UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ACME UNITED CORPORATION
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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)(4) 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:
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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.
[ ] 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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March 26, 1998
Dear Fellow Shareholder:
On behalf of your Board of Directors and Management, I cordially
invite you to attend the Annual Meeting of Shareholders of Acme
United Corporation scheduled to be held on Monday, April 27, 1998
at 11:00 a.m., at The American Stock Exchange, 86 Trinity Place,
New York, New York. This will be my third Annual Meeting since
appointment as your Company's President and Chief Executive
Officer, and I particularly look forward to greeting personally
those shareholders able to attend.
At the Meeting, shareholders will be asked to elect eight
directors to serve for a one year term; approve an Amendment to
the Company's Non-Salaried Director Stock Option Plan; and
approve an Amendment to the Company's Employee Stock Option Plan.
Information regarding these matters is set forth in the
accompanying Notice of Annual Meeting and Proxy Statement to
which you are urged to give your prompt attention.
It is important that your shares be represented and voted at the
Meeting. Whether or not you plan to attend, please take a moment
to sign, date and promptly mail your proxy in the enclosed
prepaid envelope. This will not limit your right to vote in
person should you attend the meeting.
On behalf of your Board of Directors, thank you for your
continued support and interest in Acme United Corporation.
Sincerely,
/s/ Walter C. Johnsen
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Walter C. Johnsen
President and Chief Executive Officer
Acme United Corporation
75 Kings Highway Cutoff
Fairfield, Connecticut 06430
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 27,1998
Notice is hereby given that the Annual Meeting of Shareholders of
Acme United Corporation will be held at The American Stock
Exchange, 86 Trinity Place, New York, New York, on Monday, April
27, 1998, at 11:00 A.M. for the following purposes:
1. To elect eight Directors of the Company to serve until
the next Annual Meeting and until their successors
are elected.
2. To consider and vote upon an amendment to the Non-
Salaried Director Stock Option Plan.
3. To consider and vote upon an amendment to the Employee
Stock Option Plan.
4. To transact such other business as may properly come before
the meeting.
Shareholders of record at the close of business on March 9, 1998,
will be entitled to vote at the meeting and at any adjournment
thereof.
/s/ Cheryl L. Kendall
--------------------------
March 26, 1998 Cheryl L. Kendall, Vice
Fairfield, Connecticut President - Chief Financial
Officer, Secretary and
Treasurer
YOUR VOTE IS IMPORTANT
You are urged to date, sign and promptly return your proxy so
that your shares may be voted in accordance with your wishes and
in order that the presence of a quorum may be assured. The prompt
return of your signed proxy, regardless of the number of shares
you hold, will aid the Company in reducing the expense of
additional proxy solicitation. The giving of such proxy does not
affect the right to vote in person in the event you attend the
meeting.
Enclosure: The Annual Report of the Company for the year 1997.
Acme United Corporation
75 Kings Highway Cutoff
Fairfield, Connecticut 06430
ANNUAL MEETING OF SHAREHOLDERS
APRIL 27, 1998
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation of proxies by the directors of Acme United
Corporation (hereinafter called the "Company") to be used at the
Annual Meeting of Shareholders of the Company, to be held
April 27, 1998, or at any adjournment thereof. The purposes are
set forth in the accompanying Notice of Annual Meeting of
Shareholders and in this Proxy Statement. Any proxy given may be
revoked by a shareholder orally or in writing at any time prior
to the voting of the proxy.
The approximate date on which this Proxy Statement and the
enclosed Proxy is first sent or given to shareholders is
March 26, 1998.
Only holders of Common Stock of record at the close of business
on March 9, 1998 will be entitled to vote at the meeting. Each
holder of the 3,369,875 issued and outstanding shares of $2.50
par value Common Stock is entitled to one vote per share.
Each share of Common Stock is entitled to one vote on each
question to be presented at the Annual Meeting. A plurality of
the vote cast by the shares of stock entitled to vote, in person
or by proxy, at the Annual Meeting will elect directors as long
as a quorum is present. A quorum consists of a majority of the
votes entitled to be cast on a question. Once a share is
represented for any purpose at the meeting, it is deemed present
for quorum purposes for the remainder of the meeting. If a
quorum exists, action on each other question to be voted upon
will be approved if votes, in person or by proxy, cast by
shareholders favoring the action exceed the vote cast by
shareholders opposing the action. In certain circumstances, a
shareholder will be considered to be present at the Annual
Meeting for quorum purposes, but will not be deemed to have voted
in the election of directors or in connection with other matters
presented for approval at the Annual Meeting. Such circumstances
will exist where a shareholder is present but specifically
abstains from voting, or where shares are represented at a
meeting by a proxy conferring authority to vote on certain
matters but not for the election of directors or on other
matters. Under Connecticut law, such abstentions and non-votes
have a neutral effect on the election of management's nominees
for directors and on the approval or disapproval of the other
matters presented for shareholder action.
PRINCIPAL SHAREHOLDERS
The following information is given with respect to any person
who, to the knowledge of the Company's Board of Directors, owns
beneficially more than 5% of the Common Stock of the Company
(exclusive of treasury shares) as of February 9, 1998:
Shares Owned
Type of on February 9, Percent
Shareholder Ownership 1998 of Class
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Henry C. Wheeler Direct 392,192 11.64
149 Lansdowne
Westport, CT 06880
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Henry C. Wheeler and Fleet Direct (1) 93,740 2.78
National Bank
777 Main Street,
MSN 321, Hartford, CT 06115
Trustees for Henry C. Wheeler
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Fleet National Bank Direct 9,033 .27
777 Main Street
MSN 321, Hartford, CT 06115
Executor of the Estate of Phyllis S. Wheeler
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Walter C. Johnsen Direct 190,200 5.64
75 Kings Highway Cutoff
Fairfield, CT 06430
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Dimensional Fund
Advisors Inc. Indirect (2) 181,538 5.39
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
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The persons shown above have sole voting power in these shares
except that in the trust marked (1) the fiduciaries share voting
and dispositive power, and as noted in (2) below.
(2) Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of
181,538 shares, all of which are held in portfolios of DFA
Investment Dimensions Group Inc. ("Fund"), a registered open-end
investment company, or in series of The DFA Investment Trust
Company ("Trust"), a Delaware business trust, or the DFA Group
Trust and DFA Participation Group Trust, investment vehicles for
qualified employee benefit plans, all of which Dimensional serves
as investment manager. Dimensional has sole voting power over
142,831 shares and sole dispositive power over 181,538 shares.
Persons who are officers of Dimensional also serve as officers of
the Fund and the Trust. In their capacity as such officers, they
have the right to vote 28,707 additional shares which are owned
by the Fund and 10,000 shares which are owned by the Trust and
all of which shares are included in the 181,538 shares disclosed.
Dimensional disclaims beneficial ownership of such shares.
SECURITY OWNERSHIP OF MANAGEMENT
The following table indicates, as to each named executive
officer, director and nominee, and as to all directors and
executive officers as a group, the number of shares and
percentage of the Company's Common Stock beneficially owned as of
February 9, 1998. The persons shown have sole voting power in
these shares except as shown in the footnotes below.
Common Stock
Beneficially Owned as of
February 9, 1998
Number of Shares (1) Percent
- ----------------------------------------------------------------------
David W. Clark, Jr. ................ 11,546 (2) *
George R. Dunbar ................... 7,526 (2) *
Walter C. Johnsen................... 340,200 (3) 9.41
Newman M. Marsilius ................ 11,053 (4) *
Wayne R. Moore ..................... 9,388 (2) *
Gary D. Penisten ................... 45,600 (2) 1.26
James L.L. Tullis................... 15,000 (5) *
Henry C. Wheeler ................... 485,932 (6) 13.44
Executive Officers and Directors
as a Group (10 persons)........ 950,995 (7) 26.31
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*Less than 1.0%
(1) Based on a total of 3,369,875 outstanding shares as of
February 9, 1998 and 245,125 shares issuable upon exercise
of outstanding options exercisable within 60 days of
February 9, 1998.
(2) Includes 2,500 shares issuable upon exercise of outstanding
options within 60 days of February 9, 1998.
(3) Includes 150,000 shares issuable upon exercise of
outstanding options within 60 days of February 9, 1998.
(4) Marie K. Marsilius, wife of Newman M. Marsilius, owns 632
shares in which Mr. Marsilius disclaims any beneficial
interest. Includes 2,500 shares issuable upon exercise of
outstanding options within 60 days of February 9, 1998.
(5) Includes 10,000 shares issuable upon exercise of outstanding
options within 60 days of February 9, 1998.
(6) Henry C. Wheeler is Co-Trustee with Fleet National Bank of
93,740 shares and shares voting and dispositive power on
these shares. See Principal Shareholders for details.
(7) Includes 190,250 shares issuable upon exercise of
outstanding options exercisable within 60 days of February
9, 1998.
ELECTION OF DIRECTORS
Each of the following persons has been nominated as a director
until the next Annual Meeting of Shareholders and until his
successor is chosen and qualified. The proxies in the enclosed
form which are executed and returned will be voted (unless
otherwise directed) for the election as directors of the
following nominees, all of whom are now members of the Board of
Directors, except Richmond Y. Holden, Jr.
Nominees Principal Occupation Director Since
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Walter C. Johnsen President and Chief Executive Officer 1995
(age 47) as of November 30,1995; Executive Vice
President from January 24, 1995 to
November 29, 1995. Formerly served as
Vice Chairman and a principal of Marshall
Products, Inc., a medical supply distributor.
Previously, Mr. Johnsen held various venture
capital positions at Smith Barney and was
Managing Partner of the firm's West Coast
activities. Earlier in his career, he
worked at Pfizer, Inc.
Gary D. Penisten Chairman of the Board since February 1994
(age 66) 27, 1996. He is a Director of D.E.
Foster & Partners L.P., an executive
search firm. From 1977 to 1988,
he was Senior Vice President of Finance, Chief
Financial Officer and a Director of Sterling
Drug Inc. in New York City. From 1974 to 1977
he served in the U.S. Government as
Assistant Secretary of the Navy for
Financial Management. Prior to that,
he was employed by General Electric.
Henry C. Wheeler Chairman and Chief Executive Officer 1941
(age 81) through December 20, 1994, Chairman
through November 29, 1995, Chairman
Emeritus as of November 30, 1995.
Wayne R. Moore President and Chief Executive Officer 1976
(age 67) of The Moore Special Tool Company
(1974-93). Mr. Moore was Chairman
of the Board of The Moore Special
Tool Company and The Producto Machine
Company (1993-96), and is presently
a Director and Chairman Emeritus.
He was Chairman of the Association
for Manufacturing Technology/U.S.
Machine Tool Builders (1985-86) and
Committee Member of U.S. Eximbank
(1984).
George R. Dunbar President of Dunbar Associates, 1977
(age 74) a municipal management consulting
firm. Former Chief Administrative
Officer for the City of Bridgeport.
President (1972-87), Bryant Electric
division of Westinghouse Electric
Corporation, manufacturer of electrical
distribution and utilization products,
Bridgeport, CT. Mr. Dunbar is also a
Director of People's Bank, Bridgeport, CT.
David W. Clark, Jr. Managing Director of Pryor & Clark 1980
(age 60) Company, an investment company. From
July 1988 to June 1992, Mr. Clark
was President of Corcap, Inc., which
was spun out of Lydall, Inc. in July
1988. Mr. Clark joined Lydall in 1972
as Vice President-Treasurer and Director.
He became Executive Vice President in
1977 and President in 1986. Until July
of 1992, Mr. Clark was also Chairman of
the Board of CompuDyne Corporation of
which he remains a Director. He is also
a Director of Checkpoint Systems, Inc.,
Thorofare, NJ; and SSC Technologies,
Bloomfield, CT.
James L.L. Tullis Chairman and Chief Executive Officer 1996
(age 50) of Tullis-Dickerson & Co., Inc.,
Greenwich, Connecticut, a venture capital firm.
From 1972 to 1983, he was a securities
analyst researching the health care
industry at Putnam Funds and
Morgan Stanley and Co., Inc. From 1983 to
1986, he was a senior vice president at
E.F. Hutton and Co. He is a Director
of Physician Sales & Service, Inc.
Richmond Y. Holden, Jr.
(age 44) President and Chief Executive Officer of
J.L. Hammett Co. since 1992; Executive Vice
President from 1989 to 1992. J.L. Hammett Co.
is a distributor and retailer of educational
products throughout the United States, and
is one of the largest distributors to the K-12
educational marketplace. Currently Chairman
of the Board of PC-Build, a computer upgrade,
network services and computer services company.
Management does not expect that any of the nominees will become
unavailable for election as a director, but, if for any reason
that should occur prior to the Annual Meeting, the persons named
in the proxy will vote for such substitute nominee, if any, as
may be recommended by Management.
There were no material transactions between the Company and any
officer of the Company, any director or nominee for election as
director, any security holder holding more than 5% of the Common
Stock of the Company or any relative or spouse of any of the
foregoing persons.
The Board of Directors had seven meetings. All directors attended
90% of the aggregate of the total number of the Board meetings
and meetings of Committees of which they were a member.
DIRECTORS' FEES
All directors who are not salaried employees received a fee of
$1,500 per quarter plus $500 for each Board of Directors meeting
attended. Effective January 1, 1998, the quarterly fee for
directors who are not salaried employees increased to $2,500 per
quarter. The fees earned for service on the Committees of the
Board were $500 per Committee meeting and $500 for each one-half
day, or major portion thereof, devoted to Committee work. The
Chairman of the Executive Committee earned an additional $500 per
day to compensate for the broader responsibility and related
effort.
Effective November 19,1995, all fees payable to such directors
have been deferred until the Company completes four consecutive
quarters with aggregate earnings per share of $.50 or more, the
Company or one of its major businesses has been sold or a change
in control of the Company has occurred. Until one such events
occurs, the fees as earned shall be accrued by the Company and
when one of such events does occur, the accrued fees shall be
paid as promptly as possible thereafter.
Fees Earned Prior to July 1, 1997
For fees earned prior to July 1, 1997, each such director was
offered the option of receiving, when such fees become payable,
(a) an amount equal to the fees earned during the period of
deferral, or (b) the sum of (i) the amount of the fees earned
during the period of deferral, plus or minus, as the case may be
(ii) the aggregate amount of the fees earned each month during
the period of deferral times the Percentage Increase or Decrease
in the Company's Stock Price index ("Index"). The "Percentage
Increase or Decrease in the Index" shall mean the increase or
decrease expressed as a percentage in the Index from the first
business day of the month during which fees were earned and the
Index on the last business day prior to the date of payment. The
Index for any given day shall be the closing price on the
American Stock Exchange for the Company's stock on such day. All
payments pursuant to the Deferred Compensation Plan for Directors
shall be without interest. All such directors selected Option
(b), which ties payments to the Stock Price Index, and is
applicable to all fees earned prior to July 1, 1997.
Fees Earned on and after July 1, 1997
Effective July 1, 1997, the plan was amended so all fees that
have been deferred under the plan will be paid when due in
treasury shares. Treasury shares will be allocated each month
based on the closing price of Company shares on the first day of
the month during which the fees were earned divided into fees
earned. Also, effective July 1, 1997, two new long-term payout
options were approved. The first option authorizes deferral of
receipt of treasury shares based on fees earned until the board
member retires or otherwise departs from the board. The second
option also authorizes deferral of receipt of treasury shares
based on fees earned until the board member retires or otherwise
departs from the board; however, the payout is deferred over a
four year period. If the deferred payout option is selected,
upon departure from the board, 20% of the shares will be paid out
immediately and the remainder will be paid in four equal
installments over the next four anniversaries of the board
member's departure. If a major business is sold or a change of
control of the Company is imminent, at the discretion of the
board the stock balance in each director's account can be
distributed to the director or to his estate immediately prior to
culmination of the transaction. In the event of death, all stock
will be distributed promptly to the director's estate. All but
one director elected the first option. One director elected the
second option.
Under the amendment effective July 1, 1997, directors also had
the option to continue the indexing of fees after July 1, 1997,
but would be paid in treasury shares. No director elected this
option.
Equivalent treasury shares that have been deferred under this
plan since its inception in November 1995 to December 31, 1997
are as follows:
Equivalent
Treasury Shares Market
Earned Through Value at
December 31, 1997 December 31, 1997
- ----------------------------------------------------------------------
David W. Clark, Jr. 6,728 $ 40,368
George R. Dunbar 13,966 83,796
Newman M. Marsilius 5,846 35,076
Wayne R. Moore 6,837 41,022
Gary D. Penisten 33,841 203,046
James L.L. Tullis 4,050 24,300
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Total 71,268 427,608
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The Company owned 111,620 treasury shares as of December 31,
1997.
DIRECTORS STOCK OPTIONS
Under the Non-Salaried Directors Stock Option Plan, options were
granted on April 28, 1997 for 10,000 shares each to Messrs.
Clark, Dunbar, Marsilius, Moore and Penisten, of which 2,500
shares vested on April 28, 1997, 2,500 shares will vest on April
28, 1998, 2,500 shares on April 28, 1999, and 2,500 shares on
April 28, 2000.
COMMITTEE STRUCTURE
There is an Executive Committee of the Board of Directors which
is composed of Mr. Penisten as Chairman, and Messrs. Clark and
Dunbar. The function of the Executive Committee is to act for
the Board of Directors during the intervals between meetings of
the Board. During 1997, the Committee held no formal meetings as
issues were handled at the full Board level. In addition, the
Committee members each worked independently on numerous projects
for the Company.
There is an Audit Committee of the Board of Directors which is
composed of Mr. Penisten as Chairman, and Messrs. Dunbar,
Marsilius and Moore. During 1997, this committee met two times
with the Company's independent auditors. The function of the
Audit Committee is to maintain a direct and separate line of
communications between the Board of Directors and the Company's
independent auditors.
The functions of a Nominating Committee are performed by the
whole Board. The Board will consider nominees for directors
recommended by shareholders, and such recommendations may be made
by submitting in writing to the Board, care of the Secretary at
Company's principal executive office, the name, address,
telephone number and resume of his or her business and
educational background along with a written statement by the
shareholder as to why such person should be considered for
election to the Board of Directors.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION COMMITTEE AND INSIDER PARTICIPATION
The Company's executive compensation program is administered by
the Compensation Committee of the Board of Directors. During
1997, the Committee was composed of certain non-employee members
of the Board of Directors, which include Mr. Dunbar as Chairman,
and Messrs. Clark, Moore and Tullis. The Committee had one
meeting during 1997.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is committed to a strong, positive
link between business, performance and strategic goals, and
compensation and benefit programs.
OVERALL EXECUTIVE COMPENSATION POLICY
Our compensation policy is designed to support the overall
objective of enhancing value for our shareholders by:
- Attracting, developing, rewarding and retaining highly
qualified and productive individuals.
- Directly relating compensation to both Company and
individual performance.
- Ensuring compensation levels that are externally
competitive and internally equitable.
Following is a description of the elements of the Company's
executive compensation program and how each relates to the
objectives and policy outlined above.
BASE SALARY
The Committee reviews each executive officer's salary annually.
In determining appropriate salary levels, we consider level and
scope of responsibility, experience, company and individual
performance, internal equity, as well as pay practices of other
companies relating to executives of similar responsibility.
By design, we strive to set executives' salaries at competitive
market levels. External surveys and resource materials are used
to verify this. We believe maximum performance can also be
encouraged through the use of appropriate incentive programs.
ANNUAL INCENTIVES
Annual incentive award opportunities are made to executives to
recognize and reward corporate and individual performance. The
plan in effect for 1997 provided for an incentive bonus based on
the achievement of corporate profitability goals set for each
individual, based upon his area of responsibility. The bonuses
would range from 5% to 31% of base salary, provided a minimum
goal were reached. The amount individual executives may earn
under the bonus plan is directly dependent upon the individual's
position, responsibility and ability to impact our financial
success. No incentive bonus was granted for 1997.
In 1998, the incentive plan criteria will be similar to the plan
in 1997.
STOCK OPTION INCENTIVES
The Company's stock option compensation program is administered
by the Compensation Committee of the Board of Directors. The
purpose of the Company's Amended and Restated Stock Option Plan
for Employees is to promote the interests of the Company by
enabling its key employees to acquire an increased proprietary
interest in the Company and thus to share in the future success
of the Company's business. Accordingly, the plan is intended as a
means not only of attracting and retaining outstanding management
personnel but also of promoting a closer identity of interests
between employees and stockholders. Since the employees eligible
to receive options under the plan will be those who are in a
position to make important and direct contributions to the
success of the Company, the Committee believes that the grant of
options under the plan will be in the best interests of the
Company.
The following options were granted in 1997:
Options for 10,000 shares were granted to Brian S. Olschan
on September 23, 1997 of which 2,500 shares vested on
September 23, 1997, 2,500 shares will vest on September 23,
1998, 2,500 shares on September 23, 1999, and 2,500 shares
on September 23, 2000.
Options for 3,000 shares were granted to Cheryl L. Kendall
on June 24, 1997 of which 750 shares vested on June 24,
1997, 750 shares will vest on June 24, 1998, 750 shares on
June 24, 1999, and 750 shares on June 24, 2000.
The Committee also granted options for 3,000 shares in the
aggregate to three other employees with staggered vesting
dates through September 23, 2000.
RATIONALE FOR CEO COMPENSATION
Walter C. Johnsen was designated President and Chief Executive
Officer of the Company effective on November 30, 1995. His
compensation package was designed to encourage performance in
line with the interests of our shareholders. We believe Mr.
Johnsen's total compensation was competitive in the external
marketplace and reflective of Company and individual performance.
Mr. Johnsen's compensation was $150,000 per annum prior to his
becoming Chief Executive Officer, and was not initially changed
as a result of his new position. Effective January 1, 1997, his
compensation was changed to $183,000 per annum, of which $30,000
was deferred compensation. The deferred compensation will be
indexed in a manner consistent with the Directors' Fees Deferred
Plan described above for salary earned prior to August 1, 1997.
Deferred compensation earned after August 1, 1997 will be paid
when due in treasury shares. The factors which the Committee
considered in determining Mr. Johnsen's base salary for fiscal
1997 were those as stated above for other executive officers.
COMPENSATION COMMITTEE
George R. Dunbar, Chairman
David W. Clark, Jr.
Wayne R. Moore
James L.L. Tullis
The Compensation Committee Report on Executive Compensation shall
not be deemed incorporated by reference by any general statement
incorporating by reference in this proxy statement into any
filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
SUMMARY COMPENSATION TABLE
The following sets forth information concerning the compensation
of the Company's Chief Executive Officer and each of the two
other most highly compensated executive officers of the Company
at the end of the last completed fiscal year earning more than
$100,000 in salary and bonuses. No information is given as to any
person for any fiscal year during which such person was not an
executive officer of the Company.
ANNUAL COMPENSATION
Name and Other Annual All Other
Principal Position Year Salary(1) Bonus Compensation (2) Compensation
- -----------------------------------------------------------------------------------
Walter C. Johnsen 1997 $149,423 $ 0 $ 0 $30,000 (4)
President & Chief 1996 $150,000 $ 0 $2,000 $ 0
Executive Officer (3) 1995 $143,750 $ 0 $1,000 $ 0
- -----------------------------------------------------------------------------------
Brian S. Olschan 1997 $140,115 $ 0 $ 0 $ 0
Senior Vice President (5) 1996 $ 43,283 $ 0 $ 0 $ 0
- -----------------------------------------------------------------------------------
Cheryl L. Kendall 1997 $102,463 $ 0 $ 0 $ 0
Vice President-Chief 1996 $ 50,004 $ 0 $ 0 $ 0
Financial Officer (6)
(1) Effective 1997, the Company changed its payroll payment
cycle from monthly to bi-weekly. The salary reported is gross
wages paid, which varies slightly from annual compensation.
(2) Does not include the value of perquisites and other personal
benefits because the aggregate amount of such compensation, if
any, does not exceed the lesser of $50,000 or ten (10%) percent
of the total amount of annual salary and bonus for any named
individual. Amounts shown represent certain reimbursements for
taxes.
(3) Walter C. Johnsen also served as Chief Financial Officer
from March 26, 1996 to June 30, 1996.
(4) Walter C. Johnsen received $30,000 in deferred compensation
for 1997 to be paid in treasury shares.
(5) Brian S. Olschan joined Acme as Senior Vice President-Sales
and Marketing on September 12, 1996.
(6) Cheryl L. Kendall joined Acme as Vice President-Chief
Financial Officer on July 1, 1996. On September 20, 1996 she
assumed the additional positions of Secretary and Treasurer.
OPTION GRANTS IN LAST FISCAL YEAR AND POTENTIAL REALIZABLE VALUES
The following table provides information concerning each option
granted during the last fiscal year to each of the named
executive officers and the potential realizable value of such
options at certain assumed rates of stock appreciation.
Individual Grants
- -------------------------------------------------------- Potential Realizable
Number of % of Total Value at Assumed Annual
Shares Options Rates of Stock Price
Underlying Granted to Exercise Expira- Appreciation for
Options Employees in or Base tion Option Term
Name Granted Fiscal Year Price Date 5% 10%
- ----------------------------------------------------------------------------------
Walter C. -0- 0% $0 --- $0 $0
Johnsen
- ----------------------------------------------------------------------------------
Brian S. 10,000 62.5% $7.25 September 23, $30,000 $47,000
Olschan per share 2007
- ----------------------------------------------------------------------------------
Cheryl L. 3,000 18.75% $6.125 June 24, 2007 $ 7,000 $12,000
Kendall per share
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR
END OPTION VALUES
The following table provides information concerning each option
exercised during the last fiscal year by each of the named
executive officers and the value of unexercised options held by
such executive officers at the end of the fiscal year.
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at Fiscal Year at Fiscal Year
Shares End (#)(1) End ($)(1)(2)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized($) Unexercisable Unexercisable
- ----------------------------------------------------------------------------------
Walter C. Johnsen -0- $0 150,000/-0- $346,875/$0
- ----------------------------------------------------------------------------------
Brian S. Olschan -0- $0 12,500/17,500 $19,375/$13,125
- ----------------------------------------------------------------------------------
Cheryl L. Kendall -0- $0 4,250/5,750 $6,906/$6,719
(1) The Company has no unexercised SARs.
(2) Values stated are based on the closing price per share of
the Company's Common Stock on the American Stock Exchange
on December 31, 1997, the last trading day of the fiscal
year.
ACME UNITED CORPORATION RETIREMENT PLANS
In December 1995, the Board of Directors adopted a resolution
to freeze the defined benefit pension plan resulting in no
further benefit accruals after February 1, 1996. The life
annuity annual benefit at age 65 was zero for Walter C.
Johnsen, Cheryl L. Kendall and Brian S. Olschan. Amounts
earned by others under this plan are not subject to a
deduction for estimated Social Security benefits, and do not
include benefits which would result from the transfer by a
retiring employee of his accrued profit-sharing account
balance to the pension plan.
CHANGE-IN-CONTROL ARRANGEMENTS AND SEVERANCE PAY PLAN
The Company has a Salary Continuation Plan in effect covering
officers of the Company employed in the United States at the
level of Vice President or above, under the age of 65 and having
at least one (1) year of Company service. Amongst others, this
plan covers Walter C. Johnsen, Brian S. Olschan and Cheryl L.
Kendall, and is designed to retain key employees and provide for
continuity of management in the event of an actual or threatened
change in control of the Company. First, the plan provides that
in the event of such a change in control each such key employee
would have specific rights and receive certain benefits if,
within one year after such change in control (two years for
officers who like Mr. Johnsen are also directors), either the
employee's employment is terminated by the Company involuntarily,
his/her responsibility, status or compensation is reduced, or if
he/she is transferred to a location unreasonably distant from
his/her current location. In such circumstances the compensation
which the employee would be entitled to receive would be a lump
sum payment equal to a specific number of months' compensation
based upon the level of his/her non-deferred compensation in
effect immediately preceding such disposition. Secondly, any such
key employee resigning within six (6) months after the
disposition of the Company (one year for certain officers who
like Mr. Johnsen are also directors) would be entitled to a
similar payment. Under the first scenario Messrs. Johnsen and
Olschan and Ms. Kendall would be entitled to thirty (30) months',
eighteen (18) months' and nine (9) months' compensation,
respectively; under the second scenario, Messrs. Johnsen and
Olschan and Ms. Kendall would be entitled to twenty-four (24)
months', twelve (12) months' and six (6) months' compensation,
respectively.
The Company has a Severance Pay Plan in effect covering officers
of the Company employed in the United States at the level of Vice
President or above, under the age of 65 and having at least one
(1) year of Company service. Amongst others, this Plan covers
Messrs. Johnsen and Olschan and Ms. Kendall and is designed to
enable the Company to attract and retain key employees. The Plan
provides that in the event the key employee's employment is
terminated by the Company involuntarily, his/her responsibility,
status or compensation is reduced, or if he/she is transferred to
a location unreasonably distant from his/her current location,
he/she shall be entitled to benefits under the Plan. In such
circumstances the compensation which the employee would be
entitled to receive would be a lump sum payment equal to a
specific number of months compensation based upon the level of
his/her non-deferred compensation in effect immediately preceding
such termination. Under the Plan Messrs. Johnsen and Olschan and
Ms. Kendall would be entitled to nine (9) months', nine (9)
months', and six (6) months' compensation, respectively, upon
such severance. This plan applies only if the Salary
Continuation Plan does not apply.
PERFORMANCE GRAPH
The following Performance Graph shall not be deemed incorporated
by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of
1933 or the Securities Exchange Act of 1934, except to the extent
that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such
Acts.
The graph compares the yearly cumulative total stockholder return
on the Company's Common Stock with the yearly cumulative total
return of (a) the AMEX Market Index and (b) a peer group of
companies that, like the Company, (i) are currently listed on
the American Stock Exchange, and (ii) have a market
capitalization of $10 million to $20 million. The peer group
includes the following companies: Acme United Corporation,
Advanced Photonix CL A, American Restaurants PRT, American
Vanguard Corp, Arizona Land Income Corp, B&H Ocean Carriers LTD,
Barrister Info Systs CP, Beard Co, BFX Hospitality Group,
Blackrock CA INV QMT, Blackrock FL IQMT, Blackrock NJ IQMT,
Blackrock NY IQMT, Bowar Instrument Corp, Bull & Bear Muni Inc
FD, Calton Inc, Carmel Container System, Coast Distribution
Systs, Concord Fabrics Inc A, Concord Fabrics Inc B, Cornerstone
Bank, Dairy Mart Conv CL A, Dairy Mart Conv CL B, Dakota Mining
Corp, Dallas Gold & Silver EX, Dewolfe Companies Inc, Digital
Power Corp, Driver-Harris Co, Emerson Radio Corp, Empire of
Carolina Inc, Espey Mfg & Electronics, ETZ Lavud CL A, ETZ Lavud
Ltd Ord, Fortune Natural Res Corp, FPA Corp, Frontier Adjustr of
Amer, General Automation Inc, Global Ocean Carriers, Globalink
Inc, Goldfield Corp, Halifax Corporation, Hallmark Financial
Svcs, Hastings Manufacturing, Host Funding Inc, ILX Resorts Inc,
Income Opportun Rlty Inv, Integrated Tech USA, Intersystems Inc,
ION Laser Technology Inc, Jaclyn Inc, Joule Inc, Kentucky First
Bancorp, Kinark Corp, Matec Corp, Mcrae Industries CL A,
Measurement Specialities, Media Logic Inc, Medtox Scientific Inc,
Meridian Point Realty 8, Merrimac Industries Inc, Michael Anthony
Jewelers, Midland Resources Inc. Movie Star Inc, MSR Exploration
Ltd, Multigraphics Inc, Ohio Art Co, Oriole Homes CL B, Pacific
Gateway Props, Pittsbgh & WV Railroad, Polk Audio Inc,
Professional Bancorp Inc, Professional Dental Tech, Provena Foods
Inc, QC Optics, Randers Group Inc, Richton Internat Corp,
Rotonics Manufacturing, Santa Fe Gaming Corp, Scandinavia Co,
Scotland Bancorp Inc, Sheffield Pharma Inc, Soligen Technologies
Inc, Southfirst Bancshares, Spatial Technology Inc, Sterling Cap
CP, Stevens Internat CL A, Sunair Electronics Inc, Thermo
Opportunity Fund, Thermwood Corp, Three Rivers Fin, Top Air
Manufacturing, Trans Lux Corp, Unimar Co, United Foods Inc CL A,
United Foods Inc CL B, Wellco Enterprises Inc, Winston Resources
Inc.
The Company does not believe it can reasonably identify a peer
group of companies on an industry or line-of-business basis for
the purpose of developing a comparative performance index. While
the Company is aware that some other publicly-traded companies
market products in one of the Company's two lines-of-business,
none of these other companies provide most or all of the products
offered by the Company, and many offer other products or services
as well. Moreover, some of these other companies that engage in
one of the Company's two lines-of-business do so through
divisions or subsidiaries that are not publicly-traded.
Furthermore, many of the other companies are substantially more
highly capitalized than the Company. For all of these reasons,
any such comparison would not, in the opinion of the Company,
provide a meaningful index of comparative performance.
The comparisons in the graph below are based on historical data
and are not indicative of, or intended to forecast, the possible
future performance of the Company's Common Stock.
(Printer: Insert Graph)
COMPARISION OF CUMULATIVE TOTAL RETURN OF COMPANY, PEER GROUP AND
BROAD MARKET
- --------------------------FISCAL YEAR ENDING--------------------------
COMPANY 1992 1993 1994 1995 1996 1997
ACME UNITED CORP 100 74.57 57.02 67.99 96.50 105.28
PEER GROUP 100 112.99 97.07 88.94 90.32 88.56
BROAD MARKET 100 118.81 104.95 135.28 142.74 171.76
PROPOSAL FOR AMENDMENT TO THE NON-SALARIED DIRECTOR STOCK OPTION
PLAN
On January 27, 1998, the Board of Directors, subject to approval
of the Shareholders, amended the Non-Salaried Director Stock
Option Plan (the "Plan"). The following description of the Plan
as amended is qualified in its entirety by reference to the text
of the Plan, a copy of which has been filed with the SEC.
PURPOSE
The purpose of the Plan is to provide long-term incentive
supplemental compensation for members of the Board of Directors
who are not salaried employees of the Company through the
ownership of the Company's Common Stock, thereby further aligning
their interest with the interests of shareholders. Stock option
plans for such directors have served other companies and their
shareholders well by directly relating incentive compensation to
the building of long-term shareholder values. In 1996 a plan was
proposed for the first time for directors to provide equity-
related compensation for this important group as well. Such
plans are increasingly common throughout American industry and
are found in other companies with which the Company competes for
the services of qualified individuals to serve as directors.
ADMINISTRATION OF THE PLAN
The Plan is administered by the Compensation Committee of the
Board of Directors composed of certain non-employee directors
(the "Committee"). The Committee, however, has no discretion
affecting the timing, price or amount of any grants, all of which
are determined in the Plan.
SHARES OF STOCK SUBJECT TO THE PLAN
As amended in 1997, the aggregate number of shares subject to
options during the term of the Plan was limited to 60,000 shares
of the Common Stock of the Company. It is now proposed that the
number of shares subject to options be increased from 60,000 to
120,000. This limit may not be increased during the term of the
Plan, except by the shareholders or by equitable adjustment
following recapitalization, stock splits, stock dividends or any
similar adjustment in the number of shares subject to outstanding
options, and in the related option exercise price. If the
shareholders approve this Plan amendment, additional shares
(which can be authorized but unissued shares,or treasury shares,
or a combination thereof) will be set aside for the award of
options.
ELIGIBILITY
Directors of the Company who are not salaried employees of the
Company are eligible to receive benefits under the Plan.
DURATION OF THE PLAN
No awards of stock options may be made after 2007, but
termination will not affect the rights of any participant with
respect to any grants made prior to termination.
OPTION
The Plan as adopted in 1996 provided that an option to purchase
10,000 shares of the Common Stock of the Company be granted to
each new director on April 22, 1996, and for each additional new
director added each year thereafter (beginning with 1997) on the
date of the Annual Meeting for that calendar year (or on the date
of the meeting of the Board of Directors at which such director
was elected to fill a vacancy) to each director who, at the
adjournment of that meeting, is an eligible director. Mr. Tullis
was granted an option for 10,000 shares on April 22, 1996, which
is fully vested. On April 28, 1997, the Plan was amended to
grant an option for 10,000 shares to directors elected for the
first time in earlier years. Accordingly, an option for 10,000
shares was granted to each of Messrs. Clark, Dunbar, Marsilius,
Moore and Penisten. Vesting of these options will be as follows:
2,500 shares on April 28, 1997
2,500 shares on April 28, 1998
2,500 shares on April 28, 1999
2,500 shares on April 28, 2000
The Plan was amended on January 27, 1998 to provide that
directors elected at an annual meeting but not receiving an
initial option grant for 10,000 shares will receive an option
grant for 2,500 shares each year, subject to approval of the
amendment to the Plan by the shareholders. These options will
vest immediately. The Plan Amendment further provides that upon
a termination as a result of death, disability or retirement, any
outstanding options may be exercised by the Participant or the
Participant's legal representative within 12 months after such
death, disability or retirement; provided, however, that in no
event shall the period extend beyond the expiration of the option
term. Accordingly, all directors under the Plan, except for Mr.
Holden, will receive option grants for 2,500 shares, and Mr.
Holden will receive an option grant for 10,000 shares, upon
election at the 1998 Annual Meeting.
EXERCISE PRICE
The exercise price with respect to an option awarded under the
Plan is 100% of the fair market value of the Common Stock as of
the date the option is granted. It will be paid for in full, in
cash or in any other medium and manner satisfactory to the
Company, at the time the option is exercised. The optionee must
satisfactorily provide for the payment of any taxes which the
Company is obligated to collect or withhold before the Common
Stock is transferred to the optionee.
PROVISIONS RELATING TO OPTIONS
Options may not be exercised until vested as described and not
after ten years from the date of the grant, except in the case of
death of the grantee in the final year prior to expiration of the
10-year term. In that case, stock options may be exercised for a
period of eleven years from the date of grant. The Committee may
make provision for exercises within the 10-year terms of a grant
but following termination of Board membership. Except in the
case of death or disability, any unvested options expire
immediately if a participant ceases to be a director of the
Company. Recipients will have no rights as stockholders until
the date of exercise in the case of an exercise involving receipt
of stock. Options may not be transferred except upon the death
of the grantee, in certain other instances as provided by law,
and for the benefit of immediate family members if permitted by
law and under uniform standards adopted by the Committee.
AMENDMENT TO THE PLAN
The Board of Directors on recommendation of the Committee may
amend or terminate the Plan, except that no amendment shall
affect the timing, price or amount of any grants to eligible
directors. In addition, shareholders must approve any change (i)
increasing the numbers of shares subject to the Plan (except as
described under "Shares Of Stock Subject To The Plan") or (ii)
changing the eligibility for grant. Provisions of the Plan may
not be amended more than once every six months, other than to
comply with provisions of applicable law.
FEDERAL INCOME TAX CONSEQUENCES
A recipient of options incurs no income tax liability as a result
of having been granted those options or rights.
The exercise by an individual of a stock option normally results
in the immediate realization of income by the individual of the
difference between the market value of the stock which is being
purchased on the date of exercise and the price being paid for
such stock. The amount of such income also is deductible by the
Company.
Under current law an individual who sells stock which was
acquired upon the exercise of options will receive long-term
capital gains or loss treatment, if he or she has held such stock
for longer than one year following the date of such exercise, on
gain or loss equal to the difference between the price for which
such stock was sold and the market value of the stock on the date
of the exercise. If the individual has held the stock for one
year or less the gain or loss will be treated as short-term
capital gain or loss.
PLAN BENEFITS
Upon approval of the amendment to the Plan by the shareholders
and upon their election as directors at the 1998 Annual Meeting,
all directors who are not salaried employees of the Company will
receive option grants for 2,500 shares each year which will vest
immediately, except for newly elected directors who will receive
an initial option grant for 10,000 shares, which vests after one
year.
VOTE REQUIRED
The approval of the amendment to the Non-Salaried Director Stock
Option Plan requires the affirmative vote of a majority of the
shares of Common Stock of the Company voting in person or by
proxy on the amendment. If the amendment is not approved by
shareholders, it will not become effective.
The Board of Directors recommends a vote FOR approval of the
amendment to the Non-Salaried Director Stock Option Plan.
PROPOSAL FOR AMENDMENT TO EMPLOYEES' STOCK OPTION PLAN
DESCRIPTION OF 1996 AMENDED AND RESTATED STOCK OPTION PLAN
The Company adopted a non-qualified stock option plan, the 1988
Stock Option Plan effective February 22, 1988, which was amended
effective January 29, 1991 and further amended and restated as
the 1992 Amended and Restated Stock Option Plan (the "Plan")
effective February 25, 1992. A further amendment of the Plan on
April 22, 1996 increased the number of shares available under the
Plan to 400,000. Under the Plan, which is administered by the
Compensation Committee of the Board of Directors (the
"Committee"), key employees of the Company (including directors
and officers who are employees) have been granted options to
purchase shares of Common Stock.
The Plan permits the granting of an aggregate of 400,000 shares
of Common Stock (proposed to be increased to 520,000 shares) at a
price equal to one hundred percent (100%) of the fair market
value of the Common Stock on the date that the option is granted
provided, however, that the price shall not be less than the par
value of the Common Stock which is subject to the option.
Further no Incentive Stock Option may be granted to an employee
owning Common Stock having more than 10% of the voting power of
the Company unless the option price for such employee's option is
at least 110% of the fair market value of the Common Stock
subject to the option at the time the option is granted and the
option is not exercisable after five years from the date of
granting. The par value of the Company's Common Stock is
presently $2.50 per share. No option may be granted under the
Plan after the tenth anniversary of the adoption of the Plan. As
a result of the amendment and restatement of the Plan in 1992,
options may be granted until February 24, 2002. Unless otherwise
specified by the Committee, options granted under the Plan are
Incentive Stock Options under the provisions and subject to the
limitations of Section 422 of the Internal Revenue Code. Options
granted prior to the 1992 amendment and restatement are non-
qualified stock options and any shares issued under these options
would be included in the 400,000 share total proposed to be
increased to 520,000.
ADMINISTRATION OF THE PLAN
The Plan is administered by the Committee, which consists of
members of the Board who are not employees of the Company. The
Committee is authorized, subject to the provisions of the Plan,
to determine the employees who will receive options under the
Plan, the number of shares subject to each option and the terms
of those options, and to interpret the Plan and to make such
rules of procedure as the Committee may deem proper.
Upon the granting of any option, the optionee must enter into a
written agreement with the Company setting forth the terms upon
which the option may be exercised. Such an agreement sets forth
the length of the term of the option and the timing of its
exercise as determined by the Committee. In no event shall the
length of an option extend beyond ten years from the date of its
grant. An optionee may exercise an option by delivering payment
to the Company in cash.
Under the Plan, if the employment of any person to whom an option
has been granted is terminated for any reason other than the
death, disability or retirement of the optionee, the optionee may
exercise within thiry (30) days (three months for options granted
prior to June 2, 1996) of such termination such options as the
optionee could have exercised if his or her employment had
continued for such 30 day or three month period. If the
termination is by reason of retirement, the optionee may exercise
the option, in whole or in part, at any time within one year
following such termination of employment, but if the option is
exercised later than thirty (30) days from the date of retirement
the option shall not constitute an Incentive Stock Option. If
the optionee dies while employed by the Company or its
subsidiaries, or during a period after termination of employment
in which the optionee could exercise an option, the optionee's
beneficary may exercise the option within one year of the date of
the optionee's death but in no event may the option be exercised
later than the date on which the option would have expired if the
optionee had lived. If the termination is by reason of
disability, the optionee may exercise the option, in whole or in
part, at any time within one year following such termination of
employment or within such other period, not exceeding three years
after the date of disability as is set forth in the option
agreement with respect to such options, provided, however, that
if the option is exercised later than one year after the date of
disability, it shall not constitute an Incentive Stock Option.
Notwithstanding the above, no option may be exercised after the
expiration date specified in the option agreement.
FEDERAL INCOME TAX CONSEQUENCES
With respect to the tax effects of non-qualified stock options,
since the options granted under the Plan do not have a "readily
ascertainable fair market value" within the meaning of the
Federal income tax laws, an optionee of an option will realize no
taxable income at the time the option is granted. When a non-
qualified stock option is exercised, the optionee will generally
be deemed to have received compensation, taxable at ordinary
income tax rates, in an amount equal to the excess of the fair
market value of the shares of Common Stock of the Company on the
date of exercise of the option over the option price. The Company
will withhold income and employment taxes in connection with the
optionee's recognition of ordinary income as a result of the
exercise by an optionee of a non-qualified stock option. The
Company generally can claim an ordinary deduction in the fiscal
year of the Company which includes the last day of the taxable
year of the optionee which includes the exercise date or the date
on which the optionee recognizes income. The amount of such
deduction will be equal to the ordinary income recognized by the
optionee. When stock acquired through the exercise of a non-
qualified stock option is sold, the difference between the
optionee's basis in the shares and the sale price will be taxed
to the optionee as a capital gain (or loss).
With respect to the tax effects of Incentive Stock Options, the
optionee does not recognize any taxable income when the option is
granted or exercised. If no disposition of shares issued to an
optionee pursuant to the exercise of an Incentive Stock Option is
made by the optionee then (a) upon sale of such shares, any
amount realized in excess of the option price (the amount paid
for the shares) will be taxed to the optionee as long-term
capital gain and any loss sustained will be a long-term capital
loss and (b) no deduction will be allowed to the Company for
Federal income tax purposes. The exercise of an Incentive Stock
Option will give rise to an item of tax preference that may
result in alternative minimum tax liability for the optionee.
If shares of Common Stock acquired upon the exercise of an
Incentive Stock Option are disposed of prior to the expiration of
the two year and one year holding periods described above (a
"Disqualifying Disposition") generally (a) the optionee will
realize ordinary income in the year of disposition in an amount
equal to the excess (if any) of the fair market value of the
shares at exercise (or, if less, the amount realized upon the
sale of such shares) over the option price thereof, and (b) the
Company will be entitled to deduct such amount, subject to
applicable withholding requirements. Any further gain realized
will be taxed as short-term or long-term capital gain and will
not result in any deduction by the Company. A Disqualifying
Disposition will eliminate the item of tax preference associated
with the exercise of the Incentive Stock Option.
CHANGES IN PLAN
The Plan may be terminated, suspended, or modified at any time by
the Board of Directors, but no amendment increasing the maximum
number of shares for which option may be granted (except to
reflect a stock split, stock dividend or other distribution),
reducing the option price of outstanding options, extending the
period during which options may be granted otherwise materially
increasing the benefits accruing to optionee or changing the
class of persons eligible to the optionees shall be made without
first obtaining approval by a majority of the shareholders of the
Company. No termination, suspension or modification of the Plan
shall adversely affect any right previously acquired by the
optionee or other beneficary under the Plan.
Options granted under the Plan may not be transferred other than
by will or by the laws of descent and distribution and, during
the optionee's lifetime may be exercised only by the optionee.
All of the Options prevously issued will remain unchanged and
outstanding after the 1998 amendment to the Plan.
AMENDMENT TO THE 1996 AMENDED AND RESTATED STOCK OPTION PLAN
On January 27, 1998, the Board of Directors adopted, subject to
the approval of the shareholders, an amendment to the Plan. The
only change adopted is an increase in the aggregate number of
shares of Common Stock available under the Plan from 400,000
shares to 520,000 shares. The foregoing description of the Plan
is qualified in its entirety by reference to the text of the Plan
(excluding the proposed amendment), a copy of which has been
filed with the Securities and Exchange Commission ("SEC"). The
purpose of the proposed amendment is to provide shares for
managers who will be instrumental in improving the operating
results of the Company.
VOTES REQUIRED
The approval of the amendment to the 1996 Amended and Restated
Stock Option Plan requires the affirmative vote of a majority of
the shares of Common Stock of the Company voting in person or by
proxy on the amendment. If the amendment is not approved by
shareholders, it will not become effective.
The Board of Directors recommends a vote FOR approval of the
amendment to the 1996 Amended and Restated Stock Option Plan.
SELECTION OF AUDITORS
Coopers & Lybrand L.L.P., auditors for the Company since 1969,
acted as auditors for 1997. Representatives of Coopers & Lybrand
L.L.P. are expected to be present at the 1998 Annual Meeting with
the opportunity to make a statement if they desire to do so and
are expected to be available to respond to appropriate questions.
The Company and Coopers & Lybrand L.L.P. mutually agreed in early
March of 1998 that Coopers & Lybrand L.L.P. will not be engaged
as the Company's independent accountants for 1998. The decision
to change accountants was approved by the Company's Audit
Committee. There were and are no disagreements between the
Company and Coopers & Lybrand L.L.P. on any matter of accounting
principles or practices, financial statement disclosure or
auditing scope or procedure. The accountant's reports for the
past two years have not contained an adverse opinion or a
disclaimer of opinion, nor have they been qualified or modified
in any respect.
The Company is in the process of considering candidates to serve
as its independent accountants for the year 1998. The Company
anticipates that the selection of new independent accountants
will be made prior to the 1998 Annual Meeting.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF
1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own
more than 10% of a registered class of the Company's common
stock, to file with the SEC and the American Stock Exchange
reports of ownership and changes in ownership of common stock and
other equity securities of the Company. Officers, directors and
greater than 10% shareholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on review of copies of such reports furnished to the
Company or written representations that no other reports were
required, the Company believes that, during the 1997 fiscal year,
all filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with, except as
follows:
* The filings of Form 4's with the SEC by Mr. Henry C.
Wheeler were not made within ten (10) days after the
end of the months of sale of 10,400 shares of stock in
the aggregate during the months of February, March and
April 1997. The Form 4's were filed with the SEC on or
about May 22, 1997.
SHAREHOLDER PROPOSALS
To allow sufficient time for preparation of the proxy and proxy
statement, shareholder proposals for presentation at the Annual
Meeting scheduled for April 26, 1999 must be received by the
Secretary of the Company no later than November 26, 1998.
In addition, the Company's by-laws provide that any shareholder
wishing to make a nomination for the office of director at the
1999 Annual Meeting must give the Company at least sixty (60)
days' advance notice, and that notice must meet certain
requirements set forth in the by-laws. Shareholders may request
a copy of the by-laws from the Secretary of the Company.
Notices and requests should be addressed to Secretary, Acme
United Corporation, 75 Kings Highway Cutoff, Fairfield,
Connecticut 06430.
OTHER BUSINESS
Management does not know of any matters to be presented, other
than those described herein, at the Annual Meeting. If any other
business should come before the meeting, the persons named in the
enclosed proxy will have discretionary authority to vote all
proxies in accordance with their best judgment.
Solicitation of proxies is being made by management through the
mail, in person and by telephone and telegraph. The Company will
be responsible for costs associated with this solicitation.
By Order of the Board of Directors
Cheryl L. Kendall, Vice President -
Chief Financial Officer, Secretary
and Treasurer
Acme United Corporation
75 Kings Highway Cutoff
Fairfield, Connecticut 06430
March 26, 1998
