above. However, if any
other proper business should come before the Meeting, it is the intention of
the persons named in the enclosed form of Proxy to vote the Proxies with
respect to any such business in accordance with their best judgment. Matters
with respect to which the enclosed form of Proxy confers such discretionary
authority are as follows: (i) matters which the Board of Directors does not
know of a reasonable time before the mailing of this Proxy Statement are to be
presented at the Annual Meeting; (ii) approval of the minutes of the prior
meeting of stockholders, such approval not constituting ratification of the
action taken at such meeting; (iii) election of any person as a director if
any of the nominees named herein are unable to serve or for good cause will
not serve; and (iv) matters incident to the conduct of the meeting.
The vote required for approval of directors is the affirmative vote of a
plurality of the shares present or represented at the Meeting and entitled to
vote thereon. Unless authority to vote for any director is withheld in the
Proxy, votes will be cast in favor of election of the nominees listed herein.
Votes withheld from election of directors will be excluded entirely from the
vote and will have no effect.
The cost of preparing, assembling and mailing the proxy material will be
borne by the Company. In addition to the use of the mails, certain officers
and regular employees of the Company, without additional compensation, may use
their personal efforts, by telephone or otherwise, to obtain Proxies. The
Company will also request brokerage houses, custodians, nominees and
fiduciaries to forward copies of the proxy material to those persons for whom
they hold shares and to request instruction for voting the Proxies. The
Company will reimburse such brokerage houses and other persons for their
reasonable expenses in connection therewith.
Any stockholder giving a Proxy in the accompanying form retains the power to
revoke it, by appropriate written notice to the Secretary of the Company or by
the giving of a later-dated Proxy, at any time prior to the exercise of the
powers conferred thereby. Attendance in person at the Meeting will not in
itself be deemed to revoke a Proxy unless the stockholder gives an affirmative
notice at the Meeting that the stockholder intends to revoke the Proxy and to
vote in person.
The shares represented by a Proxy will be voted as directed by the
stockholder giving the Proxy.
IF NO CONTRARY INSTRUCTIONS ARE GIVEN, THE PROXY WILL BE VOTED (1) TO FIX
THE NUMBER OF DIRECTORS AT EIGHT AND TO ELECT THE PERSONS NAMED UNDER
"ELECTION OF DIRECTORS," (2) TO RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP
AS AUDITORS FOR FISCAL YEAR 1996, AND (3) IN THE DISCRETION OF THE PROXY
HOLDERS AS TO ANY OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING.
11
PROXY
NEW ENGLAND BUSINESS SERVICE, INC.
Meeting of Stockholders -- October 27, 1995
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF NEW ENGLAND BUSINESS SERVICE, INC.
The undersigned stockholder in New England Business Service, Inc. (the
"Company") hereby appoints Richard H. Rhoads, William C. Lowe and Russell V.
Corsini, Jr. and each of them, attorneys, agents and proxies, with power of
substitution to each, to vote all shares of Common Stock that the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the Company to be held
at the offices of the Company, 500 Main Street, Groton, Massachusetts on October
27, 1995 at 10:00 a.m., Eastern Daylight Savings Time, and any adjournments
thereof.
-------------
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
-------------
Please mark New England Business Services, Inc.
[X] votes as in
this example. Job-1: 8/14/95
The shares represented by this proxy will 2 Proposals *
be voted as directed by the undersigned.
IF NO CONTRARY INSTRUCTIONS ARE INDICATED, MULTIPLE ISSUE (2) PROOF
THIS PROXY WILL BE VOTED IN FAVOR OF ALL
PROPOSALS IN THE PROXY STATEMENT.
1. To fix the number of persons constituting the full Board of Directors at
eight and to elect the following nominees as directors. Richard H. Rhoads,
Peter A. Brooke, Benjamin H. Lacy, William C. Lowe, Robert J. Murray,
Frank L. Randall, Jr. Jay R. Rhoads, Jr. and Brian E. Stern.
FOR WITHHELD MARK HERE
[_] [_] IF YOU PLAN [_]
TO ATTEND
THE MEETING
MARK HERE
FOR ADDRESS [_]
[_] CHANGE AND
-------------------------------------- NOTE BELOW
For all nominees except as noted above
2. To ratify the selection of Deloitte & Touche LLP as independent auditors of
the Company for the current fiscal year ending June 30, 1996.
[_] [_] [_]
FOR AGAINST ABSTAIN
3. And to vote and act upon any other business which may properly come before
the meeting or any adjournment thereof.
Please sign exactly as your name is printed opposite. When signing as
attorney-in-fact, executor, administrator, trustee or guardian, please give
title. If stock is held in joint names, all named stockholders should sign.
Signature: Date
--------------------------------------------- -----------------
Signature: Date
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