1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A)
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 / / 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 sec.240.14a-11(c) or sec.240.14a-12
THE STANDARD REGISTER COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee 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:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2
P.O. BOX 1167 - DAYTON, OH 45401
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF THE STANDARD REGISTER COMPANY
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
The Standard Register Company which will be held at The Mandalay Banquet Center,
2700 East River Road, Dayton, Ohio at 11:00 A.M. Eastern Daylight Savings Time
on Wednesday, April 17, 1996.
The subjects to be considered at this Annual Meeting are:
(1) To fix the number of directors to be elected at ten;
(2) To elect ten Directors;
(3) To adopt The Standard Register Company 1995 Stock Option Plan;
(4) To select and retain Battelle & Battelle, Certified Public Accountants,
as the Company's auditors for the year 1996; and
to transact any other business that may properly come before the meeting.
The Board of Directors has fixed the close of business on February 23,
1996, as the record date for determining the shareholders entitled to vote at
the Annual Meeting.
As part of the meeting, we will discuss the Company's 1995 operations and
our plans for the future. Board members and officers of the Company will be
available to discuss the Company's business with you.
Rebecca H. Appenzeller
Secretary
Dayton, Ohio
March 22, 1996
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE SIGN
AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING ENVELOPE.
3
INDEX
PAGE
----
GENERAL MATTERS
1. Solicitation and Revocation of Proxies................................................ 1
2. Shareholder Proposals for 1997 Annual Meeting......................................... 2
VOTING SECURITIES AND PRINCIPAL HOLDERS
3. Owners of More than 5% of the Shares of the Company................................... 2
4. Security Ownership of Directors, Nominees and Executive Officer....................... 3
PROPOSALS
5. Proposal 1: Fixing the Number of Directors at Ten.................................... 4
6. Proposal 2: Election of Directors.................................................... 4
Nominees................................................................. 5
Board Committees......................................................... 5
Board Compensation....................................................... 6
7. Proposal 3: Adoption of The Standard Register Company 1995 Stock Option Plan......... 6
8. Proposal 4: Selection of Auditors.................................................... 7
EXECUTIVE COMPENSATION
9. Executive Compensation Report of the Compensation Committee........................... 7
10. Summary Compensation Table............................................................ 9
11. Retirement Plans...................................................................... 9
12. Retirement Plan Tables 1, 2 and 3..................................................... 10
13. Stock Option Tables................................................................... 11
14. Named Executive Officers.............................................................. 11
CORPORATE PERFORMANCE
15. Performance Graph..................................................................... 11
OTHER MATTERS
16. Solicitation Expenses................................................................. 12
APPENDIX A: THE STANDARD REGISTER COMPANY 1995 STOCK OPTION PLAN
4
THE STANDARD REGISTER COMPANY
- --------------------------------------------------------------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING
OF
SHAREHOLDERS
- --------------------------------------------------------------------------------
PRINCIPAL EXECUTIVE OFFICES:
600 ALBANY STREET
DAYTON, OHIO 45408
(513) 443-1000
Mailing Date: March 22, 1996
- --------------------------------------------------------------------------------
This Proxy Statement accompanies the Notice of Annual Meeting of Shareholders of
The Standard Register Company, an Ohio corporation, to be held at The Mandalay
Banquet Center, 2700 East River Road, Dayton, Ohio, on Wednesday, April 17,
1996, at 11:00 A.M.
GENERAL MATTERS
1. SOLICITATION AND REVOCATION OF PROXIES
THE PROXIES ARE SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its exercise. Properly executed proxies received in
time to be voted at the Annual Meeting, or any adjournments thereof, will be
voted according to the instructions indicated on the proxies unless the proxies
have been revoked. If no choice is specified, the shares will be voted as
recommended by the Board of Directors. Proxies may be revoked by giving a later
dated proxy to the Company or by giving notice of revocation to the Company in
writing or orally at the Annual Meeting. The presence of a shareholder at the
Annual Meeting will not, by itself, revoke a proxy. The proxies solicited on
behalf of the Board of Directors of the Company contain the authority to vote
the shares of stock cumulatively in the election of directors to the Company's
Board of Directors at the Annual Meeting.
5
2. SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Any proposal of a shareholder intended for inclusion in the Company's Proxy
Statement and form of proxy for the 1997 Annual Meeting of the Company, to be
held on April 16, 1997, must be received by the Corporate Secretary of the
Company on or before November 25, 1996, at its principal executive offices at
600 Albany Street, Dayton, Ohio 45408.
VOTING SECURITIES AND PRINCIPAL HOLDERS
Shareholders of record at the close of business February 23, 1996, are entitled
to notice of and to vote at the Annual Meeting. At that date, the Company had
outstanding 23,969,867 shares of Common Stock (each share having one vote) and
4,725,000 shares of Class A Stock (each share having five votes).
All properly cast votes, in person or by proxy, will be counted for purposes
of the issues to be voted on at the Annual Meeting. Abstentions and broker
non-votes will not be counted and therefore will have no impact on any matter
voted upon, except that an abstention on the Stock Option Plan Proposal will
have the effect of a vote against that Proposal.
3. OWNERS OF MORE THAN 5% OF THE SHARES OF THE COMPANY
On February 23, 1996, the following persons owned of record or beneficially, as
trustees or beneficiaries, more than five percent (5%) of any class of equity
security of the Company (each share of Class A Stock carries five votes and each
share of Common Stock carries one vote):
NAME AND PERCENT OF
ADDRESS OF COMBINED
BENEFICIAL NUMBER PERCENT VOTING
OWNERS CLASS OF SHARES OF CLASS POWER
- ---------------------------------------------------------------------------------
PAUL H. GRANZOW, (1) Class A 2,516,856 53.27
JAMES L. SHERMAN Common 5,810,508 24.24 38.65
and CHARLES F.
SHERMAN, TRUSTEES
50 E. Third St.,
Dayton, OH 45402
WILLIAM P. SHERMAN (2) Class A 359,551 7.61
50 East Third St. Common 878,187 3.66 5.62
Dayton, OH 45402
MARY C. NUSHAWG (2) Class A 359,551 7.61
50 East Third St. Common 842,996 3.51 5.55
Dayton, OH 45402
JAMES L. SHERMAN (2) Class A 359,551 7.61
50 East Third St. Common 908,740 3.79 5.69
Dayton, OH 45402
ROBERT N. SHERMAN (2) Class A 359,551 7.61
50 East Third St. Common 878,061 3.66 5.62
Dayton, OH 45402
CHARLES F. SHERMAN (2) Class A 359,551 7.61
50 East Third St. Common 880,341 3.67 5.63
Dayton, OH 45402
PATRICIA L. BEGLEY (2) Class A 359,550 7.61
50 East Third St. Common 830,073 3.46 5.52
Dayton, OH 45402
THE FIFTH THIRD BANK, (3) Class A 1,081,392 22.89
TRUSTEE Common 2,595,312 10.83 16.81
Cincinnati, Ohio 45202
THE FIFTH THIRD BANK, (4) Class A 1,071,624 22.68
TRUSTEE Common 2,571,912 10.73 16.66
Cincinnati, OH 45202
QUEST ADVISORY CORP. (5) Common 1,290,610 5.38 2.71
New York, NY 10019
- --------------------------------------------------------------------------------
(1) Paul H. Granzow, James L. Sherman and Charles F. Sherman, the Trustees under
the Last Will and Testament of John Q. Sherman, deceased, hold the voting
securities in separate equal trusts for each of the six surviving children
and heirs of the deceased children of John Q. Sherman, deceased, each of
whom is a life beneficiary of his or her respective trust. The Trustees
share voting and investment power for the securities in the trusts. The Will
of John Q. Sherman requires the Trustees give each beneficiary who is a
child of J. Q. Sherman, upon his or her request, a proxy authorizing the
beneficiary to vote the shares held in his or her respective trust. A
grandchild of J. Q. Sherman is not entitled to vote the shares held in
Trust.
2
6
(2) None of the persons who are beneficiaries of the above trusts owns in his or
her own name more than 5% of the outstanding voting securities of the
Company; however, each has the right, upon his or her request, to vote the
shares of the Company held by the trustee in his or her respective trust.
Each of the beneficiaries has the right to vote approximately 5.52% of the
outstanding votes of the stock of the Company by reason of each
beneficiary's right to request a proxy to vote both Class A and Common Stock
in his or her respective trust.
(3) The trust under the Last Will and Testament of William C. Sherman, deceased,
provides for the payment of net income for life to Helen Margaret Hook
Clarke, niece of William C. Sherman, deceased. The Trustee, The Fifth Third
Bank ("Fifth Third"), has the sole voting and investment power for the
securities in the testamentary trust. This trust shall be referred to as the
"William C. Sherman Testamentary Trust".
(4) The trust created under the Agreement with William C. Sherman dated December
29, 1939, provides for the payment of net income for life to Helen Margaret
Hook Clarke and the children of John Q. Sherman. Fifth Third has the sole
voting and investment power for the securities in the trust. This trust
shall be referred to as the "William C. Sherman Inter Vivos Trust". The
William C. Sherman Testamentary Trust and the William C. Sherman Inter Vivos
Trust shall be referred to collectively as the "William C. Sherman Trusts".
(5) Charles M. Royce may be deemed to be a controlling person of Quest Advisory
Corp. ("Quest") and Quest Management Company ("QMC"), and as such may be
deemed to beneficially own the shares of Common Stock of The Standard
Register Company beneficially owned by Quest (1,290,610 shares of Common
Stock) and QMC (30,150 shares of Common Stock). Mr. Royce does not own any
shares outside of Quest and QMC, and disclaims beneficial ownership of the
shares held by Quest and QMC.
So far as is known to the Company, no other person as of February 23, 1996,
owned beneficially more than 5% of any class of equity security of the Company.
4. SECURITY OWNERSHIP OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
Each director, nominee and executive officer listed on the compensation table
and all current directors and executive officers as a group beneficially own
securities of the Company as follows:
PERCENT OF
COMBINED
NUMBER OF PERCENT VOTING
BENEFICIAL OWNER CLASS SHARES OF CLASS POWER
----------------------------------------------------------------------------------------
ROY W. BEGLEY, JR. Common 500 (1) 0.002 0.001
Director
CRAIG J. BROWN Common 24,305 0.101 0.051
Sr. Vice President -
Administration, Treasurer & CFO
RALPH R. BURCHENAL Common 3,000 0.013 0.006
Director
F. DAVID CLARKE, III Common 6,776 (2) 0.028 0.014
Director Class A 5,096 0.108 0.054
JOHN K. DARRAGH Common 32,949 0.137 0.069
Director
PAUL H. GRANZOW (3)(4) Common 33,289 0.139 0.070
Director and Chairman of Board
PETER S. REDDING (5) Common 34,836 0.145 0.073
Director and President and
Chief Executive Officer
ANN SCAVULLO Common 300 0.001 0.0000
Nominee
JOHN J. SCHIFF, JR. Common 28,200 0.118 0.059
Director
CHARLES F. SHERMAN (3) Common 880,341 (6) 3.673 1.850
Director Class A 359,551 (6) 7.610 3.777
JOHN Q. SHERMAN, II Common 160 0.001 0.000
Director
JOSEPH V. SCHWAN Common 20,310 (7) 0.085 0.042
Sr. Vice President & General
Manager - Document Mgmt. Div.
HARRY A. SEIFERT, JR. (8) Common 38,665 (9) 0.161 0.081
Vice President - Manufacturing -
Document Mgmt. Div.
MICHAEL SPAUL Common 24,717 0.103 0.052
Sr. Vice President & General
Manager - Communicolor Div.
3
7
PERCENT OF
COMBINED
NUMBER OF PERCENT VOTING
BENEFICIAL OWNER CLASS SHARES OF CLASS POWER
----------------------------------------------------------------------------------------
On February 23, 1996, the shares Common 1,136,659 4.742 2.388
beneficially owned by all current Class A 364,647 7.717 3.831
executive officers and directors
as a group (23 persons in group)
----------------------------------------------------
(1) Roy W. Begley, Jr. and his wife Margaret Begley
own as joint tenants 500 shares of Common Stock
of the Company. Mrs. Begley owns 130 shares of
Common Stock of the Company as to which Mr.
Begley disclaims beneficial ownership.
(2) F. David Clarke, III and his wife, Loretta M.
Clarke, own as joint tenants 6,776 shares of
Common Stock of the Company.
(3) Paul H. Granzow, and Charles F. Sherman (along
with James L. Sherman) are trustees under the
Last Will and Testament of John Q. Sherman. As
such, the Trustees have the power to vote shares
held by the trusts in the event that the
beneficiaries of the trusts do not desire to
exercise their right to vote the shares. The
John Q. Sherman Trust owns, in trust, 2,516,856
shares of Class A Stock and 5,810,508 shares of
Common Stock which in the aggregate represents
38.65% of the outstanding votes of the Company.
The Trustees share the investment power with
respect to Class A and Common Stock held by the
trusts. The beneficiaries of the trusts do not
have the investment power with respect to the
securities in the trusts.
(4) Lana T. Granzow, the wife of Mr. Granzow, owns
1,220 shares of Common Stock of the Company. Mr.
Granzow disclaims beneficial ownership of these
shares of Common Stock.
(5) Lorelei L. Redding, the wife of Peter S.
Redding, owns 250 shares of Common Stock of the
Company. Mr. Redding disclaims beneficial
ownership of these shares of Common Stock.
(6) Charles F. Sherman is a beneficiary of the John
Q. Sherman Trust and as such has the right to
vote 359,551 shares of Class A Stock and 830,073
shares of Common Stock of the Company. The
Trustees have the investment power with respect
to these shares.
(7) Joseph V. Schwan and his wife, Charlann Schwan,
own as joint tenants 650 shares of Common Stock
of the Company.
(8) Harry A. Seifert, Jr. is custodian for shares
held under the Uniform Gift to Minors Act of
Ohio on behalf of his children Heather L.
Seifert and Harry A. Seifert, III, 1,200 shares
for each.
(9) Mr. Seifert and his wife, Joan Seifert, own as
joint tenants 1,950 shares of Common Stock of
the Company.
C. Thomas Russell was elected an officer of the Company on July 20, 1995,
effective August 14, 1995. He inadvertently failed to file Form 3, Initial
Statement of Beneficial Ownership of Securities under Section 16 of the
Securities Exchange Act of 1934 on a timely basis. A Form 3 was filed with the
Securities and Exchange Commission on January 17, 1996.
PROPOSALS
The subjects to be considered at the Annual Meeting are as follows:
5. PROPOSAL 1 FIXING NUMBER OF DIRECTORS
The Company presently has ten directors. The Board of Directors recommends
fixing the number of directors to be elected at ten. The affirmative vote of the
holders of the majority of the votes cast upon this proposal is required for
approval.
6. PROPOSAL 2 ELECTION OF DIRECTORS
The Board of Directors is nominating for election the ten persons hereinafter
named, to be directors of the Company and to hold office until the next annual
election or until their successors are elected and qualified.
Although the Board of Directors does not contemplate that any of the nominees
will be unavailable for election, if any of them is unavailable, the shares will
be voted for substitute nominees as determined by the persons voting the
proxies.
Cumulative voting is permitted by the laws of Ohio in voting for the election
of directors, if notice is given in writing by any shareholder to the President,
a Vice President or the Secretary of the Company not less than forty-eight (48)
hours before the time fixed for the Annual Meeting. If any shares may be voted
cumulatively for the election of directors, each shareholder present at the
Annual Meeting and the persons voting the proxies shall have full discretion and
authority to cumulate such voting power as the shareholder or proxy possesses
and to give one candidate as many votes as the number of directors to be elected
multiplied by the number of votes which the shareholder or proxy is entitled to
cast, or to distribute such votes on the same principle among two or more
candidates, as the shareholder or proxy sees fit.
4
8
In the absence of cumulative voting, nominee's receiving the highest number of
votes cast for the positions to be filled will be elected.
NOMINEES
All nominees recommended by the Company for election were previously elected
as Directors with the exceptions of Messrs. Rediker and Keeping and Ms.
Scavullo. Information concerning each nominee follows:
SERVED AS
NAME AGE DIRECTOR SINCE
- ---------------------------- --------- ---------------
ROY W. BEGLEY, JR. * 40 1994
Mr. Begley has been an Investment Officer with Key Trust Co. of Ohio, N.A.
since 1995. Prior to that he was an Investment Executive of Society Investment,
Inc. from April 1994, and an Investment Specialist with Provident Securities and
Investments from August 1992 until April 1994. From 1987 until 1992, Mr. Begley
was a Financial Consultant with Shearson-Lehman Brothers. He is a member of the
Pension Advisory Committee of the Board of Directors.
F. DAVID CLARKE, III 39 1992
Mr. Clarke has been Chairman of the Board of Directors of Clarke-Hook
Corporation as well as its Vice President and General Counsel since December
1990. He is Chairman of the Compensation Committee and a member of the Pension
Advisory Committee of the Board of Directors.
PAUL H. GRANZOW 68 1966
Mr. Granzow has been Chairman of the Board of Directors of the Company since
January 1984. Prior to September 1992, he was Of Counsel with the law firm of
Turner, Granzow & Hollenkamp. He is a co-trustee of the John Q. Sherman Trust.
See "Voting Securities and Principal Holders Thereof." He is a Senior
Vice-President and a director of The Weston Paper and Manufacturing Co.
GRAEME G. KEEPING 54
Mr. Keeping has been President of Information Resources Management Associates,
a consulting firm since 1987.
PETER S. REDDING 57 1992
Mr. Redding was elected President & Chief Executive Officer of the Company
effective December 17, 1994. Prior to December 1994, he served the Company in
various executive, sales management and sales positions. Mr. Redding is a member
of Society National Bank, Dayton Region Advisory Board. He is an ex-officio
member of all committees of the Board of Directors except for the Audit
Committee.
DENNIS L. REDIKER 52 1995
Mr. Rediker has been Chief Executive Officer of English China Clays, plc ("ECC
plc") since 1996. From 1993 until 1996, Mr. Rediker was President and CEO of ECC
International Inc. From 1989 until 1993, Mr. Rediker was President of Mead
Coated Board Division of Mead Corporation Worldwide Operations. Mr. Rediker is
also a Director of ECC plc. Mr. Rediker was appointed Director filing a vacancy
occurring in 1995. He is a member of the Compensation Committee of the Board of
Directors.
ANN SCAVULLO 49
Ms. Scavullo has been Vice President of Strategic Alliances and Joint Ventures
of Avon Products, Inc. since 1995. Avon is a global direct seller of beauty and
related products. From 1991 until 1995, she was Vice President of Investor
Relations at Avon and from 1986 until 1991 she was Director of Investor
Relations at Avon.
JOHN J. SCHIFF, JR. 52 1982
Mr. Schiff has been Chairman of the Board of Directors of John J. and Thomas
R. Schiff & Co., Inc., an insurance agency for more than five years. He is
Chairman of the Board of Directors of The Cincinnati Insurance Company and the
Cincinnati Financial Corporation. He is a director of The Cinergy Corp., Fifth
Third Bancorp, The Fifth Third Bank, and the Cincinnati Bengals, Inc. He is
Chairman of the Audit Committee and a member of the Pension Advisory Committee
of the Board of Directors.
CHARLES F. SHERMAN * 68 1992
Mr. Sherman has had personal business interests in Ohio and Kentucky for over
five years. He is a member of the Audit Committee of the Board of Directors.
JOHN Q. SHERMAN, II * 42 1994
Mr. Sherman has been a Manufacturers' Representative for A. Rifkin Company,
Wilkes-Barre, Pennsylvania since 1985. The company is a manufacturer of
specialty security packaging. He is a member of the Compensation Committee of
The Board of Directors.
* Roy W. Begley, Jr. and John Q. Sherman, II are first cousins, and are nephews
of Charles F. Sherman.
- --------------------------------------------------------------------------------
The Board of Directors met six times 1995. All directors, except Mr. Schiff,
attended at least 75% of Board of Directors and committee meetings of which they
were members during 1995.
BOARD COMMITTEES
The Company has a standing Audit Committee which held three meetings in 1995.
Mr. Schiff is Chairman of the Committee. Messrs. Burchenal and C. Sherman are
the other members. The Audit Committee is also responsible for reviewing the
Company's corporate
5
9
accounting, auditing and financial reporting practices. It also recommends the
employment of independent public accountants and reviews the relationships
between the Company and its outside accountants.
The Compensation Committee held three meetings and took action in writing once
in 1995. Mr. Clarke is Chairman of the Committee. Messrs. Burchenal, Rediker and
J. Sherman are the other members. The Compensation Committee formulates the
Company's executive compensation program and determines executive compensation
and incentives each year. It also administers the Company's Stock Option Plan.
The Company does not have a Nominating Committee of the Board of Directors.
The Board of Directors, which performs the function of a Nominating Committee,
will consider nominees recommended by any shareholder which are submitted in
writing by November 25, 1996.
BOARD COMPENSATION
Non-officer members of the Board of Directors receive an annual fee of $20,000
plus an annual fee of $3,000 for serving on the Audit Committee and Compensation
Committee, and $5,500 for serving on the Pension Advisory Committee of the Board
of Directors. The chairmen of the Audit and Compensation Committees receive an
additional annual fee of $1,000. The chairman of the Pension Advisory Committee
receives an additional annual fee of $2,000. Each non-officer director is paid
$1,000 for each Board of Directors' meeting attended. Officer members of the
Board of Directors do not receive any fees for serving as members of the Board
of Directors or as members of any committees.
The Company has a supplemental retirement benefit agreement with Paul H.
Granzow which provides that the Company will supplement his retirement benefits
from the Qualified Retirement Plan to the extent necessary to provide him with
annual retirement benefits equal to the greater of $150,000 or 50% of the
average annual compensation paid to him for the five year period immediately
preceding the year of his termination of employment with the Company.
7. PROPOSAL 3: ADOPTION OF THE STANDARD REGISTER COMPANY 1995 STOCK OPTION PLAN
On October 19, 1995, the Board of Directors unanimously adopted a Stock Option
Plan subject to shareholder approval. Under the Plan, options for 2,000,000
Common Shares may be granted to participants. The following is a summary of the
Plan; the full text is set forth in Appendix A.
ADMINISTRATION
The Compensation Committee of the Board of Directors administers the Plan.
Subject to the express provisions of the Plan, the Committee has the authority
to establish the terms and conditions of options agreements, which need not be
uniform.
GRANTS
The Plan provides for the issuance of incentive and nonqualified stock
options. Options may be granted for varying periods of from one to ten years;
however, employees who own 10% or more of the Company's outstanding Common Stock
("10% Owners") may be granted incentive stock options only for terms of five
years or less. Options do not become exercisable until at least one year from
the date of grant. The right to exercise options vests according to a schedule
determined at the time of grant. The right to exercise grants is cumulative to
the extent not utilized in prior periods. The Committee determines the exercise
prices of all options, subject to the requirement that an incentive stock option
must carry an exercise price at least equal to the market value of the Common
Stock on the date of grant. In the case of 10% Owners, an incentive stock option
may be granted only if the option price is at least 110% of the market value of
the Common Stock on the day of grant.
TAX CONSEQUENCES
There are no federal income tax consequences to either the Company or the
recipient upon the grant or exercise of an incentive stock option. If a person
sells or disposes of stock acquired upon the exercise of an incentive stock
option within one year of the date of exercise or two years of the date of
grant, the gain equal to the amount realized over the amount paid for the stock
will be taxed as ordinary income. The Company will be entitled to an income tax
deduction to the same extent. If the shares are held for more than one year
following the date of exercise and two years from the date of grant, any gain
realized will be taxed as a capital gain, in which case the Company will not be
entitled to any deduction.
There are no federal income tax consequences upon the grant of a nonqualified
option. A person exercising a nonqualified stock option will recognize ordinary
income to the extent of the difference between the exercise price and the fair
market value of the Common Stock on the date of exercise, and the Company will
be entitled to a corresponding deduction. Upon any sale of that stock, the
difference between the amount realized and the fair market value on the date of
the exercise will be treated as a capital gain or loss.
EFFECT OF RECAPITALIZATIONS
In the event of any changes in the outstanding Common Stock as a result of
stock dividends, split ups, recapitalizations, combinations or exchanges, the
number and class of shares of Common Stock authorized to be the subject of
options under this Plan and the number and class of Common Stock and option
price for each option which is outstanding, shall be correspondingly adjusted by
the Committee. The
6
10
Committee may also make appropriate adjustments to reflect any spin-off of
assets, extraordinary dividends or other distributions to shareholders.
In the event of the dissolution, liquidation, merger, or other transaction in
which the Company is not the surviving corporation or in which the outstanding
Common Stock of the Company is converted into cash, other securities or other
property, each outstanding option shall terminate on a date fixed by the
Committee. The Committee must give no less than 20 days' written notice of the
date of expiration to each holder of an option. Each holder has the right during
that period following notice to exercise the vested portion of the option.
CURRENT PRICE
On February 23, 1996, the closing price of the Company's Common Stock was
$23.00 per share.
VOTE REQUIRED
The affirmative vote of the holders of a majority of shares of Common Stock
voting or abstaining on the matter at the meeting is required to approve the
Plan.
8. PROPOSAL 4: SELECTION OF AUDITORS
Action will be taken by the shareholders with respect to the selection of
auditors for the Company to serve for 1996. The Board of Directors recommends
that the firm of Battelle & Battelle, PPL, Certified Public Accountants, who
served as auditors last year, be retained.
A representative of Battelle & Battelle is expected to be present at the
Annual Meeting. This representative will have an opportunity to make a statement
to the shareholders and will be available to respond to appropriate questions
from shareholders.
The affirmative vote of the holders of the majority of the votes cast is
required to retain Battelle & Battelle as the Company auditors for the year
1996.
The Board of Directors does not intend to present any other proposals for
action by the shareholders at the Annual Meeting and has not been informed that
any other person or persons intend to present any other proposal for action by
shareholders at the Annual Meeting. If any other matters come before the Annual
Meeting, the persons voting the proxies will vote the shares they are authorized
to vote on the proposals or matters in their best judgment.
EXECUTIVE COMPENSATION
9. EXECUTIVE COMPENSATION REPORT OF THE COMPENSATION COMMITTEE
THE COMMITTEE
The Compensation Committee has the overall responsibility for determining
specific compensation levels for executive officers and bonuses for executive
officers and key management personnel subject to approval of the full Board of
Directors. The Company's stock option plan is administered by the Compensation
Committee.
The Committee's goal is to establish an executive compensation program that
enhances the Company's overall fundamental objective of providing value for its
shareholders. The Committee believes that the interests of management and
shareholders can be more closely aligned by providing executives with
competitive levels of compensation that will enable the Company to attract and
retain executives with the highest qualifications and by tying executive pay to
overall corporation performance. The compensation system developed over the
years by the Company is designed so that a relatively high percentage of all
compensation is incentive-based. In addition, the Company's Stock and Stock
Option Plans are designed to tie a portion of the executives' compensation to
the market performance of the Company's stock.
During 1995 the Committee reviewed the compensation of the Company's executive
officers, including those listed in the Summary Compensation Table. The
Committee also developed a Stock Option Plan set forth in Proposal 3 above for
executive officers and key management personnel.
No executive officer earned compensation, not otherwise excluded from the
Internal Revenue Code Section 162(m) limitation on deductibility, in excess of
$1 million in 1995. All of Mr. Redding's compensation was deductible since the
portion in excess of $1 million was incentive based.
BASE COMPENSATION
In determining its recommendations to the Board of Directors for executive
officer salaries, the Committee assigned each executive position, including the
President and Chief Executive Officer position, a salary range that defined a
minimum, midpoint and maximum salary commensurate with the responsibilities of
the job, as determined by compensation guidelines and competitive information
provided to the Committee by an independent compensation consultant. The ranges
were adjusted to reflect changes in the competitive business climate from the
prior year. Executive officer salaries were targeted at the midpoint of the
range for that position. Factors that determined the salary within the range
included objective performance and level of experience. Each executive officer's
performance was judged on
7
11
both a subjective and objective basis, the latter measured against specific,
personal objectives agreed upon at the outset of the year by the executive and
the President and CEO. Merit salary increases were awarded on the basis of each
executive officer's performance rating.
Mr. Redding's salary as President and CEO was determined in the same manner as
all other executive officers of the Company except that his performance was
judged on a subjective basis by the Board of Directors. His salary was not
determined by specific performance measures.
After reviewing the determinations of the Compensation Committee, the Board of
Directors adopted them as its own and implemented the salary levels recommended.
This process resulted in the base salaries shown in the Summary Compensation
Table.
INCENTIVE COMPENSATION
All bonuses were determined by specific performance measures provided in the
incentive plans discussed below. The Company's incentive-based bonus plans took
total compensation levels to the third quartile (50%-75%) of compensation for
similar positions within the industry. The Company's executive officers' bonuses
were established by the Company's Incentive Plan and the Company's Stock Plan
which were originally approved by the Company's shareholders in 1976 and 1978,
respectively. Neither the Compensation Committee nor the Board of Directors
determines the bonuses which are paid to the Company's executive officers as the
bonus amounts are predetermined under the Incentive Plan and Stock Plan
formulae.
The Incentive Plan requires the Company annually to provide 3% of the
pre-federal income tax profit of the Company as an incentive ("Incentive
Reserve") to and for the benefit of all executive officers and Corporate and
Document Management Division headquarters' employees. Each person shares
pro-rata in the bonus pool, determined by their targeted participation level and
their salary. Each executive officer's targeted participation is equivalent to
50% of their salary. If the bonus pool exceeds the amount required to pay each
person their full targeted participation, the excess amount is allocated
pro-rata among the management participants, including executive officers, with
payment deferred until after age 65. The maximum amount that may be deferred is
equivalent to their targeted participation level, 50% in the case of executive
officers.
The Stock Plan requires the Company annually to provide an amount equal to the
lesser of (i) 4% of the Company's annual pre-federal income tax profit in excess
of the Company's 1976 pre-federal income tax profit or (ii) 4% of the Company's
annual pre-federal income tax profit in excess of 31.5% of the Company's
pre-federal income tax profit for the immediately preceding fiscal year as an
incentive ("Stock Reserve") to all officers of the Company. The relative
participation of each executive officer in the Stock Plan is in proportion to
the executive officer's annual salary with payment made fifty percent (50%) in
cash and fifty percent (50%) in Common Stock of the Company.
Pre-federal income tax profit means the Company's net income as reported to
the Company's shareholders, plus (i) federal income tax expense, (ii) the
Incentive Reserve, and (iii) the Stock Reserve exclusive of any extraordinary
items, if any, as verified by the Company's independent Certified Public
Accountants.
The Incentive Plan and Stock Plan effectively tie a major portion of each
executive officer's compensation to corporate profit performance. The Stock Plan
has the added feature of placing fully-valued Company stock in the hands of
executive officers, creating the opportunity for capital gains from higher stock
prices produced by improving the Company's performance. Both Plans are
administered by the Board of Directors. The Board does not have the discretion
to readjust or waive the formulae.
These formulae resulted in the bonuses shown in the Summary Compensation
Table.
STOCK OPTION PLAN
Stock options also represent a performance-based component of the Company's
compensation plan. The Committee wants to provide an incentive to management to
increase the value of the Company's stock over the long term. To that end, to
reward past performance and to motivate future performance, stock options were
granted to all executive officers and certain key management personnel under the
proposed Stock Option Plan ("Plan"), subject, however, to its approval by
shareholders. The purpose of the Plan is to encourage participants to maintain a
long term stock ownership position in the Company in order that their interests
are aligned with those of the shareholders. The Committee determines
participants in the Plan, the timing of option grants, the numbers of shares
granted, vesting schedules, option prices and duration and other terms of the
options.
All of the executives named in the Summary Compensation Table were granted
options during 1995 under the proposed Stock Option Plan. Options granted to
executive officers in 1995 can be found in the Option Grants Tables.
THE COMPENSATION COMMITTEE:
F. David Clarke, III (Chairman)
Ralph R. Burchenal
Dennis L. Rediker
John Q. Sherman, II
8
12
10. SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
ALL OTHER
COMPENSATION ($)
(2)
ANNUAL COMPENSATION ($) ----------------
-----------------------
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (1)
- ------------------------------------------------------------------------------------------
PETER S. REDDING 1995 $315,000 $837,507 $924
President & Chief 1994 274,000 447,607 924
Executive Officer 1993 224,000 429,089(3) 899
JOSEPH V. SCHWAN 1995 191,500 509,151 924
Sr. Vice President & 1994 168,000 274,445 924
General Manager -- Document 1993 160,700 275,450 899
Management Division
MICHAEL SPAUL 1995 148,000 393,496 924
Sr. Vice President & 1994 140,000 228,705 924
General Manager -- 1993 132,000 271,395(3) 899
COMMUNICOLOR
HARRY A. SEIFERT, JR. 1995 144,700 384,721 924
Vice President -- Manufacturing, 1994 138,700 226,580 924
Document Management Division 1993 133,400 266,271(3) 899
CRAIG J. BROWN 1995 130,000 345,638 924
Sr. Vice President -- 1994 120,000 196,032 924
Administration, Treasurer 1993 109,000 224,447(3) 899
& Chief Financial Officer
- ------------------------------------------------------------------------------------------
(1) Includes the following: (a) The cash incentive earned by the officers
pursuant to the Company's Stock Incentive Plan ("Stock Plan"); (b) The market
value of the shares of Common Stock of the Company as of December 31, of 1993
($20.75 per share) and 1994 ($17.50 per share) and 1995 ($20.125 per share)
earned by the officers pursuant to the Stock Plan; (c) The cash incentive earned
by the officers pursuant to the Company's Key Employees Incentive Plan
("Incentive Plan"); and (d) includes amount earned under the Incentive Plan, in
excess of the 50% annual base salary target level, with payment deferred until
normal retirement or earlier termination date. The cash and stock incentives
listed in (a), (b) and (c) above were earned by the Company officers in 1993,
1994 and 1995 but were paid in the following years pursuant to the Incentive and
Stock Plans.
(2) Includes the Company's matching contributions under The Standard Register
Employees Savings Plan (the "Savings Plan") pursuant to Section 401(k) of the
Internal Revenue Code. The Savings Plan provides that the Company may make an
annual matching contribution for each participant in an amount up to ten percent
(10%) of each participant's contribution; provided, however, the Company's
matching contribution for each participant shall in no event exceed .6% of the
participant's eligible compensation. Employee contributions to the Savings Plan
are fully vested. The Company's matching contribution vests after five years of
Company service.
(3) Includes the cash incentive earned by the Company officers pursuant to an
Officer Supplemental Bonus Plan (the "Supplemental Plan") adopted on December
13, 1990 by the Board of Directors as an incentive and reward to officers for
extraordinary effort in restructuring the Company's operations with the
objective of increasing the annual pre-federal income tax earnings of the
Company from January 1, 1991 to December 31, 1993. The Supplemental Plan
provided that the Company's officers would earn as a group a cash bonus equal to
1% of the total aggregate increase in the Company's pre-federal income tax
earnings attained during the Company's 1991, 1992 and 1993 fiscal years in
excess of $150,000,000 but below $208,800,000, plus 6% of the amount in excess
of $208,800,000.
11. RETIREMENT PLANS
The Stanreco Retirement Plan (the "Stanreco Plan") is a Pension Benefit
Guarantee Corporation insured plan and provides for retirement benefits based on
the average compensation for the highest five years of total plan participation.
The Stanreco Plan is funded, in part, by contributions by the Stanreco Plan
participants. The annual contributions by the Company are computed on an
actuarial basis. The Company's annual contribution to the Stanreco Plan with
respect to an individual person is not and cannot readily be separately
calculated by the Stanreco Plan actuaries. In 1995, the Company's contribution
to the Stanreco Plan amounted to 2.8% of the total remuneration of the
participants in the Stanreco Plan. All forms of remuneration, excluding overtime
and shift differential, are included in the benefit calculation.
The Company has a non-qualified retirement plan known as The Standard Register
Company Non-Qualified Retirement Plan ("Non-Qualified Plan"). Benefits under the
Non-Qualified Plan are determined by the same formula used in the Stanreco Plan.
The Non-Qualified Plan is supplemental to the Stanreco Plan in that it provides
retirement benefits which would have been payable from the Stanreco Plan but for
the limits imposed by the Tax Reform Act of 1986. The Company does not currently
fund or contribute to the Non-Qualified Plan but does accrue for projected
benefit expense annually.
9
13
The Company also has an Officers' Supplemental Non-Qualified Plan
("Supplemental Non-Qualified Plan). This Supplemental Non-Qualified Plan pays
retirement benefits in addition to the Stanreco Plan and Non-Qualified Plan
based on the number of years of credited service as an officer in excess of five
years.
For an officer, the sum of annual benefits earned under the Stanreco Plan,
Non-Qualified Plan and Supplemental Non-Qualified Plan is subject to a limit of
50% of the average of the highest five years of compensation.
12. RETIREMENT PLAN TABLES 1, 2 AND 3
Table 1 shows the estimated annual retirement benefits payable from the
Stanreco Plan and the Non-Qualified Plan to the Company's employees in specified
remuneration and years of service. Part of the estimated annual benefits include
the return of and earnings on contributions made by the employees. Table 2 shows
the estimated annual retirement benefits payable from the Supplemental Non-
Qualified Plan to officers based on remuneration and years of officer service
(in excess of five years). An officer's annual retirement benefit is equal to
the lesser of the sum of the benefits from Tables 1 and 2 or 50% of the average
of the highest five (5) years of compensation.
TABLE 1
AVERAGE OF FIVE YEARS OF CREDITED SERVICE
HIGHEST YEARS OF ----------------------------------------------------------------------------------------------------
COMPENSATION 1 5 10 15 20 25 30 35
---------------- --------- --------- --------- --------- --------- --------- --------- ---------
200,000 2,600 13,000 26,000 39,000 52,000 65,000 78,000 91,000
300,000 3,900 19,500 39,000 58,500 78,000 97,500 117,000 136,500
400,000 5,200 26,000 52,000 78,000 104,000 130,000 156,000 182,000
500,000 6,500 32,500 65,000 97,500 130,000 162,500 195,000 227,500
600,000 7,800 39,000 78,000 117,000 156,000 195,000 234,000 273,000
TABLE 2
AVERAGE OF FIVE YEARS OF OFFICER SERVICE IN EXCESS OF FIVE
HIGHEST YEARS OF -----------------------------------------------
COMPENSATION 1 5 10 11
---------------- -------- --------- --------- ---------
200,000 6,100 30,500 61,000 67,100
300,000 9,150 45,750 91,500 100,650
400,000 12,200 61,000 122,000 134,200
500,000 15,250 76,250 152,500 167,750
600,000 18,300 91,500 183,000 201,300
Estimated annual benefits are based upon the assumption that the employee
remains in the service of the Company until age 62, at which age the employee
qualifies for the maximum retirement benefit. Retirement prior to age 62 will
result in actuarially reduced benefits. The estimated annual benefits are
taxable income but are not subject to any deduction for social security
benefits. No additional benefit can be earned from the Supplemental
Non-Qualified Plan after the sixteenth year of officer service.
The table below shows the average of the highest five years of total
compensation and the years of service and officer service for each person listed
in the Summary Compensation Table.
TABLE 3
AVERAGE OF
THE HIGHEST FIVE YEARS OF YEARS OF
YEARS OF CREDITED OFFICER
NAME TOTAL COMPENSATION SERVICE SERVICE
- ----------------- ------------------ -------- --------
Peter S. Redding $580,858 28 14
Joseph V. Schwan $311,939 3 4
Michael Spaul $310,927 12 5
Harry A. Seifert $326,478 29 9
Craig J. Brown $276,394 21 9
10
14
13. STOCK OPTION TABLES
Option grants for fiscal 1995 for the Executive Officers named in the
Compensation Table are as follows:
OPTION GRANTS DURING FISCAL 1995
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL RATES
INDIVIDUAL GRANTS OF STOCK PRICE
- ------------------------------------------------------------------------------------------- APPRECIATION
NUMBER OF % OF TOTAL OPTIONS FOR OPTION TERM
OPTIONS GRANTED TO EMPLOYEES EXERCISE PRICE EXPIRATION -------------------------
NAME GRANTED IN FISCAL YEAR (PER SHARE) DATE 5% 10%
- ------------------- --------- -------------------- -------------- ---------- -------- ----------
Peter S. Redding 70,000 12.7% $ 20.125 12/28/05 $885,955 $2,245,185
Joseph V. Schwan 25,000 4.5% 20.125 12/28/05 316,415 801,850
Michael Spaul 25,000 4.5% 20.125 12/28/05 316,415 801,850
Harry A. Seifert 15,000 2.7% 20.125 12/28/05 189,850 481,100
Craig J. Brown 25,000 4.5% 20.125 12/28/05 316,415 801,850
Options exercised in fiscal 1995 for the Executive Officers named in the
Compensation Table are as follows:
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR ("FY") AND FISCAL YEAR-END OPTION VALUES
VALUE OF
NUMBER OF UNEXERCISED UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED VALUE OPTIONS AT FY-END OPTIONS AT FY-END
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------- --------------- -------- ------------------------- -------------------------
Peter S. Redding 0 0 0/70,000 0/0
Joseph V. Schwan 0 0 0/25,000 0/0
Michael Spaul 0 0 0/25,000 0/0
Harry A. Seifert 0 0 0/15,000 0/0
Craig J. Brown 0 0 0/25,000 0/0
14. NAMED EXECUTIVE OFFICERS
Information concerning each of the Named Executive Officers who are not
nominees for election as directors is as follows:
SERVED AS
NAME AGE DIRECTOR SINCE
- ---------------------------- --------- ---------------
CRAIG J. BROWN 46 1987
Mr. Brown has been Senior Vice President-Administration, Treasurer and Chief
Financial Officer since March 1995. From January 1993 through February 1995 he
was Vice President-Finance, Treasurer and Chief Financial Officer. Prior to
1993, he served the Company in various executive and financial positions.
JOSEPH V. SCHWAN 59 1991
Mr. Schwan has been Senior Vice President and General Manager-Document
Management Division since March 1995. From August 1991 through February 1995 he
was Vice President-Forms Sales & Marketing. From approximately January 1990
through July 1991, Mr. Schwan was Vice President and Chief Operating Officer of
Rittenhouse Paper. Mr. Schwan is a member of the Board of Directors of Hach
Company in Loveland, Colorado, a producer of instrumentation and chemicals for
analysis for the food and water industries.
HARRY A. SEIFERT 58 1987
Mr. Seifert has been Vice President-Manufacturing, Document Management
Division, since 1987.
MICHAEL SPAUL 48 1991
Mr. Spaul has been Senior Vice President and General Manager - COMMUNICOLOR
Division since March 1, 1995. From 1989 through February 1995 he was Vice
President and General Manager - COMMUNICOLOR Division.
CORPORATE PERFORMANCE
15. PERFORMANCE GRAPH
The following graph presents the total return to shareholders, assuming the
reinvestment of dividends, of an investment in the Company's Common stock on
December 31, 1990. A comparison to an industry peer group and a NASDAQ stock
index is also provided.
11
15
The Company has added companies to its peer group, displaying both the prior
and current groups in the graph below. In addition to Moore Corporation, Ltd.
and Duplex Products, Inc., which were included in prior graphs, The Reynolds +
Reynolds Company, Wallace Computer Sciences, Inc. and the Company have been
added. Management believes that this expanded peer group better reflects the
Company's current mix of products and services.
Measurement Period Standard Previous Peer
(Fiscal Year Covered) Register NASDAQ Index New Peer Group Group
1990 1.00 1.00 1.00 1.00
1991 1.40 1.61 1.19 0.98
1992 1.87 1.87 1.44 0.83
1993 2.23 2.15 2.19 0.98
1994 1.95 2.10 2.76 1.00
1995 2.32 2.96 4.53 1.04
OTHER MATTERS
16. SOLICITATION EXPENSES
The expenses soliciting proxies and the expenses of brokers, custodians,
nominees or fiduciaries incurred in forwarding the documents to their principals
or beneficiaries will be paid by the Company.
BY ORDER OF THE BOARD OF DIRECTORS
REBECCA H. APPENZELLER
Secretary
Dayton, Ohio
12
16
APPENDIX A
THE STANDARD REGISTER COMPANY
1995
STOCK OPTION PLAN
ARTICLE 1
OBJECTIVES
The Standard Register Company, an Ohio corporation, has established this Stock
Option Plan effective October 19, 1995 as an incentive to the attraction and
retention of dedicated and loyal employees of outstanding ability, to stimulate
the efforts of such persons in meeting Standard Register's objectives and to
encourage ownership of Standard Register Common Stock by employees.
ARTICLE 2
DEFINITIONS
For purposes of the Plan the following terms shall have the definition which
is attributed to them, unless another definition is clearly indicated by a
particular usage and context.
A. "Code" means the Internal Revenue Code of 1986.
B. The "Company" means The Standard Register Company and any subsidiary
of The Standard Register Company, as the term "subsidiary" is defined in
Section 424(f) of the Code.
C. "Date of Exercise" means the date on which the Company has received a
written notice of exercise of an Option, in such form as is acceptable to
the Committee, and full payment of the purchase price.
D. "Date of Grant" means the date on which the Committee makes an award
of an Option.
E. "Eligible Employee" means any individual who performs services for
the Company and is treated as an employee for federal income tax purposes.
F. "Fair Market Value" means the last sale price reported on any stock
exchange or over-the-counter trading system on which Shares are trading on
the last trading day prior to a specified date or, if no last sales price is
reported, the average of the closing bid and asked prices for a Share on a
specified date. If no sale has been made on the specified date, then prices
on the last preceding day on which any such sale shall have been made shall
be used in determining Fair Market Value under either method prescribed in
the previous sentence.
G. "Incentive Stock Option" shall have the same meaning as given to that
term by Section 422 of the Code.
H. "Nonqualified Stock Option" means any Option granted under the Plan
which is not considered an Incentive Stock Option.
I. "Option" means the right to purchase a stated number of Shares at a
specified price. The option may be granted to an Eligible Employee subject
to the terms of this Plan, and such other conditions and restrictions as the
Committee deems appropriate. Each Option shall be designated by the
Committee to be either an Incentive Stock Option or a Nonqualified Stock
Option.
J. "Option Price" means the purchase price per Share subject to an
Option and shall be fixed by the Committee, but shall not be less than 100%
of the Fair Market Value of a Share on the Date of Grant in the case of an
Incentive Stock Option.
K. "Permanent and Total Disability" shall mean any medically
determinable physical or mental impairment rendering an individual unable to
engage in any substantial gainful activity, which disability can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months.
L. "Plan" means this 1995 Stock Option Plan as it may be amended from
time to time.
M. "Share" means one share of the Common Stock, $1.00 par value, of the
Company.
ARTICLE 3
ADMINISTRATION
3.1 The Plan shall be administered by a committee (the "Committee") designated
by the Board of Directors of the Company. The Committee shall be comprised
solely of three or more directors each of whom shall be (i) a "disinterested
person" as defined under Rule 16b-3 of the Securities and Exchange Act of 1934
(the "Act") and (ii) an "outside director" to the extent required by Section
162(m) of the Internal Revenue Code ("Section 162(m)").
Actions shall be taken by a majority of the Committee.
3.2 Except as specifically limited by the provisions of the Plan, the
Committee in its discretion shall have the authority to:
A. Determine which Eligible Employees shall be granted Options;
B. Determine the number of Shares which may be subject to each Option;
A-1
17
C. Determine the Option Price;
D. Determine the term of each Option;
E. Determine whether each Option is an Incentive Stock Option or
Nonqualified Stock Option;
F. Interpret the provisions of the Plan and decide all questions of fact
arising in its application; and
G. Prescribe such rules and procedures for Plan administration as from
time to time it may deem advisable.
3.3 Any action, decision, interpretation or determination by the Committee
with respect to the application or administration of this Plan shall be final
and binding upon all persons, and need not be uniform with respect to its
determination of recipients, amount, timing, form, terms or provisions of
Options.
3.4 No member of the Committee shall be liable for any action or determination
taken or made in good faith with respect to the Plan or any Option granted
hereunder, and to the extent permitted by law, all members shall be indemnified
by the Company for any liability and expenses which may occur through any claim
or cause of action.
ARTICLE 4
SHARES SUBJECT TO PLAN
4.1 The Shares that may be made subject to Options granted under the Plan
shall not exceed 2,000,000 Shares in the aggregate. Except as provided in
Section 4.2, upon lapse or termination of any Option for any reason without
being completely exercised, the Shares which were subject to such Option may
again be subject to other Options.
4.2 The maximum number of Shares with respect to which options may be granted
to any employee during each fiscal year of the Company is 100,000. If an Option
is cancelled by mutual agreement, it continues to be counted against the maximum
number of Shares for which Options may be granted to an employee. If an Option
is repriced by mutual agreement, the transaction is treated as a cancellation of
the Option and a grant of a new Option.
ARTICLE 5
GRANTING OF OPTIONS
Subject to the terms and conditions of the Plan, the Committee may, from time
to time prior to October 18, 2005, grant Options to Eligible Employees on such
terms and conditions as the Committee may determine. More than one Option may be
granted to the same Eligible Employee.
ARTICLE 6
TERMS OF OPTIONS
6.1 Subject to specific provisions relating to Incentive Stock Options set
forth in Article 9, each Option shall be for a term of from one to ten years
from the Date of Grant and may not be exercised during the first twelve months
of the term of said Option. The Committee shall establish exercise schedules and
impose other conditions upon exercise for particular Options or groups of
Options at the time of grant. Rights of exercise shall be cumulative and shall
be exercisable in whole or in part. The Committee in its sole discretion may
permit particular holders of Options to exercise an Option to a greater extent
than provided herein.
6.2 The holder of an Option must remain continuously in the service of the
Company as an employee for a period of at least twelve months. Nothing contained
in this Plan or in any Option granted pursuant to it shall confer upon any
employee any right to continue in the employ of the Company or to interfere in
any way with the right of the Company to terminate employment at any time. So
long as a holder of an Option shall continue to be an employee of the Company,
the Option shall not be affected by any change of the employee's duties or
position.
ARTICLE 7
EXERCISE OF OPTIONS
Any person entitled to exercise an Option in whole or in part, may do so by
delivering a written notice of exercise to the Company, attention Corporate
Secretary, at its principal office. The written notice shall specify the number
of Shares for which an Option is being exercised and the grant date of the
option being exercised and shall be accompanied by full payment of the Option
Price for the Shares being purchased.
ARTICLE 8
PAYMENT OF OPTION PRICE
8.1 Payment of the Option Price may be made in cash, by the tender of Shares,
or both. Shares tendered shall be valued at their Fair Market Value on the date
of tender.
A-2
18
8.2 Payment through tender of Shares may be made by instruction from the
Optionee to the Company to withhold from the Shares issuable upon exercise that
number which have a Fair Market Value equal to the exercise price for the Option
or portion thereof being exercised.
ARTICLE 9
INCENTIVE STOCK OPTIONS AND NONQUALIFIED STOCK OPTIONS
9.1 The Committee in its discretion may designate whether an Option is to be
considered an Incentive Stock Option or a Nonqualified Stock Option. The
Committee may grant both an Incentive Stock Option and a Nonqualified Stock
Option to the same individual. However, where both an Incentive Stock Option and
a Nonqualified Stock Option are awarded at one time, such Options shall be
deemed to have been awarded in separate grants, shall be clearly identified, and
in no event will the exercise of one such Option affect the right to exercise
the other such Option.
9.2 Any option designated by the Committee as an Incentive Stock Option will
be subject to the general provisions applicable to all Options granted under the
Plan. In addition, the Incentive Stock Option shall be subject to the following
specific provisions:
A. At the time the Incentive Stock Option is granted, if the Eligible
Employee owns, directly or indirectly, stock representing more than 10% of
(i) the total combined voting power of all classes of stock of the Company,
or (ii) a corporation that owns 50% or more of the total combined voting
power of all classes of stock of the Company, then:
(i) The Option Price must equal at least 110% of the Fair Market
Value on the Date of Grant; and
(ii) The term of the Option shall not be greater than five years from
the Date of Grant.
B. The aggregate Fair Market Value of Shares (determined at the Date of
Grant) with respect to which Incentive Stock Options are exercisable by an
Eligible Employee for the first time during any calendar year under this
Plan or any other plan maintained by the Company shall not exceed $100,000.
9.3 If any Option is not granted, exercised, or held pursuant to the
provisions noted immediately above, it will be considered to be a Nonqualified
Stock Option to the extent that the grant is in conflict with these
restrictions.
ARTICLE 10
TRANSFERABILITY OF OPTION
During the lifetime of an Eligible Employee to whom an Option has been
granted, such Option is not transferable voluntarily or by operation of law and
may be exercised only by such individual. Upon the death of an Eligible Employee
to whom an Option has been granted, the Option may be transferred to the
beneficiaries or heirs of the holder of the Option by will or by the laws of
descent and distribution.
ARTICLE 11
TERMINATION OF OPTIONS
11.1 An Option will terminate as follows:
A. Upon exercise or expiration by its terms.
B. Except as provided in Subsection 11.1.C, upon termination of
employment for reasons other than cause, the then exercisable portion of any
Option will terminate on the 60th day after the date of termination. The
portion not then exercisable will terminate on the date of termination of
employment. For purposes of the Plan, a leave of absence approved by the
Company shall not be deemed to be termination of employment.
C. If an Eligible Employee holding an Option dies or becomes subject to
a Permanent and Total Disability while employed by the Company, or within 60
days after termination of employment for reasons other than cause, such
Option may be exercised, to the extent exercisable on the date of the
occurrence of the event which triggers the operation of this paragraph, at
any time within one year after the date of termination of employment of such
Eligible Employee, by the estate or guardian of such person or by those
persons to whom the Option may have been transferred by will or by the laws
of descent and distribution.
D. Options shall terminate immediately if employment is terminated for
cause. Cause is defined as including, but not limited to, theft of or
intentional damage to Company property, intentional harm to the Company's
reputation, material breach of the optionee's duty of fidelity to the
Company, excessive use of alcohol, the use of illegal drugs, the commission
of a criminal act, willful violation of Company policy, or trading in shares
for personal gain based on knowledge of the Company's activities or results
when such information is not available to the general public.
E. If an Eligible Employee holding an Option violates any terms of any
written employment or noncompetition agreement between the Company and the
Eligible Employee, all existing options held by such Employee will
terminate. In addition, if at the time of such violation the Employee has
exercised Options but has not received certificates for the shares to be
issued, the Company may void the Option and its exercise. Any such actions
by the Company shall be in addition to any other rights or remedies
available to the Company in such circumstances.
A-3
19
11.2 Except as provided in Article 12 hereof, in no event will the
continuation of the term of an Option beyond the date of termination of
employment allow the Eligible Employee, or his beneficiaries or heirs, to accrue
additional rights under the Plan, or to purchase more Shares through the
exercise of an Option than could have been purchased on the day that employment
was terminated. In addition, notwithstanding anything contained herein, no
option may be exercised in any event after the expiration of ten years from the
date of grant of such option.
ARTICLE 12
ADJUSTMENTS TO SHARES AND OPTION PRICE
12.1 In the event of changes in the outstanding Common Stock of the Company as
a result of stock dividends, splitups, recapitalizations, combinations of Shares
or exchanges of Shares, the number and class of Shares for all purposes covered
by the Plan and number and class of Shares and price per Share for each Option
and each outstanding Option covered by the Plan shall be correspondingly
adjusted by the Committee.
12.2 The Committee may make appropriate adjustments in the Option Price to
reflect any spin-off of assets, extraordinary dividends or other distributions
to shareholders.
12.3 In the event of the dissolution or liquidation of the Company or any
merger, consolidation, exchange or other transaction in which the Company is not
the surviving corporation or in which the outstanding Shares of the Company are
converted into cash, other securities or other property, each outstanding Option
shall terminate as of a date fixed by the Committee provided that not less than
20 days' written notice of the date of expiration shall be given to each holder
of an Option and each such holder shall have the right during such period
following notice to exercise the Option as to all or any part of the Shares for
which it is exercisable at the time of such notice. The Committee, in its sole
discretion, may provide that Options in such circumstances may be exercised to
an extent greater than the number of shares for which they were exercisable at
the time of such a notice.
12.4 All outstanding Options shall become immediately exercisable in full if a
change in control of the Company occurs. For purposes of this Agreement, a
"change in control of the Company" shall be deemed to have occurred if any
"person," as such term is used in Sections 13(d) and 14(d) of the Act, other
than (i) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or (ii) a trustee under the John Q. Sherman
Testamentary Trust or the William C. Sherman Testamentary Trust or the William
C. Sherman Intervivos Trust dated December 29, 1939, becomes the "beneficial
owner," as defined in Rule 13d-3 under the Act, directly or indirectly, of
securities of the Company representing 35% or more of the combined voting power
of the Company's then outstanding securities.
ARTICLE 13
OPTION AGREEMENTS
13.1 All Options granted under the Plan shall be evidenced by a written
agreement in such form or forms as the Committee in its sole discretion may
determine.
13.2 Each optionee, by acceptance of an Option under this Plan, shall be
deemed to have consented to be bound, on the optionee's own behalf and on behalf
of the optionee's heirs, assigns and legal representatives, by all terms and
conditions of this Plan.
ARTICLE 14
AMENDMENT OR DISCONTINUANCE OF PLAN
14.1 The Board of Directors of the Company may at any time amend, suspend, or
discontinue the Plan; provided, however, that no amendments by the Board of
Directors of the Company shall, without further approval of the shareholders of
the Company:
A. Change the definition of Eligible Employees;
B. Except as provided in Articles 4 and 12 hereof, increase the number
of Shares which may be subject to Options granted under the Plan.
C. Cause the Plan or any Option granted under the Plan to fail to (i)
qualify for exemption from Section 16(b) of the Act, (ii) be excluded from
the $1 million deduction limitation imposed by Section 162(m) of the Code,
or (iii) qualify as an "Incentive Stock Option" as defined by Section 422 of
the Code.
14.2 No amendment or discontinuance of the Plan shall alter or impair any
Option granted under the Plan without the consent of the holder thereof.
ARTICLE 15
EFFECTIVE DATE
This Plan shall become effective as of October 19, 1995, having been adopted
by the Board of Directors of the Company on such date subject to approval by the
affirmative vote of the holders of a majority of the shares of Capital Stock of
the Company voting on the issue, and all Options granted prior to such approval
are expressly conditioned upon such approval being received. If shareholder
approval is not received, within 12 months of the effective date, Options
granted pursuant to this Plan shall be null and void.
A-4
20
ARTICLE 16
MISCELLANEOUS
16.1 Nothing contained in this Plan or in any action taken by the Board of
Directors or shareholders of the Company shall constitute the granting of an
Option. An Option shall be granted only at such time as a written Option shall
have been executed and delivered to the respective employee and the employee
shall have executed an agreement respecting the Option in conformance with the
provisions of the Plan.
16.2 Certificates for Shares purchased through exercise of Options will be
issued in regular course after exercise of the Option and payment therefor as
called for by the terms of the Option but in no event shall the Company be
obligated to issue certificates more often than once each quarter of each fiscal
year. No persons holding an Option or entitled to exercise an Option granted
under this Plan shall have any rights or privileges of a shareholder of the
Company with respect to any Shares issuable upon exercise of such Option until
certificates representing such Shares shall have been issued and delivered. No
Shares shall be issued and delivered upon exercise of an Option unless and until
the Company, in the opinion of its counsel, has complied with all applicable
registration requirements of the Securities Act of 1933 and any applicable state
securities laws and with any applicable listing requirements of any national
securities exchange on which the Company securities may then be listed as well
as any other requirements of law.
16.3 This Plan shall continue in effect until the expiration of all Options
granted under the Plan unless terminated earlier in accordance with Article 14;
provided, however, that it shall otherwise terminate ten years after the
Effective Date.
A-5
21
THE STANDARD REGISTER COMPANY
PROXY PROXY FOR ANNUAL SHAREHOLDERS' MEETING, APRIL 17, 1996
THIS PROXY IS SOLICTED ON BEHALF OF THE BOARD OF DIRECTORS
KNOW ALL MEN BY THESE PRESENTS That the undersigned, a shareholder of The
Standard Register Company ("Company") hereby appoints PETER S. REDDING, PAUL H.
GRANZOW and CHARLES F. SHERMAN ("Appointed Proxies"), each with full power to
substitute or act alone, to vote (the action of a majority of those present to
control) with repect to all shares of stock of the undersigned in the Company
at the Annual Meeting of Shareholders of the Company ("Annual Meeting") to be
held April 17, 1996 and any adjournments thereof, upon the following:
(1) PROPOSAL TO FIX AND DETERMINE THE NUMBER OF DIRECTORS TO BE TEN
/ / FOR / / AGAINST / / ABSTAIN
(2) ELECTION OF DIRECTORS
A vote FOR includes discretionary authority (i) to cumulate votes
selectively among the nominees and (ii) to vote for a substitute nominee if
any of the nominees listed becomes unable or unwilling to serve.
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees
below) listed below
INSTRUCTION: To withhold authority to vote for any individual nominee
strike a line through the nominee's name in the list below:
Roy W. Begley, Jr., P. David Clarke, III, Paul H. Granzow,
Graeme G. Keeping, Peter S. Redding, Dennis L Rediker, Ann
Scavullo, John J. Schiff, Jr., Charles F. Sherman, John Q.
Sherman, II
(3) PROPOSAL FOR ADOPTION OF THE STANDARD REGISTER COMPANY 1995 STOCK OPTION
PLAN
/ / FOR / / AGAINST / / ABSTAIN
(4) PROPOSAL TO APPROVE BATTELLE & BATTELLE, CERTIFIED PUBLIC ACCOUNTANTS, AS
THE INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY.
/ / FOR / / AGAINST / / ABSTAIN
(Continued and to be signed on reverse side)
(5) According to their best judgment on any and all matters as may properly
come before the meeting or any adjournments thereof.
The Board of Directors does not know of any matters to be brought before
the Annual Meeting other than those described above.
THE APPOINTED PROXIES WILL VOTE FOR EACH OF THE MATTERS SET FORTH ABOVE AT
PARAGRAPHS (1), (2), (3) AND (4) WHICH ARE MORE FULLY DESCRIBED IN THE PROXY
STATEMENT, UNLESS A CONTRARY CHOICE IS SPECIFIED ABOVE, IN WHICH CASE THE
APPOINTED PROXIES WILL VOTE OR WITHHOLD IN ACCORDANCE WITH INSTRUCTIONS GIVEN.
IMPORTANT: Signature should agree with name on this proxy. Executors,
administrators, trustees, etc., should so indicate when signing.
------------------------------
Signature
------------------------------
Signature
Date:
--------------------,1996
PLEASE FILL IN, SIGN AND RETURN THIS PROXY WHETHER OR NOT YOU PLAN TO
ATTEND THE ANNUAL MEETING IN PERSON.