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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:
[X] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
Liqui-Box Corporation
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing 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: ...........................................................
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LIQUI-BOX CORPORATION
POST OFFICE BOX 494
WORTHINGTON, OHIO 43085-0494
TELEPHONE: (614) 888-9280
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of
LIQUI-BOX CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of Liqui-Box Corporation ("Liqui-Box") will be held at the Columbus
Marriott North, 6500 Doubletree Avenue, Columbus, Ohio, on Wednesday, April 22,
1998, at 9:00 a.m. (local time) for the following purposes:
1. To elect three (3) directors to serve for terms of two years each.
2. To consider and act upon a proposal to amend Section 6 of Article I
of the Code of Regulations of Liqui-Box to reduce the number of
voting shares required for a quorum at meetings of Liqui-Box's
shareholders.
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment(s) thereof.
A copy of the Annual Report for the 1997 fiscal year accompanies this
Notice.
By Order of the Board of Directors,
C. William McBee
Secretary
Dated: April 6, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE FILL IN, SIGN, DATE
AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE, TO WHICH NO POSTAGE
NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
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LIQUI-BOX CORPORATION
POST OFFICE BOX 494
WORTHINGTON, OHIO 43085-0494
TELEPHONE: (614) 888-9280
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Liqui-Box Corporation ("Liqui-Box") to be
used at its Annual Meeting of Shareholders (the "Annual Meeting") to be held on
April 22, 1998, and at any adjournment(s) thereof. Common shares represented by
properly executed proxies will be voted at the Annual Meeting. Where a choice is
specified by the shareholder, the proxy will be voted in accordance with such
choice. Any proxy may be revoked at any time insofar as it has not been
exercised provided notice of revocation of the proxy is received by Liqui-Box
either in writing or in open meeting.
This Proxy Statement and the accompanying proxy were first mailed to
shareholders on or about April 1, 1998.
February 24, 1998, has been fixed as the record date for the determination
of shareholders entitled to notice of and to vote at the Annual Meeting or any
adjournment(s) thereof. On the record date, 4,725,773 common shares of Liqui-Box
were outstanding and entitled to vote. The holders of common shares entitling
them to exercise a majority of the voting power of Liqui-Box will constitute a
quorum for the Annual Meeting.
Common shares represented by signed proxies that are returned to Liqui-Box
will be counted toward the quorum in all matters even though they are marked as
"Abstain", "Against" or "Withhold Authority" with respect to one or more or all
matters or they are not marked at all. Broker/dealers, who hold their customers'
common shares in street name, may, under the applicable rules of the
self-regulatory organizations of which the broker/dealers are members, sign and
submit proxies for such common shares and may vote such common shares on routine
matters, which, under such rules, typically include the election of directors,
but broker/ dealers may not vote such common shares on other matters, which
typically include approval of significant corporate transactions such as
amendments to the articles of incorporation or code of regulations of a
corporation and the approval of stock compensation plans, without specific
instructions from the customer who owns such common shares. Proxies signed and
submitted by broker/dealers, which have not been voted on certain matters as
described in the previous sentence, are referred to as "broker non-votes". Such
proxies count toward the establishment of a quorum. The effect of an abstention
or broker non-vote on each of the matters to be voted on at the Annual Meeting
is the same as a "no" vote.
Each shareholder is entitled to one vote for each common share held and has
cumulative voting rights in the election of directors. A shareholder wishing to
exercise cumulative voting must so notify the President, a Vice President or the
Secretary of Liqui-Box in writing not less than forty-eight hours before the
Annual Meeting. If cumulative voting is requested, each shareholder will have a
number of votes equal to the number of directors to be elected multiplied by the
number of common shares owned by him and will be entitled to distribute his
votes among the nominees as he sees fit. If cumulative voting is requested, as
described above, the enclosed proxy would grant discretionary authority to the
proxies named therein to cumulate votes and to distribute the votes among the
candidates.
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PRINCIPAL HOLDERS OF SECURITIES
The following table sets forth, as of February 24, 1998 (except as
otherwise indicated), certain information concerning the beneficial ownership of
Liqui-Box's common shares by the only persons known to Liqui-Box to own
beneficially more than five percent (5%) of the outstanding common shares of
Liqui-Box.
COMMON SHARES OF LIQUI-BOX
BENEFICIALLY OWNED (1)(2)
NAME AND ADDRESS -----------------------------------
OF BENEFICIAL OWNER AMOUNT % OF TOTAL (3)
- ------------------- --------- --------------
Samuel B. Davis 1,553,359(4) 32.1%
6950 Worthington-Galena Road
P. O. Box 494
Worthington, Ohio 43085
Fiduciary Management, Inc. 351,808(5) 7.3%
225 East Mason Street
Milwaukee, Wisconsin 53202
- ---------------
(1) As of February 24, 1998, except as otherwise indicated.
(2) Sole voting and investment power, unless otherwise indicated.
(3) The percent of total is based upon the sum of 4,725,773 common shares
outstanding on February 24, 1998 and the number of common shares, if any, as
to which the named person has the right to acquire beneficial ownership upon
the exercise of presently exercisable options.
(4) Includes 72,777 common shares subject to presently exercisable options and
61,376 common shares held for the account of Mr. Davis in the Liqui-Box
Corporation Employees' Stock Ownership Plan (the "Liqui-Box ESOP").
Supplemental Retirement Discounted Options become exercisable upon
termination of employment. Under the rules of the Securities and Exchange
Commission (the "SEC"), options which become exercisable during the next 60
days are deemed to be presently exercisable options. For purposes of
determining presently exercisable options, it is assumed that Mr. Davis will
not terminate his employment with Liqui-Box during the next 60 days. Also
includes 490,113 common shares held by Mr. Davis as the Successor Trustee
under the S.S. Davis Residual Trust. Also includes 1,689 common shares held
by the estate of Jeanette A. Davis, as to which Mr. Davis exercises shared
voting and investment power as co-executor with one of his sisters. Also
includes 127,027 common shares deposited with Mr. Davis in his capacity as
voting trustee of a trust that expires on September 29, 2003. Mr. Davis
exercises sole voting power, but has no investment power, with respect to
the common shares deposited in the trust. Mr. Davis holds the right of first
refusal on the disposal of these common shares. Does not include 2,428
common shares as to which the wife of Mr. Davis has sole voting and
investment power.
(5) Based on information contained in filings with the SEC dated February 5,
1998, Fiduciary Management, Inc., a registered investment adviser
("Fiduciary"), may be deemed to have sole investment power with respect to
263,008 common shares and shared investment power with respect to 88,800
common shares. Fiduciary does not have voting power with respect to any of
these common shares.
The following table sets forth, as of February 24, 1998, certain
information with respect to Liqui-Box's common shares owned beneficially by each
director of Liqui-Box, by each nominee for election as a director of
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Liqui-Box, by each executive officer of Liqui-Box named in the SUMMARY
COMPENSATION TABLE and by all current directors and executive officers of
Liqui-Box as a group:
COMMON SHARES OF LIQUI-BOX
BENEFICIALLY OWNED (1)(2)(3)
NAME OF ------------------------------------------
BENEFICIAL OWNER AMOUNT % OF TOTAL (4)
---------------- --------- --------------
Samuel B. Davis 1,553,359(5) 32.1%
Robert S. Hamilton 136,905(6) 2.8%
Samuel N. Davis 134,652(7) 2.8%
C. William McBee 44,216(8) 0.9%
Joseph F. Pranckus 6,657(9) 0.1%
Stewart M. Graves 5,000(10) 0.1%
Russell M. Gertmenian 2,600(11) 0.1%
Carl J. Aschinger, Jr. 1,008 0.0%
Charles R. Coate 0 0.0%
All current directors and executive officers as
a group (9 persons) 1,884,397(12) 38.9%
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(1) As of February 24, 1998. All fractional common shares have been rounded.
(2) Sole voting and investment power, unless otherwise indicated.
(3) Supplemental Retirement Discounted Options become exercisable upon
termination of employment. Under SEC rules, options that become exercisable
during the next 60 days are deemed to be presently exercisable options. For
purposes of determining presently exercisable options, it is assumed that
no current executive officer will terminate his employment with Liqui-Box
during the next 60 days.
(4) See footnote (3) to the preceding table.
(5) See footnote (4) to the preceding table.
(6) Includes 13,326 common shares subject to presently exercisable options and
1,437 common shares held for his account in the Liqui-Box ESOP. Does not
include 4,746 common shares as to which his wife has sole voting and
investment power.
(7) Includes 12,208 common shares subject to presently exercisable options and
121 common shares held for his account in the Liqui-Box ESOP. Also includes
15,750 common shares held in an indirect trust as to which he has no voting
power and shared investment power.
(8) Includes 15,030 common shares subject to presently exercisable options and
664 common shares held for his account in the Liqui-Box ESOP.
(9) Includes 654 common shares subject to presently exercisable options and 941
common shares held for his account in the Liqui-Box ESOP.
(10) Includes 5,000 common shares subject to presently exercisable options.
(11) Includes 200 common shares held by his wife as to which she has sole voting
and investment power. Also includes 1,600 common shares held as custodian
for son.
(12) Includes, as to all current directors and executive officers of Liqui-Box
as a group, 121,995 common shares subject to presently exercisable options
and 64,539 common shares held for their respective accounts in the
Liqui-Box ESOP.
ELECTION OF DIRECTORS
At the Annual Meeting, three directors will be elected to hold office until
the 2000 Annual Meeting of Shareholders and until their respective successors
are elected and qualified. It is the intention of the persons named in the
accompanying form of proxy to vote the common shares represented by such proxy
for the election of the persons named in the following table unless the proxy is
marked otherwise. In case any person
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named in the table is unable to serve or is unwilling to accept nomination or
election (which is not anticipated), the persons named in the proxy will vote
the common shares represented by such proxy for one or more substitute nominees
designated by the present Board of Directors. Under Ohio law and Liqui-Box's
Code of Regulations, the three nominees for election as directors in the class
whose terms expire in 2000 receiving the greatest number of votes will be
elected as directors. Common shares as to which the voting authority is withheld
will be counted for quorum purposes but will not be counted toward the election
of directors, or toward the election of individual nominees specified on the
form of proxy.
The following individuals have been nominated for election to the class of
directors whose terms expire in 2000:
NAME, AGE, POSITIONS AND OFFICES WITH
YEAR LIQUI-BOX LIQUI-BOX, PRINCIPAL OCCUPATION
DIRECTORSHIP COMMENCED AND OTHER DIRECTORSHIPS
- ---------------------- -------------------------------
Samuel B. Davis Chairman, Chief Executive Officer, Treasurer and Director of
56-1977 Liqui-Box
Robert S. Hamilton Vice Chairman and Director of Liqui-Box; Director of
69-1984 Lancaster Colony Corporation
Russell M. Gertmenian Partner, Vorys, Sater, Seymour and Pease LLP; Director of
50-1995 Liqui-Box and of AirNet Systems, Inc.
The following directors will continue to serve after the Annual Meeting
until the 1999 Annual Meeting of Shareholders:
NAME, AGE, POSITIONS AND OFFICES WITH
YEAR LIQUI-BOX LIQUI-BOX, PRINCIPAL OCCUPATION
DIRECTORSHIP COMMENCED AND OTHER DIRECTORSHIPS
- ---------------------- -------------------------------
Carl J. Aschinger, Jr. Chairman and Chief Executive Officer of the Columbus
59-1985 Showcase Company, a manufacturer of retail showcases in
Columbus, Ohio; Director of Liqui-Box
Charles R. Coate Vice President, State Savings Bank, an Ohio savings
56-1997 association in Columbus, Ohio; Director of Liqui-Box
Samuel N. Davis Vice President, Development and Director of Liqui-Box
33-1997
C. William McBee Chief Operating Officer, President and Director of Liqui-Box
55-1996
Mr. McBee has been Chief Operating Officer and President of Liqui-Box since
December 1997. From February, 1994 until December, 1997, Mr. McBee was a Vice
President of Liqui-Box. Prior to February, 1994, Mr. McBee was the General
Manager for Stone Container Corporation, Columbus, Indiana, a manufacturer of
corrugated cardboard containers. Mr. Samuel N. Davis has been Vice President,
Development of Liqui-Box since April 1996. From September, 1995 until the
present and prior to January, 1993, Mr. Samuel N. Davis held various offices
with Liqui-Box. From January 1993 through August 1995, Mr. Samuel N. Davis was
an active investor in Zacchaeus Clothiers, Columbus, Ohio, a clothing retailer.
Each other director and nominee for election as a director has had the same
principal occupation for the past five years.
Russell M. Gertmenian, a director of Liqui-Box, is a partner in the law
firm of Vorys, Sater, Seymour and Pease LLP, which rendered legal services to
Liqui-Box during the 1997 fiscal year and continues to render legal services to
Liqui-Box during the 1998 fiscal year.
Samuel B. Davis is the father of Samuel N. Davis.
During 1997, there was one meeting of Liqui-Box's Board of Directors. Each
of the incumbent directors attended at least 75% of the aggregate of the total
number of meetings held by the Board of Directors during
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the period he served and the total number of meetings held by all committees of
the Board of Directors on which he served during the period he served.
Liqui-Box has an Audit Committee consisting of Carl J. Aschinger, Jr.,
Russell M. Gertmenian and Robert S. Hamilton. The Audit Committee met once
during 1997. Its function is to review the adequacy of Liqui-Box's system of
internal controls, to investigate the scope and adequacy of the work of
Liqui-Box's auditors and to recommend to the directors a firm to serve as
Liqui-Box's auditors.
Liqui-Box does not have a compensation committee or a nominating committee
separate from the Board as a whole.
REPORT OF THE BOARD OF DIRECTORS AND STOCK OPTION COMMITTEE
ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of Liqui-Box's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, this Report and the graph
set forth on page shall not be incorporated by reference into any such filings.
The Board of Directors makes decisions on compensation of Liqui-Box's
executive officers, except that the Stock Option Committee makes decisions on
stock option compensation. Set forth below is a report of the Board addressing
Liqui-Box's compensation policies as they affect Samuel B. Davis, the Chief
Executive Officer (CEO), and Robert S. Hamilton, C. William McBee, Samuel N.
Davis, Stewart M. Graves and Joseph F. Pranckus, the other current executive
officers of Liqui-Box.
COMPENSATION PRINCIPLES
Liqui-Box's executive compensation program has existed in its present form
for approximately twelve years and consists of base salary, a bonus based on
pretax profits payable under the Liqui-Box Corporation Profit Participation Plan
(the "Liqui-Box PPP"), contributions to various savings and stock ownership
programs and stock options.
Liqui-Box recognizes the need for executive compensation to be directly
reflective of corporate earnings performance. As such, the philosophy has been
for many years, and continues to be, that base salary should constitute a small
portion of an executive officer's total compensation package with the largest
portion of his compensation being based on an allocated percentage of pretax
profits under the Liqui-Box PPP. This practice applies to the majority of
Liqui-Box employees, with the exception that, at lower levels of responsibility,
a greater portion of compensation is base salary with less of the employee's
total compensation being tied to profit.
Under the Liqui-Box PPP, pretax profits are calculated quarterly for the
first three quarters and are estimated in December for the fourth quarter.
Liqui-Box applies a fixed percentage to each quarter's pretax profit to come up
with an allocation to be distributed among all the eligible employees in the
form of a quarterly bonus. This allocation is further broken down to distribute
a greater fixed percentage to those employees who have a more direct impact on
corporate profits (CEO, officers, managers) and a smaller fixed percentage to
those employees who have a less direct impact on profits. Each employee's share
of the pool is further impacted by the number of employees in the overall bonus
pool in any year.
If Liqui-Box's pretax profits increase, the allocation of pretax profit
dollars to compensation increases in direct proportion to the increase in pretax
profits. If pretax profits decrease, so does the allocation of pretax profit
dollars to compensation. This directly impacts compensation of executive
officers, as well as all other eligible employees.
The Board believes that this type of compensation has attracted, and
continues to attract, the type of executive officers and employees that are
critical to the long-term success of Liqui-Box. The Board also believes that
this type of compensation has led, and will continue to lead, to the solid
earnings growth of Liqui-Box while rewarding executive officers and employees
for their joint effort to improve profitability.
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Since 1992, stock option grants have been used to create long-term
incentives to continue the growth in shareholder value. In that year, the Stock
Option Committee adopted guidelines for annual option grants under the 1990
Liqui-Box Corporation Stock Option Plan (the "1990 Stock Option Plan"). The
Stock Option Committee believes option grants in accordance with these
guidelines in the past has accomplished, and in the future will accomplish, the
objective of linking the compensation of executive officers to increases in
shareholder wealth as reflected in the market price of the common shares. No
options were granted to executive officers in 1997. The Stock Option Committee
is considering alternatives for future option grants which will, in their
opinion, accomplish the objective of linking the compensation of executive
officers to increases in shareholder wealth as reflected in the market price of
the common shares.
Section 162(m) of the Internal Revenue Code of 1986, as amended, prohibits
a publicly-held corporation, such as Liqui-Box, from claiming a deduction on its
federal income tax return for compensation in excess of $1 million paid for a
given fiscal year to the chief executive officer (or person acting in that
capacity) at the close of the corporation's fiscal year and the four most highly
compensated officers of the corporation, other than the chief executive officer,
at the end of the corporation's fiscal year. The $1 million compensation
deduction limitation does not apply to "performance-based compensation." The
Internal Revenue Service issued final regulations in December of 1995, which
give some guidance to publicly-held corporations about how to qualify
compensatory plans to meet the "performance-based compensation" requirements.
Liqui-Box does not have a policy that requires all compensation payable in
1997 and thereafter to the covered executive officers to be deductible under
Section 162(m). Liqui-Box has not attempted to revise the Liqui-Box PPP or the
1990 Stock Option Plan to satisfy the "performance-based compensation"
exceptions but may, in the future, consider doing so if compensation paid
thereunder would otherwise not be deductible under Section 162(m) and such
provisions would not distort or discourage the existing incentives for
performance that enhance the value of Liqui-Box. In all cases, however, whether
or not some portion of a covered executive officer's compensation is
tax-deductible, Liqui-Box will continue to carefully consider the net cost and
value to Liqui-Box of its compensation policies.
COMPANY PERFORMANCE AND CEO COMPENSATION
As indicated above, Liqui-Box's executive compensation program is based, in
large part, upon business performance. This pay-for-performance program is
exemplified in the compensation of the CEO.
The Board has believed, since the mid-1980s when the present executive
compensation program was approved, and continues to believe, that Mr. Davis'
base salary of $70,000, which has been unchanged for approximately five years,
is substantially below the base salaries of CEO's in the peer group included in
the performance graph.
Approximately 93.7% of Mr. Davis' cash compensation for 1997 was paid in
the form of a cash bonus under the Liqui-Box PPP. The amount of this bonus is
directly tied to the pretax profits of Liqui-Box. Mr. Davis' 1997 cash bonus
under the PPP program increased from the 1996 amount in proportion to the
increase in pretax profits from 1996 to 1997. Had Liqui-Box failed to make a
profit, Mr. Davis, as well as most of the other employees, would have received
no bonus under the Liqui-Box PPP.
Submitted by:
Carl J. Aschinger, Jr.*
Charles R. Coate*
Samuel B. Davis
Samuel N. Davis
Russell M. Gertmenian*
Robert S. Hamilton
C. William McBee
---------------------
*Member of Stock Option Committee.
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SUMMARY COMPENSATION TABLE
The following table summarizes compensation awarded or paid to, or earned
by, each of Liqui-Box's five most highly compensated executive officers during
each of the last three years:
LONG TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
---------------------- UNDERLYING ALL OTHER
SALARY BONUS OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)
- --------------------------- ---- -------- ---------- ------------ ------------
Samuel B. Davis, 1997 $ 70,000 $1,032,715 0 $15,123(1)
Chairman, Chief 1996 $ 70,000 $ 955,910 0 $ 9,758
Executive Officer, 1995 $ 70,000 $ 804,678 82,471 $ 9,812
Treasurer
Samuel N. Davis, 1997 $ 51,000 $ 134,900 0 $ 5,466(1)
Vice President -- 1996 $ 46,100 $ 51,650 0 $ 103
Development (2) 1995 $ -- $ -- -- $ --
Stewart M. Graves, 1997 $ 62,000 $ 101,110 0 $16,311(1)
Vice President -- 1996 $ 78,757 $ 74,287 0 $15,550
International (3) 1995 $ -- $ -- -- $ --
C. William McBee, 1997 $ 70,000 $ 212,939 0 $12,202(1)
President 1996 $ 70,000 $ 151,765 0 $11,405
1995 $ 70,000 $ 134,441 30,930 $10,859
Joseph F. Pranckus, 1997 $ 51,000 $ 134,900 0 $ 9,413(1)
Vice President -- 1996 $ 51,000 $ 112,634 0 $ 5,300
Sales(4) 1995 $ -- $ -- -- $ --
- ---------------
(1) Includes employer contributions to the Liqui-Box ESOP and to the 401(k)
portion of the Liqui-Box Corporation Employees' Profit Sharing and Salary
Deferral Plan (the "Liqui-Box Profit Sharing and Salary Deferral Plan").
Does not include amounts allocable to the named executive officers' accounts
in the deferred profit-sharing portion of the Liqui-Box Profit Sharing and
Salary Deferral Plan for 1997, which amounts will be calculated during 1998
and disclosed as earned in 1997 in next year's proxy statement. The amounts
shown for Stewart M. Graves relates to employer pension costs in the United
Kingdom.
(2) Samuel N. Davis became an executive officer in April 1996.
(3) Mr. Graves became an executive officer in August 1996.
(4) Mr. Pranckus became an executive officer in October 1996.
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OPTIONS GRANTED IN THE LAST FISCAL YEAR
No options were granted to any of the executive officers named in the
SUMMARY COMPENSATION TABLE during the 1997 fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
None of the executive officers named in the SUMMARY COMPENSATION TABLE
exercised any options during the 1997 fiscal year. The following table sets
forth certain information concerning unexercised options held at fiscal year-end
by each of the named executive officers:
NUMBER OF SECURITIES UNDER- VALUE OF UNEXERCISED
LYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)(2)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Samuel B. Davis 72,777 184,636 $1,031,062 $4,087,949
Samuel N. Davis 12,208 5,000 $ 245,646 $ 56,563
Stewart M. Graves 5,000 5,000 $ 56,563 $ 56,563
C. William McBee 15,030 21,030 $ 165,217 $ 328,027
Joseph F. Pranckus 3,654 3,471 $ 37,958 $ 37,708
- ---------------
(1) All values shown are pretax.
(2) Based on the fiscal year-end closing price of $39.0625 per common share.
DIRECTOR COMPENSATION
Directors who are not employees of Liqui-Box receive a $2,500 per quarter
retainer. Directors who are employees of Liqui-Box receive no additional
compensation for serving as directors.
PEER GROUP COMPARISON
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
The following line graph compares the yearly percentage change in
Liqui-Box's cumulative total shareholder return (as measured by dividing (i) the
sum of (A) the cumulative amount of dividends for the measurement period,
assuming dividend reinvestment, and (B) the difference between Liqui-Box's
common share price at the end and the beginning of the measurement period; by
(ii) the common share price at the
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beginning of the measurement period) against the cumulative return of the
Wilshire 5000 Index and the Dow Jones: Containers/Packaging Industry Group Index
for the five year period ended December 31, 1997.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG LIQUI-BOX CORPORATION, WILSHIRE 5000
AND DOW JONES CONTAINERS/PACKAGING INDEX
MEASUREMENT PERIOD WILSHIRE
(FISCAL YEAR COVERED) LIQUI-BOX 5000 DOW JONES
1992 100 100 100
1993 135 109 95
1994 119 106 94
1995 108 141 101
1996 120 170 125
1997 151 223 139
OVERALL -- Each performance graph index begins with a base value of $100.
This base is adjusted by annual stock market price changes and cumulative annual
dividend payments over the time frame of each index (as specified by the SEC in
its disclosure rules).
LIQUI-BOX CORPORATION -- Stock prices and dividends adjusted for stock
splits.
WILSHIRE 5000 -- The broadest of all indices, tracking value of all stock
issues for which quotes are available. Changes are measured against a base value
established in December 31, 1980. This index is market-value weighted.
DOW JONES: CONTAINERS/PACKAGING INDUSTRY GROUP -- An industry index
published by Dow Jones of geographically representative companies in the
industry. The index is adjusted to account for stock splits and dividends.
BOARD OF DIRECTOR INTERLOCKS AND INSIDER PARTICIPATION
Liqui-Box does not have a compensation committee; therefore, the Board
functions as that committee. The Board includes Samuel B. Davis, Samuel N.
Davis, C. William McBee and Robert S. Hamilton, current executive officers of
Liqui-Box, each of whom participated in Board discussions concerning executive
officer compensation. Russell M. Gertmenian, who is a partner in the law firm of
Vorys, Sater, Seymour and Pease LLP, which rendered legal services to Liqui-Box
during the 1997 fiscal year and continues to render legal services to Liqui-Box
during the 1998 fiscal year, also serves on the Board of Directors.
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PROPOSAL TO AMEND SECTION 6
OF ARTICLE I OF LIQUI-BOX'S
CODE OF REGULATIONS TO REDUCE
QUORUM FOR SHAREHOLDERS' MEETINGS
Liqui-Box's Board of Directors has considered and adopted a proposal to
reduce the number of voting shares required for a quorum at meetings of
Liqui-Box's shareholders and is now presenting this proposal for consideration
and adoption by the shareholders. Section 6 of Article I of Liqui-Box's Code of
Regulations as amended (the "Regulations") currently provides that the holders
of shares entitling them to exercise a majority of the voting power of Liqui-Box
must be present, either in person or by proxy, in order to have a quorum for the
transaction of business at the meeting, except when a greater proportion is
required by law. The Board's proposal is to amend Section 6 of Article I of the
Regulations to reduce the number of shares required to be present, either in
person or by proxy, for a quorum at shareholders' meetings to 33 1/3% of the
voting power of Liqui-Box.
The Board is proposing to amend Section 6 of Article I of the Regulations
to read as follows:
"At any meeting, called for any purpose, the holders of shares entitling
them to exercise 33 1/3% of the voting power of the Corporation, present in
person or represented by proxy, shall constitute a quorum, except when a greater
proportion is required by law."
The Board of Directors has determined that the adoption of this proposal is
in the best interests of Liqui-Box and its shareholders because lowering the
number of shares required for a quorum will reduce the risk of incurring
additional expenses and delays in connection with postponing a shareholders'
meeting and the business to be acted on at such meeting for lack of a quorum. In
the past two years, Liqui-Box has achieved a quorum at its annual shareholders'
meetings by only a small margin. At the 1997 Annual Meeting, a total of 65.67%
of all of the shares entitled to vote was present. In each of the last two
years, Liqui-Box was forced to focus its efforts on the close monitoring of the
proxy returns prior to the meeting and in both years, a quorum was not achieved
until shortly before the commencement of the meeting.
The Board believes that if the voting results in connection with
shareholders' meetings continue to be low or the return of proxies continues to
be slow, Liqui-Box may be forced to postpone an annual or special meeting and
incur significant additional expenses in connection with the organization and
shareholder communications which would be necessary in order to reschedule such
a meeting. Further, the inability to produce a quorum could result in delays in
taking shareholder action with respect to important corporate matters. In some
cases, such delays could result in additional costs for Liqui-Box or have an
adverse effect on ongoing business matters.
The Board does not believe that there are any disadvantages to the proposed
lower quorum. The voting rights of Liqui-Box's shareholders will not be affected
by the proposed change. The principal advantage of lowering the number of shares
required for a quorum is that it will be easier to achieve the quorum necessary
to hold meetings at which the shareholders may be voting on significant
corporate matters. In addition, Liqui-Box will avoid the uncertainties
encountered in connection with "last-minute" quorums.
Lowering the number of shares necessary for a quorum would not result in a
change in the percentage of shares present and entitled to vote which would be
required to take shareholder action. Ohio law provides that no action required
by law, the articles of incorporation, or the regulations to be authorized or
taken by the holders of a designated proportion of the shares may be authorized
or taken by a lesser proportion.
Under the rules of The Nasdaq Stock Market, where shareholder approval of a
plan or arrangement involving Liqui-Box shares is required, the minimum vote
which will constitute shareholder approval will be a majority of the total votes
cast on the proposal in person or by proxy. A similar vote is required to
approve other corporate actions not specifically addressed in the Ohio General
Corporation Law. A lower quorum requirement would reduce the actual number of
shares required to take shareholder action with respect to these matters. Under
Liqui-Box's current requirement, at least 51% of the shares entitled to vote
must be present at a shareholders' meeting, either in person or by proxy, in
order to obtain a quorum. Assuming the minimum number of shares required for a
quorum is present and voting, a minimum of approximately 26% of
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all shares entitled to vote would be necessary in order to take shareholder
action. Under the proposed reduced requirement, at least 33 1/3% of the shares
entitled to vote must be present at a shareholders' meeting, either in person or
by proxy, in order to have a quorum. Assuming the required minimum of 33 1/3% of
the shares are present and voting, the minimum number of shares necessary to
take shareholder action would be reduced to approximately 17% of all shares
entitled to vote.
For certain extraordinary corporate transactions, such as the adoption of
an amendment to Liqui-Box's Amended Articles of Incorporation (the "Amended
Articles") or to the Regulations; a lease, sale, exchange, transfer or other
disposition of all or substantially all of Liqui-Box's assets; a merger or
consolidation; a combination or majority share acquisition; or a voluntary
dissolution; Ohio law and the Amended Articles provide that the affirmative vote
of holders of shares entitling them to exercise not less than a majority of the
voting power of Liqui-Box is necessary in order to obtain shareholder approval
of the transaction. In addition, the Amended Articles require the affirmative
vote of the holders of 80% of the voting power of Liqui-Box to approve certain
"business combinations" (e.g., merger or consolidation, sale or other
disposition of all or substantially all of Liqui-Box's assets, dissolution of
Liqui-Box, etc.) with an entity that owns or controls 15% of the voting shares
of Liqui-Box, unless the "business combination" is approved by two-thirds of the
"continuing directors". Lowering the number of voting shares required for the
quorum at shareholders' meetings would have no effect on Liqui-Box's necessity
to obtain the required shareholder approval for such extraordinary corporate
transactions.
RECOMMENDATION AND VOTE
The affirmative vote of the holders of common shares entitling them to
exercise a majority of the voting power of Liqui-Box on such proposal is
required to adopt the proposed amendment to Section 6 of Article I of the
Regulations.
THE BOARD OF DIRECTORS OF LIQUI-BOX UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR THE PROPOSAL TO APPROVE THE AMENDMENT TO SECTION 6 OF
ARTICLE I OF THE REGULATIONS TO REDUCE THE QUORUM FOR SHAREHOLDERS' MEETINGS.
UNLESS OTHERWISE DIRECTED, THE PERSONS NAMED IN THE ENCLOSED PROXY WILL VOTE THE
COMMON SHARES REPRESENTED BY ALL PROXIES RECEIVED PRIOR TO THE ANNUAL MEETING,
AND NOT PROPERLY REVOKED, IN FAVOR OF THE PROPOSAL TO APPROVE THE AMENDMENT.
NOTIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of Liqui-Box has selected Deloitte & Touche LLP to
serve as independent auditors for Liqui-Box and its subsidiaries at the close of
the current fiscal year. Deloitte & Touche LLP has served as independent
auditors for Liqui-Box since April 7, 1995. Representatives of Deloitte & Touche
LLP are expected to be present at the Annual Meeting and will be given the
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions.
ANNUAL REPORT
The 1997 Annual Report, which includes financial statements and information
concerning Liqui-Box's operations during the 1997 fiscal year, accompanies this
Proxy Statement.
LIQUI-BOX WILL PROVIDE, WITHOUT CHARGE, TO ANY PERSON SOLICITED (UPON
WRITTEN REQUEST OF SUCH PERSON), A COPY OF LIQUI-BOX'S ANNUAL REPORT ON FORM
10-K FOR THE 1997 FISCAL YEAR, INCLUDING THE FINANCIAL STATEMENTS AND THE
FINANCIAL STATEMENT SCHEDULES THEREIN, REQUIRED TO BE FILED WITH THE SEC. SUCH
REQUEST SHOULD BE ADDRESSED TO SAMUEL B. DAVIS, CHAIRMAN, LIQUI-BOX CORPORATION,
P.O. BOX 494, WORTHINGTON, OHIO 43085-0494.
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OTHER MATTERS
The management and the Board of Directors of Liqui-Box do not know of any
other matters that may come before the Annual Meeting. However, if any other
matters properly come before the Annual Meeting, it is the intention of the
persons named in the accompanying form of proxy to vote the common shares
represented by the proxy in their discretion as the Board of Directors may
recommend. The enclosed proxy is being solicited by the Board of Directors of
Liqui-Box. Liqui-Box will bear the cost of solicitation of proxies. In addition
to the use of the mails, officers, directors and regular employees of Liqui-Box,
may solicit proxies personally, by telephone or by facsimile.
SHAREHOLDER PROPOSALS
Any proposals by Liqui-Box shareholders intended to be presented at the
1999 Annual Meeting of Shareholders must be received by Liqui-Box prior to
December 8, 1998, in order to be considered for inclusion in Liqui-Box's 1999
Proxy Statement.
By Order of the Board of Directors
C. William McBee
Secretary
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LIQUI-BOX CORPORATION
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 22, 1998
The undersigned hereby constitutes and appoints Samuel B. Davis, C. William
McBee and Robert S. Hamilton and each of them, with full power of substitution
and revocation, as proxy or proxies to appear and vote the common shares of
Liqui-Box Corporation ("Liqui-Box") which the undersigned would be entitled to
vote if personally present at the Annual Meeting of Shareholders on April 22,
1998, and any adjournment thereof, for the following purposes:
1. Election of three (3) directors for terms expiring in 2000.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to contrary below)* to vote for all nominees listed below
Samuel B. Davis C. William McBee Robert S. Hamilton
* (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE LINE PROVIDED BELOW:)
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2. Amendment of Section 6 of Article I of the Code of Regulations of Liqui-Box
to reduce the number of voting shares required for a quorum at meetings of
Liqui-Box's shareholders.
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Over)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED BY THE
SHAREHOLDERS. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL
1 AND 2. IF ANY OTHER MATTERS ARE BROUGHT BEFORE THE MEETING OR IF A NOMINEE FOR
ELECTION AS A DIRECTOR NAMED IN THE PROXY STATEMENT IS UNABLE TO SERVE OR FOR
GOOD CAUSE WILL NOT SERVE, THE PROXY WILL BE VOTED IN THE DISCRETION OF THE
PROXIES ON SUCH MATTERS OR FOR SUCH SUBSTITUTE NOMINEE(S) AS THE DIRECTORS MAY
RECOMMEND.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement and hereby expressly revokes any and all proxies heretofore
given or executed by the undersigned with respect to the common shares
represented by this proxy.
Date.........................
.............................
.............................
(Please sign here exactly as
name appears herein. If
common shares are registered
in two names, both should
sign.) When signing as
attorney, executor,
administrator, trustee,
guardian or corporate
official, please give your
full title.