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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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 Under Rule 14a-12
Silgan Holdings Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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SILGAN HOLDINGS INC.
4 Landmark Square
Stamford, Connecticut 06901
(203) 975-7110
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Notice of Annual Meeting of Stockholders
To be Held on May 29, 2002
-----------------
YOU ARE HEREBY NOTIFIED that the annual meeting of stockholders of Silgan
Holdings Inc., or the Company, a Delaware corporation, will be held at the
Sheraton Stamford Hotel, 2701 Summer Street, Stamford, Connecticut 06905 at
9:00 a.m. on Wednesday, May 29, 2002, for the following purposes:
1. To elect two directors of the Company to serve until the Company's
annual meeting of stockholders in 2005 and until their successors are
duly elected and qualified;
2. To approve the adoption of the Silgan Holdings Inc. 2002 Non-Employee
Directors Stock Option Plan;
3. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 2002; and
4. To transact such other business as may properly come before the annual
meeting or any adjournment or postponement of the annual meeting.
The close of business on April 12, 2002 has been fixed as the record date
for determining the stockholders of the Company entitled to notice of and to
vote at the annual meeting. All holders of record of Common Stock of the
Company at that date are entitled to vote at the annual meeting or any
adjournment or postponement of the annual meeting.
By Order of the Board of Directors,
/s/ Frank W. Hogan, III
Frank W. Hogan, III
Secretary
Stamford, Connecticut
April 26, 2002
Please complete, sign and mail the enclosed Proxy in the accompanying envelope
even if you intend to be present at the annual meeting. Please sign the
enclosed Proxy exactly as your name appears on it. Returning the Proxy will not
limit your right to vote in person or to attend the annual meeting. If you hold
shares of Common Stock of the Company in more than one name, or if your shares
of Common Stock of the Company are registered in more than one way, you may
receive more than one copy of the proxy material. If so, please sign and return
each of the Proxies that you receive so that all of your shares of Common Stock
of the Company may be voted.
The annual meeting will be held to vote on the first three items listed above,
tabulate the votes cast in respect of those items and report the results of the
vote. No presentations or other business matters are planned for the annual
meeting.
SILGAN HOLDINGS INC.
4 Landmark Square
Stamford, Connecticut 06901
(203) 975-7110
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PROXY STATEMENT
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Annual Meeting of Stockholders
to be held on May 29, 2002
To Stockholders of Silgan Holdings Inc.:
This Proxy Statement and the accompanying proxy card are furnished in
connection with the solicitation of proxies by the Board of Directors of Silgan
Holdings Inc., or the Company, for use at our annual meeting of stockholders,
or the Meeting, to be held at the Sheraton Stamford Hotel, 2701 Summer Street,
Stamford, Connecticut 06905 on Wednesday, May 29, 2002, at 9:00 a.m., and at
any postponements or adjournments of the Meeting. This Proxy Statement and the
accompanying proxy card are first being mailed to stockholders on or about
April 26, 2002.
Only holders of record of our Common Stock as of the close of business on
April 12, 2002, the Record Date, will be entitled to notice of and to vote at
the Meeting. As of the Record Date, we had 18,005,685 shares of our Common
Stock outstanding, and each share is entitled to one vote. We have no other
class of voting securities issued and outstanding. The presence in person or by
proxy of the holders of a majority of the outstanding shares of our Common
Stock will be necessary to constitute a quorum for the transaction of business
at the Meeting.
All shares of our Common Stock represented by properly executed proxies will
be voted in accordance with the instructions indicated on such proxies unless
such proxies previously have been revoked. If any proxies do not contain voting
instructions, the shares of our Common Stock represented by such proxies will
be voted FOR the election of the nominees for director listed below to serve
until our annual meeting of stockholders in 2005 and until their successors are
duly elected and qualified, FOR the approval of the Silgan Holdings Inc. 2002
Non-Employee Directors Stock Option Plan and FOR the ratification of the
appointment of Ernst & Young LLP as our independent auditors for the fiscal
year ending December 31, 2002. We do not anticipate that any other matters will
be brought before the Meeting. If any other matters properly come before the
Meeting, the shares of our Common Stock represented by all properly executed
proxies will be voted in accordance with the judgment of the persons named on
such proxies. Shares of our Common Stock abstaining, and shares of our Common
Stock held in street name as to which a broker has not voted on some matters
but has voted on other matters, or Broker Shares, will be included in
determining whether a quorum exists at the Meeting. Approval of each matter
specified in the Notice of Meeting requires the affirmative vote of a majority
of shares of our Common Stock present in person or by proxy at the Meeting,
assuming that a quorum exists at the Meeting. Stockholders may not cumulate
their votes. Abstentions and Broker Shares that have not been voted with
respect to a particular proposal will not be counted in determining the total
number of votes cast or in determining whether such proposal has received the
requisite number of affirmative votes.
You may revoke your proxy at any time before it is exercised at the Meeting
by (1) delivering to the Secretary of the Company a duly executed proxy bearing
a later date; (2) filing a written notice of revocation with the Secretary of
the Company; or (3) appearing at the Meeting and voting in person.
In addition to solicitations by mail, some of our directors, officers and
employees may solicit proxies for the Meeting personally or by telephone
without extra remuneration. We will also provide persons, banks, brokerage
firms, custodians, nominees, fiduciaries and corporations holding shares in
their names or in the names of nominees, which in either case are beneficially
owned by others, with proxy materials for transmittal to such beneficial owners
and will reimburse such record owners for their expenses in doing so. The
Company will bear the costs of soliciting proxies.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON TO
WHOM A COPY OF THIS PROXY STATEMENT HAS BEEN DELIVERED, UPON THE WRITTEN
REQUEST OF ANY SUCH PERSON, A COPY OF OUR ANNUAL REPORT ON FORM 10-K, INCLUDING
THE FINANCIAL STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULE THERETO, THAT HAS
BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 13a-1
UNDER THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER
31, 2001. REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO SILGAN HOLDINGS INC.,
4 LANDMARK SQUARE, STAMFORD, CONNECTICUT 06901 (TELEPHONE NUMBER: (203)
975-7110), ATTENTION: GENERAL COUNSEL.
ELECTION OF DIRECTORS
Nominees
Our Board of Directors is composed of six members, divided evenly into three
classes (designated Class I, Class II and Class III). At each annual meeting of
stockholders, the term of office of one class of directors of the Company
expires, and directors nominated to the class of directors whose term is
expiring at such annual meeting will be elected for a term of three years. Our
remaining directors continue in office until their respective terms expire and
until their successors are duly elected and qualified. Accordingly, at each
annual meeting of stockholders of the Company two of our six directors will be
elected, and each of our directors will be required to stand for election once
every three years. At the Meeting, the term of office for our Class II
Directors expires.
Our Class II Directors currently are Messrs. D. Greg Horrigan and John W.
Alden. Our Board of Directors has nominated each of Messrs. Horrigan and Alden
for re-election at the Meeting as Class II Directors of the Company, each to
serve until our annual meeting of stockholders in 2005 and until his successor
has been duly elected and qualified. Messrs. Horrigan and Alden were nominated
for re-election as Class II Directors of the Company pursuant to provisions of
the Amended and Restated Stockholders Agreement dated as of November 6, 2001,
or the Stockholders Agreement, among R. Philip Silver, D. Greg Horrigan and the
Company. You should read the section in this Proxy Statement titled ''Certain
Relationships and Related Transactions--Stockholders Agreements'' for a
description of the material terms and provisions of the Stockholders Agreement.
Each nominee for Class II Director of the Company has consented to be named
in this Proxy Statement and to serve on our Board of Directors if elected. If,
prior to the Meeting, any nominee should become unavailable to serve on our
Board of Directors for any reason, the shares of our Common Stock represented
by all properly executed Proxies will be voted for such alternate individual as
shall be designated by our Board of Directors.
We have provided information regarding each nominee for Class II Director of
the Company and each Director of the Company whose term of office continues
after the Meeting, including the individual's age (as of December 31, 2001),
principal occupation, business experience during at least the last five years,
and other directorships currently held and the year in which such individual
was first elected a director of the Company.
Nominees for election as Directors (Class II)--term expiring 2005
D. Greg Horrigan, age 58, has been our President and Co-Chief Executive
Officer since March 1994. Mr. Horrigan is one of our founders and was formerly
our Chairman of the Board. Mr. Horrigan has been a Director since our inception
in 1987. Mr. Horrigan has been Chairman of the Board of Silgan Containers
Corporation, or Silgan Containers, one of two wholly owned subsidiaries of the
Company through which we conduct principally all of our business, and a
director of Silgan Plastics Corporation, or Silgan Plastics, the other wholly
owned subsidiary of the Company through which we conduct principally all of our
business, since their inception in August 1987. Prior to founding the Company
in 1987, Mr. Horrigan was Executive Vice President and Operating Officer of
Continental Can Company from 1984 to 1987.
2
John W. Alden, age 60, has been one of our directors since November 2001.
From 1965 until 2000, Mr. Alden was employed by United Parcel Service of
America, Inc., or UPS, serving in various management positions. Until his
retirement in 2000, Mr. Alden was Vice Chairman of UPS since 1996 and a
director of UPS since 1988. Mr. Alden is also a director of Barnes Group Inc.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR BOTH NOMINEES
FOR DIRECTOR (CLASS II) OF THE COMPANY.
Incumbent Directors (Class I)--term expiring 2004
R. Philip Silver, age 59, has been our Chairman of the Board and Co-Chief
Executive Officer since March 1994. Mr. Silver is one of our founders and was
formerly our President. Mr. Silver has been a Director since our inception in
1987. Mr. Silver has been a director of Silgan Containers since its inception
in August 1987 and Vice President of Silgan Containers since May 1995. Mr.
Silver has been a director of Silgan Plastics since its inception in August
1987 and Chairman of the Board of Silgan Plastics since March 1994. Prior to
founding the Company in 1987, Mr. Silver was a consultant to the packaging
industry. Mr. Silver was President of Continental Can Company from June 1983 to
August 1986.
Leigh J. Abramson, age 33, has been one of our directors since September
1996. He has been with Morgan Stanley & Co. Incorporated, or Morgan Stanley,
since 1990 and Morgan Stanley Private Equity since 1992. He has been a Managing
Director of Morgan Stanley since December 2001. Mr. Abramson is also a director
of Weblink Wireless, Inc., Smurfit Stone Container Corporation and several
private companies.
Incumbent Directors (Class III)--term expiring 2003
Edward A. Lapekas, age 58, has been one of our directors since October 2001.
Mr. Lapekas was Executive Chairman of Packtion Corporation, an e-commerce
packaging venture, from October 2000 until June 2001. From May 1996 until July
2000, Mr. Lapekas was employed by American National Can Group, Inc., last
serving as Chairman and Chief Executive Officer. Prior to that, Mr. Lapekas
served as Deputy Chairman and Chief Operating Officer of Schmalbach-Lubeca AG.
From 1971 until 1991, Mr. Lapekas was employed by Continental Can Company where
he served in various strategy, planning, operating and marketing capacities.
Jeffrey C. Crowe, age 55, has been one of our directors since May 1997. Mr.
Crowe has been Chairman of the Board, President and Chief Executive Officer of
Landstar System, Inc., or Landstar, since April 1991, and President and Chief
Executive Officer of Landstar System Holdings, Inc., or LSHI, since June 1989
and Chairman of LSHI since March 1991. Mr. Crowe has also been President of
Signature Insurance Company, a subsidiary of LSHI, since February 1997. Mr.
Crowe has served as Chairman of the National Defense Transportation Association
since October 1993. From November 1989 to November 1998, Mr. Crowe served in a
number of capacities at the American Trucking Association, Inc., or ATA,
including Director, Secretary and as a member of the ATA Executive Committee.
Mr. Crowe has served as a Director of the National Chamber Foundation since
November 1997, a Director of the U.S. Chamber of Commerce since February 1998
and a Director of Sun Trust Bank North-Florida, N.A. since January 1999.
Mr. Horrigan was elected as a Director of the Company at our annual meeting
of stockholders in 1999. Mr. Alden was nominated for election as a Director of
the Company pursuant to the Stockholders Agreement to replace James S. Hoch,
who resigned as a Director of the Company in November 2001, and Mr. Alden was
elected to the Board of Directors of the Company in November 2001 by the
unanimous vote of the other Directors of the Company pursuant to our Restated
Certificate of Incorporation. Messrs. Silver and Abramson were elected as
Directors of the Company at our annual meeting of stockholders in 2001. Mr.
Crowe was elected as a Director of the Company at our annual meeting of
stockholders in 2000. Mr. Lapekas was nominated for election as a Director of
the Company pursuant to a prior stockholders agreement of the Company to
replace Thomas M. Begel, who resigned as a Director of the Company in October
2001, and Mr. Lapekas was elected to the Board of Directors of the Company in
October 2001 by unanimous vote of the other Directors of the Company pursuant
to our Restated Certificate of Incorporation.
3
Our Board of Directors met four times and acted by written consent ten times
during 2001. None of our incumbent Directors attended fewer than 75 percent of
the aggregate of: (1) the total number of meetings of the Board of Directors
held in 2001 while he was a Director and (2) the total number of meetings held
in 2001 by all committees of the Board of Directors on which he served while he
was a Director.
Compensation of Directors
Directors who do not receive compensation as officers or employees of the
Company or any of our affiliates are paid an annual retainer fee of $25,000 for
their service on our Board of Directors, and a fee of $2,000 for each meeting
of our Board of Directors that they attend and each meeting of a committee of
our Board of Directors that they attend and that is not held on the same day as
a meeting of our Board of Directors, plus reasonable out-of-pocket expenses.
Directors who receive compensation as officers or employees of the Company or
any of our affiliates do not receive annual or meeting fees.
Committees of the Board of Directors
Our Board of Directors has three standing committees. The principal
responsibilities of each of the standing committees and the members of such
committees are set forth below.
1. Audit Committee. The Audit Committee has the responsibility of
overseeing the Company's financial reporting process on behalf of our Board of
Directors. The functions performed by the Audit Committee are described in the
"Report of the Audit Committee" below. The Audit Committee is governed by a
written charter approved by our Board of Directors. During 2001, the Audit
Committee held three meetings and acted by written consent twice. The Audit
Committee currently consists of Messrs. Abramson, Alden and Lapekas, each of
whom is independent as required by the written charter of the Audit Committee
and applicable securities rules and regulations.
2. Compensation Committee. The Compensation Committee has the
responsibility of (i) reviewing matters relating to the compensation of all
executive officers of the Company (other than those who are compensated by S&H
Inc. (see "Certain Relationships and Related Transactions" and "Executive
Compensation")) and any executive officers of the subsidiaries of the Company
who are among the five most highly compensated executive officers of the
Company and its subsidiaries, and (ii) making recommendations to the Board of
Directors with respect to the compensation of such executive officers. The
Compensation Committee held one meeting and acted by written consent twice
during 2001. The Compensation Committee currently consists of Messrs. Crowe and
Lapekas.
3. Stock Option Committee. The Stock Option Committee administers the
Silgan Holdings Inc. 1989 Fourth Amended and Restated Stock Option Plan, or the
Stock Option Plan, and determines the officers and key employees of the Company
to whom stock options should be granted in accordance with the Stock Option
Plan. The Stock Option Committee did not formally meet during 2001 but acted by
written consent five times during 2001. The Stock Option Committee currently
consists of Messrs. Silver and Horrigan.
Our Board of Directors does not have a nominating committee.
4
REPORT OF THE AUDIT COMMITTEE
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors of the Company. Management of the Company has
the primary responsibility for the financial statements and the reporting
process of the Company including the systems of internal controls. In
fulfilling its oversight responsibilities, the Audit Committee reviewed with
management the audited consolidated financial statements included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2001,
including the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments and the clarity of
disclosures in the consolidated financial statements.
The Audit Committee reviewed with Ernst & Young LLP, the Company's
independent auditors responsible for expressing an opinion on the conformity of
those audited consolidated financial statements with accounting principles
generally accepted in the United States, their judgments as to the quality, not
just the acceptability, of the Company's accounting principles and other
matters as are required to be discussed with the Audit Committee under auditing
standards generally accepted in the United States. In addition, the Audit
Committee discussed with the independent auditors the auditors' independence
from management and the Company, including the matters in the written
disclosures and the letter required by the Independence Standards Board, and
considered the compatibility of nonaudit services with the auditors'
independence.
The Audit Committee discussed with the Company's management and independent
auditors the overall scope and plans for the Company's annual audits. The Audit
Committee met with the independent auditors, with and without management
present, to discuss the results of their examinations along with management's
responses to significant matters. Also, the Audit Committee discussed with
management and the independent auditors of the Company the integrity, adequacy
and effectiveness of the Company's financial reporting processes and accounting
and financial controls. The Audit Committee held three meetings during 2001.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors of the Company (and the Board
of Directors of the Company has approved) that the audited consolidated
financial statements be included in the Company's Annual Report on Form 10-K
for the year ended December 31, 2001 for filing with the Securities and
Exchange Commission. The Audit Committee has also recommended and the Board of
Directors of the Company has approved, subject to stockholder approval, the
selection of Ernst & Young LLP as the Company's independent auditors for the
fiscal year ending December 31, 2002.
By the Audit Committee of the Board
of Directors:
Leigh J. Abramson
John W. Alden
Edward A. Lapekas
5
EXECUTIVE OFFICERS
Our Board of Directors appoints the executive officers of the Company. The
executive officers of our subsidiaries are appointed by the respective boards
of directors of our subsidiaries. We provide below certain information
concerning the executive officers of the Company and its subsidiaries,
including each individual's age (as of December 31, 2001). Information
concerning Messrs. Silver and Horrigan, our Chairman of the Board and Co-Chief
Executive Officer and our President and Co-Chief Executive Officer,
respectively, is set forth in the section in this Proxy Statement titled
"Election of Directors." There are no family relationships among any of the
directors or executive officers of the Company.
Executive Officers of the Company
Harley Rankin, Jr., age 62, has been our Executive Vice President and Chief
Financial Officer since our inception. Mr. Rankin was also our Treasurer from
January 1992 until October 2001. Mr. Rankin has indicated his intention to
retire in June 2002. Mr. Rankin has been Vice President of Silgan Containers
and Silgan Plastics since January 1991 and May 1991, respectively, and was
Treasurer of Silgan Plastics from January 1994 to December 1994. Prior to
joining us, Mr. Rankin was Senior Vice President and Chief Financial Officer of
Armtek Corporation. Mr. Rankin was Vice President and Chief Financial Officer
of Continental Can Company from November 1984 to August 1986.
Frank W. Hogan, III, age 41, has been our Vice President, General Counsel
and Secretary since June 1997. Mr. Hogan has also been Vice President, General
Counsel and Secretary of Silgan Containers and Silgan Plastics since June 1997.
From September 1995 until June 1997, Mr. Hogan was a partner at the law firm of
Winthrop, Stimson, Putnam & Roberts. From April 1988 to September 1995, Mr.
Hogan was an associate at that firm.
Glenn A. Paulson, age 58, has been our Vice President--Corporate Development
since January 1996. Mr. Paulson has also been Vice President of Silgan
Containers since January 1999. From August 1995 to December 1995, Mr. Paulson
was employed by Silgan Containers to manage the transition of the Food Metal
and Specialty Business of American National Can Company, or ANC. From January
1989 to July 1995, Mr. Paulson was employed by ANC, last serving as Senior Vice
President and General Manager, Food Metal and Specialty, North America. Prior
to his employment with ANC, Mr. Paulson was President of the beverage packaging
operations of Continental Can Company.
Nancy Merola, age 39, has been our Vice President and Controller since
October 2000. Ms. Merola has also been Vice President of Silgan Containers and
Silgan Plastics since October 2000. From February 2000 to October 2000, Ms.
Merola was Manager, Reporting and Specialized Accounting, for Texaco Inc.
Previously, Ms. Merola was Director, Corporate Accounting and Headquarters
Planning, at RJR Nabisco Holdings, Inc. since January 1997. From September 1995
to January 1997, Ms. Merola was Financial Manager--Operations Finance at Kraft
Foods Inc., a subsidiary of Philip Morris Companies Inc. From 1989 to 1995, Ms.
Merola held various positions with Philip Morris Companies Inc., last serving
as Manager, Financial Planning and Analysis.
Malcolm E. Miller, age 34, has been our Vice President and Treasurer since
October 2001. Mr. Miller has also been Vice President of Silgan Containers and
Silgan Plastics since October 2001. Previously, Mr. Miller was Assistant Vice
President and Assistant Treasurer of Primedia Inc. from April 2000 until
October 2001. Prior to that, Mr. Miller was employed by us from June 1997 until
April 2000, last serving as Assistant Treasurer. From June 1995 until June
1997, Mr. Miller was employed by International Paper Company, last serving as a
Senior Financial Analyst.
Executive Officers of Silgan Containers
James D. Beam, age 58, has been President of Silgan Containers since July
1990. From September 1987 to July 1990, Mr. Beam was Vice President--Marketing
& Sales of Silgan Containers. Mr. Beam was Vice President and General Manager
of Continental Can Company, Western Food Can Division, from March 1986 to
September 1987.
6
Gary M. Hughes, age 59, has been Executive Vice President of Silgan
Containers since January 1998. Previously, Mr. Hughes was Vice President--Sales
& Marketing of Silgan Containers since July 1990. From February 1988 to July
1990, Mr. Hughes was Vice President, Sales and Marketing of the Beverage
Division of Continental Can Company. Prior to February 1988, Mr. Hughes was
employed by Continental Can Company in various sales positions.
Thomas Richmond, age 43, has been Executive Vice President of Silgan
Containers since September 2001. Previously, he was Senior Vice President of
Silgan Plastics since October 2000. Prior to that, Mr. Richmond was President
of RXI Plastics, Inc. from October 1995 to October 2000. From January 1993 to
October 1995, Mr. Richmond was Executive Vice President of Plastic Engineered
Components. From February 1991 to January 1993, he was Vice President and
General Manager of Berry Plastics Corporation. From October 1988 to February
1991, Mr. Richmond was Vice President and General Manager of Carnaud Metalbox
in the United States. Prior to that, he was employed by American Can Company
since September 1979, last serving as an Area Manager.
L. Geoffrey Greulich, age 40, has been Senior Vice President of Silgan
Containers since July 2000. From October 1998 to June 2000 he was Vice
President of Corporate Development for American Business Products Corp. Prior
to that, Mr. Greulich was employed by Tenneco Packaging, a unit of Tenneco
Inc., last serving as Regional Operations Director.
John Wilbert, age 42, has been Senior Vice President--Operations of Silgan
Containers since September 2001. Prior to that, Mr. Wilbert was Vice
President-Operations of Silgan Containers since January 1998. From October 1992
to January 1998, Mr. Wilbert was Area Manager of Operations of Silgan
Containers. Prior to October 1992, Mr. Wilbert was employed by Silgan
Containers in various positions.
Michael A. Beninato, age 53, has been Vice President--Supply Chain
Management of Silgan Containers since January 2001. Prior to that, Mr. Beninato
was Director of Production Planning and Warehousing of Silgan Containers from
August 1995 to January 2001. Prior to joining Silgan Containers in August 1995,
Mr. Beninato was employed by ANC for over 28 years in various production
control positions.
Joseph A. Heaney, age 48, has been Vice President--Finance of Silgan
Containers since October 1995. From September 1990 to October 1995, Mr. Heaney
was Controller, Food Metal and Specialty Business of ANC. From August 1977 to
August 1990, Mr. Heaney was employed by ANC and American Can Company in various
divisional, regional and plant finance/accounting positions.
H. Schuyler Todd, age 61, has been Vice President--Human Resources of Silgan
Containers since April 1999. From September 1987 to April 1999, Mr. Todd was
Director of Human Resources of Silgan Containers. Previously, Mr. Todd was
employed for approximately eleven years by the Can Division of the Carnation
Company as Industrial Relations Manager.
Executive Officers of Silgan Plastics
Russell F. Gervais, age 58, has been President of Silgan Plastics since
December 1992. From September 1989 to December 1992, Mr. Gervais was Vice
President--Sales & Marketing of Silgan Plastics. From March 1984 to September
1989, Mr. Gervais was President and Chief Executive Officer of Aim Packaging,
Inc.
Alan H. Koblin, age 49, has been Senior Vice President of Silgan Plastics
since January 2000. Previously, Mr. Koblin was Vice President--Sales &
Marketing of Silgan Plastics since December 1994. From 1992 to 1994, Mr. Koblin
was Director of Sales & Marketing of Silgan Plastics. From 1990 to 1992, Mr.
Koblin was Vice President of Churchill Industries.
7
Charles Minarik, age 64, has been Senior Vice President--Commercial
Development of Silgan Plastics since January 2000. Previously, he was Vice
President--Operations and Commercial Development of Silgan Plastics since May
1993. From February 1991 to August 1992, Mr. Minarik was President of Wheaton
Industries Plastics Group. Mr. Minarik was Vice President--Marketing of Constar
International, Inc. from March 1983 to February 1991.
Colleen J. Jones, age 41, has been Senior Vice President--Finance and
Administration of Silgan Plastics since October 2000. Prior to that, Ms. Jones
was Vice President--Finance of Silgan Plastics since December 1994. From
November 1993 to December 1994, Ms. Jones was Corporate Controller of Silgan
Plastics and from July 1989 to November 1993, she was Manager--Finance of
Silgan Plastics.
Emidio DiMeo, age 42, has been Senior Vice President of Silgan Plastics and
of Silgan Plastics Canada Inc. since October 2000. Prior to that, Mr. DiMeo was
Vice President of Silgan Plastics Canada Inc. since May 1999. From April 1997
to May 1999, Mr. DiMeo was General Manager of Silgan Plastics Canada Inc. From
March 1995 to April 1997, Mr. DiMeo was President and General Manager of Rexam
Containers Limited of Canada.
Donald E. Bliss, age 50, has been Vice President--Sales of Silgan Plastics
since January 2000. From November 1993 to December 1999, Mr. Bliss was National
Sales Director at Silgan Plastics. Prior to that, Mr. Bliss was employed by
Graham Packaging Company, last serving as Regional Sales Director.
Howard H. Cole, age 56, has been Vice President--Human Resources and
Administration and Assistant Secretary of Silgan Plastics since September 1987.
From April 1986 to September 1987, Mr. Cole was Manager of Personnel of the
Monsanto Engineered Products Division of Monsanto Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management Agreements
Each of the Company, Silgan Containers and Silgan Plastics has entered into
a management services agreement, or the Management Agreements, with S&H Inc.,
or S&H, a corporation wholly owned by Messrs. Silver and Horrigan. Pursuant to
the Management Agreements, S&H provides the Company, Silgan Containers and
Silgan Plastics and their subsidiaries with general management and
administrative services, or the Services. The term of the Management Agreements
currently continues until June 30, 2003. Thereafter, the term of the Management
Agreements is automatically renewed for successive one-year periods unless
either party gives written notice at least 180 days prior to the end of the
then current term of its election not to renew the term. Pursuant to the
Management Agreements, the Compensation Committee of our Board of Directors
(other than any member who is receiving or is entitled to receive, or is
affiliated with an entity that is receiving or entitled to receive, any payment
from the Company or S&H under or in connection with the Management Agreements)
determines on behalf of the Company and its subsidiaries whether to give such
written notice not to renew the term. In November 2001, the Compensation
Committee of our Board of Directors (other than Mr. Horrigan, who was then
serving as a member of the Compensation Committee) determined by written
resolution to continue the term of the Management Agreements after June 30,
2002 for a one-year renewal term until June 30, 2003.
The Management Agreements provide for payments to S&H in an amount equal to
90.909% of each of (i) on a monthly basis, $5,000 plus an amount equal to
2.475% of consolidated earnings before depreciation, interest and taxes of the
Company, or Company EBDIT, for such calendar month until Company EBDIT for the
calendar year reaches an amount set forth in the Management Agreements for such
calendar year, or the Scheduled Amount, and (ii) on a quarterly basis, an
amount equal to 2.475% of Company EBDIT for such calendar quarter until Company
EBDIT for the calendar year reaches the Scheduled Amount. The Scheduled Amount
was $111.9 million for the calendar year 2001 and is $115.3 million for the
calendar year 2002. For each calendar year after 2002, the Scheduled Amount
increases by 3% from the previous year.
8
Additionally, the Management Agreements provide that the Company, Silgan
Containers, Silgan Plastics and their subsidiaries reimburse S&H on a monthly
basis for all out-of-pocket expenses paid by S&H in providing the Services,
including fees and expenses to consultants, subcontractors and other third
parties in connection with the Services. All fees and expenses paid to S&H
under each of the Management Agreements are credited against amounts owed to
S&H under the other Management Agreements. Under the terms of the Management
Agreements, the Company, Silgan Containers and Silgan Plastics have agreed,
subject to exceptions, to indemnify S&H and its affiliates, officers,
directors, employees, subcontractors, consultants or controlling persons
against any losses, damages, costs and expenses they may sustain arising in
connection with the Management Agreements.
The Management Agreements may be terminated (i) at the option of each of the
Company, Silgan Containers and Silgan Plastics upon the failure or refusal of
S&H to perform its obligations under the Management Agreements, if such failure
or refusal continues unremedied for more than 60 days after written notice of
its existence is given; (ii) at the option of S&H upon the failure or refusal
of any of the Company, Silgan Containers and Silgan Plastics to perform its
obligations under the Management Agreements, if such failure or refusal
continues unremedied for more than 60 days after written notice of its
existence is given; (iii) at the option of S&H or the Company, Silgan
Containers and Silgan Plastics (a) if S&H or one of the Company, Silgan
Containers and Silgan Plastics is declared insolvent or bankrupt or a voluntary
bankruptcy petition is filed by any of them, (b) upon the occurrence of any of
the following events with respect to S&H or one of the Company, Silgan
Containers and Silgan Plastics if not cured, dismissed or stayed within 45
days: the filing of an involuntary petition in bankruptcy, the appointment of a
trustee or receiver or the institution of a proceeding seeking a
reorganization, arrangement, liquidation or dissolution, (c) if S&H or one of
the Company, Silgan Containers and Silgan Plastics voluntarily seeks a
reorganization or arrangement or makes an assignment for the benefit of
creditors or (d) upon the death or permanent disability of both of Messrs.
Silver and Horrigan; (iv) upon at least 180 days prior written notice at the
option of each of the Company, Silgan Containers and Silgan Plastics for any
reason; (v) upon at least 180 days prior written notice at the option of S&H
for any reason other than Cause or a Change of Control (each as defined in the
Management Agreements); (vi) at the option of S&H after a Change of Control;
(vii) at the option of the Company, Silgan Containers and Silgan Plastics in
the event of criminal conduct or gross negligence by S&H in the performance of
the Services; or (viii) at the option of S&H or the Company, Silgan Containers
and Silgan Plastics upon the termination of any of the Management Agreements
for Cause. The Management Agreements prohibit S&H from competing with the
Company and its subsidiaries during the term and, only if S&H terminates the
Management Agreements pursuant to clause (v) above, for a period of one year
after termination. The Management Agreements provide that, in the event that
they are terminated pursuant to clause (iv) above, each of the Company, Silgan
Containers and Silgan Plastics will be required to pay to S&H the present value
of the amount of the payments that would have been payable to S&H under the
Management Agreements through the end of the then current term of the
Management Agreements.
We believe that it is difficult to determine whether the Management
Agreements are on terms no less favorable than those available from
unaffiliated parties because of the personal nature of the services provided
under the Management Agreements and the expertise and skills of the individuals
providing the services. We believe that the arrangements under the Management
Agreements are fair to both parties.
For the year ended December 31, 2001, S&H earned aggregate fees under the
Management Agreements of $5.1 million from the Company and its subsidiaries.
Stockholders Agreements
In November 2001, Messrs. Silver and Horrigan and the Company entered into
the Stockholders Agreement. The Stockholders Agreement replaced in its entirety
the Stockholders Agreement dated as of February 14, 1997, or the 1997
Stockholders Agreement, among Messrs. Silver and Horrigan and The Morgan
Stanley Leveraged Equity Fund II, L.P., or MSLEF II, a former stockholder of
the Company and an affiliate of Morgan Stanley.
9
Under the Stockholders Agreement, the Group (as defined in the Stockholders
Agreement) has the right to nominate for election all directors of the Company
until the Group holds less than one-half of the number of shares of our Common
Stock held by it in the aggregate on February 14, 1997. At least one of the
Group's nominees must be either Mr. Silver or Mr. Horrigan. On February 14,
1997, the Group held 7,153,090 shares of our Common Stock in the aggregate.
Additionally, the Group has the right to nominate for election either Mr.
Silver or Mr. Horrigan as a member of our Board of Directors when the Group no
longer holds at least one-half of the number of shares of our Common Stock held
by it in the aggregate on February 14, 1997 but beneficially owns 5% of our
Common Stock. The Group generally includes Messrs. Silver and Horrigan and
their affiliates and related family transferees and estates.
If either Mr. Silver or Mr. Horrigan notifies our Board of Directors that
the Group cannot agree on an individual for any of its nominees under the
Stockholders Agreement or if at least 45 days prior to our annual meeting of
stockholders the Group fails to nominate for election at such annual meeting
the requisite number of individuals to stand for election to our Board of
Directors at such annual meeting, then our Board of Directors has the right to
nominate for election to our Board of Directors the number of individuals that
Messrs. Silver and Horrigan could not agree on as nominees or that the Group
failed to nominate timely.
The Stockholders Agreement continues until the death or disability of both
of Messrs. Silver and Horrigan.
The provisions of the Stockholders Agreement could have the effect of
delaying, deferring or preventing a change of control of the Company and
preventing our stockholders from receiving a premium for their shares of our
Common Stock in any proposed acquisition of the Company.
Additionally, in November 2001, the Company entered into an agreement with
MSLEF II pursuant to which MSLEF II was granted the right to nominate one
individual for election as a Class I Director of the Company for so long as
MSLEF II beneficially owned at least 5% of our Common Stock. Mr. Abramson, who
is currently serving as a Class I Director of the Company, was deemed to be the
initial nominee of MSLEF II under this agreement. In February 2002, this
agreement terminated once MSLEF II no longer beneficially owned at least 5% of
our Common Stock.
Messrs. Silver and Horrigan, MSLEF II, Bankers Trust New York Corporation
and the Company are also parties to a Stockholders Agreement dated as of
December 21, 1993, or the 1993 Stockholders Agreement. Under the 1993
Stockholders Agreement, if at any time until February 2005 the Company
determines to register additional shares of our Common Stock (other than in
connection with certain non-underwritten offerings), the Company must offer to
the other parties to the 1993 Stockholders Agreement the opportunity to include
shares of our Common Stock held by them in such registration. Additionally, the
1993 Stockholders Agreement provided MSLEF II with the right, until February
2005, to demand two separate registrations of the shares of our Common Stock
held by it until MSLEF II held less than 5% of our Common Stock. In November
2001, MSLEF II exercised one of its demand registration rights under the 1993
Stockholders Agreement and sold 4,592,000 shares of our Common Stock held by it
under a registration statement filed by the Company. In February 2002, any
further demand registration rights of MSLEF II expired once MSLEF II no longer
owned at least 5% of our Common Stock.
Concurrent with the Company's initial public offering of its Common Stock,
or the IPO, in February 1997, MSLEF II and Messrs. Silver and Horrigan entered
into the 1997 Stockholders Agreement. The 1997 Stockholders Agreement was
replaced entirely in November 2001 by the Stockholders Agreement. The 1997
Stockholders Agreement had provided generally that (i) for so long as MSLEF II
held at least one-half of the number of shares of our Common Stock held by it
immediately prior to the IPO, each of Messrs. Silver and Horrigan would use his
best efforts (including to vote any shares of our Common Stock owned or
controlled by him) to cause the nomination and election of two members of our
Board of Directors to be chosen by MSLEF II; and (ii) from and after the time
that MSLEF II held less than one-half of the number of shares of our Common
Stock held by MSLEF II immediately prior to the IPO and until such time that
MSLEF II held less than 5% of
10
our outstanding Common Stock, each of Messrs. Silver and Horrigan would use his
best efforts (including to vote any shares of our Common Stock owned or
controlled by him) to cause the nomination and election of one member of our
Board of Directors to be chosen by MSLEF II. In addition, the 1997 Stockholders
Agreement had provided generally that (i) for so long as the Group (as defined
in the 1997 Stockholders Agreement) held at least one-half of the number of
shares of our Common Stock held by it in the aggregate at the time of the IPO,
MSLEF II would use its best efforts (including to vote any shares of our Common
Stock owned or controlled by it) to cause the nomination and election of two
individuals nominated by the holders of a majority of the shares of our Common
Stock held by the Group as members of our Board of Directors, (ii) from and
after the time that the Group held less than one-half of the number of shares
of our Common Stock held by it in the aggregate at the time of the IPO and
until such time that the Group held less than 5% of our outstanding Common
Stock, MSLEF II would use its best efforts (including to vote any shares of our
Common Stock owned or controlled by it) to cause the nomination and election of
one individual nominated by the holders of a majority of the shares of our
Common Stock held by the Group as a member of our Board of Directors, and (iii)
so long as the Group held at least one-half of the number of shares of our
Common Stock held by it in the aggregate at the time of the IPO, the Group
would have the right to nominate for election all directors of the Company
other than the directors referred to above in this paragraph, and MSLEF II
would vote all shares of our Common Stock owned or controlled by it against any
director standing for election for our Board of Directors that had not been
nominated by the Group.
Other
For 2001, we retained Morgan Stanley to provide us and our subsidiaries with
financial advisory services. For such services, we paid Morgan Stanley
approximately $0.5 million in 2001.
In 2001 we entered into natural gas swap agreements with Morgan Stanley
Capital Group, Inc., or MSCG, an affiliate of Morgan Stanley, for an aggregate
notional principal amount of 1,000,000 MMBtu of natural gas. During 2001, an
aggregate notional principal amount of 100,000 MMBtu of these natural gas swap
agreements were settled under which we paid an insignificant amount to MSCG.
Morgan Stanley Senior Funding, Inc., or MSSF, an affiliate of Morgan
Stanley, is a lender under our U.S. bank credit agreement. MSSF receives a
portion of the commitment fees paid by us under our U.S. bank credit agreement
based on the amount of its lending commitment. MSSF will continue to receive
such fees under our U.S. bank credit agreement in the future.
In 2001, Landstar provided transportation services to our subsidiaries. We
expect that Landstar will continue to provide transportation services to our
subsidiaries in 2002. We believe that these transportation services were
provided on terms no less favorable to us than provided generally to Landstar's
other customers. We paid Landstar approximately $0.7 million in 2001 for such
transportation services. Mr. Jeffrey C. Crowe, a Director of the Company, is
the Chairman of the Board, President and Chief Executive Officer of Landstar.
In the event that we enter into any future transactions with any of our
affiliates, we expect to enter into any such transactions on terms no less
favorable to us than those available from unaffiliated parties.
11
EXECUTIVE COMPENSATION
In the table below, we provide information concerning the annual and
long-term compensation for services rendered in all capacities to the Company
during the fiscal years ended December 31, 2001, 2000 and 1999 of those persons
who at December 31, 2001 were the Chief Executive Officer of the Company and
the other four most highly compensated executive officers of the Company,
collectively the Named Executive Officers.
Summary Compensation Table
Long-Term
Annual Compensation Compensation
------------------- -------------
Awards
-------------
Securities
Underlying All Other
Name and Principal Position Year Salary(a) Bonus(b) Stock Options Compensation(c)
--------------------------- ---- ---------- -------- ------------- ---------------
R. Philip Silver.......................... 2001 $2,235,000 -- -- --
(Chairman of the Board and Co-Chief 2000 2,170,000 -- -- --
Executive Officer of the Company and 1999 2,080,000 -- -- --
Chairman of the Board of Silgan Plastics)
D. Greg Horrigan.......................... 2001 $2,235,000 -- -- --
(President and Co-Chief Executive Officer 2000 2,170,000 -- -- --
of the Company and Chairman of the 1999 2,080,000 -- -- --
Board of Silgan Containers)
Harley Rankin, Jr......................... 2001 $ 509,063 -- -- --
(Executive Vice President and Chief 2000 494,394 -- 120,000 --
Financial Officer of the Company) 1999 474,168 -- -- --
James D. Beam............................. 2001 $ 435,000 $139,896 -- $107,937
(President of Silgan Containers) 2000 422,340 141,273 120,000 99,809
1999 410,040 108,558 -- 101,811
Russell F. Gervais........................ 2001 $ 299,500 $113,800 -- $ 23,205
(President of Silgan Plastics) 2000 289,300 82,500 84,000 28,031
1999 280,050 29,600 -- 59,577
--------
(a) The salaries of Messrs. Silver, Horrigan and Rankin reflect amounts as
earned and were paid by S&H. Each of them received no direct compensation
from the Company or its subsidiaries, except that Mr. Rankin received stock
options from the Company in 2000 under the Stock Option Plan. You should
also read the section in this Proxy Statement titled "Certain Relationships
and Related Transactions--Management Agreements."
(b) Bonuses of Messrs. Beam and Gervais were earned by them in the year
reported in the table and paid in the following year pursuant to applicable
performance incentive plans of the Company's subsidiaries. Under such
plans, executive officers and other key employees may be awarded cash
bonuses provided that certain assigned financial targets and, in some
cases, organizational goals are achieved.
(c) In the case of Mr. Beam, this consists of (i) amounts contributed under the
Silgan Containers Corporation Supplemental Executive Retirement Plan, or
the Containers Supplemental Plan, and used to pay premiums for split-dollar
life insurance for him maintained in conjunction with the Containers
Supplemental Plan and (ii) amounts contributed under the Silgan Containers
Corporation Deferred Incentive Savings Plan, or the Containers Savings
Plan. For 2001, Silgan Containers contributed $92,237 under the Containers
Supplemental Plan and $15,700 under the Containers Savings Plan for the
benefit of Mr. Beam. In the case of Mr. Gervais, this consists of amounts
contributed by Silgan Plastics for him under the Silgan Plastics
Corporation Supplemental Saving and Pension Plan, or the Plastics
Supplemental Plan.
12
In the table below, we provide information concerning the exercise in 2001
of stock options by, and the value at December 31, 2001 of unexercised stock
options of, each of the Named Executive Officers.
Aggregate Option Exercises In 2001 And Option Values At December 31, 2001
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at in-the-Money Options at
Acquired December 31, 2001 December 31, 2001(a)
on Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- ---------- ----------- ------------- ----------- -------------
R. Philip Silver............. -- -- -- -- -- --
D. Greg Horrigan............. -- -- -- -- -- --
Harley Rankin, Jr............ 86,786 $1,174,682 -- 96,000 -- $1,158,720
James D. Beam................ -- -- 24,000 96,000 $ 289,680 1,158,720
Russell F. Gervais........... -- -- 135,262 67,200 3,235,138 811,104
--------
(a) The value of an unexercised option is based upon the difference between
$26.16, the closing sales price for a share of our Common Stock on the last
business day of 2001 (December 31, 2001) as quoted by the Nasdaq National
Market System, and the exercise price per share of our Common Stock for
such option.
Pension Plans
The Company has established pension plans, or the Pension Plans, covering
substantially all of the salaried employees of Silgan Containers and Silgan
Plastics, or the Containers Pension Plan and the Plastics Pension Plan,
respectively. The Pension Plans are defined benefit plans intended to be
qualified pension plans under Section 401(a) of the Internal Revenue Code of
1986, as amended, or the Code, under which pension costs are determined
annually on an actuarial basis with contributions made accordingly.
The table below illustrates the estimated annual normal retirement benefits
that are payable under the Containers Pension Plan (also taking into account
benefits payable under the Containers Supplemental Plan described below). The
benefit levels assume retirement at age 65, the years of service shown,
continued existence of the Containers Pension Plan without substantial change
and payment in the form of a single life annuity.
Containers Pension Plan Table
Years of Service
----------------------------------------------------
Final Average
Earnings 10 15 20 25 30 35
-------- ------- -------- -------- -------- -------- --------
$100,000 $13,260 $ 21,270 $ 29,270 $ 37,280 $ 45,290 $ 53,290
150,000 20,640 33,020 45,400 57,780 70,160 82,540
200,000 28,010 44,770 61,520 78,280 95,040 111,790
250,000 35,390 56,520 77,650 98,780 119,910 141,040
300,000 42,760 68,270 93,770 119,280 144,790 170,290
350,000 50,140 80,020 109,900 139,780 169,660 199,540
400,000 57,510 91,770 126,020 160,280 194,540 228,790
450,000 64,890 103,520 142,150 180,780 219,410 258,040
Benefits under the Containers Pension Plan are based on the participant's
average base pay (the "Salary" column in the Summary Compensation Table) over
the final three years of employment. The amount of average base pay taken into
account for any year is limited by Section 401(a)(17) of the Code, which
imposes a cap of $200,000 (to be indexed for inflation) on compensation taken
into account for 2002 and later years. Benefits under the Containers Pension
Plan are not subject to any deduction for Social Security or other offset
amounts.
13
As of December 31, 2001, Mr. Beam, the only Named Executive Officer who is
an eligible participant under the Containers Pension Plan, had fourteen years
of credited service under the Containers Pension Plan. Mr. Beam also
participates in the Containers Supplemental Plan, which is designed to make up
for benefits not payable under the Containers Pension Plan due to Code
limitations. His benefits under the Containers Supplemental Plan are funded
through a split-dollar life insurance policy. Income attributable to this life
insurance policy is included in the "All Other Compensation" column of the
Summary Compensation Table.
The table below illustrates the estimated annual normal retirement benefits
that are payable under the Plastics Pension Plan (also taking into account
benefits payable under the Plastics Supplemental Plan described below). The
benefit levels assume retirement age at 65, the years of service shown,
continued existence of the Plastics Pension Plan without substantial change and
payment in the form of a single life annuity.
Plastics Pension Plan Table
Years of Service
--------------------------------------------------
Final Average
Earnings 10 15 20 25 30 35
------------- ------- ------- ------- -------- -------- --------
$100,000 $11,000 $16,500 $22,000 $ 27,500 $ 33,000 $ 38,500
150,000 16,500 24,750 33,000 41,250 49,500 57,750
200,000 22,000 33,000 44,000 55,000 66,000 77,000
250,000 27,500 41,250 55,000 68,750 82,500 96,250
300,000 33,000 49,500 66,000 82,500 99,000 115,500
350,000 38,500 57,750 77,000 96,250 115,500 134,750
400,000 44,000 66,000 88,000 110,000 132,000 154,000
450,000 49,500 74,250 99,000 123,750 148,500 173,250
Benefits under the Plastics Pension Plan are based on the participant's
average total cash compensation (the "Salary" and "Bonus" columns in the
Summary Compensation Table) over the final 36 months of employment or over the
highest three of the final five calendar years of employment, whichever
produces the greater average compensation. In computing this average,
compensation for any year cannot exceed 125% of base pay. Compensation used in
determining benefits is also limited by Section 401(a)(17) of the Code, which
imposes the limit indicated above.
Benefits under the Plastics Pension Plan are determined based on two
methods. Under the first method, the Plastics Pension Plan provides for
benefits based on a formula without any offset for social security. Most of
Silgan Plastics' officers are eligible participants under the Plastics Pension
Plan based on this first method and the above table is based on this first
method. Under the second method, benefits under the Plastics Pension Plan are
based on one of three formulas, one of which provides for an offset for social
security. Additionally, officers of Silgan Plastics are eligible to participate
in the Plastics Supplemental Plan, which is designed to make up for benefits
not payable under the Plastics Pension Plan due to Code limitations.
As of December 31, 2001, Mr. Gervais, the only Named Executive Officer who
is an eligible participant under the Plastics Pension Plan, had twelve years of
credited service under the Plastics Pension Plan. Mr. Gervais also participates
in the Plastics Supplemental Plan, which is designed to make up for benefits
not payable under the Plastics Pension Plan due to Code limitations and for
benefits not payable under the Silgan Plastics Corporation Compensation
Incentive (401(k)) Plan due to restrictions under the Code. Amounts contributed
by Silgan Plastics for Mr. Gervais under the Plastics Supplemental Plan are
included in the ''All Other Compensation'' column of the Summary Compensation
Table.
14
Employment Agreements
James D. Beam, President of Silgan Containers, has entered into an
employment agreement with Silgan Containers. The initial term of his employment
agreement was three years from its effective date, and the term has been, and
will continue to be, automatically extended for successive one year periods
unless terminated pursuant to the terms of his employment agreement. Mr. Beam's
employment agreement provides for, among other things, a minimum severance
benefit equal to his then current base salary and benefits for a period of up
to one year following termination if (i) Mr. Beam is terminated by Silgan
Containers for any reason other than death, disability or for cause as
specified in his employment agreement or (ii) Mr. Beam voluntarily terminates
his employment due to a demotion, all as specified in his employment agreement.
Russell F. Gervais, President of Silgan Plastics, has entered into an
employment agreement with Silgan Plastics. The initial term of his employment
agreement was five years, commencing September 1, 1989, and the term has been,
and will continue to be, automatically extended for successive one year periods
unless terminated pursuant to the terms of his employment agreement. Mr.
Gervais' employment agreement provides for, among other things, a severance
benefit equal to his then current base salary and benefits for a period of one
year following termination if (i) Mr. Gervais is terminated by Silgan Plastics
for any reason other than death, disability or for cause as specified in his
employment agreement or (ii) Mr. Gervais voluntarily terminates his employment
due to a demotion, all as specified in his employment agreement.
REPORT ON EXECUTIVE COMPENSATION
General
The goals of the Company's executive compensation program are as follows:
(i) to attract and retain executives and to provide fair compensation to them
taking into account the responsibilities undertaken by them; (ii) to motivate
the Company's executives to achieve the Company's business strategy; and (iii)
to align the interests of the Company's executives and stockholders through the
granting of options under the Stock Option Plan. The principal components of
the Company's executive officer compensation program are base salary, annual
cash bonuses and stock options. The Stock Option Plan is administered by the
Stock Option Committee, as described under the section titled "Stock Option
Plan" below. Certain of the Company's executive officers also receive
additional forms of compensation as described in the Summary Compensation Table
of this Proxy Statement and footnote (c) to the Summary Compensation Table and
in the section in this Proxy Statement titled ''Executive Compensation--Pension
Plans."
For 2001, the Compensation Committee made recommendations to the Board of
Directors of the Company for its approval with respect to the compensation of
executive officers of the Company, other than those executive officers
compensated by S&H, and of executive officers of the Company's subsidiaries who
are Named Executive Officers, and the Board of Directors of the Company
approved such recommendations. The compensation of executive officers of the
Company's subsidiaries who are not Named Executive Officers is determined by
the Board of Directors of Silgan Containers or Silgan Plastics, as the case may
be.
Compensation of Co-Chief Executive Officers and Certain Other Executive Officers
Messrs. Silver, Horrigan and Rankin receive no direct compensation from the
Company or its subsidiaries, except that Mr. Rankin has received stock options
from the Company under the Stock Option Plan. They are compensated by S&H,
which is paid by the Company for management services provided by it to the
Company pursuant to the Management Agreements. The amounts paid by the Company
to S&H under the Management Agreements are based upon fixed financial formulas
related to the Company's operating results. The term of the Management
Agreements currently continues through June 30, 2003, and the Management
Agreements will be automatically renewed for successive one-year terms unless
either party gives written notice at least 180 days prior to the end of the
then current term of its election not to renew. The Compensation Committee of
the Board of Directors of the Company (other than any member who is receiving
or is entitled to receive, or is affiliated
15
with an entity that is receiving or entitled to receive, any payment from the
Company or S&H under or in connection with the Management Agreements)
determines on behalf of the Company and its subsidiaries whether to give such
written notice not to renew such term. You should also read the section in this
Proxy Statement titled "Certain Relationships and Related
Transactions--Management Agreements."
Base Salary
Base salaries for the Company's executive officers (other than for those
compensated by S&H) are determined, in part, through general geographic market
conditions and comparisons with companies in the packaging industry and other
companies with which the Company competes for personnel. Additionally, other
factors are considered such as individual experience and performance and the
overall performance of the Company. Each executive's base salary is reviewed on
an annual basis and may be adjusted, consistent with the terms of any
applicable employment agreement, based on (i) the individual's contribution to
the Company over the preceding year; (ii) a change in the individual's
responsibilities over the preceding year; (iii) any change in median
competitive pay levels; or (iv) a general increase in the cost of living.
Annual Cash Bonuses
If the Company or any of the Company's business units achieves certain
assigned financial targets for earnings before depreciation, interest, taxes
and amortization, or EBDITA, annual cash bonuses are paid to the executive
officers of the Company or such business unit, as the case may be. The EBDITA
target levels of each of the Company and its business units for a given year
are established at the beginning of such year as part of the operating budgets
of the Company and its subsidiaries, which operating budgets are approved by
the boards of directors of the Company and its subsidiaries. The amount of the
bonus of each such executive officer is determined by a formula which
calculates such bonus based on the percentage that the actual applicable EBDITA
amount represents of the applicable EBDITA target level. In addition, in the
case of officers of Silgan Containers, a portion of their annual cash bonuses
for 2001 was payable to them if Silgan Containers met certain organizational
goals as established by its board of directors at the beginning of the year,
including cash flow management, quarterly forecasting of certain financial
information and cost management goals. For 2002, a portion of the annual cash
bonuses for officers of Silgan Containers will be payable to them if Silgan
Containers meets certain organizational goals as established by the board of
directors of Silgan Containers at the beginning of the year, such as quarterly
forecasting of certain financial information, cost management and working
capital management goals. Annual cash bonuses are paid in the beginning of the
year following the year in which they are earned.
Tax Deductibility
Section 162(m) of the Code disallows a federal income tax deduction to any
publicly held corporation for compensation paid in excess of $1 million in any
taxable year to an individual who is the chief executive officer or any of the
four most highly compensated executive officers (other than the chief executive
officer) employed by such corporation (or a member of its affiliated group) on
the last day of such taxable year, but does allow a deduction for
"performance-based compensation" the material terms of which are disclosed to
and approved by stockholders. The Company believes that its current
compensation programs meet the requirements to qualify for compensation to be
deductible for federal income tax purposes. In the future, it is the Company's
intent to modify, when necessary, compensation plans for the Company's
executive officers so that the Company's federal tax deduction is maximized.
Because the Company believes that the use of prudent judgment in determining
pay levels is in the best interests of the Company and its stockholders, under
some circumstances it may determine to pay amounts of compensation that may not
be fully deductible. The Company reserves the right to use prudent judgment in
establishing compensation policies to attract and retain qualified executives
to manage the Company and to reward such executives for outstanding
performance, while taking into consideration the financial impact of such
actions on the Company.
By the Compensation Committee of the Board of
Directors:
Jeffrey C. Crowe
Edward A. Lapekas
16
Stock Option Plan
The Stock Option Committee of the Board of Directors administers the Stock
Option Plan and has the power to, among other things, choose participants and
fix the type of grant of stock options and all the terms and conditions of such
grants, including the number of shares of our Common Stock covered by a grant
and the exercise price, in accordance with the provisions of the Stock Option
Plan. The Stock Option Plan forms the basis of the Company's long-term
incentive compensation plan. The Stock Option Committee believes that placing a
portion of compensation in the form of stock options achieves certain
objectives: it aligns the interest of the Company's executive officers and key
employees directly with those of the Company's stockholders; it gives executive
officers and key employees a significant long-term interest in the Company's
success; and it helps the Company retain executive officers and key employees.
In determining to whom stock options shall be granted, the terms of the stock
options and the number of stock options to grant to an executive officer or key
employee, the Stock Option Committee primarily considers past performance and
the prospective value of the stock options to be granted as a performance
incentive. The Stock Option Committee granted stock options to six executive
officers and key employees of the Company and its subsidiaries under the Stock
Option Plan in 2001 with respect to 100,000 underlying shares of our Common
Stock. No stock options were granted in 2001 to any of the Named Executive
Officers listed in the Summary Compensation Table.
By the Stock Option Committee of the
Board of Directors:
R. Philip Silver
D. Greg Horrigan
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 2001, the Compensation Committee of our Board of Directors consisted of
Messrs. Horrigan, Abramson (until November 2001) and Crowe. Mr. Horrigan is the
President and Co-Chief Executive Officer of the Company. During 2001, none of
our executive officers served as: (i) a member of the compensation committee
(or other board committee performing equivalent functions or, in the absence of
any such committee, the entire board of directors) of another entity, one of
whose executive officers served on the Compensation Committee of our Board of
Directors, or (ii) a director of another entity, one of whose executive
officers served on our Board of Directors, or (iii) a member of the
compensation committee (or other board committee performing equivalent
functions or, in the absence of any such committee, the entire board of
directors) of another entity, one of whose executive officers served on our
Board of Directors.
17
COMPANY PERFORMANCE
The graph below compares the Company's Common Stock performance from the IPO
price with the performance of the Dow Jones Containers & Packaging Index and
the Standard & Poor's 500 Composite Stock Price Index, or the S&P 500 Index, by
valuing the changes in common stock prices from February 13, 1997 through
December 31, 2001 plus reinvested dividends. The companies included in the Dow
Jones Containers & Packaging Index are: AptarGroup, Inc.; Ball Corporation;
Bemis Company, Inc.; Chesapeake Corporation; Crown Cork & Seal Company, Inc.;
Owens-Illinois, Inc.; Pactiv Corp.; Sealed Air Corp.; Smurfit Stone Container
Corporation; Sonoco Products Company; and Temple-Inland, Inc. The graph below
assumes in each case an initial investment of $100.00 on February 13, 1997 plus
reinvestment of dividends, with the investment in the Dow Jones Containers &
Packaging Index weighted on the basis of market capitalization at February 13,
1997.
Comparison Of Cumulative Total Return Among Silgan Holdings Inc.,
Dow Jones Containers & Packaging Index and S&P 500 Index
[The graph appears here]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPH
February 13, December 31, December 31, December 31, December 31, December 31,
1997 1997 1998 1999 2000 2001
------------ ------------ ------------ ------------ ------------ ------------
Silgan Holdings Inc.... 100 163 139 67 45 131
Dow Jones Containers
& Packaging Index..... 100 109 97 92 67 84
S&P 500 Index.......... 100 126 161 195 178 156
18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
In the table below, we provide information, as of the Record Date, with
respect to the beneficial ownership of our Common Stock by (i) each current
director and each Named Executive Officer of the Company, (ii) each person or
entity who is known by the Company to own beneficially more than 5% of our
Common Stock and (iii) by all executive officers and directors of the Company
as a group. Except as otherwise described below, each of the persons named in
the table below has sole voting and investment power with respect to the
securities beneficially owned.
Number of Shares of Percentage Ownership of
Common Stock Owned Common Stock(1)
------------------- -----------------------
R. Philip Silver(2).............................. 3,603,244 20.01%
D. Greg Horrigan(2).............................. 3,603,244 20.01%
Leigh J. Abramson(3)............................. -- --
John W. Alden(3)................................. -- --
Jeffrey C. Crowe(3).............................. 2,000 *
Edward A. Lapekas(3)............................. 1,330 *
Harley Rankin, Jr.(4)............................ 105,672 *
James D. Beam(5)................................. 247,273 1.37%
Russell F. Gervais(6)............................ 102,112 *
FMR Corp. and related parties(7)................. 2,017,700 11.21%
All officers and directors as a group(8)......... 7,937,232 43.11%
--------
(1) An asterisk denotes beneficial ownership of 1% or less of our Common Stock.
(2) Director of the Company, Silgan Containers and Silgan Plastics. Messrs.
Silver and Horrigan currently intend to vote their shares as a block. Each
of Mr. Silver and Mr. Horrigan has sole investment power over 3,449,045.7
shares of our Common Stock. As the sole general partner of Silver Family
Limited Partnership, Mr. Silver shares investment power with Silver Family
Limited Partnership over the 154,198.3 shares of our Common Stock owned by
such partnership. As the sole general partner of Horrigan Family Limited
Partnership, Mr. Horrigan shares investment power with Horrigan Family
Limited Partnership over the 154,198.3 shares of our Common Stock owned by
such partnership. In addition to the shares included in the above table,
Messrs. Silver and Horrigan share voting and investment power with S&H over
one share of our Common Stock owned by S&H. The address for each of Messrs.
Silver and Horrigan is 4 Landmark Square, Stamford, Connecticut 06901.
(3) Director of the Company.
(4) Includes 84,389 shares of our Common Stock owned by Mr. Rankin and 21,283
shares of our Common Stock owned by Rankin Limited Partnership. As the sole
general partner of Rankin Limited Partnership, Mr. Rankin shares investment
power with Rankin Limited Partnership over the shares owned by such
partnership.
(5) Includes 199,273 shares of our Common Stock owned by Mr. Beam and 48,000
shares of our Common Stock that may be acquired by Mr. Beam through the
exercise of (i) vested stock options granted pursuant to the Stock Option
Plan and (ii) stock options granted pursuant to the Stock Option Plan that
will vest within 60 days after the Record Date.
(6) Includes 50 shares of our Common Stock owned by Mr. Gervais and 102,062
shares of our Common Stock that may be acquired by Mr. Gervais through the
exercise of (i) vested stock options granted pursuant to the Stock Option
Plan and (ii) stock options granted pursuant to the Stock Option Plan that
will vest within 60 days after the Record Date.
(7) This information is based solely upon our review of Amendment No. 1 to
Schedule 13G filed by FMR Corp. and certain related parties with the
Securities and Exchange Commission on or about February 14, 2002, reporting
beneficial ownership as of December 31, 2001. FMR Corp. is a parent holding
company which,
19
along with Edward C. Johnson 3d (the Chairman of FMR Corp.) and Abigail P.
Johnson (a director of FMR Corp.), reports that it has the sole power to
dispose or direct the disposition of 2,017,700 shares of our Common Stock
and the sole power to vote or direct the voting of 11,000 of such shares
owned by Fidelity Management Trust Company, a wholly owned subsidiary of FMR
Corp., and 4,100 of such shares owned by Fidelity International Limited.
Voting power with respect to the remainder of the shares is held by the
boards of trustees of the respective funds which own the shares. One of
these funds, Fidelity Low Priced Stock Fund, owns 1,784,100 shares of our
Common Stock. The business address for FMR Corp. is 82 Devonshire Street,
Boston, Massachusetts 02109.
(8) Includes 405,237 shares of our Common Stock that may be acquired through
the exercise of (i) vested stock options granted pursuant to the Stock
Option Plan and (ii) stock options granted pursuant to the Stock Option
Plan that will vest within 60 days after the Record Date.
ADOPTION OF THE SILGAN HOLDINGS INC. 2002
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
We will present at the Meeting a proposal to approve the adoption of the
Silgan Holdings Inc. 2002 Non-Employee Directors Stock Option Plan, or the
Directors Plan. Our Board of Directors has unanimously approved the Directors
Plan. The Directors Plan is intended to benefit us and our stockholders by
providing us with an additional means of attracting and retaining highly
qualified non-employee directors. In addition, by allowing non-employee members
of the Board of Directors to increase their financial stake in the Company
through ownership of our Common Stock, the Directors Plan would further align
the interests of our directors and stockholders in increasing the long-term
value of our Common Stock.
The primary aspects of the Directors Plan, the text of which is set forth in
Exhibit A to this Proxy Statement, are as follows.
Eligibility
Participation in the Directors Plan would be limited to members of our Board
of Directors who are not current employees or officers of the Company or any of
its subsidiaries. After the election of the Class II Directors at the Meeting,
we will have four non-employee directors.
Option Grants
We have reserved 60,000 shares of our Common Stock for issuance under the
Directors Plan. The first option grants under the Directors Plan would be made
on May 30, 2002. Thereafter, option grants under the Directors Plan would be
made on the first business day after each annual stockholders meeting.
On each grant date, each of our non-employee directors will automatically
receive, in consideration for service as a director, nonqualified stock options
to purchase 1,500 shares of our Common Stock. The exercise price for the
options will be the average of the high and low sales prices for our Common
Stock on the date of grant as reported by the Nasdaq National Market System, or
NASDAQ, or the national securities exchange on which our Common Stock is then
trading (if our Common Stock is not publicly traded at the time of grant, the
exercise price will be the fair market value of our Common Stock on the date of
grant as determined by our Board of Directors). The exercise price must be paid
in cash or, if the applicable option agreement so provides, in shares of our
Common Stock that have been held for at least six months prior to exercise.
Each option will be exercisable no sooner than six months from the date of
grant of the option. Options cannot be exercised later than ten years after the
date of grant, or such earlier date as specified in the applicable option
agreement.
20
Cessation of Service
If a non-employee director voluntarily resigns before the end of his or her
term of service as a director, such director's unexercised options generally
expire as of the date on which such director voluntarily resigns. If a
non-employee director ceases to be a member of our Board of Directors at the
end of his or her term of service or for any reason other than voluntary
resignation prior to the end of his or her term of service, any unexercised
options will remain outstanding for ninety days following the date on which
such director ceases to be a member of our Board of Directors. In the event
that a non-employee director becomes disabled, such director's unexercised
options may be exercised within the twelve-month period following the date on
which such director ceases to be a member of our Board of Directors. In the
event that a non-employee director dies, such director's unexercised options
may be exercised by his or her legal representatives or heirs during the
twelve-month period following such director's death.
Adjustments in Common Stock
The Directors Plan provides that our Board of Directors may make certain
adjustments to the number and kind of shares subject to options granted under
the Directors Plan and to the exercise price of options granted under the
Directors Plan where the Company undergoes, among other things, a change of
control, merger, recapitalization, reclassification or stock split or where the
Company declares a stock dividend. Such adjustments could increase the number
of shares of our Common Stock reserved for issuance under the Directors Plan.
Federal Income Tax Consequences
The grant of a nonqualified stock option under the Directors Plan will not
result in income for the non-employee director or in a deduction for the
Company. The exercise of a stock option under the Directors Plan will result in
ordinary income for the non-employee director and a deduction for the Company
equal to the difference between the exercise price and the fair market value of
the shares of our Common Stock received at the time of exercise.
Other Information
The Directors Plan will become effective upon approval by the Company's
stockholders and will terminate, for purposes of granting further options, on
November 29, 2012 unless earlier terminated by our Board of Directors. The
Directors Plan is administered by our Board of Directors, which has the power
to set additional terms and conditions concerning options granted under the
Directors Plan.
Our non-employee directors are compensated for their services as directors
of the Company. For a description of such compensation, you should read the
section in this Proxy Statement titled "Election of Directors--Compensation of
Directors." As of April 12, 2002, the closing sales price of our Common Stock,
as reported by NASDAQ, was $37.49.
New Plan Benefits
The following table sets forth the stock options that our non-employee
directors, as a group, will receive in 2002 if the Directors Plan is approved
by our stockholders at the Meeting. Executive officers, employee directors and
other employees of the Company are not eligible to participate in the Directors
Plan and, therefore, will not receive any stock options under the Directors
Plan.
21
NEW PLAN BENEFITS
Silgan Holdings Inc. 2002 Non-Employee Directors Stock Option Plan
Dollar Number
Name and Position Value ($) Of Units
----------------- --------- --------
Non-Executive Director Group............................. (a) 6,000
--------
(a) The dollar value is dependent upon the future price of our Common Stock
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ADOPTION OF
THE SILGAN HOLDINGS INC. 2002 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Appointment of Independent Auditors
Upon recommendation of the Audit Committee, the Board of Directors of the
Company appointed Ernst & Young LLP as the Company's independent auditors for
the fiscal year ending December 31, 2002. The Board of Directors of the Company
is requesting ratification of this appointment by the stockholders of the
Company.
A representative of Ernst & Young LLP is expected to be present at the
Meeting and to be available to respond to appropriate questions from those
attending the Meeting, but is not otherwise expected to make a statement.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2002.
Audit Fees
Aggregate fees for professional services rendered by Ernst & Young LLP in
connection with the audit of the Company's consolidated financial statements
for the year ended December 31, 2001 and for reviews of the Company's unaudited
financial statements included in its Quarterly Reports on Form 10-Q for 2001
were $0.8 million.
Financial Information Systems Design and Implementation Fees
During 2001, Ernst & Young LLP did not provide the Company or its
subsidiaries with any professional services in connection with financial
information systems design and implementation.
All Other Fees
During 2001, in addition to the amount described in "Audit Fees" above,
aggregate fees of $0.8 million were paid to Ernst & Young LLP for professional
services and expenses primarily related to internal audit services ($0.3
million), tax related services ($0.1 million) and other audit related services
($0.4 million, of which $0.2 million were paid for audit related services in
connection with the secondary public offering of our Common Stock by MSLEF II
in November 2001). You should also read the section in this Proxy Statement
titled "Report of the Audit Committee."
22
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, or the
Exchange Act, requires our directors and officers and persons holding more than
ten percent of a registered class of our equity securities to file with the SEC
initial reports of ownership, reports of changes in ownership and annual
reports of ownership of Common Stock and other equity securities of the
Company. These directors, officers and ten percent stockholders are also
required to furnish us with copies of all such filed reports.
Based solely upon a review of the copies of reports furnished to us and/or
representations that no reports were required, we believe that all of our
directors, executive officers and ten percent stockholders complied with all
filing requirements under Section 16(a) of the Exchange Act in 2001.
STOCKHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for stockholder
action at our annual meetings consistent with the rules and regulations adopted
by the Securities and Exchange Commission. Proposals to be considered for
inclusion in the Proxy Statement for our annual meeting of stockholders in 2003
must be received by us at our principal executive offices not later than
December 27, 2002. In accordance with the Exchange Act and the rules and
regulations promulgated under the Exchange Act, proxies solicited by our Board
of Directors will confer discretionary voting authority with respect to any
proposal raised at our annual meeting of stockholders in 2003 as to which the
proponent has not notified us by March 12, 2003. Proposals should be directed
to the attention of the General Counsel, Silgan Holdings Inc., 4 Landmark
Square, Stamford, Connecticut 06901.
OTHER MATTERS
As of the date of this Proxy Statement, our Board of Directors and
management have no knowledge of any other business matters that will be
presented for consideration at the Meeting other than those referred to in this
Proxy Statement. However, persons named in the accompanying proxy card shall
have authority to vote such proxy as to any other matters that properly come
before the Meeting and as to matters incidental to the conduct of the Meeting
in accordance with their discretion.
By Order of the Board of Directors,
/s/ Frank W. Hogan, III
Frank W. Hogan, III
Secretary
Stamford, Connecticut
April 26, 2002
23
Exhibit A
SILGAN HOLDINGS INC.
2002 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
I. PURPOSE OF PLAN; DEFINITIONS.
1.1 Purpose.
The purpose of the Silgan Holdings Inc. 2002 Non-Employee Directors Stock
Option Plan (the "Plan") is to strengthen Silgan Holdings Inc., a Delaware
corporation (the "Company"), by providing an additional means of attracting,
retaining and compensating highly qualified individuals for service as members
of the Board of Directors of the Company. The Plan enables non-employee
directors to increase their ownership of the Company's common stock, allowing
them to have a greater personal financial stake in the Company and underscoring
their common interest with stockholders in increasing the value of the
Company's common stock in the long term.
1.2 Definitions.
For purposes of this Plan, the following terms shall be defined as
indicated, unless otherwise clearly required by the context in which the term
appears:
"Board of Directors" shall mean the Board of Directors of the Company.
"Change of Control" shall mean any sale of the assets or voting stock of
the Company, whether by purchase, merger, consolidation or other similar
transaction, pursuant to which there is a transfer of ownership of more than
fifty percent (50%) of the assets or the voting stock of the Company to a
Person which theretofore did not own, directly or indirectly, any of the
voting stock of the Company; provided, however, that a restructuring of the
Company in which the stockholders of the Company retain at least fifty
percent (50%) of the voting stock of the surviving Person shall not be
deemed a Change of Control.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the authorized and issuable common stock of the
Company ($.01 par value).
"Fair Market Value" shall mean (i) if the stock is listed or admitted to
trade on a national securities exchange, the average of the high and low
sales prices for the stock on the composite tape of the principal national
securities exchange on which the stock is so listed or admitted to trade,
(ii) if the stock is not listed or admitted to trade on a national
securities exchange, the average of the high and low sales prices for the
stock as furnished by the National Association of Securities Dealers, Inc.
through NASDAQ or a similar organization if NASDAQ is no longer reporting
such information, or (iii) if the stock is not listed or admitted to trade
on a national securities exchange and if sales prices for the stock are not
so furnished through NASDAQ or a similar organization, the fair market value
of the stock as determined in good faith by the Board of Directors or an
authorized committee thereof in such manner as it deems appropriate, taking
into consideration, among other things, recent sales of the stock.
"Non-Employee Director" shall mean each member of the Board of Directors
who is not a current employee or a current officer of the Company or any of
its Subsidiaries.
"Nonstatutory Options" shall mean an option granted pursuant to the Plan
which does not qualify as an incentive stock option under Section 422 of the
Code.
"Option(s)" shall mean option(s) to purchase Common Stock under this Plan.
1
"Option Price" shall have the meaning set forth in Section 3.2 hereof.
"Person" shall mean any individual, partnership, joint venture,
corporation, association, trust, or any other entity or organization,
including a government or political subdivision or any agency or
instrumentality thereof.
II. ADMINISTRATION; PARTICIPATION.
2.1 Administration.
This Plan shall be administered by the Board of Directors. Subject to the
express provisions of this Plan, the Board of Directors shall have the
authority to construe and interpret this Plan and any agreements defining the
rights and obligations of the Company and participants under this Plan, to
further define the terms used in this Plan, to prescribe, amend and rescind
rules and regulations relating to the administration of this Plan and to make
all other determinations necessary or advisable for the administration of this
Plan. The determinations of the Board of Directors on the foregoing matters
shall be conclusive.
2.2 Participation.
All Non-Employee Directors shall be eligible to participate in this Plan.
2.3 Stock Subject to this Plan.
Subject to Section 4.1 hereof, the stock to be offered under this Plan shall
be shares of authorized but unissued Common Stock or Common Stock held in
treasury. The aggregate amount of Common Stock to be delivered upon exercise of
Options granted under this Plan shall not exceed the sum of 60,000 shares of
Common Stock. Such amount of Common Stock is hereby reserved for issuance under
this Plan. If any Option shall expire or terminate for any reason without
having been fully exercised, the unexercised shares subject thereto shall again
be available for the purposes of this Plan.
2.4 Stock Option Agreements.
Each Option granted pursuant to this Plan shall be evidenced by a written
stock option agreement (any of which are at times herein referred to as an
"Option Agreement" or, collectively, as "Option Agreements").
III. OPTIONS.
3.1 Annual Grant of Nonstatutory Options.
Only Nonstatutory Options may be granted under this Plan. On the first
business day following the day of each annual meeting of the stockholders of
the Company beginning in 2002, each person who is then a Non-Employee Director
shall automatically and without further action by the Board of Directors be
granted a Nonstatutory Option to purchase 1,500 shares of Common Stock, subject
to adjustment and substitution as set forth in Article IV. If the number of
shares then remaining available for the grant of stock options under this Plan
is not sufficient for each Non-Employee Director to be granted an Option for
1,500 shares (or the number of adjusted or substituted shares pursuant to
Article IV), then each Non-Employee Director shall be granted an Option for a
number of whole shares equal to the number of shares then remaining available
divided by the number of Non-Employee Directors, disregarding any fractions of
shares.
3.2 Option Price.
Except as otherwise provided herein, the purchase price per share of the
Common Stock covered by each Option (the "Option Price") shall be one hundred
percent (100%) of the Fair Market Value on the date of grant.
2
The Option Price of any share purchased shall be paid in full at the time of
each purchase in cash, by check, or, provided that all necessary regulatory
approvals have been received and provided further that the Option Agreement
provides for such exercise, the person exercising the Option may deliver in
payment of all or a portion of the Option Price certificates for other shares
of Common Stock that have been held by such person for at least six (6) months
(such other shares shall be valued at the Fair Market Value of such Common
Stock as of the date of exercise of the Option).
3.3 Option Period.
Except as otherwise provided herein or as otherwise determined by the Board
of Directors, each Option and all rights and obligations thereunder shall
expire on such date as shall be provided in the Option Agreement, but not later
than the tenth anniversary of the date on which the Option is granted and shall
be subject to earlier termination as hereinafter provided.
3.4 Exercise of Options.
Each Option shall become exercisable and the total number of shares subject
thereto shall be purchasable no sooner than six (6) months from the date of the
grant of the Option. If the holder of an Option shall not purchase all of the
shares which the holder is entitled to purchase, the holder's right to purchase
any shares not so purchased shall continue until the expiration or earlier
termination of the holder's Option. No Option shall be exercisable except in
respect of whole shares, and fractional share interests shall be disregarded
except that they may be accumulated in accordance with the second sentence of
this Section 3.4. No fewer than ten (10) shares may be purchased at one time
unless the number purchased is the total number at the time available for
purchase under the Option. The Board of Directors may impose such conditions or
limitations, as shall be specified in the applicable Option Agreement, on the
sale or transfer of Common Stock acquired upon exercise of an Option as it may
deem necessary or desirable.
An Option shall be deemed to be exercised when the Secretary of the Company
receives written notice of such exercise from the person entitled to exercise
the Option, together with payment in full of the Option Price made in
accordance with Section 3.2 of this Plan and all applicable withholding taxes.
3.5 Nontransferability of Options.
An Option granted under this Plan shall, by its terms, be nontransferable by
the grantee other than by will or the laws of descent and distribution, and
shall be exercised during the grantee's lifetime only by the grantee or a duly
appointed guardian or personal representative.
3.6 Cessation of Service.
(a) Except as provided in Sections 3.7 and 3.8 hereof, if an Option holder
ceases to be a Director of the Company because of the Option holder's voluntary
resignation prior to the expiration of such Option holder's term of service as
a member of the Board of Directors, the Option shall be exercisable only until
the date of such resignation, to the extent, and only to the extent, the Option
had become exercisable as of the date of such resignation.
(b) Except as provided in Sections 3.7 and 3.8 hereof, if an Option holder
ceases to be a Director of the Company on the date of the expiration of such
Option holder's term as a member of the Board of Directors or for any other
reason other than voluntary resignation prior to the expiration of such Option
holder's term as a member of the Board of Directors, the Option holder shall
have ninety (90) days, or such other period provided in the Option Agreement,
from the date on which such Option holder ceases to be a Director of the
Company to exercise his or her Option, to the extent, and only to the extent,
the Option had become exercisable prior to the date of such cessation of
service.
3
3.7 Permanent Disability of Non-Employee Director.
If an Option holder is no longer a Non-Employee Director as a result of
permanent disability (as defined below), the holder shall have twelve (12)
months, or such shorter period as is provided in the Option Agreement, from the
date of cessation of service to exercise his or her Option. The Option shall
expire at the end of such 12-month period (or such shorter period as is
provided in the Option Agreement or as provided pursuant to Section 3.3 hereof)
to the extent not exercised within that period. As used herein, "permanent
disability" shall mean the inability of an Option holder by reason of illness
or injury to perform substantially all of his or her duties as a Non-Employee
Director during any continued period of one hundred eighty (180) days.
3.8 Death of Non-Employee Director.
If an Option holder dies while a Non-Employee Director of the Company or
during the periods described in Section 3.6 or 3.7 hereof, the holder's Option
shall be exercisable during the twelve-month period, or such shorter period as
is provided in the Option Agreement, following the holder's death, by the
executor of the holder's will, the administrator of the holder's estate, or as
otherwise provided in the Option Agreement, (and not otherwise, regardless of
any community property or other interest therein of the spouse of the holder or
such spouse's successor in interest), provided that in no event shall the
Option be exercised after the period provided for in Section 3.3 hereof. Unless
sooner terminated pursuant to the Plan, the Option shall expire at the end of
such twelve-month period (or such shorter period as is provided in the Option
Agreement or as is provided pursuant to Section 3.3 hereof) to the extent not
exercised within that period. In the event that the holder's spouse shall have
acquired a community property interest in the Option, the holder, the executor
of the holder's will, the administrator of the holder's estate or such other
Person as is otherwise provided in the Option Agreement may exercise the option
on behalf of the spouse of the holder or such spouse's successor in interest.
IV. OTHER PROVISIONS.
4.1 Adjustments Upon Changes in Capitalization and Ownership.
Subject to Section 4.2 below, if the outstanding shares of Common Stock are
increased, decreased or changed into, or exchanged for, a different number or
kind of shares or securities of the Company through a reorganization or merger
in which the Company is the surviving entity, combination, recapitalization,
reclassification, stock split-up, reverse stock split, stock dividend, stock
consolidation or otherwise, an appropriate and proportionate adjustment shall
be made in the number and kind of shares for which Options may be granted as
set forth in Section 2.3 hereof. A corresponding adjustment changing the number
or kind of shares and the exercise price per share allocated to unexercised
Options or portions thereof, which shall have been granted prior to any such
change, shall also be made.
Upon the dissolution or liquidation of the Company, or, subject to Section
4.2 below, upon a reorganization, merger or consolidation of the Company with
one or more corporations as a result of which the Company is not the surviving
corporation, in which such surviving corporation (or an affiliate), if
applicable, does not assume all obligations of the Company under this Plan and
substitute for the unexercised Options granted under the Plan options to
purchase securities of such surviving corporation having a value substantially
equivalent to or greater than the Common Stock issuable upon exercise of such
Options and on terms substantially the same as or better than those granted
under the Plan, such Options shall become immediately exercisable upon the
occurrence of such an event, but in no event may such Options be exercised
after the exercise period specified in each individual Option Agreement.
Adjustments under this Section 4.1 shall be made by the Board of Directors
or an authorized committee thereof, whose determination as to what adjustments
shall be made, and the extent thereof, shall be final, binding and conclusive.
No fractional shares of Common Stock shall be issued under this Plan on account
of any such adjustment. If for any reason any person becomes entitled to any
interest in a fractional share, a cash payment shall be made of an equivalent
value of such interest.
4
4.2 Change of Control.
In the event of a Change of Control during the term of one or more Options,
such Options shall, subject to Section 4.1 above, remain outstanding and shall
become exercisable by the holder thereof upon the terms and conditions of the
Plan and the Option Agreement between such holder and the Company; provided,
however, the Board of Directors or an authorized committee thereof may, in its
discretion, take one or more of the following actions in connection with a
Change of Control:
(a) The Board of Directors or an authorized committee thereof may declare
that any or all Options shall terminate as of a date to be fixed by the Board
of Directors or such committee and may require that the respective holders
thereof surrender all or a portion of their unexercised Options for
cancellation by the Company prior to such date and, upon such surrender, such
holders shall receive (i) the cash, securities or other consideration they
would have received had they exercised such Options immediately prior to such
Change of Control and had they disposed of their shares of Common Stock
issuable upon such exercise in connection with such Change of Control (subject
to required deductions and withholdings), minus (ii) an amount of cash or fair
market value of securities or other such consideration equal to the Option
Price for such Options surrendered; or
(b) The Board of Directors or an authorized committee thereof may declare
that, upon the exercise by a holder of any or all Options after a Change of
Control in accordance with the provisions of the Plan, such holder shall be
entitled to receive only the cash, securities or other consideration he would
have been entitled to receive had he exercised such Options immediately prior
to such Change of Control and had he disposed of the Common Stock issuable upon
such exercise in connection with such Change of Control; or
(c) The Board of Directors or an authorized committee thereof may declare
that any or all Options shall terminate as of a date to be fixed by the Board
of Directors or such committee and give the holders thereof the right to
exercise their Options prior to such date as to all or any part thereof; or
(d) The Board of Directors or an authorized committee thereof may permit
the successor corporation to assume the obligations of the Company under the
Plan and to substitute for the unexercised Options granted under the Plan
options to purchase securities of such successor corporation having a value
substantially equivalent to or greater than the Common Stock issuable upon
exercise of such Options and on terms substantially the same as or better than
those granted under the Plan, all as determined by the Board of Directors or
such committee, whereupon all outstanding Options and all future Options
granted under the Plan shall thenceforth become options to purchase such
securities of such successor corporation on such terms.
4.3 Government Regulations.
This Plan and the grant and exercise of Options shall be subject to all
applicable rules and regulations of governmental authorities.
4.4 Withholding.
The Company may require, as a condition to (1) issuing or delivering to the
holder of an Option shares or certificates evidencing the shares upon exercise
of the Option or (2) allowing the transfer of shares subsequent to their
issuance to the holder of an Option, that the holder of an Option or other
person exercising the Option pay any sums that federal, state, or local tax law
requires to be withheld with respect to such exercise or transfer. The Company
shall not be obligated to advise any holder of an Option of the existence of
the tax or the amount which the Company will be so required to withhold.
4.5 Amendment, Termination and Reissuance.
(a) The Board of Directors may at any time suspend, amend or terminate this
Plan (or any part thereof) and, with the consent of the holder of an Option,
may make such modifications of the terms and conditions of
5
such holder's Option as it shall deem advisable. No Option may be granted
during any suspension of this Plan or after such termination. The amendment,
suspension or termination of this Plan shall not, without the consent of the
holder of an Option, adversely alter or impair any rights or obligations under
any Option theretofore granted under this Plan.
(b) In addition to the Board of Directors' approval of any amendment, if
the amendment would (i) increase the benefits accruing to participants in this
Plan, (ii) increase the aggregate number of shares which may be issued under
this Plan or (iii) modify the requirements of eligibility for participation in
this Plan, then such amendment shall be approved by the holders of a majority
of the Company's outstanding capital stock present, or represented, and
entitled to vote at a meeting duly held for the purpose of approving such
amendment.
4.6 Privileges of Stock Ownership; Nondistributive Intent.
The holder of an Option shall not be entitled to the privilege of stock
ownership as to any shares of Common Stock not actually issued and delivered to
him or her. Upon exercise of an Option, unless a registration statement is in
effect under the Securities Act of 1933, as amended, relating to the Common
Stock issuable upon exercise and there is available for delivery a prospectus
meeting the requirements of Section 10(a)(3) of said Act, the Common Stock may
be issued to the option holder only if he or she represents and warrants in
writing to the Company and its counsel that the shares purchased are being
acquired for investment and not with a view to the resale or distribution
thereof. No shares shall be issued upon the exercise of any Option unless and
until there shall have been full compliance with any then applicable
requirements of the Securities and Exchange Commission, or any other regulatory
agencies having jurisdiction over this Plan (and of any exchanges upon which
stock of the Company may be listed).
4.7 Issuance of Stock Certificates.
Upon exercise of an Option, the person receiving Common Stock shall be
entitled to one stock certificate evidencing the shares acquired upon such
exercise; provided, however, that any person who tenders Common Stock to the
Company in payment of a portion or all of the purchase price of stock purchased
upon exercise of an Option, shall be entitled to receive two certificates, one
representing a number of shares equal to the number of shares exchanged for the
stock acquired upon exercise and another representing the additional shares
acquired upon exercise of the Option.
4.8 Effective Date of this Plan.
This Plan shall, subject to its adoption by the Board of Directors and the
approval by the Company's stockholders in accordance with applicable law and
the Company's Restated Certificate of Incorporation, be effective as of May 29,
2002.
4.9 Expiration.
Unless previously terminated by the Board of Directors, this Plan shall
expire at the close of business on the date that is ten (10) years and six (6)
months from the date specified in Section 4.8, and no Option shall be granted
under it thereafter, but such expiration shall not affect any Option
theretofore granted.
4.10 Governing Law.
This Plan and the Options issued hereunder shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts made and performed within such State, except as such laws may be
supplanted by the laws of the United States of America, which laws shall then
govern its effect and its construction to the extent they supplant Delaware law.
6
FORM OF PROXY
-------------
SILGAN HOLDINGS INC.
4 Landmark Square
Stamford, CT 06901
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints R. Philip Silver and D. Greg Horrigan as
Proxies, each with the power of substitution, and hereby authorizes each of them
to represent and to vote, as designated below, all the shares of common stock,
par value $.01 per share, of Silgan Holdings Inc. (the "Company") held of record
by the undersigned on April 12, 2002 at an Annual Meeting of Stockholders of the
Company to be held on May 29, 2002 or any adjournment or postponement thereof.
When properly executed, this proxy 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, 2 and 3.
(Continued and to be dated and signed on the reverse side.)
[_] Please mark, sign, date [X]
and return this proxy to Votes must be indicated
the Company. (x) in Black or Blue ink.
1. ELECTION OF DIRECTORS (CLASS II)
FOR all nominees [_] WITHHOLD AUTHORITY to vote [_] *EXCEPTIONS [_]
listed below for all nominees listed below
Nominees (each to serve until the Company's Annual Meeting of Stockholders in
2005 and until their successors are duly elected and qualified):
D. Greg Horrigan and John W. Alden
(INSTRUCTION: To withhold authority to vote for any individual nominee, mark the
"Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions
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2. To approve the adoption of the Silgan Holdings Inc. FOR AGAINST ABSTAIN
2002 Non-Employee Directors Stock Option Plan. [_] [_] [_]
3. To ratify the appointment of Ernst & Young LLP FOR AGAINST ABSTAIN
as the Company's Independent Auditors for the fiscal [_] [_] [_]
year ending December 31, 2002.
4. To consider and act upon any other business as may properly come before the
meeting or any adjournment or postponement thereof.
To change your address, please mark this box. [_]
When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such. If a
corporation, please provide the full name of the corporation
and the signature of the authorized officer signing on its
behalf.
Date
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Share Owner sign here
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Co-Owner sign here
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