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 Section 240.14a-11(c) or Section 240.14a-12
CROWN CENTRAL PETROLEUM CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing 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:
[LOGO OF CROWN CENTRAL PETROLEUM CORPORATION]
CROWN CENTRAL PETROLEUM CORPORATION
ONE NORTH CHARLES STREET
BALTIMORE, MARYLAND 21201
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
December 14, 2000
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To the Stockholders of CROWN CENTRAL PETROLEUM CORPORATION:
Notice is hereby given that the Annual Meeting of Stockholders of Crown
Central Petroleum Corporation (the "Company") will be held at the Turf Valley
Conference Center, 2700 Turf Valley Road, Ellicott City, Maryland on Thursday,
the 14th day of December, 2000 at two o'clock in the afternoon, Eastern
Standard Time, for the following purposes:
1. Election of Directors. To elect a Board of eight (8) directors, each to
serve for the next succeeding year and until his or her successor is
elected and has qualified. Six (6) directors will be elected by the holders
of Class A Common Stock and two (2) directors will be elected by the
holders of Class B Common Stock.
2. Shareholder Proposal. To vote upon a shareholder proposal, if properly
presented at the meeting.
3. Other Business. To transact such other business as may properly come before
the meeting. The Board of Directors of the Company knows of no other
business that will be presented for consideration at the Annual Meeting.
Details respecting these matters are set forth in the Proxy Statement. Only
stockholders of record at the close of business on November 15, 2000 will be
entitled to notice of and to vote at the Annual Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND DATE
THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTAGE PAID,
ADDRESSED ENVELOPE AS PROMPTLY AS POSSIBLE. YOU MAY REVOKE THE PROXY BY GIVING
WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY AT THE ADDRESS ABOVE OR BY
EXECUTION AND DELIVERY OF A LATER DATED PROXY.
By order of the Board of Directors,
/s/ Dolores B. Rawlings
Dolores B. Rawlings
Vice President--Secretary
CROWN CENTRAL PETROLEUM CORPORATION
ONE NORTH CHARLES STREET
BALTIMORE, MARYLAND 21201
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PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 14, 2000
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SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
Proxies on behalf of the Board of Directors of Crown Central Petroleum
Corporation ("Crown" or the "Company") for use at the Company's Annual Meeting
of Stockholders (the "Annual Meeting") to be held at the Turf Valley
Conference Center, 2700 Turf Valley Road, Ellicott City, Maryland on Thursday,
the 14th day of December, 2000 at two o'clock in the afternoon, Eastern
Standard Time. This Proxy Statement and form of Proxy will first be mailed to
stockholders on or about November 20, 2000.
The Board of Directors of the Company has fixed the close of business on
November 15, 2000 as the record date (the "Record Date") for the determination
of Company stockholders entitled to notice of and to vote at the Annual
Meeting. Accordingly, only holders of record of Class A Common Stock, par
value $5.00 per share ("Class A Stock"), and holders of record of Class B
Common Stock, par value $5.00 per share ("Class B Stock"), at the close of
business on the Record Date ("Record Holders") are entitled to notice of the
Annual Meeting and to attend and vote at the Annual Meeting. The holder of a
valid proxy will be permitted to attend the Annual Meeting and to vote the
stock of a Record Holder. To be valid, a proxy must either be in writing and
be signed by the Record Holder or be authorized by an electronic transmission
from the Record Holder. In addition, to be valid, a proxy cannot have been
revoked or superseded by a valid proxy with a later date.
The Proxy Card provided with this Proxy Statement is for completion both by
holders of Class A Stock and by holders of Class B Stock. If a stockholder
owns shares of Class A Stock, the stockholder should vote on the election of
the directors to be elected by the holders of Class A Stock. If a stockholder
owns shares of Class B Stock, the stockholder should vote on the election of
the directors to be elected by the holders of Class B Stock. If a stockholder
owns shares of both Class A Stock and Class B Stock, the stockholder should
vote on the election of all directors. All properly executed proxies delivered
pursuant to this solicitation will be voted at the Annual Meeting, or any
adjournments thereof, in accordance with instructions contained therein, if
any. IF NO INSTRUCTIONS ARE INDICATED, SHARES OF CLASS A STOCK AND CLASS B
STOCK FOR WHICH EXECUTED PROXIES ARE RECEIVED WILL BE VOTED:
. FOR THE ELECTION OF THE NOMINEES NAMED IN THE PROXY AS DIRECTORS OF THE
COMPANY,
. AGAINST THE SHAREHOLDER PROPOSAL, AND
. IN THE DISCRETION OF THE PROXY HOLDER AS TO ANY OTHER MATTER THAT MAY
PROPERLY COME BEFORE THE MEETING.
The execution and return of the accompanying Proxy Card will not in any way
affect a stockholder's right to attend the Annual Meeting and, if such
stockholder's proxy is revoked, to vote in person. The stockholder giving the
proxy has the power to revoke it at any time before it is exercised by filing
with the Secretary of the Company a written revocation or a duly executed
proxy bearing a later date. Presence at the Annual Meeting will not, of
itself, revoke a proxy.
The expense of the solicitation of proxies by the Company for the Annual
Meeting, including the cost of preparing and mailing this Proxy Statement,
will be borne by the Company. Proxies may be solicited by use of the mails, by
personal interview or by telephone or other electronic means and may be
solicited, to a limited extent, by officers and directors and by other
employees of the Company. Brokers, nominees, fiduciaries and other custodians
will be requested to forward soliciting material to the beneficial owners of
shares and to request authority for the execution of proxies and will be
reimbursed by the Company for their expenses in forwarding such material.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, DATE, EXECUTE AND RETURN THE PROXY
CARD SENT TO THEM WITH THIS PROXY STATEMENT.
1
MATTERS TO BE VOTED ON AT THE ANNUAL MEETING
Election of Directors. Eight (8) directors are to be elected, each to serve
until the next annual meeting of stockholders and until his or her successor
is duly elected and has qualified. Six (6) directors will be elected by the
holders of Class A Stock, and two (2) directors (who may not be employees of
the Company or any subsidiary of the Company) will be elected by the holders
of Class B Stock. See "Voting at the Annual Meeting--Voting Rights of Class A
and Class B Stock" for a description of the voting rights of Class A Stock and
of Class B Stock in the election of directors. A plurality of all votes cast
by the applicable class will be sufficient to elect each such director. For
purposes of the election of directors, abstentions and broker non-votes will
not be counted as votes cast and will have no effect on the result of the
vote.
Shareholder Proposal. If properly presented, a shareholder proposal will be
voted on at the Annual Meeting. Two-thirds of all of the votes cast on the
proposal will be necessary to approve the shareholder proposal. See "Voting at
the Annual Meeting--Voting Rights of Class A and Class B Stock" for a
description of the voting rights of Class A Stock and Class B Stock as to the
approval of the shareholder proposal. For purposes of the vote on the
shareholder proposal, abstentions and broker non-votes will not be counted as
votes cast and will have no effect on the result of the vote.
VOTING AT THE ANNUAL MEETING
Outstanding Shares; Quorum. At the close of business on the Record Date,
there were 4,817,394 shares of Class A Stock outstanding and 5,248,912 shares
of Class B Stock outstanding. The presence, in person or by a properly
executed and delivered proxy, of the holders of a majority of the votes of
Class A Stock and Class B Stock entitled to vote at the Annual Meeting, taken
together, is necessary to constitute a quorum at the Annual Meeting. For
information with respect to stockholders who own more than 5% of the
outstanding Class A Stock or Class B Stock, see "Security Ownership by Certain
Beneficial Owners and Management."
Voting Rights of Class A Stock and Class B Stock. The holders of record of
Class A Stock are entitled, voting separately as a class, to elect and to
remove all directors other than directors to be elected by any other class or
classes or series of stock. The holders of record of Class B Stock may elect
and remove two (2) directors, who may not be employees of the Company or of
any subsidiary of the Company. There are no classes of stock other than Class
A Stock and Class B Stock currently outstanding.
Except with respect to the election of directors as described above, in all
proceedings in which action of the stockholders of the Company is to be taken,
each share of Class A Stock shall entitle the holder of record thereof to one
vote, and each share of Class B Stock shall entitle the holder of record
thereof to one-tenth (1/10) vote. Except with respect to the election of
directors, holders of Class A Stock vote together with holders of Class B
Stock as a single class.
The Company Savings Plans. A unit of T. Rowe Price serves as the trustee
for the Company's Employees Savings Plan and the Employees Supplemental
Savings Plan (collectively the "Savings Plans"). Each plan participant with an
investment in Class A Stock or Class B Stock will be given a form of proxy by
the trustee to be used to instruct the trustee how to vote the Company stock
held in the Savings Plans for the benefit of the participant. Shares for which
no instructions are timely given will be voted as provided in the Savings
Plans by the trustee in the same proportion as the votes cast with respect to
those shares for which the trustee receives proper instructions. There is no
provision in the Savings Plans to permit the trustee to grant a proxy to a
plan participant, and as a result, all shares of Class A Stock and Class B
Stock held in the Savings Plan will be voted by the trustee in accordance with
the procedures described in this paragraph.
ELECTION OF DIRECTORS
At the Annual Meeting, eight (8) directors will be elected, each to serve
until the next annual meeting of the stockholders and until his or her
successor is duly elected and has qualified. Six (6) directors will be elected
by the holders of Class A Stock, and two (2) directors (who may not be
employees of the Company or any subsidiary of the Company) will be elected by
the holders of Class B Stock.
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INFORMATION CONCERNING THE NOMINEES
The Nominating Committee considered, approved and recommended to the Board
nominees for election by the holders of Class A Stock and by the holders of
Class B Stock. The Board of Directors approved the list of nominees selected
by the Nominating Committee and directed that the nominees be presented to the
stockholders for election at the Annual Meeting.
The names and ages (as of September 30, 2000) of those persons nominated by
the Company to be directors of the Company, as well as their principal
occupations for the last five years, directorships held by them in certain
other publicly held companies, the year in which they became a director of the
Company (if they are presently a director of the Company) and certain other
information with respect to such nominees are set forth below. The first six
(6) nominees listed are presented for election by the holders of Class A
Stock, and the last two (2) nominees listed are presented for election by the
holders of Class B Stock.
There are no family relationships among any of the current directors. Frank
B. Rosenberg, Senior Vice President--Marketing and a nominee for election as a
director of the Company, is the son of Henry A. Rosenberg, Jr., Chairman of
the Board, President and Chief Executive Officer. Stanley A. Hoffberger, a
nominee for election as a director of the Company, is married to Judith R.
Hoffberger, Henry A. Rosenberg, Jr.'s sister, and is the brother-in-law of
Henry A. Rosenberg, Jr., and the uncle of Frank B. Rosenberg. There are no
other family relationships among the directors, nominees and the executive
officers, and there is no arrangement or understanding between any directors
and any other person pursuant to which the director was elected.
Proxies received will be voted in the manner directed in the proxy or, if
no direction is made, for the election of the nominees named below. Although
it is not expected that such a contingency will occur, if any nominee declines
or is unable to serve, the proxies will be voted for a substitute nominee and,
unless otherwise directed, for the other nominees named below.
Name and Age on Principal Occupation for Last 5 Years; Director
September 30, 2000 Directorships in Public Corporations Since
------------------ -------------------------------------- --------
Nominees for election by the holders of Class A Stock:
Michael F. Dacey (56)... Private investor. 1991
Stanley A. Hoffberger N/A
(71)................... Private real estate developer.
Barry L. Miller (52).... Senior Vice President, Treasurer and Chief Financial N/A
Officer of Rosemore, Inc. since January 1999; Vice
President--Taxation of American Trading and Production
Corporation from May 1995 to December 1998; Assistant
Treasurer and Director of Taxation of American Trading
and Production Corporation from February 1987 to April
1995.
Frank B. Rosenberg Senior Vice President--Marketing of the Company since N/A
(42)................... April 1996; Vice President--Marketing of the Company
from January 1993 to March 1996.
Henry A. Rosenberg, Jr. Chairman of the Board and Chief Executive Officer of 1955
(70)................... the Company since May 1975 and President since March
1996.
John E. Wheeler, Jr. Executive Vice President--Chief Financial Officer of N/A
(47)................... the Company since April 1998; Executive Vice
President--Chief Financial Officer and Treasurer of the
Company from February 1998 to April 1998; Senior Vice
President--Finance and Treasurer of the Company from
October 1996 to January 1998; Senior Vice President--
Finance of the Company from April 1996 to September
1996; Senior Vice President--Treasurer and Controller
of the Company from June 1994 to March 1996.
Nominees for election by the holders of Class B Stock:
Jack Africk (72)........ Retired. Formerly, Vice Chairman, UST, Inc. Also a 1991
director of Tanger Factory Outlet Centers, Inc.
The Reverend Harold 1995
Ridley, S.J. (61)...... President, Loyola College in Maryland since July 1994.
The Board of Directors recommends that the stockholders vote FOR the nominees
presented above.
3
POSSIBLE NOMINATION OF DIRECTOR BY GOLNOY BARGE COMPANY, INC.
In a letter dated January 27, 2000, Golnoy Barge Company, Inc., a Missouri
corporation ("Golnoy"), provided notice that Golnoy would nominate Mr. Paul A.
Novelly for election to the Board of Directors of the Company. According to
the Schedule 13D filed with the Securities and Exchange Commission on January
14, 1983 and Amendment No.11 dated November 18, 1999, Mr. Novelly, along with
Golnoy, and their affiliates, own or control 14.70% of the issued and
outstanding Class A Stock and 3.48% of Class B Stock.
PRESENT BOARD OF DIRECTORS
In addition to Messrs. Dacey and Henry A. Rosenberg, Jr. who have been
nominated to continue to serve as directors elected by the holders of Class A
Stock and Mr. Africk (currently serving as a director elected by the holders
of Class A Stock) and Father Ridley (currently serving as a director elected
by the holders of Class B Stock), who have been nominated to serve as
directors elected by the holders of Class B Stock, the following individuals
are currently serving on the Board of Directors:
Name and Age on Principal Occupation for Last 5 Years; Director
September 30, 2000 Directorships in Public Corporations Since
------------------ -------------------------------------- --------
George L. Bunting, Jr. President and Chief Executive Officer, Bunting 1992
(59)................... Management Group since July 1991. Also a director of
Baltimore Equitable Society, Guilford Pharmaceuticals
Inc. and Mercantile Bankshares Corporation.
Patricia A. Goldman Retired. Formerly, Senior Vice President--Corporation 1989
(58)................... Communications, USAir, Inc. Also a director of Erie
Family Life Insurance Company and Erie Indemnity Compa-
ny.
William L. Jews (48).... President and Chief Executive Officer, CareFirst, Inc. 1992
since January 1998; President and Chief Executive
Officer, Blue Cross and Blue Shield of Maryland from
April 1993 through December 1997. Also a director of
Municipal Mortgage and Equity, L.L.C. and the Ryland
Group, Inc.
Thomas M. Gibbons (74).. Retired. Formerly, Chairman of the Board, Chesapeake 1988
and Potomac Telephone Companies, part of Verizon
Communications Inc.
Attendance. The Board of Directors held twelve meetings during 1999. All of
the directors attended in person or telephonically at least 75% of the
aggregate of the total number of meetings of the Board of Directors and the
committees on which he or she served during the year.
Compensation of Directors. Each director who is not an employee of the
Company or a subsidiary of the Company is paid $12,000 per year for serving as
a director and a meeting fee of $750, plus travel expenses, for attendance at
each meeting. Each non-employee director who is a member of any standing
committee of the Board of Directors other than the Executive Committee is paid
$3,000 per year for serving on each such committee. The chairman of any
committee other than the Executive Committee is paid a fee of $1,000 for
serving in that capacity. Directors who are employees receive no separate
compensation for serving on the Board, on any Board committee or as chairman
of any committee. See "Interest of Management and others in Transactions with
the Company and its Subsidiaries" for a description of Mr. Africk's prior
consulting agreement with the Company.
Under a Deferred Compensation Plan for non-employee directors, a director
may defer all or a portion of his or her compensation for payment after his or
her termination as a director. The plan provides for the accrual of interest
quarterly on the funds at the 90-day Treasury Bill rate in effect at the
beginning of the quarter. The director may elect to receive the deferred
compensation in one lump sum payment or in a number of annual installments
(not-exceeding ten).
BOARD COMMITTEES
Executive Committee. The Executive Committee has the authority to act on
behalf of the Board of Directors between meetings of the Board. Mr. Rosenberg
serves as Chairman and Messrs. Africk and Gibbons are members of the
Committee. The Executive Committee did not meet in 1999.
4
Audit Committee. Mr. Bunting serves as Chairman and Mr. Dacey, and Father
Ridley currently serve as members of the Audit Committee. The Audit Committee
met five times during 1999. Prior to the Annual Meeting of Stockholders in
1999, Mr. Africk served as Chairman and Messrs. Bunting and Dacey were members
of this Committee. The functions that this Committee performs under its
charter include: (i) recommending the selection of independent public
accountants and reviewing with such accountants the audit scope and the
results of the audit engagement, (ii) reviewing matters pertaining to internal
audit and other internal control procedures, (iii) reviewing the audited and
the unaudited financial statements to be submitted to the Board for approval,
(iv) reviewing substantial claims by or against the Company, (v) reviewing the
Company's financing plan and its compliance with debt covenants, (vi)
reviewing current accounting-related matters affecting the Company, and (vii)
reviewing the effect of the scope of non-audit services rendered by the
independent public accountants on their independence.
Executive Compensation and Bonus Committee. Mr. Gibbons serves as Chairman
and Ms. Goldman, Mr. Africk and Mr. Jews currently serve as members of the
Executive Compensation and Bonus Committee (the "Compensation Committee"). The
Compensation Committee met three times during 1999. Prior to the Annual
Meeting of Stockholders in 1999, Father Ridley served as a member of the
Compensation Committee. The Compensation Committee has the principal
responsibility for the administration of the Company's annual executive
incentive plan, which is known as the Executive Performance Incentive Plan,
the 1994 Long-Term Incentive Plan (the "Long-Term Plan") and the 1999 Long-
Term Incentive Plan (the "1999 Long-Term Plan"). The Compensation Committee
also has the authority and duty to submit recommendations to the Board with
respect to the salaries of the Chairman of the Board and President and with
respect to plans for the compensation of executives of the Company, including
amendments to any compensation plans.
Nominating Committee. Mr. Jews serves as Chairman and Messrs. Africk,
Bunting and Rosenberg are members of the Nominating Committee. The Nominating
Committee did not meet in 1999. The Nominating Committee has the principal
responsibility of assisting the Board choose the persons that will be
nominated by the Company for election to the Board of Directors of the Company
and of recommending to the Board matters related to the line of succession
within senior management.
Committee of Independent Directors. Mr. Dacey serves as Chairman and Mr.
Africk, Mr. Bunting, Mr. Gibbons, Ms. Goldman, Mr. Jews and Father Ridley are
members of the Committee of Independent Directors (the "Independent
Committee"). The Chairman and the members receive no compensation for their
service on the Independent Committee. The Independent Committee was
established at a Board of Directors meeting on January 27, 2000 and therefore
did not meet during the year ending December 31, 1999. The Independent
Committee has the authority to review and evaluate strategic alternatives for
the Company, to enter into negotiations with respect to the terms of a
strategic transaction, including negotiating on behalf of the Company a
definitive transaction agreement, and to make a recommendation to the Company
Board of Directors as to the course of action, if any, the Company should
pursue. At its meeting on January 27, 2000 the Independent Committee retained
Skadden Arps, Slate, Meagher & Flom LLP to act as special legal counsel to the
Independent Committee.
REPORT OF EXECUTIVE COMPENSATION AND BONUS COMMITTEE
On an annual basis, the Company engages an internationally known management
consulting firm to assist it in performing a review of its executive
compensation practices. The Company's compensation philosophy, objectives, and
total direct compensation packages which consist of base salary and annual and
long-term incentives, are reviewed. The results of this study are carefully
considered by the Compensation Committee in connection with its approval of
the compensation to be paid to the Company's executive officers.
The following objectives and guiding principles have been identified in
establishing the Company's executive compensation program: (1) provide a
strong link between management and stockholder interests by rewarding
executives for the creation of stockholder value, (2) attract and retain key
executive talent by providing competitive total reward opportunities based on
the Company's performance, (3) provide an appropriate balance between short
and long-term reward opportunities, and (4) ensure there is a clear line-of-
sight between reward opportunities and performance controlled or directly
influenced by the executive.
Specifically, base salaries are targeted to the median or fiftieth
percentile of overall competitive practices. Recommendations for base salary
adjustments for officers are determined by considering the executive's
position, experience, knowledge, skills, and job performance and the strategic
importance of the individual and the position, as reflected in the
5
Chairman's recommendations to the Compensation Committee. Annual incentive and
long-term incentive awards are each targeted to generate total cash
compensation between the fiftieth and seventy-fifth percentile of competitive
practices and are based on the Company's performance.
The Company's competitive position is determined by conducting an annual
survey of the practices of other companies, both national and regional,
including companies of similar size and focus within the petroleum industry.
Eight of the nine companies most recently selected as industry comparables are
included in the twenty-six companies in the Value Line Integrated Petroleum
Index shown on the Performance Graph in this Proxy Statement.
The Company's most recent survey analysis of compensation practices shows
that, except for the Chairman of the Board, officers' base salaries, total
cash compensation (base salary and annual incentives) and total direct
compensation (total cash compensation plus the estimated annualized present
value of long-term incentive awards) are below the median. The Committee
believes that Mr. Rosenberg is in the comparable median salary range for chief
executive officers. The Compensation Committee is, to the extent practicable,
attempting to insure that increases in base salaries and total cash
compensation for executive officers are targeted to median levels; however,
except for a $15,000 increase in Mr. Wheeler's base salary in April 1999,
there have been no increases in 1999 or to date in the year 2000 in the base
salaries previously established for the executive officers including the
Chairman of the Board.
In 1994, the Company adopted, with stockholder approval, the Long-Term
Plan. In 1996, it adopted the Performance Incentive Plan; and in 1999, the
1999 Long-Term Plan which is a stock performance plan with cash payments based
on stock appreciation. These Plans are intended to provide additional
incentives to officers and senior managers for improvements in Company-wide
performance.
The 1999 Performance Incentive Plan is a cash plan offered to officers,
senior management and other salaried employees. Minimum, target and maximum
awards are established by the Compensation Committee for the Plan year.
Executive officers can earn a target award of 35-65% of base salary based upon
the Company's performance, as measured by EBITDAAL, which is defined as
earnings before interest, taxes, depreciation, amortization, abandonments and
LIFO accounting provisions. EBITDAAL must meet the annual minimum threshold
approved by the Compensation Committee for any awards to be earned in a Plan
year. The Company's 1999 actual operating performance did not meet the minimum
threshold and no incentive awards were earned under the 1999 Performance
Incentive Plan. The 2000 Executive Performance Incentive Plan also establishes
target awards of 35-65% of base salary. Awards will be based on a combination
of EBITDAAL and performance goals established for each operating unit and
corporate department and require the Company to achieve a positive net income
for the year.
The Long-Term Plan is designed to provide incentives to officers and key
employees who have significant responsibilities for the successful
implementation of the Company's long-term business strategies. The Long-Term
Plan provides for awards of non-qualified stock options ("Options") for the
purchase of the Company's Class B Stock and for Performance Vested Restricted
Stock ("PVR Stock"), which is also awarded in shares of Class B Stock. Awards
are made by the Compensation Committee, and no participant may receive Options
for more than 150,000 shares of stock or more than 50,000 shares of PVR Stock
in any one year.
PVR Stock is issued to a participant subject to the attainment of
performance goals and the satisfaction of various restrictions established by
the Compensation Committee. The performance goals are currently based upon the
Company's operating performance as measured by EBITDAAL. In addition, three-
year Net Income on a FIFO Basis must meet the minimum threshold approved by
the Compensation Committee for any awards of PVR Stock to vest at the end of
the performance cycle. In 1996, the Compensation Committee amended the Plan to
permit PVR Stock that has not vested at the end of the performance cycle to
vest at the end of five years rather than being forfeited by the participant.
This feature is intended to help the Company retain the services of
participants in the Long-Term Plan and to simplify the accounting treatment of
PVR Stock.
The 1999 Long-Term Plan is also designed to provide incentives to officers
and key employees and to encourage the retention of these executives. The 1999
Long-Term Plan is a stock performance plan that provides for cash payments
based upon stock appreciation during a three-year performance period.
Participants were granted a number of Units that were based upon competitive
long-term incentive awards available to executives in similar positions. A
$14.91 Unit Strike Price was established for the 1999 grants under the Plan.
The Unit Strike Price was based on the average stock price of Class B Stock
during the previous three years, and it was significantly higher than the
current market price of Class B Stock. Cash awards will be calculated by
multiplying the number of Units granted to the Participant times the
appreciation in the stock price at
6
the end of a three-year performance period over the Unit Strike Price of
$14.91. Participants in this Plan are, therefore, rewarded for results that
directly contribute to increases in stockholder value over the performance
period. There have been no grants of Units under this plan in the year 2000.
The Company's Supplemental Retirement Income Plan for Senior Executives
(the "SRI Plan") and the Executive Severance Plan (the "Severance Plan") are
designed to provide competitive executive benefits that are consistent with
current practices. All officers at the Vice President level and above are
participants in the SRI Plan, and benefits vest after five years of service.
All current officers at the Vice President level and above have been
designated as participants in the Severance Plan; however, Mr. Henry A.
Rosenberg, Jr. voluntarily withdrew from the Severance Plan in 1998. Under the
Severance Plan, as amended in 1998, if a participant is terminated without
good reason within two years of a change of control, as defined in the
Severance Plan, the participant receives credit for enhanced age and service
under the SRI Plan and the immediate payment of SRI Plan benefits. In
addition, the participant receives a payment of three times the executive's
annual salary, full payment under the annual Performance Incentive Plan, an
additional contribution equal to a three-year Company match for participants
in the Savings Plans, the continuation of certain welfare benefits for a
three-year period, a payment equal to the excise tax on the basic severance
benefits and certain other miscellaneous benefits. The Committee views the
Severance Plan as a typical executive benefit that will help insure stability
and continuity of employment of key management personnel at the time of a
proposed or threatened change of control, if any.
It is not currently anticipated that any officer could earn annual
compensation in excess of one million dollars under the existing compensation
plans. Stockholder approval of the Executive Performance Incentive Plan would
be required for compensation under this plan to qualify for deductibility
under Section 162(m) of the Internal Revenue Code. Some additional limitations
on the PVR Stock portion (but not the portion relating to Options) of the
Long-Term Plan might also be required to qualify that compensation for
deductibility. The Compensation Committee will consider recommending such
steps as may be required to qualify either annual or long-term incentive
compensation for deductibility if that appears appropriate at some time in the
future.
This report has been submitted by the Compensation Committee: Thomas M.
Gibbons, Chairman; Jack Africk; Patricia A. Goldman; and William L. Jews.
INTEREST OF MANAGEMENT AND OTHERS IN TRANSACTIONS WITH THE COMPANY AND ITS
SUBSIDIARIES
Consulting Agreement. From November 1, 1993 until April 28, 2000, Mr.
Africk served as a general business adviser and consultant to the Company for
which he was paid a consultancy fee of $3,000 per month. His work in this
capacity was in addition to his service as a director, committee chairman and
member of various board committees.
Rosemore. Rosemore, Inc. ("Rosemore"), through its wholly-owned subsidiary,
Rosemore Holdings, Inc., holds 2,366,526 shares of Class A Stock and 591,629
shares of Class B Stock. All of the stock of Rosemore is held by Trusts for
the benefit of Henry A. Rosenberg, Jr., his sisters, Ruth R. Marder and Judith
R. Hoffberger, and for members of their respective immediate families. Mrs.
Hoffberger is married to Stanley A. Hoffberger, who has been nominated to
become a member of the Board of Directors. Rosemore, Rosemore Holdings, Inc.
and various individuals who are beneficial owners of Rosemore stock are a
"group" as that term is used in Section 13 (d)(3) of the Securities Exchange
Act of 1934 (the "Exchange Act"), and the group has filed reports on Schedule
13D to report its holdings of Class A and Class B Stock.
Rosemore participates in the Company's working capital and letter of credit
facility established pursuant to a Loan and Security Agreement by and among
Congress Financial Corporation, as Administrative Agent for First Union
National Bank and Congress Financial Corporation, as Lenders, and the Company
and various Company subsidiaries, as Borrowers. Rosemore's participation
resulted in an increase of $50,000,000 in the credit limit under this
facility. Rosemore is compensated at competitive rates for its participation
in the facility as it relates to the availability of certain letters of credit
issued for the account of the Company. Payments for 1999 comprised of
commitment and utilization fees totaled approximately $147,000. Of this
amount, in accordance with the terms of the working capital facility, Rosemore
paid approximately $49,000 to First Union.
During the first quarter of 2000 Rosemore agreed to guarantee crude oil
purchases by Crown, subject to certain limits. The maximum amount that
Rosemore guaranteed at any one time was $61 million. Rosemore has reduced the
size of the facility to a maximum of $40 million, and has advised Crown that
it is agreeable to the continuation of this facility through the end of
November, 2000. As of November 15, 2000, there was one $17 million crude oil
purchase guarantee by
7
Rosemore outstanding under this facility. The Company pays Rosemore at
competitive rates for these outstanding performance guarantees. Through
September 30, 2000, the Company had incurred $246,700 in guarantee fees
payable to Rosemore. Rosemore also made available to the Company during the
year 2000 up to $16.2 million in unsecured cash borrowings. The Company
borrowed up to $8 million under this facility, and the facility has since
expired. The expiration of Rosemore's agreements to provide performance
guarantees and unsecured cash borrowings would likely result in the Company's
inability to maintain current production levels assuming oil prices remain at
or exceed current levels.
The Company terminated its aircraft lease with General Electric Credit
Corporation in early 1999. Rosemore subsequently entered into an aircraft
lease with General Electric Credit Corporation. The Company then assigned its
lease with the Maryland Aviation Administration of hanger space at Martin
State Airport to Rosemore, and Rosemore has purchased from the Company for
$345,000 the leasehold improvements, furniture and various supplies and spare
parts formerly used by the Company in connection with its operation of the
aircraft and the related charter activities.
During 1999, Rosemore and its subsidiaries purchased certain entertainment
and oil product related assets of the Company for approximately $208,000.
Rosemore entered into an Agreement and Plan of Merger dated April 7, 2000
(the "Merger Agreement"), with the Company. The Merger Agreement proposed that
the Company be merged into Rosemore Holdings. Under the Merger Agreement, the
public stockholders of the Company would have received $9.50 per share in
exchange for their Company stock if the Merger had been approved by the
Company's stockholders. The Merger Agreement was submitted to the Company's
stockholders for approval at a special meeting of stockholders on August 24,
2000. The Merger Agreement did not receive the requisite two-thirds approval
from the Company stockholders and following the meeting the Merger Agreement
was terminated by the Company and Rosemore.
ADDITIONAL INFORMATION WITH RESPECT TO COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
None.
8
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Owners of More than Five Percent. The following table sets forth the class
of shares of Company common stock, and the amount and percentage of that
class, owned by all persons known by the Company to be the beneficial owners
of more than 5% of the shares of any class of the Company's common stock on
the Record Date:
Title
Name and Address of of Percent
Beneficial Owner Class Amount of Class
- ------------------- ------- --------- --------
Rosemore "Group" (a)................................. Class A 2,401,232 49.85
One North Charles Street Class B 954,745 17.32
Suite 2300
Baltimore, MD 21201
Novelly "Group" (b).................................. Class A 708,375 14.70
8182 Maryland Avenue Class B 182,800 3.48
St. Louis, MO 63105
Dimensional Fund Advisors Inc. (c)................... Class A 288,850 6.00
1299 Ocean Avenue, 11th Floor Class B 291,100 5.55
Santa Monica, California 90401
Heartland Advisors, Inc. (c)......................... Class B 900,000 17.15
789 North Water Street
Milwaukee, WI 53202
Franklin Resources, Inc. (c)......................... Class B 309,600 5.90
Mariners Island Boulevard
P.O. Box 7777
San Mateo, CA 94403
- -------
(a) Rosemore Holdings, Inc., a wholly owned subsidiary of Rosemore, owns
directly over 49% of Class A Stock and over 11% of Class B Stock. Trusts
for the benefit of Mr. Henry A. Rosenberg, Jr., his sisters, Mrs. Ruth R.
Marder and Mrs. Judith R. Hoffberger, and for the benefit of members of
their respective immediate families hold all of the stock of Rosemore.
Rosemore, Rosemore Holdings, Inc., and various individuals who are
beneficial owners of Rosemore stock are a "group" as that term is used in
Section 13(d)(3) of the Exchange Act; accordingly, the Rosemore group has
filed reports on Schedule 13D with the SEC to report its holdings of Class
A and Class B Stock. Rosemore Holdings, Inc. is the holder of 2,366,526
shares of Class A Stock and 591,629 shares of Class B Stock, and other
members of the Rosemore group are the holders of 34,706 shares of Class A
Stock and 363,116 shares of Class B Stock. Class B Stock shown in the
table includes 82,270 shares of stock granted to members of the Rosemore
group as performance vested restricted stock under the Company's 1994
Long- Term Incentive Plan and 263,039 shares that members of the Rosemore
group have a right to acquire pursuant to options granted under the 1994
Long-Term Incentive Plan that vested on or before the Record Date. No
additional options will vest for members of the Rosemore group within 60
days of the Record Date. The percentage calculation is based on the shares
outstanding plus the shares that may be acquired pursuant to vested
options granted to members of the Rosemore group.
(b) This information was obtained from a report on Schedule 13D dated January
14, 1983 and Amendment No. 11 dated November 8, 1999, which were filed
with the Commission. The Novelly Exempt Trust, Golnoy Barge Company, Inc.
and others acknowledge that they are a "group" as that term is used in
Section 13(d)(3) of the Exchange Act.
(c) Information concerning the stock holdings of Dimensional Fund Advisors
Inc., Heartland Advisors, Inc. and Franklin Resources, Inc. was obtained
from reports on Schedule 13G and amendments to those schedules that have
been filed with the Commission. Each of these three entities reports that
it is registered as an investment adviser.
9
Directors, Nominees and Officers. The following table sets forth the number
of shares of each class of Company stock and the percentage of each class
owned by each of the directors, by each nominee, by certain executive officers
and by all directors, nominees and officers as a group on the Record Date:
Shares of Securities
Beneficially Owned on the
Record Date (a)
-------------------------------------
Class A Stock Class B Stock
--------------- ------------------
Name Amount % Amount %
- ---- --------- ----- --------- -----
Jack Africk........................... -- -- 500 (b)
George L. Bunting, Jr. ............... -- -- 1,000 (b)
Michael F. Dacey...................... 1,000 (b) -- --
Thomas M. Gibbons..................... 200 (b) -- --
Patricia A. Goldman................... 100 (b) -- --
Stanley A. Hoffberger................. -- -- -- --
William L. Jews....................... -- -- 200 (b)
Barry L. Miller....................... -- -- -- --
Thomas L. Owsley...................... 100 (b) 52,471(c) (b)
Rev. Harold Ridley, S.J. ............. -- -- 100 (b)
Frank B. Rosenberg (d)................ 1,863 (b) 52,700(c) 1.00
Henry A. Rosenberg, Jr. (e)........... 2,399,369 49.81 902,049 16.48
Randall M. Trembly.................... 11,774 (b) 104,518(c) 1.97
John E. Wheeler, Jr. ................. 3,264 (b) 72,876(c) 1.37
All directors, nominees and officers
as a group including those listed
above (21 individuals)............... 2,423,896 50.32 1,371,667(f) 23.57
- -------
(a) Each director holds sole voting and investment power over the shares
listed except for Mr. Dacey, who holds his stock jointly with his wife;
however, in one or more cases the stock may be registered in the name of a
trust or retirement fund for the benefit of the director. In the case of
officers of Crown, the table includes interests in shares held by the
trustee under the Savings Plans, Class B Stock granted as performance
vested restricted stock under the 1994 Long-Term Incentive Plan (but not
shares of performance vested restricted stock granted but subsequently
forfeited) and shares subject to options. See footnote (c).
(b) Represents less than one percent of the shares outstanding.
(c) Includes vested options as follows: Mr. Owsley, 41,686 shares; Mr. Frank
B. Rosenberg, 39,613 shares; Mr. Trembly, 67,003 shares and Mr. Wheeler,
52,813 shares. The percentage calculations are based on the shares
outstanding plus the shares that may be acquired pursuant to the vested
options granted to the executive.
(d) Mr. Frank B. Rosenberg disclaims membership in any filing "group" as that
term is used in Section 13(d)(3) of the Exchange Act.
(e) Mr. Henry A. Rosenberg, Jr. is chairman of the board of Rosemore. The
shares listed are the shares owned by the Rosemore group other than shares
reported separately in the table as owned by Mr. Frank B. Rosenberg. Of
the shares listed above, Mr. Henry A. Rosenberg, Jr. holds 32,525 shares
of Class A Stock and 305,854 shares (including PVR Stock) of Class B Stock
individually and in Crown's Savings Plans. The Class B Stock shown on the
table also includes 223,426 shares that may be acquired by Mr. Henry A.
Rosenberg, Jr. upon the exercise of vested options granted under the 1994
Long-Term Incentive Plan. The percentage calculation is based on the
shares outstanding plus the shares that may be acquired pursuant to vested
options granted to Mr. Rosenberg.
(f) Includes 570,865 shares that may be acquired pursuant to vested options
granted under the 1994 Long-Term Incentive Plan or under the 1995
Management Stock Option Plan. The percentage calculation is based on the
shares outstanding plus the shares that may be acquired pursuant to vested
options. No additional options held by the executive officers will vest
within 60 days of the Record Date.
Compliance with Section 16(a). Based upon a review of the Forms 3, 4 and 5
and any amendments thereto filed with the Commission and furnished to the
Company as well as letters provided to the Company by various reporting
persons, the Company is of the opinion that no reporting person has failed to
file on a timely basis the reports required by Section 16(a) of the Exchange
Act during the Company's most recent fiscal year.
10
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation awarded to, earned by or
paid to the Chief Executive Officer and
the other four most highly compensated executive officers for all services
rendered in all capacities to the Company and its subsidiaries during the last
three fiscal years. The positions shown on the table are those held by the
officers on December 31, 1999:
Long-Term
Annual Compensation Compensation Awards
--------------------------------------- ---------------------------
Securities
Underlying
Name and Other Annual Options/ All Other
Principal Position Year Salary Bonus Compensation (a) SARs (b) Compensation (c)
------------------ ---- -------- -------- ---------------- ---------- ----------------
Henry A. Rosenberg,
Jr..................... 1999 $600,000 $21,093 148,000 $23,975
Chairman of the Board, 1998 600,000 21,659 43,900 19,847
President and Chief 1997 591,668 $321,390 20,519 50,000 20,799
Executive Officer
Randall M. Trembly...... 1999 $260,004 $18,600 55,000 $12,130
Executive Vice 1998 255,008 18,600 16,400 12,837
President
1997 236,680 $163,391 17,250 17,600 12,170
John E. Wheeler, Jr. ... 1999 $255,004 $20,817 55,000 $12,407
Executive Vice 1998 241,671 21,761 15,500 10,607
President--
Chief Financial Officer 1997 201,672 $ 79,868 18,913 7,800 9,974
Thomas L. Owsley........ 1999 $220,008 $18,798 25,000 $11,905
Senior Vice President-- 1998 210,008 18,891 7,300 11,641
Legal 1997 188,008 $ 55,514 17,112 5,800 10,455
Frank B. Rosenberg...... 1999 $195,000 $18,537 23,000 $10,007
Senior Vice President-- 1998 185,000 19,880 6,500 9,507
Marketing 1997 160,000 $ 56,983 18,363 6,300 8,228
- -------
(a) These amounts include automobile allowances, gasoline allowances, and the
tax gross-ups applicable to the gasoline allowances. Perquisites below the
required reporting levels are not included in this table.
(b) The 1999 grants are Appreciation Units, and the 1998 and the 1997 grants
are stock options for the purchase of shares of Class B Stock.
(c) These amounts include imputed income related to excess life insurance,
payments for executive medical insurance and the Company's matching
payments under the Savings Plans. In 1999, the imputed income for Mr.
Henry A. Rosenberg, Jr. was $12,768; for Mr. Trembly, $552 and for
Mr. Owsley, $898. The executive medical payments for each of the officers
listed in the table were $2,207. The Company's matching payments under the
Savings Plans were for Mr. Henry A. Rosenberg, Jr., $9,000; for Mr.
Trembly, $9,371; for Mr. Wheeler, $10,200; for Mr. Owsley, $8,800 and for
Mr. Frank B. Rosenberg, $7,800.
11
SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
Number of % of
Securities Total SARs
Underlying Granted to
SARs Employees in Base Expiration
Name Granted (a) Fiscal Year Price Date
---- ----------- ------------ ------ -------------
Henry A. Rosenberg, Jr. ......... 148,000 29.51 $14.91 Dec. 31, 2001
Randall M. Trembly............... 55,000 10.96 14.91 Dec. 31, 2001
John E. Wheeler, Jr. ............ 55,000 10.96 14.91 Dec. 31, 2001
Thomas L. Owsley................. 25,000 4.98 14.91 Dec. 31, 2001
Frank B. Rosenberg............... 23,000 4.59 14.91 Dec. 31, 2001
- -------
(a) All of the securities shown are for Appreciation Units granted under the
Company's 1999 Long-Term Incentive Plan. The value of the Appreciation
Unit is equal to the excess of the average fair market value of the Class
B Stock during the last thirty days of the performance period which began
on January 1, 1999 and ends on December 31, 2001 over the fair market
value of the stock in the three calendar years preceding the performance
period, which was $14.91 per share. There is no potential realizable value
of the Appreciation Units at assumed annual rate of stock price
appreciation of either 5% per year or 10% per year for the three year term
of the 1999 Long-Term Incentive Plan awards.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES (a)
Number of Securities
Underlying Unexercised
Options/SARs at FY-End
----------------------------
Exercisable Unexercisable
------------ ---------------
Name Options SARs Options SARs
---- ------- ---- ------- -------
Henry A. Rosenberg, Jr............................. 192,126 -- 45,934 148,000
Randall M. Trembly................................. 55,669 -- 16,801 55,000
John E. Wheeler, Jr................................ 45,046 -- 12,934 55,000
Thomas L. Owsley................................... 37,319 -- 6,801 25,000
Frank B. Rosenberg................................. 35,346 -- 6,434 23,000
- -------
(a) The Options are for the purchase of Class B Stock. There were no
unexercised in-the-money Options or SARs at fiscal year end.
12
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR (a)
Name Number of Units Performance Period
---- --------------- ---------------------------------
Henry A. Rosenberg, Jr....... 148,000 January 1, 1999-December 31, 2001
Randall M. Trembly........... 55,000 January 1, 1999-December 31, 2001
John E. Wheeler, Jr.......... 55,000 January 1, 1999-December 31, 2001
Thomas L. Owsley............. 25,000 January 1, 1999-December 31, 2001
Frank B. Rosenberg........... 23,000 January 1, 1999-December 31, 2001
- -------
(a) All of the units listed are Appreciation Units granted under the Company's
1999 Long-Term Incentive Plan. The value of the Appreciation Unit is equal
to the excess of the average fair market value of the Class B Stock during
the last thirty days of the performance period which began on January 1,
1999 and ends on December 31, 2001 over the fair market value of the stock
in the three calendar years preceding the performance period, which was
$14.91 per share.
PENSION PLAN TABLE (a)
Years of Service
--------------------------------------------------------------
Remuneration 15 20 25 30 35 40 45
- ------------ -------- -------- -------- -------- -------- -------- --------
$150,000........ $ 54,000 $ 72,000 $ 94,500 $117,000 $139,500 $162,000 $184,500
200,000........ 72,000 96,000 126,000 156,000 186,000 216,000 246,000
250,000........ 90,000 120,000 157,500 195,000 232,500 270,000 307,500
300,000........ 108,000 144,000 189,000 234,000 279,000 324,000 369,000
400,000........ 144,000 192,000 252,000 312,000 372,000 432,000 492,000
500,000........ 180,000 240,000 315,000 390,000 465,000 540,000 615,000
600,000........ 216,000 288,000 378,000 468,000 558,000 648,000 738,000
- -------
(a) The table above reflects the retirement benefits (life annuity with 60
months certain) that would be payable under the Company's Retirement Plan
at various base salary levels and years of service projected to normal
retirement. The table assumes that the participant has earned the annual
remuneration shown in the table in every year of credited service. The
Retirement Plan is a career average plan with benefits based on taxable
compensation. Limitations imposed by the Internal Revenue Code or any
other statute are not reflected in the table since the Company's
Supplemental Retirement Income Plan for Senior Executives is designed to
provide or restore to participants the benefits that would have been
received under the Retirement Plan if calculated without regard to such
limitations. All officers at the Vice President level and above
participate in the Supplemental Retirement Income Plan. Mr. Henry A.
Rosenberg, Jr.'s normal retirement date was December 1, 1994. His credited
service at that time was 42 years and 4 months. The estimated credited
service projected to normal retirement for the other current executives
listed in the Summary Compensation Table is: Mr. Trembly, 27 years and 10
months; Mr. Wheeler, 41 years and 8 months; Mr. Owsley, 23 years and 6
months and Mr. Frank B. Rosenberg, 38 years and 7 months.
13
PERFORMANCE GRAPH
1994 1995 1996 1997 1998 1999
Crown Common 100 119 98 170 57 44
AMEX Market Value Index 100 126 134 163 166 214
Value Line Int. Petr. Index 100 130 169 217 239 430
The graph above plots the cumulative stockholder's return on a $100
investment in the Company's Common Stock (Class A and Class B Stock combined
on a weighted market value basis) over a five-year period, assuming that all
dividends are reinvested. The American Stock Exchange Market Value Index and
the Value Line Integrated Petroleum Index are also shown on the graph for
comparative purposes. It should be noted that the Value Line Index includes a
number of major oil companies that are significantly larger than the Company.
Many of these companies are also engaged in the upstream production of both
crude oil and natural gas and are in other lines of business in addition to
their petroleum refining and marketing activities.
14
SHAREHOLDER PROPOSAL
Paul A. Novelly of 8182 Maryland Avenue, Clayton MO 63105, as trustee of
the Paul A. Novelly Living Trust U/I Paul A. Novelly dated July 28, 1982, has
advised the Company by letter dated November 24, 1999 that, in his capacity as
trustee, he is the owner of 16,325 shares of Class A Stock, and that he
intends to present the following shareholder proposal for consideration at the
Annual Meeting:
Shareholder Proposal.
RESOLVED, That the stockholders of Crown Central Petroleum Corporation
believe that, for the purpose of maximizing stockholder value, the Board of
Directors should take immediate action to cause the sale, merger or other
disposition of the company or its assets as a whole.
Supporting Statement.
I have been a stockholder of Crown Central Petroleum Corporation since the
early 1980's. During that time, I have watched the value of my investment in
Crown decrease from a high of more than $40 per share to its recent values of
less than $5 per share. In the past decade, Crown reported net income only
twice (in 1990 and 1997), and in the period from 1990 through 1998, Crown
incurred net losses averaging $12,085,000 per year. Crown's revenues decreased
from $2,060,000,000 in 1990 to $1,264,000,000 in 1998, a 38% decrease.
Industry statistics show that in virtually every financial category, Crown
performs below its industry and sector peers and below the S&P 500.
I am not satisfied with my investment in Crown and a dramatic change is
required in Crown's strategic direction. Crown's refineries and network of
gasoline stations and convenience stores together should make it an attractive
candidate for an acquirer seeking additional sources of refined petroleum
products or additional retail outlets.
A company which I control, Apex Oil Company, Inc., has expressed interest
in merging with Crown. After our attempts to engage in substantive discussions
with Crown and its representatives failed, we forwarded a more specific
proposal directly to Crown's board of directors. I do not believe that either
Crown or its board has responded to the Apex proposal in any meaningful
manner.
More importantly, I am not aware of either Crown or its board having taken
any other affirmative, strategic action that reasonably may be expected to
increase stockholder value. I am not insisting that Crown's board agree to a
merger between Crown and Apex on the terms which have been proposed. I am
concerned, however, that Crown's board may decide to make only cosmetic
changes, sell only a portion of its operations (such as valuable service
stations) or worse, do nothing. At this point, I believe that Crown's board
must undertake immediate action for the sale, merger or other disposition of
the company or its assets as a whole. Without this approach, Crown will
continue what I believe to be the failed policies--and woefully inadequate
financial performance--of the past several years.
For these reasons, I ask that you vote FOR the resolution I propose.
Board of Directors Statement in Opposition.
The Board of Directors recommends that you vote AGAINST this shareholder
proposal because it attempts to prevent the Company from realizing shareholder
value through the sale of selected assets in separate transactions, or through
a refinancing of Crown's debt.
The Board of Directors has explored a sale of the whole Company through a
lengthy and thorough process. The Company's stockholders did not approve a
buy-out proposal for the whole Company from Rosemore, Inc. at $9.50 per share.
The Company is, at the date of this proxy solicitation, continuing its efforts
to reach an agreement with the proponent, Mr. Novelly, and his affiliate, Apex
Oil Company, on their proposal to acquire control of Crown. No other proposals
have been made to acquire the whole Company.
If the Company is unable to reach an agreement with Mr. Novelly and Apex
Oil Company that receives the support of the Company's stockholders, the
Company wants to be free to pursue shareholder value through any other
available alternative, including the sale of selected assets or a refinancing
of Crown's debt, or both. If approved, this shareholder proposal would seek to
prevent the Company from exploring other alternatives and to press the Company
into negotiating only with Mr. Novelly on behalf of his Novelly Group which is
the only party other than Rosemore, Inc. to have expressed
15
an interest in acquiring the whole Company. The proposal would seek to do this
regardless of whether other alternatives could yield greater value for the
Company's stockholders, and regardless of whether Mr. Novelly and Apex Oil
Company are able to present to, and agree with the Company on, a proposal that
would receive the support of the Company's stockholders.
THE BOARD OF DIRECTORS THEREFORE RECOMMENDS THAT YOU VOTE AGAINST THIS
SHAREHOLDER PROPOSAL.
OTHER MATTERS
Management does not know of any business other than the election of
directors and the vote on the shareholder proposal that may come before the
meeting. However, if any other business should properly come before the
meeting, the proxies will be voted with respect thereto in accordance with the
direction of the stockholders.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The principal independent public accountant for the Company and its
subsidiaries since the organization of the Company has been Ernst & Young LLP
or its predecessors, and such firm has been selected again for the current
fiscal year. A representative of Ernst & Young LLP will be present at the
Annual Meeting. Their representative does not intend to make a formal
statement but will respond to any questions.
STOCKHOLDERS' PROPOSALS FOR THE 2001 ANNUAL MEETING
Proposals of stockholders of the Company intended to be presented at the
Annual Meeting of stockholders of the Company in 2001 must be received by the
Secretary of the Company, One North Charles Street, P.O. Box 1168, Baltimore,
Maryland 21203 on or before December 28, 2000 and must otherwise comply with
the rules of the Commission and the Bylaws of the Company to be eligible for
inclusion in the Proxy Statement for the Annual Meeting in 2001. Any
stockholder proposal received by the Company later than December 28, 2000 will
be deemed untimely.
ADDITIONAL INFORMATION
THE COMPANY UNDERTAKES TO PROVIDE YOU, WITHOUT CHARGE, UPON WRITTEN REQUEST
A COPY OF THE COMPANY'S MOST RECENT ANNUAL REPORT ON FORM 10-K, AS AMENDED.
Please direct all requests to Crown Central Petroleum Corporation P.O. Box
1168, Baltimore, Maryland 21203, Attention: Dolores B. Rawlings, Vice
President--Secretary.
By order of the Board of Directors,
/s/ Dolores B. Rawlings
Dolores B. Rawlings,
Vice President--Secretary
November 20, 2000
16
3620-PS-00
[LOGO OF CROWN CENTRAL PETROLEUM CORPORATION]
- --------------------------------------------------------------------------------
DETACH HERE
PROXY
CROWN CENTRAL PETROLEUM CORPORATION
P.O. BOX 1168
BALTIMORE, MARYLAND 21203
PROXY FOR CLASS A COMMON STOCK AND CLASS B COMMON STOCK
Solicited on behalf of the Board of Directors
for the Annual Meeting of Stockholders - December 14, 2000
Reserving the right of revocation, the undersigned hereby appoints as his or her
proxy or proxies, with full power of substitution, Thomas L. Owsley, Dolores B.
Rawlings and Henry A. Rosenberg, Jr. or any one or more of them, to vote all
Class A Common Stock and Class B Common Stock of the undersigned at the Annual
Meeting of Stockholders of Crown Central Petroleum Corporation, a Maryland
corporation to be held at Turf Valley Conference Center, 2700 Turf Valley Road,
Ellicott City, Maryland on December 14, 2000 or any adjournment of said meeting.
This proxy when properly executed will be voted in the manner directed by
the undersigned stockholder. If no direction is made, this proxy will be voted
FOR the election of the nominees named, and AGAINST the Shareholder Proposal,
and at the proxy holder's discretion on any other matter or matters which may
properly come before the Meeting.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
[LOGO OF CROWN CENTRAL PETROLEUM CORPORATION]
CROWN CENTRAL PETROLEUM CORPORATION
Refiners/marketers of petroleum products and petrochemicals
One North Charles Street
P.O. Box 1168
Baltimore, Maryland 21203
This Proxy card is provided for completion both by holders of Class A Stock and
by holders of Class B Stock.
If a stockholder owns shares of Class A Stock, the stockholder should vote on
the election of the directors to be elected by the holders of Class A Stock.
If a stockholder owns shares of Class B Stock, the stockholder should vote on
the election of the directors to be elected by the holders of Class B Stock.
If a stockholder owns shares of both Class A Stock and Class B Stock, the
stockholder should vote on the election of all directors.
ZCCP9A DETACH HERE
[x] Please mark
votes as in
this example.
The Board of Directors recommends a vote FOR the nominees listed.
1. Election of six (6) Directors. Election of two(2) Directors. The Board of Directors recommends
a vote AGAINST the Shareholder
Class A Common Stock Nominees: Class B Common Stock Nominees: Proposal and to GRANT discretion
(01) Michael F. Dacey, (02) Stanley A. Hoffberger, (07) Jack Africk and (08) Rev. under item 3.
(03) Barry L. Miller, (04) Frank B. Rosenberg, Harold Ridley, S.J.
(05) Henry A. Rosenberg, Jr., and (06) 2. Shareholder Proposal requiring
John E. Wheeler, Jr. the immediate sale of the
Company or its assets as a
FOR WITHHELD FOR WITHHELD whole.
ALL [ ] [ ] FROM ALL BOTH [ ] [ ] FROM BOTH FOR AGAINST ABSTAIN
NOMINEES NOMINEES NOMINEES NOMINEES [ ] [ ] [ ]
[ ] [ ] 3. In their discretion on any
--------------------------------------------- ----------------------------- other matter which may
For, except vote withheld from the nominee(s) For, except vote withheld from the properly come before said
listed above nominee listed above meeting or any adjournment
thereof.
GRANTED WITHHELD
[ ] [ ]
MARK HERE
FOR ADDRESS [ ]
CHANGE AND
NOTE AT LEFT
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY IN THE
ENCLOSED ENVELOPE.
This proxy should be signed by the stockholder in
person. If a joint account, all joint owners should
sign.
Signature: Date: Signature: Date:
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