UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
GIBRALTAR PACKAGING GROUP, INC.
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(Name of Registrant as Specified In Its Charter)
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[GIBRALTAR LOGO]
Fellow Shareholders,
Fiscal 2003 began with high expectations for a successful year building upon the
strong finish we achieved in the fourth quarter of fiscal 2002. Many of our
goals were met for the year as net sales were up by $3.6 million over the prior
year. This, coupled with our continuous pursuit of cost reductions enabled
Gibraltar to make great strides throughout the year.
In the midst of this growth, Gibraltar also experienced some disappointments in
fiscal 2003. As our industry continued to struggle with overcapacity and fierce
competition, we began to feel a stronger impact of these tough market conditions
as two pieces of business totaling $8.5 million were lost through bidding
scenarios in the third quarter of fiscal 2003. Although our sales were not
greatly impacted by these losses in the second half of fiscal 2003, we are now
feeling the effect starting in the first quarter of fiscal 2004.
These losses have created a major challenge for the Gibraltar management team in
fiscal 2004 but we are determined to rebound from these set-backs. We have been
making a strong push for new business at each facility and have made great
strides in our cross-selling efforts among our divisions. Our sales team has
been able to capitalize on the multiple product lines we offer, and with recent
enhancements that have been made to our flexible packaging line, we expect these
efforts to flourish. In addition, the new equipment upgrades at our facilities
have also begun to show great results in improving efficiencies and enhancing
our competitive position in the industry.
These initiatives, along with continued emphasis on cost containment and cash
flow, will enable Gibraltar to emerge from these turbulent market conditions
even stronger than before.
Sincerely,
/s/ Walter E. Rose
Walter E. Rose
Chairman and Chief Executive Officer
GIBRALTAR PACKAGING GROUP, INC.
2000 SUMMIT AVENUE
HASTINGS, NEBRASKA 68901
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 12, 2003
----------------------------------------
TO THE STOCKHOLDERS OF GIBRALTAR PACKAGING GROUP, INC.:
The Annual Meeting of the Stockholders of Gibraltar Packaging Group,
Inc., a Delaware corporation (the "Company"), will be held at the Lochland
Country Club, 601 West Lochland Road, Hastings, Nebraska, on November 12, 2003,
at 12:00 p.m., Central Time, for the following purposes:
1. To elect five directors to serve until the annual
stockholders' meeting in 2004 or until their successors have
been elected and qualified (Proposal 1);
2. To ratify and approve the appointment of Deloitte & Touche LLP
as the Company's independent auditors for the 2004 fiscal year
(Proposal 2); and
3. To act upon such other business as may properly come before
the meeting or any adjournments thereof.
These items of business are more fully described in the Proxy Statement
accompanying this Notice.
Only stockholders of record at the close of business on September 15,
2003 are entitled to notice of and to vote at the Annual Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING
OF STOCKHOLDERS REGARDLESS OF WHETHER YOU PLAN TO ATTEND. THEREFORE, PLEASE
MARK, SIGN, DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY. IF YOU ARE PRESENT AT
THE MEETING, AND WISH TO DO SO, YOU MAY REVOKE THE PROXY AND VOTE IN PERSON.
By Order of the Board of Directors
/s/ BRETT E. MOLLER
BRETT E. MOLLER
SECRETARY
October 6, 2003
Hastings, Nebraska
GIBRALTAR PACKAGING GROUP, INC.
2000 Summit Avenue
Hastings, Nebraska 68901
---------------
PROXY STATEMENT
---------------
The accompanying proxy is solicited by the Board of Directors of
Gibraltar Packaging Group, Inc. (the "Company") for use at the 2003 Annual
Meeting of Stockholders to be held on November 12, 2003, and at any adjournments
thereof (the "Annual Meeting"). The Annual Meeting will be held at 12:00 p.m.,
Central Time, at the Lochland Country Club, 601 West Lochland Road, Hastings,
Nebraska. If the accompanying proxy is properly executed and returned, the
shares it represents will be voted at the meeting in accordance with the
directions noted on the proxy or, if no direction is indicated, it will be voted
in favor of the proposals described in this Proxy Statement. In addition, the
proxy confers discretionary authority to the persons named in the proxy
authorizing those persons to vote, in their discretion, on any other matters
properly presented at the Annual Meeting. The Board of Directors is not
currently aware of any other matters to be considered. Any stockholder giving a
proxy has the power to revoke it by oral or written notice to the Secretary of
the Company at any time before it is voted.
The approximate date on which this Proxy Statement and the accompanying
proxy, together with the Company's annual report to stockholders on Form 10-K
for the fiscal year ended June 28, 2003, will first be sent to stockholders is
October 6, 2003.
VOTING RIGHTS AND QUORUM
At the close of business on September 15, 2003, the record date for the
determination of stockholders of the Company entitled to receive notice of and
to vote at the Annual Meeting, 5,041,544 shares of the Company's common stock,
par value $0.01 per share (the "Common Stock"), were outstanding. Each share of
Common Stock is entitled to one vote upon each of the matters to be voted on at
the Annual Meeting. The presence, in person or by proxy (including abstentions
and "broker non-votes"), of at least a majority of the outstanding shares of
Common Stock is required for a quorum. A broker non-vote occurs when a broker
holding stock in "street name" indicates on the proxy that it does not have
discretionary authority to vote with respect to non-routine matters.
The affirmative vote of the holders of a plurality of the votes of the
shares of Common Stock present in person or represented by proxy at the Annual
Meeting is required for the election of directors. Ratification of Deloitte &
Touche LLP as the Company's independent public accountants requires the
affirmative vote of the holders of a majority of the shares of Common Stock
present in person or represented by proxy at the Annual Meeting.
With respect to the election of directors, votes may be cast in favor
or withheld. Votes that are withheld will be excluded entirely from the vote and
will have no effect. Abstentions may be specified on the ratification of
Deloitte & Touche LLP as the Company's independent public accountants and will
be counted as shares that are present and entitled to vote for a proposal, but
will not be counted as votes in favor of such proposal. Accordingly, an
abstention from voting by a stockholder present in person or represented by
proxy at the Annual Meeting will have the same legal effect as a vote "against"
the ratification of Deloitte & Touche LLP as the Company's independent public
accountant even though the stockholder or interested parties analyzing the
results of the voting may interpret such vote differently. Broker non-votes are
not shares entitled to vote, will not be counted in the total number of votes,
and thus will have no effect on the outcome of voting.
PROPOSAL NUMBER 1:
ELECTION OF DIRECTORS
Five directors are to be elected to the Company's Board of Directors at
the Annual Meeting. The Board of Directors has nominated and urges you to vote
for the election of the five nominees identified below, who, if elected, will
serve as directors until the next annual meeting of stockholders or until their
successors are duly elected and qualified. The five nominees listed below are
members of the Company's present Board of Directors. Proxies solicited hereby
will be voted FOR all five nominees unless stockholders specify otherwise in
their proxies.
If, at the time of or prior to the Annual Meeting, any nominee is
unable or declines to serve, the discretionary authority provided in the proxy
may be used to vote for a substitute or substitutes designated by the Board of
Directors. The Board of Directors has no reason to believe that any substitute
nominee or nominees will be required.
NOMINEES FOR DIRECTOR
The five nominees for election as directors and certain additional
information with respect to each of them are as follows:
YEAR FIRST BECAME
NAME AGE POSITION WITH THE COMPANY A DIRECTOR
---- --- ------------------------- -----------------
Richard D. Hinrichs 59 Director, President and Chief Operating Officer 2000
John W. Lloyd 59 Director 1992
Walter E. Rose 60 Director and Chief Executive Officer 1986
Robert G. Shaw 63 Director 1992
John D. Strautnieks 66 Director 1986
RICHARD D. HINRICHS became President and Chief Operating Officer of the
Company in August 1998. Previously, Mr. Hinrichs had served as Division
President - Great Plains Packaging from May 1992 until August 1998. In addition,
he has also served as Vice President of Sales of Great Plains Packaging from
February 1986 through May 1992, and has held various positions with the Company
and its predecessors since 1963.
JOHN W. LLOYD presently serves as a consultant to the Company since his
resignation as Chief Financial Officer of the Company in September 2000. He has
also served as Executive Vice President and Chief Financial Officer of Rostra
Technologies, Inc. ("Rostra"), a manufacturer of automotive electronic
components, since 1993. Mr. Lloyd was previously employed from September 2000
until February 2002 as Chief Financial Officer for Cert. Co, a provider of
security and risk management infrastructure solutions for B2B e-commerce.
WALTER E. ROSE became Chief Executive Officer of the Company in August
1995. Mr. Rose serves as President of Rostra, which he co-founded in 1982.
ROBERT G. SHAW has been Chairman of the Board, President and Chief
Executive Officer of International Jensen, an equipment manufacturer
specializing in loud speaker drivers and related components for the audio
industry, since 1984.
JOHN D. STRAUTNIEKS serves as Chairman of the Board of Rostra, which he
co-founded in 1982.
2
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
ELECTION OF EACH OF THE NOMINEES NAMED ABOVE.
All directors hold office until the next annual meeting of the
stockholders of the Company or until their successors have been duly elected and
qualified. The Company's officers are appointed by, and serve at the pleasure
of, the Board of Directors, subject to the terms of any employment agreements.
See "Executive Compensation and Other Information -- Employment Contracts,
Termination of Employment and Change-in-Control Arrangements."
The Company's Certificate of Incorporation and Bylaws provide that the
number of directors shall be fixed from time to time by the Board of Directors,
but shall not be less than two, nor more than 15 persons. The Board, in its
discretion and in accordance with such authority, has fixed its size at five
persons. No proxy will be voted for more than five persons.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Company's Board of Directors has an Audit Committee and a
Compensation Committee. The Audit Committee is responsible for oversight of the
quality and integrity of the accounting, auditing, internal control, and
financial reporting practices of the Company and the appointment, compensation,
and retention of the Company's independent auditors. It may also have such other
duties as may from time to time be assigned to it by the Board. In November of
2002, the Board of Directors unanimously approved an amendment of the Audit
Committee Charter, reducing the size of the Audit Committee from three members
to two. This amendment was the result of Mr. David Chandler, a previous member
of the Board of Directors and the Audit and Compensation Committees, voluntarily
declining to run for re-election to the Board in 2002. The current members of
the Audit Committee are Messrs. Shaw and Strautnieks. The Compensation Committee
makes recommendations concerning compensation, including incentive arrangements,
for the Company's officers. The Compensation Committee also administers the
Company's 1992 Incentive Stock Option Plan, Director Stock Option Plan, 1998
Stock Appreciation Rights Plan, and the Company's Non-Qualified Deferred
Incentive Compensation Plan. In January of 2003, the Board of Directors
nominated Mr. Strautnieks to serve as a member of the Compensation Committee, to
fill the position previously held by Mr. Chandler. The Board unanimously
approved Mr. Strautnieks' nomination. The current members of the Compensation
Committee are Messrs. Shaw and Strautnieks.
During fiscal 2003, the Board of Directors had four meetings, the Audit
Committee had five meetings, and the Compensation Committee had two meetings.
During fiscal 2003, no director of the Company attended fewer than 75% of the
number of board meetings and meetings of the committee(s) on which he served.
DIRECTOR COMPENSATION
Members of the Board of Directors are reimbursed for out-of-pocket
expenses incurred in attending Board of Directors and committee meetings.
Messrs. Shaw and Strautnieks receive $3,000 each quarter as director
compensation. Mr. Lloyd receives $2,000 a month as compensation for serving as a
consultant and director of the Company. No additional compensation is paid for
committee meetings. In addition, each director who is not an employee of the
Company, or of a subsidiary or affiliate of the Company, is eligible to receive
stock options under the Company's Director Stock Option Plan. During fiscal
2003, no options to purchase shares of Common Stock were awarded under the
Director Stock Option Plan.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
The table on the following page sets forth, as of September 15, 2003,
certain information with respect to the shares of Common Stock beneficially
owned by (i) each person known by the Company to own beneficially five percent
or more of the Common Stock, (ii) each director and director nominee of the
Company, (iii) each of the five most highly compensated executive officers of
the Company during its most recent fiscal year and (iv) all directors and
executive officers of the Company as a group. Except as indicated below, each of
the persons listed in the table has sole voting and investment power with
respect to the shares listed. For purposes of the following table, each person's
"beneficial ownership" of Common Stock has been determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and Rule 13d-3 promulgated thereunder. Information with respect to
beneficial ownership is based upon information furnished by such persons or
contained in filings made with the Securities and Exchange Commission ("SEC").
3
BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1) OWNERSHIP CLASS
------------------------------------ ---------- ----------
Agro Industrial and Trading Holding B.V.
18 Lindenstraat, 7411 NV Deventer, Netherlands (2)............................... 317,400 6.3%
William Blair Leveraged Capital Fund, L.P.
222 West Adams Street, Chicago, Illinois 60606................................... 863,275 17.0%
John W. Lloyd, Director (3)......................................................... 249,148 4.9%
Walter E. Rose, Director and Chief Executive Officer................................ 438,996 8.7%
Robert G. Shaw, Director (3)........................................................ 10,000 *
John D. Strautnieks, Director....................................................... 306,296 6.1%
Richard D. Hinrichs, Director and President and Chief Operating Officer (3)......... 269,092 5.3%
Mark A. Lessor, Vice President & General Manager, Great Plains Packaging (3)........ 3,000 *
Lyle O. Halstead, Vice President Finance & General Manager, Flashfold Carton........ 2,011 *
James W. Anderson, Vice President & General Manager, Standard Packaging & Printing.. 430 *
Directors and executive officers as a group (8 persons) (3)......................... 1,278,973 25.3%
-----------------------
* Represents beneficial ownership of less than one percent of the outstanding
shares of Common Stock.
(1) Unless otherwise indicated, the address of each of the beneficial
owners identified is c/o Gibraltar Packaging Group, Inc., 2000 Summit
Avenue, Hastings, Nebraska 68901.
(2) Based solely on information set forth in a Schedule 13D, dated December
11, 1996.
(3) Includes the following shares issuable upon the exercise of outstanding
stock options granted by the Company that are exercisable within 60
days of September 15, 2003: 5,000 for Mr. Lloyd, 5,000 for Mr. Shaw,
8,000 for Mr. Hinrichs, and 3,000 for Mr. Lessor.
4
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE OFFICERS
Set forth below is certain information concerning the executive
officers of the Company, including the business experience of each during the
past five years.
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
Walter E. Rose 60 Chairman and Chief Executive Officer
Richard D. Hinrichs 59 President and Chief Operating Officer
Brett E. Moller 41 Vice President Finance
Mark A. Lessor 44 Vice President and General Manager
Great Plains Packaging Division
Lyle O. Halstead 38 Vice President and General Manager
Flashfold Carton Division
James W. Anderson 42 Vice President and General Manager
Standard Packaging & Printing Division
Information regarding the business experience of Messrs. Rose and
Hinrichs is set forth above under the heading "Proposal Number 1: Election of
Directors."
BRETT E. MOLLER became Vice President Finance of the Company in June
2002. Previously, he served as Vice President Finance - Corporate of the Company
since September 2000, and as Corporate Controller since October 1998.
MARK A. LESSOR became Vice President and General Manager of the
Company's Great Plains Packaging Division in July 2003. Prior to this
appointment, Mr. Lessor previously served as the Company's Vice President of
Sales since March 2001. In addition he served as Great Plains Packaging's Vice
President of Sales since 1997, and added sales management responsibilities for
Flashfold Carton, another division of the Company, to his duties in 1998. He has
held various other positions with Great Plains Packaging including, Sales
Manager, Product Manager, and Sales Representative since his employment with the
Company and its predecessors in 1981.
LYLE O. HALSTEAD became Vice President and General Manager of the
Company's Flashfold Carton Division in June 2002. He previously served as Vice
President Finance - Operations of the Company since September 2000. In addition,
he served as Vice President Finance and Human Resources of the Great Plains
division since 1997, as well as Division Controller for Great Plains Packaging
from April 1992 through December 1995.
JAMES W. ANDERSON became Vice President and General Manager of the
Company's Standard Packaging & Printing Division in June 2002. Previously, Mr.
Anderson served as Vice President and General Manager of the Company's Flashfold
Carton Division since January 2000. Mr. Anderson held other various positions
within the division since September 1997.
5
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors of the Company
currently consists of Messrs. Shaw and Strautnieks, neither of whom are officers
or employees of the Company. The Committee is responsible for evaluating and
establishing the level of executive compensation and administering the Company's
stock option and stock appreciation rights plans.
It is the philosophy of the Company and the Compensation Committee that
in order to achieve continual growth and financial success, the Company must be
able to attract and retain qualified executives. The Company's executive
compensation programs are designed to attract and retain executives capable of
leading the Company to meet its business objectives and to motivate them to
enhance long-term stockholder value. The Compensation Committee regularly
reviews the Company's compensation programs to insure that salary levels and
incentive opportunities are competitive and reflect the performance of the
Company. The Company's compensation package for its executive officers can
consist of a cash salary, a cash incentive bonus, deferred incentive
compensation, stock option grants, and stock appreciation rights.
Base salary levels are largely determined through comparisons with
industrial companies of similar size, complexity, and performance. The
determination of the comparable companies was based upon choices made by the
Compensation Committee and the Board of Directors. Actual salaries are based on
individual performance contributions within a competitive salary range for each
position that is established through job evaluation and market comparisons. The
Company previously paid Rostra a management fee for Mr. Rose's services as Chief
Executive Officer. However, in 2003, in recognition of Mr. Rose's contributions
to the Company, the Compensation Committee approved a compensation package for
Mr. Rose. This package includes an annual base salary of $50,000, commensurate
with Mr. Rose's time allocation to the Company, as well as a performance-based
bonus ranging from $0 to $100,000, to be paid directly by the Company. The
$50,000 current year bonus was based on the Company achieving improved results
in fiscal 2003 over the prior year.
The Company uses annual bonuses to motivate its executive officers and
reward individuals for their initiative and outstanding performance. Bonuses are
determined annually based upon achievement of performance-oriented indicators,
which include improvement in sales and net income, the control of working
capital and cash flow, and the achievement of specified operating objectives
that favorably impact the Company's overall financial performance. In fiscal
2003 the Company established and the Compensation Committee approved a long term
incentive program entitled The Gibraltar Packaging Group Non-Qualified Deferred
Incentive Compensation Plan. Within this plan, participants will share in 5% of
the net growth of the fair market value of the Company, as defined by the plan,
over the base year. Additional information regarding this plan is located in the
"Long Term Incentive Plans - Awards in Last Fiscal Year" table included under
"Executive Compensation" below.
The Compensation Committee believes that by providing the executives
who have substantial responsibility for the management and growth of the Company
with an opportunity to increase their ownership of Common Stock of the Company,
the best interest of stockholders and executives will be closely aligned.
Therefore, executives are eligible to receive stock options from time to time,
giving them the right to purchase Common Stock of the Company. While various
factors such as the potential of the recipient, prior grants, and the
performance of the Company are considered in selecting the recipients and
determining the size of the grant, the Company does not adhere to any firmly
established formulas or schedules for the issuance of options, and options are
awarded when considered appropriate. No stock options were awarded in fiscal
2003.
The Committee believes that granting stock appreciation rights
("SARs"), like stock options, can increase stockholder value by aligning the
interests of the SARs recipient with the Company's stockholders. Once the SARs
reach maturity, they will provide cash incentives to key executives only if the
then current value of the Common Stock has exceeded predetermined levels. SARs
previously granted reached maturity in fiscal 2003. Cash payouts are further
explained in the "Fiscal Year End SAR Values" table included under "Executive
Compensation" below.
The foregoing report is given by the following members of the
Compensation Committee:
Robert G. Shaw
John D. Strautnieks
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Shaw and Strautnieks. No
member of the Compensation Committee was an officer or employee of the Company,
or any of its subsidiaries, during fiscal 2003. Messrs. Rose and Strautnieks
serve on the Board of Directors of Rostra, which board makes all
compensation-related decisions for that company.
6
EXECUTIVE COMPENSATION
The following table summarizes certain information regarding aggregate
cash compensation, stock option awards, stock appreciation rights, and other
compensation earned by the Company's Chief Executive Officer and each of the
four other most highly compensated executive officers of the Company during the
Company's last three fiscal years.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
FISCAL ------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) OPTIONS/SARS(#) COMPENSATION($)(2)
--------------------------- ------ ---------- ------------ --------------- ------------------
Walter E. Rose 2003 50,000 50,000 0 0
Chief Executive Officer 2002 0 50,000(3) 0 0
2001 0 50,000(4) 0 0
Richard D. Hinrichs 2003 236,665 49,000 0 78,433(5)(6)
President and Chief Operating Officer 2002 230,428 49,000 0 1,705
2001 221,563 53,000 0 1,821
Mark A. Lessor 2003 125,977 17,000 0 26,781(6)
Vice President & General Manager 2002 122,634 19,000 0 1,424
Great Plains Packaging Division 2001 105,139 20,000 0 1,273
Lyle O. Halstead 2003 119,545 17,000 0 26,640(6)
Vice President & General Manager 2002 103,777 15,000 0 1,182
Flashfold Carton Division 2001 94,200 16,000 0 442
James W. Anderson 2003 140,002 17,000 0 26,613(6)
Vice President & General Manager 2002 129,387 15,000 0 1,106
Standard Packaging & Printing Division 2001 104,760 16,000 0 1,080
(1) Bonuses reflect amounts earned and accrued during each fiscal year, but
paid in a subsequent fiscal year.
(2) Represents Company contributions to the Company's 401(k) profit sharing
plan. For fiscal 2003, these amounts represented $2,253 for Mr.
Hinrichs, $1,451 for Mr. Lessor, $1,310 for Mr. Halstead, and $1,283
for Mr. Anderson. During each of the three years ended June 28, 2003,
June 29, 2002, and June 30, 2001, perquisites for each individual named
in the "Summary Compensation Table" aggregated less than 10% of the
total annual salary and bonus reported for such individual in the
"Summary Compensation Table." Accordingly, no such amounts are included
in the "Summary Compensation Table."
(3) The amount listed represents fees paid to Rostra for services provided
by Mr. Rose as the Company's Chief Executive Officer in fiscal 2002.
The amount listed was accrued in fiscal 2002 and paid in fiscal 2003.
(4) The amount listed represents fees paid to Rostra for services provided
by Mr. Rose as the Company's Chief Executive Officer. This amount was
accrued in fiscal 2001; however, payment was contingent upon the
Company achieving sustained profitability. The amount was subsequently
paid in fiscal 2002.
(5) Includes $28,500 for Mr. Hinrichs' SARs that reached maturity in fiscal
2003. The payment of these SARs will be made in three annual
installments of $9,500 beginning in fiscal 2004.
(6) Includes deferred compensation of $47,680 for Mr. Hinrichs and $25,330
for Messrs. Lessor, Halstead, and Anderson that was earned in fiscal
2003 but deferred through the Company's Non-Qualified Deferred
Incentive Compensation Plan.
7
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS GRANTED IN FISCAL 2003
The Company did not grant any stock options or SARs in fiscal 2003.
STOCK OPTION AND SAR VALUES AT FISCAL YEAR-END
The following table summarizes information concerning the value of
unexercised options held as fiscal year end 2003, by the executive officers
named in the "Summary Compensation Table." No stock options were exercised by
these officers in fiscal 2003.
FISCAL YEAR-END OPTION VALUES
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF IN-THE-MONEY
OPTIONS HELD AT OPTIONS AT
FISCAL YEAR END 2003 FISCAL YEAR END 2003 (1)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Richard D. Hinrichs (2).. 10,000 0 0 0
Mark A. Lessor (2)....... 3,000 0 0 0
(1) Computed based on the difference between aggregate fair market value
and aggregate exercise price. The market value of the Company's Common
Stock at fiscal year end 2003 was $2.35 based on the closing price on
the NASDAQ National Market System on that date. All of the options held
by Messrs. Hinrichs and Lessor have exercise prices in excess of $2.35.
(2) All options for Mr. Hinrichs and Mr. Lessor were granted under the
Company's 1992 Incentive Stock Option Plan.
The following table includes information concerning the value of SARs
held as of fiscal year end 2003, by the executive officers named in the "Summary
Compensation Table."
FISCAL YEAR-END SAR VALUES
NUMBER OF PRESENT VALUE
SARS OUTSTANDING AT OF SARS OUTSTANDING AT
FISCAL YEAR END 2003 FISCAL YEAR END 2003 (1)
------------------------ -------------------------
NAME VESTED UNVESTED VESTED UNVESTED
---- ------ -------- ------ --------
Richard D. Hinrichs (2).. 150,000(3) 0 $28,500(4) 0
(1) Computed based on the difference between aggregate fair market value
and aggregate initial value. The maturity value of the SARs was $2.63,
based on the average closing price of the Company's stock on the NASDAQ
National Market System for the three month period from and including
April 1, 2003 to June 30, 2003, as outlined in the 1998 Stock
Appreciation Rights Plan.
(2) All SARs for Mr. Hinrichs were granted under the Company's 1998 Stock
Appreciation Rights Plan.
(3) 75,000 of Mr. Hinrichs' SARS have initial values in excess of $2.63.
These SARS have since expired.
(4) The computed value of the 75,000 vested, in-the-money SARs will be paid
out in three equal annual installments of $9,500 beginning in fiscal
2004.
8
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF OR OTHER NON-STOCK PRICE-BASED PLANS
SHARES, UNITS PERIOD UNTIL ------------------------------
OR OTHER MATURATION OR THRESHOLD TARGET MAXIMUM
NAME RIGHTS (#) PAYOUT ($) ($) ($)
---- ------------- ------------- --------- ------ -------
Richard D. Hinrichs N/A (1) (1) (1) (1)
Mark A. Lessor N/A (1) (1) (1) (1)
James W. Anderson N/A (1) (1) (1) (1)
Lyle O. Halstead N/A (1) (1) (1) (1)
(1) The Gibraltar Packaging Group Non-Qualified Deferred Compensation Plan
is an ongoing incentive plan whereby the participants share in 5% of
the net growth of the fair market value of the Company, as defined by
the Plan, over the base year. The annual amount deferred under this
Plan in any given fiscal year is reduced by the amount paid to the
participant as a cash bonus for that fiscal year, as determined by the
sole discretion of the Compensation Committee. Participants vest in the
deferred portion of their annual allocation at 20% per year, beginning
with fiscal 2003, the first plan year. Disbursements are governed by
the Plan and generally cannot occur until the relevant annual
allocation is 100% vested, termination of the participant, or a change
of control of the Company. Refer to the "Summary Compensation Table"
for the amounts earned by the named executive officers for fiscal 2003.
9
PERFORMANCE GRAPH
The following performance graph compares the performance of the
Company's Common Stock to the NASDAQ Market Index and two peer group indexes for
the period beginning June 30, 1998 and ending June 30, 2003. The graph assumes
that the value of the investment in the Company's Common Stock and each index
was $100 at June 30, 1998 and that all dividends were reinvested. The Company
has reviewed its peer group and has identified a new group of peers that
provides a more accurate comparison to the Company based on similarities in
company size and products produced. The members of the old peer group consist of
Bemis Inc., Outlook Group Corp., and Sonoco Products Co. In addition, the old
peer group previously consisted of three other companies which have since ceased
operations, or have been purchased by larger, diversified companies. The members
of the new peer group consist of Caraustar Industries, Inc., Rock Tenn Co,
Bemis, Inc., Graphic Packaging International Corp, and MOD-PAC Corp.
COMPARISON OF 5 YEAR CUMULATIVE RETURN
AMONG GIBRALTAR PACKAGING GROUP, INC.,
NASDAQ MARKET INDEX, AND PEER GROUP INDEX
[GRAPH]
Cumulative Total Return
----------------------------------------------------------
6/98 6/99 6/00 6/01 6/02 6/03
GIBRALTAR PACKAGING GROUP, INC. 100.00 31.82 26.73 46.55 50.91 87.82
NASDAQ STOCK MARKET (U.S.) 100.00 143.67 212.43 115.46 78.65 87.33
NEW PEER GROUP 100.00 100.29 73.98 87.47 113.13 104.25
OLD PEER GROUP 100.00 100.75 78.32 97.34 115.60 109.03
There can be no assurance that the Company's stock performance will
continue into the future with the same or similar trends depicted in the graph
above or that its performance will change in the future. The Company will not
make or endorse any predictions as to future stock performance.
10
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company entered into an employment agreement with Mr. Hinrichs,
dated January 15, 1999, which supercedes all prior employment agreements between
Mr. Hinrichs and the Company. The agreement provides that Mr. Hinrichs would
receive an annual base salary of not less than $201,000 and be entitled to
receive a bonus not to exceed 40% of his base salary each fiscal year. The
employment agreement also provides Mr. Hinrichs with the right to participate in
the 1998 Stock Appreciation Rights Plan (see "Report of the Compensation
Committee of the Board of Directors"). In addition, the agreement provides that
if the Company terminates Mr. Hinrichs' employment without just cause, or in the
event of a change-in-control (as defined in the agreement), Mr. Hinrichs would
be entitled to receive severance pay, for the one-year period from termination,
equal to his annual base salary at the time of termination.
The Company entered into an agreement with Mr. Lloyd on September 1,
2000, based upon his resignation as Chief Financial Officer of the Company,
effective September 5, 2000. This agreement supercedes all previous employment
agreements between Mr. Lloyd and the Company. As a part of this agreement, Mr.
Lloyd serves as a consultant to the Company and is paid a retainer of $2,000 per
month, for so long as he remains a consultant and director to the Company. The
agreement also states that so long as Mr. Lloyd remains employed as a consultant
for the Company, he retains his rights under the 1998 Stock Appreciation Rights
Plan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than ten percent of the Company's Common
Stock, to file initial reports of ownership and reports of changes in ownership
of Common Stock with the SEC. Officers, directors, and greater than ten percent
stockholders are required by SEC regulation to furnish the Company with copies
of all such forms that they file.
To the Company's knowledge, based solely on the Company's review of the
copies of such reports received by the Company, and on written representations
by certain reporting persons, the Company believes that during the fiscal year
ended June 28, 2003, all Section 16(a) filing requirements applicable to its
officers, directors, and ten percent stockholders were made.
CERTAIN TRANSACTIONS
Walter Rose, the Company's CEO, holds an equity interest in Rostra.
During fiscal 2003, the Company paid Rostra $50,000 in management fees for
services provided by Mr. Rose during fiscal 2002. During fiscal 2002, the
Company paid $100,000 to Rostra in management fees for services provided by Mr.
Rose in fiscal years 2000 and 2001.
11
AUDIT COMMITTEE REPORT
The Company's Audit Committee is responsible for oversight of the
quality and integrity of the accounting, auditing, internal control, and
financial reporting practices of the Company and the appointment, compensation,
and retention of the Company's independent auditors. It may also have such other
duties as may from time to time be assigned to it by the Board. The Audit
Committee members satisfy the regulations of the National Association of
Securities Dealers ("NASD") requiring that all audit committee members be
"independent directors" as defined in the NASD listing standards. While the
Company is not required to adopt a written charter for the Audit Committee, it
nevertheless adopted a formal charter in 2002. The Audit Committee's charter is
attached to this Proxy Statement as Attachment I.
During fiscal 2003, the Committee met five times, and discussed the
interim financial information contained in each quarterly earnings announcement
with management and independent auditors prior to public release. In connection
with the Company's June 28, 2003 audited financial statements, the Audit
Committee reviewed and discussed the financial statements with management. The
Audit Committee also discussed with the Company's independent public accountants
the matters required by Statement on Auditing Standards ("SAS") No. 61,
"Communication with Audit Committees," as amended by SAS No. 90.
In discharging its oversight responsibility as to the audit process,
the Audit Committee obtained from Deloitte & Touche LLP, the Company's
independent public accountants, a formal written statement describing all
relationships between the independent public accountants and the Company that
might bear on the auditor's independence consistent with the Independence
Standards Board Standard No. 1, "Independence Discussions with Audit
Committees," and discussed with the auditors any relationships that may impact
their objectivity and independence. In considering the auditor's independence,
the Audit Committee also considered whether the non-audit services performed by
the auditors on the Company's behalf were compatible with maintaining the
independence of the auditors. In addition, all non-audit and audit related
services performed by the auditors must be approved in advance by the Audit
Committee. Based on this review, the Audit Committee believes appropriate
independence is maintained.
Based on the Audit Committee's review and discussions with management
and the Company's independent public accountants, the Audit Committee
recommended to the Board that the audited financial statements be included in
the Company's Annual Report on Form 10-K for the fiscal year ended June 28,
2003, for filing with the SEC. The Audit Committee also recommended the
reappointment of the independent public accountants and the Board concurred in
this recommendation, subject to the ratification of the appointment by the
stockholders at the Annual Meeting.
Audit Committee
Robert G. Shaw, Chairman
John D. Strautnieks
PRINCIPAL ACCOUNTING FIRM FEES
The following table lists the aggregate fees billed to the Company for
the fiscal year ended June 28, 2003, by the Company's principal accounting firm,
Deloitte & Touche LLP.
Audit Fees $ 140,500
Financial Information Systems Design and
Implementation Fees $ --
All Other Fees $ 56,600
12
PROPOSAL NUMBER 2:
APPROVAL OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed the firm of
Deloitte & Touche LLP as the Company's independent public accountants for the
fiscal year ending July 3, 2004, subject to ratification by the Company's
stockholders. Representatives of Deloitte & Touche LLP are expected to be
present at the Annual Meeting of Stockholders and will have an opportunity to
make a statement, if they desire to do so, and to respond to appropriate
questions from those attending the meeting. Deloitte & Touche LLP has served as
auditors for the Company since 1986.
For ratification, this proposal will require the affirmative vote of
the holders of a majority of the shares of Common Stock represented at the
meeting in person or by proxy. If the resolution is rejected, or if Deloitte &
Touche LLP declines to act or becomes incapable of action, or if its employment
is discontinued, the Board of Directors will appoint other independent
accountants. The enclosed proxy will be voted for ratification of Deloitte &
Touche LLP unless the proxy holders are otherwise instructed.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
RATIFICATION OF DELOITTE & TOUCHE LLP'S APPOINTMENT.
PROPOSALS OF STOCKHOLDERS
Any proposal of a stockholder intended to be presented at the next
annual meeting must be in the form required by the Company's By-laws and
received at the Company's principal executive offices no later than June 12,
2004, if the proposal is to be considered for inclusion in the Company's proxy
statement relating to next year's meeting.
A stockholder may also present a proposal directly to the Company's
stockholders at the 2004 Annual Meeting. However, if the Company does not
receive notice of the stockholder proposal prior to the close of business on
August 26, 2004, SEC rules permit management to vote proxies in their discretion
on the proposed matter. If the Company receives notice of the stockholder
proposal on or before the close of business on August 26, 2004, management can
only vote proxies in their discretion if they advise stockholders in the
Company's 2004 proxy statement about the nature of the proposed matter and how
management intends to vote on the matter.
FINANCIAL INFORMATION
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING ANY
FINANCIAL STATEMENTS AND SCHEDULES AND EXHIBITS THERETO, MAY BE OBTAINED WITHOUT
CHARGE BY E-MAILING investorrelations@gppkg.com OR BY WRITTEN REQUEST TO
INVESTOR RELATIONS, GIBRALTAR PACKAGING GROUP, INC., 2000 SUMMIT AVENUE,
HASTINGS, NEBRASKA 68901. THESE REPORTS CAN ALSO BE OBTAINED ON OUR WEBSITE AT
www.gibraltarpackaginggroup.com.
OTHER MATTERS
The Company will bear the cost of preparing and mailing proxy materials
as well as the cost of solicitation of proxies. The Company will reimburse
banks, brokerage firms, custodians, nominees, and fiduciaries for their expenses
in sending proxy materials to the beneficial owners of Common Stock. In addition
to solicitation by mail, certain directors, officers, and regular employees of
the Company may solicit proxies by fax, telephone, and personal interview.
By Order of the Board of Directors
/s/ WALTER E. ROSE
WALTER E. ROSE
CHIEF EXECUTIVE OFFICER
October 6, 2003
Hastings, Nebraska
13
ATTACHMENT I
GIBRALTAR PACKAGING GROUP, INC
AUDIT COMMITTEE CHARTER
This Audit Committee Charter (Charter) has been adopted by the Board of
Directors (the Board) of Gibraltar Packaging Group, Inc. (the Company). The
Audit Committee of the Board (the Committee) shall review and reassess this
charter annually and recommend any proposed changes to the Board for approval.
ROLE AND INDEPENDENCE: ORGANIZATION
The Committee is responsible for oversight of the quality and integrity of the
accounting, auditing, internal control and financial reporting practices of the
Company and the appointment, compensation and retention of the Company's
independent auditors. It may also have such other duties as may from time to
time be assigned to it by the Board. The membership of the Committee shall
consist of at least two directors, who are each free of any relationship that,
in the opinion of the Board, may interfere with such member's individual
exercise of independent judgment. Each Committee member shall also meet the
independence and financial literacy requirements for serving on audit
committees, and at least one member shall have accounting or related financial
management expertise, all as set forth in the applicable rules of the NASDAQ.
The Committee shall maintain free and open communication with the independent
auditors and Company management. In discharging its oversight role, the
Committee is empowered to investigate any matter relating to the Company's
accounting, auditing, internal control or financial reporting practices brought
to its attention, with full access to all Company books, records, facilities and
personnel. The Committee may retain outside counsel, auditors or other advisors.
One member of the Committee shall be appointed as chair. The chair shall be
responsible for leadership of the Committee, including scheduling and presiding
over meetings, preparing agendas, and making regular reports to the Board. The
chair will also maintain regular liaison with the CEO, Vice Presidents of
Finance, and the lead independent audit partner.
The Committee shall meet at least four times a year in person or by telephone,
or more frequently as the Committee considers necessary. At least once each year
the Committee shall have separate private meetings with the independent auditors
and management.
RESPONSIBILITIES
Although the Committee may wish to consider other duties from time to time, the
general recurring activities of the Committee in carrying out its oversight role
are described below. The Committee shall be responsible for:
o Recommending to the Board the independent auditors to be
retained (or nominated for shareholder approval) to audit the
financial statements of the Company. Such auditors are
ultimately accountable to the Board and the Committee, as
representatives of the shareholders.
o Evaluating, together with the Board and management, the
performance of the independent auditors and, where
appropriate, replacing such auditors.
o Obtaining annually from the independent auditors a formal
written statement describing all relationships between the
auditors and the Company, consistent with Independence
Standards Board Standard Number 1. The Committee shall
actively engage in a dialogue with the independent auditors
with respect to any relationships that may impact the
objectivity and independence of the auditors and shall take,
or recommend that the Board take, appropriate actions to
oversee and satisfy itself as to the auditor's independence.
o Reviewing the audited financial statements and discussing them
with management and the independent auditors. These
discussions shall include a review of the annual management
letter and matters required to be discussed under Statement of
Auditing Standards No. 61, as amended by SAS 89 and 90, and
consideration of the quality of the Company's accounting
principals as applied in its financial reporting, including a
review of particularly sensitive accounting estimates,
reserves and accruals, judgmental areas, audit adjustments
(whether or not recorded), and other such inquiries as the
Committee or the independent auditors shall deem appropriate.
Based on such review, the Committee shall make its
recommendation to the Board as to the inclusion of the
Company's audited financial statements in the Company's Annual
Report on Form 10-K.
1
o Issuing annually a report to be included in the Company's
proxy statement as required by the rules of the Securities and
Exchange Commission.
o Overseeing the relationship with the independent auditors,
including discussing with the auditors the nature and rigor of
the audit process, receiving and reviewing audit reports, and
providing the auditors full access to the Committee (and the
Board) to report on any and all appropriate matters.
o Discussing with a representative of management and the
independent auditors: (1) the interim financial information
contained in the Company's Quarterly Report on Form 10-Q prior
to its filing, and (2) the results of the review of such
information by the independent auditors. (These discussions
may be held with the Committee as a whole or with the
Committee chair in person or by telephone.)
o Discussing with management and the independent auditors the
quality and adequacy of and compliance with the Company's
internal controls.
o Discussing with management and/or the Company's general
counsel any legal matters (including the status of pending
litigation) that may have a material impact on the Company's
financial statements, and any material reports or inquiries
from regulatory or governmental agencies.
o Reviewing alleged fraudulent actions or violations of law
reported by internal compliance programs or, under the terms
of the Private Securities Litigation Reform Act of 1995, by
the independent auditors.
o Reviewing management "conflict of interest" transactions.
o Self-assessing audit committee performance.
o Reviewing the range and cost of audit and non-audit services
performed by the independent accountants.
o Pre-approving all engagements in connection with the audit,
review or attestation of reports required under the securities
laws, as well as all permissible non-audit services.
The Committee's job with respect to the Company's financial statements is one of
oversight. Management is responsible for the preparation of the Company's
financial statements and the independent auditors are responsible for auditing
those financial statements. The Committee and the Board recognize that
management and the independent auditors have more resources and time, and more
detailed knowledge and information regarding the Company's accounting, auditing,
internal control and financial reporting practices than the Committee does;
accordingly the Committee's oversight role does not provide any expert or
special assurance as to the financial statements and other financial information
provided by the Company to its shareholders and others.
2
GIBRALTAR PACKAGING GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS
WEDNESDAY, NOVEMBER 12, 2003
12:00 P.M. CENTRAL TIME
LOCHLAND COUNTRY CLUB
601 WEST LOCHLAND ROAD
HASTINGS, NEBRASKA
--------------------------------------------------------------------------------
GIBRALTAR PACKAGING GROUP, INC.
[LOGO] 2000 SUMMIT AVENUE
HASTINGS, NEBRASKA 68901 PROXY
________________________________________________________________________________
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
OF STOCKHOLDERS ON NOVEMBER 12, 2003.
The undersigned hereby constitutes and appoints WALTER E. ROSE, BRETT E. MOLLER,
and each or either of them, lawful attorneys and proxies of the undersigned,
with full power of substitution, for and in the name, place and stead of the
undersigned, to attend the Annual Meeting of Stockholders of Gibraltar Packaging
Group, Inc. (herein the "Company") to be held at the Lochland Country Club, 601
West Lochland Road, Hastings, Nebraska, on the 12th day of November 2003 at
12:00 p.m., Central Time, and any adjournment(s) thereof, with all powers the
undersigned would possess if personally present and to vote thereat, as provided
on the reverse side, the number of shares the undersigned would be entitled to
vote if personally present. Please mark an X in the appropriate boxes on the
reverse side.
In accordance with their discretion, said attorneys and proxies are authorized
to vote upon such other business as may properly come before the meeting or any
adjournments thereof.
THE BOARD RECOMMENDS THAT YOU VOTE FOR ALL NOMINEES AND TO RATIFY THE
APPOINTMENT OF DELOITTE & TOUCHE LLP.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
SEE REVERSE FOR VOTING INSTRUCTIONS.
/ PLEASE DETACH HERE \
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
1. Election of directors: 01 Richard D. Hinrichs 04 Robert G. Shaw [ ] FOR all nominees [ ] WITHHOLD AUTHORITY
02 John W. Lloyd 05 John D. Strautnieks listed below except as to vote for all
03 Walter E. Rose marked to the contrary nominees listed below
___________________________________________________
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, WRITE | |
THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) |___________________________________________________|
2. To ratify the appointment of Deloitte & Touche LLP as the
independent auditors of the Company for the 2004 fiscal year. [ ] For [ ] Against [ ] Abstain
Every properly signed proxy will be voted in accordance with the specification made thereon. IF NOT OTHERWISE SPECIFIED, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2. All prior proxies are hereby revoked.
This proxy will be voted in accordance with the discretion of the proxies or proxy on any other business. Receipt is hereby
acknowledged of the Notice of Annual Meeting and Proxy Statement of the Company dated October 6, 2003.
Address Change? Mark Box [ ]
Indicate changes below: Date ___________________________________________
___________________________________________________
| |
| |
|___________________________________________________|
Signature(s) in Box
(Please sign exactly as your name appears hereon.
When signing as attorney, executor, administrator,
trustee, guardian, etc., give full title as such. For
joint accounts, each joint owner should sign.)
PLEASE MARK, SIGN, DATE, AND RETURN THE
PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.