-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WtDWZZGM4pajNJn20WdJ0yQYGIcUFJ1dZZKQoVblo/IVDO8y+WPJAInQ6337cEoV uE9EnJUUp42QSJOrqVxLAw== 0000950152-99-003781.txt : 19990503 0000950152-99-003781.hdr.sgml : 19990503 ACCESSION NUMBER: 0000950152-99-003781 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GIBSON GREETINGS INC CENTRAL INDEX KEY: 0000717829 STANDARD INDUSTRIAL CLASSIFICATION: CONVERTED PAPER & PAPERBOARD PRODS (NO CONTAINERS/BOXES) [2670] IRS NUMBER: 521242761 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 000-11902 FILM NUMBER: 99606940 BUSINESS ADDRESS: STREET 1: 2100 SECTION RD CITY: CINCINNATI STATE: OH ZIP: 45237 BUSINESS PHONE: 5138416600 10-K405/A 1 GIBSON GREETINGS, INC. 10-K405/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 10-K/A (AMENDMENT NO. 1) [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO _____ COMMISSION FILE NUMBER 0-11902 GIBSON GREETINGS, INC. INCORPORATED UNDER THE LAWS IRS EMPLOYER OF THE STATE OF DELAWARE IDENTIFICATION NO. 52-1242761 2100 SECTION ROAD, CINCINNATI, OHIO 45237 TELEPHONE NUMBER: AREA CODE 513-841-6600 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK, $.01 PAR VALUE ------------------ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the Common Stock, $.01 par value, of the registrant held by non-affiliates of the registrant as of March 26, 1999 was approximately $120,619,000. Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: 15,831,897 shares of Common Stock, $.01 par value, at March 26, 1999. Documents incorporated by reference: None 2 EXPLANATORY NOTE: This amended report is being filed to furnish the Part III information set forth below. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The Directors of the Company are as follows: FRANK J. O'CONNELL, age 55. Mr. O'Connell has been Chairman of the Board of the Company since April 1997 and has been the Company's Chief Executive Officer and President since August 1996. He was a business consultant from May 1995 to August 1996. He served as President and Chief Executive Officer of SkyBox International, Inc., a trading card manufacturer, from July 1991 to May 1995. Prior to joining SkyBox, he was a venture capital consultant from February 1990 to July 1991 and served as President of Reebok Brands, North America from February 1988 to February 1990. He became a director of the Company in August 1996. GEORGE M. GIBSON, age 64. Mr. Gibson retired in 1992 from The Procter & Gamble Company, having served as its Vice President - Treasurer from 1987 to 1992 and as Vice President - Comptroller from 1973 to 1987. He was associated with Procter & Gamble, a manufacturer of consumer household products, for over 35 years. Mr. Gibson has been a director of the Company since April 1996. ROBERT P. KIRBY, age 62. Mr. Kirby has been Chairman and Chief Executive Officer of Castleberry/Snow's Brands, Inc., an independent meat canner, since 1990. Previously, he served as President and Chief Executive Officer of Murray Bakery Products, Inc., a manufacturer of cookies, from 1985 to 1988 and as Group Vice President of Borden, Inc., with responsibility for the Dairy Group, from 1980 to 1984. Mr. Kirby has been a director of the Company since September 1997. CHARLES D. LINDBERG, age 70. Mr. Lindberg has been a partner in the law firm of Taft, Stettinius & Hollister LLP, counsel to the Company, for more than the past five years. He has been a director of the Company since May 1991. ALBERT R. PEZZILLO, age 70. Mr. Pezzillo was Chairman of the Board of the Company from February 1996 until April 1997. He also served as the Company's Chief Executive Officer from February until August 1996. He was a business consultant from 1990 until 1996 after his retirement in 1990 from his position as Senior Vice President of American Home Products Corporation, a manufacturer and marketer of ethical pharmaceuticals, medical supplies and hospital, consumer health care, food and household products. Prior to joining American Home Products in 1981, he held a variety of executive positions with Warner Lambert Company and Colgate Palmolive Company. Mr. Pezzillo became a director of the Company in April 1990. CHARLOTTE A. ST. MARTIN, age 53. Ms. St. Martin has been Executive Vice President of Marketing of Loews Hotels since November 1996. From 1989 to November 1996, she served as Executive Vice President, Operations and Marketing for Loews Hotels. Previously she served Loews Hotels in a variety of other executive capacities, including as President of Loews Anatole Hotel for eight years. Loews Hotels owns and operates 15 hotels nationally and internationally. Ms. St. Martin is a former President of the Dallas Convention and Visitors' Bureau. She is also a director of Ryland Group, Inc. She has been a director of the Company since August 1993. C. ANTHONY WAINWRIGHT, age 65. Mr. Wainwright has been Vice Chairman of McKinney and Silver Inc., an advertising agency, since April 1997. From 1995 to 1997, he was Chairman of the advertising agency, Harris, Drury, Cohen, Inc. He was Chairman of Compton Partners, Saatchi & Saatchi (formerly Campbell-Mithun-Esty), a national advertising agency, from 1994 to 1995 and was Vice Chairman of Campbell-Mithun-Esty from 1989 to 1994. From 1980 until 1989, he was President, Chief Operating Officer and a director of The Bloom Companies, Inc., a holding company for a national advertising agency group. Prior to 1980, Mr. Wainwright held various executive positions with companies in the advertising and marketing industries. He is also a director of Marketing Services Group, Inc., American Woodmark Corporation, Del Webb Corp., Advanced Polymer Systems and Caribiner International. He has been a director of the Company since March 1988. 2 3 The Executive Officers of the Company are as follows: FRANK J. O'CONNELL. (See information in Directors' section above.) JAMES T. WILSON, age 50. Mr. Wilson joined the Company in September 1997 as Executive Vice President of Finance and Operations, and Chief Financial Officer. From 1995 to 1996, Mr. Wilson served as Chief Financial Officer of Datatec Industries Inc., a national leader in the implementation of enterprise-wide information networks for major retail chains, financial institutions and multi-branch commercial and industrial companies. From 1992 to 1994, Mr. Wilson served as Chief Financial Officer of Marvel Entertainment Group, Inc., an international publisher of comic books and a distributor of sports and entertainment cards. Prior to 1992, Mr. Wilson held positions as Chief Operating Officer of Andrews Group Inc. and Chief Financial Officer of Technicolor Holdings, Inc., companies controlled by MacAndrews and Forbes Holdings. GREGORY IONNA, age 47. Mr. Ionna has been Executive Vice President of the Company's Card Division since September 1993. Prior to that he served in various management capacities within the sales and marketing functions of the Card Division. KAREN L. KEMP, age 48. Ms. Kemp joined the Company in April 1997 as Senior Vice President with responsibility for Human Resources, Legal and Corporate Communications. From 1990 to 1997, Ms. Kemp was employed by Fisher-Price, Inc., a leading toy company. At Fisher-Price, she held a series of increasingly responsible management positions, most recently serving as Senior Vice President of Administration and Human Resources. Previously, Ms. Kemp held management positions with Goldome Bank and New England Electric System. GREGORY A. BROWN, age 49. Mr. Brown joined the Company in May 1997 as Senior Vice President with responsibility for the sales function of the Company's Card Division. From 1996 to 1997, Mr. Brown was Vice President of Sales for the baby food business of Gerber Baby Products Corp. From 1989 until 1996, Mr. Brown served as Vice President of Sales for Tombstone Pizza Corporation, a division of Kraft General Foods. Previously, Mr. Brown held sales and marketing management positions with Frito-Lay, Incorporated, Polaroid Corporation and the Procter & Gamble Distributing Company. PAUL W. FARLEY, age 54. Mr. Farley has been Vice President, Controller since April 1997 and has served as the Company's Principal Accounting Officer since September 1996. From 1992 to 1996, he served as Vice President-Finance of the Company's Card Division. Previously, he served as Corporate Controller from 1986 to 1992. He was appointed Assistant Treasurer in 1981. Officers serve with the approval of the Board of Directors. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires the Company's executive officers and directors, and persons who beneficially own more than 10% of the Company's equity securities, to file reports of security ownership and changes in such ownership with the Securities and Exchange Commission ("SEC"). These persons also are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based upon a review of such forms and written representations from its executive officers and directors, the Company believes that all Section 16(a) filing requirements were complied with on a timely basis during and for 1998. 3 4 ITEM 11. EXECUTIVE COMPENSATION SUMMARY INFORMATION The following table sets forth, for the years indicated, amounts of cash and certain other compensation paid by the Company and its subsidiaries, for services in all capacities, to (i) Mr. O'Connell and (ii) each of the Company's four other most highly compensated executive officers during 1998. These persons are sometimes referred to as the "named executive officers."
SUMMARY COMPENSATION TABLE LONG-TERM ANNUAL COMPENSATION COMPENSATION ------------------------------------------ ----------------------------- RESTRICTED SECURITIES OTHER ANNUAL STOCK UNDERLYING ALL OTHER NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS COMPENSATION PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) (1) - -------------------------------------------------------------------------------------------------------------------------- Frank J. O'Connell (2) 1998 $462,500 -- -- -- 500,000 $ 25,150 Chief Executive Officer 1997 $370,833 -- -- -- -- $ 4,184 1996 $124,744 $200,000 $ 15,952 -- 1,000,000 $ 218,601 James T. Wilson (2) 1998 $250,000 $ 50,000 -- -- 25,000 $ 28,997 Executive Vice 1997 $ 64,423 $ 50,000 -- -- 125,000 $ 11,728 President, Finance and Operations Gregory Ionna 1998 $230,000 -- -- -- -- $ 3,288 Executive Vice 1997 $237,500 -- -- -- 50,000 $ 3,288 President, Card Division 1996 $195,625 $145,000 -- -- 55,000 $ 4,308 Gregory A. Brown (2) 1998 $225,000 -- $ 41,706 (3) -- -- $ 2,532 Senior Vice President, 1997 $139,904 $180,000 $ 47,725 -- 100,000 $ 70,358 Sales, Card Division Karen L. Kemp (2) 1998 $175,000 -- -- -- -- $ 1,827 Senior Vice President, 1997 $121,378 $ 30,000 $ 80,592 -- 60,000 $ 109,103 Human Resources
(1) For 1998 includes the following: (i) matching contributions to the Company's 401(k) Plan on behalf of Messrs. O'Connell ($1,200), Ionna ($1,200), and Brown ($444) in respect of their 1998 contributions to the Plan; (ii) group term life insurance payments for Messrs. O'Connell ($5,400), Wilson ($3,456), Ionna ($2,088) and Brown ($2,088), and Ms. Kemp ($1,827); (iii) reimbursement of relocation, temporary living and/or travel expenses for Mr. Wilson ($25,541); and (iv) split-dollar life insurance payments for Mr. O'Connell ($18,550). (2) Mr. O'Connell was first employed by the Company in 1996. Messrs. Wilson and Brown, and Ms. Kemp were first employed by the Company in 1997. (3) Reflects total executive perquisites and related tax gross up payments. Total perquisites include club membership initiation fee ($15,900) and personal auto usage ($10,256). 4 5 STOCK OPTIONS The following table contains information concerning stock option grants to the named executive officers during the year ended December 31, 1998. None of the Company's Stock Option or Stock Incentive Plans provides for the grant of stock appreciation rights ("SARs").
OPTION GRANTS IN LAST FISCAL YEAR INDIVIDUAL GRANTS (1) ----------------------------------------------------------------------------- NUMBER OF SECURITIES % OF TOTAL UNDERLYING OPTIONS GRANTED EXERCISE OR GRANT DATE OPTIONS GRANTED TO EMPLOYEES IN BASE PRICE PRESENT VALUE NAME (#) FISCAL YEAR ($/SH) EXPIRATION DATE ($) (4) - ------------------------------------------------------------------------------------------------------------------------------- Frank J. O'Connell (2) 166,667 30.64% $20.750 08/10/08 $1,202,085 166,666 30.64% $28.000 08/10/08 $ 788,230 166,667 30.64% $30.000 08/10/08 $ 702,351 James T. Wilson (3) 25,000 4.60% $19.625 09/03/08 $ 172,428 Gregory Ionna -- -- -- -- -- Gregory A. Brown -- -- -- -- -- Karen L. Kemp -- -- -- -- --
(1) The exercise price of all options may be paid in cash or by the transfer of shares of the Company's common stock valued at their fair market value on the date of exercise. (2) Mr. O'Connell's options vest as follows, by exercise price: $20.75 -- immediately upon grant; $28.00 -- April 15, 1999; and $30.00 -- April 15, 2000. The options are transferable to members of Mr. O'Connell's immediate family and to specified entities owned by them or for their benefit. Mr. O'Connell's options become immediately exercisable (a) in the event of a "change in control" of the Company, as defined in his employment agreement, (b) if the average closing price for the Company's common stock over a 20-day period equals or exceeds $35.00 per share or (c) if his employment terminates due to death, disability or failure to renew his employment agreement or is terminated by the Company without just cause or by him for good reason. Under certain circumstances, Mr. O'Connell is entitled to tax "gross up" payments in connection with the exercise of the options. (3) Mr. Wilson's options vest at the rate of one-third per year beginning September 4, 1999. The options become exercisable in full (a) if any person becomes, or commences a tender offer which could result in the person becoming the beneficial owner of more than 30% of the Company's common stock or (b) unless the survivor or transferee corporation agrees to continue the option, in the event of the execution of an agreement of merger, consolidation or reorganization pursuant to which the Company is not to be the surviving corporation or the execution of an agreement of sale or transfer of all or substantially all of the assets of the Company. (4) The Black-Scholes option-pricing model was used to estimate the grant date present value of the options shown. The Company's use of this model should not be construed as an endorsement of its accuracy at valuing options. All stock option valuation models, including Black-Scholes, require a prediction about the future movement of the stock price. The real value of an option, if any, depends upon the actual performance of the Company's stock during the applicable period. 5 6 With respect to each named executive officer, the following table sets forth information concerning stock option exercises during 1998 and unexercised options held December 31, 1998. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNDERLYING UNEXERCISED UNEXERCISED OPTIONS IN-THE-MONEY AT FY-END (#) OPTIONS AT FY-END ($) SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/ NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE - ------------------------------------------------------------------------------------------------------------------ Frank J. O'Connell -- -- 1,166,667/333,333 --/-- James T. Wilson -- -- 41,666/108,334 --/-- Gregory Ionna -- -- 69,001/51,666 $36,835/-- Gregory A. Brown -- -- 33,333/66,667 --/-- Karen L. Kemp -- -- 20,000/40,000 --/--
PENSION PLANS The Pension Plan Table set forth below shows estimated annual pension benefits payable to a covered participant under the Company's Retirement Income Plan (the "Retirement Plan"), a qualified defined benefit pension plan, and under the Gibson Greetings, Inc. ERISA Makeup Plan (the "Makeup Plan"), a non-qualified supplemental pension plan providing benefits that would otherwise be denied participants because of Internal Revenue Code limitations on qualified plan benefits. Benefits shown are computed as a straight life annuity for an employee retiring at age 65 in 1999 with no offsets.
PENSION PLAN TABLE YEARS OF SERVICE -------------------------------------------------------------------------------------------------- REMUNERATION 5 10 15 20 25 30 35 40 - --------------------------------------------------------------------------------------------------------------------- $200,000 $14,010 $28,020 $42,030 $56,040 $70,050 $84,060 $98,070 $112,080 300,000 21,510 43,020 64,530 86,040 107,550 129,060 150,570 172,080 400,000 29,010 58,020 87,030 116,040 145,050 174,060 203,070 232,080 500,000 36,510 73,020 109,530 146,040 182,550 219,060 255,570 292,080 600,000 44,010 88,020 132,030 176,040 220,050 264,060 308,070 352,080 700,000 51,510 103,020 154,530 206,040 257,550 309,060 360,570 412,080 800,000 59,010 118,020 177,030 236,040 295,050 354,060 413,070 472,080 900,000 66,510 133,020 199,530 266,040 332,550 399,060 465,570 532,080 1,000,000 74,010 148,020 222,030 296,040 370,050 444,060 518,070 592,080
Benefits under the Retirement and Makeup Plans are based upon the highest average 60 consecutive months' salary and bonus (as shown on the Summary Compensation Table) during the 120 months immediately preceding retirement. Compensation covered by the Plans at the end of 1998 for each named executive officer (which includes relocation and similar nonrecurring payments) is as follows: Mr. O'Connell, $725,919; Mr. Wilson, $382,626; Mr. Ionna, $344,735; Mr. Brown, $446,380; and Ms. Kemp, $317,078. For the purpose of computing a benefit under the table, on December 31, 1998, Mr. O'Connell had two years of credited service; Mr. Wilson, one year; Mr. Ionna, 24 years; Mr. Brown, two years; and Ms. Kemp, two years. Covered compensation amounts differ from amounts shown on the Summary Compensation Table due to differences in the recognition of pensionable earnings. 6 7 In addition to the Retirement Plan and the Makeup Plan, certain executives are eligible for benefits under the Company's Supplemental Executive Retirement Plan (the "SERP"), which was adopted to attract and retain highly qualified executives by providing retirement benefits at levels which the Company believes to be competitive. A participant in the SERP who retires at age 65 is entitled to receive supplemental retirement benefits equal to the difference between (i) that percentage of the participant's final monthly average earnings (as defined in the Retirement Plan without regard to certain limitations imposed by the Internal Revenue Code on qualified plans) determined by crediting 2%, 1-2/3% and 1-1/3% per year, respectively, for each of the first 10, next 10 and next 10 years of credited service, up to a maximum of 30 years of credited service (the "SERP percentage") and (ii) the aggregate of the participant's monthly benefits from the Retirement Plan and the Makeup Plan plus supplemental retirement benefits under any individual agreement with the Company. The SERP provides for adjustments to the basic benefit formula in the event of a participant's early retirement, disability retirement, death or other termination of employment. At the normal retirement age each named executive officer's years of credited service and SERP percentage would be as follows: Mr. O'Connell, 20 years and 37%; Mr. Wilson, 16 years and 30%; Mr. Ionna, 30 years and 50%; Mr. Brown, 17 years and 32%; and Ms. Kemp, 19 years and 35%. For SERP purposes, Mr. O'Connell's retirement compensation base is $500,000. Pursuant to his employment agreement, Mr. O'Connell received, in 1998, additional credit for five years of service for all purposes under the Company's retirement plans. He will receive credit for one additional year of deemed service (up to a maximum of five years) for each year of actual service after 1997. Mr. O'Connell also will receive credit for one year of additional deemed service in the event of termination of employment due to disability, death or non-renewal of his employment agreement by the Company and credit for three years of additional deemed service if the Company terminates his employment without "just cause" or if he terminates his employment for "good reason" (each as defined in the employment agreement). EMPLOYMENT CONTRACTS Each of the named executive officers has an employment agreement with the Company. Mr. O'Connell initially had an agreement that ran from August 1996 through December 1999. This agreement provided for a minimum annual salary of $350,000, subject to increase from time to time, and for annual bonuses based upon specified increases in the Company's operating income from year to year. Effective August 1, 1997, Mr. O'Connell's salary was set at $400,000. In August 1998, the Company entered into a new employment agreement with Mr. O'Connell which expires on December 31, 2002 and automatically renews from year to year thereafter. Under the new agreement, Mr. O'Connell's base salary was set at $500,000 effective August 1, 1998, subject to adjustment over the term of the agreement. Mr. O'Connell is entitled to an annual bonus, in an amount up to 200% of then-current base salary, based 50% on the percentage increase in the Company's operating income over the prior year and 50% on the percentage increase in the Company's revenue over the prior year. Additionally, Mr. O'Connell was granted an option to purchase 500,000 shares of the Company's common stock at exercise prices increasing from 100% of fair market value on the date of grant to 145% of that fair market value. Under most circumstances which result in Mr. O'Connell's termination of employment, he will receive payments based upon his "Current Compensation." The employment agreement defines "Current Compensation" as then-current base salary plus the average of bonuses earned over the prior two fiscal years, with a deemed bonus of $500,000 for 1997. In the event of Mr. O'Connell's disability, he will receive at least one year of Current Compensation. In the event of either the non-renewal of his employment agreement by the Company or of his death, he or his spouse or estate will receive one year of Current Compensation. If his employment is terminated by the Company without "just cause" or voluntarily by him for "good reason," he will receive three times Current Compensation. The employment agreement also provides for continuation of various insurance benefits under these circumstances and for crediting of one or more extra years under the Company's retirement plans. If, after a change in control, (a) Mr. O'Connell terminates his employment for "good reason" or (b) his employment is terminated without "just cause" or because of a failure to renew his employment agreement, Mr. O'Connell is entitled to receive a tax "gross up" of up to $5,000,000 on any resulting payments on which an "excess parachutes payments" tax is imposed. Mr. Ionna has an employment agreement, entered into during 1996, which had an original expiration date of March 31, 1999 that has been extended to March 31, 2000 and may be extended further on an indefinite basis by mutual agreement. The agreement provides for an annual base salary of $230,000 (subject to increase from time to time) and for participation in the Company's incentive compensation program. It also provides for severance pay equal to six months' salary in the event of death, for a payment equal to 2.9 times annual salary then in effect in the event of termination of employment under certain circumstances after a change in control of the Company, and for severance pay equal to two times his then-current base salary in the event that he or the Company elects not to extend further the agreement. Each of Messrs. Wilson and Brown and Ms. Kemp has an employment agreement with the Company. These agreements became effective September 29, 1997, May 19, 1997 and April 22, 1997, respectively; each extends indefinitely until terminated by the Company, or by the executive officer on 30 days' advance notice to the Company. Under the agreements, Mr. Wilson, Mr. Brown and Ms. Kemp are entitled to annual base salaries, which are subject to adjustment from time to time, of $250,000, $225,000 and $175,000, respectively. Each is eligible to receive an annual bonus of up to 112.5% of base salary, as well as to participate in the Makeup Plan and the SERP. In connection with their employment agreements, each executive officer also received specified relocation expense payments or reimbursements and the following additional items of compensation: Mr. Wilson, a signing bonus of 7 8 $100,000 ($50,000 after beginning employment and $50,000 after closing on a home in the greater Cincinnati area) and options to purchase 125,000 shares of common stock; Mr. Brown, a signing bonus of $80,000, a guaranteed 1997 annual bonus of at least $100,000 and options to purchase 50,000 shares of the Company's common stock; and Ms. Kemp, a signing bonus of $30,000 and options to purchase 30,000 shares of common stock. If Mr. Wilson's agreement is terminated by the Company other than for cause or as a result of a material breach by the Company, he is entitled to a lump sum payment from the Company equal to his then-current annual salary. If Mr. Brown's or Ms. Kemp's employment agreement is terminated by the Company other than for cause (as defined in the agreement), he or she is entitled to a lump sum payment equal to one year of base salary. Effective February 1, 1999, the annual salaries of Messrs. Wilson, Ionna and Brown and Ms. Kemp were increased to $275,000, $260,000, $255,000 and $195,000, respectively. The Company's employment agreements also generally provide additional miscellaneous compensation in the form of some combination of perquisites such as club membership fees, use of automobiles, insurance benefits and tax and estate planning services. COMPENSATION OF DIRECTORS The Company pays an annual fee of $20,000 for services of directors who are not employees of the Company and an annual fee of $2,500 per chairmanship to each committee chairman. In addition, nonemployee directors receive fees of $1,000 for each Board meeting attended and $900 for each committee meeting attended, plus reimbursement of expenses. Under the Company's 1996 Nonemployee Director Stock Plan (the "Stock Plan"), nonemployee directors are required to take one-half of their annual retainer in shares of the Company's common stock. Additionally, under the Company's 1989 Stock Option Plan for Nonemployee Directors, each nonemployee director of the Company, at the close of business on the day of the Annual Meeting, has received an option to purchase 3,000 shares of common stock. This plan has now expired. The Company intends to continue annual option grants to nonemployee directors from a new 1999 Stock Incentive Plan, assuming stockholder approval of that Plan. In order to continue to attract and retain outstanding individuals to serve as nonemployee directors of the Company ("Outside Directors"), the Company has a Retirement Plan for Outside Directors (the "Directors Retirement Plan"). Outside Directors are defined by the Directors Retirement Plan as directors not employed by the Company or a subsidiary and include former or retired employees if they are not vested under any other Company retirement plan. In order to qualify for benefits under the Directors Retirement Plan, an Outside Director must have served the Company as such for at least nine years. An Outside Director who qualifies for benefits under the Directors Retirement Plan will receive an annual benefit, payable quarterly for life, equal to the amount of the Company's annual directors fee (not including payments for serving as chairman of a Board committee) paid to Outside Directors on the date on which the Outside Director's service to the Company ceases (the "Annual Retainer"). Benefits under the Directors Retirement Plan begin upon termination of service for directors who have reached age 65 and begin at age 65 for those whose services terminate prior to that age. If an Outside Director who has qualified for benefits under the Directors Retirement Plan dies before receiving any benefits, his or her designated beneficiary or estate will receive a payment equal to five times the Annual Retainer. If an Outside Director dies after the commencement of benefits but prior to having received them for five years, the beneficiary or estate will receive an amount equal to five times the Annual Retainer less any benefits already paid. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Mr. O'Connell is a member of the Board of Directors of Castleberry/Snow's Brands, Inc., of which Mr. Kirby is Chairman and Chief Executive Officer. As a director, Mr. O'Connell is involved in executive compensation decisions for the executive officers of Castleberry/Snow's Brands, Inc. 8 9 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth, as of March 26, 1999, certain information with regard to the beneficial ownership of the Company's common stock by (i) each of the Company's stockholders known to hold more than 5% of the outstanding shares of common stock, (ii) each director and each executive officer named on the Summary Compensation Table, individually, and (iii) all directors and executive officers as a group.
BENEFICIAL OWNERSHIP ---------------------------------- NUMBER NAME POSITION OF SHARES (1) PERCENT (2) - ---------------------------------------------------------------------------------------------------------------------------- The Prudential Insurance Company of 3,018,160 (3) 19.1% America Prudential Plaza Newark, NJ 07102 Royce & Associates, Inc. 1,606,100 10.1% 1414 Avenue of the Americas New York, NY 10019 Lazard Freres & Co. LLC 1,090,565 (4) 6.9% 30 Rockefeller Plaza New York, NY 10020 Frank J. O'Connell Chairman, President and Chief Executive 1,333,333 7.8% Officer George M. Gibson Director 7,490 Robert P. Kirby Director 3,387 Charles D. Lindberg Director 11,090 Albert R. Pezzillo Director 31,690 Charlotte A. St. Martin Director 8,490 C. Anthony Wainwright Director 9,590 (5) Gregory A. Brown Senior Vice President, Sales, Card Division 33,333 Gregory Ionna Executive Vice President, Card Division 69,596 Karen L. Kemp Senior Vice President, Human Resources 30,000 James T. Wilson Executive Vice President, Finance and 41,666 Operations, and Chief Financial Officer All directors and executive officers 1,618,499 9.3% as a group (12 persons)
(1) Except as otherwise noted, each owner has sole voting and dispositive power over the shares shown. The numbers of shares shown for directors and executive officers include shares which may be purchased upon exercise of presently exercisable options and options exercisable within 60 days after March 26, 1999, in the following amounts: Mr. O'Connell, 1,333,333 shares; Mr. Gibson, 5,000 shares; Mr. Kirby, 3,000 shares; Mr. Lindberg, 9,000 shares; Mr. Pezzillo, 29,750 shares; Ms. St. Martin, 7,000 shares; Mr. Wainwright, 8,000 shares; Mr. Brown, 33,333 shares; Mr. Ionna, 69,001 shares; Ms. Kemp, 30,000 shares; Mr. Wilson, 41,666 shares; and all directors and executive officers as a group, 1,605,417 shares. (2) Except as indicated, the percentage of shares held by each owner is less than 1%. The percentage is based on shares outstanding on March 26, 1999. (3) Based upon a Form 13G/A filed with the SEC dated February 2, 1999, The Prudential Insurance Company of America has sole power to vote and/or dispose of 3,100 shares; and shared power to vote and/or dispose of 3,015,060 shares. (4) Based upon a Form 13G filed with the SEC dated February 16, 1999, Lazard Freres & Co. LLC has sole power to vote 803,005 shares; and has sole power to dispose of 1,090,565 shares. (5) Includes 100 shares held by Mr. Wainwright's wife as to which beneficial ownership is disclaimed. 9 10 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS None. 10 11 SIGNATURE Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized, as of the 29th day of April 1999. Gibson Greetings, Inc. By /s/ James T. Wilson --------------------------- James T. Wilson Executive Vice President of Finance and Operations, and Chief Financial Officer 11 -----END PRIVACY-ENHANCED MESSAGE-----