-----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, C4qEmpWPhj1YT08LF4KnUOkAfZlcrEQYjximL62cnbkkClhPlyRe6k9XozVLibI1 2KVO8QsHPA4bRi7coyJBAw== 0000927016-97-001539.txt : 19970526 0000927016-97-001539.hdr.sgml : 19970526 ACCESSION NUMBER: 0000927016-97-001539 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970125 FILED AS OF DATE: 19970523 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WABAN INC CENTRAL INDEX KEY: 0000850316 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-VARIETY STORES [5331] IRS NUMBER: 330109661 STATE OF INCORPORATION: DE FISCAL YEAR END: 0130 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10259 FILM NUMBER: 97613665 BUSINESS ADDRESS: STREET 1: ONE MERCER ROAD CITY: NATICK STATE: MA ZIP: 01760 BUSINESS PHONE: 5086516500 10-K/A 1 FORM 10-K/A ================================================================================ 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 JANUARY 25, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 __________________ COMMISSION FILE NUMBER 1-10259 WABAN INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 33-0109661 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) One Mercer Road 01760 Natick, Massachusetts (ZIP CODE) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) Registrant's telephone number, including area code: (508) 651-6500 __________________ Securities registered pursuant to Section 12(b) of the Act: NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- --------------------- Common Stock, par value $.01 New York Stock Exchange Preferred Share Purchase Rights New York Stock Exchange 6 1/2% Convertible Subordinated New York Stock Exchange Debentures due July 1, 2002 Securities registered pursuant to Section 12(g) of the Act: None 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 the 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. [ ] The aggregate market value of the voting stock held by non-affiliates of the Registrant on March 29, 1997 was $937,274,000. There were 32,824,431 shares of the Registrant's Common Stock, $.01 par value, outstanding as of March 29, 1997. ================================================================================ Part III of the Annual Report on Form 10-K of Waban Inc. (the "Company") for the fiscal year ended January 25, 1997, as filed with the Securities and Exchange Commission (the "Commission") on April 18, 1997, is hereby amended and restated in its entirety as follows: PART III ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY DIRECTORS OF THE COMPANY Set forth below is certain information regarding all of the persons currently serving as directors of the Company and the one additional person expected to be nominated for election as a director at the Company's 1997 Annual Meeting of Stockholders. CURRENT DIRECTORS--TERMS EXPIRING 1997 Stanley H. Feldberg, 72, has been a director of the Company since February 1989. He was President of Zayre Corp. from 1956 to 1978. He is also an independent general partner of ML-Lee Acquisition Funds I and II. Mr. Feldberg is a member of the Executive Compensation Committee of the Company. Mr. Feldberg will not be standing for re-election at the 1997 Annual Meeting of Stockholders and will not continue to serve as a director after the 1997 Annual Meeting. Kerry L. Hamilton, 46, has been a director of the Company since September 1994. Ms. Hamilton is Vice President, Marketing for Marshalls. Prior to joining Marshalls in April 1996, Ms. Hamilton was Vice Chairman of Pamet River Partners, a marketing consulting firm, for two years. Prior to joining Pamet River Partners, Ms. Hamilton spent 17 years at Ingalls, Quinn & Johnson in various capacities, during which time she was a member of the Board of Directors, a member of the Agency Executive Committee and Senior Vice President, Director of Media Services. Ms. Hamilton is a member of the Audit Committee of the Company. Arthur F. Loewy, 68, has been a director of the Company since February 1989. He is a director of The TJX Companies, Inc. and was Chief Financial Officer and Executive Vice President--Finance of Zayre Corp. from 1982 to 1989. Mr. Loewy is Chairman of the Audit Committee, Chairman of the Finance Committee and a member of the Executive Committee of the Company. CURRENT DIRECTORS--TERMS EXPIRING 1998 S. James Coppersmith, 64, has been a director of the Company since December 1993. He was President and General Manager of WCVB-TV, a Boston television station, from 1990 to 1994. From 1982 to 1990 he was Vice President and General Manager of WCVB-TV. Mr. Coppersmith is a director of Kushner-Locke Company, Chyron Corporation, All-Comm Media Corporation, Sun America Asset Management Corporation and Uno Restaurant Corporation, Chairman of the Board of Trustees of Emerson College and a member of the Board of Governors of the Boston Stock Exchange. Mr. Coppersmith is a member of the Executive Compensation Committee of the Company. Thomas J. Shields, 50, has been a director of the Company since June 1992. He is President of Shields & Company, Inc., an investment banking firm. Mr. Shields is also a director of Seaboard Corporation and Versar, Inc. Mr. Shields is Chairman of the Executive Compensation Committee and a member of the Executive Committee of the Company. 1 Herbert J. Zarkin, 58, has been a director, President and Chief Executive Officer of the Company since May 1993 and was President of the Company's BJ's Wholesale Club Division from May 1990 to May 1993. From April 1989 to May 1993 he was Executive Vice President of the Company. Mr. Zarkin is a member of the Executive Committee and the Finance Committee of the Company. CURRENT DIRECTORS--TERMS EXPIRING 1999 Allyn L. Levy, 69, has been a director of the Company since October 1993. He has been a private investor since 1988. From 1974 until 1986, he was founder, Chairman of the Board and Chief Executive Officer of Patriot Bank Corporation, a commercial bank holding company. He is a director of CV Reit, Inc. Mr. Levy is a member of the Audit Committee of the Company. Lorne R. Waxlax, 63, has been a director of the Company since January 1990 and Chairman of the Board of the Company since June 1996. He was an Executive Vice President of The Gillette Company from 1985 to 1993. Mr. Waxlax is also a director of Quaker State Corporation, The Iams Company, Hon Industries, Inc. and Clean Harbors, Inc. Mr. Waxlax is Chairman of the Executive Committee and a member of the Finance Committee of the Company. NOMINEE FOR ELECTION AS DIRECTOR Edward J. Weisberger, 55, has been Senior Vice President and Chief Financial Officer of the Company since September 1994. From 1989 to 1994 he was Vice President--Finance of the Company. EXECUTIVE OFFICERS OF THE COMPANY The information required by this Item with respect to executive officers is set forth under the heading "Executive Officers of the Registrant" in Part I of this Form 10-K and is incorporated herein by reference. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Exchange Act requires the Company's directors and executive officers, and persons who own more than ten percent of a registered class of the Company's equity securities, to file with the Commission and the New York Stock Exchange initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, directors and greater-than-ten-percent stockholders are required by Commission regulation to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during fiscal 1996 all Section 16(a) filing requirements applicable to its officers, directors and greater-than-ten-percent beneficial owners were complied with, except that Mr. Feldberg filed three months late a Form 4 relating to the sale of 10,000 shares of Common Stock of the Company by trusts of which he and his wife are beneficiaries. 2 ITEM 11: EXECUTIVE COMPENSATION EXECUTIVE COMPENSATION The following table sets forth certain information concerning the annual and long-term compensation paid for fiscal 1994, 1995 and 1996 to (i) the Company's Chief Executive Officer and (ii) the Company's four other most highly compensated executive officers during fiscal 1996 who were serving as executive officers of the Company on January 25, 1997 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE ANNUAL COMPENSATION LONG-TERM COMPENSATION ------------------------------------ ----------------------- AWARDS(3) PAYOUTS ---------- ---------- OTHER ANNUAL SECURITIES ALL OTHER COMPEN- UNDERLYING LTIP COMPEN- NAME AND PRINCIPAL POSITION YEAR(1) SALARY BONUS SATION(2) OPTIONS(4) PAYOUTS(5) SATION(6) - --------------------------- -------- -------- -------- ---------- ---------- ---------- --------- Herbert J. Zarkin.......... 1996 $605,962 $199,361 $ 25,633 250,000 $360,640 $ 34,792 President and Chief 1995 570,000 171,285 24,112 100,000 -- 33,000 Executive Officer 1994 552,692 442,154 23,380 100,000 -- 31,969 Allan P. Sherman........... 1996 451,346 -- 238,170 20,000 83,190 27,019 Executive Vice President 1995 435,000 40,000 241,786 50,000 -- 26,250 and President, HomeBase 1994 422,885 189,420 219,829 65,000 -- 101,114 Division. John J. Nugent............. 1996 382,693 253,450 16,189 20,000 303,278 23,635 Executive Vice President 1995 350,000 134,967 14,806 50,000 -- 22,000 and President, BJ's 1994 332,692 188,038 14,074 65,000 -- 21,135 Wholesale Club Division Edward J. Weisberger....... 1996 238,077 46,996 10,071 70,000 180,320 16,404 Senior Vice President and 1995 225,000 40,567 9,518 40,000 -- 15,750 Chief Financial Officer 1994 197,847 86,777 8,369 40,000 -- 14,392 Sarah M. Gallivan.......... 1996 154,904 20,385 5,687 6,000 72,128 12,245 Vice President, General 1995 144,808 17,406 5,316 -- -- 11,740 Counsel 1994 131,885 43,074 4,842 10,000 -- 10,849
(1) Refers to fiscal year ended in January of the following year. (2) Includes for Mr. Sherman $130,344, $135,204 and $137,240 in fiscal 1996, fiscal 1995 and fiscal 1994, respectively, for loan forgiveness and the value of the interest-free component of a housing loan from the 3 Company pursuant to the terms of his employment contract, and $80,671, $80,797 and $60,374 in fiscal 1996, fiscal 1995 and fiscal 1994, respectively, for reimbursement of tax liabilities related to that loan and certain items under "All Other Compensation." Includes for all other Named Executive Officers the reimbursement for tax liabilities related to the Company's contributions under the Waban Inc. Executive Retirement Plan ("WERP") and excludes perquisites having an aggregate value of the lesser of $50,000 or 10% of salary plus bonus. (3) No restricted stock awards were granted to the Named Executive Officers in the last three fiscal years. The following table presents the aggregate restricted stock holdings of the Named Executive Officers as of January 25, 1997 and the value of such holdings based on the fair market value of the Company's Common Stock on January 25, 1997 ($27.25):
RESTRICTED STOCK HOLDINGS AT 1/25/97 ------------------- SHARES VALUE ------ -------- Herbert J. Zarkin 1,706 $ 46,489 Allan P. Sherman 5,312 144,752 John J. Nugent 1,440 39,240 Edward J. Weisberger 847 23,081 Sarah M. Gallivan 484 13,189
In the event of a change of control (as defined), each Named Executive Officer's restricted stock would become unrestricted. Holders of restricted stock are entitled to the same dividends as those paid to holders of unrestricted shares. (4) Reflects the grant of options to purchase Common Stock. The Company has never granted stock appreciation rights. (5) Payouts for fiscal 1996 represent 50% of the Waban Inc. Growth Incentive Plan ("WGIP") award earned by the Named Executive Officer for the three- year performance period ended January 25, 1997. The remaining 50% of the award is payable in April 1998, contingent on employment continuing through March 31, 1998. 4 (6) For fiscal 1996, represents the Company's contributions under its 401(k) Savings Plan and WERP as presented below:
1996 COMPANY CONTRIBUTIONS --------------------- 401(k) SAVINGS PLAN WERP -------- ----- Herbert J. Zarkin................ $4,494 $30,298 Allan P. Sherman................. 4,500 22,519 John J. Nugent................... 4,500 19,135 Edward J. Weisberger............. 4,500 11,904 Sarah M. Gallivan................ 4,500 7,745
STOCK OPTION GRANTS The following table sets forth the stock option grants made by the Company to each of the Named Executive Officers during fiscal 1996: OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE ------------------------------------------------------ VALUE AT ASSUMED ANNUAL RATES NUMBER OF PERCENT OF OF STOCK PRICE APPRECIATION FOR SECURITIES TOTAL OPTIONS OPTION TERM (1) UNDERLYING GRANTED TO EXERCISE OR ------------------------------- OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION NAME GRANTED FISCAL YEAR PER SHARE (2) DATE 0%(3) 5% 10% - -------------- ---------- ------------- ---------- ---------- ------- ---------- --------- Herbert J. Zarkin 40,000 5.1% $24.750 4/11/06 $0 $ 622,606 $1,577,805 210,000 27.0% 22.875 9/19/06 0 3,021,053 7,655,940 Allan P. Sherman 20,000 2.6% 24.750 4/11/06 0 311,303 788,903 John J. Nugent 20,000 2.6% 24.750 4/11/06 0 311,303 788,903 Edward J. Weisberger 20,000 2.6% 24.750 4/11/06 0 311,303 788,903 50,000 6.4% 22.875 9/19/06 0 719,298 1,822,843 Sarah M. Gallivan 6,000 0.8% 24.750 4/11/06 0 93,391 236,671 - -------------------
(1) The dollar amounts in these columns are the result of calculations at 0% and the arbitrary appreciation rates of 5% and 10% set by the Commission and are not intended to forecast possible future stock price appreciation, if any. (2) All options granted in fiscal 1996 were granted with an exercise price equal to the closing price of the Common Stock on the New York Stock Exchange on the date of grant. These options expire ten years from the date of grant. Options granted on April 11, 1996 vest in equal annual installments over four years; options granted on September 19, 1996 vest in equal annual installments over three years. All options vest upon a change of control (as defined). 5 (3) No gain to the optionees is possible without an appreciation in stock price, which will benefit all stockholders commensurately. A zero percent stock price appreciation will result in zero gain for the optionee. AGGREGATED OPTION EXERCISES AND VALUATION The following table sets forth, on an aggregated basis, the exercise of stock options during fiscal 1996 by each of the Named Executive Officers and the fiscal year-end value of unexercised options held by such officers: AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY NUMBER OF UNEXERCISED OPTIONS AT FISCAL YEAR-END OPTIONS AT FISCAL YEAR-END (2) SHARES ACQUIRED VALUE -------------------------------------- ---------------------------------- NAME ON EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ------------------- --------------- ------------ ---------------- ------------------ -------------- ----------------- Herbert J. Zarkin -- $ -- 265,000 335,000 $2,950,313 $1,949,688 Allan P. Sherman 19,000 215,688 108,250 67,750 1,140,844 546,594 John J. Nugent -- -- 122,250 67,750 1,349,000 544,250 Edward J. Weisberger 500 6,688 72,000 95,500 754,250 508,563 Sarah M. Gallivan -- -- 11,750 12,750 107,406 82,406
______________ (1) Based on the difference between the option exercise price and the fair market value of the Company's Common Stock on the date of exercise. (2) Based on the fair market value of the Company's Common Stock on January 25, 1997 ($27.25 per share), less the option exercise price. LONG-TERM INCENTIVE AWARDS The following table sets forth information related to long-term incentive awards granted to the Named Executive Officers during fiscal 1996 pursuant to the WGIP: LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
NUMBER OF SHARES, PERFORMANCE OR ESTIMATED FUTURE PAYOUTS UNDER UNITS OR OTHER PERIOD NON-STOCK PRICE-BASED PLANS OTHER UNTIL MATURATION ------------------------------------------ NAME RIGHTS OR PAYOUT THRESHOLD TARGET MAXIMUM - ----------------- -------- ---------------- --------- --------- ---------------- Herbert J. Zarkin 20 Units FYE 1/97 - 1/99 $468,000 $ 0 $1,710,000 Allan P. Sherman 15 Units FYE 1/97 - 1/99 194,400 0 1,305,000 John J. Nugent 15 Units FYE 1/97 - 1/99 273,000 371,220 1,050,000 Edward J. Weisberger 10 Units FYE 1/97 - 1/99 234,000 0 675,000 Sarah M. Gallivan 6 Units FYE 1/97 - 1/99 140,400 0 450,000
Employees in high-level management positions in the Company, as selected by the Executive Compensation Committee, were awarded units under the WGIP during fiscal 1996. Each unit has a value in 6 dollars equal to a designated percentage of improvement in net income (for corporate executives) or divisional pre-tax income (for divisional executives) during the three-year fiscal period ending January 30, 1999 over base period income, as defined, for fiscal 1995. No payment will be made unless cumulative net or pre-tax income, as applicable, is at least equal to 10% compounded growth over the base period amount. The "threshold" amounts in the table above would be earned upon achievement of 10% compounded growth in earnings. No participant may receive a cash award in excess of 300% of the participant's annualized base salary as of the beginning of the award period. This limit is reflected in the "maximum" amount column of the table above. The WGIP does not specify a target payout amount. Accordingly, pursuant to Commission rules, the target payout level in the table above assumes in each case that fiscal 1996's income level will be achieved in each of the three fiscal years during the award period. This assumption would result in no payout for each of the Named Executive Officers (other than Mr. Nugent) because cumulative net or pre-tax income would be less than 10% compounded growth over the base period amount. The dollar amounts in the table are not intended to forecast future payments, if any, under WGIP. One-half of the cash award earned under the WGIP for the three-year award period ending January 30, 1999 will be paid in April 1999 to participants employed through January 30, 1999. The remaining one-half of the award will be paid in April 2000, contingent upon employment continuing through March 31, 2000. DIRECTOR COMPENSATION Directors who are not employees of the Company are paid an annual retainer of $20,000 and fees of $1,250 for each Board meeting attended, $750 for each Committee meeting attended and $750 for certain telephone meetings. In addition, the Chairman of the Board is paid an additional retainer of $100,000 per annum and the Chairman of the Audit Committee and the Chairman of the Executive Compensation Committee are each paid $2,500 per annum for their services as such. All directors are reimbursed for out-of-pocket expenses incurred in attending such meetings. Directors may participate in the Company's General Deferred Compensation Plan. The stockholders approved the 1995 Director Stock Option Plan (the "Director Plan") at the Company's 1995 annual meeting of stockholders and each non-employee director of the Company was granted on June 13, 1995 an option to purchase 3,000 shares of the Company's Common Stock. On the date of each annual meeting, each continuing non-employee director is granted an option to acquire an additional 1,500 shares of the Company's Common Stock, and each non-employee director newly elected or elected subsequent to the then most recent annual meeting receives an option to purchase 3,000 shares of the Company's Common Stock. The option exercise price for each of these options is the fair market value of a share of the Company's Common Stock on the date of grant. Each option is nontransferable except upon death, expires ten years after the date of grant and becomes exercisable in three equal annual installments beginning approximately one year after the date of grant. If the director dies or otherwise ceases to be a director prior to the date the option becomes exercisable, the option will immediately expire. Any vested options will remain exercisable for a period of one year following cessation of service as a director of the Company. All unexercised options will become exercisable in full beginning 20 days prior to the consummation of a merger or consolidation (as described in the Director Plan), acquisition, reorganization or liquidation and, to the extent not exercised, shall terminate immediately after the consummation of such merger, consolidation, acquisition, reorganization or liquidation. EMPLOYMENT AGREEMENTS Under the Company's employment agreement with Mr. Zarkin, Mr. Zarkin receives a minimum annual base salary of $625,000 and participates in specified incentive and other benefit plans. The Company is entitled to terminate Mr. Zarkin's employment at any time with or without cause (as defined). If his employment terminates by reason of death, disability, incapacity or termination by the Company other than for cause, or if a change of control occurs, Mr. Zarkin is entitled to payment of certain cash compensation 7 amounts and continuation of base salary and certain benefits for a period of 24 months after termination at the rate in effect upon termination. The continuing base salary payments are subject to reduction after 12 months for compensation earned by Mr. Zarkin from other employment, and the continuing benefits are subject to reduction at any time for comparable benefits received by Mr. Zarkin from other employment. Under the Company's employment agreement with Mr. Sherman, Mr. Sherman receives a minimum annual base salary of $460,000 and participates in specified incentive and other benefit plans. In addition, in connection with his election as President of the HomeBase Division in 1993, the Company agreed to extend to him an interest-free loan of $700,000 for the purchase of a residence in California and to forgive the loan over seven years in equal installments, $100,000 of which was forgiven in each of fiscal 1994, 1995 and 1996. The Company also agreed to make certain tax "gross-up" payments to Mr. Sherman. The Company is entitled to terminate Mr. Sherman's employment at any time with or without cause (as defined). If Mr. Sherman's employment terminates by reason of death, disability or termination by the Company other than for cause, the Company is required to pay certain cash compensation amounts, to continue payment of Mr. Sherman's base salary and certain benefits for 52 weeks after termination at the rate in effect upon termination, and to extend the term of Mr. Sherman's relocation loan, including the provisions for debt forgiveness. The continuing base salary payments are subject to reduction after three months for compensation earned by Mr. Sherman from other employment, and the continuing benefits are subject to reduction at any time for comparable benefits received by Mr. Sherman from other employment. The Company has an employment agreement with each of Messrs. Nugent and Weisberger and Ms. Gallivan under which they receive minimum annual base salaries of $400,000, $245,000 and $157,500, respectively, and participate in specified incentive and other benefit plans. If employment terminates by reason of death, disability, incapacity or termination by the Company other than for cause, each such executive is entitled to payment of certain cash compensation amounts and to certain benefits and continuation of base salary for 12 months after termination at the rate in effect upon termination. The continuing base salary payments are subject to reduction after three months for compensation earned by the executive from other employment, and the continuing benefits are subject to reduction at any time for comparable benefits received by the executive from other employment. In the event of a change of control followed by termination of employment as described below under "Change of Control Severance Benefits," each of the Named Executive Officers would be entitled to the termination benefits described thereunder, to the extent such benefits would exceed the benefits otherwise described above. CHANGE OF CONTROL SEVERANCE BENEFITS The Company provides change of control severance benefits to each of the Named Executive Officers under individual agreements. Under the agreements, in general, upon a change of control (as defined) of the Company, the executive would be entitled to lump-sum payment of the Management Incentive Plan ("MIP") target award for the year in which the change of control occurs. If, during the 24-month period following a change of control, the Company were to terminate the executive's employment other than for cause (as defined) or the executive were to terminate employment for reasons specified in the agreement, or if employment were to terminate by reason of death, disability or incapacity, the 8 executive would be entitled to receive an amount equal to two times the executive's annual base salary. For up to two years following termination the Company would also be obligated to provide specified benefits, including continued health, medical and life insurance benefits. The foregoing benefits would be payable whether or not they gave rise to a federal excise tax on so- called "excess parachute payments" or were non-deductible, except to the extent a reduction in amounts paid would increase the executive's after-tax benefits. The Company would also be obligated to pay all legal fees and expenses reasonably incurred by the executive in seeking enforcement of contractual rights following a change of control. In addition, upon involuntary termination within 24 months following a change of control, any agreement by the executive not to compete with the Company following termination of the executive's employment would cease to be effective. INDEMNIFICATION AGREEMENTS The Company has entered into indemnification agreements with each of its directors and executive officers indemnifying them against expenses, settlements, judgments and fines incurred in connection with any threatened, pending or completed action, suit, arbitration or proceeding, where the individual's involvement is by reason of the fact that he or she is or was a director or officer of the Company or served at the Company's request as a director of another organization (except that indemnification is not provided against judgments and fines in a derivative suit unless permitted by Delaware law). An individual may not be indemnified if he or she is found not to have acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company, except to the extent Delaware law permits broader contractual indemnification. The indemnification agreements provide procedures, presumptions and remedies designed to substantially strengthen the indemnity rights beyond those provided by the Company's Certificate of Incorporation and by Delaware law. BOARD AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION In fiscal 1996, decisions concerning compensation of the Company's executive officers were made by the Executive Compensation Committee. Until June 11, 1996, the Executive Compensation Committee consisted of Messrs. Waxlax, Coppersmith and Feldberg. Effective upon his election as Chairman of the Board of Directors on June 11, 1996, Mr. Waxlax ceased to serve on the Executive Compensation Committee and was replaced by Mr. Shields. 9 ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information as to the beneficial ownership of the Company's Common Stock as of March 31, 1997 (unless otherwise indicated) by (i) each person or entity known to the Company to beneficially own more than 5% of the outstanding shares of the Company's Common Stock, (ii) each director or nominee for director of the Company, (iii) each of the Named Executive Officers and (iv) all current directors and executive officers of the Company, as a group.
PERCENT OF OUTSTANDING SHARES SHARES OF COMMON OF COMMON STOCK STOCK BENEFICIALLY BENEFICIALLY NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) OWNED(1) - -------------------------------------------- ------------------ ------------------ The Prudential Insurance Company of America 2,983,308(2) 9.09% 751 Broad Street Newark, New Jersey 01102 Franklin Resources, Inc. et al.............. 2,516,800(3) 7.67% 777 Mariners Island Blvd. P.O. Box 7777 San Mateo, CA 94404 David J. Greene and Company................. 2,428,555(4) 7.40% 599 Lexington Avenue New York, New York 10022 Morgan Stanley Group Inc.................... 1,811,495(5) 5.52% 1585 Broadway New York, NY 10036 S. James Coppersmith........................ 3,000 * Stanley H. Feldberg(6)...................... 16,218 * Kerry L. Hamilton........................... 1,200 * Allyn L. Levy............................... 6,000 * Arthur F. Loewy(6).......................... 9,632 * Thomas J. Shields........................... 1,500 * Lorne R. Waxlax............................. 8,000 * Herbert J. Zarkin........................... 413,932 1.25% Sarah M. Gallivan........................... 20,896 * John J. Nugent.............................. 163,316 * Allan P. Sherman............................ 153,750 * Edward J. Weisberger........................ 103,917 * All Directors and Executive Officers of the Company as a Group (12 persons).... 901,361 2.69% - ---------------------------
* Indicates less than 1% (1) Includes the following shares of Common Stock that may be acquired upon exercise of outstanding stock options which were exercisable on March 31, 1997 or within 60 days thereafter: Mr. Coppersmith, 1,000 shares; Mr. Feldberg, 1,000 shares; Ms. Hamilton, 1,000 shares; Mr. Levy, 1,000 shares; Mr. Loewy, 1,000 shares; Mr. 10 Shields, 1,000 shares; Mr. Waxlax, 1,000 shares; Mr. Zarkin, 301,250 shares; Ms. Gallivan, 16,000 shares; Mr. Nugent, 142,750 shares; Mr. Sherman, 128,750 shares; Mr. Weisberger, 82,500 shares; all Directors and Executive Officers of the Company as a group, 678,250 shares. (2) As of March 31, 1997 based on information provided to the Company by The Prudential Insurance Company of America ("Prudential"). Prudential reported that it has sole power to vote 144,200 shares and shared power to vote 2,783,734 shares and has sole dispositive power with respect to 193,800 and shared dispositive power with respect to 2,783,734 shares. Includes 5,818 shares issuable upon conversion of the Company's 6.5% Convertible Subordinated Debentures. (3) As of March 31, 1997 based on information provided to the Company by Franklin Resources, Inc., et al. Franklin Mutual Advisors, Inc. reported that (i) it has sole power to vote or to direct the voting of 2,280,800 shares and Templeton Investment Counsel, Inc. has sole power to vote or direct the voting of 236,000 shares; and (ii) it has sole dispositive power with respect to 2,280,800 shares and Templeton Investment Counsel, Inc. has sole dispositive power with respect to 236,000 shares. (4) Information is as of December 31, 1996 and is based on a Schedule 13G filed with the Commission by David J. Greene and Company, a registered broker- dealer and investment adviser. David J. Greene and Company reported that it has sole power to vote 152,400 shares and shared power to vote 1,546,500 shares and has sole dispositive power with respect to 152,400 shares and shared dispositive power with respect to 2,428,555 shares. (5) Information is as of December 31, 1996 and is based on a Schedule 13G filed with the SEC by Morgan Stanley Group Inc. ("Morgan Stanley"). Morgan Stanley reported that it has shared voting power with respect to 1,708,895 shares and shared dispositive power with respect to 1,811,495 shares. (6) Includes the following shares beneficially owned by the following persons as trustees or custodians of which beneficial interest is disclaimed unless otherwise indicated: Mr. Feldberg (8,366 shares). Excludes the following shares beneficially owned by or held in trust by or for the benefit of the respective spouses of the following persons and any shares held in a trust for which the following persons are income beneficiaries, as to which the following persons disclaim beneficial ownership: Mr. Feldberg (84 shares); Mr. Loewy (413 shares). ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Not applicable. 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 report to be signed on its behalf by the undersigned, thereunto duly authorized. WABAN INC. /s/ EDWARD J. WEISBERGER ------------------------------------------------- Edward J. Weisberger Senior Vice President and Chief Financial Officer Dated: May 23, 1997 12 -----END PRIVACY-ENHANCED MESSAGE-----