SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Soliciting Material Under Rule
|_| Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
AMERICAN BILTRITE INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(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:
___________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
___________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
_______________________________
4) Proposed maximum aggregate value of transaction: __________________________
5) Total fee paid: ___________________________________________________________
|_| 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:_______________________________________________
2) Form, Schedule or Registration Statement No.: ________________________
3) Filing Party: ________________________________________________________
4) Date Filed: __________________________________________________________
AMERICAN BILTRITE INC.
57 River Street
Wellesley Hills, Massachusetts 02481
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
MAY 10, 2005
------------------
To the Stockholders of American Biltrite Inc.:
Notice is hereby given that the Annual Meeting of the Stockholders of
American Biltrite Inc. will be held at the Bank of America, Berkeley Room,
Seventh Floor, One Federal Street, Boston, Massachusetts, on Tuesday May 10,
2005 at 9:00 A.M. local time, for the following purposes:
1. To elect four directors who will hold office until the Annual
Meeting of Stockholders in 2008 and until their successors are duly
elected and qualified.
2. To transact any other business that may properly come before the
meeting or any adjournment thereof.
The close of business on March 15, 2005 has been fixed as the record date
for determining the stockholders entitled to notice of, and to vote at, the
Annual Meeting and any adjournment thereof.
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2004 is enclosed with this proxy statement.
It is desirable that the stock of the Company should be represented as
fully as possible at the Annual Meeting. Please sign, date and return the
accompanying proxy card in the enclosed envelope, which requires no postage if
mailed in the United States. If you should attend the Annual Meeting, you may
vote in person, if you wish, whether or not you have sent in your proxy, and
your vote at the meeting will revoke any prior proxy you may have submitted.
By Order of The Board of Directors
AMERICAN BILTRITE INC.
Henry W. Winkleman
Secretary
Wellesley Hills, Massachusetts
March 31, 2005
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation, by
and on behalf of the Board of Directors (the "Board") of American Biltrite Inc.
(the "Company" or "ABI"), of proxies to be used in voting at the Annual Meeting
of Stockholders (the "Meeting") to be held on May 10, 2005 at the Bank of
America, Berkeley Room, Seventh Floor, One Federal Street, Boston, Massachusetts
at 9:00 A.M. local time, and at any adjournments thereof. The principal
executive offices of the Company are located at 57 River Street, Wellesley
Hills, Massachusetts 02481. The cost of preparing and mailing the notice, proxy
statement and proxy card will be paid by the Company. It is expected that the
solicitation of proxies will be by the Company by mail only, but may also be
made by overnight delivery service, facsimile, personal interview, e-mail or
telephone by directors, officers or employees of the Company. The Company will
request banks and brokers holding stock in their names or custody, or in the
names of nominees for others, to forward copies of the proxy material to those
persons for whom they hold such stock and, upon request, will reimburse such
banks and brokers for their out-of-pocket expenses incurred in connection
therewith. This proxy statement and the accompanying proxy card were first
mailed to stockholders on or about March 31, 2005.
Proxies in the accompanying form, properly executed, duly returned to the
Company and not validly revoked, will be voted at the Meeting (including
adjournments) in accordance with your instructions.
Any stockholder giving a proxy in the accompanying form retains the power
to revoke it at any time prior to the exercise of the powers conferred thereby
by filing a later dated proxy, by notice of revocation filed in writing with the
Secretary of the Company or by voting the shares subject to such proxy in person
at the Meeting. Attendance at the Meeting in person will not be deemed to revoke
the proxy unless the stockholder affirmatively indicates at the Meeting an
intention to vote the shares in person.
On March 15, 2005, there were issued and outstanding 3,441,551 shares of
the Company's Common Stock, par value $.01 per share (the "Common Stock"). Only
stockholders of record at the close of business on that date are entitled to
notice of and to vote at the Meeting or any adjournment thereof, and those
entitled to vote will have one vote for each share held.
A quorum for the consideration of any question at the Meeting will consist
of a majority in interest of all stock issued and outstanding and entitled to
vote upon that question. A plurality of the shares represented and voting at the
Meeting at which a quorum is present is required to elect directors. On all
other matters, a majority of the shares represented and voting at the meeting is
required to decide the question. Shares represented by proxies marked "WITHHELD"
with regard to the election of directors will be counted for purposes of
determining whether there is a quorum at the Meeting, but will not be voted in
the election of directors, and, therefore, will have no effect on the
determination of the outcome of the votes for the election of directors.
A "broker non-vote" occurs with respect to shares as to a proposal when a
broker who holds shares of record in its name is not permitted to vote on that
proposal without instruction from the beneficial owner of the shares and no
instruction is given. A broker holding your shares in its name will be permitted
to vote such shares with respect to the proposal to elect three directors to be
voted on at the Meeting without instruction from you, and, accordingly, broker
non-votes will not occur with respect to this proposal.
DELIVERY OF PROXY MATERIAL AND ANNUAL REPORTS TO HOUSEHOLDS
The Securities and Exchange Commission has implemented a rule permitting
companies and brokers, banks or other intermediaries to deliver a single copy of
an annual report and proxy statement to households at which two or more
beneficial owners reside. This method of delivery, which eliminates duplicate
mailings, is referred to as "householding." Beneficial owners sharing an address
who have been previously notified by their broker, bank or other intermediary
and have consented to householding, either affirmatively or implicitly by not
objecting to householding, will receive only one copy of the Company's Annual
Report on Form 10-K for the year ended December 31, 2004 and this proxy
statement.
If you hold your shares in your own name as a holder of record,
householding will not apply to your shares.
Beneficial owners who reside at a shared address at which a single copy of
the Company's Annual Report on Form 10-K for the year ended December 31, 2004
and this proxy statement is delivered may obtain a separate Annual Report on
Form 10-K for the year ended December 31, 2004 and/or proxy statement without
charge by sending a written request to: American Biltrite Inc., 57 River Street,
1
Wellesley Hills, Massachusetts 02481, attention Henry W. Winkleman, or by
calling the company at 781-237-6655. The Company will promptly deliver an Annual
Report on Form 10-K for the year ended December 31, 2004 and/or proxy statement
upon request.
Not all brokers, banks or other intermediaries may offer the opportunity
to permit beneficial owners to participate in householding. If you want to
participate in householding and eliminate duplicate mailings in the future, you
must contact your broker, bank or other intermediary directly. Alternatively, if
you want to revoke your consent to householding and receive separate annual
reports and proxy statements for each beneficial owner sharing your address, you
must contact your broker, bank or other intermediary to revoke your consent to
householding.
ELECTION OF DIRECTORS
The Board is divided into three classes, the terms of which expire at
successive Annual Meetings of Stockholders. Stockholders are being asked to
elect three Class III directors at the Meeting. The accompanying proxy will be
voted for the election of the nominees named in Class III below unless otherwise
instructed. The term of those Class III directors elected at the Meeting will
expire at the Annual Meeting of Stockholders held in 2008 upon the election and
qualification of their successors. Should any person named below be unable or
unwilling to serve as a director, persons named as proxies intend to vote for
such other person as management may recommend. Each nominee is currently a
director of the Company.
The following table sets forth the name, age and principal occupation of
each of the nominees for election as director and each current director in the
classes continuing in office, together with a statement as to the period during
which he or she has served as a director of the Company.
Expiration
Business Experience and of
Name (Age) Other Directorships Present Term
---------- ------------------- ------------
Nominees
CLASS III
Mark N. Kaplan, Esq. (75) Of Counsel, Skadden, Arps, Slate, Meagher & Flom 2005
LLP, attorneys. Director of the Company since
1982. Director of: DRS Technologies Inc.;
Autobytel Inc.; REFAC Technology Development
Corporation; Volt Information Sciences, Inc.; and
Congoleum Corporation, a resilient flooring
manufacturer and a majority owned subsidiary of the
Company .
Natalie S. Marcus (88) Investor Director of the Company since 1992. 2005
William M. Marcus (67) Executive Vice President and Treasurer of the 2005
Company. Director of the Company since 1966.
Director of Congoleum Corporation,.
Kenneth I. Watchmaker (62) Executive Vice President and Chief Financial 2005
Officer of Reebok International Ltd., a worldwide
designer, marketer and distributor of sports,
fitness and casual footwear, apparel and
equipment. Director of the Company since 1995.
2
Expiration
Business Experience and of
Name (Age) Other Directorships Present Term
---------- ------------------- ------------
Incumbent Directors
CLASS I
Gilbert K. Gailius (73) Former Vice President-Finance and Chief Financial 2006
Officer of the Company. Director of the Company
since 1983.
Richard G. Marcus (57) President and Chief Operating Officer of the 2006
Company. Director of the Company since 1982. Vice
Chairman of the Board of Directors of Congoleum
Corporation.
Frederick H. Joseph (68) Managing Director, Morgan Joseph & Co. investment 2006
bankers from 2001 to 2003. Managing Director, ING
Barings LLC, investment bankers, from 1998 to 2001.
Director of the Company since 1997. Director of
Watsco Inc.
CLASS II
Leo R. Breitman (64) Former Chairman and CEO, Fleet Bank - 2007
Massachusetts. Director of the Company in
September 2004. Director of Metris Companies Inc.
John C. Garrels III (65) Former Director, Global Banking, The First National 2007
Bank of Boston, a national banking association.
Director of the Company since 1977.
James S. Marcus (75) Former General Partner, Goldman, Sachs & Co., 2007
investment bankers. Director of the Company since
1971. Director of Insight Communications Company,
Inc.
Roger S. Marcus (59) Chairman of the Board and Chief Executive Officer 2007
of the Company. Director of the Company since
Chairman of the Board of Directors and Chief
Executive Officer of Congoleum Corporation.
Note: Natalie S. Marcus is the mother of Roger S. Marcus and Richard G. Marcus
and the aunt of William M. Marcus. James S. Marcus is not related to Natalie,
Roger, Richard or William Marcus.
Individuals who together beneficially own 56.8% of the outstanding Common
Stock have identified themselves as persons who have in the past taken, and may
in the future take, actions which direct or cause the direction of the
management of the Company, and their voting of shares of Common Stock, in a
manner consistent with each other. Accordingly, these individuals may be deemed
to constitute a "group" within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended, and Rule 13d-5 thereunder. In light of the
existence of this "group," the Company is a "controlled company," as that term
is defined in Section 801 of the American Stock Exchange ("AMEX") Company Guide.
As a result of the Company's status as a "controlled company," it may avail
itself of exceptions to the AMEX's corporate governance standards that generally
require a company whose stock is listed for trading on the AMEX to have a
majority of its board of directors consist of independent directors, to have
director nominations selected or recommended for the board's selection by either
a nominating committee comprised solely of independent directors or by a
majority of the independent directors and to have officer compensation
determined or recommended to the board for determination either by a
compensation committee comprised of independent directors or by a majority of
the independent directors. Pursuant to the AMEX's independence standards, the
Company's Board of Directors has determined that the following seven of its 11
directors are independent: Leo R. Breitman, John Garrels III, Frederick Joseph,
Mark Kaplan, James Marcus, Gilbert K. Gailius and Kenneth Watchmaker.
3
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR ELECTION OF EACH OF
THE NOMINEES FOR CLASS III DIRECTOR.
EXECUTIVE OFFICERS
The following table sets forth certain information relating to the executive
officers of the Company.
Executive
Officer
Executive Officer (Age) Position Since
----------------------- -------- -------
Roger S. Marcus (59) Chief Executive Officer of the Company. 1981
Chief Executive Officer of Congoleum
Corporation
Richard G. Marcus (57) President and Chief Operating Officer. 1982
Vice Chairman of Congoleum Corporation
William M. Marcus (67) Executive Vice President and Treasurer 1966
Howard N. Feist III (48) Vice President-Finance and Chief 2000
Financial Officer of the Company. Chief
Financial Officer and Secretary of
Congoleum Corporation since 1988.
J. Dennis Burns (65) Vice President and General Manager, Tape 1985
Products Division
Jean Richard (60) Vice President and General Manager 2000
American Biltrite (Canada) Ltd
Henry W. Winkleman (60) Vice President, Corporate Counsel, and 1989
Secretary
4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table, together with the accompanying text and footnotes,
sets forth, as of March 15, 2005, (a) the holdings of the Common Stock of each
director of the Company and of each person nominated to become a director of the
Company, (b) the holdings of the Common Stock of each person named in the
Summary Compensation Table that appears later in this proxy statement and of all
executive officers and directors as a group and (c) the names, addresses and
holdings of the Common Stock of each person, who to the Company's knowledge,
beneficially owns 5% or more of the Common Stock.
Amount and
Nature of
Name and Address Beneficial Percent of
of Beneficial Owner(1) Ownership(2) Common Stock
------------------------------------------------------------- -------------- -------------
Directors and Executive Officers
Natalie S. Marcus 954,928(3)(4) 27.7%
c/o American Biltrite Inc.
57 River Street
Wellesley Hills, MA 02481
Richard G. Marcus 517,723(3)(5) 14.8
c/o American Biltrite Inc.
57 River Street
Wellesley Hills, MA 02481
Roger S. Marcus 503,122(3)(6) 14.4
c/o American Biltrite Inc.
57 River Street
Wellesley Hills, MA 02481
William M. Marcus 353,734(3)(7) 10.1
c/o American Biltrite Inc.
57 River Street
Wellesley Hills, MA 02481
J. Dennis Burns 10,304(8) *
Mark N. Kaplan 5,500(9) *
Gilbert K. Gailius 13,500(10) *
John C. Garrels III 4,300(10) *
Howard N. Feist III 14,000(11) *
Kenneth I. Watchmaker 3,500(10) *
James S. Marcus 3,700(10) *
Frederick H. Joseph 3,500(12) *
Leo R. Breitman 1,000(10) *
All directors and executive officers as a group (15 persons) 2,113,011(13) 57.6
5% Beneficial Owners, other than persons included above
Dimensional Fund Advisors, Inc. 197,250(14) 5.7
1299 Ocean Avenue, Suite 650
Santa Monica, CA 90491
Wilen Management Company, Inc. 211,252(15) 6.1
2360 West Joppe Road, Suite 226
Lutherville, MD 21093
----------
* Represents beneficial ownership of less than 1% of Common Stock
outstanding.
5
(1) Addresses are given only for beneficial owners of more than 5% of the
Common Stock outstanding.
(2) Unless otherwise noted, the nature of beneficial ownership is sole voting
and/or investment power.
(3) As of the date shown, these shares were among the 2,050,907 shares, or
56.8%, of the outstanding Common Stock beneficially owned by the following
persons, who have identified themselves as persons who have taken, and
reasonably anticipate continuing to take, actions which direct or may
cause the direction of the management and policies of the Company and the
voting of their shares of Common Stock in a manner consistent with each
other, and who therefore may be deemed to constitute a "group" within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"): Natalie S. Marcus, Richard G. Marcus, Roger
S. Marcus, William M. Marcus and Cynthia S. Marcus (c/o American Biltrite
Inc., 57 River Street, Wellesley Hills, MA 02481). The Company owns
4,395,605 shares of the Class B Common Stock of Congoleum Corporation
("Congoleum") and 151,100 shares of the Class A Common Stock of Congoleum.
These shares on a combined basis represent 69.5% of the voting power of
the outstanding capital stock of Congoleum. Each of the named individuals
may be deemed a beneficial owner of these shares.
(4) Natalie S. Marcus has sole voting and investment power over 803,428
shares. Mrs. Marcus is also a co-trustee with Richard G. Marcus and Roger
S. Marcus over 144,000 shares and trustee of a charitable trust, which
holds 4,000 shares. Mrs. Marcus also has the right to acquire 3,500
shares, which are issuable upon exercise of options currently exercisable
within 60 days of the date of this proxy statement.
(5) Richard G. Marcus has sole voting and investment power over 313,723
shares. Mr. Marcus is also a co-trustee with Natalie S. Marcus and Roger
S. Marcus over 144,000 shares. Mr. Marcus also has the right to acquire
60,000 shares, which are issuable upon exercise of options exercisable
within 60 days of the date of this proxy statement. Richard G. Marcus's
wife, Beth A. Marcus, owns 6,836 shares, of which shares Mr. Marcus
disclaims beneficial ownership. Mr. Marcus also has the right to acquire
80,000 shares of common stock of Congoleum, which are issuable upon
exercise of options exercisable within 60 days of the date of this proxy
statement.
(6) Roger S. Marcus has sole voting and investment power over 299,122 shares.
Mr. Marcus is also a co-trustee with Natalie S. Marcus and Richard G.
Marcus over 144,000 shares. Mr. Marcus also has the right to acquire
60,000 shares, which are issuable upon exercise of options exercisable
within 60 days of the date of this proxy statement. Roger S. Marcus's
daughter, Elissa G. Marcus, owns 9,736 shares, of which shares Mr. Marcus
disclaims beneficial ownership. Mr. Marcus also has the right to acquire
80,000 shares of common stock of Congoleum which are issuable upon
exercise of options exercisable within 60 days of the date of this proxy
statement.
(7) William M. Marcus has sole voting and investment power over 305,734
shares. Mr. Marcus also has the right to acquire 48,000 shares, which are
issuable upon exercise of options exercisable within 60 days of the date
of this proxy statement. William M. Marcus's wife, Cynthia S. Marcus, owns
9,400 shares, of which shares Mr. Marcus disclaims beneficial ownership.
Mr. Marcus also has the right to acquire 2,000 shares of common stock of
Congoleum which are issuable upon exercise of options exercisable within
60 days of the date of this proxy statement.
(8) J. Dennis Burns has sole voting and investment power over 3,104 shares.
Mr. Burns has the right to acquire 7,200 shares, which are issuable upon
exercise of options exercisable within 60 days of the date of this proxy
statement. Mr. Burns's wife, Kristin J. Burns, owns 100 shares of Class A
Common Stock of Congoleum, which shares represent less than 1% of the
voting power of the outstanding capital stock of Congoleum, of which
shares Mr. Burns disclaims beneficial ownership.
(9) Mark N. Kaplan has sole voting and investment power over 2,000 shares.
Mark N. Kaplan has the right to acquire 3,500 shares which are issuable
upon exercise of options exercisable within 60 days of the date of this
proxy statement. Mr. Kaplan also owns 16,000 shares of Class A Common
Stock of Congoleum, and has the right to acquire 3,500 shares of of Class
A Common Stock of Congoleum which are issuable upon exercise of options
exercisable within 60 days of the date of this proxy statement which
shares represent less than 1% of the voting power of the outstanding
capital stock of Congoleum.
(10) Messrs. John C. Garrels III, James S. Marcus and Gilbert K. Gailius have
sole voting and investment power over 800, 200 and 12,000 shares
respectively. Messrs. John C. Garrels III, James S. Marcus and Kenneth I.
Watchmaker each have the right to acquire 3,500 shares, which are issuable
upon exercise of options exercisable within 60 days of the date of this
proxy statement. Mr. Gilbert K. Gailius has the right to acquire 1,500
6
shares which are issuable upon exercise of options exercisable within 60
days of the date of this proxy statement. Mr. Leo R. Breitman has the
right to acquire 1,000 shares which are issuable upon exercise of options
exercisable within 60 days of the date of this proxy statement.
(11) Howard N. Feist III has the right to acquire 14,000 shares which are
issuable upon exercise of options exercisable within 60 days of the date
of this proxy statement. Mr. Feist also owns 1,000 shares, and is trustee
for a custodial account which holds 1,177 shares, of Class A Common Stock
of Congoleum, which shares represent less than 1% of the voting power of
the outstanding capital stock of Congoleum. Mr. Feist also has the right
to acquire 6,000 shares of common stock of Class A Common Stock of
Congoleum which are issuable upon exercise of options exercisable within
60 days of the date of this proxy statement.
(12) Frederick H. Joseph has the right to acquire 3,500 shares which are
issuable upon exercise of options exercisable within 60 days of this proxy
statement. Mr. Joseph also owns 8,000 shares of Class A Common Stock of
Congoleum, which shares represent less than 1% of the voting power of the
outstanding capital stock of Congoleum.
(13) All directors and executive officers as a group may be considered
beneficial owners of 349,277 shares of Class A Common Stock of Congoleum
and 4,395,605 shares of Class B Common Stock of Congoleum, which combined
as a group represent 70.1% of the voting power of the outstanding capital
stock of Congoleum.
(14) Based on information contained in a Schedule 13G filed with the Securities
and Exchange Commission on February 9, 2005.
(15) Based on information contained in a Schedule 13G filed with the Securities
and Exchange Commission on January 25, 2005.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, requires the Company's directors,
executive officers and holders of more than 10% of the Common Stock and other
equity securities of the Company to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
the Common Stock and other equity securities of the Company. The Company
believes that during the year ended December 31, 2004, its officers, directors
and holders of more than 10% of the Company's Common Stock complied with all
Section 16(a) filing requirements.
DIRECTOR COMPENSATION AND COMMITTEES
During 2004, the Board held eleven meetings. Each director who was not an
officer and employee of the Company received a director's fee of $15,000 per
year and $2,000 for each of the four regular Board meetings attended and each
member of the Audit Committee received $3,000 for each Audit Committee meeting
attended during 2004. The Directors do not receive a fee for telephonic
meetings. In 2004, each director attended at least 75% of the aggregate of the
total number of meetings of the Board of Directors (held during the period he
was a director) and 75% of the total number of meetings of the committees of the
Board on which each Director serves (during the periods that he served) except
James Marcus and Frederick Joseph.
Directors may elect to defer the receipt of all or a part of their fees.
Amounts so deferred earn interest, compounded quarterly, at a rate equal to the
base rate quoted by Bank of America at the end of each quarter.
Directors are also eligible to have their contributions to qualified
charitable organizations matched by the Company in an aggregate amount up to
$5,000 per director per year.
The Company's Compensation Committee consists of three members. The
Compensation Committee met once during 2004. The members of the Compensation
Committee are Messrs. Mark N. Kaplan, Chairman, John C. Garrells III and Kenneth
I. Watchmaker. The Compensation Committee is responsible for the review and
establishment of executive compensation including base salaries, bonuses and
criteria for their award, personnel policies, particularly as they relate to
fringe benefits, savings and investment, pension and retirement plans and other
benefits.
The Company has an Audit Committee composed of independent directors as
defined in AMEX's listing standards. Information regarding the functions
performed by the Audit Committee, its membership, and the number of meetings
held during the fiscal year, is set forth in the Audit Committee Report included
7
in this annual proxy statement. The Board of Directors has determined that the
Company has at least one audit committee financial expert serving on its audit
committee. The audit committee financial expert is Kenneth I. Watchmaker who is
an independent director as defined in AMEX's listing standards. The written
charter adopted by the Board that governs the Audit Committee has been filed
with the Securities & Exchange Commission and is available upon request from the
Company.
The Company does not have a standing nominating committee or formal
procedure for nomination of directors. The Board of Directors believes that this
is appropriate in light of the Company's ownership structure, which includes
individuals who together beneficially own 56.8% of the outstanding Common Stock
and who have identified themselves as persons who have in the past taken, and in
the future my take, actions which direct or may cause the direction of the
management of the Company, and their voting of shares of Common Stock, in a
manner consistent with each other. Accordingly, these individuals may be deemed
to constitute a "group" within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended, and Rule 13-5 thereunder. In light of the
existence of this "group," the Company is a "controlled company," as that term
is defined in Section 801 of the AMEX Company Guide. Pursuant to the AMEX's
corporate governance rules, a "controlled company" may avail itself of an
exception to the AMEX rule that generally requires a company whose stock is
listed for trading on the AMEX to have director nominations selected or
recommended for the board's selection by either a nominating committee comprised
of independent directors or by a majority of the independent directors. All
members of the Board of Directors participate in the consideration of director
nominees. The Board does not have a policy with regard to the consideration of
any director candidates recommended by security holders. The Board of Directors
believes that such a policy is not necessary because the directors have access
to a sufficient number of excellent candidates from which to select a nominee
when a vacancy occurs on the Board and because the Board includes the
controlling shareholders of the Company. Individual directors will generally
recommend candidates to the controlling shareholders and, if acceptable, will
submit that person's name for consideration by the Board. The Board generally
seeks candidates with a broad business background and who may also have a
specific expertise in such areas as law, accounting, banking, or investment
banking.
All members of the Board of Directors are encouraged, but not required, to
attend the Company's annual meeting of stockholders. All members of the Board of
Directors except Leo Breitman, who had not been elected to the Board at that
time, attended the annual meeting held in 2004.
AUDIT COMMITTEE REPORT
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board. Management has the primary responsibility for the financial
statements and the reporting process including the systems of internal controls.
In fulfilling its oversight responsibilities, the Audit Committee reviewed the
audited financial statements in the Company's Annual Report on Form 10-K for the
year ended December 31, 2004 with management and the independent auditors,
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the Audit Committee under generally accepted auditing standards. In
addition, the Audit Committee discussed with the independent auditors the
auditors' independence from management and the Company including the matters
required to be discussed by Statement on Auditing Standards No. 61, has received
and reviewed written disclosures and the letter from the independent auditors
required by Independence Standards Board Standard No. 1 and considered the
compatibility of nonaudit services with the auditors' independence.
The Audit Committee discussed with the Company's internal and independent
auditors the overall scope and plans for their respective audits. The Audit
Committee met quarterly with the internal and independent auditors, with and
without management present, to discuss the results of their examinations, their
evaluations of the Company's internal controls, and the overall quality of the
Company's financial reporting. The Audit Committee held four meetings during
fiscal year 2004.
8
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board (and the Board has approved) that the audited
financial statements be included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2004 for filing with the Securities and Exchange
Commission. The Audit Committee has also appointed Ernst & Young LLP as the
Company's independent auditors for 2005.
AUDIT COMMITTEE
Kenneth I. Watchmaker, Chairman
John C. Garrels III
James S. Marcus
COMPENSATION COMMITTEE REPORT
Overall Policy
The Company's executive compensation program is designed to reflect both
corporate performance and individual responsibilities and performance. The
Compensation Committee administers the Company's executive compensation strategy
in an attempt to relate executive compensation appropriately to the Company's
overall growth and success and to the executive's duties, demonstrated abilities
and, where appropriate, the performance of the operating division or subsidiary
for which the executive is responsible. The objectives of the Company's
compensation strategy are to attract and retain the best possible executives, to
motivate those executives to achieve the Company's business goals and to provide
a compensation package that recognizes individual contributions as well as
overall business results.
Each year, the Compensation Committee conducts a review of the Company's
executive compensation. This review includes consideration of: the relationship
between an executive's current compensation and his/her current duties and
responsibilities; and inflationary trends. The annual compensation review
permits an ongoing evaluation of the relationships among the size and scope of
the Company's operations, the Company's performance and its executive
compensation. The Compensation Committee also considers the legal and tax
effects (including without limitation the effects of Section 162(m) of the
Internal Revenue Code of 1986, as amended) of the Company's executive
compensation program in order to provide the most favorable legal and tax
consequences for the Company.
The Compensation Committee determines the compensation of the individuals
whose compensation is detailed in this proxy statement (including in the Summary
Compensation Table) and sets policies for and reviews the compensation awarded
to the Company's most highly compensated corporate executives. This process is
designed to provide consistency throughout the executive compensation program.
In reviewing the individual performance of the executives whose compensation is
described in this proxy statement (other than Roger S. Marcus, the Company's
Chief Executive Officer), the Compensation Committee takes into account the
views of Roger S. Marcus.
The material elements of the Company's executive compensation consist of
base salary, annual bonus and stock options. In 1996, the Compensation Committee
established certain additional elements to the Company's executive compensation
program, including principally split-dollar insurance arrangements. The
Compensation Committee's policies with respect to each of these elements,
including the bases for the compensation awarded to Roger S. Marcus, are
discussed below. In addition, although the elements of compensation described
below are considered separately, the Compensation Committee takes into account
the full compensation package afforded by the Company (including its
subsidiaries) to the individual, including pension benefits, insurance and other
benefits, as well as the specific elements of the program described below.
Base Salaries
Base salaries for executive officers are determined by considering
historical salaries paid by the Company to officers having certain duties and
responsibilities and then evaluating the current responsibilities of the
position, the scope of the operations under management and the experience of the
individual. Annual salary adjustments are determined by evaluating on an
individual basis (i) new responsibilities of the executive's position, (ii)
9
changes in the scope of the operations managed, (iii) the performance both of
such operations and of the executive in the position and (iv) annual increases
in the cost of living.
With respect to the base salary of Roger S. Marcus in 2004, the
Compensation Committee took into account the Company's performance (and the
performance of Congoleum Corporation, a majority-owned subsidiary of the
Company) and the assessment by the Compensation Committee of Mr. Marcus's
individual performance as Chief Executive Officer of both the Company and
Congoleum Corporation. The Compensation Committee also took into account the
length of Mr. Marcus's service to the Company and his increasing
responsibilities in the course of such service.
Annual Bonus
The Company's executive officers are eligible for an annual cash bonus.
Annual bonuses are determined on the basis of individual and corporate
performance. The most significant corporate performance measure for bonus
payments is earnings of the Company as a whole and then the relevant divisions
or subsidiaries, where appropriate. The Compensation Committee has adopted a
policy of paying bonuses to each of Roger S. Marcus and Richard G. Marcus of
approximately 3-4% of the Company's after-tax earnings, taking into account
significant exceptional or non-operational occurrences and the actual level of
profitability for the relevant year. In determining annual bonuses, the
Committee also considers the views of Roger S. Marcus as Chief Executive Officer
and discusses with him the appropriate bonuses for all executives, including
himself.
Roger S. Marcus was not awarded a bonus for 2004 or 2003.
Stock Options
Under the Company's 1993 Stock Award and Incentive Plan, as amended, stock
options are granted to the Company's executive officers. Stock options are
granted to the Company's executive officers by the Compensation Committee or the
Stock Award Committee, as appropriate. Currently, these committees set
guidelines for the size of stock option awards based on factors similar to those
used to determine base salaries and annual bonus. Stock options are designed to
align the interests of executives with those of the stockholders.
Under the Company's 1993 Stock Award and Incentive Plan, as amended, stock
options are typically granted with an exercise price equal to the market price
of the Common Stock on the date of grant and vest over time. This approach is
designed to encourage the creation of stockholder value over the long term since
the full benefit of options granted under the plan cannot be realized unless
stock price appreciation occurs over time.
Supplemental Benefits
In 1996, the Compensation Committee established supplemental benefits for
certain executive officers of the Company. These supplemental benefits were
proposed and approved as a means of addressing the substantial inequity to the
five most highly compensated executive officers of the Company created by the
cap on credited compensation under the Company's qualified pension plan
described below under the caption "Defined Benefit Pension Plan." The Company
entered into split-dollar life insurance agreements for the benefit of each of
William M. Marcus, Richard G. Marcus, Roger S. Marcus, J. Dennis Burns and
Howard N. Feist III. Under these contracts, the Company agreed to pay a portion
of premiums due over a specified time period on certain variable life insurance
policies providing life insurance protection for the family of each executive
officer, subject to various terms and conditions.
The Company has not paid premiums under these agreements since 2001
because it is not clear whether such payments could be considered prohibited
loans under the Sarbanes-Oxley Act of 2002. Because of this potential
prohibition, as well as recent tax law changes, the Compensation Committee has
determined these split dollar agreements are no longer a viable means of
achieving their intended purpose and is considering alternatives. The
split-dollar life insurance agreements with Mr. William M. Marcus and Mr. Roger
S. Marcus have been terminated.
Employment Agreements
No executive officer of the Company has an employment agreement with the
Company.
10
Conclusion
Through the programs described above, a significant portion of the
Company's executive compensation is linked directly to individual and corporate
performance. In 2004, none of the Company's executive compensation consisted of
performance-based variable elements. In the case of Roger S. Marcus, none of his
2004 compensation consisted of performance-based variable elements. The
Compensation Committee intends to continue the policy of linking executive
compensation to corporate and individual performance, recognizing that the ups
and downs of the business cycle from time to time may result in an imbalance for
a particular period.
COMPENSATION COMMITTEE
Mark N. Kaplan, Chairman
John C. Garrels III
Kenneth I. Watchmaker
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board during 2004 are
listed above, none of whom is or was at any time during 2004 or at any previous
time an officer or employee of the Company. Mark N. Kaplan is presently Of
Counsel to Skadden, Arps, Slate, Meagher & Flom LLP, a law firm. During 2004,
the Company retained Skadden, Arps, Slate, Meagher & Flom LLP for a variety of
legal matters. The Company has retained Skadden, Arps, Slate, Meagher & Flom LLP
during 2005 and proposes to retain the firm during the remainder of 2005. Mr.
Kaplan is also a director of Congoleum Corporation and serves on the Audit and
Compensation Committees of Congoleum.
CODE OF ETHICS
The Company has adopted a code of ethics (as that term is defined in Item
406 of Regulation S-K of the regulations promulgated by the SEC) that applies to
the principal executive officer, principal financial officer, principal
accounting officer or controller and all other employees of the Company. The
text of the Company's code of ethics is posted on our Internet website
www.ambilt.com or may be obtained without charge by sending a written request to
Mr. Henry W. Winkleman, Secretary of the Company, at the Company's offices at 57
River Street, Wellesley Hills, Massachusetts 02481.
11
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
earned by or paid to the Company's Chairman of the Board and Chief Executive
Officer and the Company's four other most highly compensated officers
collectively, the "named executive officers" for services rendered to the
Company and its subsidiaries in all capacities during each of the last three
years. The table also identifies the principal capacity in which each of the
named executives served the Company at the end of 2004.
Summary Compensation Table
Long-Term
Annual Compensation Compensation Awards
------------------------ ---------------------------
Securities Securities
Underlying Underlying All Other
Name and Principal ABI Congoleum Compensation
Position Year Salary ($) Bonus ($) Options Options ($)(1)
-------------------------- ------- ----------- --------- ----------- ------------ ---------------
Roger S. Marcus 2004 572,500 0 50,000 -- 16,501
Chairman of the Board 2003 557,500 0 -- -- 16,186
and Chief Executive 2002 550,000 150,000 -- 200,000 16,800
Officer
Richard G. Marcus 2004 572,500 0 50,000 -- 16,501
President and 2003 557,500 0 -- -- 16,186
Chief Operating Officer 2002 550,000 150,000 -- 200,000 16,800
William M. Marcus 2004 458,000 0 40,000 -- 16,222
Executive Vice President 2003 446,000 0 -- -- 16,186
and Treasurer 2002 440,000 120,000 -- 5,000 16,800
Howard N. Feist III 2004 263,100 0 20,000 -- 5,034
Vice President-Finance 2003 255,600 25,000 -- -- 7,715
and Chief Financial 2002 247,500 35,000 -- 15,000 6,800
Officer
J. Dennis Burns 2004 236,700 0 6,000 -- 4,838
Vice President and 2003 230,000 0 -- -- 7,860
General Manager, 2002 223,300 20,000 -- -- 6,800
Tape Products Division
----------
(1) The amounts disclosed in this column include:
(a) Company contributions of $3,075 in 2004, $6,000 in 2003 and $6,800
in 2002, under the Company's 401(k) Savings Investment Plan, on
behalf of each individual listed;
(b) Payment by the Company of $10,000 in each of 2004, 2003, and 2002 to
individual life insurance trusts for Roger S. Marcus, Richard G.
Marcus and William M. Marcus;
(c) Company paid group-term life insurance premiums on behalf of Roger
S. Marcus, Richard G. Marcus, William M. Marcus, Howard N. Feist III
and J. Dennis Burns totaling, in 2003, $186, $186, $186, $1,715 and
$1,860, respectively, and, in 2004, $3,426, $3,426, $3,147, $1,959
and $1,763 respectively.
12
STOCK OPTIONS
The following Table sets forth information regarding options the Company granted
to the named executive officers under the Company's 1993 Stock Award and
Incentive Plan, as amended and restated as of March 4, 1997 during the year
ended December 31, 2004.
Options Grants In Fiscal Year 2004
Individual Grants
------------------------------------------------------------------------------------------
Percent of
Number of Total
Securities Options Exercise Potential Realizable Value at
Company Underlying Granted of Base Assumed Annual Rates of Stock
Granting Options In Fiscal Price Expiration Price Appreciation for Options
Name Options Granted (1) Year (per share) Date Term(2)
-------------------------------
5% 10%
-------------- ------------ ------------ --------- ----------- ---------- ------------- --------------
Roger S. Marcus ABI 50,000 19.5% $9.65 05/23/14 $303,442 $768,981
Richard G Marcus ABI 50,000 19.5% 9.65 05/23/14 303,442 768,981
William M.Marcus ABI 40,000 15.6% 9.65 05/23/14 242,753 615,185
Howard N. Feist III ABI 20,000 7.8% 9.65 05/23/14 121,377 307,592
J. Dennis Burns ABI 6,000 2.3% 9.65 05/23/14 36,413 92,278
(1) All options granted by the Company in fiscal year 2004 were granted
pursuant to the Company's 1993 Stock Award and Incentive Plan, as amended
and restated as of March 4, 1997. All options granted to the named
executive officers vest over five years at the rate of 20% per year
beginning on the first anniversary of the date of the grant, which is May
24, 2005, subject to acceleration as the Compensation Committee, in its
sole discretion, deems appropriate.
(2) These amounts represent certain assumed rates of appreciation which are
provided for illustrative purposes only. Actual gains, if any, on stock
option exercises are dependent of future performance of the Common Stock
and overall stock market conditions. There is no assurance that the
amounts reflected will be realized
13
The following table sets forth information relating to stock option exercises in
2004 by the named executive officers of the Company and the number and value of
each such officer's unexercised in-the-money options/SARs on December 31, 2004
based upon the difference between the per share exercise price of the stock
option and closing price per share of Common Stock and Class A common Stock of
Congoleum as applicable at fiscal year-end.
Aggregated Option/SAR Exercises And Year-End Value Table
Number of Securities Value of Unexercised
Underlying Unexercised In-the Money
Options/SARs at 12/31/04 Options/SARs at 12/31/04
--------------------------- ------------------------------
Company Shares Value
Granting Acquired on Realized Exercisable Unexercisable Exercisable Unexercisable
Name Options Exercise (#) ($) (#) (#) ($) ($)
----------- -------- ------------ -------- ----------- ------------- ----------- -------------
Roger S. ABI -- 60,000 40,000 19,000 76,000
Marcus Congoleum -- -- 80,000 120,000 284,000 426,000
Richard G. ABI -- -- 60,000 40,000 19,000 76,000
Marcus Congoleum -- -- 80,000 120,000 284,000 426,000
William M. ABI -- -- 48,000 32,000 15,200 60,800
Marcus Congoleum -- -- 2,000 3,000 7,100 10,700
Howard N. ABI -- -- 14,000 16,000 7,600 30,400
Feist III Congoleum -- -- 6,000 9,000 21,300 32,000
J. Dennis ABI -- -- 7,200 4,800 2,300 9,100
Burns Congoleum -- -- -- -- -- --
14
DEFINED BENEFIT PENSION PLAN
In addition to the remuneration set forth above, the Company maintains a
tax-qualified defined benefit pension plan (the "Pension Plan"). The following
table shows for various income and service levels, the annual benefits payable
under the Pension Plan, commencing at normal retirement at age 65. These
benefits are presented on a five years certain and life thereafter basis and
reflect any reduction for Social Security or other offset amounts that may
apply.
APPROXIMATE ANNUAL PENSION AT AGE 65
Years of Service
--------------------------------------------------------------------------------------------
Final Average
Annual Compensation 15 20 25 30 35 40 45
------------------- ---------- -------- ------- -------- ------- ------- --------
$200,000 .............. $24,200 $32,300 $40,400 $48,400 $56,500 $64,600 $70,700
$300,000 .............. 24,900 33,200 41,500 49,800 58,100 66,400 72,600
$400,000 .............. 24,900 33,200 41,500 49,800 58,100 66,400 72,600
$500,000 .............. 24,900 33,200 41,500 49,800 58,100 66,400 72,600
The Pension Plan provides non-contributory benefits based upon years of
service and average annual earnings for the 60 consecutive months in which the
participating employee had the highest level of earnings during the 120
consecutive months preceding retirement.
The compensation used to determine a person's benefits under the Pension
Plan is such person's salary (including amounts deferred as salary reduction
contributions to any applicable tax-qualified plans maintained under Sections
401(k) or 125 of the Internal Revenue Code of 1986, as amended). The Internal
Revenue Service has limited the maximum compensation for benefit purposes to
$205,000 in 2004. Salary amounts listed in the Summary Compensation Table are
items of compensation covered by the Pension Plan. A person's benefits under the
Pension Plan are subject to deduction for Social Security and other offset
amount that may apply.
The table below sets forth certain information relating to the Pension
Plan with respect to the named executive officers.
2004 Remuneration Credited Years
Name Covered by Plan of Service
---- --------------- ----------
Roger S. Marcus ..................... $205,000 37
Richard G. Marcus ................... 205,000 34
William M. Marcus ................... 205,000 44
Howard N. Feist III ................. 205,000 23
J. Dennis Burns ..................... 205,000 20
15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 2004, the Company retained the services of the law firm Skadden,
Arps, Slate, Meagher & Flom LLP for a variety of legal matters. The Company has
retained Skadden, Arps, Slate, Meagher & Flom LLP during 2005 and proposes to
retain that firm during the remainder of 2005. Mr. Kaplan is of counsel to
Skadden, Arps, Slate, Meagher & Flom LLP.
During 2004, the Company employed Mr. William M. Marcus' son in a
marketing position, with compensation paid (including salary, value of company
provided automobile, and 401(k) match) for 2004 of $70,892. During 2004,
Congoleum Corporation employed Mr. Roger S. Marcus' daughter in a marketing
position, with compensation paid (including salary, value of company provided
automobile, 401(k) match, and pay in lieu of medical benefits, as applicable)
for 2004 of $81,117, and employed his son-in-law in an administrative position
with compensation paid (including salary and 401(k) match) of $61,665. Congoleum
Corporation also employed Mr. Richard G. Marcus' son in a marketing position
with compensation paid (including salary, value of company provided automobile
and 401(k) match) of $47,518. Mr. Richard Marcus' son left Congoleum Corporation
in 2004. All other employment relationships are expected to continue during
2005.
CHANGE OF CONTROL ARRANGEMENTS
Under the terms of the Company's 1993 Stock Award and Incentive Plan, as
amended and restated as of March 4, 1997 (the "1993 Plan"), all outstanding
awards granted under that plan that were not previously exercisable and vested
will become fully vested and exercisable if: (i) any person (other than an
exempt person (as defined in the succeeding sentence)) is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company's then
outstanding securities; (ii) during any period of two consecutive years,
individuals who at the beginning of that two-year period constitute the entire
Board, and any new director (other than a director designated by a person who
has entered into an agreement with the Company to effect a transaction of the
type referred to in clauses (i), (iii) or (iv) of this paragraph) whose election
to the Board or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then in office who
either were directors at the beginning of that two-year period or whose election
or nomination for election was previously so approved, cease for any reason to
constitute at least a majority of the Board; (iii) the Company's stockholders
approve a merger or consolidation of the Company with any other corporation,
other than (a) a merger or consolidation which would result in the Company's
voting securities outstanding immediately prior to the consummation of that
transaction representing 50% or more of the combined voting power of the
surviving or parent entity outstanding immediately after the merger or
consummation or (b) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
(other than an exempt person) acquires 50% or more of the combined voting power
of the Company's then outstanding voting securities; or (iv) the Company's
stockholders approve a plan of complete liquidation of the Company or an
agreement for the sale of all, or substantially all of, the Company's assets (or
any transaction having a similar effect). For purposes of the 1993 Plan, an
"exempt person" means (a) the Company, (b) any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, (c) any
corporation owned, directly or indirectly, by the Company's stockholders in
substantially the same proportions as their ownership of the Company, or (d) any
person or group of persons who, immediately prior to the adoption of the 1993
Plan owned more than 50% of the combined voting power of the Company's then
outstanding voting securities.
16
CUMULATIVE TOTAL STOCKHOLDER RETURN
The graph that follows compares the cumulative total stockholder return of
the Common Stock to the cumulative returns of the American Stock Exchange Market
Value Index and a Peer Group Index which includes companies in Standard
Industrial Classification (SIC) code number 3089 - Plastic Products, N.E.C.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG AMERICAN BILTRITE INC.,
AMEX MARKET INDEX AND SIC CODE INDEX
[LINE GRAPH IS PRESENT IN THE PRINTED MATERIALS]
1999 2000 2001 2002 2003 2004
---- ---- ---- ---- ---- ----
AMERICAN BILTRITE INC. 100.00 103.67 106.79 74.20 62.35 92.31
SIC CODE INDEX 100.00 66.43 78.87 70.08 82.81 99.99
AMEX MARKET INDEX 100.00 98.77 94.22 90.46 123.12 140.99
17
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee has selected Ernst & Young LLP as independent auditors
to audit the financial statements of the Company for 2005. Fees billed by Ernst
& Young LLP for 2003 and 2004 are as follows:
Audit Fees
The aggregate fees and expenses billed by Ernst & Young LLP for
professional services rendered for the audit of the financial statements of the
Company and Congoleum for 2003 and 2004 and the reviews of the Company's and
Congoleum's quarterly financial statements included in the Company's and
Congoleum's respective Quarterly Reports on Form 10-Q for 2003 and 2004 were
$882,000 and $1,001,000, respectively, ($300,500 in 2003 and $340,000 in 2004 of
such fees was for services provided to Congoleum).
Audit Related Fees
The aggregate fees and expenses billed by Ernst & Young LLP for
professional services rendered the Company and Congoleum for audit related
services which were primarily related to audits of the employee benefit plans
and services with respect to the Company's and Congoleum's internal controls for
2003 and 2004 were $100,500 and $40,000 respectively, ($50,000 in 2003 and
$20,000 in 2004 of such fees was for services provided to Congoleum).
Tax Fees
The aggregate fees billed by Ernst & Young LLP for tax services provided
to the Company and Congoleum related to tax compliance, tax advice, tax planning
and tax examination assistance in 2003 and 2004 were $494,400 and $245,000,
respectively, ($26,000 in 2003 and $10,000 in 2004 of such fees was for services
provided to Congoleum).
All Other Fees
The aggregate fees billed by Ernst & Young LLP for all other services
rendered to the Company other than those mentioned above for 2003 and 2004 were
$31,000 and $69,000 respectively, which related to services in connection
Congoleum's filing a petition under Chapter 11 of the federal Bankruptcy Code.
Fees for services provided to Congoleum Corporation are approved by
Congoleum's audit committee. The Audit Committee does not pre-approve fees for
services for Congoleum but considers the amounts of such fees paid when making
judgments regarding independence. All audit related services, tax services and
other services, other than those provided to Congoleum, were pre-approved by the
Audit Committee, which concluded that the provision of such services by Ernst &
Young was compatible with the maintenance of that firm's independence in the
conduct of its auditing functions. The Audit Committee's pre-approval policy and
procedure is to review proposed Ernst & Young audit, audit-related services, tax
services and other services and pre-approve such services specifically described
by the Audit Committee on an annual basis. In addition, individual engagements
anticipated to exceed pre-established thresholds must be separately approved.
The policy authorizes the Audit Committee to delegate to one or more members of
the Audit Committee pre-approval authority with respect to permitted services.
The Audit Committee did not approve any services pursuant to Rule
2-01(c)(7)(i)(C) of Regulation S-X of the regulations promulgated by the
Securities and Exchange Commission.
Representatives of Ernst & Young LLP are expected to be present at the
Meeting, will be given an opportunity to make a statement if they desire to do
so, and are expected to be available to respond to appropriate questions.
18
SHAREHOLDER COMMUNICATION POLICY
The Company has established procedures for shareholders to communicate
directly with the Board of Directors on a confidential basis. Shareholders who
wish to communicate with the Board or with a particular director may send a
letter to the Secretary of the Corporation at 57 River Street, Wellesley Hills,
Massachusetts 02481 Attention: Henry W. Winkleman. The mailing envelope must
contain a clear notation indicating that the enclosed letter is a
"Shareholder-Board Communication" or "Shareholder-Director Communication." All
such letters must identify the author as a shareholder and clearly state whether
the intended recipients are all members of the Board or just certain specified
individual directors. The Secretary will make copies of all such letters and
circulate them to the Board of Directors addressed, as applicable. To the extent
that a shareholder wishes the communication to be confidential, such shareholder
must clearly indicate on the envelope that the communication is "confidential."
The Secretary will then forward such communication, unopened, to the Chairman of
the Board of Directors.
SUPPLEMENTAL INFORMATION
On December 31, 2003, Congoleum Corporation filed a petition for
reorganization under Chapter 11 of the United States Bankruptcy Code. Roger S.
Marcus, Richard G. Marcus and Howard N. Feist III were executive officers of
Congoleum Corporation at the time of such filing and continue to serve in those
capacities. Also, Roger S. Marcus, Richard G. Marcus, William M. Marcus and Mark
N. Kaplan were directors of Congoleum Corporation at the time of such filing and
continue to serve in those capacities.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the year 2006 Annual
Meeting of Stockholders pursuant to Rule 14a-8 under the Exchange Act must be
received by the Company at the Company's principal executive offices by December
1, 2005. In order for stockholder proposals made outside of Rule 14a-8 under the
Exchange Act to be considered "timely" within the meaning of Rule 14a-4(c) under
the Exchange Act, such proposals must be received by the Company at the
Company's principal executive offices by February 14, 2006.
OTHER MATTERS
Management of the Company has no knowledge of any other matters which may
come before the Meeting and does not itself intend to present any such other
matters. However, if any such other matters shall properly come before the
Meeting or any adjournment thereof, the persons named as proxies will have
discretionary authority to vote the shares represented by the accompanying proxy
in accordance with their best judgment.
By Order of the Board of Directors
AMERICAN BILTRITE INC.
Henry W. Winkleman
Secretary
Wellesley Hills, Massachusetts
March 31, 2005
19