US CAN CORP - DEF 14A - 19980324 - PERFORMANCE_GRAPH
PERFORMANCE GRAPH
The following graph shows the changes in the value of $100 invested since
March 8, 1993 (the date trading began in connection with the Company's initial
public offering), in (i) the Common Stock, (ii) the Center for Research in
Security Prices ("CRSP") at the University of Chicago Graduate School of
Business' Total Return Index for the NYSE Market (U.S. Companies) and (iii) for
a self-determined peer group.
3/8/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
U.S. Can
Corporation 100.00 129.167 158.333 112.500 140.625 140.625
NYSE U.S.
Companies 100.00 105.439 105.406 142.879 173.265 230.149
Peer Group 100.00 103.289 96.529 102.329 130.168 130.382
NOTES
(1) Assumes that all dividends were reinvested.
(2) The Total Return Index for the NYSE Market (U.S. Companies) is an index
compiled by CRSP.
(3) This peer group is comprised of Crown Cork & Seal Inc., Ball Corp.,
Continental Can Co., Inc. and BWAY Corp. Each of these companies conducts
business operations in the general packaging, food and/or beverage segments
of the metal container industry.
RELATED TRANSACTIONS
U.S. Can and the Company have agreed that U.S. Can will pay the Company's
operating expenses, which consist primarily of meeting expenses and directors'
fees for the Company's directors. U.S. Can made payments to the Company for such
expenses of approximately $367,375 in 1997. In April and October 1997, U.S. Can
funded interest payments on the Company's 10 1/8% Senior Subordinated Notes of
$13.8 million and $13.9 million, respectively.
Various amounts were loaned to the Company by U.S. Can prior to 1994 to
fund various transactions of the Company. The loans became repayable to U.S. Can
in minimum annual installments of $850,000 beginning in March 1992, with a final
payment in December 1998, or until all amounts are repaid in full, if earlier.
The Company has been making such annual payments in the form of Common Stock
contributions into U.S. Can's Salaried Employees Savings and Retirement
Accumulation Plan. In March 1997, the Company contributed shares of Common
Stock, valued at approximately $850,000, into the SRAP, which extinguished the
intra-company debt. Approximately 30,000 shares were reacquired by the Company
in open market purchases in order to make the March 1997 contribution. In March
1998, the Company will contribute shares of Common Stock from its treasury,
valued at approximately $715,000, into the SRAP. Additional
16
shares may be reacquired from time to time in the future in order to make
additional contributions to the SRAP.
Salomon Smith Barney ("SSB"), which owns beneficially approximately 9.2% of
the Common Stock, is the Company's primary investment bank and financial
advisory firm. In 1997, the Company paid Salomon Brothers Inc, one of the
predecessors of SSB, an engagement fee of $100,000 in connection with, and
agreed to pay Salomon Brothers Inc an additional $700,000 upon completion of,
the sale of the Company's commercial metal services business.
At the time that William J. Smith resigns as President and Chief Executive
Officer of the Company, which will be concurrent with election of Paul W. Jones
to the position of President and Chief Executive Officer of the Company, it is
expected that the Company will enter into a consulting agreement with Mr. Smith.
This consulting agreement is expected to provide for consulting payments to Mr.
Smith of $100,000 annually for a two-year period ending in April 2000.
Beginning in December 1997, Calvin W. Aurand, Jr., a Director of the
Company, was retained as a consultant to provide management assistance to the
Company during the transition to a new President and Chief Executive Officer and
to assist in the analysis and implementation of certain recommendations of an
outside management consulting firm. The Company has paid or agreed to pay Mr.
Aurand $6,000 in fees for December 1997, $80,000 in fees for January and
February 1998 and $40,000 in fees for March and April 1998, plus reasonable
expenses incurred while acting as the Company's consultant.
William J. Smith, Jr., the former Senior Vice President, Aerosol Operations
of U.S. Can and son of William J. Smith, resigned from the Company effective
December 31, 1996. During 1997, he received (i) salary continuation, car
allowance (including tax gross up) and group term life benefits totaling
approximately $179,362, (ii) a $50,000 bonus payment for 1996 and (iii) a
restricted stock award of 5,000 shares of Common Stock (valued at approximately
$73,750).
17
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of February 28, 1998 (unless otherwise
indicated by footnote), the number and percentage of shares of Common Stock
beneficially owned by (i) each person known by the Company to own beneficially
more than 5% of the outstanding shares of the Company's Common Stock, (ii) each
director of the Company, (iii) each named executive officer and (iv) all
directors and executive officers of the Company as a group. Unless otherwise
indicated in a footnote, each person possesses sole voting and investment power
with respect to the shares indicated as beneficially owned. Unless otherwise
indicated, the business address of each person is 900 Commerce Drive, Oak Brook,
Illinois 60523.
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
------------------------------------ ------ -------
The Prudential Insurance Company of America................. 1,546,400(1) 11.85%
751 Broad Street
Newark, New Jersey 07102-3777
Dimensional Fund Advisors Inc............................... 792,100(2) 6.07%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Salomon Brothers Inc, Salomon Brothers...................... 1,200,000 9.19%
Holding Company Inc, Salomon Smith Barney
Holdings Inc. and Travelers Group Inc.
388 Greenwich Street
New York, New York 10013
The Equitable Companies Incorporated........................ 761,000 5.83%
1290 Avenue of the Americas
New York, New York 10104
Ricardo Poma(3)(4).......................................... 918,443 7.04%
Lomas de San Francisco
San Salvador, El Salvador
President and Fellows of Harvard College,................... 1,162,900(5) 8.91%
John Stevens Trust, Nancy Stevens Trust, and
Harvard College Trust
c/o Harvard Management Company, Inc.
600 Atlantic Avenue
Boston, MA 02210
and
The Harvard University Master Trust Fund
1350 Massachusetts Avenue
Holyoke Center, Room 340
Cambridge, MA 02138
William J. Smith(3)(6)...................................... 480,663(7) 3.66%
Francisco A. Soler(3)(8).................................... 422,543 3.24%
Harbour Club
Watermeadow Lane
London SW6 2RR
Carl Ferenbach(3)........................................... 83,435 *
One Boston Place
Boston, Massachusetts 02108
Benjamin F. Bailar(3)....................................... 35,443(9) *
Old Kent Bank-Chicago, Trustee
233 South Wacker Drive
Chicago, Illinois 60606
Calvin W. Aurand, Jr.(3).................................... 1,943 *
10040 E. Happy Valley Rd.
Scottsdale, AZ 85255
18
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
------------------------------------ ------ -------
Eugene B. Connolly, Jr.(3).................................. 1,443 *
c/o USG Corporation
125 South Franklin Street
Chicago, Illinois 60606
Michael J. Zimmerman(3)..................................... 1,443 *
c/o Continental Grain Company
277 Park Avenue
New York, New York 10172
Frank J. Galvin(6).......................................... 153,623(10) 1.17%
Timothy W. Stonich(6)....................................... 152,536(11) 1.16%
Charles E. Foster(6)........................................ 35,294(12) *
Anthony F. Bonadonna(6)..................................... 29,458(13) *
All directors and executive officers as a group (15 2,404,889(14) 18.04%
persons)..................................................
* The percentage of shares beneficially owned does not exceed 1% of the
Common Stock.
(1) The Prudential Insurance Company of America ("Prudential") has sole voting
and dispositive power over 837,000 of these shares, and shared voting and
dispositive power over 463,800 of these shares. These shares are held for
the benefit of Prudential's clients by its separate accounts, externally
managed accounts, registered investment companies, subsidiaries and/or
other affiliates. This information is taken from Prudential's Amendment No.
2 to Schedule 13G dated March 10, 1997, and is as of February 28, 1997.
(2) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 792,100 shares of the
Common Stock as of December 31, 1997, all of which shares are held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company, or in series of the DFA Investment Trust Company, a
Delaware business trust, or the DFA Group Trust and DFA Participation Group
Trust, investment vehicles for qualified employee benefit plans, all of
which Dimensional serves as investment manager. Dimensional is deemed to
have sole voting power over 525,100 of these shares and shared voting power
over 267,000 of these shares. Dimension is deemed to have sole dispositive
power over all of these shares. Dimensional disclaims beneficial ownership
of all such shares. This information was taken from Dimensional's Schedule
13G received by the Company on February 13, 1998.
(3) The named individual is a director of the Company.
(4) Salcorp Ltd. ("Salcorp") is the record holder of 340,000 of these shares
and Katsura, S.A. ("Katsura") is the record holder of 60,000 of these
shares. Mr. Poma is the sole stockholder of both Salcorp and Katsura, and
is therefore deemed the beneficial owner of these shares. 443 of these
shares are owned by Scarsdale Company N.V. ("Scarsdale"), a company
associated or affiliated with Mr. Poma. The remaining 518,000 shares are
owned by Barcel Corporation ("Barcel"). Mr. Poma is the Trustee for United
Capital Trust, a family trust which owns all of the stock of Barcel. Mr.
Poma disclaims beneficial ownership of 86,400 of the shares held by Barcel
in the United Capital Trust.
(5) President and Fellows of Harvard College ("P&F") owns beneficially
1,109,300 of these shares, The Harvard University Master Trust Fund
("HUMT") owns beneficially 51,100 of these shares, the John Stevens Trust
("JST") owns beneficially 400 of these shares, the Nancy Stevens Trust
("NST") owns beneficially 700 of these shares and the Harvard College Trust
("HCT") owns beneficially 1,400 of these shares. P&F, HUMT, JST, NST and
HCT have elected to report their ownership as a group and this information
is taken from their Amendment No. 2 to Schedule 13G filed on February 13,
1998, and is believed to be as of December 31, 1997.
(6) The named individual is an executive officer.
(7) Includes 75,000 shares subject to currently exercisable options. Mr. Smith
sold 110,000 shares in 1997, pursuant to a plan of personal asset
diversification.
19
(8) 422,543 of these shares are owned beneficially by Windsor International
Corporation ("Windsor"), Atlas World Carriers S.A. ("Atlas"), The World
Financial Corporation S.A. ("World") and Scarsdale, corporations affiliated
or associated with Mr. Soler or certain of Mr. Soler's relatives, which
hold 181,100, 123,000, 118,000 and 443 shares of Common Stock,
respectively. Mr. Soler may be deemed the beneficial owner of all shares
held by Windsor, Atlas, World and Scarsdale.
(9) Dean Bailar has sole investment power with respect to the trust in which
35,000 of these shares are held. The other 443 shares are held of record by
Franklin Financial Corporation, a corporation affiliated or associated with
Dean Bailar.
(10) Includes 80,000 shares subject to currently exercisable options.
(11) Includes 55,000 shares subject to currently exercisable options.
(12) Includes 18,794 shares subject to currently exercisable options.
(13) Includes 17,958 shares subject to currently exercisable options.
(14) Includes 282,958 shares subject to currently exercisable options.
20
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, including all members of the Audit Committee, has
selected the accounting firm of Arthur Andersen LLP to serve as independent
auditor of the Company with respect to the 1998 fiscal year and proposes
ratification of such selection by the stockholders. Arthur Andersen LLP is
familiar with the business and operations of the Company, and has offices in or
convenient to most of the Company's plants and office locations.
A representative of Arthur Andersen LLP will be present at the Annual
Meeting and will be available to respond to appropriate questions. This
representative is not scheduled to make any general statement at the Annual
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR RATIFICATION OF
THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS AUDITORS FOR FISCAL YEAR 1998.
Section 16(a) of the Exchange Act requires the Company's directors and
"executive officers" (as defined in Section 16(a)) to file reports of their
ownership of stock and of changes in such ownership with the SEC. The Company
believes that, during 1997, its directors and reporting officers complied with
all applicable filing requirements, except as described in the following
sentences. Messrs. Frank J. Galvin and Timothy W. Stonich, executive officers of
the Company, failed to file on a timely basis one report each required by
Section 16(a) during 1997. All of the required reports were subsequently filed
in February 1998. An option exercise by each of them was covered by these
reports. Mr. David Ford, and executive officer of the Company, failed to file on
a timely basis one report required by Section 16(a) during 1997. The required
report was subsequently filed in February 1998. An award of restricted shares of
Common Stock was covered by this report.
SOLICITATION AND EXPENSES OF SOLICITATION
The expenses of preparing and mailing this Proxy Statement and the
accompanying form of proxy and the cost of solicitation of proxies on behalf of
the Board will be paid by the Company. Proxies may be solicited by personal
interview, mail and telephone. Banks, brokerage houses, other nominees and
custodians will be asked whether other persons are beneficial owners of the
shares which they hold of record and, if so, they will be supplied with
additional copies of the proxy materials for distribution to such beneficial
owners. The Company will reimburse parties holding stock in their names or in
the names of their nominees for their reasonable expenses in sending the proxy
materials to their principals.
SUBMISSION OF STOCKHOLDER PROPOSALS
FOR THE 1999 ANNUAL MEETING
Stockholder proposals for inclusion in the Proxy Statement to be issued in
connection with the 1999 Annual Meeting of Stockholders must be mailed to the
Corporate Secretary, U.S. Can Corporation, 900 Commerce Drive, Oak Brook,
Illinois 60523, and must have been received by the Corporate Secretary on or
before November 24, 1998. The Company will consider only proposals meeting the
requirements of applicable SEC rules.
21
ANNUAL REPORT AND FORM 10-K
Copies of the Company's combined 1997 Annual Report to Shareholders and
Annual Report on Form 10-K for the Fiscal Year Ended December 31, 1997, are
being mailed with this Proxy Statement to each stockholder entitled to vote at
the Annual Meeting. STOCKHOLDERS NOT RECEIVING A COPY OF THE COMBINED 1997
ANNUAL REPORT AND FORM 10-K MAY OBTAIN ONE BY WRITING OR CALLING MR. TIMOTHY W.
STONICH, CORPORATE SECRETARY, U.S. CAN CORPORATION, 900 COMMERCE DRIVE, OAK
BROOK, ILLINOIS, 60523, TELEPHONE: (630) 571-2500.
By Order of the Board of Directors
/s/ Timothy W. Stonich
----------------------
Timothy W. Stonich
Corporate Secretary
22
PROXY PROXY
U.S. CAN CORPORATION
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 24, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder hereby constitutes William J. Smith and
Timothy W. Stonich proxies, with full authority, which may be exercised by
either one or both of them, with power of substitution, to vote and act for the
undersigned at the Annual Meeting of Stockholders of U.S. Can Corporation
("U.S. Can") to be held at U.S. Can's offices, 900 Commerce Drive, Oak Brook,
Illinois, at 10:00 a.m. (local time) on April 24, 1998, and at any adjournment
thereof, as designated herein, and the proxies are authorized to vote in their
discretion upon such other business as may properly come before the meeting.
[ ] Check here for address change [ ] Check here if you plan
New Address: to attend the Meeting.
PLEASE COMPLETE REVERSE SIDE
U.S. CAN CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
[ ]
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF ALL PROPOSALS.
For All
For Withhold Except
1. Nominees for director, to serve a term expiring in 2001. [ ] [ ] [ ]
Calvin W. Aurand, Jr., Carl Ferenbach, Francisco A.
Soler
------------------------------------------------------------
Nominee Exception
For Against Abstain
2. To ratify the selection of Arthur Andersen LLP [ ] [ ] [ ]
as independent auditor for U.S. Can for 1998.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF
NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2.
Dated:
------------------------------, 1998
---------------------------------------------
Signature(s)
---------------------------------------------
Please sign exactly as name appears hereon.
Joint owners should each sign personally.
Executors, trustees, officers, etc. should indi-
cate their titles when signing.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED RETURN ENVELOPE.
FOLD AND DETACH HERE
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE ENCLOSED
ENVELOPE.
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