1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
DEP CORPORATION
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(Name of Registrant as Specified in Its Charter)
DEP CORPORATION
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
NA
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(2) Aggregate number of securities to which transactions applies:
NA
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
NA
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(4) Proposed maximum aggregate value of transaction:
NA
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/ / 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:
NA
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(2) Form, schedule or registration statement no.:
NA
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(3) Filing party:
NA
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(4) Date filed:
NA
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1Set forth the amount on which the filing fee is calculated and state how it
was determined.
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[DEP CORPORATION LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 9, 1996
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 Tuesday, January 9,
1996 (the "Meeting"), at 10:00 a.m. (local time) for the following purposes:
1. To elect two Class II directors to serve for three-year terms.
2. To consider and act upon a proposal to approve an amendment to the
Company's 1992 Stock Option Plan.
3. To transact such other business as may properly come before the Meeting
or any adjournment or postponement thereof.
Only Class B stockholders of record at the close of business on Friday,
November 10, 1995 are entitled to notice of and to vote at the meeting. The list
of Class B 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
/s/ JUDITH R. BERGLASS
----------------------------
Judith R. Berglass
Secretary
Rancho Dominguez, California
November 22, 1995
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[DEP CORPORATION LOGO]
2101 EAST VIA ARADO
RANCHO DOMINGUEZ, CALIFORNIA 90220-6189
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PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 9, 1996
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 Tuesday, January 9, 1996, 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 Class B Common Stock, par value $.01 per
share (the "Class B Shares"), as of the close of business on November 10, 1995
will be entitled to receive notice of, and to vote at, the Meeting. Presence at
the Meeting, in person or by proxy, of a majority of the outstanding Class B
Shares will constitute a quorum for the transaction of business at the Meeting.
Each Class B Share 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. Therefore, the
Board of Directors urges you to vote on these matters. On November 10, 1995,
there were outstanding 3,134,081 Class B Shares. Shares of the Company's Class A
Common Stock, par value $0.01 per share (the "Class A Shares"), are not entitled
to be voted at the Meeting.
Only Class B 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 (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
Class B Shares.
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 Company's Class B Shares on or about November 22, 1995.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following information is set forth as of November 10, 1995 with respect
to the Company's Chief Executive Officer and four most highly compensated other
officers, each director and nominee, all directors, nominees 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 Class A Shares or Class
B Shares:
CLASS A SHARES CLASS B SHARES
----------------------------------------- -----------------------------------------
PERCENT PERCENT
NAME & ADDRESS OF BENEFICIALLY OPTIONS OF BENEFICIALLY OPTIONS OF
BENEFICIAL OWNERS(1) OWNED(2) EXERCISABLE(2) CLASS OWNED(2) EXERCISABLE(2) CLASS
- -------------------------------- ------------ -------------- ------- ------------ -------------- -------
DIRECTORS, NOMINEES AND OFFICERS
Robert Berglass............... 703,330 22,600 21.9 1,093,230 12,500 34.6
Judith R. Berglass (3)........ 450,898 15,000 14.1 40,898 5,000 1.3
Grant W. Johnson.............. 18,064 17,500 * 9,930 5,000 *
Philip I. Wilber.............. -- -- -- -- -- --
Michael Leiner................ -- -- -- 15,000 -- *
Alexander L. Kyman............ -- -- -- 1,000 -- *
Jerome P. Alpin............... 23,084 15,000 * 15,333 2,500 *
R. Eugene Biber............... 15,000 15,000 * 8,155 2,500 *
Stephen R. Berry.............. 2,050 1,000 * 2,050 1,000 *
All Directors, Nominees &
Officers (11 Persons)......... 1,218,176 89,850 40.4 1,188,580 29,750 37.6
OTHER 5% BENEFICIAL OWNERS (4)
Dimensional Fund Advisors
Inc......................... 181,512 -- 5.8 183,412 -- 5.8
1299 Ocean Avenue, Suite 850
Santa Monica, CA 90401
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* Denotes less than 1%.
(1) The address for each director, nominee and officer is c/o DEP Corporation,
2101 East Via Arado, Rancho Dominguez, California 90220-6189.
(2) Includes options exercisable on November 10, 1995 or within 60 days
thereafter.
(3) Includes 400,000 Class A Shares held in the Berglass 1995 Irrevocable Trust
dated June 27, 1995 for which Mrs. Berglass is the Trustee.
(4) Based solely upon the information delivered to the Company by such
beneficial owners.
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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 II directors, Mrs. Berglass
and Mr. Wilber, expires at the Meeting and they have been nominated by the Board
to serve as Class II 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 II 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 II DIRECTORS
(terms to expire in
1998)
Judith R. Berglass 43 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. She has been 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 68 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.
CONTINUING DIRECTORS:
CLASS I DIRECTORS
(terms expire in 1997)
Alexander L. Kyman 66 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.
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NAME AGE PRINCIPAL OCCUPATION AND POSITION WITH THE COMPANY
- ------------------------ ---- ----------------------------------------------------
CONTINUING DIRECTORS:
CLASS I DIRECTORS
(terms expire in 1997)
Michael Leiner 49 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.
CLASS III DIRECTORS
(terms expire in 1996)
Robert Berglass 57 Robert Berglass has served as President of the
Company since 1969 and has been Chairman of the
Board 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 51 Grant W. Johnson is the Chief Financial Officer and
Senior Vice President, Finance and has been employed
by the Company since 1985 and as a director since
1986. For approximately eight years prior to 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.
BOARD OF DIRECTORS AND COMMITTEES
The Board held 13 meetings during fiscal 1995. 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. In July 1995, each
director other than Mr. Berglass automatically received an option for 1,000
Class A Shares pursuant to the Company's 1992 Stock Option Plan. In addition,
subject to stockholder approval (see "Proposal to Amend the 1992 Stock Option
Plan"), each person becoming a director on or after August 1, 1994, is entitled
to a one-time grant of an option to purchase 5,000 Class A Shares. All options
granted to directors have a term of 5 years and an exercise price equal to the
fair market value of the Class A Shares on the date of grant. During fiscal year
1995, each current director attended at least 75% of all meetings of the Board
and any committees of the Board on which such director served.
The Board currently has an Audit Committee; Compensation and Management
Stock Option Committee (the "Compensation Committee"); and Employee Stock Option
Committee. The Board does not have a standing Nominating Committee.
During fiscal 1995, 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 one meeting during fiscal 1995.
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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
one meeting during fiscal 1995.
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
twice during fiscal 1995.
CERTAIN TRANSACTIONS
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. The Berglass 1995 Irrevocable Trust dated June 27,
1995 was late in filing its initial report. However, the filing made by Judith
R. Berglass, which was timely filed, also reported the shares held by such
Trust.
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 1995, 1994 and 1993:
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION --------------
FISCAL ---------------------- STOCK OPTIONS ALL OTHER
NAME YEAR SALARY(1) BONUS(2) NUMBER GRANTED COMPENSATION(3)
- -------------------------------- ------ --------- -------- -------------- ---------------
Robert Berglass 1995 $ 523,651 $ -- -- $ 400
President and 1994 566,085 -- 30,000 2,724
Chief Executive Officer 1993 544,792 -- 75,000 3,108
Grant W. Johnson 1995 204,990 -- 26,000 1,210
Senior Vice President and 1994 206,500 -- 11,000 4,032
Chief Financial Officer 1993 196,833 91,000 35,000 3,905
Jerome P. Alpin 1995 195,594 17,970 25,000 2,060
Senior Vice President 1994 197,142 42,625 10,000 5,259
and General Manager, 1993 189,400 7,500 10,000 5,018
International Sales and
Marketing
E. Michael McNamara 1995 178,854 -- -- 300
Executive Vice President, 1994 207,475 11,840 15,000 59,850
Sales and Marketing (4) 1993 16,667 -- 40,000 --
R. Eugene Biber 1995 158,995 19,152 25,000 1,023
Senior Vice President, 1994 160,250 -- 10,000 2,892
Operations 1993 153,500 61,000 15,000 2,830
Stephen R. Berry 1995 142,200 9,157 10,000 1,293
Vice President, Sales 1994 125,725 9,437 7,000 1,672
1993 114,150 3,440 1,000 1,768
- ---------------
(1) Compensation deferred at the election of the executive pursuant to the DEP
Corporation Executive Deferred Compensation Plan is included as salary in
the year earned.
(2) Bonuses are included in the fiscal year earned, but are typically paid in
the following fiscal year. Bonuses are subject to the Company's 1993 Stock
Target Ownership Plan pursuant to which executives receive a
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portion of their bonus compensation in Class A Shares and/or Class B Shares
(collectively, the "Common Stock"), based on the fair market value of such
stock. Fiscal 1995 bonuses paid to Messrs. Alpin and Biber include the fair
market value of 1,734 and 2,773 Class B Shares, respectively, issued in
fiscal 1996. Fiscal 1994 bonuses paid to Mr. Alpin and Mr. McNamara include
2,765 and 770 Class B Shares, respectively, issued in fiscal 1995. Fiscal
1993 bonuses paid to Messrs. Johnson and Biber include the fair market value
of 4,366 and 2,882 Class B Shares, respectively, issued in fiscal 1994.
(3) Amounts paid in fiscal 1995 represent (i) supplemental life insurance
premiums paid by the Company for term life insurance of $810 for Mr.
Johnson, $1,660 for Mr. Alpin, $300 for Mr. McNamara, $623 for Mr. Biber and
$893 for Mr. Berry; and (ii) $400 for each of the named officers other than
Mr. McNamara as matching contributions under the Company's 401(k) plan. No
contribution was made by the Company to its Profit Sharing Plan for fiscal
1995.
(4) Mr. McNamara resigned from the Company effective May 31, 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 current executive
officers named in the Summary Compensation Table above, and other executive
officers, with the exception of the President, who is 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, 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 cease to
beneficially own 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 DEP
Corporation, 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 Agreement or voluntarily by the executive
other than for "good reason," as defined in the Retention Agreement, then each
current executive listed on the Summary Table, with the exception of Robert
Berglass, will receive a lump sum payment equal to approximately six (6) months
of the executive's annual base salary.
For purposes of the Agreements, base salary is calculated without taking
into account voluntary salary reductions instituted in March 1995 which amounted
to 15% for Mr. Berglass and 10% for Messrs. Alpin,
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Biber and Johnson. 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
The following table shows information regarding grants of stock options
during the fiscal year ended July 31, 1995 to the named executive officers:
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF OPTIONS % OF TOTAL ANNUAL RATES OF STOCK
OPTIONS EXERCISE PRICE APPRECIATION
GRANTED(1) GRANTED OR BASE FOR OPTION TERM(3)
----------------- IN FISCAL PRICE EXPIRATION ------------------------
NAME CLASS A CLASS B YEAR(2) ($/SH)(1) DATE 5% 10%
- -------------------------- ------- ------- ---------- --------- ---------- ---------- -----------
Robert Berglass........... -- -- -- $ -- -- $ -- $ --
Grant W. Johnson.......... 1,000 -- * 1.63 7/31/00 450 995
25,000 -- 11% 2.23 7/07/02 22,696 52,891
Jerome P. Alpin........... 25,000 -- 11% 2.23 7/07/02 22,696 52,891
R. Eugene Biber........... 25,000 -- 11% 2.23 7/07/02 22,696 52,891
Stephen R. Berry.......... 10,000 -- 4% 1.13 6/28/00 3,122 6,899
All stockholders(4)....... N/A N/A N/A N/A N/A 5,245,416 12,224,050
- ---------------
* Denotes less than 1%
(1) All options have exercise prices equal to the fair market value of the
respective Common Stock at the date of grant, except that incentive stock
options granted to Mr. Berglass have an exercise price equal to 110% of the
fair market value. Options granted to Mr. Berry and options to purchase
1,000 Class A Shares automatically granted to Mr. Johnson for his services
as a director will become exercisable three years after the date of grant;
all other options granted in fiscal 1995 are exercisable in two installments
and exercisable in full one year from the date of grant. However, all
options would be immediately exercisable in certain events as provided for
in the Company's 1992 Stock Option Plan. The closing prices for the Class A
Shares and the Class B Shares on the NASDAQ SmallCap Market on November 6,
1995, were $1.50 and $1.625, respectively.
(2) Options with respect to 233,500 Class A Shares and 3,500 Class B Shares were
granted to employees, executives, consultants and directors during fiscal
1995.
(3) The assumed rates of annual appreciation are calculated from the date of
grant, based upon the fair market value of the Common Stock on such date,
through the last date the option may be exercised. Actual gains, if any, on
stock option exercises and Common Stock holdings are dependent on the future
performance of the Common Stock, including overall stock market conditions.
The Company does not represent that the values reflected in this table will
or will not be realized.
(4) This sets forth the potential profit which would be realized on the
Company's Common Stock by all stockholders, as a group, at the assumed rates
of appreciation based on share prices at July 31, 1995, over a period of
seven years.
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OPTION EXERCISES AND VALUES
The following table presents information regarding options exercised to
acquire shares of the Company's Common Stock during fiscal 1995 and the values
of unexercised options held at the end of fiscal 1995:
AGGREGATED OPTION EXERCISES IN FISCAL 1995 AND 1995 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............... -- $ -- 35,100 94,900 $ -- $ --
Grant W. Johnson.............. -- -- 22,500 59,500 -- --
Jerome P. Alpin............... -- -- 17,500 32,500 -- --
R. Eugene Biber............... -- -- 17,500 37,500 -- --
Stephen R. Berry.............. -- -- 2,000 18,000 -- $ 5,000
- ---------------
(1) Based on the difference between the closing price on the NASDAQ National
Market System of $1.625 for the Class A Shares and $2.50 for the Class B
Shares at July 31, 1995, and the exercise price of options having an
exercise price lower than such closing prices.
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 million 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.
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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 sets 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 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 1992 Stock
Option Plan. Options are granted at no less than prevailing market value and, 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 stock increases over the option term.
The number of shares 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 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.
In July 1995, in light of the financial difficulties of the Company, the
fact that all options previously issued to the Company's executives had exercise
prices considerably in excess of the current market price of the Common Stock
and the reduction of executive salaries, the Compensation Committee determined
that it was imperative to provide the Company's key management personnel
incentives to remain with the Company. Therefore, the Compensation Committee
determined to grant options to purchase 100,000 Class A Shares to the Company's
executive officers.
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 1995 was set by the Compensation
Committee in July 1994. 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 November 13, 1995, to consider Mr.
Berglass' base salary for fiscal 1996 and to determine whether to award any
performance bonuses and stock options to him with respect to fiscal 1995. Based
upon the Company's financial results for fiscal 1995, Mr. Berglass recommended
that the
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Compensation Committee not award any performance bonus or base salary increase
and the Compensation Committee voted to make no change in Mr. Berglass'
compensation for fiscal 1996.
Compensation Committee
Philip I. Wilber, Chairman
Michael Leiner
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Wilber and Leiner, and Dennis Holt, who is no longer a director,
served on the Compensation Committee during 1995.
COMPANY STOCK PRICE PERFORMANCE GRAPH
The following graph compares the Company's total return to stockholders
over a five-year period commencing August 1, 1990 against the NASDAQ market
index and the Peer Group. The Peer Group consists of Chattem, Inc.; Del
Laboratories, Inc.; St. Ives Laboratories, Inc.; and Mem Company, Inc.
Measurement Period DEP
(Fiscal Year Covered) Corporation NASDAQ Peer Group
1990 100 100 100
1991 219 118 118
1992 275 139 140
1993 156 169 166
1994 63 174 134
1995 46 243 170
ASSUMPTIONS:
Assumes $100 invested on August 1, 1990 with reinvestment of any dividends.
No dividends were paid on the Company's securities during the period.
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PROPOSAL TO AMEND THE 1992 STOCK OPTION PLAN
On August 10, 1995, the Board adopted, subject to shareholder approval, an
amendment (the "Proposed Amendment") to the 1992 Stock Option Plan (the "1992
Plan") which provides for one-time option grants to new non-management directors
and expands the circumstances under which the Company's executive officers would
be entitled to exercise outstanding stock options in connection with a change in
control of the Company. The following summary of the Proposed Amendment is
subject to, and is qualified in its entirety by reference to, the complete text
of the Proposed Amendment set forth as Exhibit A to this Proxy Statement.
The 1992 Stock Option Plan. The purpose of the 1992 Plan is to enhance the
ability of the Company to attract, retain and develop a strong management team
by encouraging ownership of Common Stock by its officers and other employees,
directors and consultants. The 1992 Plan is administered by the Company's Board
in conjunction with its Compensation Committee and Employee Stock Option
Committee. Subject to the provisions of the 1992 Plan, the Board and such
Committees have authority to select the individuals who will receive options; to
determine the types of options to be granted and the number and class of shares
that will be subject to each option; and to impose other terms and conditions,
which need not be identical among options.
In accordance with rules promulgated under Section 16(b) of the Exchange
Act, discretionary grants to executive officers and directors under the 1992
Plan are made by a disinterested committee (a "Disinterested Committee")
comprised of two or more directors who, for at least one year prior to service
on such Committee, have not been granted any options, other than "formula grant"
options described below. The Compensation Committee is a Disinterested Committee
within the meaning of Rule 16b-3 promulgated under the Exchange Act and is
authorized to make discretionary stock option grants to executive officers and
directors who are not serving on any Disinterested Committee.
The 1992 Plan includes a formula grant pursuant to which each of the
Company's directors other than the Chairman of the Board is, on the last
business day of each fiscal year during his or her term as director, granted an
option to purchase 1,000 shares of the Company's Class A Shares. The exercise
price of all such options is the last sale price for the Class A Shares on the
date of grant.
The 1992 Plan provides that grants may be made with respect to Class A
Shares or Class B Shares or with respect to any other class of Common Stock
which the Company may hereafter be authorized to issue. Except for the formula
grants described above, the Compensation Committee determines in its sole
discretion which class of shares will be subject to any option granted under the
1992 Plan.
The Employee Stock Option Committee has the power to grant options to
non-executive employees and consultants with respect to an aggregate of 50,000
shares of Common Stock per year. Any grants proposed by such Committee with
respect to a greater number of shares are subject to approval by the Board.
Options to purchase shares of the Company's Common Stock may be granted
under the 1992 Plan until October 14, 2002. Incentive stock options granted
under the 1992 Plan to holders of more than ten percent (10%) of the outstanding
voting Common Stock of the Company may not have a term exceeding five years. No
options granted under the 1992 Plan may be exercisable for a term of more than
ten years.
Subject to the amendment described below, all outstanding options under the
1992 Plan will become immediately exercisable in the event of the dissolution or
liquidation of the Company, any merger or reorganization if the surviving entity
does not assume all obligations under the 1992 Plan or in the event that persons
who were directors on October 14, 1992 or who were nominated or recommended by
such directors do not constitute a majority of the Board.
Employees, including officers, may be granted either incentive or
non-qualified stock options under the 1992 Plan; non-management directors and
consultants may only be granted non-qualified stock options. The exercise price
of each incentive stock option granted under the 1992 Plan may not be less than
the fair market value on the date of grant of the shares of Common Stock subject
to the option. In addition, the exercise price of any incentive stock option
granted to the holder of more than ten percent (10%) of the outstanding shares
of the applicable class of Common Stock must be at least one hundred ten percent
(110%) of the fair market
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value of such shares on the date of grant. The maximum number of shares issuable
under the 1992 Plan is generally ten percent (10%) of all shares of Common Stock
issued and outstanding.
The 1992 Plan provides that the Board or the Employee Stock Option or
Compensation Committees may, in their sole discretion, include in any option
agreement a tax withholding feature permitting an option holder to elect to have
certain shares withheld upon the exercise of options granted thereunder to
satisfy withholding tax obligations.
Under federal tax laws as currently in effect, the qualified exercise of
incentive stock options may subject the option holder to alternative minimum
tax. The option holder is also subject to federal income tax on the amount by
which the proceeds from the sale of shares acquired pursuant to such options
exceeds the option exercise price. In addition, the exercise of non-qualified
stock options subjects the holder to federal income tax on the amount by which
the fair market value of the shares on the date of exercise exceeds the exercise
price.
The Company receives no federal income tax deduction upon the grant,
exercise or qualified sale of stock acquired pursuant to incentive stock
options. However, the Company does receive a deduction upon the exercise of
nonqualified stock options and upon the sale of shares issuable upon the
exercise of an incentive stock option if such shares are sold within one year of
the exercise date. Such tax deduction is based on the amount by which the fair
market value of the underlying shares at the date of exercise exceeds the
exercise price.
As of July 31, 1995 there were three non-management directors, three
outside consultants and approximately 180 employees, including eight executive
officers, eligible to participate in the 1992 Plan.
To date, options to purchase 525,050 shares of Common Stock are outstanding
under the 1992 Plan. The following table indicates the number of shares of
Common Stock subject to all Options granted under the 1992 Plan to (i) each
current executive officer named in the Summary Compensation Table under
"Executive Compensation," (ii) all current executive officers as a group, (iii)
all current directors who are not employees, as a group, and (iv) all employees
who are not executive officers, as a group. No shares have been issued upon
exercise of options granted under the 1992 Plan.
SHARES SUBJECT
NAME AND POSITION TO OPTIONS
--------------------------------------------------------------- --------------
Robert Berglass, President and Chief Executive Officer......... 105,000
Grant W. Johnson, Senior Vice President and Chief Financial
Officer...................................................... 67,000
Jerome P. Alpin, Senior Vice President and General Manager,
International Sales and Marketing............................ 45,000
R. Eugene Biber, Senior Vice President, Operations............. 50,000
Stephen R. Berry, Vice President, Sales........................ 18,000
All Executive Officers as a Group.............................. 349,500
Nonemployee Directors as a Group............................... 19,000
Nonexecutive Employees as a Group.............................. 156,550
Amendment to 1992 Plan. As a result of the Proposed Amendment, all unvested
options would become exercisable (1) upon stockholder approval of liquidation of
the Company, (2) upon stockholder approval of the merger or consolidation of the
Company with another entity with certain exceptions including if the voting
securities of the Company prior to the transaction (or securities issued in
exchange therefor) continue to represent more than two-thirds of the combined
voting power of the entity surviving such transaction, (3) if, on any date, a
majority of the Board is not comprised of "Continuing Directors," defined as
persons who were directors two years prior to such date or who were subsequently
elected or appointed to the Board upon the recommendation or with the approval
of at least two-thirds of the Continuing Directors, or (4) if Robert and Judith
R. Berglass and their affiliates cease to beneficially own securities
representing at least 26% of the combined voting power of the Company.
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The Board believes that the forgoing amendment will reinforce and encourage
the dedication of the Company's management team to their assigned duties and is
in the best interests of the Company and its stockholders.
The Proposed Amendment also provides that each person becoming a director
on or after August 1, 1994, shall receive a one-time grant of an option to
purchase 5,000 Class A Shares at the last sale price of such shares on the date
of the option grant. The Board believes the one-time grant of an option to
purchase 5,000 Class A Shares will materially aid the Company in its efforts to
recruit and retain qualified individuals to serve as directors. Subject to
stockholder ratification, on September 19, 1995, Messrs. Leiner and Kyman were
granted the following options, entitling them to purchase 5,000 Class A Shares
at the fair market value of such shares on the date of grant.
NEW PLAN BENEFITS TO NON-MANAGEMENT DIRECTORS
1992 STOCK OPTION PLAN
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATIOS OF STOCK
PRICE APPRECIATION
NUMBER OF SHARES EXERCISE FOR OPTION TERM
UNDERLYING OPTIONS PRICE EXPIRATION ------------------
NAME GRANTED ($/SHARE) DATE 5% 10%
-------------------------- ------------------ ---------- ---------- ------ ------
Alexander L. Kyman........ 5,000 $2.125 9/19/00 $2,935 $6,487
Michael Leiner............ 5,000 $2.125 9/19/00 2,935 6,487
VOTE REQUIRED. The Company is seeking stockholder approval and ratification
of the actions described above, which requires the affirmative vote of a
majority of the Class B Shares present in person or by proxy at the Meeting.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE AMENDMENT TO THE 1992
STOCK OPTION PLAN.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP served as the Company's independent auditors for the
fiscal year ended July 31, 1995 and has been selected by the Company's Audit
Committee to serve as the independent auditors for the fiscal year ending July
31, 1996. 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 1996 Annual
Meeting of Stockholders must be received by July 26, 1996 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, 1995 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 90220-6189.
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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.
/s/ JUDITH R. BERGLASS
--------------------------
Judith R. Berglass
Secretary
Rancho Dominguez, California
November 22, 1995
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EXHIBIT A
AMENDMENT TO THE
DEP CORPORATION
1992 STOCK OPTION PLAN
Set forth below is the full text of the amendment being submitted for
stockholder approval and ratification. For convenient reference, the revised
language has been italicized.
Section 3 (g) shall read in full as follows:
(g) Formula Grants. On the last business day of each of the Company's
fiscal years commencing with July 29, 1994, each of the Company's directors
then in office, other than the Chairman of the Board, shall be granted
options to purchase 1,000 shares of Class A Common Stock at the Fair Market
Value of such shares on the date of the option grant. In addition, each
person becoming a director on or after August 1, 1994, shall receive a
one-time grant of an option to purchase 5,000 shares of Class A Common
Stock at the Fair Market Value of such shares on the date of the option
grant, which shall be granted on the later of September 19, 1995 or the
date of election or appointment to the Board of Directors; provided, that
options granted prior to the date the amendment of this Section 3 (g) is
approved by stockholders of the Corporation in accordance with Section 12
(a) of this Plan shall be conditioned upon such approval and such options
may not be exercised, sold, assigned, pledged or made subject to any
encumbrance unless and until such approval has been obtained.
Notwithstanding the foregoing, if Class A Common Stock is not available for
issuance, any formula grants made pursuant to this Section 3(g) shall be
with respect to Original Common Stock. This Section 3(g) shall not be
amended more than once every six months, other than to comport with changes
in the Code, the Employee Retirement Income Security Act ("ERISA") or the
rules thereunder.
Section 11 (b) shall read in full as follows:
(b) Change in Control Defined. A "Change in Control" will be deemed to
have occurred (i) upon stockholder approval of the liquidation of the
Company, (ii) upon stockholder approval of the merger or consolidation of
the Company with another entity unless following such transaction (A) the
voting securities of the Company prior to the transaction (or securities
issued in exchange therefor) continue to represent more than two-thirds of
the combined voting power of the entity surviving such transaction, or (B)
Robert and Judith R. Berglass and their affiliates continue to beneficially
own securities representing at least 26% of the combined voting power of
the entity surviving such transaction, (iii) if, on any date, a majority of
the Board of Directors is not comprised of "Continuing Directors," defined
as persons who were directors two years prior to such date or who were
subsequently elected or appointed to the Board of Directors upon the
recommendation or with the approval of at least two-thirds of the
Continuing Directors, or (iv) if Robert and Judith R. Berglass and their
affiliates cease to beneficially own securities representing at least 26%
of the combined voting power of the Company; provided, however, that such
persons shall be deemed to beneficially own any securities of the Company
which are owned by such persons but subject to call options by third
parties unless and until such options are exercised.
Section 11(c) shall read in full as follows:
(c) Exercise of Options Upon a Change in Control. Upon a Change in
Control, each option granted under this Plan shall terminate, provided that
each holder of an option shall first be given the opportunity to exercise
all outstanding options, including options which have not vested as of the
effective date of the Change in Control. The Company shall give each option
holder written notice of any pending or actual Change in Control, and all
options shall expire on the later of the Change in Control or the notice
period specified by the Company (which shall be at least 10 days),
provided, that any exercise of an option prior to a Change in Control shall
be contingent upon the occurrence of such Change in Control.
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DEP CORPORATION
1992 STOCK OPTION PLAN, AS AMENDED
1. Purpose.
The purpose of this Plan is to enhance the ability of DEP Corporation
(the "Company") to attract, retain and develop a strong management team by
encouraging ownership of Common Stock by its key employees, including officers,
and by its directors and consultants.
2. Administration.
(a) Administrators. This Plan shall be administered by the
Company's Board of Directors and, to the extent provided herein or otherwise
authorized by the Board of Directors, by the Compensation Committee, the
Management Stock Option Committee and the Employee Stock Option Committee of
the Board of Directors.
(b) Committees. The Compensation Committee, the Management Stock
Option Committee and the Employee Stock Option Committee are hereinafter
individually referred to as a "Committee" and are collectively referred to as
the "Committees."
(c) Appointment Powers. The Board of Directors shall at all times
be entitled to remove members of the Committees and to fill vacancies or make
additional appointments. Any action of the Board of Directors or of the
Committees shall be taken pursuant to majority vote or unanimous written
consent.
(d) Interpretation. The Board of Directors (or the Management
Stock Option Committee, to the extent authorized by the Board of Directors)
shall have the authority to interpret this Plan and any option agreements
granted hereunder, to define the terms used herein, to prescribe, amend and
rescind rules and regulations for the administration of this Plan, to determine
the duration and purpose of leaves of absence which may be granted to
participants without constituting a termination of their employment for the
purposes of this Plan and, except as provided in Sections 3(d) through 3(g)
below, to make all other determinations necessary or advisable for the
administration of this Plan. The determination of the Board of Directors or
the Management Stock Option Committee on the matters referred to in this
Section 2(d) shall be conclusive.
(e) Class of Stock. Options issued under this Plan shall be with
respect to shares of (i) the Company's Class A Common Stock, $.01 par value
("Class A Common Stock"), (ii) the Company's Class B Common Stock, $.01 par
value ("Class B Common Stock"), or (iii) any other class of Common Stock which
the Company is now or hereafter authorized to issue, including, the Common
Stock, $.01 par value, outstanding as of the date hereof ("Original Common
Stock") (collectively, "Common Stock"). The determination of the class of
Common Stock to be issued upon exercise of options granted hereunder shall be
made in accordance with Section 3 hereof.
3. Participation.
(a) Eligibility. Key employees, including officers, and the
directors and consultants of the Company or of any Subsidiary shall be eligible
for selection to participate in this Plan. As used herein, "Subsidiary" shall
mean any corporation of which the Company owns, directly or indirectly, fifty
percent (50%) or more of the voting stock.
(b) Board of Directors. Except as provided in Sections 3(d)
through 3(g) or in Section 3(i), the Board of Directors shall determine which
of the eligible individuals shall be granted options and shall also determine
the timing, exercise price and term of the options, the number and class of
shares to be subject to options granted hereunder and all other terms of the
option agreements (collectively, the "Option Terms"). Such option agreements
need not be identical. An individual who has been granted an option may, if he
or she is otherwise eligible, be granted additional options hereunder. At the
time of grant, the Board of Directors or the applicable Committee shall
determine whether options granted to employees shall be non-statutory options
or incentive stock options under Section 422A of the Internal Revenue Code of
1986, as amended (the "Code").
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(c) Incentive Stock Options. The aggregate Fair Market Value of
shares of Common Stock with respect to which an incentive stock option first
becomes exercisable by any option holder may not exceed $100,000 in any
calendar year. Such Fair Market Value (as defined in Section 3(h)) shall be
determined at the time an option is granted.
(d) Management Stock Option Committee. Subject to the other
provisions of this Plan, the Management Stock Option Committee shall determine
which directors and Executive Officers (other than the Chairman of the Board)
shall be granted options and shall also determine the Option Terms for any
options granted. As used herein, "Executive Officers" shall mean those persons
designated by the Company's Board of Directors on October 14, 1992, or from
time to time thereafter, as constituting "Officers," within the meaning of Rule
16a-1 promulgated under the Securities Exchange Act of 1934, as amended (the
"1934 Act").
(e) Compensation Committee. Subject to the other provisions of
this Plan, the Compensation Committee shall determine whether the Chairman of
the Board shall be granted any options and shall also determine all Option
Terms for any options granted.
(f) Employee Stock Option Committee. Subject to this Section 3(f)
and the other provisions of this Plan, the Employee Stock Option Committee
shall determine which consultants and employees of the Company other than
Executive Officers shall be granted options and shall also determine the Option
Terms for any options granted. Any grants awarded by the Employee Stock Option
Committee in excess of an aggregate of 50,000 shares of Common Stock during any
fiscal year shall be subject to the approval of the Board of Directors.
(g) Formula Grants. On the last business day of each of the
Company's fiscal years commencing with July 29, 1994, each of the Company's
directors then in office, other than the Chairman of the Board, shall be
granted options to purchase 1,000 shares of Class A Common Stock at the Fair
Market Value of such shares on the date of the option grant. In addition, each
person becoming a director on or after August 1, 1994, shall receive a one-time
grant of an option to purchase 5,000 shares of Class A Common Stock at the Fair
Market Value of such shares on the date of the option grant, which shall be
granted on the later of September 19, 1995 or the date of election or
appointment to the Board of Directors; provided, that options granted prior
to the date the amendment of this Section 3(g) is approved by stockholders of
the Corporation in accordance with Section 12(a) of this Plan shall be
conditioned upon such approval and such options may not be exercised, sold,
assigned, pledged or made subject to any encumbrance unless and until such
approval has been obtained. Notwithstanding the foregoing, if Class A Common
Stock is not available for issuance, any formula grants made pursuant to this
Section 3(g) shall be with respect to Original Common Stock. This Section 3(g)
shall not be amended more than once every six months, other than to comport
with changes in the Code, the Employee Retirement Income Security Act
("ERISA") or the rules thereunder.
(h) Fair Market Value. Unless the Board of Directors or the
applicable Committee otherwise determines, the "Fair Market Value" of any class
of shares of Common Stock subject to options granted hereunder shall be the
price of the last reported sale of such shares on the date of grant, as
reported by NASDAQ.
(i) Tax Withholding. In order to satisfy the withholding tax
obligations arising in connection with the exercise of options under this Plan,
the Board of Directors or any applicable Committee may, in its sole discretion,
include in any option agreement a tax withholding feature which permits an
option holder, at his or her election, to have certain shares of Common Stock
withheld upon exercise of options granted hereunder and in lieu of receiving
such shares to have additional income tax withheld equal to the amount by which
the Fair Market Value of such shares exceeds the exercise price. In addition,
the Board of Directors or the applicable Committee shall incorporate in any
option agreement which contains a tax withholding provision any restrictions on
the exercise or surrender of such options which the Board of Directors or
applicable Committee deems necessary to comply with Section 16 of the 1934 Act.
4. Shares Subject to This Plan.
Subject to the anti-dilution adjustments provided for in Section 11
hereof, the maximum number of shares of Common Stock to be delivered upon the
exercise of all options granted under this Plan shall not exceed the lesser
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of ten percent (10%) of the total number of shares of Common Stock then
outstanding or two million (2,000,000) shares; provided, however, that
notwithstanding any subsequent change in the number of shares of Common Stock
outstanding, any option granted hereunder shall be deemed duly authorized if,
at the time of grant, the total number of shares subject to all options then
outstanding did not exceed such ten percent limit. If any option granted
hereunder shall expire or terminate for any reason without having been
exercised in full, the unpurchased shares subject to such option shall again be
available for the purpose of this Plan.
5. Exercise Price.
(a) Determination of Price. Except as otherwise provided in
Sections 3(d) through 3(h), the exercise price of all shares of Common Stock
subject to each option granted hereunder shall be determined by the Board of
Directors.
(b) Price and Manner of Payment. The exercise price of all shares
of Common Stock to be issued pursuant to incentive stock options granted
hereunder shall not be less than one hundred percent (100%) of the Fair Market
Value of such shares on the date of the grant. If at the time an incentive
stock option is granted, the option holder owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or its Subsidiaries, then the option price must be at least one hundred
ten percent (110%) of the Fair Market Value of the shares of Common Stock at
the time of grant and the option may only be exercisable within the period of
five (5) years from the date of grant. The consideration for any shares of
Common Stock purchased pursuant to any option granted hereunder shall be paid
in full at the time of purchase either in cash or by check, unless the Board of
Directors or applicable Committee determines, in its sole discretion, that any
of the consideration may also be payable with shares of Common Stock.
6. Option Period.
Each option and all rights or obligations thereunder shall expire on
the date determined by the Board of Directors or the applicable Committee, but
such date shall not be later than either (i) the tenth anniversary of the date
of grant or (ii) October 14, 2002. Each option and all rights or obligations
thereunder shall be subject to earlier termination as hereinafter provided.
7. Exercise of Options; Continuation of Employment.
(a) Continued Employment. Nothing contained in this Plan, or in
any option granted pursuant to this Plan, shall confer upon any person any
rights to continue in the employ of the Company or of any Subsidiary or to
continue as a director or consultant. Nor shall anything contained in this
Plan interfere in any way with the right of the Company or of any Subsidiary to
reduce any such person's compensation from the rate in existence at the time of
the granting of an option or to otherwise alter the terms of such person's
relationship with the Company.
(b) Exercise Terms. The Board of Directors or the applicable
Committee shall determine the exercise terms of all Common Stock subject to any
stock option granted hereunder. All shares which an option holder is entitled
to purchase during any installment period but which are not purchased during
such period may be purchased at any time thereafter until the earlier of the
expiration or termination of the option. Not less than 100 shares of Common
Stock may be purchased at one time and no fractional shares of any class may be
purchased unless the number of shares purchased is the total number available
for purchase under the option. The Board or the applicable Committee, in its
sole discretion, may elect to accelerate, by up to thirty (30) days, the time
at which any installment of shares of Common Stock would otherwise vest in
favor of an option holder pursuant to an individual option agreement.
8. Non-Transferability of Options.
(a) Restricted Transfer. Except as provided in Sections 8(b) and
10(a) hereof, an option granted under this Plan shall not be transferable and
shall be exercisable only by the option holder.
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(b) Permitted Disposition. An option holder shall not transfer
any rights hereunder, other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order, as defined in
the Code, or Title I of ERISA, or the rules promulgated thereunder.
9. Termination of Employment.
If an option holder who is an officer or director of the Company
ceases to be employed by the Company or any Subsidiary or to serve as a
director of the Company or any Subsidiary for any reason other than such option
holder's death or disability, the applicable option shall automatically expire
three (3) months after the date of termination of employment or service as a
director or such shorter period as may be provided in such option. If an
option holder who is not an officer or director of the Company ceases to be
employed by the Company or any Subsidiary or to serve as a consultant of the
Company or any Subsidiary for any reason other than such option holder's death
or disability, the applicable option shall expire one (1) month after the date
of termination of employment or service with the Company or such shorter period
as may be provided in such option.
10. Death or Disability.
(a) Death. If an option holder dies while employed by, or serving
as a director or consultant of, the Company or any Subsidiary, all rights of
the option holder's heirs or successors with respect to options shall expire on
the earlier of three (3) months after the date of the option holder's death or
such shorter period as may be provided in such option.
(b) Disability. If an option holder is disabled while employed
by, or serving as a director or consultant of, the Company or a Subsidiary, the
option shall automatically expire upon the earlier of one (1) year after any
termination of employment or service due to such disability or such shorter
period as may be provided in such option. Until such expiration, the option
holder shall remain entitled to purchase all shares of Common Stock such
option holder was entitled to purchase on the date of termination of employment
or service.
11. Adjustments Upon Changes in Capitalization; Change of Control.
(a) Adjustment. If the outstanding shares of Common Stock of the
Company are increased, decreased, or changed into, or exchanged for a different
number or kind of shares or securities of the Company through a reorganization,
merger, recapitalization, or any other change in capitalization, an appropriate
and proportionate adjustment shall be made in the number and kind of shares for
which options may be granted under this Plan and a corresponding adjustment
shall be made with respect to unexercised options or portions thereof.
(b) Change in Control Defined. A "Change in Control" will be
deemed to have occurred (i) upon stockholder approval of the liquidation of the
Company, (ii) upon stockholder approval of the merger or consolidation of the
Company with another entity unless following such transaction (A) the voting
securities of the Company prior to the transaction (or securities issued in
exchange therefor) continue to represent more than two-thirds of the combined
voting power of the entity surviving such transaction, or (B) Robert and Judith
R. Berglass and their affiliates continue to beneficially own securities
representing at least 26% of the combined voting power of the entity surviving
such transaction, (iii) if, on any date, a majority of the Board of Directors
is not comprised of "Continuing Directors," defined as persons who were
directors two years prior to such date or who were subsequently elected or
appointed to the Board of Directors upon the recommendation or with the
approval of at least two-thirds of the Continuing Directors, or (iv) if Robert
and Judith R. Berglass and their affiliates cease to beneficially own
securities representing at least 26% of the combined voting power of the
Company; provided, however, that such persons shall be deemed to beneficially
own any securities of the Company which are owned by such persons but subject
to call options by third parties unless and until such options are exercised.
(c) Exercise of Options Upon a Change in Control. Upon a Change
in Control, each option granted under this Plan shall terminate, provided that
each holder of an option shall first be given the opportunity to exercise all
outstanding options, including options which have not vested as of the
effective date of the Change in Control. The Company shall give each option
holder written notice of any pending or actual Change in Control, and all
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options shall expire on the later of the Change in Control or the notice period
specified by the Company (which shall be at least 10 days), provided, that any
exercise of an option prior to a Change in Control shall be contingent upon the
occurrence of such Change in Control.
(d) Determination of Adjustment. Adjustments under Section 11(a)
shall be made by the Board of Directors of the Company and such determination
shall be conclusive. No fractional shares of Common Stock shall be issued
under this Plan on account of any such adjustment.
(e) Golden Parachute Limitation. Section 11(b) hereof
notwithstanding, no option to purchase shares of Common Stock may be exercised
following a Change in Control, to the extent such exercise would cause
compensation to the individual receiving the shares to be treated as an "excess
parachute payment," as defined in Section 280G of the Code.
12. Amendment and Termination.
(a) Amendments. The Board of Directors of the Company may at any
time suspend, amend or terminate this Plan and may, with the consent of an
option holder, make such modification of the terms and conditions of an option
as it shall deem advisable, provided that except as permitted under the
provisions of Section 11(a), a majority of the outstanding shares of Common
Stock entitled to vote present in person or by proxy at a duly called meeting
at which a quorum is present must approve any amendment or modification which
would (i) materially increase the benefits accruing to participants under the
Plan, (ii) materially increase the number of shares of Common Stock issuable
under the Plan or (iii) materially modify the requirements as to the
eligibility for participation in the Plan.
(b) Effect of Suspension in Termination. No option may be granted
during any suspension of this Plan, or after termination hereof. The
amendment, suspension or termination of this Plan shall not, without consent of
the option holder, alter or impair any rights or obligations under any option
theretofore granted under this Plan.
13. Time of Granting of Options.
The granting of an option pursuant to this Plan shall take place at
the time of the action of the Board of Directors or of the applicable
Committee, unless the resolutions of the Board of Directors or such Committee
specify that the option is to be granted as of some other date.
14. Privileges of Stock Ownership; Purchase of Investment.
The holder of an option shall not be entitled to the privileges of
stock ownership as to any shares of Common Stock not actually issued and
delivered hereunder. Upon the exercise of an option at a time when there is
not in effect under the Securities Act of 1933, as amended, a registration
statement relating to the shares of Common Stock issuable upon exercise thereof
and when there is not a prospectus meeting the requirements of Section 10(a)(3)
of such Act available for delivery to the option holder, such option holder
shall represent and warrant in writing to the Company that such shares of
Common Stock are being acquired for investment purposes only. No shares of
Common Stock shall be purchased upon the exercise of any option unless and
until there have been any necessary stockholder approvals and compliance with
any then applicable requirements of federal and state securities laws and of
any exchange or system upon which securities of the Company may be listed or
quoted.
15. Effective Date of Plan.
This Plan has been adopted as of October 14, 1992.
16. Termination.
Unless previously terminated by the Board of Directors, this Plan
shall terminate at the close of business on October 14, 2002. No options shall
be granted under this Plan thereafter, but such termination shall not affect
any option previously granted.
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17. Committees.
Until otherwise changed by the Company's Board of Directors, each of
the Management Stock Option Committee and the Compensation Committee shall
consist of at least two (2) members of the Board of Directors of the Company
who are "disinterested persons," as defined in Rule 16b-3 promulgated under the
1934 Act or any successor rule or regulation; and the Employee Stock Option
Committee shall consist of one member of the Board of Directors who need not be
a "disinterested person."
18. Extension of Option Period.
The Board of Directors or the applicable Committee may, in its
discretion, waive the expiration provisions of Sections 9 and 10 of this Plan
and permit an outstanding option to be exercised by a key employee, including
an officer, or by a director or consultant during a time period designated by
the Board or such Committee following his or her ceasing to serve as an officer
or other key employee or as a director or consultant. Such time period shall
in no event terminate any later than the last day of the original term of the
option.
19. Option Agreements.
Any option agreements with respect to this Plan shall contain
restrictions upon exercise and such other provisions as the Board of Directors
or applicable Committee deems appropriate or advisable. If any conflict exists
between the provisions of an option agreement and this Plan, the provision of
this Plan shall control.
20. Compliance with Laws.
The Company intends that this Plan shall comply in all respects with
all applicable laws, including the provisions of Rule 16b-3 or any successor
Rule promulgated under the 1934 Act. Any provision of this Plan which the
Board of Directors determines is not in compliance with such laws shall be
deemed modified to comply fully therewith.
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DEP CORPORATION
ANNUAL MEETING OF STOCKHOLDERS -- JANUARY 9, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of DEP Corporation, a Delaware corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and
Proxy Statement, each dated November 22, 1995, and appoints Robert Berglass and
Grant W. Johnson, 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 DEP Corporation to be held Tuesday, January 9,
1996, 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 shares of Common Stock 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 below / / WITHHOLD AUTHORITY to vote for
(except as indicated) the nominees listed below
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THAT NOMINEE'S NAME BELOW:
Judith R. Berglass Philip I. Wilber
2. Amendment to the 1992 Stock Option Plan:
/ / FOR / / AGAINST / / ABSTAIN
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 AND FOR APPROVAL OF THE ABOVE PROPOSAL.
(Continued on other side)
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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 AND FOR
PROPOSAL 2.
Date:
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(Signature)
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(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:
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PLEASE VOTE, DATE, SIGN AND MAIL
THIS PROXY CARD PROMPTLY IN THE
ENCLOSED ENVELOPE.