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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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 Section 240.14a-11(c) or
Section 240.14a-12
CELEBRITY, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than 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 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 (Set forth the
amount on which the filing is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total Fee Paid:
[ ] Fee paid previously with preliminary materials.
[ ] 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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CELEBRITY, INC.
4520 OLD TROUP ROAD
P. O. BOX 6666
TYLER, TEXAS 75711
October 22, 1996
Dear Shareholder:
You are cordially invited to attend the Annual Meeting (the "Meeting")
of Shareholders of Celebrity, Inc. (the "Company") to be held at the Sheraton
Park Central Hotel, 12720 Merit Drive, Dallas, Texas, on Monday, December 2,
1996, at 10:00 a.m. local time. The attached Notice of Annual Meeting and
Proxy Statement fully describe the formal business to be transacted at the
Meeting, which includes the election of directors of the Company and the
ratification of the selection of Price Waterhouse LLP as independent public
accountants. We have also enclosed a copy of the Company's Annual Report for
the fiscal year ended June 30, 1996.
The Company's Board of Directors believes that a favorable vote for
each person nominated to serve as a director of the Company and for
ratification of the selection of Price Waterhouse LLP as independent public
accountants is in the best interests of the Company and its shareholders and
unanimously recommends a vote "FOR" each nominee and "FOR" such ratification.
Accordingly, we urge you to review the accompanying material carefully and to
return the enclosed Proxy promptly. If you attend the Meeting, you may vote in
person even if you have previously mailed a Proxy.
Directors and officers of the Company will attend the meeting and will
respond to questions that are appropriate for discussion at the Meeting. I
hope you will be able to attend.
Sincerely,
/s/ ROBERT H. PATTERSON, JR.
Robert H. Patterson, Jr.
Chairman of the Board
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CELEBRITY, INC.
4520 OLD TROUP ROAD
P. O. BOX 6666
TYLER, TEXAS 75711
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held December 2, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of Celebrity, Inc., a Texas corporation (the "Company" or
"Celebrity"), will be held at the Sheraton Park Central Hotel, 12720 Merit
Drive, Dallas, Texas, on Monday, December 2, 1996, at 10:00 a.m. local time. A
Proxy and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the following purposes:
(1) To elect five members of the Board of Directors for the term
of office stated in the Proxy Statement.
(2) To consider and ratify the selection of Price Waterhouse LLP
as the Company's independent public accountants.
(3) To transact any other business that may properly come before
the Meeting and any adjournments thereof.
The close of business on October 17, 1996, has been fixed as the
record date for determining shareholders entitled to notice of and to vote at
the Meeting and any adjournments thereof. For a period of at least ten days
prior to the Meeting, a complete list of shareholders entitled to vote at the
Meeting will be open to the examination of any shareholder during ordinary
business hours at the offices of the Company at 4520 Old Troup Road, Tyler,
Texas.
Information concerning the matters to be acted upon at the Meeting is
set forth in the accompanying Proxy Statement.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING IN PERSON
ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
By Order of the Board of Directors
/s/ JAMES R. THOMPSON
James R. Thompson
Secretary
Tyler, Texas
October 22, 1996
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CELEBRITY, INC.
4520 OLD TROUP ROAD
P. O. BOX 6666
TYLER, TEXAS 75711
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 2, 1996
This Proxy Statement is being first mailed on October 22, 1996, to
shareholders of Celebrity, Inc., a Texas corporation (the "Company" or
"Celebrity"), by the Board of Directors to solicit proxies (the "Proxies") for
use at the Annual Meeting of Shareholders (the "Meeting") to be held at the
Sheraton Park Central Hotel, 12720 Merit Drive, Dallas, Texas, on Monday,
December 2, 1996, at 10:00 a.m., local time, and at such other time and place
to which the Meeting may be adjourned.
The purpose of the Meeting is to consider and act upon the following:
(i) the election of five directors for the terms stated below;
(ii) the ratification of the selection of Price Waterhouse LLP as
the Company's independent public accountants and
(iii) such other matters as may properly come before the Meeting and
any adjournments thereof.
All shares represented by valid Proxies, unless the shareholder
otherwise specifies, will be voted as follows:
(i) FOR the election of the five persons named under "Election of
Directors" as nominees for election as directors of the
Company for the terms stated below;
(ii) FOR the ratification of the selection of Price Waterhouse LLP
as the Company's independent public accountants and
(iii) at the discretion of the proxyholders (the "Proxyholders")
with regard to any other matter that may properly come before
the Meeting and any adjournments thereof.
Any shareholder executing a Proxy retains the right to revoke it at
any time prior to exercise at the Meeting. A Proxy may be revoked by delivery
of written notice of revocation to the Secretary of the Company, by execution
and delivery of a later Proxy or by voting in person at the Meeting. Unless
revoked, all shares represented by properly executed Proxies will be voted as
specified therein.
RECORD DATE AND VOTING SECURITIES
The record date for determining the shareholders entitled to notice of
and to vote at the Meeting and any adjournments thereof was the close of
business on October 17, 1996 (the "Record Date"), at which time the Company had
issued and outstanding approximately 6,309,602 shares of Common Stock, par
value $.01 per share ("Common Stock"). The shares of Common Stock constitute
the only outstanding voting securities of the Company entitled to be voted at
the Meeting.
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QUORUM AND VOTING
The presence at the Meeting, in person or by proxy, of the holders of
one-third of the Common Stock issued and outstanding and entitled to vote
thereat is necessary to constitute a quorum to transact business. In deciding
all questions and other matters, a holder of Common Stock on the Record Date
will be entitled to cast one vote for each share of Common Stock then
registered in such holder's name.
Election of the director nominees named in Proposal No. 1, or any of
them, requires the affirmative vote of the holders of a plurality of the shares
of Common Stock present or represented at the Meeting and entitled to vote
thereon. A Proxy cannot be voted for more than five director nominees. Votes
may be cast in favor or withheld with respect to any of the director nominees.
Votes that are withheld will be counted toward a quorum, but will be excluded
entirely from the tabulation for the proposal and, therefore, will not
otherwise affect the outcome of the vote on the proposal.
Approval of Proposal No. 2 requires the affirmative vote of the
holders of a majority of the shares of Common Stock present or represented at
the Meeting and entitled to vote thereon. Abstentions on the proposal may be
specified and will be counted toward a quorum, but will be excluded entirely
from the tabulation for the proposal and, therefore, will not otherwise affect
the outcome of the vote on the proposal.
The election inspectors will treat shares referred to as "broker
non-votes" (shares held by brokers or nominees as to which they have no
discretionary authority to vote on a particular matter and have received no
instructions from the beneficial owners or persons entitled to vote thereon),
if any, as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. However, for purposes of determining the
outcome of any matter requiring discretionary authority to vote, broker
non-votes will be treated as not present and not entitled to vote with respect
to that matter (even though those shares are considered present and entitled to
vote for quorum purposes and may be entitled to vote on other matters).
Brokers or nominees have discretionary authority to vote on both Proposals 1
and 2.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
There are five directors to be elected for terms expiring at the
Company's Annual Meeting of Shareholders in 1997 or until their successors have
been elected and qualified. It is intended that the names of the persons
indicated in the following table will be placed in nomination and that the
persons named in the Proxy (the "Proxyholders") will vote for their election.
Each of the nominees has indicated willingness to serve as a member of the
Board of Directors if elected; however, if any nominee becomes unavailable for
election to the Board of Directors for any reason not presently known or
contemplated, the Proxyholders will have discretionary authority to vote the
Proxy for any nominee who is substituted for the nominee who becomes
unavailable.
The nominees are as follows:
NAME AGE POSITION
---- --- --------
Robert H. Patterson, Jr. 45 Chairman of the Board and Chief Executive Officer
Richard Yuen 52 Managing Director of Celebrity Exports International Limited and
Director
B.D. Hunter(1)(2) 65 Director
C.A. Langner(1)(2) 71 Director
Valerie Anne Mars(1)(2) 37 Director
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(Footnotes on following page)
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(Footnotes to table on previous page)
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
Robert H. Patterson, Jr. has served as Chairman of the Board of
Celebrity since 1989 and as a director since 1974. He served as President from
1978 to 1995, Vice President from 1975 to 1978, and as Secretary and Treasurer
from 1974 to 1975.
Richard Yuen has served as Managing Director of Celebrity Exports
International Limited, the Company's Hong Kong subsidiary, since 1984 and as a
director of Celebrity since December 1992.
B.D. Hunter has served as a director of Celebrity since April 1993.
Mr. Hunter is the founder and Chairman of Huntco Inc., which has various
operations including steel service centers, pressure vessel manufacturing,
nursing homes and other businesses. Mr. Hunter also serves on the boards of
directors of Service Corporation International, Cash America Investments, Inc.
and Mark Twain Bancshares, Inc.
C.A. Langner has served as a director of Celebrity since December
1992. Mr. Langner was Administrative Manager of the Producing Department of
Exxon Corporation from 1983 to 1986. Mr. Langner has been engaged in the
management of his personal investments since 1986.
Valerie Anne Mars has served as a director of Celebrity since
September 1995. Ms. Mars has been the General Manager of Master Foods, Czech
Republic and Republic of Slovakia, a unit of Mars, Inc., in Prague, Czech
Republic, since August 1996. From 1994 to August 1996, Ms. Mars was a project
consultant with M&M/Mars. From 1990 to 1994, Ms. Mars was engaged in the
management of her personal investments.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR EACH
NOMINEE FOR THE BOARD OF DIRECTORS.
BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the
Board of Directors. The Board meets on a regularly scheduled basis to review
significant developments affecting the Company and to act on matters requiring
Board approval. It also holds special meetings and acts by unanimous written
consent when important matters require Board action between scheduled meetings.
The Board of Directors met five times during fiscal 1996. During fiscal 1996,
each member of the Board participated in at least 75% of all Board and
applicable committee meetings held during the period for which he or she was a
director.
The Board of Directors established audit and compensation committees
to devote attention to specific subjects and to assist it in the discharge of
its responsibilities. The functions of those committees, their current members
and the number of meetings held and actions taken by written consent during
fiscal 1996 are described below.
Audit Committee. The Audit Committee recommends to the Board of
Directors the appointment of the firm selected to be independent public
accountants for the Company and monitors the performance of such firm; reviews
and approves the scope of the annual audit and evaluates with the independent
public accountants the Company's annual audit and annual consolidated financial
statements; reviews with management the status of internal accounting controls;
evaluates problem areas having a potential financial impact on the Company that
may be brought to its attention by management, the independent public
accountants or the Board of Directors; and evaluates annual public financial
reporting documents of the Company. Messrs. Langner (Chairman) and Hunter and
Ms. Mars are the members of the Audit Committee. The Audit Committee met three
times during fiscal 1996.
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Compensation Committee. The Compensation Committee approves all major
decisions with regard to executive compensation, establishes and monitors the
compensation policies of the Company and administers the Company's 1992 Stock
Option Plan (as amended to date, the "Option Plan") and 1993 Employee Stock
Purchase Plan (as amended to date, the "Purchase Plan"). The Compensation
Committee has the power to determine from time to time the individuals to whom
options will be granted, and offers to purchase stock will be made, under the
plans. Messrs. Hunter (Chairman) and Langner and Ms. Mars are the members of
the Compensation Committee. The Compensation Committee met three times and
acted by unanimous written consent once during fiscal 1996.
The Company does not have a nominating committee. The functions
customarily attributable to a nominating committee are performed by the Board
of Directors as a whole.
PRINCIPAL SHAREHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth information regarding the beneficial
ownership of Common Stock as of the Record Date by (i) each person known by the
Company to own beneficially more than 5% of the outstanding shares of Common
Stock, (ii) each director of the Company, (iii) the Company's Named Officers
(as defined under "Management Compensation -- Summary Compensation Table") and
(iv) all directors and executive officers of the Company as a group.
AMOUNT AND NATURE OF
NAME OF BENEFICIAL BENEFICIAL PERCENT
OWNER OR GROUP(1) OWNERSHIP(2) OF CLASS
----------------- -------------------- --------
Robert H. Patterson, Jr. . . . . . . . . . . . . 3,263,568 51.7%
Richard Yuen . . . . . . . . . . . . . . . . . . 104,750 1.7%
B.D. Hunter . . . . . . . . . . . . . . . . . . . 19,000 *
C.A. Langner . . . . . . . . . . . . . . . . . . 17,800 *
Valerie Anne Mars . . . . . . . . . . . . . . . . 7,500 *
David J. Huffman . . . . . . . . . . . . . . . . 32,800 *
Clifford C. Condict . . . . . . . . . . . . . . . 78,187 1.2%
James R. Thompson . . . . . . . . . . . . . . . . 13,200 *
Roger C. Craft . . . . . . . . . . . . . . . . . 9,000 *
FMR Corp. . . . . . . . . . . . . . . . . . . . . 333,900 5.29%
Robert C. Welles, Jr., Revocable Living Trust
U/A/D May 27, 1992 . . . . . . . . . . . 340,017 5.4%
Directors and executive officers as a group
(10 persons) . . . . . . . . . . . . . . 3,545,805 55.6%
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* Less than 1%
(1) "Beneficial owner" means generally any person who, directly or
indirectly, has or shares voting power or investment power with
respect to a security. All information with respect to the beneficial
ownership of any shareholder has been furnished by such shareholder
and the Company believes that, except as otherwise indicated, each
shareholder has sole voting and investment power with respect to
shares listed as beneficially owned by such shareholder.
(2) Includes shares of Common Stock issuable upon exercise of options that
are exercisable on the Record Date or within 60 days thereafter by
Patterson, Yuen, Hunter, Langner, Mars, Huffman, Condict, Thompson,
Craft and all directors and executive officers as a group, with such
shares numbering 4,000; 15,000; 11,000; 9,000; 7,000; 12,800; 10,000;
11,000; 4,000 and 83,000 shares, respectively.
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MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table contains information concerning the compensation
earned by, awarded to or paid to (i) all individuals who served as Chief
Executive Officer of the Company during fiscal 1996 and (ii) each of the four
most highly compensated executive officers of the Company at the end of fiscal
1996 other than the Chief Executive Officer whose total annual salary and bonus
exceeded $100,000, based on salary and bonus earned during fiscal 1996
(collectively, the "Named Officers"), in each case for services rendered to the
Company during fiscal years 1994 through 1996.
LONG-TERM COMPENSATION
----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------- ----------------------- -------
SECURITIES
UNDERLYING
OPTIONS/
SALARY BONUS RESTRICTED SARS ALL OTHER
NAME AND PRINCIPAL FISCAL ------ ----- OTHER ANNUAL STOCK ---- LTIP COMPENSATION
POSITION YEAR ($) ($) COMPENSATION AWARD(S) (#)(1) PAYOUTS ($)
------------------------ ---- ---- --- ------------ ---------- ------ ------- --------------
Robert H. Patterson, Jr., 1996 290,000 203,788(2)(3)
Chairman of the Board 1995 275,000 110,000 20,000 26,605
and Chief Executive 1994 250,000 26,147
Officer
Richard Yuen, 1996 258,000
Director and Managing 1995 210,000 128,200 15,000
Director of Celebrity 1994 178,750 35,256
Exports International
Limited(4)
David J. Huffman, 1996 150,000 4,356(2)
President 1995 125,000 65,000 10,000 3,221
1994 100,000 2,135
Clifford C. Condict, 1996 90,000 3,063(2)
Vice President - 1995 85,000 32,500 5,000 2,221
Merchandising 1994 100,000 2,613
James R. Thompson, 1996 100,000 3,460(2)
Vice President - 1995 85,000 32,500 10,000 2,405
Finance 1994 70,000 1,845
Roger D. Craft, 1996 90,000 3,063(2)
Vice President - 1995 85,000 32,500 5,000 2,192
Operations 1994 70,000 1,752
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(1) Options to acquire shares of Common Stock under the Option Plan.
(2) In fiscal 1996, the Company paid $3,235; $4,356; $3,063; $3,460 and
$3,063 as matching contributions for Messrs. Patterson, Huffman,
Condict, Thompson and Craft, respectively, pursuant to the Company's
tax-qualified profit sharing plan with a cash or deferred arrangement
under Section 401(k) of the Internal Revenue Code of 1986 (the
"Code").
(3) In fiscal 1996, the Company also (i) paid $2,135 on a long-term
disability insurance policy for Mr. Patterson and (ii) discontinued
certain arrangements pursuant to which it paid the premiums on, and
held ownership of, two insurance policies on Mr. Patterson's life.
The ownership of the policies, which had an aggregate cash surrender
value of $198,418, was then transferred to Mr. Patterson, resulting in
additional compensation to Mr. Patterson equivalent to such aggregate
cash surrender value.
(4) All compensation for Mr. Yuen's services is paid to Golden Pool
Limited, a British Virgin Islands company wholly owned by a trust, the
beneficiaries of which are Richard Yuen and his family.
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OPTION GRANTS DURING FISCAL 1996
No options were granted to the Named Officers during fiscal 1996.
OPTION EXERCISES DURING FISCAL 1996
AND FISCAL YEAR END OPTION VALUES
The following table provides information related to options exercised
by the Named Officers during fiscal 1996 and the number and value of options
held at fiscal year end. The Company does not have any outstanding stock
appreciation rights.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
NUMBER OF FISCAL YEAR END(1) AT FISCAL YEAR END(2)
SHARES -------------------------- --------------------
ACQUIRED VALUE
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
Robert H. Patterson, Jr. 4,000 16,000
Richard Yuen 15,000 20,000
David J. Huffman 12,800 25,200
Clifford C. Condict 10,000 10,000
James R. Thompson 11,000 14,000
Roger D. Craft 4,000 6,000
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(1) Value is calculated based on the difference between the option
exercise price and the closing price of the Common Stock on the date
of exercise multiplied by the number of shares to which the exercise
relates.
(2) At fiscal year end, none of the Named Officers held in-the-money
options.
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COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are entitled to receive
an annual fee of $10,000, plus $500 for each meeting of the Board of Directors
they attend. The members of the Audit and Compensation Committees do not
receive separate compensation for their attendance at committee meetings. In
addition, pursuant to the terms of the Option Plan, nonemployee directors
automatically receive grants of nonqualified stock options to purchase 5,000
shares of Common Stock upon their initial election to the Board of Directors
and automatically receive grants of nonqualified stock options to purchase
2,000 shares of Common Stock in each year they are reelected to the Board of
Directors. The options are fully exercisable upon the date of grant at a price
equal to the closing sale price of the Common Stock reported by the NASDAQ
National Market on the date of grant. Each of Messrs. Langner and Hunter
received options to purchase 2,000 shares of Common Stock upon his reelection
to the Board of Directors in December 1995. Such options are exercisable at a
price of $5.75 per share. Ms. Mars received options to purchase 5,000 shares
of Common Stock upon her initial election to the Board of Directors in
September 1995 and 2,000 shares of Common Stock upon her reelection to the
Board of Directors in December 1995. The options received by Ms. Mars in
September 1995 and December 1995 are exercisable at prices of $7.13 and $5.75
per share, respectively.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY
The base salary for top executive officers and annual incentive
compensation for all executive officers for fiscal 1996 were approved by the
Compensation Committee, which at that time consisted of B. D. Hunter and C. A.
Langner, both of whom are nonemployee directors. The Compensation Committee
received from the Chief Executive Officer recommendations regarding base
salaries and incentive compensation for the top executive officers. The Chief
Executive Officer set the compensation for lower level executive officers.
The objectives of the Company's executive compensation program are to:
o Support the achievement of desired Company performance.
o Provide competitive compensation that will attract and retain
superior talent and reward performance.
o Align the executive officers' interests with those of the
shareholders by placing a portion of their pay at risk because
it is dependent upon corporate performance.
To achieve the above objectives, the Company's executive compensation
policies integrate annual base compensation with bonuses based on overall
corporate performance and individual initiatives and performance. The
measurement of corporate performance and the award of bonuses are based
primarily upon the achievement of Company performance goals that are reviewed
and approved annually by the Compensation Committee. Accordingly, in years in
which these performance goals are achieved or exceeded, executive compensation
will tend to be higher than in years in which the Company's performance is
below expectations. Annual cash compensation, together with the payment of
long-term equity-based incentive compensation through stock options, is
designed to attract and retain qualified executives and to ensure that such
executives have a continuing stake in the long-term success of the Company.
The executive compensation program is designed to provide an overall
level of compensation that is competitive with that offered by companies of
comparable size and complexity. The actual compensation levels of the
Company's executive officers may be greater or less than average compensation
levels in other companies based upon annual and long-term overall Company
performance as well as individual performance. The Compensation
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Committee uses its discretion to set executive compensation at levels warranted
in its judgment by external, internal and individual circumstances.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The Company's executive officer compensation program is comprised of
base salary, annual cash incentive compensation, long-term incentive
compensation in the form of stock options and various other benefits.
Base Salary. In fiscal 1996 base salary levels for the Company's
executive officers, including the Chief Executive Officer, were competitively
set relative to comparable companies. In determining salaries, the
Compensation Committee took into account individual experience and performance
and specific issues particular to the Company.
Annual Incentive Compensation. The Company maintains incentive
compensation plans for its executive officers. These incentive compensation
plans are based on performance goals that are established each fiscal year and
are based on the Company's sales and profitability. Cash bonuses, payable
after the close of the fiscal year, are based on the extent to which these
goals have been met. The amounts of these incentive bonuses are reflected in
the summary compensation table above.
The Company's 1996 Employee Bonus Plan (the "Bonus Plan") was used to
compute bonuses payable to Messrs. Patterson, Huffman, Condict, Thompson and
Craft. The potential bonuses were based on the consolidated per share earnings
of the Company for fiscal 1996 after accruals for income taxes, bonus plans and
Company contributions to the Company's 401(k) Plan, excluding extraordinary
items ("Earnings Per Share"). Potential bonuses ranged from $10,000 to
$165,000, depending upon Earnings Per Share and the identity of the individual
receiving the bonus. Because a minimum Earnings Per Share of $.61 was required
to have been achieved for fiscal 1996 for any bonus to be distributed under the
Bonus Plan, no bonuses were earned under the Bonus Plan for fiscal 1996.
Option Plan. The Option Plan has been the Company's long-term
incentive plan for executive officers since 1992. The objectives of the Option
Plan are to align executive and shareholder long-term interests by creating a
strong and direct link between executive compensation and shareholder return,
and to enable executives to develop and maintain a significant long-term
ownership position in the Common Stock. No options were granted under the
Option Plan during fiscal 1996.
Purchase Plan. Executive officers are encouraged to increase their
ownership of Common Stock, thus increasing the alignment of their interests
with shareholder interests, by participating in the Purchase Plan. Up to
300,000 shares of Common Stock may be sold under the Purchase Plan, which was
established in 1993, pursuant to offers to employees selected by the
Compensation Committee from among all employees of the Company and its
wholly-owned subsidiaries. The Compensation Committee has discretion as to the
timing and duration of such offers to allow employees to purchase Common Stock
under the Purchase Plan. The price of such Common Stock is the fair market
value of the stock when the offer is made. Employees may purchase shares with
a promissory note providing for repayment through payroll deductions. No
employees were offered the opportunity to purchase shares under the Purchase
Plan during fiscal 1996.
401(k) Plan. The Company maintains a tax-qualified profit sharing
plan with a cash or deferred arrangement (the "401(k) Plan") under section
401(k) of the Code. All of the Company's employees, except those who are
neither citizens nor residents of the U.S., are eligible to participate in the
401(k) Plan beginning on July 1 or January 1 following their completion of one
full year of service with the Company. Plan participants may defer up to 15%
of their compensation, subject to limits imposed by the Code, including a Code
provision that limits deferrals to an indexed amount, which was $9,240 in 1995
and $9,500 in 1996. The 401(k) Plan provides that the Company, in its
discretion, may make matching contributions with respect to elective deferral
contributions by plan participants. It has been the Company's practice to
contribute, as a matching contribution, approximately $.50 per $1.00 of
employee contributions, up to six percent of each employee's compensation. A
participant's interest in Company matching contribution amounts is full, vested
and nonforfeitable following the completion of six years of
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service by the participant. The Company's aggregate matching contribution for
fiscal 1996 was approximately $79,000. Robert H. Patterson, Jr. is the trustee
of the 401(k) Plan trust. Each participant has the right to direct the
investment of his or her own account balance in the 401(k) Plan.
Benefits. The Company provided medical benefits to its Chief
Executive Officer pursuant to a medical reimbursement plan. The Company also
paid premiums on two insurance policies on the Chief Executive Officer's life,
which policies were subsequently transferred to the Chief Executive Officer.
See "Management Compensation -- Summary Compensation Table -- Note (3)."
The Company has no policy for maintaining executive compensation
within the $1,000,000 deduction limitation of Section 162(m) of the Code
because it is very unlikely that that limitation will be a factor for
executives of the Company.
This report of the Compensation Committee on executive compensation is
submitted by the current members of the Committee as noted below:
B. D. Hunter
C. A. Langner
Valerie Anne Mars
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COMPARATIVE STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on
Common Stock with the cumulative total return on the stocks comprising the
Russell 2000 Index and the stocks comprising a peer group index consisting of
Helen of Troy Corporation, Craftmade International, Inc., Catalina Lighting,
Inc., Handleman Company and Fossil, Inc. (collectively, the "Peer Group") over
the period commencing December 16, 1992 (the date of the first public trading
of the Common Stock) and ending June 30, 1996 (assuming the investment of $100
on December 16, 1992, in Common Stock, the stocks comprising the Russell 2000
Index and the stocks comprising the Peer Group and reinvestment of all
dividends).
Research Data Group Total Return - Data Summary
FLWR
Cumulative Total Return
---------------------------------
12/92 6/93 6/94 6/95 6/96
CELEBRITY INC. FLWR 100 58 26 52 34
PEER GROUP PPEER1 100 106 108 108 94
RUSSELL 2000 IR20 100 110 115 138 171
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(1) Based upon $100 invested on December 16, 1992 in stock or on November
30, 1992 in index, including in each case reinvestment of dividends.
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CERTAIN TRANSACTIONS
The Company leases distribution center space at 4501 Old Troup Road,
Tyler, Texas, from Robert H. Patterson, Jr. and the trust under the will of the
late father of Robert H. Patterson, Jr., R. Harold Patterson, Sr. (the
"Patterson Trust"). Mr. Patterson and the Patterson Trust each own 50% of the
property. During fiscal 1996, the Company paid $10,000 per month to lease the
property on a month-to-month basis. Management believes the terms of the lease
are no less favorable to the Company than could be obtained from an
unaffiliated third party.
The Company paid Golden Pool Limited, a British Virgin Islands company
wholly owned by a trust, the beneficiaries of which are Mr. Yuen and his
family, a fee of approximately $258,000 for management and consulting services
provided by Mr. Yuen in fiscal 1996.
Robert H. Patterson, Jr., David J. Huffman and Clifford C. Condict
each borrowed $109,800 from the Company in November 1993. The proceeds of
these loans were used to pay the fair market value of shares of Common Stock
(other than the par value of the shares, which was paid in cash by the
purchasing executive officer) purchased by the executive officers under the
Purchase Plan. The notes representing these loans are due in November 1998,
and bear interest at a rate of 5.35% per annum, compounded annually. The
interest on the loans is paid in biweekly installments by payroll deductions in
an amount per week calculated to repay the interest on the note over the term
of the note. Twenty-five percent of the net amount of any year-end bonus
(after withholding of all taxes) earned by the executive officer will be
applied to reduce the amount due on his note. Each loan is secured by the
Common Stock purchased with the proceeds of the loan. As of the Record Date,
the outstanding balances of the loans to Messrs. Patterson, Huffman and Condict
were $92,324; $105,040 and $104,624, respectively.
SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and officers, and persons who
own more than 10% of a registered class of the Company's equity securities, to
file initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission (the "SEC"). Directors, officers and
greater than 10% beneficial owners are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file. Based solely on
its review of the copies of such forms received by it with respect to fiscal
1996, or written representations from certain reporting persons, the Company
believes that all filing requirements under Section 16(a) of the Exchange Act
applicable to its directors, officers and greater than 10% beneficial owners
have been satisfied.
PROPOSAL NO. 2
INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee and subject to
ratification by the shareholders at the Meeting, the Board of Directors of the
Company has selected Price Waterhouse LLP to audit the consolidated financial
statements of the Company and its subsidiaries for the fiscal year ending June
30, 1997. Price Waterhouse LLP has served the Company in this capacity since
1991. Representatives of Price Waterhouse LLP are expected to be present at
the Meeting, will have the opportunity to make a statement if they desire to do
so, and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
PROPOSAL TO RATIFY THE SELECTION OF PRICE WATERHOUSE LLP.
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15
SHAREHOLDER PROPOSALS
Shareholders may submit proposals on matters appropriate for
shareholder action at subsequent annual meetings of the Company consistent with
Rule 14a-8 promulgated under the Exchange Act. For such proposals to be
considered for inclusion in the Proxy Statement and Proxy relating to the 1997
Annual Meeting of Shareholders, such proposals must be received by the Company
not later than June 24, 1997. Such proposals should be directed to Celebrity,
Inc., 4520 Old Troup Road, P. O. Box 6666, Tyler, Texas 75711, Attention:
Secretary.
OTHER BUSINESS
The Board of Directors knows of no matter other than those described
herein that will be presented for consideration at the Meeting. However,
should any other matters properly come before the Meeting and any adjournments
thereof, it is the intention of the persons named in the accompanying Proxy to
vote in accordance with their best judgment in the interest of the Company.
MISCELLANEOUS
All costs incurred in the solicitation of Proxies will be borne by the
Company. In addition to the solicitation by mail, officers and employees of
the Company may solicit Proxies by telephone, telegram or personally, without
additional compensation. The Company may also make arrangements with brokerage
houses and other custodians, nominees and fiduciaries for the forwarding of
solicitation materials to the beneficial owners of shares of Common Stock held
of record by such persons, and the Company may reimburse such brokerage houses
and other custodians, nominees and fiduciaries for their out-of-pocket expenses
incurred in connection therewith.
Accompanying this Proxy Statement is a copy of the Company's Annual
Report for the fiscal year ended June 30, 1996.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE
FINANCIAL STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES, BUT NOT INCLUDING
EXHIBITS, WILL BE FURNISHED AT NO CHARGE TO EACH PERSON TO WHOM A PROXY
STATEMENT IS DELIVERED UPON THE WRITTEN REQUEST OF SUCH PERSON ADDRESSED TO
CELEBRITY, INC., ATTN: JAMES R. THOMPSON, VICE PRESIDENT - FINANCE, P.O. BOX
6666, TYLER, TEXAS 75711.
By Order of the Board of Directors
/s/ JAMES R. THOMPSON
James R. Thompson
Secretary
Tyler, Texas
October 22, 1996
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P R O X Y
CELEBRITY, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD DECEMBER 2, 1996
The undersigned hereby appoints Robert H. Patterson, Jr. and James R.
Thompson, or either of them, with full power of substitution, as Proxies
to vote, as designated below, all stock of Celebrity, Inc., a Texas
corporation (the "Company"), owned by the undersigned at the Annual
Meeting of Shareholders to be held at the Sheraton Park Central Hotel,
12720 Merit Drive, Dallas, Texas, on Monday, December 2, 1996, at 10:00
a.m., local time, upon such business as may properly come before the
meeting, including the following:
(1) Election of Directors:
/ / FOR all nominees listed below
(except as indicated to the contrary
below):
/ / WITHHOLD AUTHORITY to vote on one
or more nominees as listed below:
below):
Robert H. Patterson, Jr., B.D. Hunter, C.A. Langner, Valerie Anne Mars
and Richard Yuen
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE LINE PROVIDED BELOW.
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(2) Ratification of the selection of Price Waterhouse LLP as the
Company's independent public accountants for the fiscal year ending
June 30, 1997.
/ / FOR / / AGAINST / / ABSTAIN
(3) In their discretion on any other matters that may properly come
before the meeting and any adjournments thereof.
(Continued, and to be signed and dated, on reverse side)
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17
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(Continued from other side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFIC DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE FIVE NOMINEES FOR DIRECTOR, FOR THE
RATIFICATION OF THE SELECTION OF PRICE WATERHOUSE LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS AND IN THE DISCRETION OF THE PROXYHOLDERS ON ANY
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS
THEREOF.
/ / Mark here for address change and note below
Dated:
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Signature
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(Signature if held jointly)
IMPORTANT: Please sign exactly as name appears to the left. When signing on
behalf of a corporation, partnership, estate, trust or in other representative
capacity, please sign name and title. If executed by a corporation, the proxy
should be signed by a duly authorized officer. If executed by a partnership,
please sign in the partnership name by an authorized person. For joint
accounts, each joint owner must sign.
THIS PROXY MAY BE REVOKED PRIOR TO THE EXERCISE OF THE POWERS CONFERRED BY THE
PROXY.
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